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Business Impact

Protecting People Above Patents

Even during its “war on terrorism,” the U.S. government says it can’t suspend patents. Wrong: it’s done so before.

Let’s say a government is at war. Imagine further that a powerful company holds a patent on technology vital to the government’s ability to fight that war or protect its citizens. Wouldn’t you assume that the government would place national protection far above patent protection?

Of course you would.

And this is indeed what happened, for instance, in 1917, when the U.S. government overrode the broad airplane patent held by the Wright brothers’ powerful company as the nation prepared to enter World War I. I’ll come back to this shortly, but first let’s fast-forward to the troubled present. The contrast couldn’t be more striking.

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Early on in the anthrax scare last October-a month into the proclaimed war on terrorism-it almost seemed the Bush administration cared more about upholding Bayer’s patent on the antibiotic Cipro (ciprofloxacin) than it did about safeguarding the public against bioterrorism.

With anthrax spores wreaking havoc from Florida to New York, shuttering offices in the nation’s capital, administration officials announced that although the government wanted more Cipro to combat anthrax, it is illegal to break a patent. Questioned on CNN about New York senator Charles Schumer’s prudent suggestion that Uncle Sam stockpile generic forms of the antibiotic from other manufacturers approved by the U.S. Food and Drug Administration to provide them, U.S. secretary of health and human services Tommy Thompson whined, “It does not look like we have the legal authority to do so.”

Leaving aside the public health considerations, Thompson’s claim about the government’s lack of legal authority is utter nonsense. As many intellectual-property experts have since pointed out, the government would be on firm legal ground in overriding a company’s patent by mandating licensing in such a situation if it chose to. Patents, after all, are government-granted monopolies; in times of war or crisis, the government has broad powers, especially in national security matters.

In this regard, Secretary Thompson would do well to consider the government’s actions in World War I. Back then, the airplane was a relatively new technology. Armed with heavy Wall Street backing from Cornelius Vanderbilt and others, the Wright brothers’ company-then called Wright-Martin Aircraft (precursor to today’s Lockheed Martin)-held a virtual monopoly on the U.S. market. Recognizing that the Wrights’ patent was thwarting the nascent domestic aviation industry and threatening the nation’s ability to produce airplanes for the war, the federal government took bold action. At the urging of a young assistant secretary of the navy named Franklin D. Roosevelt, the feds mandated that the Wrights license their closely held airplane patent.

Among the results of this intervention was the Curtiss JN-4D, or “Jenny”-one of the most successful military aircraft of its day-manufactured by Curtiss Aeroplane. By the end of World War I, more than 6,000 Jennies had been built, and the vast majority of the approximately 9,000 American wartime-trained pilots learned to fly in these airplanes. Overriding the stranglehold of a broad patent in this case was the right thing for the government to do-both for the war effort and for the aviation industry.

This history lesson seems particularly pertinent in light of Secretary Thompson’s claim of helplessness before the almighty drug patent.

Let me say that Bayer deserves criticism as well, despite ultimately agreeing to lower Cipro’s price and despite its self-serving pledge to ramp up production to meet demand. This company sold $1 billion worth of Cipro in the United States last year and has two more years before its U.S. patent runs out-so it naturally sees control of the drug as vital to its bottom line. In this case, however, Bayer should have done the right thing and offered competitors some kind of limited license to manufacture the drug as long as a credible, proven threat remains afoot. Should, heaven forbid, a large-scale anthrax attack take place, the nation might need enough antibiotics to treat the entire population for an indefinite period- far beyond the 100 million tablets Bayer has pledged to manufacture. In that dire event, Bayer executives would certainly regret their self-interested insistence on being the only U.S. supplier.

But Bayer is a drug company. Distasteful or not when lives are potentially at stake, its managers must worry about profits. The same cannot be said, however, for government officials entrusted by citizens to protect public health.

We have not likely seen the end of even the current spate of bioterrorism. True, Secretary Thompson has encouraged the use of other antibiotics for anthrax treatment, removing further pressure from Bayer. But as important as the Bush administration clearly believes patents to be, it is wrong to treat these government-granted monopolies as sacrosanct.

Letting the intellectual-property community know that extraordinary times can call for extraordinary measures does little to damage the patent system. On the contrary, by inserting a sense of priority that places people above patents, the U.S. government strengthens the system in the long run.

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