CLS’s Reply Brief is not only illogical it is filled with intellectually dishonest statements. The lack of logic is not surprising given the Supreme Court’s confused and disorganized thinking on the subject, but the intellectual dishonesty is inexcusable. Despite this a careful reading of CLS’s brief shows that their argument fails on its face. If you don’t have a winning argument, confuse and overwhelm them.
CLS’s arguments boil down to Alice’s patent claims preempt the idea of an escrow account and they are a non-practicing entity to boot.
The claims asserted by Alice recite the fundamental economic practice of intermediated settlement or escrow, in which a “middleman” stands between the counterparties to a transaction and effectuates the transfer of entitlement once all conditions are satisfied.
There are so many problems in this statement it is hard to know where to begin. First of all ESCROW has a definition: it is money, property, a deed, or a bond put into the custody of a third party for delivery to a grantee only after the fulfillment of the conditions specified. The claims do not cover this situation. The term ‘intermediated settlement’ does not have a well defined meaning. You cannot find a definition for this term in the online finance dictionary. So it clearly is not a fundamental economic concept. CLS is using the charlatan technique of purposely blurring the definition of words.
Allowing patent claims like these would effectively foreclose the productive use of economic concepts and other fundamental principles in our increasingly computerized Information Age, in contravention of the Constitution and the Patent Act.
The claims are clear and if CLS wants to computerize an escrow arrangement it can do so. This is just a lie that Alice’s patent preempts a fundamental principle and the lawyers who wrote this should be sanctioned for lying to the court. Second the purpose of the Constitution is to protect the rights of Inventors. No patent forecloses the productive use of any invention. This is an attempt to confuse patent law property rights with anti-trust law. Property rights provide for the owner the right to exclude others from using their property. Ownership of a building or an invention does not foreclose economically productive uses of the property.
Here is another dishonest statement in CLS’s brief.
The economic concept of intermediated settlement is an abstract idea under the approach taken in Bilski and subsequently endorsed by the PTO.
Note the intellectual slight of hand here. Alice did not claim the concept of an intermediated settlement. Instead of dealing with the claims, CLS attempts to provide a broad generalization of the claims and then analyze the abstraction. This is against the law and fundamentally dishonest. The court must deal with the claims, not CLS’s self serving broad categorization of the claims.
Property Rights, Patents, and Monopolies
CLS and some judges are suggesting the blatantly false statement that patents are monopolies. Patents are property rights. Property rights are the result of creation, see John Locke. This was recognized in common law and can be found in Sir William Blackstone’s Commentaries on the Laws of England. For more information see Patents are Natural Rights http://hallingblog.com/patents-are-natural-rights/.
Antitrust law is never applied to a property right. It only can be invoked based on how property rights are used. Enforcement of one’s property rights in court cannot be consider a violation of antitrust law. This whole line of reasoning is straight out of a Marxist text and should not be tolerated. But on top of it Alice’s patents do not give it property rights in electronic escrow accounts.
I have often stated that using loose definition is the handmaiden of charlatans and tyrants and CLS seems to be quite good at it.
Laws of nature, natural phenomena, and abstract ideas are not patent-eligible under this Court’s established construction of 35 U.S.C. § 101. The asserted claims of Alice’s patents are ineligible under that standard because they attempt to monopolize the abstract idea of intermediated settlement.
First of all property rights do not monopolize anything. This line of reasoning by CLS is straight from Marxist dogma. CLS and the courts have thrown around the phrase abstract idea but failed to define it. Perhaps Thomas or Scalia will demand a definition.
Let’s examine what a reasonable definition of an abstract idea would be. Some of the potential definitions of “Abstract” from Dictionary.com are provided below:
1. Considered apart from concrete existence: an abstract concept.
2. Not applied or practical; theoretical. See Synonyms at theoretical.
3. Difficult to understand; abstruse: abstract philosophical problems.
4. Thought of or stated without reference to a specific instance: abstract words like truth and justice.
5. Impersonal, as in attitude or views.
6. Having an intellectual and affective artistic content that depends solely on intrinsic form rather than on narrative content or pictorial representation: abstract painting and sculpture.
Clearly the first or second definitions appear to be the closest to what the Supreme Court means when speaking of patents.
Now here are some of the definitions of “idea” from the same source.
1. Something, such as a thought or conception, that potentially or actually exists in the mind as a product of mental activity.
2. An opinion, conviction, or principle: has some strange political ideas.
3. A plan, scheme, or method.
4. The gist of a specific situation; significance: The idea is to finish the project under budget.
5. A notion; a fancy.
The first definition appears to be the most appropriate. So what we end up with is a thought or conception that is separate from concrete existence or not applied to the practical. In the broadest sense of the word, every patent defines an invention that has been abstracted. An invention by definition is an abstraction or a category of things. If this is what the judges mean, then the standard is complete nonsense, since it negates every patent.
If we use the definition of an Abstract Idea given above “a thought or conception that is separate from concrete existence or not applied to the practical”, then every invention that meets the requirements of 35 USC 112 first paragraph is not an Abstract Idea, since this section requires that the invention be described in a manner so one skilled in the art can practice the invention. Something that can be built and used (practiced) is concrete and applied, therefore it is not an abstract idea. The ABSTRACT IDEA exclusion to 35 USC 101 should be dropped, because any logical definition of an abstract idea is excluded by 35 USC 112, first paragraph. It should also be dropped, because, Judges should not read into statutes things that are not there.
A computer is not an abstract idea, it uses electrical power, generates heat, causes electrons to move. Those are all real world effects.
Another poorly defined term is used by CLS in this statement.
The claims asserted by Alice do not include “significantly more” than the abstract idea of intermediated settlement, such that they could be patent eligible under Mayo Collaborative Services v. Prometheus Laboratories, Inc., 132 S. Ct. 1289 (2012). Alice fails to come to grips with the analytical approach this Court articulated in Mayo, which requires an “inventive concept.”
First of all the patent statutes do not discuss an inventive concept. Second of all, the phrase ‘inventive concept’ is not defined in the brief, statute, regulations, or by the Supreme Court or any other US court. Courts do not have the right to reinvent statutes. The requirements for a patent are clear and substituting another term for what the statute says is illegal and should cause any judge to be impeached for subverting the Constitution.
Another poorly defined term used to smear patents by CLS.
Petitioner Alice Corporation Pty., Ltd. Contends that the CLS system infringes “business method” patents that broadly claim a computerized form of intermediated settlement.
Every patent is part of a business and any method patent is therefore broadly speaking a business method patent. The first patent issued in the US was a method of making potash. Since making potash is/was a business the very first patent issued in the US was a business method patent. The people who argue against business method patents have failed to provide a consistent, clear definition of what they mean.
CLS tries to paint Alice’s claims as being the same as Bilski. This is nonsense. Bilski admitted that their claims did not require a computer. Alice’s claims specifically require computers and a communication network.
Note that a series of steps performed by hand can definitely be an invention. The first patent issued in the US was for a method of making potash and all the steps were performed by hand.
Other Points Nonsensical Points in CLS Reply Brief
Alice suggests that its claims do not meet its chosen dictionary’s definition of escrow because they “do not prescribe that the electronic intermediary (or any other third party) receives any money or property.” Pet. Br. 47 (emphasis added). Of course, Alice’s claims do not preclude the receipt of money or property and thus would cover such activity. In any event, nothing in the concept of intermediated settlement requires the physical exchange of money or tangible property.
This shows a lack of understanding of patent law. Either these lawyers should be fired as incompetent or they should sanctioned for lying to the court. No patent claim precludes the use of something outside of the claim. Alice’s claims do not cover the use of an electronic escrow. Claims don’t preclude things, they define what is covered by the claim. If my patent claim on a bicycle includes a shock absorber in the fork, it does not preclude having a solid fork. It also means you can build a bicycle with a solid fork. Here CLS is admitting that Alice’s claims do not preempt an escrow arrangement. But like all charlatans they state it in such a convoluted way that it is hard to untangle the mess to see what it really means.
CLS quotes two Mark Lemley papers. Mr. Lemley is not a patent attorney, has never written a patent claim in his life, is not legally or factually competent to practice patent law. Mr. Lemley is a charlatan who spouts off recycled Marxist ideology applied to patents.
Adam Mossoff takes on the common claim that patent are too vague in his paper THE TRESPASS FALLACY IN PATENT LAW, by Adam Mossoff, 65 Fla. L. Rev. 1687. The argument is often framed as patents are not like real property where you know if you are trespassing another person’s property. This analogy is flawed, he points out, because property rights in land are not limited physical trespass. Property rights include time (future interest), use, and physical boundaries. The proper analogy would be with the estate or all the property rights associated with land. Then he points out that critics of patents actually have no empirical data on litigation involving all aspects of ‘real property’. He also points out that real property disputes often turn on the meaning of arcane terms and arise because legal drafting in not an exact science or math.
I would add that most of the commentators on patents are not legally or factually competent in reading claims. In addition, neither are most judges. (See Is the Supreme Court Competent to Rule on Patent Cases?) This is not because patents are vague or purposely obscure or overly formalistic. Drafting claims is a skill that takes several years to become proficient with. The same is true of being able to interpret a paper on electromagnetics or quantum mechanics and these are very precise sciences.
Most of the people complaining that patents are too vague are not interested in the truth, logic, or reason. They want to destroy all property rights or they are crony capitalists that want a patent system that favors them, particularly against individual inventors and startups.
I have been particularly critical of the whole notion of business method patents. Every patent is part of a business and any method patent is therefore broadly speaking a business method patent. The first patent issued in the US was a method of making potash. Since making potash is/was a business the very first patent issued in the US was a business method patent. The people who argue against business method patents have failed to provide a consistent, clear definition of what they mean.
I have also defined an invention as a human creation with an objective result, while art is a human creation with a subjective result. By objective result I mean that the invention has a repeatable result. For instance, a patent for an incandescent light bulb always produces light when the correct electrical signal is applied to the light bulb. Just because a person performs one of the steps in a claim does not make it invalid. For instance, in the patent for the method of making potash a person performed many if not all the steps. However, if the person is making a non-objective evaluation or decision as part of the method, then the process does not have a repeatable or objective result. This is why most management theories are not patentable. For instance, the popular SWOT (Strengths, Weakness, Opportunities, Threats) analysis relies on experts to define each of these points. If you put different experts into the process then you get a different result. On the other hand double entry accounting yields the same results no matter who is performing the process (as long as they apply it correctly), so it has an objective or repeatable result.
Using this standard I have found that a number of ‘business method’ patents that are invalid. These patents rely on the use of subject matter experts to evaluate something and then provide input in the middle of a process. This does not result in an objective, repeatable result. Now if these experts’ subjective opinions are at the beginning of a process, then this may still provide an objective result. For instance, if the SMEs provide a subjective 1-10 evaluation of certain Strengths in a SWOT analysis and the invention then processes these to determine the mean or rank them is some way, then this is an invention, because if the process receives the same inputs it will provide the same output, i.e, it is repeatable and objective. Alternatively, if the SMEs are provided with processed information at the end of the process, then this is an invention.
This paper explores the philosophy of science. The philosophy of science is mainly concerned with metaphysics and epistemology, but it is not completely divorced from ethics. This paper defines the necessary philosophical underpinning of science. At the end of this paper I will show that the Copenhagen Interpretation of Quantum Mechanics is inconsistent with the philosophy of science. Note that I am not suggesting that every scientist holds or held this philosophy.
Identity: The fundamental principle of science is that A is A (Identity), meaning that things exist; they have certain properties; they always act in accordance with these properties; A does not suddenly become B without a reason. Aristotle had three laws of thought: 1) Law of Identity, 2) Law of non-contradiction, and 3) Law of excluded middle. It seems to me that the second and third laws follow from the Law of Identity. Note for the present discussion we will assume that A is an inanimate object.
Causality is the second tenant of science meaning things happen for a reason or for every effect there is a cause. This means that A is always A unless acted upon by another object/force. For example, gold is always gold unless it is acted on by another object/force. It means a body at rest stays at rest unless acted upon. Causality and Identity result in repeatability. In other words things in the same situation will act in the same way. A mass acted upon by a certain force will accelerate in a consistent way. Identity and causality provide the justification for experimentation. If an experiment is correctly setup to exclude other factors (object/forces) then it will result in the same result, excluding measurement and experimental errors. If any of these tenants were not true, then there would be not point to experimentation. If a lead ball’s mass could suddenly change without any cause, then experimentation would never lead to repeatable results. When we find out experiments are not repeatable, then we know that we have failed to account for a variable. Note the Identity and Causality tenets are the rejection of superstition.
Experimentation: The goal of experimentation is to isolate causes and effects. For instance, if we are to determine if the gravitational effect of an object on Earth is the same, independent of mass, we have to ensure that our experiment does not include other factors. For example, we cannot allow wind resistance in our experiment. This means the objects have to have an equal wind resistance, or better yet, we need to eliminate wind resistance in our experiment.
Since no experiment or measurement can be perfect, we take into account measurement/experimental errors. Note that if these errors are truly random (Gaussian), then they will average out for a continuous random variable and significantly reduce for a discrete random variable. If they are not random, then we have not properly setup of the experiment, meaning we have failed to account for a variable. Note the experimental tenet of science requires that we can trust our senses. This does not mean that our senses give us perfect information, but that the information we receive from our senses is also ruled by the Identity and Causality laws.
Theories: Identity and causality allow us to use logic and reason to categorize and predict results, or form hypothesis and theories. Experiments are used to verify or disprove these theories. Smaller theories can be built upon using logic to create broader theories. For instance, inertia and Galileo’s law of falling can be applied to planets and tides, which is what Newton did in creating his ideas of motion and gravity.
A good scientific theory is one that explains and predicts many individual facts. Every theory so far is incomplete and it is where experiment does not agree with theory that leads to the next big leaps in science. Thus if we assume that heavier object are subject to a greater gravitational acceleration than lighter objects, but we find that lead balls of differing masses fall at the same rate, we know we need to revisit this hypothesis/theory. This also means that there is an evolutionary or expanding nature to scientific theories. Newton’s laws of motion and gravity refined and expanded upon Galileo’s theory of inertia and his law of fall. Einstein’s relativity did disprove Newton, it just refined and expanded on them at speeds near the speed of light and in regions of very large gravity. Part of how we know that Einstein’s theory of relativity is ‘correct’ is that it is consistent with Newton in certain regions and with the body of facts that Newton physics explained. There is a similar thing in mathematics, where we define over what range a statement is true. For instance, if a*b=c, then b=c/a, where a is a non-zero real number.
This evolutionary, expanding nature of scientific theories is the difference between a real science and pseudo science (or at least a poorly formed science). In a pseudo science a new theory can come along and predict totally different results. For instance, under classical economics printing money (counterfeiting) has a negative effect on the economy. Along comes Keynes and suddenly if the government prints money it causes an increase in wealth (GPD).
Perfect Knowledge: Does knowledge have to be perfect knowledge in order to be knowledge? Often scientific theories are attacked because as being incomplete. Every scientific theory so far is incomplete, because we don’t know everything about everything. I am going to postulate that we cannot ever know everything because there is always a deeper layer of knowledge. For instance, Newton explains the effects of gravity but not how it works. In fact, Newton was greatly disturbed that his best explanation of gravity required action at a distance without some intermediate (corpuscle). Knowledge is certainty that a fact or theory is correct within certain limits and therefore repeatable in science. For instance, if a builder assumes that Earth is flat or described by Euclidean geometry will this inaccuracy cause any problems? Even if the builder is constructing a building with a mile long foundation, the error of assuming the Earth is flat is less than two inches or much less than the underlying variation in the terrain. On the other hand if I am sailing across the world or launching a spaceship and I assume that the Earth is flat, then I have a problem. This is like the bounds in mathematics and as long as we know the bound of our knowledge it does not cause any problems. On the other hand, discovering the bounds of our knowledge is where the really interesting science and engineering occur and how we expand the bounds of our knowledge. The idea that knowledge has to be perfect seems to come from Plato’s idea of pure forms. Physics makes it clear that Plato’s ideal forms do not exist and are not necessary for science or realism. Attacking a scientific theory for failure to explain everything is meaningless, it is just saying we have not learned everything. It is only a valid attack on a scientific theory if it predicts something that turns out to not be so – a contradiction. Even then the contradiction may only occur within certain bounds or only matter within in certain bounds, in fact any well tested scientific theory will only be meaningfully incorrect within certain bounds.
In keeping with this idea of imperfect or lack of absolute knowledge, I am sure my thesis (philosophy of science) is not ‘perfect.’ As a result, I have tried to define the minimum requirements for the philosophy of science. I have not for instance included Locke and Newton’s corpuscular ideas, which are really about their philosophy of how physics works.
Statistics as applied to physical sciences is not in conflict with the Law of Identity or Causality. Statistics are a way of bounding our lack of knowledge about certain factors. For instance, if you know all the initial conditions of a coin flip, you can determine whether it will land on heads or tails exactly. In grad school in physics I had to solve a similar problem of a quarter slightly tilted to one side and given an initial velocity, will it land on heads or tails. There is an exact solution, it is not random. Statistics also deal with measurement errors and uncertainty in the conditions of the experiment. None of this in anyway suggests that the Law of Identity or Causality is suspended.
Curve fitting: There has been a popular theory in physics that all we are doing is curve fitting and understanding is illusory and wrong. Curve fitting is something engineers do when working from first principles is too complex. For instance, we know that the resistance of a thermistor varies with temperature, but we cannot solve the relationship from first principles. In this case we will take a number of measurements (experiments) and then just fit a curve so that we can covert an output resistance, actually voltage to a temperature. Curve fitting is useful, but it does not provide an understanding of the underlying phenomena and is generally limited to very specific situations. It is not the goal or what science does. Science looks to understand underlying physical phenomena, not just model it. Curve fitting can tell you the rate that an object will fall to Earth, but not why and it can’t tell you why this is related to planetary orbits.
Animate objects present additional challenges. For instance, a tad pole turns into a frog. Does this violate the law of Identity? The answer is no because a tadpole never turns into a cat or something else. But with animate objects it is necessary to apply the law of identity at a finer granularity. For instance, are you the same person you were ten years ago? Well all the cells in your body have completely changed and you are older, so probably you have some wrinkles and of course ten years of experience you did not have ten year ago. The difficulty with animate objects is that they can use internal energy to change their position or state. But when we look inside of the animate object we see that it acts according (sometime very complex) to the law of Identity and Causality.
Ethics: The philosophy of science does include an ethics, which is that we must report (record) data accurately. Fudging the data in science is the greatest sin in science. This is one of the reasons the proponents of Anthropomorphic Global Warming (AGW) cannot be taken serious. Not only have they repeated lied and fudged the data but their advocates suggest this is okay in fact required. It also why much of economic data can no longer be taken seriously.
The Copenhagen Interpretation (CI) of Quantum Mechanics (QM)
There was a great fight at the beginning of QM over how to interpret Schrodinger’s wave equation. Einstein, Schrodinger and others never accepted the point particle statistical model (PPSM) of QM. Nothing in the mathematics or experimental evidence required the PPSM of QM and certainly nothing required the CI model. The main justification for the statistical approach to QM is the Heisenberg uncertainty principle. If we can only know the location and momentum of a particle with certain precision then we cannot know the original state of a system exactly or the final state of the system exactly. This is how I resolved the statistical nature of QM while I was in grad school in physics and I would bet that this is how most physicists think about this issue. Note new research has shown problems with the uncertainty principle. However, the CI does not resolve the issue this way. The CI has never actually been well defined, but here is a rough sketch of their ideas:
a) negation of causality
b) negation of realism and
c) involvement of infinite and imaginary velocities or masses.
Note that part (a) directly contradicts one of the fundamental tenants of science. You may think I am exaggerating, so here are some quotes:
Heisenberg states clearly:
“The law of causality is no longer applied in quantum theory.”
In order to be coherent, physicists today should no longer try to find the cause of a physical phenomenon. According to Heisenberg’s statement, there is no cause, it is simple magic. Greenberger uses the same expression and states simply, “Quantum Mechanics is Magic”.
Much more recently, following the use of the Copenhagen interpretation, Feynman concludes:
“The theory of quantum electrodynamics describes Nature as absurd from the point of view of common sense. And it agrees fully with experiments. So I hope you can accept Nature as she is – absurd.”
Even worse, Mermin states that the results of those absurd interpretations are enjoyable. He writes:
“The EPR experiment is as close to magic as any physical phenomenon I know of, and magic should be enjoyed.” (Whole section)
You may think the rejection of realism is also not true. But here is another quote by Heisenberg.
“The next step was taken by Berkeley. If actually all our knowledge is derived from perception, there is no meaning in the statement that the things really exist; because if the perception is given it cannot possibly make any difference whether the things exist or do not exist. Therefore, to be perceived is identical with existence.”
Clearly, the CI rejects the fundamental tenants of the science of philosophy. We know that without causality the whole point of experimentation is meaningless – if anything can happen what is the point of an experiment. The only logical result is that even the proponents of CI did not believe what they were saying. However, the problems with the PPSI of QM keep compounding. Below is a list of some of those problems.
1) Requires infinite velocities
2) Spin makes no sense for a point particles.
3) Point Particles: “Because point particles are assumed to occupy no space, they have to be accompanied by infinite charge density, infinite mass density, infinite energy density. Then these infinities get removed once more by something called “renormalization.” It’s all completely crazy.. But our physics community has been hammering away at it for decades. Einstein called it Ptolemaic epicycles all over again.”
4) The Laser: “At the heart of laser action is perfect alignment of the crests and troughs of myriad waves of light. Their location and momentum must be theoretically knowable. But this violates the holiest canon of Copenhagen theory: Heisenberg Uncertainty. Bohr and Von Neumann proved to be true believers in Heisenberg’s rule. Both denied that the laser was possible.”
Carver Mead, who studied under Feynman and worked closely with him had this to say about the CI. “It is my firm belief that the last seven decades of the twentieth will be characterized in history as the dark ages of theoretical physics.”
 Heisenberg, Werner, Physics and Philosophy, the Revolution in Modern Science, New York, Harper and Row, 1966, p. 88.
 Greenberger, Daniel, Discussion remarks at the Symposium on Fundamental Questions in Quantum Mechanics, Albany, SUNY, April 1984.
 Feynman, Richard P., The Strange Theory of Light and Matter, New Jersey, Princeton University Press, 1988, p. 10.
 Mermin, N. David, “Is the Moon There when Nobody Looks? Reality and the Quantum Theory”, in Physics Today, April 1985, p. 47.
 Marmet, Paul, Absurdities in Modern Physics: A Solution, http://www.newtonphysics.on.ca/heisenberg/chapter1.html#1.6
 Heisenberg, Werner, Physics and Philosophy, the Revolution in Modern Science, New York, Harper and Row, 1966, p. 84.
 The Paradoxes of Quantum Mechanics, http://www.physics.oregonstate.edu/~stetza/ph407H/Quantum.pdf
 American Spectator, Sep/Oct2001, Vol. 34 Issue 7, p68, Carver Mead, The Spectator Interview, http://freespace.virgin.net/ch.thompson1/People/CarverMead.htm
 American Spectator, Sep/Oct2001, Vol. 34 Issue 7, p68, Carver Mead, The Spectator Interview, http://freespace.virgin.net/ch.thompson1/People/CarverMead.htm
 American Spectator, Sep/Oct2001, Vol. 34 Issue 7, p68, Carver Mead, The Spectator Interview, http://freespace.virgin.net/ch.thompson1/People/CarverMead.htm
The authors (Sven Bostyn and Nicolas Petit) of this paper, PATENT=MONOPOLY – A LEGAL FICTION, argue that patents are not a monopoly based on standard antitrust analysis. It is very unusual for an academic paper to take such an unpopular position. They must have not got the memo that the goal of all academics is to vilify inventors, patents, and property rights. Below are some the lines I thought were interesting and my comments are below.
No other property right is so expensive, time consuming and expensive to obtain title to.
“In 2011, approximately 1,000,000 patents were granted across the globe. This would mean that 1,000,000 monopolies would have been created worldwide. This clearly, cannot be true.”
“Competition is very valuable, but innovation is probably equally, if not more, valuable.”
My main critique is that they did not explain how patents are a property right or the history of property rights and patents. Under Locke’s theory of property rights, patents and copyrights are property rights – they are granted because of the creative effort (labor) of the inventor/author. This was picked up by Sir William Blackstone in his Commentaries, where he affirms that patents and copyrights are property and therefore natural rights. This was enshrined in the constitution as “securing for limited Times to Authors and Inventors the exclusive Right to their respective Writings and Discoveries.”
Patent legislation is in the works right now that is a greater threat to independent inventors than any legislation we have seen in the past.
The bill is the Innovation Act, HR 3309, which passed in the House on Thursday, December 5th. I don’t know everything that is wrong with it, but there are two particular things that really stand out. One is Loser Pays. According to this bill, if a patent owner sues someone for infringement and doesn’t win, he automatically has to pay the other party’s legal expenses. This will end the ability of the typical independent inventor to defend his property. Historically, an inventor could hire an attorney on contingency. Loser Pays creates a huge financial risk that totally changes the playing field. Under Loser Pays, An independent inventor would have to risk financial ruin to defend a patent.
The Innovation Act also undoes provisions that were intended to prevent serial challenges to patents. Under the present law, someone challenging a patent must put their best case forward rather than withholding information and bringing multiple cases in an effort to bankrupt the patent owner. This bill enables vested interests to use serial challenges to bankrupt patent holders and eliminate competition.
The stated reason for this legislation is patent trolls – companies that don’t produce products (NPEs – non-practicing entities), and that buy patents and allegedly sue companies frivolously for infringement. This situation has been hyped up way beyond any actual harm simply to enact legislation that will 1) make it harder for large corporations to be sued successfully for infringement, and 2) eliminate the independent inventor as a threat to the vested interest.
Is there a better example of America and the American Dream than an independent inventor, burning the midnight oil, working toward success with a new invention? This is what the American Patent System was designed to spur, and it did so. It is no accident that America became the most innovative and most prosperous country in the world. But multinational corporations have been using politics to weaken our patent system. The America Invents Act hurt us, but the Innovation Act is the nail in the coffin.
This bill will be voted on in the Senate. It could happen at any time. It got pushed through in the House very fast. Please forward this information to anyone who can help defeat it. Senators need to hear how the Innovation Act will harm independent invention. 99% of the political effort is from large corporations whose interests are directly opposed to independent invention. Please contact your Senators and forward this information to anyone who can help. Time is of the essence.
I have often pointed out that patents are a natural right under Locke’s theory of property rights. Locke stated, in modern language, that you own yourself so you have the right to those things you create. Many detractors have suggested that this absurd. According to Locke the three chief natural rights are life, liberty, and property. Locke states that protecting property rights is the main reason for forming governments.
Sec. 124. The great and chief end, therefore, of men’s uniting into commonwealths, and putting themselves under government, is the preservation of their property.
Inventions are the result the inventor’s labor and therefore property under Locke. Property is a natural right, so patents are natural rights. Despite this logical connection, many people have continued to deny that patents (property rights in inventions) are a natural right.
Locke’s ideas were incorporated in the law of the United States by William Blackstone’s Commentaries on the Laws of England. This treatise became the basis of common law in the US. Here is what Blackstone said about patents and copyrights (intellectual property). Note that he cites Locke’s ideas on property rights for his explanation for why intellectual property is Property.
There is still another species of property, which (if it subsists by the common law) being grounded on labour and invention is more properly reducible to the head of occupancy than any other; since the right of occupancy itself is supposed by Mr. Locke, and many others, to be founded on the personal labour of the occupant. And this is the right, which an author may be supposed to have in his own original literary compositions; so that no other person without his leave may publish or make profit of the copies. When a man by the exertion of his rational powers has produced an original work, he seems to have clearly a right to dispose of that identical work as he pleases, and any attempt to vary the disposition he has made of it, appears to be an invasion of that right.
Now the identity of a literary composition consists entirely in the sentiment and the language: the same conceptions, clothed in the same words, must necessarily be the same composition: and whatever method be taken of exhibiting that composition to the ear or the eye of another, by recital, by writing, or by printing, in any number of copies, or at any period of time, it is always the identical work of the author which is so exhibited; and no other man (it hath been thought) can have a right to exhibit it, especially for profit, without the author’s consent.
This consent may perhaps be tacitly given to all mankind, when, an author suffers his work to be published by another hand, without any claim or reserve of right, and without stamping on it any marks of ownership; it being then a present to the public, like building a church or bridge, or laying out a new highway: but, in case the author sells a single book, or totally grants the copyright, it hath been supposed, in the one case, that the buyer hath no more right to multiply copies of that book for sale, than he hath to imitate for the like purpose the ticket which is bought for admission to an opera or a concert, and that, in the other, the whole property, with all it’s exclusive rights, is perpetually transferred to the grantee.
On the other hand it is urged, that though the exclusive property of the manuscript, and all which it contains, undoubtedly belongs to the author, before it is printed or published; yet from the instant of publication, the exclusive right of an author or his assigns to the sole communication of his ideas immediately vanishes and evaporates; as being a right of too subtile and unsubstantial a nature to become the subject of property at the common law, and only capable of being guarded by positive statutes and special provisions of the magistrate.
The Roman law adjudged, that if one man wrote any thing on the paper or parchment of another, the writing should belong to the owner of the blank materials meaning thereby the mechanical operation of writing, for which it directed the scribe to receive a satisfaction; for in works of genius and invention, as in painting on another man’s canvas, the same law gave the canvas to the painter. As to any other property in the works of the understanding, the law is silent; though the sale of literary copies, for the purposes of recital or multiplication, is certainly as antient as the times of Terence, Martial, and Statius. Neither with us in England hath there been (till very lately) any final determination upon the right of authors at the common law.
But whatever inherent copyright might have been supposed to subsist by the common law, the statute 8 Ann. c. 19 hath now declared that the author and his assigns shall have the sole liberty of printing and reprinting his works for the term of fourteen years, and no longer; and hath also protected that property by additional penalties and forfeitures: directing farther, that if, at the end of that term, the author himself be living, the right shall then return to him for another term of the same duration: and a similar privilege is extended to the inventors of prints and engravings, for the term of eight and twenty years, by the statute 8 Geo. II. c. 13, and 7 Geo. III. c. 38, besides an action for damages, with double costs, by statute 17 Geo. III. c. 57. All which parliamentary protections appear to have been suggested by the exception in the statute of monopolies, 21 Jac., I. c. 3, which allows a royal patent of privilege to be granted for fourteen years to any inventor of a new manufacture, for the sole working or making of the same; by virtue whereof it is held, that a temporary property therein becomes vested in the king’s patentee. (emphasis added)
The idea that patents are a natural right is incorporated in early American law as the quote below shows.
“we protect intellectual property, the labors of the mind, productions and interests as much a man’s own, and as much the fruit of his honest industry, as the wheat he cultivates, or the flocks he rears.” (Davoll v. Brown, 7 F. Cas. 197, 199 [C.C.D. Mass. 1845].)
It is just obstinance or disingenuousness to suggest that patents are not part of natural rights.
 The Second Treatise of Civil Government; 1690; John Locke; CHAP. IX., Of the Ends of Political Society and Government.
Here is another confused and confusing academic paper, The US, China and the G-77 in the era of responsive patentability Queen Mary Journal of Intellectual Property, Vol. 2 No. 4, pp. 315–328. The paper seems to suggest that it will be bad news for the US and the West if China and other BRIC nations create successful patent systems that result in their technological leadership. The solution according to the paper appears to be aggressive use of anti-trust law. However, the paper is far too incoherent to be sure exactly what the author’s point is.
The paper starts with some telling lines.
It appear that “‘anything made under the sun by man’” is patentable, but it is also clear that the sun never sets on the patent system.
Responsive patentability means that anything is patentable anywhere. Restrictions on patentable subject matter are read down or circumvented through clever claims drafting.
Most citizens in poor states cannot afford to pay patent prices for access to needed medical and food technologies.
Responsive patentability is unresponsive to the preferences of poor people.
The author, Mr. Drahos, is a professor of law and heads the Chair in Intellectual Property at Queen Mary University of London. Interestingly, Mr. Drahos is not a patent attorney and in fact does not have the technical background necessary to be a patent attorney or to sit for the patent bar. How universities think that it makes sense to have a professor who is incompetent to be a patent attorney teach patent law is beyond me.
The paper is full of broad unsupported statements such as those above. Why should the sun set on the patent system? Should the sun set on the criminal system, on the property rights system? Mr. Drahos offers no explanation. Why should there be a restriction on patentable subject matter? If so what should those restrictions be? Again Mr. Drahos offers no explanation.
What is the point of stating that poor people cannot afford patented foods or medicines? Poor people cannot afford many things. That is the definition of being poor. So what is Mr. Drahos point?
Finally, the statement that responsive patentability is unresponsive to the preference of the poor is totally unsupported. Should the criminal law system be responsive to the preferences of the poor? Why should the poor’s input be more important than anyone else? Is physics, algebra, chemistry, calculus responsive to the preferences of the poor? Should they be?
Patent law should be based on logic and reason. It should be firmly grounded in property rights and it should not deviate from this logic for the poor, the rich, or socialists like Mr. Drahos.
Ignoring the obvious bias of the paper it appears to be making a point about China becoming a technological leader and how the US and West should respond to this challenge. The paper explains:
China’s market socialism may yet evolve into a close variant of US knowledge monopoly capitalism. This ending to China’s development story would not surprise readers of Animal Farm.
For a patent wealth maximization strategy to succeed a country’s innovation system must generate core technologies.
Under this criterion the system can be said to work if one country is able to use it to extract monopoly rents from other countries, thereby making it an overwhelming net winner from the system.
From these statements it appears that Mr. Drahos is concerned that China might become a creator of technologies, particularly core technologies, instead of just a consumer. The paper appears to imply this would be bad. I cannot see how the world will be worse off if more people are inventing important technologies that make everyone’s life better. Again the paper fails to explain this assumption, but there are clues to why Mr. Drahos is so concerned with this outcome, for instance, the ominous reference to Animal Farm.
After setting out this dire situation, Mr. Drahos proposes at least a partial solution.
Let us assume for the sake of argument that a succession of five-year plans turn China into a patent superpower with control over many core technologies. How might the US respond to such a situation? One possibility is that it would simply issue compulsory licences over those foreign technologies it believed were vital to its national interests. Over the course of the twentieth century, antitrust law has been intellectual property’s constant regulatory shadow. For significant periods of the twentieth century it was a shadow that loomed over intellectual property owners to check the exclusionary uses of their monopoly powers. There is a resilience to antitrust principles in the US that should never be underestimated.
Mr. Drahos solution to an inventive China is to ignore property rights either with compulsory licensces or antitrust law. Modern antitrust law is anti-property rights and turned the law against monopolies on it head. The Statute of Monopolies of 1623 limited the power of the Crown (government) to interfere with private property rights. The Statute of Monopolies excluded patents for inventions because they result from the creative effort of the inventor and therefore are property rights. On the other hand modern antitrust law increases the power of government to interfere with private property rights. The underlying theory of antitrust law is the efficient market hypothesis. This hypothesis postulates that wealth is created by falling prices for existing goods and services and this is the result of competition to sell existing goods and services. However, this is incorrect and inconsistent with modern economic research. Increases in per capita income are the result of increases in technology – inventions. Antitrust law undermines the incentive to create and invest in new technologies and therefore hurts our economic health.
When the US was facing an economic and technological challenge from Japan in the 1970s, the answer was to strengthen US patent law. It worked spectacularly. The US regained both its economic and technological leadership in the 1980s and 1990s. Then the US started weakening its patent laws around 2000 and has continued to do so. Once again the US is stagnant technologically and economically. The clear answer to a technological challenge by China is for the US to strengthen its patent rights and all property rights not to resort to antitrust law, which is what the US did in the 1970s.
Let’s deconstruct Mr. Drahos paper. He hates patents and does not think they should exist. His citation of Michele Boldrin and David K Levine, who have written a book suggesting the elimination of patents, demonstrates this point. Mr. Drahos has argued elsewhere that patents are not “property”, which is consistent with his ‘monopoly’ analysis. But Mr. Drahos isn’t just against patents, he is against property rights generally. For example he quotes Fidel Castro with approval.
Fidel Castro in a speech at a G-77 Summit in Havana in 2000 claimed that developed countries ‘control 97% of the patents the world over and receive over 90% of the international licenses’ rights’. He went on to observe that the ‘new medications, the best seeds and, in general, the best technologies have become commodities whose prices only the rich countries can afford’. Castro finished with a strong appeal for unity and cooperation amongst the G-77.
Castro as a communist is against all property rights. Mr. Drahos concern in this paper is not that the US might fall behind technologically, it is that other countries might adopt a strong property rights legal system that including patents. The patent discussion in this paper is just a crutch from Mr. Drahos to push a radical Marxist ideology. It is an embarrassment that this paper is considered academic or scholarly research and that Mr. Drahos has a job as a professor of law and chair in intellectual property.
The US, China and the G-77 in the era of responsive patentability Queen Mary Journal of Intellectual Property, Vol. 2 No. 4, pp. 315–328.
There appears to be a lot of confusion on whether patents and patent laws are property rights and property laws or regulations. For instance, Steve Forbes in an article entitled, America’s patent system is all wrong for today’s high-tech world starts that article by complaining that the Obama Administration is always looking for a way to “regulate and interfere in the free market.” Mr. Forbes goes on to complain about Non-Practicing Entities (NPEs) asserting patent rights and ends the article by complaining that “don’t we have enough regulatory hurdles to jump in the first place?” I have seen this same theme that patents (all IP) are regulations in a number of blogs. These people do not seem to understand property rights. Part of the confusion may be that we do not have clear definitions of what property rights are and what regulations are. For instance, I looked up a number of definitions of property rights and the definition from Black’s Law Dictionary is representative.
What is PROPERTY?
The ownership of a thing is the right of one or more persons to possess and use it to the exclusion of others.
This definition is incomplete at best. For instance, is a taxi medallion a property right? Is a license to a part of the electromagnetic spectrum from the FCC a property right? Is a government monopoly to provide electrical power within a certain geographic region a property right? All of these are exclusive legal rights.
Personally, I would consider a taxi medallion or a FCC license a regulation. So I looked up a number of definitions of regulation, and the one below from Free Online Dictionary is representative.
1. The act of regulating or the state of being regulated.
2. A principle, rule, or law designed to control or govern conduct.
This definition is so broad as to encompass any law. For instance, is the right to free speech a regulation? Is the right to your house a regulation? Are the laws against murder a regulation? Is the Homestead Act a regulation? All of these control or govern conduct. When we are talking about regulations most people mean something like building codes or OHSA rules or the FTCs requirement that all bicycles are required to have retroreflectors on the pedals. We generally do not think of the laws against murder, burglary, or even the rules on recording title to land and houses as regulations. But if you look at these two definitions, property rights and property laws are a subset of regulations. This is clearly nonsense.
Most histories of the modern regulatory state in the US place its origin around 1900 and refer to agencies such as the Interstate Commerce Commission (whose original function was to regulate railroads), the Federal Trade Commission, the Securities and Exchange Commission, etc. This provides a clue to the correct definition of regulation and shows that we do not mean common law property rules or common law crimes when we are speaking of regulation.
According to Steve Forbes and most people when we think of a regulations we think laws and rules that interfere with the free market. Unfortunately, people use very loose definitions of ‘free market’. For instance, some people think a free market is one that has “perfect competition”, which suggests that anti-trust laws are part of the free market as might be the FTC. A better starting place to find out what is a regulation and what is a property right is the logical foundation on which this country was created – Natural Rights. Natural Rights define property rights based on the idea that if you own yourself you own the product of your labor. Thus you own land because you spent the effort to improve it, e.g., the Homestead Act. (Today most of us trade our labor for currency that we then use to purchase ownership in our house or land based on our Natural Right to contract. But the principle still applies.) Inventions are the creation of the inventor and therefore the inventor has a property right in their creation. I have created a three part test to determine whether something is a property right.
1) Does the right arise because the person created something?
2) If someone else was the creator would they have received the right in the creation?
3) Is the right freely alienable?
If the answer is yes to all three questions, it is a property right. A patent fits all three as does ownership in land. Note that taxi medallions, electrical power monopolies, and FCC licenses all have at least one no to the above definition. Thus a regulation is something that interferes with a person’s property rights, such as EPA wetland rules or the right to use your property to start a business. Other regulations, such as minimum wage laws interfere with a person’s right to contract.
A regulation is a government rule that interferes with a person’s Natural Right to property or right to contract.
Patents and NPEs do not fit that definition. This definition clearly defines that property rights are not regulations and limits regulations to true meddling in ‘free markets’.
It is generally recognized that jobs or tasks require certain skills in order for a person to competently perform them. For instance, a general practice medical doctor is not competent to perform brain surgery. This does not mean that if the general practice doctor underwent a couple of years training, they could not become competent. Competence is defined as:
b. A specific range of skill, knowledge, or ability.
(According to Free Dictionary Online)
In patent law it is generally recognized that a patent attorney needs both a strong technical background and an understanding of patent law. Patent attorneys have to take a separate bar exam on just patent law and have to prove they have taken a certain number of college level science and engineering courses. Do any of the Supreme Court justices meet this definition?
John Roberts, A.B. History Harvard College, J.D. from Harvard
Antonin Scalia, A.B. History Georgetown University and University of Fribourg, Switzerland LL.B. Harvard
Anthony Kennedy, B.A. Political Science Stanford University and London School of Economics, LL.B. Harvard
Clarence Thomas, A.B. English Literature Holy Cross College, J.D. from Yale
Ruth Ginsberg, B.A. Government Cornell University, LL.B. Columbia Law School
Stephen Breyer, B.A. Philosophy Magdalen College, Oxford, LL.B. Harvard
Samuel Alito, B.A. Princeton, J.D. Yale
Sonia Sotomayor, B.A. History Princeton University, J.D. Yale
Elena Kagan, A.B. History Princeton, M. Phil. Oxford, J.D. Harvard
Not a single Supreme Court justice has passed the patent bar and not a single Supreme Court justice has an engineering or science background. Clearly, by this standard the Supreme Court justices are in-competent to rule on patent matters.
You might argue that while the Justices do not have the required background, they are still smart enough to rule competently on patent matters. This argument also fails. No competent client or attorney would ask any of the Justices to write a claim for a patent. No patent law firm would hire any of the justices to write claims for their clients or ask them to do an infringement or clearance opinion. I think this is overwhelming evidence that the Justices do not have the practical background to rule on patent cases. This incompetence has been demonstrated in a number of recent cases. Below are just a few examples of their inability to understand patent law and technology.
*Oral Argument: Association for Molecular Pathology v. Myriad Genetics (Technical Incompetence):
The Justices made analogies to baseball bats and chocolate cookies in trying to understand this case involving genetic testing for breast cancer. No person competent in genetics would find any of these analogies helpful. Can you imagine a lecture on genetics where they attempted to use these analogies to explain what is happening in a genetic test? Clearly, the Justices do not understand the technology and are attempting to make invalid – absurd analogies in an attempt to do so.
*Mayo Collaborative Services v. Prometheus Labs., Inc. Supreme Court 2012 (Legal Incompetence):
The Supreme Court held “The three steps (of the claim) as an ordered combination adds nothing to the laws of nature that is not already present when the steps are considered separately.” P. 10 35 USC 103 states
A patent for a claimed invention may not be obtained, notwithstanding that the claimed invention is not identically disclosed as set forth in section 102, if the differences between the claimed invention and the prior art are such that the claimed invention as a whole would have been obvious before the effective filing date of the claimed invention to a person having ordinary skill in the art to which the claimed invention pertains. Patentability shall not be negated by the manner in which the invention was made.
The Supreme Court specifically ignored the statute. The law specifically prohibits looking at each step /element of a claim separately.
This also demonstrates the Supreme Court’s ignorance of Physics. Every invention ever made involves steps (elements) that were known individually before the invention; and is subject to the laws of nature. You cannot create something out of nothing – it’s called Conservation of Matter and Energy. You cannot violate the laws of nature.
The opinion also states patents are monopolies in three spots and mentions rent seeking in one spot, but it does not mention that the Constitution clearly states that inventors have a RIGHT to their invention. The patent statutes specifically state that patents are (have attributes of) personal property. 35 USC § 261. The Justices ignored both the Constitution and the statute.
*Bilski v. Kappos (Legal Incompetence): The Court confuses statutory subject matter 101 with Novelty 102 and Non-Obviousness 103. For instance, Justice Kennedy writes:
“In light of these precedents, it is clear that petitioners’ application is not a patentable “process. Claims 1 and 4 in petitioners’ application explain the basic concept of hedging, or protecting against risk: Hedging is a fundamental economic practice long prevalent in our system of commerce and taught in any introductory finance class.” p. 15. Whether Bilski claims a well known economic practice is irrelevant to a 101 analysis that is the province of 35 USC 102 & 103. This also shows that the Justices do not know how to read a claim. The claims of Bilski are related to hedging, but do not claim hedging in general. Bilski defined a system that used hedging to provide flat rate billing to small customers that could not hedge their own risks. The Justices read the claims as if they were prose, when any competent patent attorney knows that claims have to be read like an equation. Each word has to be given meaning.
*KSR Int’l Co. v. Teleflex Inc. (Legal and Technical Incompetence): The Court stated, “A court must ask whether the improvement is more than the predictable use of prior art elements according to their established functions.” P. 417. Every invention is a combination of prior art elements. The Court is ignoring 35 USC 103 see above. Every element functions as it should according to physics, it cannot violate the laws of physics.
The Supreme Court goes on to states, “In many fields there may be little discussion of obvious techniques or combinations, and market demand, rather than scientific literature, may often drive design trends. Granting patent protection to advances that would occur in the ordinary course without real innovation retards progress and may, for patents combining previously known elements, deprive prior inventions of their value or utility.” Id. At 419. (This sort of writing should get you an F in English composition 101) Almost all inventions are driven by market demand. Inventors are in the business of making money. According to the Supreme Court inventors should only get patents on inventions for which there is no demand. Do they even read their own opinions?
*eBay Inc v. MercExchange, L.L.C., 2006 (Legal Incompetence): The Court held a permanent injunction should not automatically issue as part of a judgment of infringement. A patent is a legal right to exclude, 35 USC 154, others from making, using, selling (offering for sale), or importing the invention. The Supreme Court’s eBay decision is in violation of the law 35 USC 154.
Having the Supreme Court rule on patent matters makes about as much sense as having an English literature professor (who never took any college level physics) teach quantum mechanics.
The Supreme Court in ASSOCIATION FOR MOLECULAR PATHOLOGY ET AL. v. MYRIAD GENETICS, INC., ET AL retroactively withdrew the property rights of hundreds if not thousands of inventors, by stating patents to isolated forms of DNA are not patent eligible. The relevant part of the 5th amendment states:
nor shall private property be taken for public use, without just compensation
Patents are private property, they are owned by private individuals and the statute says they have attributes of personal property. The Myriad decision is not just relevant to Myriad but thousands of patents. It was a long established policy of the Patent Office to issue patents to isolated strands of DNA. This decision changes that policy and invalidates these patents, which eliminates the patent holders’ property rights. There was not compensation, so the question is whether this is a public use? People often state that patent right revert to the public, but of course what really happens is there are no rights in the invention. The situation is roughly analogous to the EPA regulating that no building can occur on wetlands. Governmental land-use regulations that deny the property owner any economically viable use are deemed a taking of the affected property. See, e.g., Lucas v. South Carolina Coastal Council, 505 U.S. 1003 (1982), First English Evangelical Lutheran Church v. County of Los Angeles (1987). Here the Supreme Court has denied a group of patent holders and economically viable use of their property.
These sort of broad policy changes by the courts are clearly unfair to patent owners. The patent owner who applied for a patent when it was the clear policy of the Patent Office to allow patents on isolated strands of DNA has not done anything wrong. If the policy had been different then they might of structured their claims to their patent differently or invested their efforts in other areas of invention. At the least the aggrieved patent holders should have a right to a reexamination that allows them to introduce new claims based on the Myriad decision.
There has been a lot of media attention about so called patent trolls. I am intimately familiar with these issues, but the characterization is incorrect. There are legal trolls, some of whom specialize in patents, but they prey upon the same problems that infects all of our legal system and so there is nothing unique regarding patents. As happens so often, the government creates one problem and then people see the symptom and propose more improper government policies, which will just cause more problems.
I had a small software startup that was contacted by a legal troll. The troll had selected the company because its website stated it was in a somewhat similar space to the patents they were attempting to enforce. I analyzed the claims and it was clear the company was not practicing the patented invention. When I contacted the troll they were unwilling to review the case or the claims. They did not appear to be interested in the truth. The company decided it would rather die litigating than take a license they did not require. They also worried that taking the license would make it harder to be acquired.
Another case that illustrates the point, happened before the term “troll“was invented. A patent counsel for a large Fortune 500 company received a complaint for patent infringement of over 30 patents. Under the CAFC rules at the time, the company would have to spend at least three hundred thousand dollars on opinions just to respond to the complaint. A couple of days later the troll offered to settle for about one hundred thousand dollars, knowing full well that both the costs and time constraints made this a great hold up game. The patent counsel was so pissed off about this clear extortion, that he refused to give in and found there was a cross licensing agreement that gave his company the right to use the patents. Nevertheless, this was an attempt to extort the company for a quick Christmas bonus and all that happened to the troll was they had to eat crow and some minor legal fees.
These situation arose not because of patent laws that protect the rights of inventors, but because of our overly burdensome federal litigation system and because Rule 11 sanctions are almost never enforced against legal trolls. The reality is that legal trolls have been using the complexity of the law and the absurdly lenient standard for pleading to extort money from companies since at least the 1970s. These Legal Trolls use medical malpractice, product liability, securities laws, and many others areas of law for this purpose. However government is one of the biggest legal troll of them all. They use the environmental laws to extort money from companies, OHSA rules, the IRS and many others.
In the case of medical malpractice lawsuits, 90% of those that go to trial fail. In a rational system you would expect about a 50% rate of success. Otherwise it should be in the interest of the parties to settle.
Here is an article, Annual Meeting Holdup: Securities Class Action Lawyers’ Latest Scheme, on the latest holdup innovation by securities plaintiff attorneys.
But, as I pointed out, the government is the biggest legal troll of them all. The EPA regularly demands people comply with their arbitrary ruling or face bankrupting daily fines. One example of this, Sackett v. EPA, made it to the Supreme Court. The EPA has not only given itself the ability to assess this fines separate from a court or a trail, but they have argued successfully that they do not need to get a warrant to investigate a person. This case is hardly unique. In fact EPA administrator Al Armendariz admitted the EPA purposely terrorizes companies to force compliance among subsequent targets. He compared it to the Romans, when they conquered a village they would crucify five people arbitrarily to ensure compliance.
The SEC refuses to define “insider trading.” Accusing people of insider trading has been the favorite political stepping stone for attorney generals out of New York. See Rudolf Giuliani and Elliot Spitzer. How can you be charged with a crime the government won’t define? How do you know if you violated the law? How can you have mens rea? The securities laws are just politics disguised as law – also see anti-trust laws.
Clearly, we have a problem with legal trolls not with patents. So how do we fix the problem? I will ignore how to fix the abuses of our government. First,we need to clearly define what we mean by legal troll. I would define a legal troll as any group that uses the complexity of the legal system to make a profit when they know their case is dubious. Based on this definition there are two main components: the complexity of the legal system and baseless lawsuits.
In an attempt to promote justice our legal system reduced the requirements for pleadings and provided a wide open discovery process. These are the two main reasons why lawsuits are so expensive. The requirement for a good faith investigation of the facts before filing a complaint should be made stricter. However, it is utopian thinking that judges are going to enforce this. I will propose a solution in the next section for this. The discovery process should be time limited and page limited. Discovery should not be used as a fishing expedition. Another problem is that we have an over worked Federal Judiciary. This is in part because we do not have enough federal judges and partly because we have federalized too many crimes/regulations. On the patent level we should have judges who have technical backgrounds and have passed the patent bar.
Rule 11 sanctions are supposed to prevent frivolous lawsuits, but judges almost never apply them and when they do it is so arbitrary as to appear politically motivated. I suggest that the Rule 11 type sanctions should be a private right and award. This would balance the risks of filing frivolous lawsuits. In addition we might want to consider a loser pays type rule.
We do not have Patent Trolls we have Legal Trolls. The biggest Legal Trolls of all are governments.
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.
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.
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