Dale B. Halling’s new book Source of Economic Growth is now available. This book examines the two most important questions in economics: 1) What is the source of real per capita economic growth, and 2) What caused the industrial revolution? The industrial revolution is important, because it is the first time any large group of people escape subsistence living (Malthusian Trap) and their incomes start to grow. By examining these questions, the book devises a science of economics that is consistent with natural rights, the founding of the United States, and is tied to the biological reality of life.
Mr. Halling gave a related talk at Atlas Summit 2015 entitled The Source of Economic Growth. No school of economic thought is consistent with Objectivism, which is why Ayn Rand, in the very first sentences of “Capitalism: The Unknown Ideal”, said “This book is not a treatise on economics. It is a collection of essays on the moral aspects of capitalism.” Patent attorney and novelist Dale Halling proposes a science of economics that is consistent with Rand’s philosophy. The path to that understanding of economics results from examining the source of real per capita increases in wealth, which puts man’s mind at the center of economics. No other school of economics puts emphasis on man’s mind, which is one reason why Rand had a tenuous relationship with even free market economists.
I have been invited to a debate at Freedom Fest 2015. The topic of the debate is “Competition in Business: Good or Bad?” I will be taking the competition is for loser side of the debate.
This documentary explains how the United States is destroying its Patent System that has been the engine on which America’s technological and economic leadership has been built. The movie can be seen in a number of cities on December 15.
Invention is as old as human existence, and no country has promoted and thrived on invention more than the United States thanks to its patent system. But is American invention at risk?
Framed around the story of two first-time inventors, Inventing to Nowhere explores the stakes in policy fights over the American innovation economy, with interviews of legendary inventor Dean Kamen, historians, members of Congress and other key players in the effort to keep the country innovating.
For more than 200 years, the U.S. patent system has helped protect and grow ideas. This reverence for intellectual property rights has been a driving force in making the United States an economic superpower. But as the patent-law debate becomes more influenced by special interests, the future of inventors and entrepreneurs is in jeopardy.
According to Alyssa Bereznak of Yahoo Tech, in an article entitled The U.S. Government Has a Secret System for Stalling Patents, the United States Patent Office has a secret program called the Sensitive Application Warning System (SAWS) designed to delay and deep six certain politically sensitive patent applications. The Patent Office only admitted to the program after a FOIA request. The program goes back to at least 2006 and therefore includes the actions and knowledge of both Jon Dudas and David Kappos. Both men should be brought up on Capitol Hill for investigations. Did Kappos favor IBM patent applications or delay IBM’s competitors? Did Jon Dudas, who is not a patent attorney and is not legally or factually competent to be a patent attorney, provide favors to enhance his post public life position? If they were aware of this program, and it is hard to believe they were not, their pensions from the PTO should be revoked and they should be disbarred at a minimum.
I have actually had examiners tell me that they were not going to allow a patent application because they did not want to see the patent end up on the front page of the New York Times. I am not sure where that is in the statute, but it is illegal and unconstitutional. According to the article applications can end up in this purgatory for astonishing number of vague reasons including the application is “broad” or has “pioneering scope,” “seemingly frivolous or silly subject matter,” or those “dealing with inventions, which, if issued, would potentially generate unwanted media coverage (i.e., news, blogs, forums).”
I wrote a novel with my wife entitled Pendulum of Justice, where a plot device was abuse of this kind by the Director of the USPTO. Turns out fact is stranger than fiction.
An article on Cato Unbound entitled, “What’s the Best Way to Fix the Patent System’s Problems?” by law professor Christina Mulligan, argues for two different solutions of what she perceives are problems with software patents. One solution advocated by Eli Dourado is to eliminate all software patents (See CATO and Mercatus Center: Another Flawed Study on Patents). The other solution, advocated by John F. Duffy, is a more rigorous application of the obviousness standard. Ms. Mulligan comes down on the side of Eli Dourado’s solution of eliminating patents on software.
What is amazing is that Ms Mulligan never even addresses the inherent contradiction that if you are going to eliminate patents of software you have to eliminate all patents on electronics. Of course this may be because Ms. Mulligan does not have a technological background, she is not a patent attorney nor is she legally or factually competent to be a patent attorney. Software is a way of wiring an electronic circuit. Any invention implemented in software executed on a computer can be implemented in hardware (i.e., an electronic circuit) as any competent electrical engineer knows. In fact, this is exactly what happens when software is executed, it is converted into a series of voltage levels that open and close switches in a general purpose electronic circuit called a computer to create a specific electronic circuit.
Ms. Mulligan quotes the clearly incorrect statement that:
Many software patents are merely mathematical formulas or abstract ideas and should not be considered patentable subject matter because they remove too much “raw” material from the public domain.
This statement confuses two separate points. One point is that many software patents are merely mathematical formulas or abstract ideas. The second point is that software patents remove too much raw material from the public domain. The idea that any software patent is a mathematical formula is complete and obvious nonsense to anyone who has worked with computers. While it is true that software often uses mathematical formulas, so do electronic circuits, radar, rockets, mechanical systems, chemical processes, in fact almost every area of technology.
Ms. Mulligan does not define what she means by an abstract idea. In one sense every invention in the history of the world is an abstraction. Inventions define a class of things. For instance the invention of the incandescent light bulb is not a specific incandescent light bulb, but the class of these objects. The only logical definition of an abstract idea is “a thought or conception that is separate from concrete existence or not applied to the practical”. Every invention that meets the requirements of 35 USC 112 first paragraph is not an Abstract Idea, since this section requires that the invention be described in a manner so one skilled in the art can practice the invention. Something that can be built and used (practiced) is concrete and applied, therefore it is not an abstract idea. Clearly software patents are not abstract ideas because they are concrete and applied to a problem of life. If they did not solve a problem of life, then no one would care, because no one would want to practice their invention.
The second point is that they remove too much raw material from the public domain. This is a bald statement without any support. In fact, patents do not remove any material from the public domain. They secure the property rights of an inventor to their invention that did not exist before they created the invention. To suggest that this removes anything from the public domain would make even the most strident Marxist blush.
Ms. Mulligan attempts to use Ayn Rand in support of her position.
Even Ayn Rand sidestepped suggesting a length for intellectual property terms, stating that if intellectual property “were held in perpetuity . . . it would lead, not to the earned reward of achievement, but to the unearned support of parasitism.
Of course she forgets to mention that Rand stated “Patents and copyrights are the legal implementation of the base of all property rights: a man’s right to the product of his mind.” You can see from this statement that it is very unlikely that Ayn Rand would have supported Ms. Mulligan’s position.
More importantly, all property rights are term limited. A dead person cannot own property. Property is a legal (moral) relationship between a person and something. Once the person is dead they cannot have a legal relationship to something on this Earth that would be a contradiction. There is only a question of what happens to property relationship when someone dies. But no property rights go on forever.
Ms. Mulligan also ignores the obvious Constitutional problems with a law prohibiting patents on software or any other group of inventions. Article 1, section 8, clause 8 requires that the right of inventors to their inventions be secured. There is no basis under the Constitution to discriminate between securing the rights of inventors for chemical inventions, but not to software inventions for instance. Ms. Mulligan may argue that the preamble to article 1, section 8, clause.8 is a limit on patents, but this is a clear misinterpretation of a preamble under legal construction. Preambles are never considered limiting in law. In addition, if the founders intended such a limitation then they would have said Congress can take whatever steps they believe will promote the sciences and useful arts.
Ms. Mulligan’s arguments do not stand up to scrutiny. Part of the problem may be that Ms. Mulligan is not a patent attorney. But some of the problems are so outrageous, especially for someone who is a Yale Law professor that the only conclusion is that she has a political agenda.
The United States of America created the strongest patent system in the world. Most of the greatest inventors in the history of the world, Edison, Tesla, Bell, etc. lived and worked in the United States. In less than 100 years, they created the most technologically sophisticated country ever. Almost every modern product you use today was subject to a patent or a patented processes at some point. Your cell phone is the subject of hundreds of patents. The same is true of your computer, the Internet, the power system, the medicines your take, the car your drive, even your glass windows (Venice patent system), even cement. For Ms. Mulligan to suggest that patents on software or anything else inhibit the progress of technological is an extraordinary claim and requires extraordinary evidence. Ms. Mulligan has failed to provide even a scintilla of evidence and logic for her position.
This statement is from a Peter Thiel interview. Peter Thiel is a founder of Paypal, investor in Facebook and many other technology startups. Mr. Thiel is talking about entrepreneurs and businesses and that you want to create a unique company and dominate your market space. I have just finished a manuscript for a non-fiction book that makes this point from an economy wide point of view. Wealth is not created by manufacturing undifferentiated, me-too products, it is created by new technologies. There is no contradiction between what is good for the economy and what is good for an entrepreneur, despite the statement of economists on perfect competition.
One of Peter Thiel’s interview questions is tell me something you know to be true that no one else knows is true? How would you answer that question?
My answer is that the source of real per capita growth is inventions and patents, property rights in inventions, are the key to stimulating people to invent, resulting in the Industrial Revolution and our present standard of living.
The CATO Institute attacks patents in an article entitled What Is a Software Patent?, by Christina Mulligan. The article argues that the word “process” in the patent statute should be limited to those processes that have an effect on matter. The article suggests that this would eliminate the “wrong” kind of patents. Software is not patentable, per se, software is a set of written instructions and are just bad prose. When people use the term “software inventions” they are talking about executing the software in hardware (electronic circuits). What the software does is define the connections or wire the general purpose electronic circuit that we call a computer. This special purpose electronic circuit consumes energy, generates heat, causes electrons to move – in short, it has an effect on matter. The whole premise of the article is based on a lack of understanding of what software is. Logically, the article has to address the issue that all “software inventions” are electronic circuits and therefor the article’s position requires that it explain why certain electronic circuits should be patentable and other electronic circuits should not be patentable. It should be noted that the author is not a patent attorney, has never written a patent or a claim, nor does she appear to have a technical background. While this is not absolutely required, it leads to the obvious mistakes made in this article.
The Constitution requires Congress to protect the rights of inventors to their inventions. There is no justification for the distinction made in this article. An invention is a human creation with an objective and repeatable result. For instance, the incandescent light bulb always puts out light when electricity of the right voltage and current is applied. Art is a human creation with a subjective result. Software enabled inventions are clearly a human creation and they have a repeatable, objective result. The first patent ever issued in the US was for a Method of making potash and it was a method of doing business. The inventor was not making potash as a hobby, he planned to make a business of it. The label of “business method patent” is thrown around commonly, but never defined as it is not in this article. All patents are about a method of doing business.
The article ends with praise for Mark Lemley. Another law professor who is not a patent attorney, is not legally or factually competent to be a patent attorney, has never written a patent, has never written a patent claim, but somehow knows that we should not use “functional claiming.” Mr. Lemley does not even know what functional claiming is. What he appears to mean is that the claims should have to include every little step or element in the invention. This would mean that if you were writing a patent about cell phones, you would have to claim the individual transistors. Patent law had determined that this made no sense and as long as, for instance, heterodyne receivers were well known you could claim the heterodyne receiver without claiming the individual transistors or even explaining the invention to this level of detail. Patent law is right on this point and Lemely and the author are clearly wrong.
As a patent attorney, with a BSEE, an MS in Physics and twenty years of practicing patent law, it would be nice if CATO, when discussing patents and patent policy would actually include those who are factually and legally competent to be patent attorneys in technical discussions about patent law, including defining what software is.
Dale B. Halling
What Is a Software Patent?, by Christina Mulligan.
I have had the fortune or misfortune to be dealing with the aftermath of Hurricane Odile. I have a client that has an invention that would have been able to restore power in just two days. His invention is described in patent number 7589640. It senses the force load on a power pole and if it exceeds a certain level, the invention lowers the cross bars and power lines gently to the ground and turns off the sector switch (power). Once the electrical lines and cross bars are on the ground, the wind loads are almost eliminated, which means the power pole is standing at the end of the storm. Utility workers then remove the debris and use a winch type mechanism to raise the power lines and cross bars.
This invention cannot only save billions of dollars in utility repair damage per year, get power up in a tenth the time of present techniques, eliminate billions in lost business per year lost business, it also reduces the risk of injury to utility workers who are no longer required to climb utility poles and bystanders. But that is not all, the inventor has engineered his poles so that they are less expensive to install originally than present utility poles.
GUESS WHO is opposing the inventor? Unions. Their members make a lot of money working storms and they don’t want any system that allows less skilled workers to setup utility poles. Utility companies are ambivalent, because they are regulated and only allowed a certain return on capital. Thus, all the money they save using the inventor’s system will not improve their bottom line one iota. This is just another example of how regulation stifles inventions and makes our lives worse, more expensive and less safe.
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