Against Intellectual Monopoly

Aspirin,
that wonder drug, was a German invention, not a British one and, while
it was patented in the United States, Britain, and France, it could not be
patented in Germany. Bayer was forced to relinquish its patent on aspirin
in the rest of the world by the Treaty of Versailles.16
    Here is how Murmann summarizes the main findings from his historical study of the European synthetic dye industries during the 1857-1914
period:

    British and French synthetic dye firms that initially dominated the synthetic dye
industry because of their patent positions but later lost their leadership positions
are important cases in point. It appears that these firms failed to develop superior
capabilities in production, marketing and management precisely because patents
initially sheltered them from competition. German and Swiss firms, on the other
hand, could not file for patents in their home markets and only those firms that
developed superior capabilities survived the competitive home market. When the
initial French and British patents expired, the leading German and Swiss firms
entered the British and French market, capturing large portions of sales at the
expense of the former leaders.17
    It is only with the end of the two world wars and the de facto expropriation
of German chemical know-how, first by the French and British and then
by the victorious Allies, that a degree of competition was restored in the
chemical industry for a few decades. Indeed, in the end, the First World
War blockade did work - allowing DuPont to enter the dyestuff market
by pirating German products. The British government provided DuPont
with access to the industrial secrets found in a Hoechst plant in the United
Kingdom that had been confiscated at the start of the First World War; the
U.S government allowed DuPont free access in 1919 to all German chemical
patents, as these were confiscated at the end of the war.
    From a theoretical point of view, it is not hard to understand the devastating impact of patents, especially of product patents, on innovation in
the chemical industry. The chemical industry is a classic case of the innovation chains - new compounds and processes are built on the knowledge of
existing ones. As we observed, patents are particularly harmful in this case,
as the increased incentive to innovate that they may generate is, as in the
chemical industry, more than offset by the increased difficulty of doing so.
    It could be, and sometimes is, argued that the modern pharmaceutical
industry is substantially different from the chemical industry of the past
century. In particular, it is argued that the most significant cost of developing
new drugs lies in testing numerous compounds to see which ones work.
Insofar as this is true, it would seem that the development of new drugs is
not so dependent on the usage and knowledge of old drugs. However, this is
not the case according to the chief scientific officer at Bristol-Myers Squibb,
Peter Ringrose, who "told The New York Times that there were `more than
50 proteins possibly involved in cancer that the company was not working
on because the patent holders either would not allow it or were demanding
unreasonable royalties."18
    Truth-telling remarks by pharmaceutical executives aside, there is a
deeper reason why the pharmaceutical industry of the future will be more and more characterized by complex innovation chains: biotechnology. As
of 2004, already more than half of the research projects carried out in the
pharmaceutical industry had some biomedical foundation. In biomedical
research, gene fragments are, in more than a metaphorical sense, the initial
link of any valuable innovation chain. Successful innovation chains depart
from, and then combine, very many gene fragments and cannot do without
at least some of them. As gene fragments are finite in number, patenting
them is equivalent to artificially fabricating what scientists in this area have
labeled an "anticommons" problem. So, it seems that the impact of patent
law in either promoting or inhibiting research remains, even in the modern
pharmaceutical industry.19

Medicines without Patents
    Patents for medicines were introduced in Italy, under pressure from foreign
multinationals, in 1978. Today India, China, and Brazil are, reluctantly,
caving in to U.S. pressure to do the same. Proponents of intellectual property
argue that this will increase pharmaceutical innovation in those