Patent Wars

4 posts

Bob Dylan Roof
Patent law doesn't always encourage innovation and economic liberty.

Patent Wars

— By Kevin Drum
| Thu Dec. 9, 2010 7:59 AM PST
The 800-pound gorilla of the patent troll business is finally going to court:
Technology companies on Wednesday received troubling news that some had feared for years: Intellectual Ventures LLC has started suing. The secretive firm co-founded by former Microsoft Corp. Chief Technology Officer Nathan Myhrvold has raised $5 billion to amass thousands of patents over the past decade....
...This is all predictably depressing, and poses, as I said two years ago, the single biggest risk to America’s continued leadership in technology and innovation. Intellectual Ventures might do a bit of R, but it doesn’t do any D. Instead, it just sits there, extracting rents (that’s the polite way of saying “blackmailing”) technology companies who actually want to make things.

mother jones dot com :thumbsdown:

Niccolo and Donkey

Gene Callahan on Patent Law :

However, this is not really a new problem, but, rather, the worsening of an old one. Gleick quotes the commissioner of Patents and Trademarks, Q. Todd Dickinson, as claiming: "The patent system has done its job for two centuries of protecting and nurturing and rewarding innovation. The system has worked."

But what is the evidence that patent law ever "worked"? Certainly, the U.S. has had a great history of invention. Some of these inventions might not have existed if patents did not exist. On the other hand, we may have had other inventions that would have existed except for patent law. The late economist Murray Rothbard says, in Man, Economy and State :

And, as intellectual property lawyer Stephan Kinsella points out , "...maybe more money for R&D would be available if it were not being spent on patents and lawsuits."

The idea that patent law "used to work" relies heavily on the indefensible notion that someone could objectively determine whether "too little" invention is occurring. Gleick says, "[Patent law] fueled industrial progress in the early United States..." But how does he know? Did he examine the history of an alternate-universe United States and observe that it had less industrial progress? All we can say for certain is that the early United States had both patent law and rapid industrial progress. Perhaps it had rapid industrial progress despite patent law. Or perhaps it was powdery wigs that led to America's prosperity. We can gain an understanding of whether patent law "worked" only with the aid of a coherent theory of property rights and their effect on economic progress.
If we examine these foundations, we find that patents are not grounded in common law notions of property rights, but, instead, are a government intervention that strips the property rights of those who, through independent invention, arrive at the same device as a patent holder. To again quote Rothbard, "Patents prevent a man from using his invention even though all the property is his and he has not stolen the invention, either explicitly or implicitly, from the first inventor."

Most of the positive aspects of patents can be gained through trade secrets and licensing agreements, while avoiding many of these negative ones. The conclusion of Gleick's article is well reasoned and persuasive--except that what he views as an argument for "reforming" the patent system is actually an argument for eliminating it:


Patents royal -- the grant of a term monopoly by the sovereign to specific individuals or corporations -- is a form of elitism and aristocracy. If the average person or company could 'invent shit, just like that', then marketplace dynamics would be appropriate. The market would sort out and reward success. 'Patents' and other rents only make sense if compensating -- or more specifically motivating -- superstar inventors (intellectual aristocrats) is a net win for society.

A patent in intellectual property is, from an economic perspective, no different from an exclusive charter to trade, or a land grant of a large block of land to a magnate, for the specific purpose of creating that magnate. Pareto taught us that society is an 80-20 pyramid with a power-law obelisk on top [most people forget the part about the power law magnates on top of the merely ordinary super-rich].

The question of whether the notion is a wise idea for sovereigns to use largesse to create magnates, for social benefit, is one thing, and question whether our current distribution of the goodies is in fact deserved, quite another.

The Jeffersonian theory, of course, is that aristocracy is a bad thing in land, but a good thing in intellect. This is consistent with a belief that the underlying endowments are more skewed, as to intellect, than market equilibrium of its own accord would reward. (Intellectual hothouse theory). Hot-house tomatos don't really compete with those in the wild -- nature will never produce them without the extra manure, care, and sheltering required.

However, the current system makes sense if only corporations are capable of inventing the things society benefits from, and they can only create super-scale power law results [the long tail] if they are given white glove treatment by the sovereign people. If the windows to the hothouse are broken, the plants uprooted or dying, and no fruit has been produced in 25 years, then the argument from results speaks for itself. Competition to *become* the magnates, on behalf of petty contenders, would be wise. Then the hothouse can be repaired and become productive again.

/end chauncy gardiner speech