Drugs play a critical role in our daily lives – they can be used to reduce pain, regulate bodily processes, and even mitigate metastasizing of cancer. Since pharmaceutical drugs are essential to the health of American citizens, the public reacts sensitively when a price of a lifesaving drug goes up. When the price of a lifesaving drug goes up by a marginal amount, consumers will usually swallow the additional cost. But when the price goes up significantly, many might push for reform rather than passively accept the change. An instance of this happened recently when the price of a drug increased by more than 5000 percent within the span of 24 hours.

In September, price gouging in the pharmaceutical industry was brought to public attention when Martin Shkreli, the CEO of Turing Pharmaceuticals, raised the per-pill price of his newly-acquired product, Daraprim, from $13.50 to $750 overnight. Daraprim had been on the market for 62 years and was a very widely used drug for curing toxoplasmosis, a common parasitic infection.

This exorbitant price increase is known as price gouging, a market phenomenon and concern that involves firms jacking up the prices of their product by rates that are considered unfair. Price gouging is considered unfair when the new high prices make them financially inaccessible to masses. And yet, price gouging is not regulated in the pharmaceutical industry.

This price hike caused a huge public and social media backlash, with people denouncing Shkreli as a “thief”, “brat’’, or “criminal”. Shkreli, however, claimed to the Los Angeles that he wasn’t going to put “this money in [his] pocket and use it to pay [himself] a dividend,” but rather invest it in research aimed at eliminating toxoplasmosis. Many medical professionals, though, have doubted his rationale as it’s widely accepted that Daraprim is effective already with little to no side effects according to Dr. Carlos del Rio of Emory University. Eventually, Shkreli’s damaging actions, drew the attention of powerful figures and organizations. Democratic presidential candidate Hillary Clinton promised to personally look into reforming the drug market. The Infectious Diseases Society of America and the HIV Medicine Association claimed that this price gouging was unjustifiable, and the encapsulating Pharmaceutical Research and Manufacturers of America disavowed Shkreli as a member.

Shkreli’s price gouging is particularly revealing of the dilemma that price gouging in the pharmaceutical markets presents and how difficult it is to find a resolution to this dilemma. This dilemma and resulting difficulty can be underscored through three key ideas:

One, the ubiquity of price gouging makes preventative measures difficult.

Most major pharmaceutical and biotechnology groups have attempted to paint Shkreli’s decision as an anomaly. In truth, though, price hiking is commonplace among pharmaceutical companies. Drugs that are more life saving and far more consequential than Daraprim have had their prices increased gradually over time to avoid media backlash.

According to Alliance Bernstein, a global asset management firm, the Canadian drug company Valeant increased the prices of their two heart-related drugs, Cuprimine and Isuprel by more than 2000 percent over the past two years. Similarly, Wolters Kluwer’s PriceRx database, a database of drug prices information, reflects that the prices of the Pfizer’s drugs have gone up by 115.9 percent since 2013. And the well known Gilead Sciences, the research based biotechnology company, charges $84,000 per treatment for its widely sought out hepatitis C drug treatment, according to the Centers for Medicare and Medicaid Services.

These examples show that price hikes are not a rare phenomenon in the pharmaceutical market. It is a practice that is more pervasive than what is evident, and therefore these examples only detail a small aspect of the price gouging and unfair market practices that pharmaceutical companies employ. So while encompassing groups such as PhRMA attempt to portray Shkreli’s actions as uncommon, in reality, Shkreli is actually emblematic of a widespread practice, and an even larger issue in the industry.

Two, the pharmaceutical market structure facilitates price gouging.

The pharmaceutical market is imperfect with evidence of monopolistic competition in specific drug categories. Drug manufacturers produce differentiated products and can have complete market share within a therapeutic segment rather easily due to the variety of diseases encompassed under the pharmaceutical umbrella. Consequently, many drugs are not substitutes of one another, and many do not have substitutes at all. Because of this, firms can remain immune to the price changes of other drugs, essentially eliminating producer competition altogether.

What needs to be considered in conjunction with a firm’s external price immunity is the inelastic demand for certain drugs. Some people need certain drugs to live and function. These drugs are absolute necessities for these people, and in many cases, because of the market structure, these drugs have no substitutes. Thus, the pharmaceutical companies that produce these drugs can jack up the price of their drugs because they have a consumer base that has a strongly inelastic demand for these drugs, guaranteeing that sales will not wane over time.

Three, price gouging is hard to resolve from the producer side as potential solutions are hard to implement.

One way to potentially resolve this situation is to introduce competition. While this seems theoretically simple, as any firm could offer a cheaper substitute to Daraprim and push Turing out of the market, it’s not exactly feasible in practice. Drug producers looking to create substitutes might be turned off while looking at the profitability in markets that are small and dictated by a single, established firm. In addition, the patent process takes too long for firms to join in on the market. Patents for new drugs to compete with monopolistic ones like Daraprim would take an average of a little under 3 years to be approved, and because the market that the drug would compete in would probably have changed within that time, entrepreneurs are not willing to make that investment. Therefore, Shkreli’s production of Daraprim is a monopoly in its market that is created by not only market forces, but also protocols and regulations.

One possible way to combat high prices in the pharmaceutical market is by demanding transparency in pharmaceutical firms and government regulation. But government regulation in itself can be tricky to implement in that it can be too in favor of the consumer. Imposing policy that lowers drug prices may in the short run make drugs more affordable to the consumer, but it can also dramatically stifle the revenue of the pertinent pharmaceutical firms. This can lead to the loss of innovation and incentives for improvement of drugs in the long run.

Ultimately, society must decide if life-saving drugs should be more affordable for those who desperately need. However, this will have to be considered with the trade-off of creating an efficiency loss and drastically cutting the revenues of pharmaceutical companies that will put that revenue to use in research and development in the pipeline for new drugs.

No matter how many precautionary measures corporations take to avoid lawsuits, the specter of litigation is an omnipresent and potentially costly threat to businesses everywhere. These days, a court order for all documents related to a dispute can entail months of combing through electronically stored information (ESI). The process of finding, securing, aggregating, and reviewing ESI is called eDiscovery. The eDiscovery industry today is a fast-growing and expensive service but one that firms must use in the event of corporate litigation. By employing machine learning and the appropriate business model, businesses can fundamentally enhance a process that has been necessary but all too costly.

Firms either anticipating or in the process of a litigation procedure employ eDiscovery processors in accordance with court mandates. Field experts use the Electronic Discovery Reference Model (EDRM)—which involves nine distinct steps—to isolate the specific steps involved in this process. Important steps include:

  1. Identification & Aggregation of all forms of electronically stored information (ESI) that a firm has produced over a given time period.
  2. Collection and Preservation of all ESI in a format readable to eDiscovery reviewers
  3. Review of all relevant materials by paralegals (essentially, combing through data to find potential evidence of wrongdoing).
  4. Production of said evidence to a court of law.

The point of eDiscovery is to go from volume to relevance. With each successive step, an effective eDiscovery processor can winnow down the total amount of data ultimately presented to the courts and expedite the rest of the litigation process.

The increased computerization of the business world has already led to the production and accumulation of vast amounts of data. New data-gathering technologies render old forms of data collection obsolete within years or months; few law firms or corporate lawyers are able to sustain in-house eDiscovery services. This explosion in raw data shows no signs of letting up; 90 percent of the data in the world today has been created within the last two years. By 2020, the estimated annual global data production will be almost forty zettabytes (one zettabyte is equal to one billion terabytes). This increase in overall data will lead to larger cases and more business for the eDiscovery market.

In addition to the sheer size of data being produced, an additional case for the future growth of the eDiscovery space can be observed through the projected drivers of data production. One such vehicle of data creation is social media services. As platforms like Twitter and Facebook continue to attract larger user bases, more data is being created. It will be necessary for eDiscovery firms to quickly parse through this specific form of ESI. 50.6 percent of polled law firms were involved in at least one matter that contained social media data in the past year and 19.1 percent were engaged in three or more matters that involved social media. The rise of personal devices in the workplace presents a range of data collection issues stemming from a more diverse range of operating systems. The anticipated Internet of Things—a network of physical devices communicating with each other without need for direct human supervision—is expected to consist of 50 billion objects by 2020 and is expected to generate vast sums of total aggregated data, thereby increasing the amount of data that must potentially be sorted through by litigators and interested parties through eDiscovery. The bottom line is that more and more varied data requires more comprehensive eDiscovery processes.

Many established law firms still have not incorporated eDiscovery into their array of offered services. In fact, many tried; as courts began sanctioning the use of eDiscovery in more corporate cases, major law firms began purchasing sophisticated software to bring eDiscovery services in-house. But these law firms lacked the necessary IT infrastructure and technical expertise to administer the process for clients. The main problem was these firms treated eDiscovery as a product to be sold as software rather than a process to be rendered as a service by trained professionals. Recently, consultant and tech giants have had more success at incorporating eDiscovery into their wheelhouse. It remains to be seen whether or not firms such as Xerox and Deloitte can have more success in this niche space than historically technophobic law partnerships. Regardless of the specific value chain, the corporate clients are, in all cases, by far the least powerful player in the value chain; from blue chip to microcap and below, there is close to perfectly inelastic demand for eDiscovery in the event of legal action. The case is self-evident; a corporation can do little to avoid some forms of litigation and can only make sure that it has an effective and uniform means by which it saves its own data in order to minimize costs.

Though eDiscovery process has put a strain on corporations involved in civil or criminal cases, one innovation may be able to bring down the cost of the process. Recently, several firms such as Kroll Ontrack, Daegis, CDS and KCura have experimented with machine learning in order to cut down on the most expensive and time-consuming part of the eDiscovery process: review. Without technology-assisted review (TAR), the review process is conducted by trained paralegals who are responsible for manually combing through all ESI to search for data that could potentially be relevant to the case. A computer can begin to pick up on trends in the data review process and “learn” to search for certain keywords. Predictive coding has been somewhat controversial in the eyes of the court. According to the 2014 changes to the Federal Rules of Civil Procedure (FRCP), predictive coding programs are judged based on the following four metrics:

  1. Precision: How effective is the program at parsing the important from the inconsequential and is that accuracy superior that of manual review?
  2. Can the program operate similarly well on a diverse range of projects?
  3. Does the program provide time and cost efficiencies compared to rival automated processes and manual review?
  4. Can the product of your TAR eDiscovery program truly stand as valid evidence in a court of law?

Programs that are able to meet these benchmarks can cut down an estimated 55 percent of the total cost of the eDiscovey process and consequently undercut all would-be competitors.

The eDiscovery space is brimming with opportunity. Clients will continue to need eDiscovery services as our world continues to churn out ever-greater volumes and varieties of data. Though effectively melding TAR with the eDiscovery process may not sound as flashy as developing the next Flappy Bird, for any entrepreneur interested in expanding markets, cutting-edge technology, and the future of big data, eDiscovery presents a practical solution.

iPhone 5 or Samsung Galaxy S3 is now the choice that many consumers are facing these days.

On one hand you have the iPhone: a sleek, refined product of American innovation, a phone touted by enthusiastic techies and laymen as simply the most revolutionary phone product to hit the market. On the other you have Galaxy S3, which generated enough excitement in its early stages of development for many to dub it the ‘iPhone killer’. It is an amalgamation of cherry-picked features, slight alterations, and excellent execution.

After a high-profile patent case, Samsung was forced to pay over $1 billion in damages for infringing upon a number of Apple designs and patents. Nonetheless, Samsung’s business model of essentially “playing catch-up” to Apple and improving on Apple’s designs ended up paying off. In Q3 2012, the Samsung Galaxy S3 beat out the iPhone 4S (an older model) to become the world’s best-selling smartphone.

At their core, the business strategies of Apple and Samsung Electronics represent fundamental differences in thinking and attitude. The anti-corporate culture of Apple, as embodied by the image of a barefoot Steve Jobs, versus the massive, South Korean conglomerate (chaebol) Samsung Electronics.

While much could be said about how individuals have shaped their separate corporate philosophies, and in turn their trajectories, perhaps we can take a look at the intellectual and academic environments in which these two corporations formed. Perhaps Samsung’s ability to copy rather than innovate is reflective of South Korea’s education system, which many say is top-notch but doesn’t nurture creative thinkers.

A recent study done by an education research firm, Pearson, places South Korea among the most well-educated countries in the world. Considering how well South Korean students have traditionally fared on standardized reading and math tests, the results of this recent study are certainly no surprise. In contrast, the U.S. is a middle-of-the-road country when it comes to education, despite its status as the leading economic power in the world.

Educational spending could be one cause of this achievement gap. According to the Center on International Education Benchmarking, South Korea spends 7.6% of its GDP on education, the second highest among OECD countries.  Intense schooling starts from the age of 6, culminating in the College Scholastic Aptitude Test, a high-stakes college admissions test that often determines one’s future financial, social, and personal success. The average Korean student attends regular schooling in addition to “cram schools,” private after-school academies that specialize in skills ranging from English and math to playing an instrument. Nearly 9% of children are forced to attend such places past 11pm.

For all the success that the South Korean system has produced, it has many flaws. Consequences of such a high pressure educational system manifest themselves in all sorts of manners including the abnormally high prevalence of youth suicides and poor social skills.

Furthermore, in such a system it is difficult to cultivate innovative and creative thinkers. Instead of valuing individualism and unconventional thinking, children are taught at a very young age that memorization and brute repetition will lead to good grades, admissions into prestigious universities, and a successful life.

Former South Korean minister of education, Byong-man Ahn, notes, “Students have no time to ponder the fundamental question of ‘What do I need to learn, and why?’ They simply need to prepare for the test by learning the most-effective methods for digesting tremendous quantities of material and committing more to memory than others do.”

The South Korean government is currently in the process of implementing reforms that it hopes will help foster creativity. Such reforms include reducing material students need to study and refining the ways teachers engage their classes. Interestingly enough, the government itself may be the cause of the educational system’s problems. The Ministry of Education develops a national curriculum that is then disseminated to nearly all of South Korea’s primary schools. The fact that educational reform is implemented from the top-down may discourage experimentation with more effective forms of learning, such as a switch to more hands-on activities and a greater degree of freedom for students to pursue their own academic interests.

Furthermore, while there is reason to be optimistic, such reforms may not be enough. In order to truly foster a nation of innovators and outside-the-box thinkers, South Korea may need an entire cultural shift. The social stigma against those unable to gain entrance into a prestigious university may be forcing creative thinkers to focus all their time on brute memorization, which in turn could push them into despair.

It may be years before South Korea can champion its own Silicon Valley. It would take nothing short of a complete revamp of education and a cultural shift that promotes individuality and iconoclastic thinking to produce an environment conducive to producing the Steve Jobs of tomorrow. But for now we all may have to make do with products like the Samsung Galaxy S3; effective but not groundbreaking.

Imagine developing and patenting the technology that allows a user to return a “sleeping” iPhone back to functionality. Apple did just this with its “slide-to-unlock” feature, a defining characteristic of the iPhone that users have come to love. Specifically, Apple was granted a patent by the U.S. Patent and Trademark Office for the diagrams that it had submitted, showing a white rectangle with curved edges that, when dragged to the right by the touch of a finger, unlocks the device and directs the user to the home screen. Over the years, more and more smart phones have appeared with very similar features. After all, all devices need some way to unlock, and there are only so many ways to achieve this. The unlock feature, however, is an example of what has caused a great deal of controversy and led to the emergence of a recent phenomenon regarded by many as the “Patent Wars.”

Certain Samsung phones allow a user to touch the center of a circle on the screen, and then unlock the device by dragging a finger to any point outside of the circle according to the user’s particular access code. In February, Apple filed suit against Samsung with claims that Samsung violated a series of its patents, including the slide-to-unlock feature. Apple and Samsung are currently engaged in a 20-lawsuit, 10-nation battle over this disagreement. Additionally, Apple has asserted claims against Motorola for alleged patent violations of similar nature. However, something unexpected happened earlier this year – a Swedish company called Neonode Inc. declared that it had already been granted a patent for a version of the slide-to-unlock feature. Apple had unknowingly been beaten to its own idea, and arguably should neverhave been granted its patent to begin with. Stories such as this have become a familiar trend as innovators continue to develop new technology each and every day. Can a fine line between patents, particularly in the smartphone industry, ever be effectively established?

The answer to this question is extremely unclear, and whatever solution that may exist will likely be difficult to find. Thousands and thousands of characteristics of smartphones such as the unlock feature of the iPhone exist as patents. In fact, Google’s chief legal officer, David Drummond, has expressed that up to 250,000 different patents may apply to a single modern smart phone. After all, companies have claimed the rights to the most minuscule of features, and often the distinction between these features is highly ambiguous.

Professor Scott Stern, who teaches at the Sloan School of Management at the Massachusetts Institute of Technology, is a patent expert who is well aware of the uncertainty involving patents of today’s technology industry.

“The trouble is that in this industry so often a patent is not a clearly defined property right, but a lottery ticket of uncertain value,” said Stern, who is convinced that this patent ambiguity unintentionally creates risk and cost. If patents no longer provide a guaranteed incentive to innovators, the enormous benefits of technology patents appear to be diminishing.

However, news of massive patent buyouts executed by some of the world’s largest technology companies has covered recent headlines. In 2011, Apple, Microsoft, and four other companies completed a $4.5 billion joint buyout of Nortel Networks, a bankrupt Canadian telecommunications maker. Google purchased Motorola Mobility for $12.5 billion last August, and Microsoft bought $1 billion worth of AOL patents in April of this year. The aforementioned buyouts value individual patents of each deal at $750,000, $400,000, and $1.3 million, respectively. These numbers are staggering. What use value do large numbers of patents bring to the arsenals of the world’s top technology companies, especially if patents are becoming increasingly difficult to distinguish from one another? What is causing this recent trend of massive patent acquisitions?

Historically, the main idea behind patents is to provide ongoing incentives for individual innovation. However, the original inventors of these ideas are largely forgotten in today’s world. Recently, the main premise behind the massive acquisitions of patents, particularly in the rapidly expanding field of smart phones and tabloids, has become increasingly geared towards security. Ownership of patents grants companies both a stronger legal and negotiating position when faced with the growing ambiguity of the world of technology patents. Loaded with large stockpiles of patents as a defense mechanism, companies have the increased capability to secure their products and defend against potential litigation. The potential for future innovation is also strengthened. The extremely high cost of eliminating these risks is thought to greatly outweigh potential future risks themselves.

It is difficult to say what the future may hold for technology patents. Interesting responses are already beginning to emerge. Just this April, Twitter announced that it will allow its engineering inventors to veto lawsuits against alleged infringers of patents that they develop. Under the agreement, Twitter cannot sue another company or person without the consent of the engineer to whom the patent was rewarded. This action may provide an effective model for companies to avoid expensive legal messes, such as those currently fought by companies such as Apple.

One thing is certain – too many technology patents remain vague and excessively broad. Michael Carrier, a professor at Rutgers School of Law, is correct when he states, “When you have companies spending hundreds of millions in litigation, something is seriously wrong with our patent system.” Patenting of technology products will continue to face struggles unless lawmakers scrutinize the recent troubling trends and develop an appropriate response.