Patents and blood cells

By Alex Singleton | 17 July 2005

Stephan Kinsella writes on the Mises Economics Blog:

My wife and I, like yuppies we are, signed up for blood cord storage with NECBB when our baby was born a couple years ago. I get a bill every year for the annual storage fee. It's usually $99.

This year I received a letter from NECBB, stating that the fee has increased from $99 to $124 a year, since they were threatened with a patent infringement lawsuit from someone who claimed the right to control any "type of procesing of umbilical cord blood." So NECBB took out a license that costs each user about $2/month, hence the increase in price. It is most likely that NECBB never heard of the patentee and did not use any technology the patentee came up with, and that the patent may even have been invalid. But it's cheaper sometimes to just settle and buy a license. After all, they can pass the costs on to me, and all their competitors will probably have the same price increase. So, my fees have increased by 25% for no reason whatsoever, except some other company filed years ago a document with the government. Nice.

This reminds me of The Economist's line from 1851:

The public will learn that patents are artificial stimuli to improvident exertions; that they cheat people by promising what they cannot perform; that they rarely give security to really good inventions, and elevate into importance a number of trifles... no possible good can ever come of a Patent Law, however admirably it may be framed.

Whatever you think about the necessity of patents, one thing's clear. The current system isn't working.