When This American Life Attacks Patents
This American Life presented a story entitled “When Patents Attack.” This is a rambling story that touches on many points. I will review some of issues raised in this story below. I will suggest some other stories that would have been more relevant than the ones they chose to tell.
FotoTime, Due Diligence and Property Rights: They start out by telling the story of a company called FotoTime. This business was started in the late 90s and provides a service for sharing photos. According to the podcast, it took until 2005 or 2006 before the founders of this struggling company were able quit their day jobs. Shortly thereafter they were sued for patent infringement in a mass lawsuit for infringing USPN 5771354. The story then suggests that this is unfair to FotoTime. However, they never ask whether FotoTime did their due diligence to determine if they might be infringing anyone else’s property when they started building their product. It is common advice to not do a patent search because it might make you subject to 3X damages if sued. However, if I build a building, I first have to make sure I own the rights to the underlying land. The failure of companies to undertake even basic due diligence, hiding behind the 3X damages issue, is negligence. They should be vilified for this failure, but instead, everyone acts as though this is too onerous. In a time when we have to comply with numerous tax regulations and numerous other government regulations just to start a business, it is absurd to complain that you should have to actually worry about whether you are infringing someone’s property rights. During this segment, at no time does the producer interviewing Fototime, ask why Fototime didn’t explore if someone else had already patented what they were building a business around.
The producers suggest that the patent, USPN 5771354, should never have been issued. The reporters talk to some company (EmCam?? – could not locate it on the Internet) that is supposed to be an expert on patents. The company purports to have software that can analyze a patent and determine how many other people created the same invention. According to their software, over 5000 patents cover the same invention. This appears to even stretch the credulity of the reporters, who suggest that this might be overstating the case. Then the show talks to another patent attorney who also concludes after looking at the claims, that the patent is clearly invalid because of prior art. A quick review of the patent shows over two pages of prior art were cited (hopefully reviewed) as prior art. There are broad statements about how the patent seems to cover everything to do with the Internet. However, the reporters of This American Life are not patent attorneys. Do they know how to read claims? Far too many people read patents as if they are reading prose, including some patent attorneys. Reading a patent claim is like reading an equation, every word has meaning. The first claim has seven steps and is over 200 words. That does not meet the normal definition of an overly broad claim. Claim 25,the second independent claim, is also over 200 words. There are only two independent claims. For This American Life to suggest that this patent is overly broad and there are 5000 other patents on the same invention is just plain absurd.
Explosion in the Number of Patent Lawsuits
The story then suggests that there has been an exponential increase in the number of patent lawsuits. However, Judge Michel, former head of the CAFC, the court which hears all patent appeals, points out that the number of patent suits filed each year has remained constant at less than three thousand. Only about 100 of these suits ever go to trial. In a technology based economy with over 300 million people and 1 million active patents this is trivial. The show failed to even undertake a basic fact check on this propaganda.
The story says basically all (80%) of software programmers believe that software should not be patentable and it was a mistake when the courts allowed patents on software. I’m not sure where they came up with the 80% number- my practice must represent all of the 20% remaining right here in Colorado Springs. Arguments against software patents have a fundamental flaw. As any electrical engineer knows, solutions to problems implemented in software can be realized in hardware, i.e., electronic circuits. The main reason for choosing a software solution is the ease in implementing changes, the main reason for choosing a hardware solution is speed of processing. Therefore, a time critical solution is more likely to be implemented in hardware. A solution that requires the ability to add features easily will be implemented in software. As a result, to be intellectually consistent, those people against software patents also have to be against patents for electronic circuits.
The show also argues that software patents inhibit progress. However, they do not examine the number of programmers who recreate products and code that has already been created. The purposeful ignorance of what has already been created results in a huge waste of creative talent and a resulting lack of innovation. Once the courts made it clear that software was patentable, there was an explosion in the amount of investment in software startups, an explosion in the number of software products, and an explosion in the number of software programmers. Only with the attack on software patents, starting around 2000, has there been a slowdown in these three parameters.
The show attacks IV as a patent troll and suggests that none of their inventions are actually in the marketplace as real products. They suggest that the fees IV has collected are equivalent to “a tax on innovation”. They deride IV for demanding payment for people using their property rights. Adam Smith wrote that the division of labor is a critical way of increasing a nation’s wealth. Only if inventors can be paid for inventing, can they specialize in their profession. The only way inventors can be paid just for their inventing is if people respect their property rights. Note that Edison almost never practiced his inventions. He licensed almost all of his inventions and sued if people would not pay. Edison was not paid even a small percentage of the value he created in this world.
The show suggests that there is no evidence of inventors not getting paid for their inventions by attacking whether IV has successfully licensed any independent inventor’s patents. This is an attempt to go from the specific to the general, while ignoring that IV does not represent the whole cross section of independent inventors.
If This America Life had broadened their research, at one point they say they were chasing down ONE inventor for 5 months, they might have found the Data Treasury story, where Wall Street has stolen the check clearing invention of its founder. See the Data Treasury story. They could also have looked at the story of the inventor of the intermittent windshield wiper which inspired the movie Flash of Genius. There are numerous other examples that the show could of found with broader and impartial research.
Stories the Show Could Have Done
Underfunding Patent Office/Pendency Time
This American Life could have done a story on how Congress has stolen over $1B in user fees over the last decade. They could have told the story of companies that waited for years to obtain a patent, which caused them to not be able to obtain funding. However, the failure to obtain funding meant that they were unable to hire employees.
Data Treasury Story
They could have told the bizarre story of how Wall Street banks stole this company’s check processing technology that saves banks billions of dollars a year. They could have focused on how Wall Street used their lobbyists to change patent laws in anticipation for losing the court battle for infringement so they will not have to pay Data Treasury for stealing this invention.
Not Invented Here Syndrome
They could have done a story about how large companies are unwilling to license patents from independent inventors. This is completely different than the 19th century when most patents were licensed or assigned to manufacturing entities. For more information see Great Again.
Patents and the Industrial Revolution
They could have done a story on how the advent of the patent system and the advent of the Industrial Revolution not only coincide but are related. Increases in our level of technology is the only way to increase our standard of living. Property rights in inventions provide the incentive and security to invest in creating new technologies.
Theft of Our Inventions by Foreign Companies
They could have done a story of how companies in foreign countries steal American inventions. They do this legally because we publish our patent applications and patents are only enforced in the country in which they are granted. However, the value of the invention is not geographically limited.
This American Life’s story clearly was incorrect on several of the facts and it appears they started with the Open Source community’s bias against patents.
This American Life, “When Patents Attack” originally aired 7/22/2011.
10 Comments »
- Adam Mossoff on the VENUE ACT
- F. A. Hayek: Austrian Economics vs. Objectivism
- Carl Menger: Austrian Economics vs. Objectivism
- Economics, Evolution, and Rand’s Meta-Ethics (Intellectual Capitalism: Fundamentals Part 2)
- Latest Amazon review of my book Source of Economic Growth.
- Dale Halling and William R Thomas – Austrian Economics and Objectivism Panel: Atlas Summit 2016
- Dale Halling – Economics, Evolution, and Rand’s Meta-Ethics: Atlas Summit 2016
- Aristotle and Rand vs Hume: Causation and Induction
- Intellectual Capitalism: Fundamentals Part 1
- Adam Mossoff on Property Rights: A Must Read for Capitalists and Patent Attorneys
- Is Capitalism a game of the Survival of the Fittest?
- Libertarians vs Classical Liberals on Patents and Inventors
- Business Models
- Featured Videos
- Intellectual Capitalism
- Press Release
- Regulatory bill of Rights
- sarbanes oxley
- Sarbanes Oxley