Category: Patents
Darin Gibby, a patent attorney, has written the book Why America Has Stopped Inventing?. Let me first say that I agree with Mr. Gibby’s premise that America has quit inventing and that it is hurting our economy.
The book has an excellent review of the history of how patent law developed in the US, with the 1836 Patent Act playing the hero of the book. The Act was modeled on the patent statute in Venice in the 1400s, according to Gibby. This leads to an explosion of invention in the United States and in the economy. This story is told through the lens of the great inventors of the time, including Morse, Colt, and Goodyear. These stories are well told and compelling. The book is a fount of knowledge about the early history of inventing and patent law in the United States.
The book argues that the change in the patent laws resulted in a brain drain from England and that there was an explosion of invention in the US. The book states:
The rate of innovation as determined from the number of patents increased six times from 1840 to 1850, nine times from 1850 to 1860, and 13 times from 1860-1870, as compared to the increase in population.
The book claims that our per capita rate of inventing is less than half of what it was in the 1860s. The US rate of inventing has decreased over the last decade.
The conclusion of the book is that our patent system is broken and this is hurting innovation and the US economy. While I generally agree with the conclusion, I believe the premise could have been better supported. Also, I think it is impossible to talk about the lack of invention without also mentioning the restrictions on raising capital by inventors. Perhaps the biggest impediment to raising capital has been Sarbanes Oxley. This is not mentioned at all in the book.
The biggest downfall of the book is that the author calls a patent a monopoly. A patent is not a monopoly. 35 U.S.C. 261 makes it clear that a patent is personal property. Patents have all the attributes of property and none of the attributes of a government monopoly. Property rights arise from of the act of creation – but for the creator the item would not exist, therefore they have a property right in the item. Inventing is creating a new product, process, or service that did not exist before. The fact that a patent attorney could make this mistake is hard to believe, but more importantly I believe this completely undermines the thesis of the book.
The book has a number of specific proposals for fixing the patent system.
Complex Patent System: The book states that the biggest reason for our inventive decline is the overly complex, over administered, and underfunded patent system. I agree that our patent system has become overly complex, too expensive, and overly officious. The author believes this is the result of a judicial reaction to the Wright brothers’ patent, which he believes was too broad. Here I completely disagree with the author. The Wright brothers’ patent broadly claimed the ability to control an airplane by “having lateral marginal portions capable of movement to different positions above and below the normal plane” of the wing.” (USPN 821393) The author believes the Wrights only invented wing warping. I disagree. The Wright brothers clearly showed that any method of altering the flow of air over the wing could be used to control the airplane. If the Wright brothers had been limited to the author’s interpretation, then Glenn Curtis and others would have been able to free load off of the Wright brothers’ invention.
The author also argues that the growth of the airplane industry was retarded by the Wright brothers attempting to enforce their patent. This argument is also made by anti-patent forces and is without any logical basis. We have no idea how long it would taken for someone else to have created a controllable airplane if the Wright brothers had not done so. It is just as likely that, but for the Wright brothers it would have taken years for someone else to invent control surface for airplanes. If there was any delay in the development of the airplane, it was the fault of Glenn Curtis and others who refused to pay the Wright brothers for their invention.
I think it is also inexcusable that the book does not mention the detrimental effects of antitrust law on patents. The anti-patent backlash in the early 20th century was not a result to the Wright brothers patent, but to the rise of antitrust law. The author’s lack of understanding that patents are a property right and not a monopoly has blinded him to this simple fact.
Require Models: The author wants us to return to a patent system that requires models. He suggests that computer models would be acceptable, so we would not have the problem of storing these models. The author’s main reason for this requirement is based in the belief that the Wright brothers, Seldon, Bell and others received overly broad patents or really were not the true inventors. In the case of Bell, the author suggests that Bell’s attorney copied Elisha Grey’s patent application by hand into Bell’s application upon filing the Bell application. I cannot comment directly on these assertions. But the book does not even mention that there was an interference between Bell, Grey, and Edison (see Bell). All of these inventors had top patent attorneys and I seriously doubt that hand copying part of another person’s application would have survived very long in an interference.
The author seems to want to use models to limit the scope of the claims. This would allow inventors who improved another person’s invention not to have to pay royalties for using their underlying invention. I don’t see any advantage to this system and I believe the author has fallen for the anti-Wright brother, and anti-Bell propaganda.
Abolish Obviousness Standard and Doctrine of Equivalents: The author makes a strong case for abolishing the obviousness standard, which I agree with. He explains that the obviousness standard is subjective and unworkable. He suggests that the doctrine of equivalents and the obviousness standard are opposing ideas used to overly broaden or overly narrow the rights of an inventor. I did not initially agree with the author, but he made strong points in defense of his thesis. Specifically, he argues that eliminating the obviousness standard would allow inventors to craft their claims to correctly define their invention. As a result, he believes that it would be unfair for inventors to then be able to expand/change the scope of their invention in litigation. The only problem with the author’s argument is the doctrine of equivalents has been dead for all practical purposes for at least twenty years.
The author also makes the excellent point that eliminating the obviousness standard would significantly reduce the backlog of unexamined patents. His reasoning is that moving to an objective system of patentability would eliminate a lot of wasted effort on the part of the Patent Office and Applicants.
Cut the Current Twenty-Year Patent Term in Half: I disagree with the author and I think his point of view is based on the erroneous belief that patents are a monopoly. Shortening the term for patents is likely to reduce the value of investing in new inventions. This would decrease the rate of new technologies being created and introduced into the economy. The result would be slower economic growth and lower per capita incomes.
Curtail the Continuation Practice: Continuations are critical for start-up companies to reduce their cost. While I agree that eliminating the obviousness standard would reduce the cost of filing patent applications, this advantage is unlikely to be enough to protect our highly innovative start-up companies.
First to File System: The author buys into the absurd idea that eliminating interferences is going to free up resources at the Patent Office. With less than 100 interferences a year, this is very unlikely to occur. He also argues that this will be good for individual inventors and startups. While he is correct that interferences are too expensive for individual inventors (start-ups), the solution is not to subvert the Constitution and award exclusive rights to the first person to file instead of the inventor. The solution to this problem is to reduce the absurd cost of all federal litigation.
There have been several studies on the effectiveness of changing from a first to invent system to a first to file. All these studies have shown a decrease in patenting by the most innovative groups in our country – namely individual inventors and start-ups.
Conclusion: Overall there are many important points in this book. But the author’s incorrect labeling of a patent as a monopoly undermines many of the most important points he is trying to make.
The phrase “I am my brother’s keeper” is used to explain a moral goal or imperative. The word ‘brother’ does not mean your biological brother, but those people in your community, or country, or really every other human being in the world. The word ‘keeper’ is used to mean that you have a moral responsibility to help every other human being in the world. This responsibility means that you are to put their needs before your interests and your moral goal is that people exist to serve others. In other words, the phrase ‘I am my brother’s keeper’ enshrines SLAVERY as a moral goal. Slavery is the condition in which you have no right to exist for yourself, your only right to exist is to serve others. Note that all 
slaves need a master and as a result it is no surprise that President Obama has used this phrase to explain his policies as he is an avowed socialist and wants to be our master.
Wherever this moral goal has been tried it has resulted in human suffering, misery, disease, famine, death, and torture. North Korea is the country that most encapsulates this moral goal today and it is a living hell. The Soviet Union and Communist China also tried to implement this moral imperative and it resulted in the largest genocides in the 20th century, resulting in the death of over 100 million people. Attempting to following this moral code also resulted in the Dark Ages under the direction of the Catholic Church. It is also why the Christian right is often ineffective at countering socialists arguments, since they accept the same moral goal. These bad outcomes do not occur because the wrong people are in charge, they occur because slavery is immoral and this is the logical result of following an immoral goal.
The opposite moral imperative to ‘I am my brother’s keeper’ can be found in our Declaration of Independence – namely the RIGHT to Pursue One’s Own Happiness.
We hold these truths to be self-evident, that all men are created equal, that they are endowed by their Creator with certain unalienable Rights, that among these are Life, Liberty and the pursuit of Happiness.
This right to pursue your own happiness is the exact opposite of slavery. It states that no one has the right to enslave you (or anyone) morally or legally. Wherever this moral ideal has been tried it has always resulted in human happiness, abundance, technological innovation, increasing life spans, increase health care, and yes fewer environmental problems. There is no contradiction between what is moral and economic abundance and human happiness. This has not occurred because the right people have been in charge, it is the result of pursuing that which moral, namely FREEDOM.
Why should a blog directed to patents and inventions care about such a subject? Because this idea of ‘I am my brother’s keeper’ has been raised in the cases Association of Molecular Pathology v. USPTO (which was original called ACLU v. Myriad) and in Mayo v. Prometheus and it is used by opponents of patents. They all argue that the inventor has no right to his invention and the only reason we allow them to invent is to serve their fellow man. In the ACLU case this argument was re-crafted as property rights should not stand in the way of science.
Slavery is immoral and a moral goal of slavery, even if it is suppose to be voluntary, is immoral. Those who push the moral goal of slavery are advocating human misery, death, famine, and genocide.
MERRY CHRISTMAS
William W. Cochran and Christopher R. Benson & Michael C. Elmer have put together a superb paper on the history of patent damages. If you want a copy, please contact Bill Cochran.
The paper discusses how the statutory language of awarding damages has changed over time and the evolution of injunction relief. Below I will quote the historical statutes from the paper. But before I do that I want to point out three problems with the presently available relief for patent infringement.
1. Injunctions Are Optional Upon a Finding of Infringement
2. No Enhanced Damages for Purposeful Negligence.
3. Reasonable Royalties are Never Adequate Compensation.
1. Injunctions Are Optional Upon a Finding of Infringement
The patent right is the right to exclude. It is the height of absurdity to win a patent lawsuit and not obtain an injunction. If I win a lawsuit then I should be able to enforce my right, which is the right to exclude. You cannot exclude someone from trespassing on your property in the past. Thus the right to exclude means the right to exclude in the future or an injunction.
Unfortunately, this bit of illogic is brought to you by the statute 35 USC 283, which states that injunction may be granted in accordance with the principles of equity. This means in theory that you can win a patent lawsuit and still not be able to enforce your right to exclude.
The law should be changed so that an injunction should issue as part of any suit in which a patent is found to be infringed.
2. No Enhanced Damages for Purposeful Negligence.
The treble damages provision for patent infringement is only for ‘willful’ infringement. This means that companies can practice purposeful negligence and the worst case outcome for this is to pay the patent holder the damages they caused. See point 3 below. In addition, the In re Seagate Techs., LLC, 497 F.3d 1360 (Fed. Cir. 2007) (en banc) overturned the longstanding principle that an infringer must exercise a duty of due care. As a result, the enhanced damages provision has become meaningless. An infringer has no duty of care to not infringe and can then defeat any charge of willfulness by purposeful negligence. The threat of enhanced damages is now almost meaningless and provides no deterrent effect to keep people from infringing patents.
The law should be changed so that enhanced damages should be available in the case of negligent infringement. This is the only way to protect our inventors for technology thieves.
3. Reasonable Royalties are Never Adequate Compensation.
In any lawsuit there is a non-zero chance that you will win even if you are guilty. If the damages are found to be a reasonable royalty, then the logical choice is always to negligently infringe a patent. In the worst case the infringer will only pay what they would have had to pay the patent holder if they had negotiated a license and there is a chance they may win the lawsuit incorrectly and pay nothing. Now, you may object that if they are forced to pay lost profits as damages this is a real deterrent. This is true, but the reality is that it is very hard to prove lost profit and the patent holder must show that ‘but for’ the infringing activity they would have made the sale. In the case of a large company infringer and a small company patent holder, the patent holder is likely to end up with even less damages under the lost profits calculation. As a result, many large companies pursue a policy of efficient infringement. This policy is morally reprehensible, but it does make economic sense.
The law should be changed so that the minimum damages is reasonable royalty plus some percentage amount such as 20% to provide an adequate protection for America’s inventors.
Below are some of the interesting highlights from the excellent paper PATENT DAMAGES by Bill Cochran.
Act of 1790
The first patent act, the Patent Act of 1790 provided that an infringer must:
…forfeit and pay to the patentee such damages as should be assessed by a jury, and moreover, to forfeit to the person aggrieved the infringing machine.
Act of 1793
Three years later, this was changed in the new Act of 1793, §5. It was a significant departure from the Act of 1790, and a significant departure from the common law of torts. This new Act (§)5 provided:
That if any person shall make, devise, and use or sell a thing so invented, the exclusive right of which has been secured to any person by patent, without the consent of the patentee . . . the person so offended shall forfeit and pay to the patentee a sum that shall be at least equal to three times the price for which the patentee had usually sold or licensed to other persons the use of said invention.
Act of 1800
The Act of 1800 removed the requirement that the patentee had to be selling a product and recognized the value of maintaining exclusivity and not just liability. Thus, the new Act of 1800 returned to the concept of damages, requiring the infringer to:
…forfeit and pay to the patentee a sum equal to three times the actual damages sustained by such patentee.
The Act of 1819 §(c) read:
. . . that the Circuit Courts of the United States shall have original cognizance, as well in equity as at law, of all actions, suits, controversies, and cases arising under any law of the United States, granting or confirming to authors or inventors the exclusive right to their respective writings, inventions, and discoveries; and upon any bill in equity, filed by any party aggrieved in any such cases, shall have authority to grant injunctions, according to the course and principles of courts of equity, to prevent the violation of the rights of any authors or inventors secured to them by any law of the United States, on such terms and conditions as the said courts may deem fit and reasonable
This appears to be the first instance that an “injunction” could be obtained against an infringer.
The Act of 1836, §14, read as follows:
Whenever in an action for damages for making, using, selling the thing patented . . . a verdict shall be rendered for the plaintiff, it shall be in the power of the court to render judgment for any sum above the amount found by the verdict as the actual damages sustained by the plaintiff, not exceeding three times the amount thereof.
Act of 1870
. . . and the court shall have power, upon a bill in equity filed by any party aggrieved, to grant injunctions according to the course and principles of courts of equity, to prevent the violation of any rights secured by patent, on such terms as the court may deem reasonable; and upon a decree being rendered in any such case for an infringement, the claimant [complainant] shall be entitled to recover, in addition to the profits to be accounted for by the defendant, the damages the complainant has suffered thereby, and the court shall assess the same or cause the same to be assessed under its direction, and the court shall have the same powers to increase the same in its discretion that are given by this Act to increase the damages found by verdicts in actions upon the case…
The Patent Act of 1922 stated:
. . . and upon a decree being rendered in any such action for infringement the complainant shall be entitled to recover, in addition to the profits to be accounted for by the defendant, the damages the complainant has sustained thereby, and the court shall assess the same or cause the same to be assessed under its direction.
If on the proofs it shall appear that the claimant has suffered damage from the infringement or that the defendant has realized profits therefrom to which the complainant is justly entitled, but that such damages or profits are not susceptible of calculation and determination with reasonable certainty, the court may, on evidence tending to establish the same, in its discretion, receive opinion or expert testimony, which is hereby declared to be competent and admissible, subject to the general rules of evidence applicable to this character of testimony; and upon such evidence and all other evidence in the record the court may adjudge and decree the payment by the defendant to the complainant of a reasonable sum as profits or general damages for the infringement…
The Act of 1946 reads as follows, now being numbered as 35 USC §70:
[after authorizing injunctions, the first paragraph continues] …and upon a judgment being rendered in any case for an infringement the complainant shall be entitled to recover general damages which shall be due compensation for making, using or selling the invention, not less than a reasonable royalty therefor, together with such costs, and interest, as may be fixed by the court. The court may in its discretion award reasonable attorney’s fees to the prevailing party upon the entry of judgment on any patent case.
The court is hereby authorized to receive expert or opinion evidence upon which to determine in conjunction with any other evidence in the record, due compensation for making, using, or selling the invention, and such expert or opinion evidence is hereby declared to be competent and admissible subject to the general rules of evidence applicable thereto.
The court shall assess said damages, or cause the same to be assessed, under its direction and shall have the same power to increase the assessed damages, in its discretion, as is given to increase the damages found by verdicts in actions in the nature of actions of trespass upon the case; but recovery shall not be had for any infringement committed more than six years prior to the filing of the complaint in the action.
This is the first statement about reasonable royalties.
Act of 1952
Section 284 states:
Upon finding for the claimant the court shall award the claimant damages adequate to compensate for the infringement but in no event less than a reasonable royalty for the use made of the invention by the infringer, together with interest and costs as fixed by the court.
When the damages are not found by a jury the court shall assess them. In either event the court may increase the damages up to 3 times the amount found or assessed.
The court may receive expert testimony as an aid to the determination of damages or of what royalty would be reasonable under the circumstances.
However, the decision in In re Seagate overturned a longstanding principle that an infringer must exercise a duty of due care.
Present statute
§283. Injunction
The several courts having jurisdiction of cases under this title may grant injunctions in accordance with the principles of equity to prevent the violation of any right secured by patent, on such terms as the court deems reasonable.
As stated by the Federal Circuit in Smith International, Inc. v. Hughes Tool Co., 718 F.2d 1573 (Fed. Cir.), cert. denied, 464 U.S. 996 (1983):
Without this injunctive power of the courts, the right to exclude granted by the patent would be diminished, and the express purpose of the Constitution and Congress, to promote the progress of the useful arts, would be serious undermined. The patent owner would lack much of the “leverage,” afforded by the right to exclude, to enjoy the full value of his invention in the market place. Without the right to obtain an injunction, the right to exclude granted to the patentee would have only a fraction of the value it was intended to have, and would no longer be as great an incentive to engage in the toils of scientific and technological research.
In eBay v. MercExchange, L.L.C., 547 U.S. 388 (2006) , the Supreme Court made it clear that obtaining injunctions in patents is no different from obtaining an injunction is any other civil matter relying upon equitable relief. The plaintiff must prove four factors:
- The Plaintiff will suffer irreparable harm without an injunction.
- The remedies at law, which are money damages, are inadequate to compensate for the injury.
- Considering the balance of hardships between the plaintiff and the defendant, an injunction is warranted.
- The public interest would not be disserved by issuing an injunction.
PatentlyO reported the following hypothetical.
In Mayo v. Prometheus, the Supreme Court is again addressing patentable subject matter. During oral arguments, Justice Breyer came-up with a hypothetical invention to help him draw the line on patentable subject matter.
JUSTICE BREYER: Suppose I discover that if … someone takes aspirin … for a headache and, you know, I see an amazing thing: if you look at a person’s little finger, and you notice the color [indicates that] you need a little more, unless it’s a different color, you need a little less. Now, I’ve discovered a law of nature and I may have spent millions on that. And I can’t patent that law of nature, but I say: I didn’t; I said apply it. I said: Look at his little finger.
MR. SHAPIRO: Sure.
JUSTICE BREYER: Okay? Is that a good patent or isn’t it?
MR. SHAPIRO: No … Well, because you — you’ve added to a law of nature [to] just a simple observation of the man’s little finger.
First of all taking aspirin is not a law of nature. The law of nature would be how the body reacts to aspirin, but the process of taking aspirin is not a law of nature. If you use this information to observe whether someone is taking too much or too little aspirin, then you have applied that “law of nature” to a human problem. Namely, how to know how much aspiring one should take for a headache.
The Supremes struggled to find a hypothetical to understand 35 USC 101 according to the reports. Here is a simple 35 USC 101 test that even they should be able to apply correctly.
Anything that man creates to solve an objective problem is an invention. If a device/service is not found in nature separate from man then it is an invention. For example, the ability to create fire or harness it is an invention of man. No other animal has the ability to create or harness fire. Man did not have some sort of inherent knowledge of how to create or harness fire, so creating fire is an invention.[1]
Applying this information to the above hypothetical, aspirin is created by man. It does not exist separate from man, so this hypothetical is clearly within 35 USC 101. Taking aspirin is not a part of nature. Observing the effects of taking aspirin is not a part of nature.
Mayo’s argument in this case boils down to patents should not exist, or at least should not be apply to Mayo.
[1] However, it is no longer novel and therefore you could not patent for creating fire.
The USPTO just issued new rules for ex-parte Appeals. These changes appear to be an honest attempt to reduce the unnecessary paper work and formalities associated with Appeals. They also attempt to deal with Examiner’s introducing new grounds of rejections during appeals. However, they do not deal with the churning of Appeals where the PTO decides to reopen prosecution and this process repeats itself several times with no resolution for the applicant. Here are the notable changes according to the USPTO:
The notable changes to the rules are: (1) The Board will presume that an appeal is taken from the rejection of all claims under rejection unless cancelled by an amendment filed by appellant (final Bd.R. 41.31(c)); (2) the Board will take jurisdiction upon the filing of a reply brief or the expiration of time in which to file such a reply brief, whichever is earlier (final Bd.R. 41.35(a)); (3) the requirements to include statements of the status of claims, status of amendments, and grounds of rejection to be reviewed on appeal and the requirements to include an evidence appendix and a related proceedings appendix are eliminated from the appeal brief (final Bd.R. 41.37(c)); (4) the Board may apply default assumptions if a brief omits a statement of the real party-in-interest or a statement of related cases (final Bd.R. 41.37(c)(1)(i) and (ii)); (5) for purposes of the examiner’s answer, any rejection that relies upon Evidence not relied upon in the Office action from which the appeal is taken (as modified by any advisory action) shall be designated as a new ground of rejection (final Bd.R. 41.39(a)(2)); (6) an appellant can await a decision on a petition seeking review of an examiner’s failure to designate a rejection in the answer as a new ground of rejection prior to filing a reply brief (final Bd.R. 41.40) and thereby avoid having to file a request for extension of time in which to file the reply brief; and (7) the examiner’s response to a reply brief is eliminated.
Today is Mark Twain’s 176th birthday, which makes it a perfect time to review some of his thoughts on the patent system. Mark Twain wrote extensively about the patent system. In the book, Innocents Abroad, he explains the virtues of our country and moral decay of Europe by contrasting the patent system to the preservers of art. Remember, Twain was first and foremost an artist and he held this opinion. He states:
The Popes have long been the patrons and preservers of art, just as our new, practical Republic is the encourager and upholder of mechanics. In their Vatican is stored up all that is curious and beautiful in art; in our Patent Office is hoarded all that is curious or useful in mechanics. When a man invents a new style of horse-collar or discovers a new and superior method of telegraphing, our government issues a patent to him that is worth a fortune; when a man digs up an ancient statue in the Campagna, the Pope gives him a fortune in gold coin. We can make something of a guess at a man’s character by the style of nose he carries on his face. The Vatican and the Patent Office are governmental noses, and they bear a deal of character about them. (Emphasis added)
In the last fifteen years we have extended the copyright term to be almost infinite, we have criminalize willful copyright infringement and we have had numerous government programs to protect intellectual property, which always means copyrights and perhaps trademarks, but not patents. Alternatively, we have spent the last fifteen years stealing the fees inventors pay to the patent office, we have forced the publication of U.S. inventors’ patent applications for the world to see and steal, we have vilified the actions of our greatest inventors such as Edison, calling them trolls and some have even suggested that Edison really made incremental improvements on other people’s inventions, and called inventor’s monopolists. Twain would be horrified by our capitulation to Europe. It says something about our character that we are following in the Popes footsteps.
Deadly Monopolies: The Shocking Corporate Takeover of Life Itself–And the Consequences for Your Health and Our Medical Future, by Harriet A. Washington
There have been several books suggesting that you can patent human genes or parts of humans. The latest is entitled Deadly Monopolies, which appears to be a rehash of David Koepsell’s Who Owns You?: The Corporate Gold-Rush to Patent Your Genes. The first person to raise this issue was Michael Crichton. None of these people are patent attorneys and they all misinterpret the claims of patents to be broader than they are. We know Ms. Washington does not understand patents, because she mislabels them as a monopoly in the title of her book. Ms. Washington also does not understand property rights. Patent are property rights and you obtain title to your invention because you created something. Monopolies are granted based on political decisions.
In Washington’s blog, she suggests that Myriad Genetics has patented a part of John Moore’s body. This is clearly incorrect on its face. The patent is for an isolated form of a gene that is an indicator of breast cancer. The critics of gene patents have made this outrageous accusation that a patent covers a part of your body. With the implication that just by being alive you are violating their patent. This is complete nonsense, but great propaganda. It appears that Ms. Washington really adds nothing to the discussion, but is just rehashing points that have already been made and proven wrong.
The Court of Appeals for the Federal Circuit when ruling on the Myriad case provided the following insights “Isolation of a DNA sequence is more than separating out impurities: the isolated DNA is a distinct molecule with different physical characteristics than the naturally occurring polymer containing the corresponding sequence in nature.” (P. 11 Slip Opinion – Judge Moore) He further states, “I decline to extend the laws of nature exception to reach entirely manmade sequences of isolated DNA, even if those sequences are inspired by a natural template.” P. 14 Moore. He further explains the difference between this case and purified vanadium or uranium as, “Given the chemical differences highlighted by Judge Lourie’s opinion and discussed supra, the mere fact that the larger chromosomal polymer includes the same sequence of nucleotides as the smaller isolated DNA is not enough to make it per se a law of nature and remove it from the scope of patentable subject matter. The actual molecules claimed in this case are therefore not squarely analogous to unpatentable minerals, created by nature without the assistance of man.” P. 15 Moore. Harriet Washington, seems to have ignored all this information or simple does not understand the science and certainly does not understand the patent law. I attempted to find out about Washington’s background to determine if she had a scientific background. The only information I could find was that she had been a medical ethicist at Harvard, but nothing about her education.
While I have not read the book, Deadly Monopolies: The Shocking Corporate Takeover of Life Itself–And the Consequences for Your Health and Our Medical Future, by Harriet A. Washington, all indications are that the author does not understand the science or the law involved in this topic. Her statements on her blog that gene patents spur profits not cures is example of the shallowness of her research. See David E. Adelman & Kathryn L. DeAngelis, Patent Metrics: The Mismeasure of Innovation in the Biotech Patent Debate, 85 Tex. L. Rev. 1677, 1681 (2007), as clearly showing biotech patents have resulted in increase innovation. Washington’s book is not about science, the law, or the truth, it is a propaganda attack on patents, property rights, and the pharmaceutical industry.
According to a Fox News story, President Obama: U.S. Gotten a Bit “Lazy” on Attracting Businesses, “President Obama said that the United States has gotten a “little bit lazy” when it comes to bringing in new businesses in to the states”. He said some of the advantages of the US are its stability, and its innovative free market culture.
I guess I am just a little confused how a 2300 page health care law provides stability or how the government taking over 1/7th of the economy is free market? How is a patent law (AIA) written by large companies to entrench their position furthering our innovation? How does Dodd Frank also over 2300 pages further the free market? Or contribute to stability? How does interfering with Boeing’s decision to move to South Carolina result in stability? How is that a free market?
Of course Obama is such a narcissist that he would never look at his own idiotic policies and how they are causing the slowdown in American business. It is doubtful that Obama really wants the US to be successful. So, his speech was really an exercise in DOUBLESPEAK. 1984 predicted the future it just took twenty five years longer than Orwell thought.
Donald Trump is fond of saying that China is stealing our economy from us and he attributes this to China manipulating its currency. Here is an article, Counterfeit Chinese Parts in US Military Weapons, that would appear to support his point of view. The article explains that counterfeit Chinese parts are found in U.S. military weapon systems and the implication is that this is happening even more widely in the US economy. Pat Choate’s excellent book Hot Property: The Stealing of Ideas in an Age of Globalization, documented this problem. Counterfeit products are not the result of currency manipulation but lax enforcement of intellectual property rights. Our politicians talk a lot about protecting our intellectual property, but ten years ago they required U.S. inventions be published for all the world to see and steal at 18 months from filing a patent application. They passed the America Invents Act this year which made it easier to challenge patents issued in the U.S. and effectively eliminated the one year grace period. Congress is a bunch of hypocrites when it comes to intellectual property, they only want to protect Hollywood and software copyrights. They have done everything in their power to undermine our inventors, who are much more important to our economy than Hollywood.
The U.S does have a legitimate complaint with China, but it is not currency manipulation it is the theft of our Intellectual Property – particularly our inventions. Here is what Congress should do to revive our economy and protect our inventors.
1) Repeal the publication requirement for patents
2) Demand that China and other countries require reciprocity for patents. This means that if you receive a patent in the U.S. it is enforceable in China and vice versa without the cost of filing a patent application in every country around the world. The present situation with respect to patents is exactly the position that existed with respect to copyrights in the 1860s. We realized that it made no sense for copyrights and it makes no sense for patents to only apply in each country.
3) Fully fund the Patent Office. It now takes from 3 to 10 years to obtain a patent. This is severely hurting our technology startup companies. When combined with the publication requirement it has allowed China and the rest of the world to steal our technology.
4) Apply tariffs to those sectors of Chinese goods that have consistently violated U.S. intellectual property rights.
The Supreme Court will hear arguments in this case on December 8, 2011. This case is about whether Prometheus’ patents (6,355,623 & 6,680,302) claim patent eligible material under 35 USC 101. Section101 is a bit obscure, but logically anything that is not found in nature (separate from man) and that solves an objective problem is an invention. Ultimately, section 101 is a threshold question of whether the subject of the patent is an invention. The novelty requirement, section 102, is not asking whether the subject of the patent is an invention, but whether the applicant is the inventor. The nonobviousness requirement, section 103, is really the outgrowth of judicial activism (see Non-Obviousness: A Case Study in Judicial Activism). The only logical basis for the nonobviousness requirement is that you have to be more than just the inventor to deserve a patent. This is a violation of the Constitution, Article 1, Section 8, Clause 8, but I digress. Section 112 of the statute is about whether the applicant fulfilled their part of the social contract. The only question before the Court is whether the patents are directed to an invention.
The patents claim methods for determining the optimal dosage of thiopurine drugs used to treat gastrointestinal and non-gastrointestinal autoimmune diseases. Thus, the questions in this case are whether determining optimal dosages of thiopurine drugs to treat autoimmune diseases exists in nature separate from man and whether this solves an objective problem? Clearly, determining optimal dosages does not exist in nature for any drug and the patent solves the objective problem of determining the optimal dosages of thiopurine drugs for autoimmune diseases. CASE DISMISSED. This case is straight forward and should never have been granted certiorari by the Supreme Court. I have previously written about this case at Mayo v. Prometheus – Supreme Court Grants Cert (Again).
I consider it bad news that the Supreme Court granted certiorari in this case, because they have gotten so many patent cases wrong in the last five years. Their understanding of patent issues would make a first year patent associate blush. However, the last patent case they decided, Stanford University v. Roche Molecular Systems, showed some signs for hope.
Mayo has attempted to obscure the issues, by blurring the differences between section 101 & sections 102 & 103. For instance “Mayo argues that the claims’ physical steps should be disregarded because they are old in the art.” (p. 1 Prometheus Brief) Whether these steps are new or old is totally irrelevant to the 101 question. This question is only relevant to the question of novelty and non-obviousness. But even with respect to the question of novelty and non-obviousness this statement is non-sense. It is a violation of both logic and legal precedent. Every invention ever created is a combination of known elements (steps) because of conservation of matter and energy – you cannot create something from nothing. From a legal precedent point of view, this is an attempt to reinstitute the point of novelty test, which was always nonsense because it violates conservation of matter and energy.
Mayo also attempts to argue that Prometheus has patented a law of nature. This is absurd – the optimal dosage for an individual human being of thiopurine drugs, is a law of nature? Admittedly, I am not an expert in pharmacology but there is no way that determining an individual dosage for a specific person is a law of nature. Mayo knows this is non-sense, so they attempt to make the argument respectable by again disregarding parts of the claims. A law of nature would be something like the absorption rate of a drug into a cell is based on certain factors. An application of that law of nature, for instance to tailor a drug so it has a faster or slow absorption rate is an invention.
Mayo then puts forth the fraudulent argument that every patent should be evaluated by the courts as to whether it “promotes science and the useful arts.” First, of all the preamble to Article 1, Section 8, Clause 8 is not limiting and never was meant to be limiting. It is standard knowledge to every patent attorney that preambles are not meant to be limiting. The Constitutional clause uses the word “RIGHT” and by right the Founding Fathers meant “natural rights”, which are not subject to some utilitarian purpose. The right to Life, Liberty, and the Pursuit of happiness are not subject to some utilitarian goal, they are unalienable – inherent in being a human being. The fraudulent nature of this argument can be seen in the fact that its proponents never suggest that every trashy novel, movie, or painting should not receive copyright protection because it does not advance science and the useful arts.
Mayo then puts forth another argument made by every parasite – namely that patents are a monopoly. This is just nonsense. Patents are a property right not a monopoly. The statute defines patents as a personal property right and patents meet all the tests of a property right. Namely, 1) Does the right arise because the person created something? Creation is the basis of all property rights. The law is just recognizing the reality that the person is the creator and without that person the creation would not exist. This is consistent with Locke’s Natural Rights and Ayn Rand’s Objectivism. 2) If someone else was the creator would they have received the right in the creation? This ensures that the right does not arise from political favoritism. 3) Is the right freely alienable? Freely alienable means that right can be sold, transferred, divided, leased, etc. This is a key feature of property rights. Patents fit all three criteria and are property rights.
Mayo then puts forth the PATENTABLY absurd argument that the patent system could be replaced by government funding of inventions. The absurdity of this argument can be summed up in one word – SOLYNDRA. First of all, the Supreme Court does not have the authority to make the decision to scrap the patent system and replace it with government funding. This argument by Mayo borders on delusional. Even Congress does not have the right under the Constitution to eliminate patents that would require a Constitutional Amendment.
Mayo has neither the facts or the law on its side so its approach is to purposely confuse the issues and to outright lie. Mayo should be ashamed to have its name associated with the parasitic attempt to rob the invention of others.
According to the paper, Korea’s Patent Policy and Its Impact on Economic Development: A Model for Emerging Countries?, a strong patent system is a positive part of encouraging economic growth for emerging economies. The paper points out that:
Korea has long been a proponent of strong patent protection and of the need to maintain a robust, well-functioning patent office that supports the development of local technology. That view is consistent with the notion, to which Korea subscribes, that the patent system can help promote and sustain healthy economic development, particularly in emerging-or newly industrializing-countries. P. 443
Korea’s economic results have been some of the best among emerging countries.
In the early 1960s the Republic of Korea (Korea) was the poorest country in East Asia with a per capita income less than half that of Ghana or Honduras, and a per capita GDP of approximately $160. Today, Korea has achieved the status of a newly advanced economy. It ranks thirteenth in the amount of trade generated, fourth in the number of patent applications filed in 2008,3 and by 2007 its per capita GDP had risen to $20,000. P. 442
Korea has put real teeth into its patent laws and even has criminal provisions
There are serious consequences for infringing a patent right under the Korean Patent Act. A patentee is entitled not only to an injunction to prevent the infringing activity, but also to demand destruction of the infringing articles, and a patent infringer is subject not only to damages, but also to criminal sanctions, including imprisonment. P. 458
Korea requires separate compensation for inventions of employees.
The Korean patent law requires that inventors who are employees be compensated for their inventions. P. 461
Korea’s creative use of the patent system to promote technological capacity has arguably been a significant factor in the country’s economic growth. P. 480
Erstling, Jay, “Korea’s Patent Policy and Its Impact on Economic Development: A Model for Emerging Countries?” (2010). Faculty Scholarship. Paper 138. http://open.wmitchell.edu/facsch/138
Two Singapore professor show patents result in significant economic growth. Their paper, Patent Rights and Economic Growth: Evidence from Cross-Country Panels of Manufacturing Industries concludes “the effect of strengthening patent rights on economic growth was substantial in economic terms.” P. 16
In the abstract of the paper, they conclude:
Our results have important implications for public policy. One is that patent laws and their enforcement matter for economic growth. However, our findings also suggest that patent rights vary by country and industry. We show that patent rights have a smaller impact on economic growth in poorer countries and in less patent-intensive industries. Since patent intensive industries account for a smaller share of the economies of the poorer countries, our results imply that the welfare gain in terms of economic growth for these countries is more likely to be outweighed by the welfare loss due to lower end-usage, and hence, tip the balance towards weaker rights being socially optimal. Abstract
The paper’s conclusion with respect to “poorer” countries being better off with a weak patent system is pure conjecture and was not part of their study. The reason that poor countries do not see a big boost by having stronger patent laws is: 1) poor countries are technologically backward and can advance economically by copying (purchasing) existing non-patented technologies, and 2) poor countries have poor property rights systems diminishing the effectiveness of their patent systems. A poor country is poor because of its low level of technology. Just raising a poor countries level of technology to the same level as the United States twenty years ago would result in huge economic gains. The reason poor countries have a lower level of technology is because they have weak property right systems that results in under investment in technology (Capital Spending). The paper hints at this point:
Our patent rights index depended on an assumption that enforcement of patent rights was correlated with enforcement of property rights in general, as measured by the Fraser index (The Fraser Institute does a study of economic freedom for all countries once a year). P. 10
In Figure 1, we plotted the Fraser index against the GP index (Patent Strength) scaled up by a factor of two. The two indices were highly correlated. P. 10
In other words, there is a strong correlation between the strength of property rights in general with the strength of a patent system in a country. This should not be surprising since patents are property rights in inventions. If you did a study of arbitrary government grants or monopolies versus the strength of patents in countries, you would find they are highly uncorrelated. Despite the nonsense that suggests that patents are monopolies.
Another interesting point in the paper:
Among 15 Western countries over several centuries, enactment of patent law was associated with higher rates of scientific discoveries, inventions, and innovations.
Hu , Albert G.Z. and Png , I.P.L., Patent Rights and Economic Growth: Evidence from Cross-Country Panels of Manufacturing Industries, August, 2010.
Perfect competition is when no one producer or consumer has the ability to affect the market price and all producers and consumers compete for a homogenous product, driving down the cost of the product. Under perfect competition, a producer’s profit is eliminated or at least reduced to a trivial return. Why this matters to patents is that the theory of perfect competition is often used to attack the patents. It is argued that patents allow producers a differentiating feature or product and therefore they have a greater margin than their competitors. Economists argue this means that the patent holder is getting monopoly profits according to the “perfect competition” theory and they call this profit a “deadweight” loss. This supposedly shows that resources are not being allocated efficiently.
So why do I say Perfect Competition is the equivalent of Altruism morally? Altruism is the idea of self sacrifice as a moral value and perfect competition is the economic idea of sacrificing a producer profits and a consumer’s right to choice. The goal of perfect competition is that no one, producer or consumer, is treated as an individual and everyone needs to be sacrificed to the altar of perfect competition collective. There is never any discussion of property rights with respect to “perfect competition” or individual rights.
Ayn Rand often stated that so called defenders of capitalism are often worse than its detractors. Perfect competition is another example of this. The Chicago School of economics, which included Milton Friedman, pushed the idea of “perfect competition.” The book of A Random Walk Down Wall Street was the application of perfect competition to Wall Street by a Chicago School of Economics professor. Perfect competition is the enemy of capitalism, individual rights, and economic growth.
Real per capita growth is the result of increases in one’s level of technology. Under perfect competition, there is no reason to invest in creating new technologies and in fact there is no reason to invest at all. Under perfect competition every investment yields the same low rate of return or no rate of return. Perfect competition is used to justify antitrust laws that destroy property rights and most importantly property rights in inventions. Perfect competition results in the same sort of idea of self sacrifice as altruism and is totally incompatible with capitalism, property rights, natural rights, and human happiness.
Patrick Anderson at GametimeIP has an interesting post that explains investment in new technologies is affected by competition between the patent systems of countries. He quotes Judge Rader as pointing out that
By creating obstacles to patent protection, the real-world impact is to frustrate innovation and drive research funding to more hospitable locations. To be direct, if one nation makes patent protection difficult, it will drive research to another, more accommodating, nation.
Anderson further explains:
Rader then recounts the tale of the European patent system, which he says “became known for subjecting [biotech] inventions to delays in the patent office, challenges in litigation, increases in cost, and uncertainties in the legal landscape.” Consequently, Rader continues, “investors, corporations, and clinics shifted their research from Europe to the United States.” Rader then warns that the tide can turn against the United States just as easily.
It appears that in these difficult economic times other countries are waking up to these facts. The post talks about a Halliburton case in the UK in which the judge took a narrow approach to excluding software inventions. The judge made this insightful comment:
Thus when confronted by an invention which is implemented in computer software, the mere fact that it works that way does not normally answer the question of patentability. The question is decided by considering what task it is that the program (or the programmed computer) actually performs. A computer programmed to perform a task which makes a contribution to the art which is technical in nature, is a patentable invention and may be claimed as such. Indeed in those circumstances the patentee is perfectly entitled to claim the computer program itself.
Please read the full post at GametimeIP.
The study of economics would be the same thing as the study of evolution of humans if humans did not invent. Without invention there is no reason for trade. Why would we trade my berries for your berries if they are essentially the same berries? If we both eat the same dead animals, what would the purpose of trade be? Without trade, production is limited to the immediate needs of the person. Perhaps you might store up some nuts, but everything else will spoil. Note that shelter is an invention, unless it only involves taking over a cave or a hole in a tree. The unique feature of man is that he is a rational animal and in the economic realm this means that he invents. No other animal invents. Only humans change their environment to meet their needs.
The driving function of evolution is the Malthusian Trap. In the Malthusian Trap, food (things need to survive) is limited and population growth in any species is always greater than the growth of the food supply, except humans very recently. This puts species into competition for food and selects for the species that are most successful in a given area. The only reason that humans (some) were able to escape the Malthusian Trap was that they invented faster than their population grew. Meaning the rate at which technology changed provided greater productivity growth than the expansion in the population. Why after 20,000 to 100,000 years of human existence did people in England, the United States, and the West suddenly escape the Malthusian Trap? Clearly, the rate of invention accelerated in these places so that productivity outstripped population growth. But why there and why then? There is extensive evidence that the introduction of property rights (individual – there is no such thing as group property rights) always provides a strong incentive to maximize return on an asset. England and then the U.S. at the beginning of the Industrial Revolution were the first large groups of people to introduce property rights in inventions. This provided the necessary impetus to invent new technologies and diffuse them widely. Clearly, patents cannot provide this incredible benefit outside of a system of individual rights and property rights. However, it was the linchpin that launched large groups of humans outside of the Malthusian Trap and the constraints of biological evolution.
For more information see:
The Most Powerful Idea in the World: A Story of Steam, Industry, and Invention
Recent Comments