Patents and Eminent Domain

mrbill writes "Interesting take on the Eminent Domain case now before the Supreme Court. Could the same logic behind using Eminent Domain to take real property be used to take a Patent? Apparently some states are contemplating taking drug company patents to force lower drug prices." From the article: "Patents are the key to huge drug-company profits. The industry will fight vociferously to protect them. In West Virginia, where the issue came up last summer, industry lawyers warned a legislative advisory council away from proposing such action on patents, claiming it would be unconstitutional. "

Skeptical of courts...

[ntxb229 (542609)]

I'd have to say I'm a little skeptical about this, even if the drug companies did lose. Not to be a troll, but I imagine if they did lose in court they'd do what every other industry does when they lose in court; buy legislation.

they don't even have to do that...

[ecalkin (468811)]

because patents have an expiration. if i have property and some government (local, state, etc) wants to take it, i have rights to fight it in court.

most drug patents are close enough to expiration that the company could delay enough in court to make it a moot point.

eric

Bugged

[Virtual Karma (862416)]

I'm so bugged with this whole paptent issue. I will tell you why. I was once developing a IM Bot for MSN messenger using perl. I was almost towards the end of coding the bot. Thats when I hear that the IM bot technology is patented by ActiveBuddy. I had to stop development. I wish they had a better model to protect software inventions

Re:Bugged

[idlake (850372)]

It is doubtful that the patent is valid; IM bots go back to the dark ages of the IRC networks. There is plenty of prior art.

fair market value

[by Anonymous Coward]

if a government did apply this to drug patents they would be required to pay fair market value for them which would be roughly equal to the rediculous profit the companies are gaining from their sale. This means that any difference in price would be made up in tax money.

Re:fair market value

[eric76 (679787)]

They definition of "fair market value" is not necessarily fair at all.

Patents aren't really evil, just misguided, but the power of eminent domain is truly evil.

Lessing did a good one!

[mabhatter654 (561290)]

In the Lessing case, the Supreme Court said Congress has the consitiutional right to set copyrights.... Lessing argued there had to be "limits" from "common sense"... The court disagreed.

The Law gives, the law takes away" was the court's basic argument.... It will be really funny to find out what happens when the Congress wants to "take away" This could be good or bad, after all, When We want to get copyright back under control we'll have the same basic argument again by the *IAA's...

Hopefully the court will keep tooting it's horn!! This jsut the IP trap we need to get the IP situation under control... then all we have to do is convice lawmakers... their decisions will stick.

Re:fair market value

[Max Threshold (540114)]

Not really. In eminent domain cases, the government conveniently determines the fair market value of the property, and it's seldom anywhere near its real value.

Besides, the drug companies' ridiculous profits represent the unfair market value, not the fair market value!

Won't this deter research?

[wasted (94866)]

Since the drug companies invest so much in research due to the potential profit, wouldn't reducing the potential profit reduce the incentives for research?

Re: Won't this deter research?

[Black Parrot (19622)]

> Since the drug companies invest so much in research due to the potential profit, wouldn't reducing the potential profit reduce the incentives for research?

I don't know whether it's true or not, but critics claim that the drug companies spend 10x as much on advertising as they do on research.

Profits at a pharmaceutical company

[ArsSineArtificio (150115)]

I don't know whether it's true or not, but critics claim that the drug companies spend 10x as much on advertising as they do on research.

There's no need to discuss these things theoretically, when all publicly traded companies have to make SEC filings of their financial statements.

According to Pfizer's most recent 10-Q filing, for instance, they incurred "selling, informational, and administrative expenses" of $4,036 million (or 31.5% of revenues), and "research and development expenses" of $1,888 million (or 14.7% of revenues). The former category includes much more than advertising (administrative expenses include accounting, payroll, facilities maintenance, etc.) Nevertheless, total administrative and marketing expenses were only about twice as much as R&D costs.

People like to talk about the rapacious profits of drug companies. Well, go and look at the numbers for yourself: Pfizer's earnings per share are $1.19; Eli Lilly's are $1.66; Merck's are $2.90. By way of comparison, American Electric Power is $1.51, Wal-Mart is $2.41, Staples is $1.40, Home Depot is $2.26, Anheuser-Busch is $2.77.

Drug companies are not massively more profitable than everything else. People who think that they are should simply invest in them and benefit from the price-gouging which they are supposedly inflicting upon the public.

Re:Won't this deter research?

[Datasage (214357)]

Incentive to do drug research commercially yes. But there are still many drug researchers who are intrinsically motivated and will continue to research at universities or part of non profit orginizations.

Im not sure about this, but isnt some drug research partially funded by public money? If the public pays for it, why should a corporation get exclusive control over it?

Re:Won't this deter research?

[Duncan3 (10537)]

Most all research is actually done in universities, and "finished" in corporations.

So no loss to the end customer.

Brazil did this with AIDS drugs...

[doormat (63648)]

because the drug companies wouldnt lower prices. Although I would say that this would easily be overturned/outlawed by the bought and paid for [opensecrets.org] Congress. Although if they were to take patents for drugs, whats to stop them for taking patents for everything else?

Its a shame that the states are doing what the federal govt. should be doing these days.

For those slashdotters unaware of the SCOTUS case

[Raul654 (453029)]

The summary above refers to Susette Kelo v. City of New London [ij.org]. The city is attempting to use eminent domain to take some land from people, and sell it to a private developer to develop. (I emphasize private because the case hinges on that) Cnn had a good write up here [cnn.com]

Not so much profit

[meckardt (113120)]

In West Virginia, where the issue came up last summer, industry lawyers warned a legislative advisory council away from proposing such action on patents, claiming it would be unconstitutional.

With good reason, since the concept of eminent domain is not actually part of the constitution. Not that it will stop political bodies from trying it.

Of course, the "huge profits" that phamaceutical companies get from selling a drug under patent are not all that great. Not after paying for the cost of creating the drug... not to mention a dozon other drugs that don't make it through the FDA approval process.

Re:Not so much profit

[Kymermosst (33885)]

With good reason, since the concept of eminent domain is not actually part of the constitution.

That's funny, I could have sworn that an amendment to the Constitution [house.gov] addressed the taking of private property for public use [reference.com]:

Article [V.] [house.gov]

No person shall be held to answer for a capital, or otherwise infamous crime, unless on a presentment or indictment of a Grand Jury, except in cases arising in the land or naval forces, or in the Militia, when in actual service in time of War or public danger; nor shall any person be subject for the same offence to be twice put in jeopardy of life or limb; nor shall be compelled in any criminal case to be a witness against himself, nor be deprived of life, liberty, or property, without due process of law; nor shall private property be taken for public use, without just compensation. (Emphasis mine.)

You might actually try reading the Constitution and some of the laws you like to talk about. Seriously, you might learn something. Now, what were you saying?

Oh yeah, this is a brilliant solution...

[Kymermosst (33885)]

Let a private business go through all the work and expense of developing a drug, and then simply procure it because of "public good."

That'll keep drug companies in business developing new drugs. In fact, if I was president of a drug company, I'd make sure I got my products to market faster after this happened the first time. I would just love deals like this. Here, let me bend over for you... do you mind if I lean on my desk?

It's The American Way!

[nick_davison (217681)]

It's a fantastic idea. Drug companies make way too much money. Better the states take their patents to more fairly control them. The same goes for most other successful businesses and, indeed, private individuals, too. If the state takes them all over, they'd be able to distribute the assets far more fairly.

It's such a great idea, I can't believe no one's tried it before!

The only concern would be those damn Commie Ruskies trying to undermine our great system.

Eminent Domain & Compensation

[randall_burns (108052)]

When property is taken by eminent domain, there is a requirement that the company in question be given "fair compensation". If the patent is owned by a publicly traded company, that would imply that appplication of eminent domain to an especially valuable patent that constituted a heft share of that company's value wouldn't affect stock price at all.

Personally, I think there are cases where eminent domain should be applied to patents-and cases where the government should offer prizes for creation of patents that will be placed in the public domain. The only real dangers of application of Eminent Domain to patents are

a) the price will be too low so folks have their property expropriated

b) the price is too high-so companies lobby to get
Eminent Domain applied to their patents

Of these, I tend to see 2 as the lessor danger.

Re: Unconstitutional?

[Black Parrot (19622)]

> I don't see how it would be assuming there's due process.

The US Constitution gives authority over patents to the US Congress, not to the states.

Re: Unconstitutional?

[pablonyc (125604)]

Actually, Article I, Sec. 8 of the Constitution gives Congress authority to grant patents and copyrights. However, it is not specifically denied to the states - it is up to Congress, under the Supremacy Clause, to decide whether to allow states to regulate the same areas. For example, states had independent copyright laws until the 1970s, until Congress took that power away. With that said, it's a meaningless issue here, as the Federal government has in fact blocked parallel state rulemaking regarding patents.

However, the doctrine of sovereign immunity and the 11th amendment make it hard to prosecute state governments for patent or copyright infringement. So a statewide agency could just start making patented drugs, and it would be hard to stope them

Re:What about copyrights?

[eric76 (679787)]

These days, the government takes land from one citizen or business so it can transfer to another citizen or business.

Their rationale is that it is okay to do that if the new owner will pay more in taxes.

Of course, the new owner, in addition to being able to receive stolen property, is often given a tax break. So it's not about increasing tax revenue -- it's about doing favors for the rich and powerful.

Re:In the long term...

[eric76 (679787)]

What we really need is for patents to protect the copying the invention itself, not all independent developments of the same idea.

Anyone who independently develops an idea without looking to see how the patent holder did it should be able to use and profit by his work.

Re:local leftism is the way to save America?

[croddy (659025)]

I like this idea.

Because if I'm living in a state that's wasting my taxes on this broadband, healthcare, and other ridiculous shit, I can just move to Nevada.