This lack of understanding of property rights causes multiple errors in both the paper and CATO’s and Reason’s analysis of this issue.  For instance, once you understand that patents are property rights you understand the purchase of patents by investors is not different that the purchase of a building from the builder.  The profits by the subsequent purchaser of the building are not “DEAD WEIGHT” costs and neither would a lawsuit by the purchaser to demand rent for someone squatting in their building.  When the (paying) occupancy rate for buildings is high this encourages the building of new structures.  The same is true for patents – when owners of patents receive good returns on their assets then inventors create more of these assets.

Unfortunately, the CATO Institute has become hopelessly lost on the issue of property rights.  They have adopted the Utilitarian point of view that property rights are just an efficient way of allocating scarce resources.  Professor Adam Mossoff has commented on this nonsense.  Mossoff states that Jeremy Bentham’s ideas are at the root of Libertarian’s attack on IP.  Bentham basic philosophy was Utilitarianism – the greatest good for the greatest number. Bentham stated that the reason for property rights was because of scarcity and conflict resolution not natural rights.  Mossoff then points out that the followers of Bentham argue that there is no conflict between people using the same ideas like there is with land.  Ideas can be copied and used endlessly.  This argument fails for because there is a conflict when a physical embodiment of the idea (invention) is created. The copier has clearly limited the return for the inventor and patent law only prohibits the physical embodiment.  I discuss the fallacies behind the scarcity theory of property at my post Scarcity: Does it Prove Intellectual Property is Unjustified and Scarcity -2 and Scarcity -3.  Mossoff points out that this is the philosophical point of view used by the Cato Institute and the Von Mises Institute to attack patents (IP).

Utilitarianism’s “greatest good for the greatest number” always leads to totalitarianism.  It also never leads to the purported goal.  The reason for this is that utilitarianism is merely a justification for short term actions.  Once something has been produced, it always looks like the greatest good is to redistribute the creation.  However, this is clearly only true in the short term.  In the long term it is clear that this always destroys the economy.  This is the theory behind the USSR, North Korea, and all socialist states.  As Ayn Rand pointed out you only need open your eyes to see that these countries do not produce the greatest good for the greatest number.  This is because stealing the product of one’s mind (mental labor is labor) is no different than banning free speech.  It stifles the mind, which source of all economic progress (values).

The CATO Institute’s article is under the header “Regulation.”  This again demonstrates that the CATO Institute does not know the difference between property rights and regulations.  Here are three easy questions for Libertarians, Socialists, and Economists to determine if a right is a monopoly (rent seeking) or 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?

Patents meet all the tests of property rights.  They are not a regulation.  Enforcing property rights does not result in dead weight costs.

Another great article on this issue can be found at Gametimeip entitled Myopic Patent Cynicism.

Wherever this moral goal has been tried it has resulted in human suffering, misery, disease, famine, death, and torture.  North Korea is the country that most encapsulates this moral goal today and it is a living hell.  The Soviet Union and Communist China also tried to implement this moral imperative and it resulted in the largest genocides in the 20^th century, resulting in the death of over 100 million people.  Attempting to following this moral code also resulted in the Dark Ages under the direction of the Catholic Church.  It is also why the Christian right is often ineffective at countering socialists arguments, since they accept the same moral goal.  These bad outcomes do not occur because the wrong people are in charge, they occur because slavery is immoral and this is the logical result of following an immoral goal.

The opposite moral imperative to ‘I am my brother’s keeper’ can be found in our Declaration of Independence – namely the RIGHT to Pursue One’s Own Happiness.

We hold these truths to be self-evident, that all men are created equal, that they are endowed by their Creator with certain unalienable Rights, that among these are Life, Liberty and the pursuit of Happiness.

This right to pursue your own happiness is the exact opposite of slavery.  It states that no one has the right to enslave you (or anyone) morally or legally.  Wherever this moral ideal has been tried it has always resulted in human happiness, abundance, technological innovation, increasing life spans, increase health care, and yes fewer environmental problems.  There is no contradiction between what is moral and economic abundance and human happiness.  This has not occurred because the right people have been in charge, it is the result of pursuing that which moral, namely FREEDOM.

Why should a blog directed to patents and inventions care about such a subject?  Because this idea of ‘I am my brother’s keeper’ has been raised in the cases Association of Molecular Pathology v. USPTO (which was original called ACLU v. Myriad) and in Mayo v. Prometheus and it is used by opponents of patents.  They all argue that the inventor has no right to his invention and the only reason we allow them to invent is to serve their fellow man.  In the ACLU case this argument was re-crafted as property rights should not stand in the way of science.

Slavery is immoral and a moral goal of slavery, even if it is suppose to be voluntary, is immoral.  Those who push the moral goal of slavery are advocating human misery, death, famine, and genocide.

MERRY CHRISTMAS

The Popes have long been the patrons and preservers of art, just as our new, practical Republic is the encourager and upholder of mechanics.  In their Vatican is stored up all that is curious and beautiful in art; in our Patent Office is hoarded all that is curious or useful in mechanics.  When a man invents a new style of horse-collar or discovers a new and superior method of telegraphing, our government issues a patent to him that is worth a fortune; when a man digs up an ancient statue in the Campagna, the Pope gives him a fortune in gold coin.  We can make something of a guess at a man’s character by the style of nose he carries on his face.  The Vatican and the Patent Office are governmental noses, and they bear a deal of character about them. (Emphasis added)

In the last fifteen years we have extended the copyright term to be almost infinite, we have criminalize willful copyright infringement and we have had numerous government programs to protect intellectual property, which always means copyrights and perhaps trademarks, but not patents.  Alternatively, we have spent the last fifteen years stealing the fees inventors pay to the patent office, we have forced the publication of U.S. inventors’ patent applications for the world to see and steal, we have vilified the actions of our greatest inventors such as Edison, calling them trolls and some have even suggested that Edison really made incremental improvements on other people’s inventions, and called inventor’s monopolists.  Twain would be horrified by our capitulation to Europe.  It says something about our character that we are following in the Popes footsteps.

There have been several books suggesting that you can patent human genes or parts of humans.  The latest is entitled Deadly Monopolies, which appears to be a rehash of David Koepsell’s Who Owns You?: The Corporate Gold-Rush to Patent Your Genes.  The first person to raise this issue was Michael Crichton.  None of these people are patent attorneys and they all misinterpret the claims of patents to be broader than they are.  We know Ms. Washington does not understand patents, because she mislabels them as a monopoly in the title of her book.  Ms. Washington also does not understand property rights.  Patent are property rights and you obtain title to your invention because you created something.  Monopolies are granted based on political decisions.

In Washington’s blog, she suggests that Myriad Genetics has patented a part of John Moore’s body.  This is clearly incorrect on its face.  The patent is for an isolated form of a gene that is an indicator of breast cancer.  The critics of gene patents have made this outrageous accusation that a patent covers a part of your body.  With the implication that just by being alive you are violating their patent.  This is complete nonsense, but great propaganda.  It appears that Ms. Washington really adds nothing to the discussion, but is just rehashing points that have already been made and proven wrong.

The Court of Appeals for the Federal Circuit when ruling on the Myriad case provided the following insights “Isolation of a DNA sequence is more than separating out impurities: the isolated DNA is a distinct molecule with different physical characteristics than the naturally occurring polymer containing the corresponding sequence in nature.” (P. 11 Slip Opinion – Judge Moore) He further states, “I decline to extend the laws of nature exception to reach entirely manmade sequences of isolated DNA, even if those sequences are inspired by a natural template.” P. 14 Moore.  He further explains the difference between this case and purified vanadium or uranium as, “Given the chemical differences highlighted by Judge Lourie’s opinion and discussed supra, the mere fact that the larger chromosomal polymer includes the same sequence of nucleotides as the smaller isolated DNA is not enough to make it per se a law of nature and remove it from the scope of patentable subject matter.  The actual molecules claimed in this case are therefore not squarely analogous to unpatentable minerals, created by nature without the assistance of man.” P. 15 Moore.  Harriet Washington, seems to have ignored all this information or simple does not understand the science and certainly does not understand the patent law.  I attempted to find out about Washington’s background to determine if she had a scientific background.  The only information I could find was that she had been a medical ethicist at Harvard, but nothing about her education.

While I have not read the book, Deadly Monopolies: The Shocking Corporate Takeover of Life Itself–And the Consequences for Your Health and Our Medical Future, by Harriet A. Washington, all indications are that the author does not understand the science or the law involved in this topic.  Her statements on her blog that gene patents spur profits not cures is example of the shallowness of her research.  See David E. Adelman & Kathryn L. DeAngelis, Patent Metrics: The Mismeasure of Innovation in the Biotech Patent Debate, 85 Tex. L. Rev. 1677, 1681 (2007), as clearly showing biotech patents have resulted in increase innovation.  Washington’s book is not about science, the law, or the truth, it is a propaganda attack on patents, property rights, and the pharmaceutical industry.

In the abstract of the paper, they conclude:

Our results have important implications for public policy. One is that patent laws and their enforcement matter for economic growth. However, our findings also suggest that patent rights vary by country and industry. We show that patent rights have a smaller impact on economic growth in poorer countries and in less patent-intensive industries. Since patent intensive industries account for a smaller share of the economies of the poorer countries, our results imply that the welfare gain in terms of economic growth for these countries is more likely to be outweighed by the welfare loss due to lower end-usage, and hence, tip the balance towards weaker rights being socially optimal.  Abstract

The paper’s conclusion with respect to “poorer” countries being better off with a weak patent system is pure conjecture and was not part of their study.  The reason that poor countries do not see a big boost by having stronger patent laws is: 1) poor countries are technologically backward and can advance economically by copying (purchasing) existing non-patented technologies, and 2) poor countries have poor property rights systems diminishing the effectiveness of their patent systems.  A poor country is poor because of its low level of technology.  Just raising a poor countries level of technology to the same level as the United States twenty years ago would result in huge economic gains.  The reason poor countries have a lower level of technology is because they have weak property right systems that results in under investment in technology (Capital Spending).  The paper hints at this point:

Our patent rights index depended on an assumption that enforcement of patent rights was correlated with enforcement of property rights in general, as measured by the Fraser index (The Fraser Institute does a study of economic freedom for all countries once a year). P. 10

In Figure 1, we plotted the Fraser index against the GP index (Patent Strength) scaled up by a factor of two.  The two indices were highly correlated. P. 10

In other words, there is a strong correlation between the strength of property rights in general with the strength of a patent system in a country. This should not be surprising since patents are property rights in inventions.  If you did a study of arbitrary government grants or monopolies versus the strength of patents in countries, you would find they are highly uncorrelated.  Despite the nonsense that suggests that patents are monopolies.

Another interesting point in the paper:

Among 15 Western countries over several centuries, enactment of patent law was associated with higher rates of scientific discoveries, inventions, and innovations.

Hu , Albert G.Z. and Png , I.P.L., Patent Rights and Economic Growth: Evidence from Cross-Country Panels of Manufacturing Industries, August, 2010.

Howells and Katznelson explain, “that Lemley has most of his facts wrong, misstates the holdings of several court cases, and misunderstands the commercial realities that surrounded implementation of these technologies.”  They show the Lemley does not clearly define each invention.  As the paper explains “under patent law‘s formal definition, the word invention refers to a single idea—Edison‘s high resistance filament, the Wright brothers’ wing-warping, Watt‘s steam engine condenser, etc.”  Anyone with even an elementary familiarity of patents knows that simultaneous inventions are very rare.  The Patent Office has a procedure (soon to be extinct) to determine which of two or more people are the true inventors of an invention.  These cases are extremely rare involving around 0.01% of all patent application filed.

As an example of Lemley’s gross negligence of the facts, with respect to Edison’s invention of the high resistance incandescent light bulb, the authors show that a court found:

It is very clear to us that, in the original application for the patent sued on, the applicants had no such object in view as that of claiming all carbon made from fibrous and textile substances as a conductor for an incandescing electric lamp. Nothing on which to base any such claim is disclosed in the original application. We have carefully compared it with the amended application, on which the patent was issued, and are fully satisfied that, after Edison’s inventions on this subject had been published to the world, there was an entire change of base on the part of Sawyer and Man, and that the application was amended to give it an entirely different direction and purpose from what it had in its original form. (emphasis added)

But Lemley ignores this part of the history and asserts that this is a case of simultaneous invention.

The actual invention of Sawyer and Man was:

improvements were directed at having a lamp filled with an absorbent of carbonic acid gas, a spring-loaded feeder feeding a vertical carbon pencil upwards as it was consumed and a design for cheap carbon pencil renewal with easy sealing and exhausting of air. Lemley neglects to tell us that despite these improvements, and even after Edison’s invention, many of the [Sawyer & Man] lamps failed to last more than a few hours.

Lemley also ignores that :

the electrical resistance of these (pre-Edison) lamps was typically only a few Ohms and thus required large currents to power them, rendering power losses through long distribution wires prohibitive. Lemley also neglects to tell us that Sawyer & Man‘s light bulbs could not be used effectively more than a few feet away from a generator, and therefore had little commercial practicality

Please read the whole paper, A Critique of Mark Lemley’s “The Myth of the Sole Inventor” http://bit.ly/Lemley-Critique.  I will leave you one final quote from the paper.

One can only speculate how much longer it would have taken someone else to come up with Edison‘s idea had it not been for Edison‘s reliance on the patent system and the revenue it protected to support his research and development over the two years that he spent on inventing his incandescent electric lamp.

There are three main inventions in Atlas Shrugged, Rearden metal, the static electric motor, and the sonic destruction ray (aka Project X).  The story is intimately woven around these three inventions.

Below are the quotes (bolded) and context where necessary with my commentary.

1) Location 5796-5802  ”…’he didn’t invent smelting and chemistry and air compression.  He couldn’t have invented HIS metal but for thousands and thousands of other people. HIS Metal! Why does he think it’s his? Why does he think it’s his invention?  Everybody uses the work of everybody else.  Nobody ever invents anything.’ (Jim Taggart) She (Jim Taggart’s Wife) said, puzzled, ‘But the iron ore and all those other things were there all the time.  Why didn’t anybody else make that Metal, but Mr. Rearden did?’”

Rand anticipates Open Source socialists.  This idea that no one invents anything is the standard argument of collectivists, but it does not stand up to scrutiny.  Why has inventing been concentrated in the last two centuries in relatively small populations of the U.S. and western countries?

2) James Taggart angry about Rearden’s success

location 5832-      “‘…And Dr. Pritchett, the old fool, is going around saying that he knows Rearden didn’t invent that Metal- because he was told, by an unnamed reliable source, that Rearden stole the formula from a penniless inventor whom he murdered!”

This anticipates the defense of every infringer.

3) location 5808-5810 “I’m not sure it was so great-inventing this new Metal, when so many nations are in  need of plain iron-why do you know the People’s State of China hasn’t even got enough nails to put wooden roofs over peoples’ heads?”

Fast track for green tech at the PTO – Why, except for politics, are so-called green tech inventions more important than other inventions?

4) location 5812-5822     “No sensitive person these days-when there’s so much suffering around us- would devote 10 years of his life to splashing about with a lot of trick metals.  You think it’s great?  Well, it’s not any kind of superior ability, but just a hide that you couldn’t pierce if you poured a ton of his own steel over his head!  There are many people of much greater ability in the world, but you don’t read about them in headlines and you don’t run to gape at them at grade crossings-because they can’t invent non-collapsible bridges at a time when the suffering of mankind weighs on their spirit!”

5)  location 5827 “The country gave Rearden that Metal, now we expect him to give the country something in return.”

Dr. Ferris, State Science Institute response on the Bill Directive 10-289

6) location7042-7046 ” ‘Did you hire any research men of your own?’ ‘ Yes, yes, some- but let me tell you, I didn’t have much money to spend on such things as laboratories, when I never had enough funds to give me a breathing spell.  I couldn’t even pay the bills I owed for the absolutely essential modernizing and redecorating which I had to do- that factory was disgracefully old-fashioned from the standpoint of human efficiency…’”

Lee Hunsaker, owner of 20th Century Motor Co. after a lawsuit forced Midas Mulligan to sell, and then Mulligan Galted

Our accounting rules don’t value inventions.  No accounting system shows any return for an invention.  I and other have written about how our accounting rules inhibits investment in the inventing process.  See Accounting Inhibits R&D http://hallingblog.com/accounting-inhibits-rd/

7) location 7111 “Our aim was not to produce gadgets, but to do good.”

Sounds like President Obama or President Bush’s 1000 points of light.

 location 7126 ” Don’t you know any words but ‘engineer’?”

Ivy Starnes, sister of Gerald Starnes, last owners of 20th Century Motors, on their “great plan” to change the factory that caused its failure and response to Dagny’s urgency for the names of the engineers working on the revolutionary motor

Do we value our engineers? Sales people and marketing managers are compensated more than corporate inventors/engineers.  Perhaps this is related to our dysfunctional accounting systems.

9)  location 7300-7302 “‘The secret you are trying to solve involves something greater-much greater-than the invention of a motor run by atmospheric electricity.  There is only one helpful suggestion that I can give you: By the essence and nature of existence, contradictions cannot exist.’”

Dr. Akston, professor of philosophy, speaking to Dagny about why people have Galted

10) location 196 “Anyway, this should be my lead for the character of John Galt.  He, too, is a combination of an abstract philosopher and a practical inventor; the thinker and the man of action together…”

Ayn Rand, forward to Atlas Shrugged

Iillustrating the fallacy of the “tinker-er, mad professor/inventor”

11) Location 152-154 “ [ Galt represents]…For Dagny, the ideal. The answer to her two quests: the man of genius…is expressed in the search for the inventor of the engine.”

Forward to Atlas Shrugged

12) Location 3758- 3763   “He [Rearden] had devised a new type of truss. It had never been made before and could not be made except with members that had the strength and lightness of Rearden Metal.  ‘Hank,’ she [Dagny] asked, ‘did you invent this in two days?’  ‘Hell, no. I “invented” it long before I had Rearden Metal.  I figured it out while making steel for bridges.  I wanted a metal with which one would be able to do this, among other things.’”

Dagny asking Hank about the invention of his new bridge truss

An illustration of advanced inventing: what could I do if…  I have written on this process before, see How to Build a Patent Portfolio that Dominates Your Market Place http://hallingblog.com/how-to-build-a-patent-portfolio-that-dominates-your-marketplace/

Evolutionary vs. revolutionary technologies: how one invention opens up myriad new inventions. This passage illustrates that each invention can open up the possibility of more inventions and there is no finite number of inventions to be created.

13) Location 6377   Hank and Dagny find motor

14) Location 7777-7780  “’ A man with the genius of a great scientist, who chose to be a commercial inventor?  I find it outrageous.  He wanted a motor, and he quietly performed a major revolution in the science of energy, just as a means to an end, and he didn’t bother to publish his findings, but went right on making his motor.  He did he want to waste his mind on practical appliances?’ ‘Perhaps because he liked living on this earth,’ she [Dagny] said involuntarily.”

Dr. Stadler speaking with Dagny

France vs England at the beginning of Industrial Rev.  France was just as advanced in science, if not more so, however, their scientists didn’t work on practical applications or with practical inventors.  Only those admitted to the French Academy of Sciences were considered worthy – there was a stiff hierarchy.  In England, practical inventors interfaced with the scientific community aided by a patent law that did not care (as much) if the inventor came from the Academic Community.  For more information see The Most Powerful Idea in the World http://www.amazon.com/Most-Powerful-Idea-World-Invention/dp/1400067057.

15) Location 8968-8972 “Then is money made by the man who invents a motor at the expense of those who did not invent it?  Is money made by the intelligent at the expense of fools?…Money rests on the axiom that every man is the owner of his mind and his effort…”

Francisco d’Anconia response to Money is the root of all evil

Anticipating the absurd arguments of Von Mises economists who want to use the inventions without paying the creator

Man’s mind is the key factor in production for humankind

15) Location11722- 11724     “Point Three.  All patents and copyrights pertaining to any devices, inventions, formulas, processes and works of any nature whatsoever, shall be turned over to the nation as a patriotic emergency gift by means of gift certificates to be signed voluntarily by the owners of such patents…the Unification Board shall then license the use of such patents and copyrights to all applicants, equally and without discrimination, for the purpose of eliminating monopolistic practices…”

Directive 10-289

Rand anticipated the nonsense of considering patents a monopoly.

This anticipates the actions of the Bush administration’s response to the anthrax scare: threatening a drug company to lower their prices on the antidote, or they would compulsory allow other companies to manufacture

It also anticipates Obama proposal to reduce the length of pharma’s patents to 7 years

And anticipates Liberals demanding that the drug companies reduce their costs for elderly, poor, and 3^rd world.  Most countries already have made use of these compulsory measures, which leads to higher costs in the US where the inventions originate.

This illustrates people’s lack of understanding about the importance of property rights

16) location 11729  “Point Four. No new devices, inventions, products, or goods of any nature whatsoever, not now on the market, shall be produced, invented, manufactured or sold after the date of this directive.   The Office of Patents and Copyrights is hereby suspended.”

Sounds like the failure to fully fund the PTO and

Dudas’ irrational rationing of issuances of new patents

17) Location 11765  “A man’s brain is a social product.  A sum of the influences that he’s picked up from those around him.  Nobody invents anything, he merely reflects what’s floating in the social atmosphere…”

Dr. Ferris’s view there is no such thing as genius

Of course this begs the question, why are the majority of inventors in this world concentrated in so few countries?

18) Location 11817  “ We won’t have to worry about new inventions upsetting the market”

Explains why large multi-nationals want to pass the America invents act- to stifle disruptive competition

19) 11839  “There’s been enough invented already-enough for everyone’s comfort-why should they be allowed to go on inventing?”

You are either moving forward or moving backwards.  You cannot remain static. The reason why is in post Sustainability isn’t Sustainable http://hallingblog.com/sustainability-isn%E2%80%99t-sustainable/.

20) location13028   “…the boy had cared for nothing but his studies, not for sports or parties or girls, only for the vision of the things he was going to create as an inventor.”

Young genius commits suicide on eve of passage of Directive 10-289

21) Loc 11880  “…Taking over the patents is fine.  Nobody’s going to defend industrialists.  But I’m worried about taking over the copyrights. That’s going to antagonize the intellectuals.  It’s dangerous.  It’s a spiritual issue…”

Lawson responding to Mouch on impact of Directive

See the Copyright Term extension Act vs. America Invents Act- We are constantly weakening patent rights on one hand and strengthening copyrights.

This anticipates that Congress is always concerned about artists but could care less about inventors

22)  loc 15001”… Dwight Sanders? Where was the inventor of her motor?”

23) loc 15237   “…in whose arms? ‘ why the inventor of the motor.’ She gasped, closing her eyes; this was one connection she knew she should have made.”

24) Loc 15318 “The young inventor of the 20^th century motor company is the one real version of the legend, isn’t it?”

Dagny on crashing into Galt Gulch

25) Loc 15587 “…I ask less of the men to whom I trade it for the things I need.  I add an extra span of time to their lives with every gallon of my oil that they burn.  And since they’re men like me, they keep inventing faster ways ways to make the things they make- so every one of them grants me an added minute, hour, or day with the bread I buy from them, with the clothes, the lumber, the metal…”

Wyatt on living in the Galt Gulch

This is a response to the whining about paying inventors or their patents stifling competition is nonsense, unless you want something for nothing

26) Loc 15777  “she was looking at the inventor of the motor, but what she saw was the easy, casual figure of a workman in his natural setting and function…”

Dagny observing Galt at work in the Gulch

27) Loc15989 “…no more than we consume for our immediate needs-with not a penny nor an inventive thought left over to harm the world.  It is evil to succeed, since success is made by the strong at the expense of the weak?”

Galt explaining to Dagny why they are on strike

28) Loc 16896 “that sacred fire which is said to burn within musicians and poets-what do they suppose moves an industrialist to defy the whole world for the sake of his new metal, the inventors of the airplane, the builders of railroads, the discoverers of new germs or new continents have done through all the ages?”

This demonstrates the absurd argument that artists are creative but inventors and scientists aren’t creative

29) Loc 17033  “…john intended to be an inventor, which meant that he was to be a physicist…”

Dr. Akston on the three brilliant students

30) Loc 17709  “…fraudulently solemn voice magnified by the microphone inventor’s ingenuity into the sound and power of a giant…”

Mouch getting ready to announce Directive 10-289.

31) Loc17745  “…Project X would not have been possible, this great invention will henceforth be known as the Thompson Harmonizer!”

32) Loc 17785  “..who invented that ghastly thing?”

Dr. Stadler talking to Dr. Ferris about the Thompson Harmonizer (Sonic Destruction Ray aka Project X)

33) Loc 17791  “’ what is the practical purpose of this invention?  What are the ‘epoch-making possibilities’?  ‘Oh, but don’t you see?  It is an invaluable instrument of public security.  No enemy would attack the possessor of such a weapon.”

Stadler asking Ferris about Project X, realizing it was his research that led to the invention

34) Loc17819   “…voice galloping across the continent with a description of the new invention…”

Dr. Ferris on Project X

35) Loc 17828 “This great invention was the product of the genius of a man whose devotion to the cause of humanity is not to be questioned…”

Wesley Mouch discussing Project X.

36 Loc 17836 “…the new invention was an instrument of social welfare, which guaranteed general prosperity… this invention, the product of dr. Robert Stadler…”

Announcer to the world on project x

37) Loc 17852 “…if people should misunderstand the nature of the new invention, they’re liable to vent their rage on all scientists.  Scientists have never been popular with the masses.”

Dr. Ferris talking about Project X

38) Loc 17853 “…this invention is a great, new instrument of peace…”

More on Project X

39) Loc 17875  “ Dr. Stadler could not believe it at first-that the new invention was to be greeted with particular gratitude by the mothers of the country.”

More on Project X

40) Loc 17956   “…fraudulent voices talking about some sort of new invention that was to bring some undefined benefits to some undefined public’s welfare.”

Dagny overhearing the broadcast

41) Loc 18603 “…he is the man who invented the motor we found…”

Dagny telling Hank that John Galt exists

42) Loc 19113 “wondering whether some invention of his own, some device of rays and lenses, permitted him to observe her every movement…”

Dagny wondering how Galt has followed her progress the past 10 years

43) Loc 19403 “They were both performing an expected routine, a routine invented by someone and imposed upon them, performing it in mockery, in hatred, in defiling parody on its inventors.”

Taggert with Lillian Rearden

44) Loc 20698 “…while you were combing the country for the inventor of my motor…”

Galt explaining to Dagny that he was working as a lineman for Taggert Transcontinental all this time

45) Loc 21962 “that the alleged short-cut to knowledge, which is faith, is only a short-circuit destroying the mind-that the acceptance of a mystical invention is a wish for the annihilation of existence and, properly, annihilates one’s consciousness.”

Galt radio speech

46) Loc 22391 “…you would not be able to fulfill or even to conceive your wishes.  You would not be able to desire the clothes that had not been made, the automobile that had not been invented, the money that had not been devised…”

Galt radio speech

47) Loc 22396 “just as your mystics of spirit invented their heaven in the image of our earth, omitting our existence, and promised you rewards…”

Galt radio speech

48) Loc 22454 “physical objects cannot act without causes. That his organs of perception are physical and have no volition, no power to invent or to distort, that the evidence they give him is an absolute, but that his mind must learn to understand it…”

Galt radio speech

49) Loc 22495 “a student reading a book understands it through a process of-blank-out.  A scientist working on an invention is engaged in the activity of-blank-out.” [how most  teachers explain the world]

Blank-out is Rand’s way of showing that people refuse to acknowledge the process of reason, of thinking

50) Loc22577 “You who have never grasped the nature of evil, you who describe them as ‘misguided idealists’-may the God you invented forgive you!”

Galt radio speech

51) Loc 22594 “…when I worked in your world, I was an inventor.  I was one of a profession that came last in human history and will be first to vanish on the way back to the sub-human. An inventor is a man who asks ‘Why?’ of the universe and lets nothing stand between the answer and his mind.”

It is interesting that Rand points out that being an “inventor” was one of the last professions in human history.  Perhaps the first person to take on the profession of a being an inventor was Galileo, who lived in Venice.  Venice passed the first modern patent laws in 1474.  The U.S. has been the preeminent producer of people who made their living as inventors.  The America Invents Act is another step along the path of ensuring that no one will make a living as an inventor in the U.S. anymore.

In fact, whenever you see great periods of prosperity, you see large numbers of new inventions.  Whenever you see a lack of inventors inventing, you can be assured we are stagnating economically

52) Loc 22621 “…whether you would be able to invent a wheel, a lever, an induction coil, a generator, an electric tube,-then decide whether men of ability are exploiters who live by the fruit of YOUR labor…”

Galt radio speech

53) Loc 22631  “…dream of enslaving the material providers who are scientists, inventors, industrialists…”

Galt radio speech

54) Loc 22644 “…and to exile from the human race the hero, the thinker, the producer, the inventor…”

Galt radio speech

55) Loc 22875 “you failed to recognize the motor I invented-and it became, in your world, a pile of dead scrap.”

Shows nations and people are wealthy because of their mind-embodied by their inventions and technology-not their natural resources, labor and land.

56) Loc 22947 “…Nor will he give ten years of unswerving devotion to the task of inventing a new product… they will seize his rewards and his invention”

Galt radio speech

57) Loc 22958 “…for the work of the inventor who created the product which you spend your time on making, for the work of the scientist who discovered the laws that went into the making of that product…”

Galt radio speech

58) Loc 22974 “in proportion to the mental energy he spent, the man who creates a new invention receives but a small percentage of his value in terms of material payment, no matter what fortune he makes, no matter what millions he earns.  But the man who works as a janitor in the factory producing the invention, receives an enormous payment in proportion to the mental effort that his job requires of him.”

Hear, Hear

59) Loc 23002 “…they deliver their science to the service of death, to the only practical purpose it can ever have for looters: to inventing weapons of coercion and destruction.”

This is not about self-defense, it is about the policies we pursue that force us to spend so much time and talent and money on defense

60) loc 24304 “I’m Robert Stadler- he had thought-it’s my property, it came from my discoveries, they said it was I who invented it…”

Stadler on seizing Project X under his control and rule the country

61) Loc 24400 “’I invented it! I created it! I made it possible!’ ‘You did?  Well, many thanks, but we don’t need you any longer.  We’ve got our own mechanics.’ ‘Have you any idea what I had to know in order to make it possible?  You couldn’t think of a single tube of it!  Not a single bolt!’…’What claim do you have to it?’ Meigs patted his holster. ‘This.’”

Mayo’s argument in the Prometheus case,  patent claims cover a natural phenomenon and are therefore not patentable, does not pass the laugh test.  The Prometheus invention is a method of treating Crohn’s disease.  There is no method of treating Crohn’s disease in nature, other than letting the disease take its natural course.  Mayo’s defense is clearly an immoral attempt to appropriate the property of the inventor.

ACLU’s arguments in the Myriad case run the gamut from: patents are monopolies, to the patent office (PTO) actions violated their 1^st Amendment free speech rights, to property rights should not stand in the way of science, to the need of public out weighs the property rights of the inventor, and finally to the idea that patent claims to “isolated genes” cover “products” of nature.  Mayo justification for stealing other people’s property rights is right out of Ayn Rand’s Atlas Shrugged.  Every looter tries to denigrate patents by claiming they are a monopoly.  Patents are granted because the inventor created something new that did not exist before.  This is the basis of all property rights.  The value of science over property rights is also straight from Atlas Shrugged – the State Science Institute (in the novel) makes exactly the same argument.  The needs of the public or the poor are the arguments of every dictator from Hitler, to Stalin, to Mao and now includes the Mayo Clinic.  One argument that was so bizarre that even Ayn Rand could not anticipate it was the free speech claim.  Nothing in patent law or the regulations say anything about speech.  Their argument seemed to be that other people’s property rights were interfering with their free speech rights.  This is a rehash of a Marxist argument,  based on the idea that my need for an outlet for my speech means that you have to give me your property to achieve my need.  It is not surprising to see the ACLU rehashing tired, worn out, and intellectually dishonest socialist arguments, but for Mayo to be associated with them is frightening.

The only argument the trial court addressed was the idea that claims to “isolated genes” are a product of nature.  The trial court opinion was  156 pages of rambling nonsense by a senile judge who does not understand patent law.  Despite this, it is clear to anyone who wants to exercise their reason,  genes are not found in isolation in nature.  Even the argument that they are in isolation during mitosis does not separate them from the cell or from the human body.  As a result, the nonsense argument that this allows companies to own a part of you is without any foundation.

Mayo has not only put forth intellectual dishonest arguments for stealing Myriad’s inventions,  they are also  hypocrites.  Mayo owns three patents directed to “isolated genes”: see USPN 5981217 and USPN 5618695 and USPN 6207375, ironically for Breast Cancer.  The patent, 6207375,  shows that the argument by Mayo researchers, namely, that it is impossible to design around the Myriad patents is nonsense and is being used as just another excuse to steal other people’s property.

Mayo better wake up and realize that using the government to be a parasite works both ways.  With the likely enactment of the America Invents Act, Mayo will soon get a taste of their own medicine.  Unfortunately, they are likely to hurt a number of innocent people along the way.

The researchers at Mayo need to understand that their management will not confine their theft to just outside inventors.  The reason Mayo supports the America Invents Act and is pushing these lawsuits is that they do not want to pay for people’s inventions whether they be internal or external inventors.  Weakening our patent laws has been a favorite way for large companies to reduce the wages they have to pay for engineers and scientists.

These cases are likely the tip of the iceberg of Mayo’s systematic theft of other people’s intellectual property.  The cost of filing a lawsuit has probably discouraged many other’s from filing a patent infringement case against Mayo.  The actions by the management at Mayo should result in their immediate firing, imprisonment for theft and civil racketeering.

Part 1 of 8: Introduction

This part is a general discussion of the state of the economy and how Ayn Rand’s ideas apply.  Mossoff argues that intellectual property has risen to prominence and discusses all the new advances in technology that are based on IP.  He explains that Leftists and Libertarians have joined in an all out attack on IP, particularly patents. He also argues that “Net Neutrality” is an attack on IP.  He notes that recent Supreme Court cases have significantly weakened patent rights.  He concludes with the idea that all property is really intellectual property.

Part 2 of 8: All Property is Fundamentally Intellectual Property

From this point forward the lecture focuses on patents and inventions.  Ayn Rand stated that patents are the heart and core of property rights.  The talk is about the moral justification for IP.  All property is based on two concepts: 1) the nature of value, and 2) man as a rational animal and his mind is his basic tool of survival.  It is only life that makes the concept of value possible.  Unlike other animals, man has to first determine what values are necessary to sustain his life using his mind.

Professor Mossoff seems to be making an argument that all products/services we use are/were inventions (products of the human mind).  They may have been invented a long time ago, but they do not exist in nature (separate from man) and therefore they had to be invented by man before they could be produced.  He then points out that human needs do result in the creation of products/services to fill those needs.  First, the solution to the need has to be invented and produced and only then can the need be satisfied.

The birth of Industrial Revolution corresponds with the creation of property rights in inventions, i.e., patents.  I make this point in my post, Source of Economic Growth.

Part 3 of 8: The Industrial Revolution

The Industrial Revolution was an explosion of inventions that occured when patents were created.  Daniel Webster argued that an invention is the product of the inventor’s mind and he has more rights to his invention than any other property.  Mossoff quotes a US judge in the 1800s who states that patents are a natural right.  Mossoff argues that theUSpatent system (first modern patent system) was the key reason theUSsurpassedEnglandas the driving force of the Industrial Revolution.  This explosion of inventive and economic activity in theUSamazed Europeans.

Ayn Rand in Atlas Shrugged refers to machines as the frozen form ingenuity.

Mossoff states that Jeremy Bentham’s ideas are at the root of Libertarian’s attack on IP.  Bentham basic philosophy was Utilitarianism – the greatest good for the greatest number.  Bentham stated that the reason for property rights was because of scarcity and conflict resolution not natural rights.  Mossoff then points out that the followers of Bentham then argue that there is no conflict between people using the same ideas like there is with land.  Ideas can be copied and used endlessly.  This argument fails for two reasons.  One, there is not conflict between ideas, but there is a conflict when a physical embodiment of the idea (invention) is created.  They the copier has clearly limited the return for the inventor.  Second, a specific purpose of patent laws is to spread the knowledge behind the invention so that other inventors can take advantage of this knowledge – so patents do not limit access to knowledge they increase it.  I discuss the fallacies behind the scarcity theory of property at my post Scarcity: Does it Prove Intellectual Property is Unjustified and Scarcity -2 and Scarcity -3.  Mossoff points out that this is the philosophical point of view used by the Cato Institute and the Von Mises Institute to attack patents (IP).

Utilitarianism’s “greatest good for the greatest number” always leads to totalitarianism.  It also never leads to the purported goal.  The reason for this is that utilitarianism is merely a justification for short term actions.  Once something has been produced, it always looks like the greatest good is to redistribute the creation.  However, this is clearly only true in the short term.  In the long term it is clear that this always destroys the economy.  This is the theory behind theUSSR,North Korea, and all socialist states.  As Ayn Rand pointed out you only need open your eyes to see that these countries do not produce the greatest good for the greatest number.  This is because stealing the product of one’s mind (mental labor is labor) is no different than banning free speech.  It stifles the mind, which source of all economic progress (values).

Part 4 of 8: Libertarians Assume Resources

Mossoff shows that Libertarians ignores the creation of these inventions.  They just assume they exist.  The Leftists version of this in theUSis the statement “theUSis the wealthiest Nation in the World” and therefore we should be able to afford X (national health care, social security, free education, fill in the blank).  Both groups ignore how and why these resources were created.

Libertarians deny the very foundation of all property rights in their attacks on IP – the rational mind.  Libertarians embrace the anti-mind collectivist premises that Leftist use to attack all property rights.  I made the same point in my book The Decline and Fall of the American Entrepreneur.

Part 5 of 8: Why the Utilitarian Defense of IP Fails

Mossoff points to the ACLU v. Myriad, see my post ACLU – Gene Patent Non-Sense.

Value creation is the source of property rights according to Ayn Rand.  Mossoff states that it is no coincidence thatRandin Atlas Shrugged had the state nationalize all patents in the infamous Directive 10-289.  It was because patents are the most fundamental of all property rights.  Man’s mind is the root of all material value ever produced in the world.

Mossoff argues that Locke’s labor theory of property is incorrect.  He argues that Locke was specifically talking about physical labor.  Note it takes calories and effort to perform mental labor, so the distinction between physical labor and mental labor is not that one involves the physical transform of the world.  (A similar point seems lost on computer programmers).  I would argue that Locke never intended labor to mean “physical labor” but productive effort in modern terms.  However, Locke also never clearly defined that all material values comes from the mind.

Part 6 of 8: Question -1

The question is from a teacher at theHenryGeorgeSchoolwho suggests that Kilby and Noyce’s decision to resolve the interference (who owns the patent) to the integrated circuit by not pursuing a patent resulted in faster development of the IC.  Mossoff points out that this is fallacy.  First, other people would have been inspired to design around the patents or license them and there is no evidence that the development of the IC would have been slowed down.  (Most patent attorneys will tell you that there has never been a patent that cannot be designed around eventually)  Second, the macroeconomic evidence shows that countries with weak patents are slow to adopt new technologies.  Third, Mossoff points to the Bayh–Dole Act, which was enacted because federally funded research was not being commercialized.  The reason it was not being commercialized was that the ownership rights were uncertain.  This is a typical tragedy of the commons problem.  Fourth, Mossoff points out that when the uncertainty about the ability to patent genetically modified life forms was removed in theUSthe biotech industry took off.  Biotech languished inEuropefor another decade because of their resistance to recognize patent rights in genetically modified organisms.

The questioner clearly did not listen to a single thing that was being said during the lecture.

Part 7 of 8: Question – 2 & 3

Another question from a teacher at theHenryGeorgeSchool.  He suggest that land is special.  He argues that the value of land is often enhanced by what is done around your parcel of land and has nothing to do the owner’s labor.  As a result, he argues that people should pay “society” a rent for the use of the land.  The questioner is confusing externalities with property rights.  Externalities and spillover benefits have been used over and over by socialists to justify stealing from producers for the socialists pet projects.  The questioner also confuses luck with property rights.  Just because someone is lucky and becomes wealthy does not justify stealing from them.

Mossoff points out that land has value because people used their mind to create value from land.  Land has no inherent value.

The next questioner asks about multiple people who contribute to the invention of a chair.  In patent law this is why patent are a right to exclude, not the right to make something.  This ensures that all contributors have rights to the invention.  If we did not have a right to exclude, then the final inventor (or first inventor) would be the only one who would receive an economic return.

Part 8 of 8: Question – 4 . . .

Is IP enforcement of copyrights censorship?  Mossoff points out that if a Leftist comes into your house and spouts off socialist nonsense it is not a violation of their free speech rights to force them to either leave or shut up.  The right to free speech does not give you the right to use someone else’s property.  The government’s enforcement of your property rights is not a violation of the 1^st Amendment because you do not have a right to free speech while on or using someone else’s property.  Milton Freedman showed that free speech is actually impossible without property rights.

Another question suggests that IP slows down the adoption of new technologies.  There is absolutely no statistically valid evidence for this point of view.  There are anecdotal stories of this happening, but the actual evidence is that countries with weak patent rights have slower adoption rates of new technologies not vice versa.