Category: Philosophy
Business Insider: Google Gets An Absurd Patent For Its “Google Doodles”, by Matt Rosoff
An article in Business Insider, argues that Google’s patent (USPN 7912915) on Google Doodles is absurd. The patent describes a computerized 
method of creating a new company logo associated with an event. The modified company logo is associated with a link. Google uses this on their search page. The goal is to entice people to visit the webpage and increase the webpage’s traffic. A major goal of most websites is to increase their page views and the patent describes a new technology to achieve this goal.
The article demonstrates the ignorance of the author, Matt Rosoff. A patent is a property right in an invention. An invention is a new creation. This means that it has to be useful and to be an invention it has to use technology to solve the problem. This is exactly the sort of invention that patents were designed to protect. If someone copies Google’s technology, then they are clearly free loading off the efforts of Google. If the invention has no value, then the patent will not hamper anyone’s development efforts. If the invention has value, then using it without authorization is theft. As someone who has been enticed to click on the modified Google logo, I would say the invention appears to have value.
The author is so typical of anti-patent religionists that either ignore or are ignorant of what the true limits of a patent are. The author describes the patent as:
The actual methods described in the patent don’t seem to be anything special — it’s not like Google has some amazing unique way of changing its logo daily. It’s just creating a new image, storing it on a server, and uploading it to the Web server.
The scope of a patent is defined by its claims and the above characterization is much broader than the actual claims and makes it sound like there is no new technology involved in the patent. The claims require modifying the link to be associated with an event. The modified logo has to be linked to another page. And even my characterization does not capture all the limitations in the independent claims.
The anti-patent crowd misinterprets (purposely?) the scope of a patent making it much broader than it actually is, ignoring the real technology behind the invention. They then use these misinterpretations to demonstrate the absurdity of the patent. This dishonest technique has successfully hoodwinked the public and has resulted in exactly the outcome the author is against: namely a patent system that is biased in favor of large corporations at the expense of individual inventors and startups.
Business Insider: Google Gets An Absurd Patent For Its “Google Doodles“, by Matt Rosoff
Intellectual Property’s Great Fallacy,by Eric Johnson
This paper starts with a bold statement that the theoretical underpinning for intellectual property (patents & copyrights) “has been washed away.” Shortly thereafter it states “it’s hard to imagine big-budget Hollywood movies being made without copyrights. And many new pharmaceuticals would not have been brought to market without the inducement of the patent laws.” The paper never attempts to 
resolve this contradiction. But this is far from the only problems and errors with the paper.
Property Rights: Mr. Johnson does not seem to understand the basis of property rights or the difference between property rights and monopolies. He incorrectly states that patents and copyrights are monopolies. Patents and Copyrights are property rights and any definition of monopoly that includes patents also includes all property rights. This of course leads to the nonsense that all property rights are monopolies. For more information see The Myth That Patent are Monopolies.
Mr. Johnson tries to denigrate patents and copyrights by showing that their origin is from arbitrary government grants. In the case of patents this was reformed by the Statue of Monopolies. The exact same thing can be said of all property rights. All land was considered to be owned by the King and he arbitrarily gave monopolies over certain areas of land. This usually included the right to profit from the peasants on the land. If the noble who received this arbitrary grant of land crossed the King, the King could and did take back the grant. This practice continued at least until the U.S. Revolutionary War. For instance, most of the colonies were arbitrary grants of land and President Washington was given large tracts of land for his service in the French and Indian War. It was not until Locke that the theoretical basis for property was established, which is productive effort. Patents and copyrights are property rights given for the inventor’s or author’s productive effort. This theory of property rights acknowledges the reality that but for the creator the property would not exist and therefore the creator is the owner.
Extrinsic vs. Intrinsic Rewards: The main thesis of the paper is that creative activities do not need extrinsic rewards. In fact, the author argues that extrinsic rewards actually reduce the amount of creativity. His evidence appears to be survey data. However, survey data tends to be subject to a number of bias errors. The paper ignores the actual empirical evidence. The industrial revolution was an outpouring of new inventions. As explained in the book The Most Powerful Idea in the World “For a thousand centuries, the equation that represented humanity’s rate of invention could be plotted on an X-Y graph as a pretty straight line.”[1] “Then during a few decades of the eighteenth and nineteenth centuries” in England and the US that equation changed.[2] Michael Kremer published a study (Population Growth and Technological Change: One Million B.C. to 1990) that argued that inventive talent and motivation are randomly distributed throughout the population. His model works well until the industrial revolution. Then England and other common law countries significantly out invent the rest of the world and their GDP per capita also grows much faster than the other countries in the world.[3]
Mr. Johnson also repeats the myth of the First Mover Advantage. Even the author of the seminal paper on the first mover advantage has admitted that he overstated the case. There are numerous business books that have argued that it is better to be a copier, including In search of Excellence and more recently Copycats: How Smart Companies Use Imitation to Gain a Strategic Edge. For more information see More Evidence that Stealing Invention is a Business Strategy. My post Invention – A Financial Analysis, show that an inventor is always disadvantaged compared to a copier without property rights in his invention.
The paper argues that R&D managers at large corporations believe there are plenty of incentives for companies to invent aside from patents. First of all this survey data is selective. There are plenty of studies that show patents are critical for the success of start-ups. See Patent Signaling, Entrepreneurial Performance, and Venture Capital Financing . Once again Mr. Johnson’s data is selective at best. Large corporations are not highly inventive. According the SBA most emerging technologies are created by individual inventors and startups. See An Analysis of Small Business Patents by Industry and Firm Size.
Free Markets and Patents
Mr. Johnson makes a number of statements like “While intellectual property entitlements are conceded to be modes of interfering in a free market, they are nonetheless understood to be necessary to address a problem of “market failure.” This statement is based on the “Efficient Market Hypothesis.” This hypothesis has been an major excuse for interfering with markets and property rights by statists, while pretending to support free market capitalism. For instance, it is used to justify government involvement in education, labor markets, and limiting property rights through antitrust laws. Free market capitalism is not based on the efficient market hypothesis. It is based on property rights and contracts and the right of individuals to exercise these rights without government interference.
Value of Patents
Mr. Johnson makes the outrageous and completely unsupported statement that, “Patents have turned to be largely worthless to own, and, even worse, costly to defend against.” As shown above Patents (property rights for inventions) were essential for humans in escaping the Malthusian Trap. Patents have been shown to be critical for startups, see Patent Signaling, Entrepreneurial Performance, and Venture Capital Financing. IBM makes over $3B a year from licensing fees. Once again Mr. Johnson’s assertion is selective at best and perhaps purposely misleading.
Open Source
Mr. Johnson argues that the low cost of inventing has opened up opportunities for most people to be inventive and they are doing so in increasingly large numbers. Again his data is selective at best if not outright misleading. Since the advent of the open source and anti-patent movement the U.S. has faded from the clear technological and innovation leader of the world to being a second tier country according to most observers. People in the US are not talking about the explosion of innovation, but the implosion. Mr. Johnson seems to live in an academic fantasyland.
Conclusion
This paper may pass for an academic paper in today’s world, but it is not science. At best is a selective survey of existing research in this area. It does not add any new data, informatio, or conclusions. If it were a patent application, it would not pass the novelty test. However, this appears to be the norm for most of what is considered academic research today.
Intellectual Property’s Great Fallacy, by Eric Johnson
[1] Rosen, William, The Most Powerful Idea in the World”: A Story of Steam: A Story of Steam, Industry, and Invention, Random House, Kindle Version, location 258-264, 2011.
[2] Rosen, William, The Most Powerful Idea in the World”: A Story of Steam: A Story of Steam, Industry, and Invention, Random House, Kindle Version, location s64-270, 2011
[3]Kremer, Michael, Population Growth and Technological Change: One Million B.C. to 1990, Quarterly Journal of Economics, Vol 103, p. 681-716, 1993.
Larry Kudlow in an article titled How to Combat an Arrogant China, suggests that China’s economy is based on the theft of our intellectual property.
They’re stealing our technology, violating all sorts of patent-protection laws, hacking into Google and infringing on intellectual-property rights. In fact, 80 percent of Chinese software is reportedly pirated from American companies.
It is great to see Mr. Kudlow wake up to the value of intellectual property. Unfortunately, he seems to imply that enforcing intellectual property is not consistent with free trade.
As a strong free-trader myself, I recognize the many benefits free and open trade offers both China and the United States. But like many others, my free-trade patience with China is wearing thin.
If China stole its raw materials from the US, would it be a violation of free trade to then to demand that China pay for its raw materials? The single most important raw material that China uses to produce it products is intellectual property.
It is nice to see the Larry Kudlow is beginning to wake up to the importance of intellectual property particularly patents. Note that the US spent a lot of political capital in the 90s to get a mechanism to force other countries to strengthen their intellectual property as part of the TRIPs treaty. But no president has had the courage to actually use the mechanism to force other countries to live up to their agreements.[1] Perhaps this is because every president since Reagan has been ambivalent about patents at best. Only Hollywood and the software industry’s copyrights are able to get the attention of Washington. However, patents are much more important to the US’s economic future.
Perhaps now that Mr. Kudlow has woken up to the fact that the economy is driven by more than Wall Street, tax rates, and the money supply, he will help advance some initiatives that will strengthen patent laws both here an abroad for American inventors. Here is a short list of suggestions
1) Patent Reciprocity: If you drive your car across the border into Canada you do not lose title to your car. If you take your manuscript across the border into Canada you do not lose the copyright to your manuscript. But, if you take your invention across the border into Canada, you lose your patent protection and anyone can steal the invention – not the physical embodiment, but the underlying invention.
Patent reciprocity would automatically provide patent rights in a foreign country when you obtained a patent in the US and vice versa. This idea was first proposed by the US in the mid 1800s according to B. Zorina Kahn’s book “The Democratization of Invention: Patents and Copyrights in American Economic Development, 1790-1920”. Unfortunately, the idea died and since then patent rights have been part of the convoluted process of trade negotiations.
Patent reciprocity would significantly increase the value of patents and increase the value of research and development. As a result, it would spur investment in innovation. Reciprocity would increase the valuation of technology start-up companies in all countries that participated. It would also increase per capita income.
2) Repeal the Publication Requirement: This would restore the social contract
3) Repay PTO: Congress should repay the over $1B it stole from inventors with interest.
4) Repeal KSR: A subject standard of patentability just increases costs and uncertainty associated with the patent process. KSR makes bureaucrats the ultimate arbiter of what is patentable instead of logic.
5) Repeal eBay: This decision is logical absurdity. If a patent gives you the right to exclude, then if you win a patent infringement case you must be able to enforce your only right – the right to exclude
6) Eliminate “Combination of Known Elements”: The fact that the Supreme Court does not understand that every invention in the history of the world is a combination of known elements is pinnacle of ignorance. Have they ever heard of “conservation of matter and energy”?
[1] Pat Choate has documented this issue extensively
This is one the best ideas I have heard for improving our patent system. It was proposed by Gene Quinn of IPWatchdog. The idea is that after a certain period of time a patent becomes incontestable, meaning it cannot be challenged on validity grounds. This idea is similar to the idea of incontestability for trademarks or quite title suits for real property. Quite title suits recognize that having endless open questions about the title to property reduces its economic value and results in under-investment and under-productivity for that asset. 
The same is true for patents.
Incontestability could be part of a package that strengthens inter parties reexamination to allow appeals to the CAFC. Here is the way I envision it working. Five years from publication a patent would become incontestable. This would eliminate the defenses of lack of novelty, obviousness, on-sale bar, inequitable conduct, inventorship, best mode, utility, and statutory subject matter issues. This would increase the value of the property right. The evidence associated with these issues is often years old when raised in an infringement suit and not reliable. All these issues would have to be open for inter parties reexamination. However, there would have to be safeguards that inter parties reexamination is not just a fishing expedition to increase your competitor’s costs. As a result, all PTO (Patent Office) and court fees would have to be paid by the challenger. If a challenge to a patent is unsuccessful the challenger will have to pay the patent holder’s attorney’s fees. The reverse is not true. The patent holder has already paid to have the invention examined by the patent office. This would eliminate a lot of the costs and discover associated with patent lawsuits, which should result in faster, less expensive litigation. Justice delay is justice denied.
How would this affect the defenses of latches, equitable estoppel, and patent misuse. Latches should be limited to the statutory timeframes in 35 USC 286. Equitable estoppel is not appropriate in patent law. No one should be able to argue that they relied on the patent holder’s representations that are not in writing. We have many areas of law where agreements (representations) have to be in writing to be enforceable and this should be one of them. Patent misuse as it pertains to antitrust violations should not be a defense. All antitrust attacks on patents are based on a misunderstanding (misrepresentation) that patents are a monopoly not a property right. Exercising a legal property right should never result in an antitrust violation.
Critics may argue that it could be years before a company is confronted with a patent and the potentially infringing company may not even have existed when the five year incontestability period expired. This may be true, but we do not want companies creating me-too products or reinventing the wheel. If the company is building on the patent to create a new invention, then they should do their homework and determine if they are likely to infringe a patent. It is a waste of resources for companies to reinvent a patented invention. No longer should we reward purposeful ignorance.
Incontestability for patents is based on the same reasons we have for incontestability in trademarks and quite title suits for real property. It would reduce the number of issues in litigation, making patent litigation quicker and less expensive.
A good friend pointed this case out as an example of why software patents do not result in innovation. Here is my response:
Let’s unravel a number of issues:
1) Is this lawsuit frivolous?
2) Is the present system for litigating (obtaining) patents an intelligent way to resolve these issues?
3) What is the empirical evidence of whether strong or weak patents for software result in more funding, more products, and more employment?
1) Is this lawsuit frivolous?
I have not studied this case in enough detail to know the answer. The outrage over the Amazon one click patent was complete misplaced. The Amazon one click patent was a real invention, there was not a mountain of prior art that the critiques claimed, and it was copied and much more successful than previous techniques. The one click patent not only simplified the ordering process, it was more secure, and customer preferred it. The level of outrage about lawsuits is more about politics than about logic. By the way all Barnes and Noble had to do to avoid the patent was put in two clicks. I have heard no outrage about how lazy they were to not even write code that had two clicks.
Unfortunately the software industry has the habit of rewriting code, which is inefficient, instead of buying previously developed code. Despite the open source communities attempt to wrap themselves in the innovation flag, much of what they do is rewrite code that has already been written. This is not innovation, it is not productive, it is narcissism. In addition, many companies follow the policy of purposeful ignorance. Meaning they purposely do not have their engineers look for prior art to supposedly avoid willful infringement. We should not reward purposeful ignorance and we should not encourage people to reinvent the wheel.
Note that when Fritz Haber invented the process of fixing nitrogen the competitor of Bosch said he should never have received a patent. He went one to win the Nobel Prize in Chemistry and this invention is the main reason we are not presently starving. Again, the level or outrage is a tactical decision, it is not a reasoned argument.
2) Is the present system for litigating (obtaining) patents an intelligent way to resolve these issues?
There are a number of problems with the way our patent system is implemented. Why do we have judges who do not understand patent law and do not understand the underlying technology (facts) deciding this cases. They are ignorant on the law and the facts. In addition, we have made it so expensive to litigate in federal court that justice is secondary (tertiary) to the cost of litigation. Many large companies use this fact to pursue a policy of efficient litigation. You should not confuse the problems with the system of adjudicating the conflict with the value of the underlying property right. My clients have been the victims of this absurd lottery system. But. they have also been the victims of big companies who believe in efficient infringement.
In my opinion, we need a set of special courts that hear patent cases. The amount of discovery should be significantly limited, because this is the big cost of these lawsuits. Perhaps we should implement a loser pays system. The timeframe should be significantly limited, such as one year to the end of trial. We should also limit the number of issues. For instance, only infringement and prior art validity should be considered. Arguments by the defense of inequitable conduct are mainly made to increase the cost to the patent holder and to allow the defense to go on a fishing expedition. The threshold for inequitable conduct needs to be much higher. Many of the things claimed to be inequitable conduct are not, they are excuses to steal other people’s inventions.
Patents on software also suffer from a couple of problems. One is that we decided not to allow patents for software back in the 70s. As a result, the patent office does not have a good base of prior art. This means they are going to make more mistakes in both allowance are rejecting these kinds of inventions. Second, the time (4-10 years) that it takes to get a patent, particularly one on software, through the patent office causes all sorts of problems. These problems are not inherent to software. They are the result of purposeful decisions. Why has Congress taken (stolen) a billion dollars of user fees from the patent office? If it took 2-10 years to obtain title to your house and the risk of losing your property in court was high, would you say that we should not have property rights in real property? Or would you say the process of obtaining and defending these rights flawed. The problem is not with the property right it is with the implementation.
3) What is the empirical evidence of whether strong or weak patents for software result in more funding, more products, more employment?
Every study on this issue is overwhelming. It shows that software investment, products, and employment all took off as it became clear that you could obtain a patent on software –see the 1990s. When the open source began to successfully attack software patents, the number of product stagnated, the number of software employees stagnated, and investment in software stagnated – see this decade.
If a lack of patents was the key to software innovation, then North Korea, Libya, Nigeria should all be bastions of software innovation. The anti-software patent crowd argument is about emotion not logic.
David Kline, author of Rembrandts in the Attic, has added the following insight from history on the idea that patents are monopolies.
“The condemnation of monopolies ought not to extend to patents, by which the originator of a new process is permitted to enjoy, for a limited period, the exclusive privilege of using his own improvement. This is not making the commodity dearer for his benefit, but merely postponing a part of the increased cheapness (or excellence) which the public owe to the inventor,
in order to compensate and reward him for his service.”
John Stuart Mill, “Principles of Political Economy,” 1848
“The dawn of the right of inventors has been actually [contemporaneous] with the destruction of monopolies odious to the common justice of men; and the common sense of mankind has marked a distinction between such monopolies and the exclusive rights conceded to inventors. Their rights, under patents, are called ‘monopolies’ only from the poverty of language, which has failed to express in words a distinction which no less clearly exists.”
Louis Wolowski, Chair of Industrial Economics, Conservatoire des Arts et Métiers, 1864
“How can the exclusive right of an invention be compared with a monopoly in trade? How can the exclusive privilege to sell salt in Elizabeth’s time, which added not one bushel to the production, but which enriched the monopolist and robbed the community, and the exclusive right of Whitney to his cotton gin, which has added hundreds of millions to the products and exports of the country, be both branded, with equal justice, with the odious name of monopoly?”
George H. Knight, 1891
A patent is a property right, it is not a monopoly. For more information see The Myth That Patents are Monopoly.
Some people are suggesting that Congress has the power to abolish patents and copyrights in the United States. The argument is that Article 1, Section 8, Clause 8 of the Constitution states “The Congress shall have Power To promote the Progress of Science and useful Arts, by securing for limited Times to Authors and Inventors the exclusive Right to their respective Writing and Discoveries” and whether they exercise this power is optional.
This interpretation relies on the idea that when Congress is granted a Power it is unlimited. The United States was founded on the idea that Government power is not unlimited like the Devine Right of Kings. The United States was founded on the idea that powers of government are limited and come with duties, while Rights of citizens are unlimited and do not come with duties. I know this will come as a shock to those people raised on the modern liberal interpretation, which wants unlimited powers for government and sees the Bill of Rights as a list of negative rights – see Barack Obama. Congress, under Article 1, Section 8 also has the power to set “an uniform Rule of Naturalization, and uniform Laws on the subject of Bankruptcies throughout the United States.” This is not optional on the part of Congress, with the power comes the duty to establish these rules.
The interpretation of the Constitution that suggests Congress has the option to establish systems to protect inventors’ and authors’ rights is totally inconsistent with the history of the Constitution. The purpose of the Constitution was to set out the powers of the federal government. Article 1, Section 8 lists the powers but also the responsibilities of Congress. For instance, even the power to declare war comes with the responsibility to do so when the U.S. is under attack from foreign powers.
How do we know that Congress has the duty to protect the “Rights” of inventors and authors? Because the Declaration of Independence say so:
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. — That to secure these rights, Governments are instituted among Men,
It is well known that the unalienable Rights of the Declaration of Independence are the Natural Rights of Locke – Life, Liberty, and Property. Many people believe that Jefferson changed property to the pursuit of happiness because he was worried it would be interpreted as endorsing slavery. When the Founders used the word “right” they meant natural rights. The purpose of government is to secure these rights. When the Constitution states that inventors and authors have “Rights” in their creations, they mean natural rights and they understood that the purpose of governments was to secure these rights. This means that Congress has a duty to secure the rights of inventors and authors under Article 1, Section 8, Clause 8. If the words patent and copyright are meant as rights in inventions and writing, then it is clear Congress does not have the option of eliminating them. It is also clear that patents and copyrights are not limited by the preamble. Natural rights are not utilitarian, but are endowed on men by their Creator.
The author, Matt Ridley, has written an excellent book that is epic in the scope of issues he tackles. The book covers why homo sapiens thrived while other members of the homo genus fail. He shows that on average the human condition has gotten consistently better and this increase in wealth has been especially true in the last 200 years. He destroys the noble savage myth. He shows the intellectual failings of Marxism, environmentalism, self sufficiency, and renewable energy. His two main themes underlying these vast topics are: 1) 
trade leads to division of labor, which leads to invention and 2) the inexorable march of human progress.
Despite Mr. Ridley’s incredible breadth of knowledge, there is a logical gap in his first thesis when he attempts to explain the industrial revolution and why it took off in England. This logical gap is the result of his misunderstanding of intellectual property.
This misunderstanding of intellectual property is most likely due to his open source utopianism. This utopianism leads the book to conclude “Thanks to the internet, each is giving according to his ability to each according to his needs, to a degree that never happen in Marxism.” P. 356. Even with this imperfection, this is an incredible book that I highly recommend to anyone.
Population Density – Good or Bad for Wealth Creation?
The book argues that population density is necessary for trade and division of labor, which is the route to economic prosperity. It also argues that the division of labor leads to inventions, which leads to further specialization. Specialization requires a large enough market to support it and as a result population density is the friend of economic progress. However, later in the book it argues that increasing population caused a decline in the living standards of Japan and Denmark. This decline supposedly occurred because the increasing population decreased the value of labor and therefore the market for specialization and inventions. England escapes this fate because of coal and phantom land in the colonies. This contradiction between the need for human density for specialization and economic progress and the idea that increased population density reduced the value of labor destroying the market for inventions is not adequately resolved.
The book argues, starting on page 52, that trade is what allowed homo sapiens to succeed where other apes failed and even other humans failed such as Neanderthals. It provides numerous examples of how various groups of humans regressed technologically because of inadequate population densities to support specialization, such as Tanzania. The book summarizes the lessons by quoting economist Julian Simon “population leading to diminishing returns is fiction: the induced increase in productivity is scientific fact.” P. 83.
In a chapter entitled “Escaping Malthus Trap,” Ridley discusses how Japan after a period of prosperity gives up its technology. He states “that sometime between 1700 and 1800, the Japanese collectively gave up the plough in favour of the hoe because people were cheaper to hire than draught animals.” P. 198. The reason for this according to Ridley was rapid population expansion due to paddy rice technology. This population boom made labor cheap and killed the market for technology. Denmark follows the same path as Japan and by the 1800s becomes “trapped by its own self sufficiency.” P. 200. Britain escapes the Malthusian trap that Japan, Denmark, and Ireland suffer, according to Ridely, because of selective breeding (maybe p. 200), ghost acres provided by the colonies (p. 202), release valve emigration to the colonies (p. 202), and coal (sustained industrial revolution p. 216.)
There is a logical inconsistency between the conclusion early in the book that population density is necessary for prosperity, but later in the book arguing that prosperity stalled after a burst in population in various countries. The explanation of selective breeding, does not explain why the US or Australia prospered. These countries were heavily populated by British rejects. Similarly, the ghost acres provided by the colonies were eventually used up. It might be argued that there was some tipping point that could only be achieved with ghost acres. I think this fails also, because it flies in the face of the book’s earlier argument that increased population densities allow more specialization and invention to increase everyone’s standard of living. The release valve emigration fails for the same reasons as the ghost acres. The emergence of coal is also unsatisfying. Coal mining was known before the birth of Christ and trade in coal occurred in England as far back as the 1300s, according to Wikipedia. The book also argues that many surges of economic growth were extinguished by parasitic political systems. However, it never states this is why Japan’s and Denmark’s prosperity was reversed.
What was new in the industrial revolution was not coal, but the machines to use coal and numerous other inventions. The book argues that these inventions were not in general due to new scientific discoveries, p. 255, and I agree. So why at this particular point in time did we have a sudden increase in rate of technological advance, including machines that used coal? The beginning of the industrial revolution coincides with the recognition of property right’s in inventions. The US constitution states (Article 1, section 1, clause 
that inventors have ‘RIGHTS” in their inventions. Patents, which are legal title to an invention, are the only free market system for encouraging people to invent. While Britain had a patent system at least back to the Statute of Monopolies, 1623, it did not recognize a right to property in one’s invention. It was a royal grant, subject to the whims of the ruling monarch. As a result, it was expensive and arbitrary. However, when the United States recognizes that inventors have a property right to their invention, this provides a whole new incentive to inventors and their financial backers. No doubt this attitude towards inventions also infected Britain. For more on the correlation between real per capita increases in income and patent systems see Source of Economic Growth.
Mr. Ridley argues that patents at best have marginal effect on the rate of invention. However, Mr. Ridley shows an appalling lack of knowledge about patents and intellectual property. He also has a number of inconsistent statements about intellectual property. For instance, on page 267, he states that copyrights have little effect on the creativity of musical composers. However, on page 326 he states that Nashville was saved by music entrepreneurs using good local copyrights in the 1930s. Not only are these two statements contradictory, there is no such thing as local copyrights in the United States.
Patents
The book has numerous other errors about intellectual property. For instance, it states that intellectual property is not like other property, because it is useless if you keep it to yourself, p. 262. This statement is nonsense. The Coca Cola formula is not shared and this is the only reason it has any value. A patent to an invention (legal title to an invention) only has value if there is some ability to exclude others from using it – as opposed to knowing about it. If everyone can make a laser without pay royalties, then it may have value to the world but it has no differential value to the inventor. Patents are derived from exactly the same philosophical basis as real property. Namely, Locke’s theory of Natural Rights. For more information see Scarcity – Does it Prove Intellectual Property is Unjustified? Below are a list of some, but not all, of the book’s errors related to patents:
1) The book then states that people get rich by selling each other things and services not ideas, p. 263. What are authors, professors, engineers, scientists, really selling? Authors are not selling books, they are selling ideas that just happen to be embodied in books. The Kindle proves this. The Kindle does not allow the user to buy a book, but to buy the ideas in a book. Professors are either selling the teaching of ideas or just an expensive way to bore students. Engineers are selling a service, which encompasses ideas not the paper (digital ones and zeros) on which it is written. Most companies do not make money manufacturing things, they make money with inventions (ideas) that are implemented in things. When a company only sells things with no (new) ideas in these things, then their profit margins are extremely narrow. One of the limitations on growth has been this Luddite refusal to allow inventors to specialize in inventing. This book’s premise is built on the division of labor, but the author rejects this idea when it comes to inventing.
2) Mr. Ridley also seems to be confused between the spread of information related to inventions and the legal right to use that information to build an invention. It is a major goal of modern patent systems to spread information about inventions so that they can be used by other people to build other inventions. In the U.S. we built patent depository libraries to spread the wealth of information in patents (before the internet). Patents encourage people to share the information associated with their inventions instead of keeping them a trade secret. Countries without patent systems tend to invent mainly things that can be protected with a trade secret. (See Switzerland before they adopt a patent system) As a result, other inventors do not get learn from these inventions and the rate of technological progress is inhibited.
3) The book perpetuates the first mover advantage alternative to patents. Xerox had the world’s greatest first mover advantage in plain paper copiers, when it agreed to settle an antitrust lawsuit in 1975 by giving away its patent portfolio. Its market share went from almost 100% in plain paper copiers to 14% in just four years. The first mover advantage is a fairy tale.
4) The book argues, p. 264, that there is no evidence that patents are what drive inventors to invent. This statement is completely illogical. Real property rights are not what drive farmers to farm or builders to build houses. Nevertheless, there would be a lot less building and less efficient farming, if we did not have real property rights. Just look at countries, where property rights in buildings and land are hard to impossible to obtain.
5) The book states that a number of inventions were never patented, p. 264, such as automatic transmission, Bakelite, ballpoint pens, cellophane, cyclotrons, gyrocompasses, jet engines, magnetic recording, power steering, safety razors and zippers. While it is possible that the first version of some of these inventions were not patented, all of these inventions were subject to numerous patents. This can be easily verified with a simple patent search. For instance, there are at least 20 patents and probably hundreds of patents on automatic transmissions. The same is true of ballpoint pens, gyrocompasses, jet engines, magnetic recording, power steering, safety razors and zippers. A simple internet search shows that chemist Leo Hendrik Baekeland (1863-1944) invented and first patented the synthetic resin that we know as Bakelite in 1907.[1] Jacques E Brandenberger was granted patents to cover the machinery and the essential ideas of his manufacturing process of the new film (cellophane).[2] The assertions of no patents for the zipper is also easily shown to be incorrect. Elias Howe, who invented the sewing machine received a patent in 1851 for an ‘Automatic, Continuous Clothing Closure’ (zipper).[3]
6) The book argues that the Wright brothers, enforcing their patent on airplane control surfaces, supposedly shut down the airplane industry in the US. This is the typical propaganda of open source community. First of all the Wright brothers were building airplanes, so the industry was not shut down by enforcement of the patents. Second stealing other people’s property is not shutting down industry, it is shutting down theft. We would not say that someone stopped the harvest of wheat, because they did not let someone else reap the wheat they planted on their land.
7) The patent thicket argument is repeated by Mr. Ridley to suggest that patents inhibit advances in technology. A number of papers[4] have shown that there is no empirical evidence for the patent thicket argument and that the logical analogies on which it is based are flawed. For more information see Intellectual Property Socialism: Part IV USPTO Takes Aim at Inventors.
Mr. Ridley further demonstrates his ignorance of patents by repeating the concern that the US Patent Office was issuing patents for human genes in the 1990s, p. 265. What the Patent Office did and does was issue patents on “isolated genes.” This is similar to patents on things like isolated forms of vitamin B12, which was patented. For more information see Gene Patenting Debate Continues.
9) The book also mistakenly calls a patent a “temporary monopoly.” A patent is a property right, just like property rights in land, houses, cars, etc. The logical basis for patents is exactly the same as other property rights. Property rights are based on Natural Rights, which states that since you own yourself you own the product of your labor (physical and mental). For more information see The Myth that Patents are Monopolies.
10) He also implies that patents are top down solution to encouraging invention. Nothing could be further from the truth. All a patent system does is provide property rights to inventors for their inventions. This is similar to property rights for land, which is a bottom up way to increase the productivity of farming for instance. Just giving pseudo property rights to peasants in the USSR and China caused enormous increases in farm production. Property rights are a bottom up solution, not a top down solution. In fact, the genius of the United States patent system (as opposed to Britain’s) is that it was accessible to all people, including women and slaves that had no property rights under their state laws. This encouraged a torrent of inventive activity in the U.S. that propelled it from a backward farming country to an economic and technological powerhouse in the world in less than 60 years. For more information see the excellent book by B. Zorina Kahn, The Democratization of Invention: Patents and Copyrights in American Economic Development, 1790-1920.
Open Source
I am convinced that Mr. Ridley’s poor research on patents and intellectual property is due to his infatuation with the open source movement. On page 356 he opines that genetic research will soon go open source. He is so excited about open source that he eventually suggests a Marxist’s open source utopia – “Thanks to the internet, each is giving according to his ability to each according to his needs, to a degree that never happen in Marxism.” P. 356
The open source movement has been a dismal failure. Its biggest success has been to extend UNIX (LINUX) to personal computers, other platforms, and add new features. Open source has mainly extended existing technologies, much like the incremental invention that can be expected from large companies. The open source movement deludes itself into believing they are fighting some sort of David versus Goliath battle against large corporations and the patent system. The reality is that open source developers are giving large corporations, such as IBM, their efforts for free and weakening the bargaining power of technical personnel. The open source movement plays right into the hands of large corporations and other large institutions, by weakening the property rights of developers in their work. It should be no surprise that open source has been an abysmal failure, since this exactly the situation most of the world lived under until 1800. Before modern patent systems, new inventions were rare and the return for the invention was often controlled by a trade guild. The members of the trade guild profited equally, meaning there was little incentive for the inventor to spend time creating. Per capita income of the world before 1800 had been stagnant for millennia. Where modern patent laws were adopted around 1800, incredible increases in per capita income occurred. Mr. Ridley trumpets this progress throughout his book. In areas without patent systems, we see stagnant growth in per capita income. For instance, Japan’s per capita income does not take off until they copy the US patent system in the 1860s.
It is unfortunate that this excellent book is disfigured by the author’s irrational infatuation with the open source movement. This infatuation causes the author to embrace the logical contradiction that increases in population density increase economic growth and also causes the Malthusian trap (decreases in economic growth). It also causes him to reject the solution to the Malthusian trap, which is the recognition of property rights in inventions.
[1] http://bakelitecollector.com/bakelite-history 7/21/10
[2] http://inventors.about.com/od/cstartinventions/a/Cellophane.htm 7/12/10
[3] http://inventors.about.com/library/weekly/aa082497.htm
[4] Ted Buckley, Ph.D., The Myth of the Anticommons, Bio, www.bio.org (2007); Epstien, Richard A., Kuhlik, Bruce N., Is there a Biomedical Anticommons, Regulation, (Summer 2004), pp. 54-58
The genesis of the non-obviousness standard (Inventive Step in Europe) was the Supreme Court’s decision in Hotchkiss v. Greenwood, 52 U.S. (11 How.) 248 (1851). This case first articulated the idea that the improvement that was the subject of a patent had to be more than “the work of the skilful mechanic.” The case involved making door and other knobs of all kinds of clay used in pottery, and of porcelain.[1]
The invention according to the patent holder was:
This improvement consists in making said knobs of potter’s clay, such as is used in any species of pottery; also of porcelain; the operation is the same as in pottery, by moulding, turning, and burning and glazing; they may be plain in surface and color, or ornamented to any degree in both; the modes of fitting them for their application to doors, locks, furniture, and other uses, will be as various as the uses to which they may be applied, but chiefly predicated on one principle, that of having the cavity in which the screw or shank is inserted, by which they are fastened, largest at the bottom of its depth, in form of a dovetail, and a screw formed therein by pouring in metal in a fused state.[2]
The Supreme Court upon reviewing the case made the common error of pointing out that each of the elements in the invention were known.
But in the case before us, the knob is not new, nor the metallic shank and spindle, nor the dovetail form of the cavity in the knob, nor the means by which the metallic shank is securely fastened therein. All these were well known, and in common use, and the only thing new is the substitution of a knob of a different material from that heretofore used in connection with this arrangement.[3]
All inventions are combinations of known elements since conservation of matter and energy means that you cannot create something from nothing, for more information see KSR: Supreme Ignorance by Supreme Court. As a result, this analysis by the Supreme Court is meaningless and sheds no light on whether the invention should have obtained a patent.
Based on this analysis the Supreme Court then reasons:
for unless more ingenuity and skill in applying the old method of fastening the shank and the knob were required in the application of it to the clay or porcelain knob than were possessed by an ordinary mechanic acquainted with the business, there was an absence of that degree of skill and ingenuity which constitute essential elements of every invention. In other words, the improvement is the work of the skillful mechanic, not that of the inventor.[4] (underlining added)
This ruling states the well known idea that for an invention to be patentable, it must be more than just the work of a skillful mechanic. Today this is stated as the invention must have taken more than just the work of “one skilled in the art.”
There are a number of problems in the Supreme Court’s ruling in Hotchkiss v. Greenwood. First, where did the Supreme Court get the authority to add an additional requirement above novelty in order for an invention to obtain a patent? The statute at the time did not contain any such additional requirement. It was judicial activism to add a requirement not found in the statute. Another error in the Supreme Court’s reasoning is the use of hindsight. All inventions are obvious in hindsight and must be described in enough detail that they can be practiced by one skilled in the art (ordinary mechanic) to meet the requirement of the social contract of patents.[5] Another error in the case was the failure to recognize that copying by competitors of the invention or success of the invention tend to show that it was non-obvious. Finally, the Supreme Court failed to understand the implications of the laws of physics as they apply to inventions, specifically that conservation of matter means all inventions are combinations of known elements.
Despite these errors, it is reasonable to ask did the Supreme Court’s judicial activism result in any lasting problems? According to Gale R. Peterson, Cox Smith Matthews in their paper, “Obviousness / Non-Obviousness Of The Novel Invention: Hotchkiss v. Greenwood to KSR v. Teleflex 35 U.S.C. § 103 – 1851 to 2006.”[6]
The cases decided after Hotchkiss in 1851, both by the Supreme Court and the lower courts, were chaotic. There was no statute governing the additional hurdle an otherwise novel invention must cross before being deemed a patentable invention.[7]
The Supreme Court’s decision in Hotchkiss v. Greenwood resulted in an unworkable standard of patentability, because it was inherently subjective. This increased the uncertainty whether an inventor would obtain a patent for their invention and increased the risk that their patent might be held invalid. It also caused the standard of patentability to vary in different Circuits and the Patent Office. Today this is widely understood to increase the cost of obtaining a patent and decrease the amount of resources invested in inventions. The Supreme Court’s judicial activism in Hotchkiss v. Greenwood resulted in numerous problems that haunt us today. Including the complete nonsense opined by the Supreme Court in the KSR v. Teleflex[8] decision, see KSR: Supreme Ignorance by Supreme Court.
Is there any logical reason for the additional requirement of non-obviousness for patents? The definition of invention according to Free Dictionary online is “to produce or contrive (something previously unknown) by the use of ingenuity or imagination.”[9] While Merriam Webster (online) defines invention as “a device, contrivance, or process originated after study and experiment.”[10] I will ignore how and invention is created as a criteria and suggest the following definition, “to create something new” as a common sense definition. This definition differentiates production or manufacturing from invention. Production is creating something, but it is not creating something new it is creating something old. If you argue that it is creating something new, then the word new has no meaning in the definition. This definition does not do a good job of differentiating an invention from a new book or painting. It might be argued that a new book is not creating something new, but it is not the same as other books. So I believe this simple common sense definition has to be supplemented. Specifically, I suggest that invention is “to create something new that has an objective result.” By an objective result I mean that goal of an invention is an objective result that can be tested as opposed to a subjective result that is the result of a song being played or a book being read or a painting be viewed. An objective result distinguishes an invention from a new artistic creation.
So how does this common sense definition of invention, “to create something new that has an objective result,” match up with the requirements of patent law (101, 102, 103, 112)? This definition is generally consistent with section 35 USC 101, statutory subject matter. It excludes scientific and mathematical discoveries since these are not creations. Notably it clearly does not exclude software patents. A software enabled invention is clearly a new creation and it has an objective result. The same is true of business methods patents (for more on the nonsense associated with business method patent see – Bilski, Software Patents and Business Method Patents. This definition is clearly consistent with section 102 – new equals novel. Is this definition consistent with section 35 USC 103? No this definition is not consistent with section 103. There is nothing in the definition that suggests a standard above novelty or new. The general reason given for section 103 is that we do not want trivial inventions that just change the size or the weight or some other trivial feature of an existing invention to obtain a patent. If a change in size or weight or color does not make a difference in the objective result, it is not new and it is not an invention. So I believe the definition of invention I have offered covers this issue and therefore there is no reason for an addition standard above novelty. My suggested definition is neither consistent nor inconsistent with section 35 USC 112, since this section does not define what is an invention. Section 112 defines the requirements an inventor must meet to obtain a patent for their invention. Section 112 deals with the social contract between the inventor and society. Overall the common sense definition I suggested for invention fits nicely with patent law, but there is absolutely no logic for a nonobviousness criteria for patents based on this definition. The creation of the nonobviousness standard was judicial activism on the part of the Supreme Court without any statutory justification. The standard has proven to be completely unworkable and completely subjective. Only the CAFC’s jurisprudence before KSR provided any measure of a stability and logic to the section 103. The nonobviousness standard has resulted in increase costs to inventors without any benefit. It has increase the cost of ligation, helped technologies thieves to steal inventions, and decreased the amount invested in new technology.
I suggest the radical notion that logically the nonobviousness standard, 35 USC 103, should be repealed. If it is not repealed then we should demand a statutory definition that is as objective as possible. One objective solution would be to codify the CAFC’s teaching, suggestion, motivation (TSM) test. I have proposed an alternative standard for 35 USC 103 that I believe is even more objective, clearer, and more consistent with reality than the TSM test – see Obviousness Flow Chart . By adopting any of these solutions we will reduce the cost and uncertainty of obtaining a patent and litigating patents. This will increase the value of issued patents and increase the investment in new technologies, which are the only way to increase real per capita income – see The Source of Economic Growth.
PS
As an interesting intellectual exercise I attempted to use ordinary definitions of novelty and obviousness to determine if the Supreme Court’s seminal decision in Graham v. Deere[11] had any basis in logic and was in anyway consistent with the statutory language. The non-obviousness standard was added to U.S. patent law in the 1952 Patent Act. The Courts’ job is to interpret the statute. The key portion of the non-obviousness statute states:
A patent may not be obtained though the invention is not identically disclosed or described as set forth in section 102 of this title, if the differences between the subject matter sought to be patented and the prior art are such that the subject matter as a whole would have been obvious at the time the invention was made to a person having ordinary skill in the art to which said subject matter pertains. (underlining added)
While many lawyers will want to immediately jump to the legislative history to interpret the statute, this is only appropriate if the statute is not clear on it face. Based on the wording and the fact that section 103 was added later than the novelty requirement, logically 103 is intended to be an additional requirement above the novelty requirement. According to Dictionary.com, novelty means “of a new kind; different from anything seen or known before: a novel idea.” The nonobviousness requirement logically requires something more than an invention be novel. In order to understand what nonobvious means, lets find out what obvious means. Then anything that does not meet the definition of obvious is nonobvious. According to Dictionary.com obvious means, “easily seen, recognized, or understood; open to view or knowledge; evident.” It is axiomatic to patent law that whether an invention is nonobvious has to be determined at the time the invention was made, in other words before the invention was known. How can an invention that has not been made be easily seen, recognized, or understood; open to view or knowledge; evident (obvious)? Clearly, an invention that has not been made cannot be open to view and how can you have knowledge of something that does not exist. Evident means, according to Dictionary.com, plain or clear to the sight or understanding, which cannot be true of something that does not exist. Unfortunately, this line of examination does not lead to any useful results. No wonder the 1952 Statute has not lead to meaningful clarification of what is patentable!
[1] Hotchkiss v. Greenwood, 52 U.S. (11 How.) 248, 249 (1851)
[2] Ibid 250-251
[3] Ibid 266
[4] Ibid 268
[5] 35 USC 112, first paragraph (Modern)
[6] Gale R. Peterson, Cox Smith Matthews, “Obviousness / Non-Obviousness Of The Novel Invention: Hotchkiss v. Greenwood to KSR v. Teleflex 35 U.S.C. § 103 – 1851 to 2006.” 11th Annual Advanced Patent Law Institute, October 26-27 2006.
[7] Ibid 3.
[8] KSR Int’l Co. v. Teleflex, Inc., 550 U.S. 398 (2007).
[9] http://www.thefreedictionary.com/inventor (6/16/10).
[10] http://www.merriam-webster.com/netdict/invention (6/16/10).
[11] Graham v. John Deere Co. of Kansas City, 86 S.Ct. 684 (1966)
Many entrepreneurs, inventors, and economists complain about the Patent System and intellectual property rights. However, when you examine their complaints they are often concerned about how the patent system is implemented as opposed to the concept of property rights for inventions – patents. For instance, an extremely successful entrepreneur and angel investor I know complained that patents increase the uncertainty when investing in a start-up company. Because of the long time that it takes patents to issue, he protested that it is difficult to know when a patent might suddenly issue, affecting the business plan of a start-up in which he has invested. Other common complaints include that the patent system is expensive, time consuming, and difficulties in determining the boundaries of a patent. Some people go so far as to suggest that this shows that patents are not a true property right. After all, they reason, it is easy to determine the boundaries of real property and obtaining title to real property (land) is a straight forward process.
Here, the complainers show that their ignorance of history. Before title insurance buyers of real property paid an attorney a lot of money to determine if they would receive “good title” to land if they bought it from the seller. This title opinion did not come with a guarantee and it was not cheap. In addition, you would have to pay a surveyor to determine the boundaries of your real property. The survey process was expensive and fraught with problems until the advent of modern technology, such as GPS. Our ancestors fought each other tooth and nail over the boundaries to their land. In fact, court battles over land are a great way to trace your ancestry, because these battles were so common.
While the critics are wrong in their comparison between real property and patents, they are correct that we need systems that reduce the cost and uncertainty of determining the boundaries of patents (inventions) and whether the owner has good title (102, 103 issues). In short, we need the equivalent of title insurance for patents. I believe that standards committees (e.g., IEEE 802.11 WiFi) are acting like title insurance companies. They determine which patents are essential to practice the invention. In effect, they determine the boundaries of patents with respect to the standard and to some extent determine if these patents have good title to an invention. I also believe that NPEs (Non-Practicing Entities) also act like title insurance companies. Of course, many of the critics of the patent system do not like NPEs either.
I, too, agree that the patent system takes too long to issue patents. However, the problem is not with the concept of a patent system but with a government that has failed to fully fund the Patent Office. In the last two decades, about billion dollars in user fees have been diverted from the Patent Office to Congressional pet projects. In the US, the Patent Office has always been funded by user fees, which are the fees that inventors pay to the Patent Office when they file for a patent. However, when an inventor writes a check to the Patent Office the money is deposited directly to the general treasury account of the federal government. Congress then appropriates these fees back to the Patent Office. When Congress diverts (steals) a billion dollars of user fees from the Patent Office, it is not surprising that the Patent Office will take longer to determine issues of patentability, increasing uncertainty for start-ups. If Congress was subject to Sarbanes Oxley, they would all be thrown in jail for this diversion of fees. In my opinion, the patent process has also become too formalistic and complicated.
These complaints that I have cataloged here are not about patents per se, but with the implementation of the patent system. I agree that the present patent system is overly cumbersome, too formalistic, too expensive, and takes too long. As an aside, I will point out that the critics of patents (IP) complain about their complexity but raise just a peep about a tax system that is over 10,000 pages and a new securities law that is over 1400 pages. There appears to be a disconnect in their thinking.
Some of the solutions to the problems with our patent system will occur if the free market is allowed to create solutions like title insurance for patents. Fully funding the Patent Office will solve many of the other problems, such as the lengthy pendency times. Patents are completely consistent with Locke’s formulation of property. Patents like real property rights are fundamental to economic progress and human rights.
My good friend, Gene Quinn, of IPWatchdog, has am interesting post on the present patent reform bill. http://www.ipwatchdog.com/2010/04/04/kappos-round-table-listening-continues-on-campus-of-uspto/id=10002/
His post brings up several interesting points.
Interferences & Independent Invention
If there were only 55 interferences last year, how come all the people calling for patent reform state that independent invention happens all the time? If independent conception of inventions are so common you would expect a lot more interferences. While I would grant you that the PTO is very reluctant to declare interferences, even taking this into account it shows very little independent invention. So all the people calling for patent reform claiming that technological progress is inhibited because they are not allowed to practice their independent inventions appear to be disingenuous at best. What is more likely is that they have not independently derived these inventions and they just do not pay a license fee to the true inventor.
First to File vs. First to Invent
The proposed solution for the first to file conversion is the scaled down one year grace period. Your post clearly points out the limitations of this provision – namely it only protects the inventor against bar issues, but does not protect them from thieves that file a patent before the true inventor. This does nothing to preserve our patent system for independent inventors or start-up companies. No one with any resources and knowledge will rely on this scaled down one year grace period. Within a decade of having passed this reform, people will argue that the one year grace period is meaningless and we should just move to a true first to file system. Given the cost of filing a patent this will be the nail in the coffin of American Entrepreneurialism. The patent system will just be for large entrenched companies who create incremental inventions.
Cost of Interferences
Your argument sounds logical. Since most independent inventors cannot afford the cost of an interference, we will just get rid of them. This correctly identifies the problem, but proposes an unjust solution. A just solution is to reduce the cost, time, and formalism associated with interferences. Logically, the inventor is the first one to conceive of the invention and reduce it to practice. We need a system that is just and practical. A practical system that is not just will lead to unintended consequences. For instance, the publication requirement has led to our patent system giving away our technology to the rest of the world. The practical answer was to publish our patent application and conform with the rest of the world. The just and practical answer was to fund the PTO fully, eliminate needless formalities to patents and have patents issue in under one year. The just and practical answer would have ensured that the US stayed the technological leader of the world and therefore economically vibrant. Our present economy is the result of the sin of being practical but not just.
24 Month Provisional
While I am not inherently against this proposal, I can just hear the critics screaming “submarine patents.” Extending the time to 24 months from 12 months that a provisional patent application allows the applicant to file a regular patent application sounds like a practical solution, however the better answer would be to streamline the process of applying for a patent. We should work to reduce the time it takes to obtain a patent, reduce the cost it takes to obtain a patent, and reduce arbitrary rules required to obtain a patent that add no real value to the patent system.
Real Patent Reform
Nothing in the present patent reform proposal does anything to solve the real problems faced by inventors. Instead of agreeing to a less bad patent reform bill, which should trash this bill and start over. The number one issue that has to be in any patent reform bill is to stop fee diversion. Fee diversion is fraud pure and simple. If Congress had to live up to Sarbanes Oxley, they would all be in jail. We need to repeal KSR. Any objective system of patentability is better than a subjective standard for entrepreneurs and businesses. (Only a judge or a trial lawyer thinks a subjective test is just). For more on real patent reform see Real Patent Reform.
There has been a constant drumbeat of propaganda suggesting that the U.S. is issuing low quality patents. The academic papers supporting this propaganda compare the issue rates of patents that were filed in the U.S. and in the EPO (European Patent Office) or JPO (Japanese patent office). While a number of papers have pointed out the methodolical problems with these academic papers (see Patent Quality Myth ), the bigger question is whether they selected the correct metric in the first place. This post suggests that other metrics are more appropriate measures of patent quality and do not suffer from imposing other countries’ goals on the U.S. patent system. These metrics show that U.S. patent quality has been steadily increasing for over a fifty years and shows that perhaps the U.S. system is becoming an elitist system – much like Europe and Japan have practiced for years.
For engineers and scientists it is easier to understand the major concepts of patent law from the perspective of natural rights, since it is consistent with their scientific training. Natural rights and science share the assumptions that the world is comprehensible and that reason plus observation can be used to understand how nature operates. A third assumption needed for this analysis is that a person owns themselves. This assumption is consistent with John Locke’s conception of natural rights.
Real Property
Property law results from the analysis that if a person owns themselves, then they own the product of their labor.[1] An example from United States history is the Homestead Act. The concept behind the Homestead Act is that land is not owned by anyone until it is improved by a person’s labor. Once the person has improved the land, then they are the owner. Similar concepts are used to define who owns a wild animal. Once a person owns property they can trade if for other property and this is the basis of a market economy.
In the ACLU v. Myriad case, the ACLU has alleged that the patents involved in the case cover genes found in nature. This statement is so patently (pun intended) false, that the ACLU either purposely deceived the court or is guilty of gross negligence about the facts plead in the case. As Gene points out in his post, Fired up: Challenging the Constitutionality of the Patent Act none of the claims in question cover genes found in nature. These claims are directed to screening, identifying, and isolating the BRCA1/2 genetic sequences. This is not a claim to the gene itself, but methods of screening, indentifying and isolating the genes, which are processes not found in nature. There are claims to an isolated gene, but genes are not isolated from human cells in nature. These claims are similar to claims on vitamin B12. More than 80 years ago, prior to the isolation and purification of vitamin B12, the only “treatment” for megaloblastic anemia was for patients to consume a pound of raw liver a day. Since isolated and purified vitamin B12 is not found in nature, a patent issued for isolated B12. The ACLU purposely deceived the court when they stated, “The patents cover the human genes themselves”, paragraphs 3-4, 55-67, & 102 of the complaint, while ignoring that isolated genes do not occur in nature.
In H&R Block Tax Services v. Jackson Hewitt Tax Services Inc., the court stated that “although tangible in some forms, money is simply a representation of a legal obligation or abstract concept.” A similar sort of attitude seems to be involved in the Bilski case. Both cases involve patents where money is used a unit of measure, and this seems to cause all sorts of confusion to the courts.
Is money just a legal obligation as the court states? The court is incorrect that money is a legal obligation. Money exists separate from a functioning legal system. Money is a medium of exchange that measures the total amount of goods and services that can be traded for a certain amount of money. The court seems to be confused by the legal tender rules, but money existed long before any legal tender laws ever existed.
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