I’ve been hoping to see some let up on the “patent troll” whiney tantrums we’ve been seeing of late. Geez, even the BBC News, which should know better, took up the issue and re-printed old arguments that keep showing up like a bad penny.

One BBC article quotes FTC commissioner Mozelle Thompson saying some companies use patents “in an anti-competitive way, sometimes to prevent other products from getting to market, to prevent people from sharing ideas and to prevent the kind of innovation that the patent system is really trying to spur on.” Note to Mozelle: “Get over it.” Companies don’t have an obligation to give things away just because you want it and don’t want to pay for it. It’s a dog-eat-dog world out there.

A recent Tech Dirt posting by Mike (NOTE: I don’t know who Mike is, I couldn’t find any info other than Tech Dirt offers some sort of corporate intelligence insert your oxymoron joke here>), took offence with the former Patent Office director, James Rogan, indicating he is off-base in saying there’s nothing wrong with companies patenting something and then refusing to do anything with it.

Tech Dirt feels that this is contrary to the original purpose of the patent system, that is, To promote the Progress of Science and useful Arts [U.S. Constitution, Art. I, Section 8]. Tech Dirt believes that patenting something and “then not doing anything with it other than suing companies who actually do innovate completely goes against the purpose of the patent system.” Really?

As we’ve written before, many people who complain about patents are only concerned about the impact they may be feeling at a particular moment. It’s selfish greed, really. This always comes up whenever someone wants to make a product and the rights holder won’t give them permission or whenever a patent holder asserts some rights against another. But those are the perks given by the system, the right to exclude others. Our great Founding Fathers looked beyond the immediate gratification we hold dear today and saw that the real value of the patent system is the investment over the long run.

The key part of the Constitutional clause is the phrase “securing for limited times” of patent rights. Although 20 years may seem like a lifetime to many (including my 8-year-old daughter with an incredibly short patience threshold), the true value comes over centuries of discoveries, the many lifetimes of hard work, all published for everyone to study and research. Yes, one may be blocked from development of certain technologies for 20 years but once the term has lapsed, the benefits run for all of eternity.

That seems like a pretty good bargain for the public as well as businesses that can take this freed knowledge and leap-frog ahead in promoting the useful arts. Without it, we’d still be using slate & chalk.

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  1. Hmm. You seem to have missed the point of my argument, and then made a bunch of incorrect assumptions. My apologies if the writeup wasn’t clear enough, so let me give some background.

    If you look at what the founding fathers actually did say about the patent system, they knew that it was a very very big deal to grant someone an unlimited monopoly and believed it should only be used in the rarest of cases. Can you honestly say that’s what’s happening now?

    The problem I (and many others) have with the patent system today is not at all what you described. It’s quite simple: it seems to us that the patent system is not actually encouraging innovation — which is the ONLY reason it exists. It doesn’t effect me right now in any way. What it impacts is the future of innovation in this country. If the price to innovate is too high, then innovation will move elsewhere. Look at places like the Netherlands in 1869-1912 or Switzerland in 1850-1907.

    During those periods both countries did away with their patent systems, and innovation thrived, because it took the hurdles out of the way and forced products to compete *in the market* rather than in a system with government granted monopolies.

    The patent system is a tradeoff. The trade is giving a monopoly to the inventor in favor getting the info out there for the sake of innovation. However, it’s important to always monitor the tradeoffs. If it’s actively harming innovation, then that’s no good and needs to be corrected.

    Another problem with the patent system is that it currently rewards invention rather than innovation. Innovation is coming up with the product or service that the market wants. Invention is just coming up with something new. We should be rewarding innovation — those who actually bring the product to market successfully, rather than those who make it more difficult to bring a product to market.

    The final problem with the current patent system is that patents are only supposed to be granted for ideas that are non-obvious to the skilled practitioner. However, it’s become quite clear that the obviousness test is not being applied at all. This means that patents are being granted on all sorts of things that others are coming up with independently. If someone else can come up with the same idea independently, that’s a very good indicator that the idea is, in fact, an *obvious* progression of the state of the art and therefore… NOT patentable.

    All of these are serious issues, and you tossing them aside because you think that there’s some immediate impact on me is an incorrect reading of our analysis.

    Does that make it clearer?

  2. Mike, thank you (as well as Stephen) for these interesting comments, which have spurred me to do what I haven’t: put some thought into the topic and vow to write a patent / IP post …soon.

    There’s such a thing as an innovation-reward, Mike: It’s called trademark. There’s also a rewards system available for innovation: royalties on copyright and on patent.

    I know that your biggest problem is that we see a lot of patent filings, some of which you believe are not valuable inventions at all, and some of which you believe are not being used to improve society.

    But the cure is not to denigrate people using the patent system as it lies (patenting and then refusing to allow royalties; after all, what harm to society is there in letting them do that?), but to upgrade and strengthen the patent examination process, both before and after issue, so that “bad patents” that in fact lack non-obviousness (or even novelty) can be strained out.

    My beef with companies that develop a fat portfolio of patents and then use it as a weapon, brandishing their thicket of rights at other competitors, is not yours. There’s nothing dog-in-the-manger about evaluating a technology, being the first to invent it, getting a patent on it (putting it into the public domain in 20 years, *or sooner*, recall) and then deciding it doesn’t fit your business model or interests to make it, sell it, license it out, or let others use it. It’s odd… but it’s not Bad.

    Now, if the value to another company was high enough, it could
    – offer to buy the patent right outright
    – offer to pay a reasonable royalty
    – offer to pay an unreasonable royalty that was still less than the cost of litigation
    – threaten to challenge the validity of the patent
    – threaten to attack the patent owner with collateral patent issues, such as anti-trust behavior (if any), potentially voiding the patent for misuse
    – threaten to attack the patent owner on other issues entirely, such as litigation based on other unfair competition.

    That is, there’s a sheaf of possibilities. Some won’t happen unless conditions are right, most won’t happen unless someone sees the value of the patented idea, and none will happen if everyone agrees that the patented idea is worthless for now.

    You are complaining about circumstances where the patent is concededly valuable because it is either very broad or quite advanced, and yet the inventer does not want to be or allow someone else to be the innovator. I’m sorry, but I take the long view: in 20 years, we get it anyway. That can’t possibly be the brake on innovation you depict.

    Also, lots of Real Good inventions are brought to market each and every year, and some aren’t even protected by trademarks, instead relying on trade secret and short horizons for technology.

    Call me unconvinced that we’re seeing a Slow Point in human innovation history.

    I personally dislike unlimited exclusive rights; that’s why the copyright extension act was anathema to me. But can you honestly say that _unlimited_ rights is what we have right now in the patent law, given the status of the federal courts? Patentees have lots of power, yes, but unlimited?

  3. I’m going to have to say that I agree whole-heartedly that it is critical that the patent system produce quality patents. I’m totally against someone getting a patent on something that’s quite obvious. But once the patent criteria are met and the invention is clearly novel and nonobvious, I can’t see why one should be forced to commercialize it themselves, if at all.

    The argument against allowing people to sit on patents usually comes up in the context of an inventor getting a patent, never producing a product (and never intending to make a product for that matter) and then trying to assert it against companies that later develop products that infringe (I say later since, by definition, the invention was not known prior to the patent).

    If the claims are truly valid, then I don’t have a problem with that occurring. While I admit that there are those who game the system and try to tweak the claims of pending applications to capture the market as it develops, this isn’t the norm. And it’s not limited to so-called patent trolls or individual evil-doers. Clearly, many a large corporation has gotten a patent and not commercialized for one reason or another. It could be that they can’t produce a product that produces a good return on their investment. In other cases, it’s because they already have a product that, though mediocre, produces plenty of revenue without having to spend more money developing a newer, better version.

    If we get into some type of evaluation process that says only certain “approved” patent holders get to hold and assert patent rights, I wonder who gets to decide? How much development must go into an invention to qualify? What if the patent holder can’t raise the capital to develop a product? Then there are universities and other research institutes that never produce products – they only do the basic research. Should they be forbidden from patenting and then licensing inventions because they will never produce a “product or service that the market wants”?

    I don’t know how we’d monitor innovation over invention, either. Often, like the transistor, a scientific breakthrough is made before an end use is discovered. I’m not sure what the criteria would be for innovation or for deciding which products the “market” wants. When camera-phones first came out all I could think was that it was a stupid idea and nobody would ever want to take crappy photos with a phone. I missed that one by a mile.

    My only point in the original post is that no matter what happens — i.e., whether or not a product is commercialized — the patent system serves its purpose. The invention is made public and, after the patent term expires, it becomes part of the public domain forever.

    — Ed.

  4. Stephen and Mike,

    This is a great debate, and I am glad you have both voiced your strong opinions on this issue. I believe you are both correct in your views. I try to make more sense of it myself on IP Counsel Blog. Check it out at http://ipcounsel.blogspot.com.



  5. Good debate.

    The point I have about having it go to market, rather than letting the patenter sit on it, is that it’s the market innovation that is valuable. You bring up the digital camera, so let’s use that example. Let’s say you invented it and patented it… and then sat on it, not thinking it was useful. Then, you went out and sued others who did bring it to market, because they actually did see why it was valuable to society. Why should you be rewarded for your short-sightedness?

    As for distinguishing innovation from invention… That’s what the market is for. The market rewards those who innovate and bring a product to market successfully by having people buy it.

    Look, I have no issue with patents for something that really is a breakthrough idea. However, I think those are few and far between and society would be better served by letting these ideas compete as products in the marketplace. For the inevitable complaint that small inventors can’t commercialize their ideas… that’s ridiculous. We have a strong capital system that makes it quite easy for money and ideas to be matched up.

    As for the point that 20 years of not being able to do anything is fine… have you looked at the pace of innovation lately? How much has changed in the last 20 years? How far behind would the US economy be if it had to sit out and wait the computer and internet revolution while the rest of the world moved forward with it.

  6. When patent attorneys discuss the effectiveness or “value” of a patent system, never do they attempt to seriously account for its costs, and to subtract the costs from the alleged benefits to arrive at a net-benefits calculation. I discuss this here: There’s No Such Thing as a Free Patent. http://www.mises.org/fullstory.aspx?Id=1763

  7. Maybe I’ve missed it, but the comments here don’t seem to appreciate the main point I was trying to make in this article http://www.mises.org/fullstory.aspx?Id=1763 . The point is that you cannot just assert that the patent system encourages innovation, nor is this enough anyway. My point is that when patent lawyers or others try to make normative assertions about patent law–what it should be, whether it’s justified or a “good” idea–they routinely adopt the utilitarian, wealth-maximization mindset, as if this is obvious to everyone, and needs no defense. And they also ignore the costs of the system, and not only do they never try to seriously determine the costs of their proposals, they don’t even seem to think anyone else needs to do so either.

    These views fail to recognize that utilitarianism is itself a very controversial ethical doctrine. And even if you adopt the test that it’s okay to weigh a law’s validity based on whether or not it helps to contribute wealth to society, they look at only the benefits flowing from the law not the costs. You have to compare the costs to the benefits to see if it’s a net gain. The comments here and elsewhere focus only on the gains–not on the costs. You can’t ignore the costs.

  8. What if VisiCalc was Patented?

    One of the Patentbaristas has talked a little bit about the link between innovation and patents. I have also been thinking about the correlation as well. Many articles about software patents refer to the fact that Dan Bricklin was not…

  9. What if VisiCalc was Patented?

    One of the Patentbaristas has talked a little bit about the link between innovation and patents. I have also been thinking about the correlation as well. Many articles about software patents refer to the fact that Dan Bricklin was not…

  10. You say “the true value comes over centuries of discoveries, the many lifetimes of hard work, all published for everyone to study and research.”

    Obviously, you have not been reading any software patent, have you ? Please, all computer scientists (I am one) use IEEE journals, citeseer and google scholar, not junk patents written by lawers.

    It’s funny to see you repeating the mantra “patents promote innovation” but to not insult those who have better understanding of software market and research field.

    Try to back up your faith with a few facts if you really want to be taken seriously.