Plumpy’Nut, part 3: What could a truly evil company do?

The hard facts of Case Plumpy’Nut have been given in Part 1 and Part 2. Now is the time to speculate. If someone wanted to be truly evil with this patent, could they start a “Kill the Children” campaign, as I have outlined in Trolling on the Human Rights?

This is clearly a patent that has the potential to be truly dangerous in the wrong hands. However, whatever bad press Nutriset has gotten, it is not causing the maximal damage that such a patent would allow.

Nor is it the only player on this field;  even a very quick Google search brings up patents and applications which on the face of it don’t seem to differ that much from the Plumpy’Nut. (See for example 1, 2, 3, 4, 5,…). All of these products are however slightly inferior to Plumpy’Nut in some way, so that Plumpy’Nut is optimized for famine relief.

Consider now a different scenario. Suppose Nutriset was not producing Plumpy’Nut anymore, but instead had sold the patent to a non-practicing entity X.  (Non-practicing entity NPE is a polite term for “patent troll”)

X would have no production of its own, meaning there are almost no running costs. The whole company could in fact consist of just one lawyer.

Due to the fact that X has a de facto monopoly on Plumpy’Nut-type emergency rations, it could demand more or less any license fee that it desires.  There may be some limit of insanity at which point the international community does something radical, but legally speaking, nothing could directly stop X from threatening to ban the production of Plumpy’Nut completely.

There would be no incentive for X to even consider something like the 1% “Patent Usage Agreement”; the license fee could easily be more than 10%, collected in all countries where the patent is valid. This might not ruin humanitarian operations, but it is a heavy overhead, especially when it is paid for no constructive service. At some point, humanitarian organizations might switch to a less optimal product, but this is an agonizing choice to make.

(There is only one scenario in which this case would be better than the current situation. If Nutriset were hugely inflating its profits due to its monopoly, the cost could even now be more than 10% above the “real” level. If multiple companies could buy the license and compete to manufacture the product at low margins, the costs could actually go down.  However, there is no evidence that Nutriset would be obscenely overpricing the product in this way. It is expensive, but strict hygiene and logistics requirements mean that this product cannot be made dirt-cheap).

At some point, WTO rules do allow governments to set up compulsory licenses, but that is a heavy road. It has so far been used once in India to cut the cost of a cancer medicine by 97%, but it is highly questionable whether a country smaller than India (and facing famine) would even consider this heavy and expensive approach.

The European Commission could potentially bring a competition law case against X, as it has in other fields (or example against Microsoft). The US anti-trust laws most likely do not apply, since monopolies are in general tolerated more than in the EU. It is anyone’s guess what a court in, say, Equatorial Guinea would do.

The Plumpy’Nut patent is reasonably narrow and feasible options do exist, so that the stranglehold is not complete. However, if a broader patent had somehow slipped through the system, the damage could be more extensive. Since humanitarian organizations typically do not put any focus into IPR issues, there is no way of knowing if there are other more threatening surprises coming up in the next years.

In a slightly unintuitive way, the very fact that Nutriset is making a profit on Plumpy’Nut means that the patent is safe from this type of abuse. They have an interest in holding on to the patent and continuing to manufacture, rather than selling it to a patent troll. In the world of IPR, many things are unintuitive. The complexity will be analyzed more closely in the next part of the series.

More on similar issues: Dangerous patents. All Plumpy’Nut articles: here.


Black and white? Or something else?

Acknowledgment: The research for this series has been done between 2012 and 2014. The series has benefited greatly from discussions with Kalle Pietilä, Viv Collins, Niko Porjo, and Timo Tokkonen.