Sunday, August 30, 2015

“If You Had A Big Idea, Would You Keep It To Yourself?”



Part I – Pharma's Problem.

In 2014, Tufts University estimated that $2.6 billion are required per new drug gaining market approval and only 7% succeed in “a process often lasting longer than a decade.” The rapidly evolving diseases and resistant pathogens seem all the more frightening. The current development process neglects the vulnerable for lack of economic incentives. Human clinical trials also tend to burden the poor in a vertically integrated large cap-player market raising ethical concerns. The development process is also irrational in some instances. Bad drugs enter the market because of regulatory approval ease, not for their therapeutic needs. Add to that, the clinical trial process often lacks transparency jeopardizing treatment decisions downstream. Pharma, in some cases, is misinformed and inefficient. If nothing is done, cost and time for development will continue to rise. Consensus has been that the industry needs change. The economic goal is to cut development cost and time, but it is also a wonder if we can also enable rational market and treatment decisions, enforce quality and ethical standards, and deliver to the under-served at the same time.

Open innovation has been trending popular as a path forward in pharma with proven results. According to one consultant group, drugs sourced via open innovation triple their chance of later phase clinical success (Deloitte, 2015). Companies like Eli Lilly, Novartis, Pfizer, AstraZeneca have been leveraging open innovation (e.g., outsourcing, joint ventures, and permissive licensing). Academics are building open access and exchange of research and data, some with “copyleft” mechanisms. Professional analysts have also been producing useful advice helping the industry unriddle open commercialization. All the while, something fundamental about the marketplace is changing. Crowd is converging on-line, sharing resources and information, restructuring global transactions. The Internet has enabled collaborative responses in real time and increased our capacity; there is now a “whole swaths of economic life . . . beginning to move to a different rhythm.”

Part II – Business Model Innovation.

McKinsey & Company recently wrote that business innovation involves identifying and dissecting the long held beliefs about how value is created and reframe the beliefs to innovate. One of the most long-held belief in pharma is the ownership concept of exclusivity in patents. But it is difficult to put patents under the microscope. The mere suggestion to re-examine patent's role in pharma development is controversial. It often draws criticism and fear of losing private sector fundings. There is also a lucrative cottage industry of non-market participants (e.g., patent trolls), which likely will impact the conversation. But any meaningful dialogue about opening therapeutics must involve a closer look at the patent system.

In an economic sense, patents are especially problematic for pharma. Patents limit a therapeutic business model's life-span usually to 10 to 12 years. Upon patent expiration the technology enters the public domain. Developers have to lean-out fast and that's becoming ever more challenging in a global market place. Patents are also capital intensive (before and after the grant of patent). It silos information and inhibits scientific progress. There are also anti-trust and price fixing concerns with the patent-driven vertical integrations that naturally occurs. To further complicate things, patent laws, regulations, and enforcement mechanisms also lag behind developmet and market trends. There is also no guarantee that patents will translate to market dominance. In the United States, Inter Partes Review (“IPR”) jeopardizes even patents that have been granted. In developing jurisdictions such as India and China, patent enforcement often is wildly unpredictable and costly to defend (e.g., Gilead's struggle with its patent for hepatitis treatment in China and India).

Reliance on patents can also hinder the industry's growth. According to a 2015 industry report, bioengineered drugs continue to increase their market shares against conventional drugs. But patenting these biologics will be more difficult and traditional drugs. This type of therapeutics also involves, in many instances, laws of nature or natural phenomena which are excluded from patent protections. Patent examiners and courts will struggle as they have when the information technology (IT) industry first began to challenge the patent paradigm. This will put the market sector on elevated risk platform. Investors will stay off early R&D. This will further starve the capacity needed to actually engineer biologic based therapeutics. The success of this biopharma market sector, and the industry generally, will likely depend on a reframe of how we understand and leverage patents and other intellectual property types in the various emerging open innovation models.

Part III – The Reframe.

Patent and ownership have become ubiquitously linked in our conversations about therapeutics. Development often starts with patent leveraged investments to conduct clinical trials. The patent grows in value with positive trial results. Once regulatory approval is granted, more value is added to the patent. This allows for additional investments for manufacturing, advertising, and other operational expenses. This is our current model, but it is premised on the idea of scarcity—an antiquated frame of mind from our understanding of real and tangible property ownership. Yes, it is true there are only so much land in the world and it is important to exclude others from exploiting the one you own. But with intellectual property, the reverse is true: there is an abundance of possibility of ideas when we put our intellectual capacity together.

Another important observation ti make here is with respect to the valuation question. In a complicated transaction involving very expensive and risky human clinical trials, regulatory approval, and manufacturing, just exactly how does one value patents along the way to “de-risk” the process? Is it by excluding others from the development process, shift the risks to large-cap players, delay the risk to more mature developments, and starving the development pipeline? Or does it make more sense to collaborate? In modern accounting, valuation is highly depended on the subjectivity around the product's exclusivity of market. What happens if exclusivity is removed and replaced instead with collaborative capacity?

Disease is an old enemy, but bioengineered therapeutic options have only recently been explored (e.g., Amgen's T-VEC). To reframe how we work and to fully leverage biopharma developments meeting the increasing demands, a public interest open community that is self-organized and self-governed is needed. Finding a sustainable balance between self-interest and ecosystem health is key (see Howard Rheingold, TED 2005). The purpose is to enable distribution of biopharma knowledge, data, and developments freely and globally. The goal is to develop viable therapeutics in less time and for less cost compared to the current proprietary patent-driven model. It is disruptive, certainly; but it can also be distributive. It is disruptive to the current commercial model and incentivizes open science and open access for the industry. The distributed market model connects the “publish or perish” academic culture with practical support structure and application development opportunities to utilize the rapidly accumulating knowledge set. An optimist would believe the open-source markets will adjust to a rational equilibrium based on the law of economic efficiency and lowered cost of information. Adopting the open therapeutics model means a company is indeed an optimist. But even for a pessimist, open-source offers undeniable benefits.

Part IV – The Shared Information Economy for Saving Lives.

“Open everything,” a friend once joked. But this is not about whether you want to open or close a business model. The key is whether you believe in finding a balance between protecting intellectual property rights and using those rights to enable collaborative problem solving. Once a market participant sees this paradigm and sees open as a spectrum of free market choices, superficial barriers (regulatory jurisdictions, language, culture) tumble. It is then a matter of finding a good opportunity, finding the lowest cost provider, leveraging existing intellectual property rationally, copyleft, and participating in the therapeutic development process fully—together.

Open science and open data exchange is the driver of this process because scientists and researchers holds the key to the therapeutic development process: knowledge, know-how, resources, connections, etc. They can chose to turn the key right excluding others and go down the patent-based commercialization route—a path of billions of dollars in investment, decades in development, a small chance of successful market entry, to then face a limited patent period demanding rapid lean-out of production and product delivery. Or they can turn the proverbial key left (copyleft) and see what the crowd is capable of accomplishing.

If open therapeutics community is to succeed, it must find and connect the capable and responsible research scientists around the world with innovators who've turned that copy key left to the public. The community must include engineers and vendors who can help design and deploy strategies to promote fair, reasonable and non-discriminatory market development and distribution of therapeutics. Open access to science and open exchange of data are only the first steps. Open reproducibility should improve quality and safety. Open standards should improve efficiency and emergency demand response time. Open trials should improve overall system integrity. All of this coming together to make a community of open therapeutics thrive, like Linux.

For an advocate of human progress, open therapeutics is a path forward with SynBio-based innovations. A friend once said about open therapeutics: “It is social engineering if you really think about it. Let's call it for what it is. But in the end, this is about saving lives.” Undoubtedly, it is. It is for supporting a good cause and empowering collective actions to respond to crisis, unless we squander the opportunity for a tragedy of the commons type of ending. To the curious mind, open therapeutics should strike a chord as a better alternative worthy of consideration. It should be self-organizing with the freedom to innovate. The possibilities for solving problems are endless. We hope the practitioners of the open-source way will be the pathfinders of our endeavors and the lifeblood of open terapeutics. If we can save just one life, this will have been worth our time.

Thursday, August 27, 2015

The Same Path Less Traveled

Though as for that the passing there
Had worn them really about the same,
                                                                             -  R. Frost 



T. Cheng, OldBoy

Sunday, July 19, 2015

“If You Had A Big Idea, Would You Keep It To Yourself?”


Synthetic biology (SynBio) is the design, re-design, and development of new biologicals and systems for useful purposes. SynBio endeavors have opened the richness of biological diversity enabling our capacity to solve the world's health, environmental, social, and economic problems in radical new ways. Specifically, SynBio can help develop precisely targeted therapeutics for challenging diseases, create sustainable fuel and chemicals for industrial use, remediate polluted ecosystems, and create new food supplies to meet the increasing global demand. The United States may have led the world in intellectual capital in this field, but China, India, and the rest of the world are aggressively funding fundamental research to catch up and surpass. This competitive growth puts the industry on an accelerated path. The SynBio market is poised to reach $38.7 billion by 2020.

The commercial opportunities may be plentiful, but much of the SynBio market today is still nascent. The industry faces a number of challenges ahead. First, the fact that SynBio inventions can be misused raises special ethical concerns. Its scientific complexity also requires vast data aggregation and multi-disciplined expertise. Additionally, the regulatory landscape also lags market trends making downstream transactions challenging. These result in higher cost of SynBio-based market entry narrowing the potential innovator pool. For these reasons and more, an open source market model may prove to be the beneficial alternative for the emerging SynBio industry. And for curiously anthropocentric reasons, there is no better starting point to open the SynBio market than from therapeutics. 
 
The Therapeutic Problem.
 
In 2014, Tufts University estimated that $2.6 billion dollars are required per new drug gaining market approval in “a process often lasting longer than a decade”. A Nature Reviews Drug Discovery article in 2010 pointed out that large-cap pharmaceutical companies themselves will only be able to replace 26 cents for every dollar lost to patent expirations by 2012. The expiring patents would jeopardize more than $200 billion in annual industry drug sales. The 2010 Nature article then declared:

The high cost and long lead time of drug development are also not conducive to meeting the rapidly evolving demands against new diseases and resistant pathogens. Almost everyone now recognizes the need to collaborate and tackle the challenges together (from building emergency response personnel networks to building R&D productivity). There is also the humanitarian challenge to finding therapeutics for rare diseases or diseases that plague low income demographics. Since the economic incentives are not there, open innovation and collaboration is critical to deliver to the under-served equal access to good therapeutic options.

There are other problems with pharma's proprietary commercialization model for therapeutics. Currently, the market is predominately based on patent filings, providing opportunities and incentives for non-market participants (e.g., patent trolls). Proprietary developments also require aggregation of specialized expertise at different stages of development: front end R&D work requires scientific expertise, clinical trials require regulatory and medical expertise, productions and product monetization are even more complex and cost intensive requiring a range of manufacturing, promotion and sales entities. The risks are plentiful for the would-be investors. This makes vertical integration likely the only true efficient way to deliver products to market; but vertical integration is capital intensive. There are also anti-trust and price fixing concerns with vertical integrations in the market place. Given the concentrated risks and low market approval rate (7% according to the Tufts University study), large-cap players who are able to vertically integrate tend to shift investment towards more mature R&D projects in later stages of the development process starving the initial work-in-progress inception. This results in a decrease of market input making market output (productivity) substantially lower in comparison to the cost of development.

To further complicate things, relevant SynBio industry regulations in therapeutics (human trials) lag behind market trends. Therefore, players often have to navigate through a patchwork of regulations from different agencies in different sovereign jurisdictions to bring something to market. This system inefficiency can be avoided if the market is more open and if there are voluntary standardizations to preempt or anticipate regulatory differences. There is also no guarantee that patent will translate to market dominance. In markets like China and India, there is not even guarantee that patents will be validated by the courts. The cost of litigation and defending patents in these jurisdictions will also have to be factored into the patent-based commercialization model.

SynBio-based therapeutic applications are also rooted in the publicly funded research projects such as the Human Genome Project (HGP). There is obvious ethical problem in using public funded research results for private monopolistic gains, but the more fundamental and complex issue is the capacity required to really develop a viable SynBio-based therapeutic application to begin with. When the U.S. Patent and Trademark Office (USPTO) called for a “patent pool” approach in 2000 for synthetic biology based therapeutics, it stated

No single company or organization, however, has the resources to develop any significant fraction of the genetic information present in an organism. If proprietary information is not freely available or licensed in an affordable manner, researchers will be precluded from using these protected nucleic acids to develop new therapeutics and diagnostics. It would be, however, shortsighted for a patent holder to demand such a prohibitively expensive licensing agreement that would preclude anyone else from utilizing a patented invention. . . . By minimizing licensing fees and extending non-exclusive licenses, potential infringers were inclined to obtain licenses and the technology was therefore broadly distributed. . . .”

The USPTO is obivously bound by the agency's limited interests in patents. Patent pools aside, the patent-based proprietary approach creates walls and barriers around scientists dis-incentivizes cross-fertilization of ideas. Open Therapeutics is not bound by any agency nor any specific firms. Open Therapeutics is a public interest community that is self-governed. This is about the freedom to innovate using copyleft finding a sustainable balance between self-interest and ecosystem health (see Howard Rheingold, TED 2005).
Open Therapeutics.
If I have seen further than others, it is by standing upon the shoulders of giants.” Issac Newton. 
Open Therapeutic is a social venture support by Microbial Robotics, a limited liability company. The Company had a vision six years ago using the open way to revolutionize industries with SynBio-based engineering to make human progress more sustainable. Having proven its rapid-prototype business model in 2014 exiting its first SynBio based subsidiary, the company moved forward to the next stage of Open Therapeutics development. In the last few months, Microbial Robotics activated its network of participants, packaged its open business model as SynBio as a Service (“SYBaaS”), and laid the ground work for a public Open Therapeutics call to action campaign. To date, groups from Europe, China, Jordan, and the United States have expressed interest to participate as alpha-testers of its web-based platform built on the Open Science Framework (OSF.io). The goal at this stage is using Microbial Robotics' current open scientific platforms to refine work-flow management (process centric) making the web-service functional and useful. The beta version will include a wider pool of open SynBio scientific platforms, further community and user centric developments, and further work-flow developments to facilitate the market place – the bazaar.

Open Therapeutics' goal is to enable the commercialization of SynBio-based therapeutics in less time and for less cost compared to the current proprietary patent-driven model. The process requires information sharing and collaborative work-flow with a copyleft culture for responsible and capable researchers and innovators. It is disruptive, certainly; but it can also be distributive. An optimist would believe the open sourced markets will adjust to rational equilibrium based on law of economic efficiency and lowered cost of information. Adopting the open therapeutic model means the company is such an optimist. But even for a pessimist, open offers undeniable benefits. All that is required to reap the rewards is a shifting of perspective and taking a closer look at how we connect (technical) invention and (entrepreneurial) innovation in the commercialization process.
Invention and Innovation.

Commercialization is generally divided into two phases: the technical invention (research) and entrepreneurial innovation (development). Traditionally, intellectual properties are all rights (copyright, trademark, and patent) reserved and negotiation occurs discretely. Invention and innovation are both done internally as much as possible to control cost, maintain and grow market share. This model's transaction cost on global scale and delivering therapeutics to the under-served is immense and discrete negotiations also translates to longer lead time. Open, or copyleft, standardizes the process making transactions more efficient (e.g., Creative Commons). This enables negotiating scale relatively simple and lowers transaction cost and time. Because the revenue model is based on external invention and external innovation, open businesses are service centric. Fortunately, today's technologies can enable “as a service” (e.g., SaaS – Software as a Service) models.

For Open Therapeutics, the key question is what are the economic opportunities if we copyleft? How much room does that freedom give us to achieve accountability, scale, revenue, and make a positive impact? Most importantly: how we can solve knowledge intensive and complex therapeutic problems (e.g., cancer, resistant pathogens, etc.,) faster, cheaper, and better together.
What's New?

Disease is an old enemy, but SynBio therapeutic options are only recently explored (e.g., Amgen's T-VEC). Now that we are free to ponder the vast possibilities of SynBio, “open” is even more important. For starters, open participation can enable innovators, researchers, and vendors (e.g., manufacturers, distribution, clinicians) to collaborate and solve problems that no one person may be able to solve on their own. To face the human health challenges presented in SynBio context, this is critically important. In 2011, University of Washington launched Fold.it— a “solve puzzles for science” crowdsourcing experiment that demonstrated the power of collective intelligence. Fold.it was able to


Using crowdsourced resources to solve problems and innovate (inbound) in pharma is also not new, but the outbound focus had only previously been executed in the software industry (e.g., RedHat®). Pharma firms have long recognized the problems of their patent-based approach. According to a 2015 industry report, Novartis, Eli Lilly, Pfizer, AstraZeneca, and Sanofi have all begun to create open innovation developments of their own. NGOs, consortia, and other loosely formed organizations are also self-organizing and moving forward Open Innovation (e.g., tranSMART, Structural Genomic Consortium, BioBricks Foundation and the Asian Cancer Research Group). Academia also joined the conversation. There are also open ecosystems in pharma and therapeutics (e.g., Nature and InnoCentive collaboration on Open Innovation Pavilion). But most of these are inbound driven: with the sponsoring firm inventing (technical) products sourced from the outside and continues to innovate (entrepreneurial) internally. Executing the kind of outbound open model requires a ready R&D work force, market demand for strategic substitutes, communication tools to lower information costs, and a community willing to support it. The explosion of web 3.0 (collaborative) and social networks, increased fundamental research in SynBio in China, India, along with the rest of the world, and increasing disease mutation have created a perfect condition for the open community to form and self-organize. All that s required is someone to step in front and say this is doable.

Open Therapeutics focuses on the outbound solution driven user and community centric approach to enable the open way for SynBio commercialization. It is not firm specific and inbound driven. Unlike Nature and InnoCentive's Open Innovation Pavilion and the other industry open innovation clusters, Open Therapeutics is about having the freedom, not free as in cost. Copyleft. It's a starting point to experiment with that freedom.

The questions that will need to be answered by this Open Therapeutics community are plentiful: How do we incentivize invention on the outside? How do we innovate using outsourced capacity using copyleft? What are the user types of a model (“polymathic”) group necessary to facilitate this open innovation process? What are the incentive structures for users to collaborate throughout the open development? How do standardize pre-peer-review to promote efficiency and maximize market potentials? How do we enable data sharing (good and bad results) to make sure rapid-prototyping does what it does: let the community learn through failures.

Key process components to this community include: Open Exchange, Open Participation, Meritocracy, and Community. The goal is rapidly prototype technical inventions (open source and open science) and translating them into innovations (i.e., finding a business model, open reproducibility, open trials, and open manufacturing). This is about equal access and empowering innovators in the open space, an incubator of sorts by the users for the users. The scientific backbone in SynBio already has the proverbial open DNA (see the Bermuda Principles). In this sense, Open Therapeutics is a social experiment leveraging open science to shape economic behaviors in a market that is destined to be opened.
Open Science, Open Standards, Open Trials, Open Commercialization.

“Open everything.” A friend once joked. But that is exactly it. This is not about whether you want to open or close a business model. The key is whether you believe in finding a balance between protecting IP rights and using those rights to enable collaborative problem solving. Once a market participant sees this paradigm and sees open as a spectrum of free market choices made possible by copying left, superficial barriers (regulatory jurisdictions, language, culture) tumble. It's then a matter of finding a good opportunity, finding the lowest cost provider, leveraging existing intellectual property, and participating in the therapeutic development process.

Open science is the driver of this Open Therapeutics process because scientists holds the key to open commercialization process: knowledge, know-how, resources, and connections, etc., (i.e., intellectual property). They can chose to turn the key right to go down a path of billions of dollars in investment, decades in development, a small chance (less than 10%) of successful market entry, to then face a limited patent period and payor pressures. Or they can turn the proverbial key left (copyleft) and see what the crowd is capable of accomplishing.

If Open Therapeutics is to succeed, it must find and connect the capable and responsible research scientists around the world with innovators who've turn that copy key left to the public (Dr. Tim Cripe, Dr. Pablo Pomposiello, Dr. Victor de Lorenzo, Dr. Li Guo, and Dr. Shengchang Su). The community must include engineers and vendors who can help design and deploy strategies to promote fair, reasonable and non-discriminatory market development and distribution of therapeutics. Open access to science is only the first step of Open Therapeutics. Open reproducibility should improve quality and safety; open standards should improve efficiency and emergency demand response time, open trials should improve overall system integrity. All coming together to make a community of Open Therapeutics thrive. Like Linux.
Yesterday is History. Tomorrow is a Mystery.
 
For an advocate of human progress, Open Therapeutics is a path forward with SynBio-based innovations. A friend once said about Open Therapeutics: “It is social engineering if you really think about it. Let's call it for what it is. But in the end, this is about saving lives.” Undoubtedly, it is. It is for a good cause and empowering collective actions to respond to crisis. Unless we squander the opportunity for a tragedy of the commons type of ending. To the curious mind, Open Therapeutics should strike a cord as a better alternative and consider it. It should be self-organizing and there must be freedom to innovate. The possibilities to solving problems are endless.


Friday, June 19, 2015

Open Therapeutics

(This is a short form paper from a longer piece currently is work in progress. To request a copy of the long form, please contact jin.kong@microbialrobotics.com)


Open Therapeutics – All scientific knowledge and data should be openly accessible and readily exploitable through common rights licensing.

“Open source is not magic pixie dust.” - CatB[1]
By Jin Kong (CC BY)


Open is a state of mind. It is a choice by the free-market participants towards fairness and collaboration. The choice gets us out of the zero-sum game. To the pharmaceutical industry, this is especially important.

Currently, the industry is in a crisis. There are large number of industry patents expiring. This can put more than $200 billion in annual drug sales at risk for the industry.[2] Experts estimate large-cap pharmaceutical companies themselves will only be able to replace 26 cents for every dollar lost to the patent expirations by 2012.[3] Everyone in the industry agrees that without increasing R&D productivity dramatically, the industry cannot sustain itself economically. There are other problems in the industry. The patent-driven “closed” system helps proliferate patent trolls who do not promote innovation.[4] The closed model also promotes inefficiencies: each step of the therapeutic development requires specialized knowledge and a different set of expertise; front end R&D work requires scientific expertise, clinical trials require regulatory and medical expertise, productions and product monetization are even more complex and cost intensive requiring a range of manufacturing, promotion and sales entities. These critical steps in the development of a single therapeutic make vertical integration likely the only true efficient way to deliver products to market in an closed commercialization model. But vertical integration concentrates risks for the few large-cap players. The success rate for bringing products to market is about seven or eight percent.[5] Given the concentrated risks and low success rate, large-cap players is unlikely to increase R&D following the strict close-model. It is no wonder new therapeutic options are slow to meet the demand.

There are also public policy and ethical issues specific to synthetic biology. New therapeutic options based in synthetic biology are rooted in the public domain (the Human Genome Project (HGP)). The individual development power for a synthetic biology-based therapeutics is seriously outmatched by the amount of genetic information present. Due to the complexity and rapid maturity of the science itself and the need for the public accountability, it makes good policy to collaborate, copyleft[6], and share knowledge to ensure ongoing product quality, safety, and continued public benefits from the HGP.[7]

Industry players are already dabbling in Open Therapeutics: Novartis, Eli Lilly, Pfizer, AstraZeneca, Sanofi, for example. NGOs, consortia, and other loosely formed organizations are working hard moving forward Open Therapeutics (e.g., tranSMART, Structural Genomic Consortium, BioBricks Foundation and the Asian Cancer Research Group). A number of academics[8] and professional experts[9] have also joined the Open Therapeutics conversation. Yet these efforts are dispersed. The industry as a whole have yet to come to grip with the economics of Open Therapeutics. For example, Deloitte's recent 2015 article is an excellent analysis of the problems and path forward in Open Therapeutics, but it referenced the economic shift as “Open Innovation” rightly to focus on the front end work-in-progress that is lacking in the industry product pipeline. But the Deloitte article also discussed network characteristics, rights and talent management, as well as general governance issues. These are critical elements of open commercialization which co-exists with open innovation by necessity. These are means by which one can manage the open commercialization of therapeutics. The end goal is not about feeding industry R&D pipelines, however; the end goal is to lower cost, shorten development time, and put more life saving drugs into the under-served. This requires a broader sense of open commercialization than the industry currently acknowledges. This will require other tangible efforts to (1) building a productive conversation around, and the understanding of, our vast new dimensions of synthetic biology-based scientific options; (2) set standards and expectations, and open peer-reviews for open publications; (3) support annotation, analysis, and algorithm automation to make future developments more efficient; (4) involve all stakeholders to innovate and participate in downstream commercialization, and (5) provide ongoing community-driven, product support environment to ensure product safety and quality improvements. To achieve these goals, some fundamentals must be cataloged.

First, there are two important economic theories in an discussion of open commercialization: (1) Coase theorem (cost-benefit analysis) and (2) strategic complements and substitutes (Nash equilibrium) in game theory. Coase theorem generally states that a firm will expand until the costs of organizing an extra transaction within the firm becomes equal to the costs of carrying out the same transaction on the open market. So long as the transaction cost internally is lower, the firm will decide to keep that cost internal to extract value. Once the cost of executing a particular operation internally exceeds the cost of doing the same externally, the firm will consider outsourcing to extract value. Information cost is a large part of the overall transactional cost that drives the Coase type considerations. There are three types of costs of information: search cost, contracting cost, and coordination cost.[10] Strategic complements and substitutes are categories of market competition. Generally speaking, every product in the marketplace has substitutes and complements. A complement is something that is purchased together with the product itself. A substitute is another product that a consumer may buy when the first product is too expensive or otherwise unattainable. Usually the demand for a product is inversely correlated with the prices of its complements. When one strategic complement market participant changes its direction, the other player usually follow in the same direction. Strategic substitutes, works differently: when on firm sets a quantity below market equilibrium, the best responding firm will set the quantity of substitutes above the equilibrium.[11] These two economic and game theories helps us understand how players make their choices on the “spectrum of openness” given the market reality. These are theoretical frameworks as a starting point. The process of open commercialization in the social/legal context must also be carefully analyzed.

Socially speaking, voluntary standardization is a powerful tool to lower transaction costs and promote market efficiency. Standardization can also become a market inhibitor and can corrupt market integrity if left in the hands of oligarchies. The concept of open standards have been around in the U.S. and Euorpean legal/social context for some time now.[12] Global standard setting organizations (SSOs) have long adopted the “fair, reasonable, and non-discriminatory” (F/RAND) commitment requirements for their members to facilitate open collaboration and control anti-competitive behaviors.[13] Generally, SSOs and participants follow a set of principles to efficiently move forward with the market. These principles include: open meetings, consensus building, due process rights for members, open intellectual property rights (sharing), global standardization, open change, open documentation, open interface, open access, and community support.[14] A more recent phenomenon of legal standardization directly aimed at open innovation is Creative Commons. Creative Commons is a legal copyleft licensing structure designed for the public to facilitate sharing of documents and content. Creative Commons is GNU inspired, Creative Commons today makes available “flexible, customizable intellectual-property licenses that artists, writers, programmers and others can obtain free of charge to legally define what constitutes acceptable uses of their work.”[15] Creative Commons supports two categories of legal rights models: (1) public domain notices (or no rights reserved), and (2) licenses (some rights reserved). The licenses are divided into six types randing from “Attribution” only (allowing for commercial exploits and derivative works) to “Attribution-NonCommercial-NoDeriv licenses offering the most restrictive legal mechanism on the copyleft open spectrum.

Finally, an important aspect of open commercialization is the conceptual paradigm that it is an open spectrum[16] and the market participants have their own rational choices to make. Assuming Nash equilibrium[17] holds, rational players recognizing the industry pressure from expiring patents, the increased risks, cost, and development time for therapeutics, and assuming the Internet will continue to lower transaction cost enabling better cost-benefit analysis, participants will make more rational decisions based on Coase theorem, and the courts will refine its enforcement of the F/RAND terms: the synthetic biology-based therapeutics development will accelerate the cascade towards open commercialization.

Once critical mass is achieved, Open Therapeutics becomes a culture of new economics of therapeutics: all scientific knowledge and data are openly accessible and readily exploitable through common rights licensing enabling better treatments and better patients.

“Adoption at the most open end is still infrequent and slow, mainly due to concerns about intellectual property (IP) rights, adopting new [Open Innovation] OI-based R&D models, and cultural and management style issues. Nontheless, for biopharma companies, OI seems to be the way forward, as it appears to be a more cost- and time-effective way to bring drugs to market. In fact, several key trends will likely continue to drive the adoption of OI, especially at the most open end of the spectrum.”[18]

___________________________
Footnotes:

1. Eric S. Raymond, The Cathedral and the Bazaar: Musing on Linux and Open Source by an Accidental Revolutionary (referred to as “CatB”), available at http://www.catb.org/esr/writings/cathedral-bazaar (first presented in 1997 at the Linux Kongress). 

2. Paul, S. M. et al. How to Improve R&D Productivity: the pharmaceutical industry’s grand challenge, Nature Rev. Drug Discov. (2010) available at http://www.nature.com/nrd/journal/v9/n3/full/nrd3078.html

3. Goodman, M. Market watch: Pharma industry performance metrics: 2007–2012E. Nature Rev. Drug Discov. 7, 795, (2008) available at http://www.nature.com/nrd/journal/v7/n10/full/nrd2730.html

4 . R. Feldman & M. A. Lemley, Does Patent Licensing Mean Innovation? Stanford Working Paper Series, Paper No. 473 (2015) available at http://ssrn.com/abstract=2565292 (stating “patent licensing seems to be an activity almost entirely divorced from innovation, a fact that has troubling implications for the patent system as a whole.”). 

5 . Tufts Center for the Study of Drug Development, Cost to Develop and Win Marketing Approval for a New Drug is $2.6 Billion, (November 18, 2014), available at http://csdd.tufts.edu/news/complete_story/pr_tufts_csdd_2014_cost_study); see also Nature Reviews, Drug Discovery, How to Improve R&D Productivity: the pharmaceutical industry’s grand challenge, http://www.nature.com/nrd/journal/v9/n3/full/nrd3078.html (2010). 

6. Copyleft is a play on the word “copyright”. It is designated to mean the right to freely distribute, copy, and modify versions of a work with the stipulation that the same rights be preserved in the derivative works. See GNU Operating System, What is Copyleft? https://www.gnu.org/copyleft (Last visited May 20, 2015). 

7 . The U.S. Patent and Trademark Office (USPTO) called for a “patent pool” approach in 2000. United States Patent and Trademark Office, Patent Pools: A Solution to the Problem of Access in Biotechnology Patents? (Dec 5, 2000) available at http://www.uspto.gov/web/offices/pac/dapp/opla/patentpool.pdf (“No single company or organization, however, has the resources to develop any significant fraction of the genetic information present in an organism. If proprietary information is not freely available or licensed in an affordable manner, researchers will be precluded from using these protected nucleic acids to develop new therapeutics and diagnostics. It would be, however, shortsighted for a patent holder to demand such a prohibitively expensive licensing agreement that would preclude anyone else from utilizing a patented invention. . . . By minimizing licensing fees and extending non-exclusive licenses, potential infringers were inclined to obtain licenses and the technology was therefore broadly distributed. . . .). 

8 . E.g., W H Lee, Oxford University, Open Access Target Validation Is a More Efficient Way to Accelerate Drug Discovery, PLOS Biology, (CC BY), http://www.plosbiology.org/article/fetchObject.action?uri=info:doi/10.1371/journal.pbio.1002164&representation=PDF (June 4, 2015) (“What was clear at the outset was that adhering to open access principles allowed cross-leveraging of public and private funds to explore novel areas of human biology in an organized way, thus reducing duplication and sharing the risks and costs that no single institution could bear alone.”); Deloitte, Executing an open innovation model: Cooperation is key to competition for biopharmaceutical companies, (2015) http://www2.deloitte.com/content/dam/Deloitte/us/Documents/life-sciences-health-care/us-lshc-open-innovation.pdf

9 . .g., Deloitte, Executing an open innovation model: Cooperation is key to competition for biopharmaceutical companies, (2015) http://www2.deloitte.com/content/dam/Deloitte/us/Documents/life-sciences-health-care/us-lshc-open-innovation.pdf

10 . D. Tapscott, A. Williams, WIKINOMICS, (Portfolio, 2006). 

11 . J. Potters & S Suetens, Cooperation in Experimental Games of Strategic Complements and Substitutes, The Review of Economic Studies, available at http://www.researchgate.net/publication/4867103_Cooperation_in_experimental_games_of_strategic_complements_and_substitutes, (Sep 2008) (“A straightforward but important implication of strategic complementarity is that a change in one player’s choice gives the other player an incentive to move in the same direction, whereas with strategic substitutability the incentive for the other player is to move in the opposite direction.”). 

12 . There have been many cases in recent years focused directly on SSO members’ FRAND commitments. Within the United States, Broadcom alleged that Qualcomm’s patent licensing policies violated its FRAND commitment to the European Telecommunications Standards Institute (ETSI). See Broadcom Corp. v. Qualcomm, Inc., No. 05-3350 (D. N.J. Aug 31, 2006). Nokia also filed suit alleging similar grounds and enforceable contractual obligations claiming that Qualcomm breached its contract by offering licensing terms that are not fair, reasonable, and non-discriminatory. See Nokia Corp. v. Qualcomm, Inc., No. 06-509 (D. Del Aug. 16, 2006). 

13 . A. Layne-Farrar et al., CEMFI Working Paper No. 0702, Pricing Patents for Licensing in Standard Setting Organizations: Making Sense of FRAND Commitments, (Jan 2007) available at ftp://ftp.cemfi.es/wp/07/0702.pdf

14 . K. Krechmer, Open Standards Requirements, (Feb 2005, originally published Nov. 1998), available at http://www.csrstds.com/openstds.pdf. See also OpenStand, Principles, https://open-stand.org/about-us/principles (Last visited May 18, 2015) (The OpenStan Principles are jointly affirmed on August 12, 2012, by the Institute for Electrical and Electronics Engineers (IEEE), the Internet Society (ISOC), World Wide Web Consortium (W3C), the Internet Engineering Task Force (IETF), and the Internet Architecture Board (IAB). The joint affirmation contributed to exponential growth of the internet and related technologies.); ITU-T, Definition of “Open Standards”, http://www.itu.int/en/ITU-T/ipr/Pages/open.aspx (Last visited, May 18, 2015). 


15 . H. Plotkin, All Hail Creative Commons / Stanford professor and author Lawrence Lessig plans a legal insurrection, http://www.sfgate.com/news/article/All-Hail-Creative-Commons-Stanford-professor-2874018.php (Feb 11, 2002, 4 AM, Special to SF Gate). 

16. See Deloitte, Executing an open innovation model: Cooperation is key to competition for biopharmaceutical companies, (2015) http://www2.deloitte.com/content/dam/Deloitte/us/Documents/life-sciences-health-care/us-lshc-open-innovation.pdf (referring to the “open spectrum”). 

17. Mathematician John Nash originated a theory proving the likely occurrence of several players making decisions at the same time cascading towards an equilibrium of rational decisions – if each player has chosen a strategy and no player can benefit by changing strategies while the others do not, then the current set of strategic choices are said to have reached a Nash Equilibrium. J. Nash, Equilibrium points in n-person games, Proceedings of the National Academy of Sciences, 36(1): 48-49, available at http://www.sscnet.ucla.edu/polisci/faculty/chwe/austen/nash1950.pdf; see also J. Nash, Non-cooperative Games, The Annals of Mathematics, Second Series, Volume 54, Issue 2 (1951), available at http://www.cs.upc.edu/~ia/nash51.pdf

18. Deloitte, Executing an open innovation model: Cooperation is key to competition for biopharmaceutical companies, (2015) http://www2.deloitte.com/content/dam/Deloitte/us/Documents/life-sciences-health-care/us-lshc-open-innovation.pdf.

Friday, May 29, 2015

Global Open Standards

The core of open communities is the freedom to copy, modify and commercialize. The methods and organizations are many. However, dispersed open communities can do very little on their own if their methods and organizational models are not connected. Collaboration and standardization are keys to their success. For example, a Linux software developer needs to work with hardware makers and customers to design its products. The parts manufacturer that depends on the automotive patent-pool will have to work with other parts manufacturers and suppliers to standardize production and assembly process. Therefore, one important facet of the open commercialization uniformity is “open standardization”. Conceptually, much of our attention so far has been on the definitions of “open”—what it is and who are the players. What about the process and ecosystem interoperability? In scientific terms: what about reproducibility confirming scientific progress? Compatibility standards are therefore crucial to the interactions between idea and science; between software and hardware; between supply chain and widget makers, between services, products and consumers; between components, companies and ecosystem. In other words, there has to be some level of shared language to enable communication and action.[1] In commercialization, this is economics; in pure science, it is the language of mathematics and logic.

To this end, some of the major global standard setting organizations (SSOs) have long adopted the “fair, reasonable, and non-discriminatory” (“FRAND”) commitment requirement for their members. U.S. based FRAND membership commitments drops the “fair” requirement in the commitment (“RAND”) to implicate legal commitment to offer intellectual property openly.[2] The basic concept behind FRAND/RAND is that a patent that applies to standards must be adopted on “fair, reasonable and non-discriminatory terms” to enhance pro-competitive character of the industry. It is, in essence, an anti-trust tool. Other than the SSO commitments, there are also a number of smaller industries or technology specific groups forming consortia and adopting their own standardization process. On the other end of the spectrum, we see relatively lose information standards developing communities including the open source software movement.[3] These SSOs, consortia, and loosely connected open development ecosystems struggle with the tension between design standards and emergence of technology. Commonly referred to as “standard wars” (e.g., VHS vs. Betamax), the tension is much of the recent debate and case studies.[4] In light of the standard wars, it is important here to pause and consider the conceptual overlaps and exclusivity between open innovation and open standards. This is because there is no clear indication that close standards is uniformly bad or that open standards works best with open innovation. The cost determination is a complex study on its own. We merely present the introduction to the problem here for future inquiries by more capable theorists.

Open standards and open innovation both refer to a process involving sharing or exchange of technology across firm boundaries.[5] Open standard promotes the adoption of a common standard while open innovation’s objective is to profit from the commercialization efforts. Therefore, it is conceivable to think open innovation take place in a regime of close standards. Notably, open standards usually produce more value by promoting more competition between implementations, which cuts down prices and improves product quality.[6] Open standardization also reduces risk by coordinate failures and reduces implementation costs. However, a close standardization model is incentivized by the seemingly larger pie. Additionally, the cost of close-standard approach is higher for companies that specialize in developing input technologies and licensing them to downstream implementation companies. On the other hand, vertically integrated companies that can burden the cost on the front end can establish market dominance by the closed-standardization option. The effect of this business bet is depended on a number of factors including the quality of their product and brand recognition. The key to standardization is that value is not created by the standardization artifacts themselves. Rather, value is created in the implementation process, a process which is conditionally necessary. Therefore, the choice is ultimately the determining factor. Choice aside, there is also much controversy in the enforceability of FRAND/RAND.[7]

Leaving the choice of standardization (open or closed) and the difficulty in interpreting the public commitments (FRAND/RAND), we turn to the common characteristics of open standards. According to the Open Stand, the paradigm of open standards is shaped by adherence to five (5) principles[8]:

1. Cooperation and respect for autonomy, integrity, processes, and intellectual property rules of the others;
2. Compliance with:
  • Due process, 
  • Consensus, 
  • Transparency, 
  • Balance (fairness), 
  • Openness; 
3. Collective empowerment through:
  • Technical merit peer-judged, 
  • Global interoperability, scalability, stability, and resiliency, 
  • Enabled global competition, d. Contribution to global community 
4. Accessibility and availability of standards based on and derivatives of FRAND/RAND; and 5. Voluntary adoption.

The United Nations special agency, International Telecommunications Union, has its own standards development organization called ITU-T. The ITU-T’s definition of open standard adopts similar principles but added two additional requirements: (1) quality and level of detail, and (2) ongoing support. Quality and level of detail requirement stipulates the sufficiency for development of variety of competing implementations and of interoperability. Ongoing support is required to sustain long term operability.[9] There are also various country specific laws regarding “open standard”. For example, the Indian government’s policy states mandatory characteristics to include: free or nominal fee limits for standardization documents, royalty free basis for patented standards, universal access and non-profit hosting entities, and localization.[10] Similar laws exist in a number of other countries (e.g., Italy, France, New Zealand, etc.,).

Another influential publication on open standards is written Ken Krechmere, Fellow of the International Center for Standards Research, University of Colorado. Krechmere enumerated ten (10) requirements that enable open standards:[11]

1. Open meetings,
2. Consensus,
3. Due Process,
4. Open Intellectual Property Rights
5. One World-Wide Standard
6. Open Change
7. Open Documentation
8. Open Interface
9. Open Access
10. Ongoing support.

The importance of open standards cannot be over looked. The Internet itself, in fact, is an open global model tuned to may open collaborations (e.g., the Polymath Project) enabled by open standards. Open standards are critical to communication and implementation of processes or plans. Without standards, we would not be able to execute joint global efforts in disaster relief, outbreak response, security cooperation, fight climate change, and conduct other important global initiatives. But open standards are only half of the tale. The other half is in open licensing terms. We shall see in the next subsection, there are already adopted models (e.g., Creative Commons). But on the spectrum of SSOs to loosely organized ecosystem platforms such as Linux, there are many ways of imposing contractual obligations to help the open ecosystem self-organize. The limiting agent here is simply the cost of initial legal services, but for that one can always turn to legal clinics at law schools or passionate pro bono attorneys.

___________________________________________________

[1] T Simcoe, Open Innovation: Researching a New Paradigm, Chapter 8 (TBD), available at http://www-2.rotman.utoronto.ca/timothy.simcoe/papers/OpenStandards_IPR.pdf.

[2] A. Layne-Farrar et al., CEMFI Working Paper No. 0702, Pricing Patents for Licensing in Standard Setting Organizations: Making Sense of FRAND Commitments, (Jan 2007) available at ftp://ftp.cemfi.es/wp/07/0702.pdf.

[3] Simcoe.

[4] Simcoe.

[5] Simcoe.

[6] Simcoe.

[7] There have been many cases in recent years focused directly on SSO members’ FRAND commitments. Within the United States, Broadcom alleged that Qualcomm’s patent licensing policies violated its FRAND commitment to the European Telecommunications Standards Institute (ETSI). See Broadcom Corp. v. Qualcomm, Inc., No. 05-3350 (D. N.J. Aug 31, 2006). Nokia also filed suit alleging similar grounds and enforceable contractual obligations claiming that Qualcomm breached its contract by offering licensing terms that are not fair, reasonable, and non-discriminatory. See Nokia Corp. v. Qualcomm, Inc., No. 06-509 (D. Del Aug. 16, 2006).

[8] OpenStand, Principles, https://open-stand.org/about-us/principles (Last visited May 18, 2015) (The OpenStan Principles are jointly affirmed on August 12, 2012, by the Institute for Electrical and Electronics Engineers (IEEE), the Internet Society (ISOC), World Wide Web Consortium (W3C), the Internet Engineering Task Force (IETF), and the Internet Architecture Board (IAB). The joint affirmation contributed to exponential growth of the internet and related technologies.).

[9] ITU-T, Definition of “Open Standards”, http://www.itu.int/en/ITU-T/ipr/Pages/open.aspx (Last visited, May 18, 2015).

[10] Government of India, Ministry of Communications & Information Technology, Department of Information Technology, Policy on Open Standards for e-Governance, (Nov. 2010), available at https://egovstandards.gov.in/sites/default/files/Published_Policy_Framework_Document/Policy%20on%20Open%20Standards%20for%20e-Governance.pdf.

[11] K. Krechmer, Open Standards Requirements, (Feb 2005, originally published Nov. 1998), available at http://www.csrstds.com/openstds.pdf.

Monday, May 25, 2015

Open Therapeutics - Intro

“Open source is not magic pixie dust.'' – CatB[1]

What is “open”? A survey of the Internet reveals no precise definition or word origin. Much of the axiomatic bits of the concept “open” depend on what one means by “closed” or “shut”; and the proliferation of using “open” in the English language openly, pun intended, began in the 1800s.[2] History aside, “open” is used in this article to clear the contours of therapeutics. To begin, we first clear the foundation of what open source is generally. This will help us understand its many mirages of a single “open” vision for better global participations. From there, we will see the potentials of Open Therapeutics.

Introduction - A Historical Perspective

Open source is not a new concept. For example, Chinese traditional medicine during its 5,000 years or so history was loosely based on an open source and collaborative approach with reserved private commercial rights protected as trade secrets by those who have mastered their domains.[3] There were no pro-active governmental policies to assign proprietary control over intellectual resources. Collaboration and social norms found in the more flexible systems of open publication governed under Confucius traditions. Trade secrets passed down from master to apprentice governed the private affairs of responsible business conducts. It was a social enterprise model of sort idealistic nonetheless with its own set of problems.

Turning to the modern times (1949 onward), the Chinese government actively participated in the further opening of traditional Chinese medicine industry and published knowledge for public consumption. It wasn’t until recent years of global growth that forced China to turn its intellectual property focus on a more western style private property protection model. Some scholars created the perception that the proprietary control over traditional Chinese medical knowledge was non-existence.[4] This supported a mistaken view that China’s early technological advancement fell into decline in modern times due to lack of private intellectual protection.[5] The fallacy is assuming China had no regulatory regime to intellectual property in the commercial sense during its long history. Or that it was not conducive to innovation and commerce. But a look at China’s success with innovation and commercialization in its long dynastic history reveals the core of those false beliefs and fallacies. Attributing modern China’s early technological failures to this lack of western sense of individual intellectual property rights is a jump of inferences, one that should not go well with those who indeed understands the value of China’s own ways. Indeed, as we discover here, the open source approach is nothing new to China or the world. It is intuitive. Open source requires a sense of entrepreneurial responsibility and encourages a distribution of wealth based on meritocracy and equal opportunity—not monopolies. This aligns with Confucian values and a traditional sense of responsible business conducts. There is something to be gained from understanding better China’s historical open source approach then, but that is not the aim here. That’s a topic requiring its own devotion of time and attention. This article focuses its attention here on moving forward with an open approach globally and leaves the details of China’s anthropology to others.

Open Source Generally 

To begin then: open source communities today generally promote public access to products’ designs or blueprints (e.g., the Linux ecosystem). Additionally, they also promote universal redistribution of those designs or blueprints including subsequent improvements and commercial exploitations, by anyone using consistent common rights license terms voluntarily chosen by the users (e.g., CreativeCommons.org). Open source approach is typically disruptive and pervasive. It is disruptive in that it decentralizes the process of innovation and production. And it is pervasive because of the decentralized and distributed network. But the open source approach in economic progress is not limited to promoting disruptive innovation. In the economic sense, “open” does not mean “free” and profit opportunities are just as diverse as the closed intellectual property system. In the software industry, for example, commercialization occurs for open sourced models in layers of proprietary products or services (e.g., RedHat and hardware manufacturers like System76). Open sourced commercial applications today include: software and hardware,[6] electronics, beverages, digital content, medicine, science and engineering, architecture, fashion and others. Open societies and cultures now encompass: government and municipalities, ethics, religion, media, education, innovation communities, and arts and recreation. Although the open source communities are decentralized, they are usually pretty well self-organized and self-regulated. For example, various open standard and licensing structures exist that can easily be adopted cross platform, across industry sectors.[7] These common licensing agreements often ensure simplicity and applicability of legal rights aligned with the right kind of market incentives.

Open Source Communities and Commercialization 

Sharing technology for commercial purposes is not new. China, for example, has historically followed a somewhat open sourced approach; or at least the government did not attempt to regulate intellectual property.[8] Open science and journal publishing for the common progress has also been around since the 1600s. Open source commercialization is also not foreign to the United State. Henry Ford built his empire on an open model.[9] The United States aviation industry was built on an open patent-pool platform. Another notable global open platform is the Human Genome Project.

With respect to biologics and therapeutics commercialization, the U.S. Patent and Trademark Office (USPTO) specifically noted the open (patent-pool) approach:

“No single company or organization, however, has the resources to develop any significant fraction of the genetic information present in an organism. If proprietary information is not freely available or licensed in an affordable manner, researchers will be precluded from using these protected nucleic acids to develop new therapeutics and diagnostics. It would be, however, shortsighted pf a patent holder to demand such a prohibitively expensive licensing agreement that would preclude anyone else from utilizing a patented invention. . . . By minimizing licensing fees and extending non-exclusive licenses, potential infringers were inclined to obtain licenses and the technology was therefore broadly distributed. . . .”[10]

The public fear of a “closed” biologic or synthetic biology-based therapeutic commercialization model was the removal of valuable research resources from the public domain. This allows private companies leverage publicly funded research to privately benefit and also preclude others from participating and improving on the Human Genome Project. Some level of open licensing approach to commercialization is beneficial as the USPTO noted.

Open source achieved cult commercial status alongside of the explosion of Internet usage. Linux, the open platform, is developer favorited due its stability and community support. Some industry folks estimate 97% of the world’s 500 fastest supercomputers run some variant of Linux.[11] Android, your familiar mobile phone platform, is Linux based and covers 79.3% of the phones sold worldwide.[12] Open sourced software are now widely used and commercialized. The open business participants include independent software vendors, value-added resellers, and hardware vendors. Opens sourced concept now applies in frameworks, modules, and libraries which can be housed in proprietary for-profit products or models. In terms of funding, open models like Kickstarters and Indigogos of the world supplement the now global commercialization process. Also worth mentioning is the “Free Beer” open commercialization platform. Free Beer was developed in collaboration between the IT-University and an artist collective Superflex, both located in Copenhagen. The Free Beer receipt is published under a Creative Commons (Attribution-ShareAlike 2.5) license. This means anyone can use the recipe and branding to modify, brew and commercialize.[13] The license requires users to post the same ShareAlike license to their products irrespective if they commercialize. To date, Free Beer has funded artistic production in New Zealand and has active commercial users in Australia, Germany and Taiwan.







________________________________________

Footnotes:

[1] Eric S. Raymond, The Cathedral and the Bazaar: Musing on Linux and Open Source by an Accidental Revolutionary (referred to as “CatB”), available at http://www.catb.org/esr/writings/cathedral-bazaar/ (first presented in 1997 at the Linux Kongress).

[2] See Random House, Inc., open – Word Origin and History for open, Dictionary.com, http://dictionary.reference.com/browse/open (accessed: May 17, 2015) (“Of shops, etc., ‘available for business’ . . . dates from 1824. . . . Open door in reference to international trading policies is attested from 1856. . . . Open season is first recorded 1896, of game . . . . Open book . . . is from 1853. . . . Open house is first recorded 1824. . . . Open road (1817, American English) originally meant a public one; romanticized sense of ‘traveling as an expression of personal freedom’ first recorded in 1856, in Whitman.”).

[3] See Heath & Sanders, eds., New Frontiers of Intellectual Property Law: IP and Cultural Heritage, Bloomsbury Publishing (2005) (Chinese traditional medicine, like Chinese martial art known as kung-fu generally, is taught from master to apprentice mostly. Apprenticeship selection is in part based on the master’s belief of temperament alignment with the teaching. However, the anthropologic study of traditional Chinese medicine and its 5,000 years of intellectual property regime is only beginning.).

[4] Heath & Sanders, at 3.

[5] Alford, To Steal A Book is an Elegant Offense: Intellectual Property Law in Chinese Civilization, Stanford University Press (1995).

[6] E.g., software platform: Linux, Ubuntu; hardware platform: Sun Microsystems’s OpenSPARC T1 Multicore processor, Tinkerforge’s open source hardware platform of stackable microcontroller building blocks that can control different modules.

[7] E.g., CreativeCommons.Org, http://creativecommons.org/licenses, (offers a spectrum of licensing choices for copyrights); GNU General Public License, http://www.gnu.org/licenses/gpl.html, (ensures copyleft for software licensing).

[8] E.g., generally, Heath & Sanders. The open source approach is pervasive in Chinese history. A more in-depth exploration of that topic is explored elsewhere.

[9] The early years of automobile development was controlled by a patent originally filed by George B. Selden. Using the patent, a group of capital monopolists forced car manufacturers to adhere to their demands. Henry Ford won a challenge to the Selden patent in 1911. Ford’s success in challenging the patent opened the market to collaboration. The Motor Vehicle Manufacturers Association was formed. The newly formed association implemented a cross-licensing agreement among all United States auto makers. The open framework stipulated that each company is free to develop its patents, but the patents will be shared openly without the exchange of money. By the Second World War, Henry Ford had 92 open patents and the association had over 500 open patents for the patent pool. See James J. Flink (1977). The Car Culture. MIT Press. ISBN 0-262-56015-1.

[10] United States Patent and Trademark Office, Patent Pools: A Solution to the Problem of Access in Biotechnology Patents? (Dec 5, 2000) available at http://www.uspto.gov/web/offices/pac/dapp/opla/patentpool.pdf. The USPTO noted two of the most profitable in the biotechnology area are those of Cohen and Boyer, which are owned by Stanford University. Stanford minimized licensing fees and extended non-exclusive licenses. This discouraged would-be infringers since the cost of obtaining a license is low. Instead of encourage infringement and patent trolling, the ease of non-exclusive licenses meant broad distribution and spurred further innovation. See also National Research Council, Intellectual Property Rights and Research Tools in Molecular Biology (1996), available at http://www.nap.edu/readingroom/books/property/5.html.

[11] Top500.org, TOP500 Supercomputer Sites: Operating system Family / Linux, http://www.top500.org/statistics/details/osfam/1, (Last visited May 18, 2015).

[12] TechCrunch, Android Nears 80% Market Share In Global Smartphone Shipments, As iOS And BlackBerry Shares Slides, Per IDC, http://techcrunch.com/2013/08/07/android-nears-80-market-share-in-global-smartphone-shipments-as-ios-and-blackberry-share-slides-per-idc/ (reporting based on International Data Corporation (IDC) Worldwide Quarterly Mobile Phone Tracker).

[13] Free Beer, About, http://www.freebeer.org/blog/about (Last visited, May 18, 2015).

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