Levine & Boldrin Argue the U.S. Should End the Patent System
The authors of Against Intellectual Monopoly in an editorial in the Christian Science Monitor suggest ending the patent system. The number of errors in such a short editorial is staggering, especially considering the authors are distinguished professors at a major university – Washington University in St. Louis. Each of the major errors are discussed below.
Levine and Boldrin constantly describe a patent as a monopoly in their editorial. A patent gives the holder the right to exclude others from making, using or selling the invention. 35 USC 154. It does not give the holder the right to make, use or sell their invention. According to Wikipedia “In economics, a government-granted monopoly (also called a “de jure monopoly”) is a form of coercive monopoly by which a government grants exclusive privilege to a private individual or firm to be the sole provider of a good or service; potential competitors are excluded from the market by law, regulation, or other mechanisms of government enforcement.” Since patents are clearly “government granted”, then this is the appropriate definition. Since a patent does not even provide the holder the right to sell their invention, it clearly does not grant an exclusive privilege to a firm to be the sole provider of a good or service.
When a person describes a patent as a monopoly to be consistent they should also state that they have a monopoly over their car or over their house. In fact, they have more rights in their car and house than a patent gives the inventor over their invention, since you have a right to use and sell your car or house. A patent does not give these rights to an inventor over his invention. Some economists state that all property rights give some monopoly power. The property rights are monopolies thesis shows how confused economic thought is on this subject. The only logically consistent definition of a monopoly is an exclusive right to a market. People who suggest a patent is a monopoly are not being intellectually honest and perpetuating a myth to advance a political agenda.
The Constitution states that inventors and authors have the “right to their writings and discoveries.” The preamble states that the goal is to “promote science and the useful arts.” In law the preamble is not limiting it is merely descriptive. The patent and copyright clause is part of the powers of Congress under the Constitution. The argument of Levine and Boldrin is that Congress has a choice. The problem with this argument is that the Constitution states that inventors and authors have a “Right” to a patent or copyright. What the Constitution has authorized Congress to do is to create the specific law to implement a system for “securing” to inventors’ and authors’ their “exclusive rights” as opposed to the Executive or Judicial branch of the government. Under natural rights theory that dominated the thinking of both the Constitutional delegates and signers of the Declaration of Independence a right was not granted by a government, but inherent to a person as a matter of reason and logic. Levine and Boldrin’s analysis of the patent and copyright clause is either intellectually dishonest or based on extreme historical ignorance.
Levine and Boldrin argue that the incentives provided by patents cut both ways encouraging and discouraging innovation. They state a great deal of applied economics research has tried to answer whether the patent system encourages innovation. According to the authors “the short answer is intellectual property does not increase innovation.”
The authors have clearly not examined the historical evidence. The richest countries in the world have the strongest intellectual property laws. The poorest countries have weak or non-existent intellectual property laws. The industrial revolution and attendant enormous increase personal income in western countries corresponds with the advent of modern intellectual property law. Is this coincidence? Modern economic theory shows that innovation is the only way in which real per capita incomes grow. According to the book A Farewell to Alms, by Gregory Clark, Chair of the Economics Department at the University of California Davis, all the free market precursors to a modern economy other than protection for intellectual property existed long before real per capita increases income starting growing around 1800. In addition, these earlier economies had much less burdensome tax and regulator policies than our present economy. The policy reason countries adopted patent laws was to encourage innovation. Those countries that adopted patent laws are the most innovative. Those countries that never adopted a patent system are the least innovative.
In the history of the U.S. in the last one hundred years all three major extended economic downturns are associated with a weakening of our patent system. During the Great Depression and 1970s, antitrust law was used to marginalize the value of patents. During the present economic downturn other mechanisms have been used to weaken our patent laws, for more information see Intellectual Property Socialism.
In the 1970s, antitrust was used to force U.S. companies to give away the technology of over 50,000 patents directly and frighten companies into not enforcing their patents. A MITI substantiates that most Japanese companies took advantage of this traitorous policy by the U.S. government to catch up with U.S. companies technologically. For more information on this disastrous social tinkering by the U.S. government see Jobs, the Economy and Patents. The data from the U.S. patent office also shows that the economy falters when the number of patents issued to U.S. inventors declines or stagnates. For more information see Foreigners Receive More Patents Than U.S. Inventors.
We know that in all areas of economics where it has been tested private property rights encourage economic activity. Experience shows that when the government establishes incentives, it always results in more of the incentivized activity. Countries with the strongest patent laws have the most innovation and the greatest technology diffusion and vice versa those countries with weak or non-existent patent laws have little or no innovation and little technology innovation. Despite this, the authors ask us to believe that patents do not follow the normal rules of economics and logic. As Thomas Paine pointed out in his book The Age of Reason, extraordinary claims require extraordinary evidence. The authors have provided no evidence that patents harm innovation.
The authors lament Africans are dying of AIDS because of the cost of the drugs to treat the disease. Of course they ignore that the Africans would be dying if no one invented the AIDS drugs. The authors are supposed to be economists, but they assume the drugs or other inventions just happen by magic. This is not economics, but it is first class demagoguery.
Later the article complains that BlackBerry had to defend itself from patent lawsuits, when they clearly stole technology from another company (NTP). The authors suggest that NTP is a patent troll, which is demagogic term. The term patent trolls is usually applied to companies that enforce patents that they are not practicing. The term includes Universities and divisions of most large corporations such as IBM.
The moral argument against Non-Practicing Entities (NPEs) is that they are not practicing their patents, so they are not entitled to enforce them. The U.S. has consistently rejected a working requirement for patents. The only time the U.S. had a working requirement for patents, was in early 1800s and only for English inventors. We do not argue that a landowner has to work his land in order to keep his property rights in the land. The argument against NPEs does not stand up to scrutiny.
The editorial suggests that patents do not provide any real protection for inventors anyway. They point to the sad anecdotal stories of Philo T. Fransworth and Eli Whitney. While these are sad cases, the authors ignore that many companies have used patents to protect themselves from technology thieves including NTP, which they vilified as a troll. Edison, the Wright Brothers, and Xerox are just a few examples of great American inventors and companies that were only able to start thriving companies because of patent protection. There are numerous other examples. The authors are right that it is disgraceful that our legal system did not protect Eli Whitney, Philo Fransworth, and other inventors and shows that we need stronger patent laws not weaker or non-existent patent laws. Note that both of these inventors were unable to protect their inventions when the U.S. patent laws were relatively weak.
Ultimately, the authors do not believe that inventors and authors should be able to earn a return on their intellectual effort. Since both the authors are professors and presumably get paid for their work, they are receiving a return on their intellectual efforts. If people should not earn a return on their mental labor, then doctors, professors, lawyers, engineers, teachers, and most other modern jobs should pay less than a ditch digger. The authors have either failed to think through their position logically or are hypocrites pushing a political agenda.
20 Comments »
- Source of Economic Growth Reviews
- Carl Menger: Principles of Economics
- Pendulum of Justice (1st Hank Rangar Thriller) on Sale 99¢
- Economics and Evolution: How We Think and Grow Rich
- Intellectual Capitalism: Philosophy
- Can Patents be a True Property Right When They Expire?
- The Flawed Private Property Argument Against Immigration
- Response to The Economist on Patents
- Capital in Disequilibrium: The Austrians’ Answer to New Growth Theory
- Praxeology: An Intellectual Train Wreck
- Source of Economic Growth: The talk and the Book
- Gene Quinn Destroys ‘The Economist’ on Patents
- Business Models
- Featured Videos
- Intellectual Capitalism
- Press Release
- Regulatory bill of Rights
- sarbanes oxley
- Sarbanes Oxley