CLS Bank v. Alice Corp was an en banc decision that attempted to set the record straight on 35 USC 101. IT FAILED. The patents in suit deal with settlement risk in financial transactions. The holding can be boiled down to we don’t like patents on software or on financial transactions and we really don’t like patents that cover both.
Below is an updated chart of the CAFC judges and whether they are patent attorneys or have a technical background. In my opinion and based on the latest rulings out of the CAFC all the Judges on this court should have a technical degree and be patent attorneys. Presently only four of the judges are patent attorneys and only five of the judges have a technical background. This is down from five judges being patent attorneys in 2010 and in April of 2011. Clearly neither Congress or the Obama administration have put a very high priority on the quality of judges at the CAFC.
According to Kiwi Blog “A good move from the Gov’t on patents” there is a new Patent Bill that will prohibit patents on software. Logically, this suggests that there is something special about software that is incompatible with patents. In order to determine, we first have to have a clear understanding of what software is and what a patent is. A patent is a property right that a person earns by creating a new invention. But what is an invention? An invention is anything created by man that has an objective result. This definition clearly delineates that inventions are not things in nature or occurring naturally. An invention, also, is not everything created by man. For instance, a painting or a song is a creation of man, but they do not have an objective result. Songs and paintings fall into the category of aesthetic creations. Their goal is to elicit a subjective response and people will react differently. An invention has an objective result. For instance, a controllable heavier than air powered craft, such as the Wright brothers invented has the objective result of controllable powered flight. Software is a set of written instructions that are converted by a compiler (interpreter) into a wiring scheme that opens and closes transistors. Software that is not converted into instructions is just a bunch of bad writing.
Now that we have a clear definition of a patent and software, we can examine whether there is something special about software that would cause it to not be patentable. The written instructions of software do not have an objective result, unless they converting into a wiring scheme. Therefore, software code is not patentable. No country has patent laws that apply to software code. The way this is normally stated is that software per se is not patentable.
If this was all the New Zealand bill was proposing, we could stop here. But all indications are that the proposed law would not allow patents for inventions in which software was used to wire an electronic circuit. As any electrical engineer knows and software developer should know, solutions to problems implemented in software can also be realized in hardware, i.e., electronic circuits. The main reason for choosing a software solution is the ease in implementing changes, the main reason for choosing a hardware solution is speed of processing. Therefore, a time critical solution is more likely to be implemented in hardware. While a solution that requires the ability to add features easily will be implemented in software. Software is just a method of converting a general purpose electronic circuit (computer) into an application specific electronic circuit. If software is not patentable it leads to absurd results. For instance, if I design a pacemaker using logic circuits, it is patentable. However, if I use a microcontroller to do the exact same thing, it is not patentable.
Software per se is not patentable. Executed software is just a way of wiring an electronic circuit. Electronic circuits have objective results, are a creation of man and therefore an invention. There is no logical reason to distinguish between software-implemented inventions and other inventions. This bill is based on emotion or an anti-property rights agenda or both.
David Kelley gave a talk on Ayn Rand vs. Friedrich Hayek On Abstraction. (If you want to read Mr. Kelly’s paper on point click here) This is a very important talk and explains the difference between Austrian economists and free market (objectivists). It also helps explain why Austrian economists who say they are for free markets are against patents, which are property rights in one’s invention.
Ultimately, Hayek is a warmed over Platonist. According to Hayek our perception and reason are limited (Plato). It is this limit to reason that is Hayek’s justification for a free market. Basically, Hayek argues that because our reason is limited it is sheer folly to suggest that central planning can ever work. Rand on the other hand sees no limit to reason and notes that reason is man’s basic tool of survival. But each man must reason for them self. To force (central planning) someone to do something against their reason is immoral and eliminates the creativity and ingeniousness of everyone subject to the central planning decree. This means we have a small group of people attempting to “solve” problems instead of many people and the people making the decision are not the ones that feel it’s effects. As a result, central planning is an open loop process, which as any engineer knows is a very inaccurate process. In addition, central planning does not take all the variables into account, since only each individual can know exactly what their circumstances and needs are.
I believe Austrians gravitate to Hayek’s ideas because it saves religion (Christianity) from reason and the free market. Hayek’s ideas on the limits of reason puts him in the company of Kant, Hume and Plato. Hayek in that sense is both anti-reason and anti-science, which leaves plenty of room for religion.
It also explains why Austrians do not understand patents. Property rights to Austrians are based on social convention or utilitarianism but not based on reason. According to the Austrians we have property rights (privileges, arbitrary grants) because of tradition or because they believe (not know – reason is limited) it results in the best use of resources. As Hakek states:
[M]orals, including, especially, our institutions of property, freedom and justice, are not a creation of man‘s reason but a distinct second endowment conferred on him by cultural evolution.
Patents were once characterized as monopolies (see English history), so Austrians cannot reason out the difference between what were called patents before the Statute of Monopolies and what are patents today. For Rand, creation is the basis of property rights and all human creations start with one man’s mind. Because of this Rand made it clear patents/copyright (Intellectual property) are the basis of all property rights.
For more see Defending Capitalism: Ayn Rand vs. Hayek
More specifically on Hayek’s concept of Abstraction:
If Hayek’s ideas had any validity, then a person whose eyesight was restored after being blind from birth could immediately (visually) identify an apple or red, which we know is not true. If Hayek’s ideas were true then we would have to have some inherent understanding of the double slit experiment in quantum mechanics or the idea that time slows down as we approach the speed of light, but this is clearly nonsense.
Yesterday the Supreme Court heard oral arguments in the Association for Molecular Pathology v. Myriad Genetics No. 11-725 and once again proved that they are incompetent to rule on patent cases. The Justice made analogies to baseball bats and chocolate cookies in trying to understand this case involving genetic testing for breast cancer. For more see USA article and Genetic Engineering and BioTechnology News articles. Asking these Supreme Court Judges to rule on this decision makes about as much sense as giving a child explosives (This analogy actual works – unlike the Justices). This would be funny if this case did not involve property rights worth billions of dollars and have the potential to destroy the biotech industry.
THE SUPREME COURT IS NOT COMPETENT TO RULE ON PATENT LAW.
The Justices on the Supreme Court neither have the scientific and technical training to rule on patent cases nor do they an appropriate understand of the basics of patent law. Congress has the power to limit the Supreme Court’s jurisdiction and it should strip it of jurisdiction for patent cases.
The Supreme Court is hearing oral arguments in the Association for Molecular Pathology v. Myriad Genetics No. 11-725 case that revolves around the myth that you can patent a person’s genes. Typical of the idiocy surrounding this case is the article by the AP, which states that this case is about monopolies for human genes. The author proves not only their lack of understanding of the science, but also the fact that they do not know that patents are a property right. (For more on Patents, Property Rights and Monopolies see below) A number of books have also pushed the agenda that human genes are patentable. The CAFC’s ruling in this case sets the record straight.
CAFC ruling under reviewed
The ruling in the 2012 version of this case was very similar to the ruling in 2011 that I discussed in my post Association of Molecular Pathology v. USPTO. Below I provide what I think are the most interesting excerpts from the opinion.
Composition claims are all eligible under 35 USC 101.
They (The isolated strands of DNA) are obtained in the laboratory and are man-made, theproduct of human ingenuity. While they are prepared from products of nature, so is every other composition of matter. All new chemical or biological molecules, whether made by synthesis or decomposition, are made from natural materials. For example, virtually every medicine utilized by today’s medical practitioners, and every manufactured plastic product, is either synthesized from natural materials (most often petroleum fractions) or derived from natural plant materials. But, as such, they are different from natural materials, even if they are ultimately derived from them. The same is true of isolated DNA molecules. PP. 38-39
The highlight portion points out a general rule of patent law (actually nature) – all inventions are combinations of existing elements, these elements are formed from natural materials. You cannot create something from nothing – it’s called conservation of matter and energy. Unfortunately, this simple rule of physics is often ignored by the courts – probably because most of them do not have a scientific background and are therefore unfit to rule in patent cases.
A composition of matter is not a law of nature. P. 51
The anti-patent crowd has been trying to expand laws of nature to include anything that occurs naturally. A law of nature is something that explains a host of data and can be used to accurately predict how things will behave in nature, such as gravity. Using a counterbalance in an elevator uses gravity – a law of nature, but it is not a law of nature.
It is undisputed that Myriad’s claimed isolated DNAs exist in a distinctive chemical form—as distinctive chemical molecules—from DNAs in the human body, i.e., native DNA. P. 44
The critics of patenting human genes miss this point. The claims do not cover native DNA, they cover DNA that does not exist but for the intervention and ingenuity of humans.
Claims 1 of the ’999, ’001, and ’441 patents, as well as method claims 1 and 2 of the ’857 patent—all of which consist of analyzing and comparing certain DNA sequences—not to be patent-eligible subject matter on the ground that they claim only abstract mental processes. P. 55
I strongly disagree with this statement. Myriad clearly showed that the analyzing step requires machines that are clearly described in the specification. Even if a doctor had the print out of the results of analysis and then he compared the results without a machine, then this is contributory infringement. The only justification for the CAFC’s decision is hyper technical analysis of the claim that requires a recited machine in the claims. This sort of overly formal interpretation does nothing to protect the property rights of inventors, but does advance the interests of entities that want to steal other people’s inventions.
We once again, even in light of Mayo, arrive at the same conclusion of patent-eligibility because at the heart of claim 20 is a transformed cell, which is made by man, in contrast to a natural material.
By definition, however, performing operations, even known types of steps, on, or to create, novel, i.e., transformed subject matter is the stuff of which most process or method invention consists. All chemical processes, for example, consist of hydrolyzing, hydrogenating, reacting, etc. In situations where the objects or results of such steps are novel and nonobvious, they should be patent-eligible. P. 61
The idiots at the Supreme Court have attempted to break claims down and determine if each step is new. You can’t create something from nothing and a step which is completely new does not meet the requirements of 35 USC 112. This form of interpretation of the claims was specifically rejected by the 1952 Patent Act under 35 USC 103. But the anti-patent Justices on the Supreme Court are not interested in logic, the Constitution, or the law. They are only interested in forcing their policy visions on the American public.
Patents and Monopolies
If patents are a monopoly, as some suggest, then it should led to certain outcomes. A close examination shows that none of the supposed monopoly effects result from granting patents.
This post explains the characteristics of a monopoly and a property right and poses three questions to show the difference. Patents fit all the characteristics of a property right and none of a monopoly. Note that professional license, such as a law license has some of the characteristics of a monopoly.
This post contains a number of quotes from philosophers explaining that patents are not monopolies.
This post explains the difference in the concepts of property rights, possession, and objects. Most economists and patent detractors confuse these concepts. The origin, definition, and legal basis of property right are explained.
This post compares the definition of a monopoly to the rights obtained with a patent. It shows that the rights obtained with a patent do not confer a monopoly.
The en banc rehearing of this case is considering whether the presumption of validity applies to under 35 USC 101. The statute involved in this question is 35 USC § 282 which states:
(a) In General.— A patent shall be presumed valid. Each claim of a patent (whether in independent, dependent, or multiple dependent form) shall be presumed valid independently of the validity of other claims; dependent or multiple dependent claims shall be presumed valid even though dependent upon an invalid claim. The burden of establishing invalidity of a patent or any claim thereof shall rest on the party asserting such invalidity. (Emphasis added)
CLS Bank argued in their brief that validity and eligibility are different and 35 USC 101 is directed to the latter. Nothing in the statute suggestions that there is a distinction between eligibility and validity. How can a patent be valid and not meet the requirements of 35 USC 101? It can’t. When you turn the question around you see the absurdity of this position. In addition, the reason for a Patent Office is to review inventions to determine if they are eligible for a patent. If the courts are going to ignore the determinations of the Patent Office, then we should just have a registration system. In every other area of law the courts are extremely deferential to administrative agency decisions, but not with patents. Ask yourself why this is. I would suggest the reason is that every other administrative agency increases the power of government, but the Patent Office increases the power of the people. It is patently unfair that an inventor has to defend their patent, two, three or more times and on multiple issues. If the EPA or the FCC or the FTC, etc. had to survive this scrutiny or legislation in general, almost none of the laws or regulations passed in the last decade would stand. It is time to end the double standard that gives a pass for every regulation that increases government power, while forcing private people to jump through hoops. In fact it is time to reverse the process, as the Founders intended.
NO RATIONAL person would buy CLS argument that there is a difference between validity and eligibility. But that does not mean the Judges on the CAFC or Supreme Court will not buy into CLS argument.
For more on the earlier decision CLICK HERE.
According to CBC News Margaret Thatcher practiced patent law. After being called to the bar she specialized in patent law and then tax law, until 1961.
No wonder, she was one of the greatest leaders of the 20th Century. Thatcher died today at 87. As Prime Minister she took the decaying cesspool that Socialists and Marxist had turned Great Britain into and made it proud, strong and great again. Barak Obama is exactly one of those “people hating” socialist/environmentalist that she fought against. Can you image Lady Thatcher saying ‘you didn’t build that’? Here are a couple of memorable quotes.
“Europe was created by history. America was created by philosophy.”
“There can be no liberty unless there is economic liberty. “
In a unanimous decision the Supreme Court ruled that State Courts have jurisdiction over malpractice cases related to patents. Gunn v. Minton, No. 11-1118, 2013 WL 610193 (U.S. Feb. 20, 2013) . At first glance this would appear to be an unimportant decision. But state courts do not understand patent law. How can they decide if there was a malpractice if they do not understand the underlying law. Most likely the judges also will not understand the underlying technology associated with the patent either. So what you will have is a judge that neither understands the facts or the law. Talk about kangaroo courts. And the AIPLA supported this nonsense. The AIPLA has proven that it is not a defender of US patent practitioners or US patent law or the US economy. (For more on how corrupt the AIPLA has become see Why I Quit the AIPLA – American Intellectual Property Law Association)
According to one malpractice attorney:
Most patent attorneys don’t understand the crap shoot that many state courts present. In South Carolina, it is almost impossible for a defendant to get summary judgment in a case, no matter how weak the plaintiff’s position is. In SC, the standard is a “scintilla of the evidence.” As a state court judge said in a seminar, “do you know how small a scintilla is?”. Never mind that the state court rule is the same as the federal rule: a genuine issue of material fact.
Without a doubt, the likelihood of a patent attorney being sued is much higher than if the federal courts had exclusive jurisdiction. The time and expense incurred by a plaintiff’s lawyer in a federal case is much higher than bringing the same suit in state court. A plaintiff’s lawyer is therefore much more likely to bring a doubtful contingency case in state court than in federal court, hoping to extract some money on a doubtful claim, or if he or she is lucky, to confuse a jury in a difficult area of law, and get a giant verdict.
Then we have the fact that few carriers will write coverage for patent practitioners. You can expect that situation to get worse.
Then, we have AIA (America Invents Act), and with new rules and first to file rules, which increases the exposure for patent attorneys.
AIPLA has taken a position that increases the risk for patent attorneys, and decreases their ability to obtain coverage. Patent attorneys could be subject to a claim based on an application you filed 20 years ago. Since policies are claims made, patent attorneys could all end up with no coverage in years where we should be looking forward to, or are in, retirement.
The management of AIPLA is clueless, and is not the friend of patent practitioners who are not in large, big city firms.
This paper is exploratory not definitive. Comments and input is greatly appreciated. My interest in the comparison between Rand and Locke started when I wrote my book The Decline and Fall of the American Entrepreneur. My investigation was spurred on by reading the excellent book The Power and the Glory: The Key Ideas and Crusading Lives of Eight Debaters of Reason vs. Faith, by Burgess Laughlin. In my opinion, John Locke is often misrepresented by both his supporters and detractors. I admit that I do not have the time or energy to review Locke’s original writings in depth at this time. Your input is appreciated.
Charles Murray has suggested that Ayn Rand’s ideas are just a rehash of Locke, Nietzsche, and Adam Smith. I reject this out of hand. Nietzsche’s uberman influenced Rand’s fictional characters, but she rejected Nietzsche as her philosophical ideas matured. Adam Smith’s book Theory of Moral Sentiments is not consistent with Rand’s ideas at all. He wrote this book before he wrote The Wealth of Nations and the two do not appear to be entirely consistent with each other. As a result, it is hard to pin Smith down on his ethics and epistemology. The differences between Rand and Locke are more subtle.
My book mainly discusses patent law in terms of Natural Law or Locke, because that is the historical basis for the founding of the US and US patent law. Readers of my blog State of Innovation may wonder what this has to do with patent law. My answer is everything, since this is about the fundamental basis of property rights.
In my opinion all philosophers fall either into camp of Aristotle or Plato. Aristotle’s metaphysics is that we can trust our senses and there is only one universe or as Rand stated it A is A. Plato’s metaphysics is that there is more than one world and our senses cannot be trusted to understand them or that our senses only give us a vague impression of the real world. Rand and Locke are both Aristotelian in the realm of metaphysics.
Some people may object that Locke advocated there was a deity. Locke did appear to make somewhat contradictory statements on god and faith, but he was writing at a time in which you could have your head cut off for being on the wrong side of a religious debate. Locke appeared to be a deist and believed;
His philosophy on human progress proposed the following: a) human beings can progress by acquiring knowledge, b) reason and action are subject to natural law, and c) the mind (as consciousness) is subject to scientific inquiry (Smith, 1997).
A Deist believes in god or a deity that created the laws of the Universe and has no effect thereafter.
John Locke’s epistemology was Reason. Reason is the means of integrating and conceptualizing perceptions by means of logic. It is distinguished from rationalism which starts with reveled truths and then applies a logical system derived from these assumptions. This is distinguished from empiricism which holds that man’s only source of knowledge is his senses without any recourse to concepts. The logical positivists did us one favor in showing that all logical systems are based on either an assumption, such as Euclidean geometry’s idea that a straight line goes on forever and two parallel lines never intersect, or based on an observation.
Some people argue that Locke was an empiricist. Locke was attempting to use the techniques of science to analyze ethics and political philosophy. (Note that he also defined the metaphysics and epistemology used by science.) People who argue that Locke was an empiricist usually argue that modern science is based on empiricism. This is incorrect based on the definition given above. Science builds on observation, but it is highly conceptual and many discoveries in modern physics derive from following the logical consequences of theory. For instance, the Higgs Boson particle was first predicted by following the math of field theory and now may have been verified by experiment. Locke was not an empiricist either, based on the definition given above. He is widely quoted as having said “logic was the anatomy of thought”, which would be inconsistent with empiricism.
Rand’s epistemology was Reason also. One difference is Rand’s refutation of Kant’s epistemology that emotion is a valid path to knowledge and his attempts to limit reason. However, Locke came before Kant and therefore could not have commented on Kant. Ayn Rand spends a lot of time explaining how concepts are formed and how they relate to the real world or specific instances. An example is reproduced below:
The same principle directs the process of forming concepts of entities—for instance, the concept “table.” The child’s mind isolates two or more tables from other objects, by focusing on their distinctive characteristic: their shape. He observes that their shapes vary, but have one characteristic in common: a flat, level surface and support(s). He forms the concept “table” by retaining that characteristic and omitting all particular measurements, not only the measurements of the shape, but of all the other characteristics of tables (many of which he is not aware of at the time).
It is my understanding that Rand is explaining in modern language the concepts of Aristotle or refining them. This seems consistent with John Locke’s epistemology.
This is where we see the major differences between Rand and Locke. In my brief survey of Locke’s ethics, I found two competing concepts for Locke. One is his ideas about Natural Rights and the other is a hedonistic perspective on ethics. Locke’s hedonistic perspective on ethics is in conflict with Rand’s selfishness and I would suggest in conflict with Natural Rights.
Locke’s hedonistic ethical views start with the idea that people naturally want to maximize their pleasure and minimize their pain. Locke’s Natural Rights starts with the idea that moral laws are divine, but he does state these divine laws are discoverable by reason. This second part makes it consistent with his deist metaphysics. He does not seem to reconcile these two competing ethical systems. I will focus on Locke’s Natural Rights ethics.
Locke’s formulation of Natural Rights starts with his concept of man’s rights in a state of nature. In a state of nature a man owns himself. Since he owns himself he has a right to defend himself. Man also has a right to those things he creates, which is where the right to property comes from. From these concepts the moral repugnancy of slavery follows as well as most of traditional criminal law, contracts, and property law. Locke does not explicitly state that man is an end in himself like Rand, however ownership in one’s self certainly implies this. To the extent we focus on Locke’s Natural Rights, Rand and Locke are not in conflict and I would suggest Rand’s ideas are a refinement and provide a deeper insight. Like Relativity and Quantum Mechanics expand our knowledge over Newtonian physics, but are not in conflict with it.
Ayn Rand’s ethics starts with idea that human life has value and ethics is the actions necessary to allow man to live. By live she does not mean mere existence, but thriving. Everything else she derives from an evolutionary point of view. In Galt’s speech she states,
There is only one fundamental alternative in the universe: existence or nonexistence—and it pertains to a single class of entities: to living organisms. The existence of inanimate matter is unconditional, the existence of life is not: it depends on a specific course of action. . . . It is only the concept of ‘Life’ that makes the concept of ‘Value’ possible. It is only to a living entity that things can be good or evil.
From this she defines focuses on man and his unique tool of survival, which is his mind.
In order to sustain its life, every living species has to follow a certain course of action required by its nature. The action required to sustain human life is primarily intellectual: everything man needs has to be discovered by his mind and produced by his effort. Production is the application of reason to the problem of survival. (Emphasis added)
It is reason that requires an ethics of individuality, where each person’s life has value separate from the species. This is not true of other organisms.
Man’s mind is his basic means of survival—and of self-protection. Reason is the most selfish human faculty: it has to be used in and by a man’s own mind, and its product—truth—makes him inflexible, intransigent, impervious to the power of any pack or any ruler. Deprived of the ability to reason, man becomes a docile, pliant, impotent chunk of clay, to be shaped into any subhuman form and used for any purpose by anyone who wants to bother. (Emphasis added)
Thus Rand ends up with an ethics in which each individual person is their own end. The exercise of their mind is the means by which they attain values to live. In order to achieve their values they must not only think but act. In order for this to be true, man must own himself, which is the starting point of Locke. The main difference between Locke and Rand is that Rand starts with a scientific or metaphysical basis of the nature of man to derive her ethics. Locke starts with the assumption that each man owns themselves, but Rand proves why this must be true. Her starting point is that every living organism must value its life or go extinct. Note there are ethical systems that do not value human life, so this cannot be taken as a given. We will explore these more later. The second biggest difference between Rand and Locke is she shows the central place of reason and the mind in man’s existence. Evolution had not been discovered at the time of Locke, so he could not use it to develop his ethics. Another major achievement of Rand was to debunk the supposed is-ought dichotomy.
In answer to those philosophers who claim that no relation can be established between ultimate ends or values and the facts of reality, let me stress that the fact that living entities exist and function necessitates the existence of values and of an ultimate value which for any given living entity is its own life. Thus the validation of value judgments is to be achieved by reference to the facts of reality. The fact that a living entity is, determines what it ought to do. So much for the issue of the relation between “is” and “ought.”
This issue was supposedly first raised by David Hume who lived after John Locke died. As a result, this was not a problem which Locke could address. In fairness to Hume, Rand starts with one assumption or observation in order to solve this problem, mainly that a living entity has to value its own life. As I pointed out earlier it is impossible to have a logical system that is not based on at least one assumption or observation.
I have suggested that a deeper understanding of these issues can be had by understanding that evolution is the application of the second law of thermodynamics (entropy) to living organisms. Note I am not the first person to suggest that evolution and entropy are related. Applying entropy concepts to living organisms is fraught with potential logical errors. I have attempted to avoid them in my writings, but in passing these around I have found that even my most ardent supporters found them a little difficult to get through. My most well received post along this line is Sustainability isn’t Sustainable. My other posts on point can be found below.
Life is a fight against entropy. Entropy as applied to economics is the concept of diminishing returns. It shows that inventions are the only way to overcome entropy – production without invention leads to the Malthusian Trap. As a result, this idea is consistent with Rand’s idea that the mind and reason are the primary means of survival but refines this to the understanding of the critical role of inventions.
Why is this important? Because the intellectual battle today is against those people who have combined an incorrect interpretation of entropy with Kant’s emotion driven epistemology. These people do not believe human life is valuable, in fact they believe humans are evil because they believe we accelerate the entropy of the Universe. Other living species do not harness and use energy (outside their physical body) so they do not accelerate the entropy of the universe and therefore are not evil. These people advocate the death of at least five billion people as a moral good. The basis of their morality is founded on a flawed understanding of entropy and physics. For more information see The Pseudo Scientific Basis of Environmentalism. Defeating this evil philosophy intellectually is vital to anyone who values human happiness.
Locke formulation of property rights is based on the Labor Theory of Property, which is commonly stated as when you mix your labor with natural resources you obtain property rights in your creation. This has been purposely mischaracterized and attacked by Locke opponent. Adam Mossoff has an excellent paper on point entitled Locke’s Labor Lost. Locke’s concept of property is that your productive effort crates a property right in the thing you created. One problem or misinterpretation of Locke’s theory of property rights is that labor means physical labor. This is most likely a mischaracterization, but leaves open the question of whether intellectual property such as patents is property.
Rand’s theory of property rights is that they derive from your right to life.
The right to life is the source of all rights—and the right to property is their only implementation. Without property rights, no other rights are possible. Since man has to sustain his life by his own effort, the man who has no right to the product of his effort has no means to sustain his life. The man who produces while others dispose of his product, is a slave. (Emphasis Added)
But Rand’s understanding that man’s mind is the most important tool for survival causes her to put intellectual property rights as primary.
Patents and copyrights are the legal implementation of the base of all property rights: a man’s right to the product of his mind. (Emphasis Added)
Ayn Rand’s more detailed understanding of man leads to the primacy of man’s mind and reason as his tool of survival. This leads to a deeper understanding of property rights and the primacy of intellectual property rights. My refinement of Rand’s ideas leads to the primacy of property rights for inventions.
Locke and Rand are not in conflict philosophically, but Rand provides a coherent ethics based on the fundamental nature of man and living organisms, which Locke did not. Rand’s main difference in her epistemology is to dispense with the need for a deity, even one whose only effect was to create the world and her tackling of Kant’s emotion is a path to knowledge. I see the relationship between Rand and Locke as the difference between Newton and Einstein or Algebra and Analytic Geometry; refinement not opposition. I believe that Rand’s ethics can be further refined by understanding how entropy and evolution are related. This leads to a slightly different understanding of property rights, but more importantly provides a direct argument against the religion of environmentalism and the related we are running out of natural resources Malthusian economic argument.
 Ayn Rand’s Critics, Capitalism Magazine, by JAMES VALLIANT, http://capitalismmagazine.com/2011/08/ayn-rands-critics/, accessed 3/20/13.
 The Empiricist John Locke, http://nmalbert.hubpages.com/hub/The-Empiricist-John-Locke, 3/18/13.
 “Concept-Formation,” Introduction to Objectivist Epistemology, 11–12
 The state of nature concept has been much maligned by Marxists and others. They have purposely distorted his argument into an anthropological statement. This clearly was not Locke’s intent and shows an intellectual dishonesty on the part of Marxists.
 For those people who do not know, Relativity and Quantum Mechanics are in complete agreement with Newtonian physics except in the realms of very fast systems, very high gravitational fields, and very small distances. This is part of how we know they are correct.
 It is surprising that Rand was indifferent on the idea of evolution. Her ethics is clearly based on the same concepts. I believe the reason for this is she was worried it would lead to erroneous ideas about Determinism.
 What Is Capitalism?” Capitalism: The Unknown Ideal, 16
 The Comprachicos,” Return of the Primitive: The Anti-Industrial Revolution, 84
 “The Objectivist Ethics,” The Virtue of Selfishness, 17
 This is a favorite argument of Christians. They believe it shows morality is impossible without god. This is inconsistent with both Locke and Rand.
 The Science of Economic Growth 1-3, http://hallingblog.com/the-science-of-economic-growth-part-1/, http://hallingblog.com/the-science-of-economic-growth-part-2/, http://hallingblog.com/the-science-of-economic-growth-part-3/; and
The Pseudo Scientific Basis of Environmentalism http://hallingblog.com/the-pseudo-scientific-basis-of-environmentalism/.
 “Man’s Rights,” The Virtue of Selfishness, 93
 Rand, Ayn, Capitalism: The Unknown Ideal, Signet, New York, 1967, p. 130.
In an opinion piece on Fox News entitled “America’s patent system is all wrong for today’s high-tech world”, Mr. Forbes argues that “patent holding entities that do not produce anything in the way of devices or technology are disrupting the free market and stifling innovation for consumers.” Patent pools were first created during the sewing machine patent wars in the 1850s. (For more information see Adam Mossoff’s excellent paper The Rise and Fall of the First American Patent Thicket: The Sewing Machine War of the 1850s. ) During the sewing machine wars it was found that overlapping patent rights made it impossible to produce the best sewing machine for the customer. As a result, a patent pool was created to clear these rights and allow manufactures to produce state of the art sewing machines. A patent pool is nothing more than a clearing house for people’s rights in their inventions, much like ASCAP works for copyrights. Patent pools allow for the efficient division of labor between inventors and manufactures and reduce wasteful litigation. In this sense they are similar to how title insurance works for “real” property. Patent pools were and are a free market device that allows for the efficient clearing of property rights by contract. Patent pools combine people’s right to their property with their right to contract. Both of which are part of a free market. It is disappointing that Mr. Forbes who styles himself a free market proponent has missed these obvious facts.
Mr. Forbes uses the standard rhetoric of the antitrust laws. These laws are not part of the free market, and were championed by people who opposed the free market and property rights, such as Teddy Roosevelt. The FTC’s attack on patent pools and licensing in the 1970s did more damage to the economy than the 911 attackers did. For more information on the FTC’s traitorous attack on US property rights see Jobs, the Economy and Patents.
The article states a number of other fallacies. For instance, Mr. Forbes repeats the idea that there were too many dubious software patents issued. Any objective study of this issue has shown that it is nonsense. For instance, see the paper Of Smart Phone Wars and Software Patent.
The article also asserts that patents that are about to expire necessarily have a lower market value. First of all the market determines the value of patents, not Mr. Forbes arbitrary dictates. Second, patents that are older and cover technology on which numerous other inventions are built are more valuable because they are building blocks. Algebra is not less valuable today than it was when it was discovered, it is more valuable because other areas of math build on that knowledge.
Mr. Forbes suggestion in his conclusion that patents are regulations shows a profound ignorance of property rights and the free market.
 My only complaint with Mr. Mossoff paper is that he suggests that a patent thicket existed. A patent thicket cannot exists in a free market, at least as the term was originally defined. There are a number of papers on point, if you want a link to them let me know.
 Real property in law refers to land and permanent structures. This is similar to the use of real in math to refer to real numbers. Imaginary numbers are real in that they exist as do patents, other intellectual property and personal property (Cars, tools, etc.).
Fox News has an article, Wright brothers flew 2 years after Gustav Whitehead, Researcher Claims, that suggests that Wright brothers did not invent the airplane. The article is correct; the Wright brothers invented the system that allows for controlled, powered flight. Their plane used wing wrapping, but their patent application made it clear that they could use control surfaces (ailerons, elevators, and rudders). Rudders were known before the Wright brothers. The article suggests that Whitehead was the first person to achieve powered flight, but this is clearly incorrect. There were numerous people before Whitehead and the Wright brothers who had achieved powered flight. Others had also understood the need for a rudder, but only the Wright brothers understood the need for all the control surfaces.
I decided to investigate if Whitehead had any unique control surfaces? Since most people do not understand what the Wright brother invented, this information is difficult to come by. But as best as I can tell Whitehead had a rudder and shifted his weight in the aircraft to control the plane. This was not unique when Whitehead undertook his flight. In other words Whitehead’s flight was a demonstration of what was known, not an invention.
This article is typical of the ignorance in the debate about invention and patents.
For another example of this ignorance see Did Edison Invent the Light Bulb?
I would like to believe these are innocent mistakes – but I don’t. I think they are a coordinated attack on the patent system and individual inventors. The goal of this attack is to suggest that no one invents anything and therefore the patent system is unfair and should be eliminated.
Here are the four ways to administratively challenge a patent or patent application. Note that I do not consider an ITC (International Trade Commission) case an administrative challenge. The challenges are organized from least expensive and complicated to more complicated and expensive.
35 U.S.C. §122(e)
37 CFR §1.290
For more information see http://www.uspto.gov/forms/3prsubmission_instructions.pdf.
This process only allows one to submit printed publications, including published patents and patent application along with a concise statement as to why they are relevant. Note
Third-Party Submissions must be made (1) before the later of (i) 6 months after the date the application is first published by the Office, or (ii) the date of a first Office action on the merits rejecting any claim, and (2) before the date a notice of allowance is given or mailed.
2. Ex Parte Reexamination (Determination of issue by Director)
35 USC 303(a)
The basic characteristics of ex parte reexamination are as follows:
(A) Anyone can request reexamination at any time during the period of enforceability of the patent;
(B) Prior art considered during reexamination is limited to prior art patents or printed publications applied under the appropriate parts of 35 U.S.C. 102 and 103;
(C) A substantial new question of patentability must be present for reexamination to be ordered;
(D) If ordered, the actual reexamination proceeding is ex parte in nature;
(E) Decision on the request must be made no later than 3 months from its filing, and the remainder of proceedings must proceed with “special dispatch” within the Office;
(F) If ordered, a reexamination proceeding will normally be conducted to its conclusion and the issuance of a reexamination certificate;
(G) The scope of a claim cannot be enlarged by amendment;
(H) All reexamination and patent files are open to the public, but see paragraph (I) below;
(I) The reexamination file is scanned into IFW to provide an electronic format copy of the file. All public access to and copying of the reexamination file may be made from the electronic format copy available through PAIR. Any remaining paper files are not available to the public.
3. Inter Partes Review
35 U.S.C. §§ 311-319
For More information See http://www.aiarulemaking.com/rulemaking-topics/group-2/inter-partes-review.php
Essentially this is a mini-lawsuit in front of the Patent Office that requires the challenger to present mainly publications as evidence that a patent should not have issued (35 USC 102 & 103). This process must be initiated within nine months of issuance of a patent. The decision is non-appealable.
4. Post Grant Review
35 USC § 321
This is a newly introduced process by the AIA. In general it only applies to patents filed after March 15, 2013. This process will allow the challenger a broader range of challenges than Inter Partes Review.
For More information see http://www.uspto.gov/aia_implementation/faqs_post_grant_review.jsp
Reason Magazine has released a video, entitled How Patent Trolls Kill Innovation. The magazine banner states that they support “Free Minds and Free Markets” but this video relies on the same irrational, emotion driven logic as the media. I cannot point out all the errors in this video, but below I will highlight some of the major points. Before I do that , let me show some of the sleazy attempts by Reason Magazine to use emotion and hidden assumptions to advance their argument, instead of reason and logic.
Emotion and Faith
*The video starts with the hidden assumption that patents are not property rights – faith not reason.
*The video uses the phrase “patent trolls” to immediately define who is right or wrong without actually proving their case – an emotional appeal.
*The video selects a small entrepreneur to narrate their story – using the typical liberal tactic of pretending this is a fight between a small virtuous entity against a big faceless entity. The reality is that so-called “Trolls” sue large entities much more often than small businesses. Emotional appeal, not reason.
*The video uses an “expert”, Julie Samuels, from a biased source, (Mark Cuban’s lobby group) who has no qualifications in the subject. She has a degree in Journalism and Law, which means she is NOT A PATENT ATTORNEY and does not have the technical skills to understand the underlying technology of patents. Faith not reason.
The video never asks if Austin Meyer did a patent search and clearance opinion before building and selling his software. You would not build a house without doing a title search to make sure you owned the land. Given Mr. Meyer’s surprise that he was being sued for patent infringement, he almost certainly did not undertake this simple due diligence step.
Using Other Peoples’ Property
Mr. Meyer complains that he may have to pay the patent holder for the life of his product. Yes, that is what happens when you use someone else’s property. This is like a steel manufacturer complaining that they have to continue to pay for coal or pay rent for a building they do not own.
Note that the underlying technology is critical to Mr. Meyer getting paid, but he doesn’t want to pay for it.
The anti-patent crowd always complains that these suits are brought in East Texas. If someone refused to pay you rent for staying in your house, would you chose the slowest court in the country or a faster court? Federal Court for the Eastern district of Texas has been one of the fastese to bring invention squatters to justice.
The video makes the implicit assumption that non-practicing entities (NPE) are evil. However, Edison was a NPE, as was Tesla, as was almost every great inventor in the last 200 years, as our most major corporations, as most of our Universities and Government labs. Our Founders looked at the issue of requiring inventors to practice their invention in order to keep their patent and rejected it. They voted for a FREE MARKET system where people could be independent inventors, just like writers do not have to be publishers in order to obtain or keep their copyrights. This is consistent with Adam Smith’s division of labor theory.
The video takes the stand that if you buy the patent rights instead of being the inventor,this is somehow evil. First, all corporations buy their patents – often by paying wages. Corporation don’t invent so they have to buy their patents. Second, we do not argue just because you didn’t build your house you cannot rent it out .
Mr. Meyer states in the video that the technology he wants to use is old, from the 80s. If this were true, Mr. Meyer would be free to use it. But, instead, he wants the updated version of the technology that ensures he gets paid, he just doesn’t want to pay for it.
The Patent Should Not Have Issued
Neither Mr. Meyer nor the so called expert, Julie Samuels, are patent attorneys. They are NOT QUALIFIED to evaluate the scope of the claims of a patent. It is interesting how lay people (I include attorneys who are not patent attorneys in this definition) believe they can just read a patent and evaluate it, but they would never try to do the same thing with a Warranty Clause in a contract or an Indemnity Clause. No one would believe a Journalism major or an attorney (non-technical) is qualified to comment on software technology; but somehow they are qualified to comment on patents on software? This is like asking a plumber to comment on the design of a Nuclear Power Plant.
Patents and the Free Market
Patents are property rights, just like a property right in a farm. The basis for all property rights is creation. Inventions are clearly creations. Property rights are part of the free market. Those countries that are the freest economically have the strongest patents laws, are the most innovative, and have the highest standards of living. REASON MAGAZINE is pushing a point of view that is much more consistent with a Marxist’s labor theory of value than Capitalism.
REASON MAGAZINE is neither promoting REASON or FREE MARKETS in posting this video.
DYSTAR TEXTILFARBEN GMBH & CO DEUTSCHLAND KG, Plaintiff-Appellee, v. C.H. PATRICK CO., and Bann Quimica LTDA, Defendants-Appellants, 464 F.3d 1356, 1368 (Fed. Cir. 2006) illustrates the problem of non-technical, non-patent attorney judges on the CAFC. I suspect this case will cause more and more problems.
Indeed, we have repeatedly held that an implicit motivation to combine exists not only when a suggestion may be gleaned from the prior art as a whole, but when the “improvement” is technology-independent and the combination of references results in a product or process that is more desirable, for example because it is stronger, cheaper, cleaner, faster, lighter, smaller, more durable, or more efficient. Because the desire to enhance commercial opportunities by improving a product or process is universal — and even common-sensical — we have held that there exists in these situations a motivation to combine prior art references even absent any hint of suggestion in the references themselves. In such situations, the proper question is whether the ordinary artisan possesses knowledge and skills rendering him capable of combining the prior art references.
I guess you can obtain a patent when your invention is not more desirable, one that is weaker, more expensive, slower, heavier (unless that would make it better), less durable, or less efficient. Inventors need to focus on inventions that have reduce their commercial opportunities, according to these judges.
Do these people actually read what they write? Do they understand the logical implications of their statements? The judges on this case were Michel, Raider and Schall. Not surprisingly, none of the judges who wrote this have a technical background and none are patent attorneys.
What the hell does “the ‘improvement’ is technology-independent” mean? Not surprisingly, there is no explanation of this phrase in the case.
This is just one more example of why we should not allow non-patent attorneys on the CAFC – or at least they should have to take a course on logic as it applies to patents and inventions.
- step back on Is 35 USC 101 Judged by the Claims?: CLS Bank v. Alice Corp CAFC en banc decision: Nation of Men
- step back on New Zealand to Outlaw Patent on Software
- step back on New Zealand to Outlaw Patent on Software
- dbhalling on New Zealand to Outlaw Patent on Software
- dbhalling on New Zealand to Outlaw Patent on Software
- Is 35 USC 101 Judged by the Claims?: CLS Bank v. Alice Corp CAFC en banc decision: Nation of Men
- CAFC Makeup: May 16, 2013
- New Zealand to Outlaw Patent on Software
- Hayek vs. Rand: Patents and Capitalism
- WHY THERE IS NO GLOBAL WARMING CONSENSUS: Guest Post
- Earth Day: Environmentalists are Evil
- Myriad Oral Argument: Supreme Court Analogies show Supreme Ignorance
- Supreme Court Hears Myriad Case: The Myth You Can Patent Human Genes
- CLS Bank v. Alice: 35 USC 101 Presumption of Validity
- Margaret Thatcher Patent Attorney: You Did Build That