State of Innovation

Patents and Innovation Economics

Book Review: Why America Has Stopped Inventing?

Darin Gibby, a patent attorney, has written the book Why America Has Stopped Inventing?.  Let me first say that I agree with Mr. Gibby’s premise that America has quit inventing and that it is hurting our economy.

The book has an excellent review of the history of how patent law developed in the US, with the 1836 Patent Act playing the hero of the book.  The Act was modeled on the patent statute in Venice in the 1400s, according to Gibby.  This leads to an explosion of invention in the United States and in the economy.  This story is told through the lens of the great inventors of the time, including Morse, Colt, and Goodyear.  These stories are well told and compelling.  The book is a fount of knowledge about the early history of inventing and patent law in the United States.

The book argues that the change in the patent laws resulted in a brain drain from England and that there was an explosion of invention in the US.  The book states:

The rate of innovation as determined from the number of patents increased six times from 1840 to 1850, nine times from 1850 to 1860, and 13 times from 1860-1870, as compared to the increase in population.

The book claims that our per capita rate of inventing is less than half of what it was in the 1860s.  The US rate of inventing has decreased over the last decade.

The conclusion of the book is that our patent system is broken and this is hurting innovation and the US economy.  While I generally agree with the conclusion, I believe the premise could have been better supported.  Also, I think it is impossible to talk about the lack of invention without also mentioning the restrictions on raising capital by inventors.  Perhaps the biggest impediment to raising capital has been Sarbanes Oxley.  This is not mentioned at all in the book.

The biggest downfall of the book is that the author calls a patent a monopoly.  A patent is not a monopoly.  35 U.S.C. 261 makes it clear that a patent is personal property.  Patents have all the attributes of property and none of the attributes of a government monopoly.  Property rights arise from of the act of creation – but for the creator the item would not exist, therefore they have a property right in the item.  Inventing is creating a new product, process, or service that did not exist before.  The fact that a patent attorney could make this mistake is hard to believe, but more importantly I believe this completely undermines the thesis of the book.

The book has a number of specific proposals for fixing the patent system.

Complex Patent System: The book states that the biggest reason for our inventive decline is the overly complex, over administered, and underfunded patent system.  I agree that our patent system has become overly complex, too expensive, and overly officious.  The author believes this is the result of a judicial reaction to the Wright brothers’ patent, which he believes was too broad.  Here I completely disagree with the author.  The Wright brothers’ patent broadly claimed the ability to control an airplane by “having lateral marginal portions capable of movement to different positions above and below the normal plane” of the wing.” (USPN 821393)  The author believes the Wrights only invented wing warping.  I disagree.  The Wright brothers clearly showed that any method of altering the flow of air over the wing could be used to control the airplane.  If the Wright brothers had been limited to the author’s interpretation, then Glenn Curtis and others would have been able to free load off of the Wright brothers’ invention.

The author also argues that the growth of the airplane industry was retarded by the Wright brothers attempting to enforce their patent.  This argument is also made by anti-patent forces and is without any logical basis.  We have no idea how long it would taken for someone else to have created a controllable airplane if the Wright brothers had not done so.  It is just as likely that, but for the Wright brothers it would have taken years for someone else to invent control surface for airplanes.  If there was any delay in the development of the airplane, it was the fault of Glenn Curtis and others who refused to pay the Wright brothers for their invention.

I think it is also inexcusable that the book does not mention the detrimental effects of antitrust law on patents.  The anti-patent backlash in the early 20th century was not a result to the Wright brothers patent, but to the rise of antitrust law.  The author’s lack of understanding that patents are a property right and not a monopoly has blinded him to this simple fact.

Require Models: The author wants us to return to a patent system that requires models.  He suggests that computer models would be acceptable, so we would not have the problem of storing these models.  The author’s main reason for this requirement is based in the belief that the Wright brothers, Seldon, Bell and others received overly broad patents or really were not the true inventors.  In the case of Bell, the author suggests that Bell’s attorney copied Elisha Grey’s patent application by hand into Bell’s application upon filing the Bell application.  I cannot comment directly on these assertions.  But the book does not even mention that there was an interference between Bell, Grey, and Edison (see Bell).  All of these inventors had top patent attorneys and I seriously doubt that hand copying part of another person’s application would have survived very long in an interference.

The author seems to want to use models to limit the scope of the claims.  This would allow inventors who improved another person’s invention not to have to pay royalties for using their underlying invention.  I don’t see any advantage to this system and I believe the author has fallen for the anti-Wright brother, and anti-Bell propaganda.

Abolish Obviousness Standard and Doctrine of Equivalents: The author makes a strong case for abolishing the obviousness standard, which I agree with.  He explains that the obviousness standard is subjective and unworkable.  He suggests that the doctrine of equivalents and the obviousness standard are opposing ideas used to overly broaden or overly narrow the rights of an inventor.  I did not initially agree with the author, but he made strong points in defense of his thesis.  Specifically, he argues that eliminating the obviousness standard would allow inventors to craft their claims to correctly define their invention.  As a result, he believes that it would be unfair for inventors to then be able to expand/change the scope of their invention in litigation.  The only problem with the author’s argument is the doctrine of equivalents has been dead for all practical purposes for at least twenty years.

The author also makes the excellent point that eliminating the obviousness standard would significantly reduce the backlog of unexamined patents.  His reasoning is that moving to an objective system of patentability would eliminate a lot of wasted effort on the part of the Patent Office and Applicants.

Cut the Current Twenty-Year Patent Term in Half: I disagree with the author and I think his point of view is based on the erroneous belief that patents are a monopoly.  Shortening the term for patents is likely to reduce the value of investing in new inventions.  This would decrease the rate of new technologies being created and introduced into the economy.  The result would be slower economic growth and lower per capita incomes.

Curtail the Continuation Practice: Continuations are critical for start-up companies to reduce their cost.  While I agree that eliminating the obviousness standard would reduce the cost of filing patent applications, this advantage is unlikely to be enough to protect our highly innovative start-up companies.

 

First to File System: The author buys into the absurd idea that eliminating interferences is going to free up resources at the Patent Office.  With less than 100 interferences a year, this is very unlikely to occur.  He also argues that this will be good for individual inventors and startups.  While he is correct that interferences are too expensive for individual inventors (start-ups), the solution is not to subvert the Constitution and award exclusive rights to the first person to file instead of the inventor.  The solution to this problem is to reduce the absurd cost of all federal litigation.

There have been several studies on the effectiveness of changing from a first to invent system to a first to file.  All these studies have shown a decrease in patenting by the most innovative groups in our country – namely individual inventors and start-ups.

Conclusion: Overall there are many important points in this book.  But the author’s incorrect labeling of a patent as a monopoly undermines many of the most important points he is trying to make.

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January 4, 2012 - Posted by | News, Patents | , , ,

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