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Archive for August, 2013


I have written extensively on the problems I see with IPXI’s model to market licensing rights to patents.  Their model is based on a commodities contracts type of model, where unit licensing rights can be bought and traded.  I believe a model based on how Amazon sells books would be more effective and open up the patent licensing market to smaller entities and inventors.  This sort of retail licensing system would allow inventors to post an invention that they are willing to license with a unit licensing rate for one instance of the invention.  For software enabled inventions the unit licensing rate might be based on a per execution basis or a time limited period.  The retail licensing system would issue a certificate that the licensor would use to prove that they had bought a license and only be good for one instance or execution.  It is my assumption that the unit licensing rates would be so low that it would be easier to license the invention than infringe.  The license would not come with any warranties of validity or non-infringement, but would come with a warranty of ownership of an issued patent.  In addition, there might be bulk unit licensing discounts and a chance for the inventor to sell their engineering talent to help implement the invention.

This system would reduce the cost of licensing.  Avoid some of the problems of IPXIs model, such as having a limited number of unit licenses and it would open up the market to individual inventors and small entities and spark an inventive wave that we would all profit from.

 
Pendulum of Justice – A Novel About Inventors and Patents

My novel Pendulum of Justice  is now available on Kindle.  It is a technothriller involving the theft of life saving technology.  The main character’s journey illustrates the incredible problems today’s technology entrepreneurs face.  Here is the back cover blurb for the book.

All that is necessary for the triumph of evil is that good men do nothing.

With two high tech start-ups going gangbusters, former cyber warrior Hank Rangar has finally “made” it. His lab, “Made By Man,” has revolutionized cardiac procedures, potentially saving millions of lives and billions of dollars.  But, the most important person in his life is very sick and his technology is suddenly stolen.  Hank discovers two things: This lifesaving procedure may be the only way to save his sister AND Big Washington will stop at nothing to bury it.

 

Pendulum of Justice reads like a book on anti-gravity: impossible to put down!  My main complaint is how come the next book in the series isn’t out already.”

Peter Cresswell, Publisher of NotPC

 

I hope you enjoy it.

 
How Should the US Respond if China Creates a Successful Patent System?

Here is another confused and confusing academic paper, The US, China and the G-77 in the era of responsive patentability  Queen Mary Journal of Intellectual Property, Vol. 2 No. 4, pp. 315–328.  The paper seems to suggest that it will be bad news for the US and the West if China and other BRIC nations create successful patent systems that result in their technological leadership.  The solution according to the paper appears to be aggressive use of anti-trust law.  However, the paper is far too incoherent to be sure exactly what the author’s point is.

The paper starts with some telling lines.

It appear that “‘anything made under the sun by man’” is patentable, but it is also clear that the sun never sets on the patent system.

Responsive patentability means that anything is patentable anywhere. Restrictions on patentable subject matter are read down or circumvented through clever claims drafting.

Most citizens in poor states cannot afford to pay patent prices for access to needed medical and food technologies.

Responsive patentability is unresponsive to the preferences of poor people.

The author, Mr. Drahos, is a professor of law and heads the Chair in Intellectual Property at Queen Mary University of London.  Interestingly, Mr. Drahos is not a patent attorney and in fact does not have the technical background necessary to be a patent attorney or to sit for the patent bar.  How universities think that it makes sense to have a professor who is incompetent to be a patent attorney teach patent law is beyond me.

The paper is full of broad unsupported statements such as those above.  Why should the sun set on the patent system?  Should the sun set on the criminal system, on the property rights system?  Mr. Drahos offers no explanation.  Why should there be a restriction on patentable subject matter?  If so what should those restrictions be?  Again Mr. Drahos offers no explanation.

What is the point of stating that poor people cannot afford patented foods or medicines?  Poor people cannot afford many things.  That is the definition of being poor.  So what is Mr. Drahos point?

Finally, the statement that responsive patentability is unresponsive to the preference of the poor is totally unsupported.  Should the criminal law system be responsive to the preferences of the poor?  Why should the poor’s input be more important than anyone else?  Is physics, algebra, chemistry, calculus responsive to the preferences of the poor?  Should they be?

Patent law should be based on logic and reason.  It should be firmly grounded in property rights and it should not deviate from this logic for the poor, the rich, or socialists like Mr. Drahos.

Ignoring the obvious bias of the paper it appears to be making a point about China becoming a technological leader and how the US and West should respond to this challenge.  The paper explains:

China’s market socialism may yet evolve into a close variant of US knowledge monopoly capitalism. This ending to China’s development story would not surprise readers of Animal Farm.

For a patent wealth maximization strategy to succeed a country’s innovation system must generate core technologies.

Under this criterion the system can be said to work if one country is able to use it to extract monopoly rents from other countries, thereby making it an overwhelming net winner from the system.

From these statements it appears that Mr. Drahos is concerned that China might become a creator of technologies, particularly core technologies, instead of just a consumer.  The paper appears to imply this would be bad.  I cannot see how the world will be worse off if more people are inventing important technologies that make everyone’s life better.  Again the paper fails to explain this assumption, but there are clues to why Mr. Drahos is so concerned with this outcome, for instance, the ominous reference to Animal Farm.

After setting out this dire situation, Mr. Drahos proposes at least a partial solution.

Let us assume for the sake of argument that a succession of five-year plans turn China into a patent superpower with control over many core technologies. How might the US respond to such a situation? One possibility is that it would simply issue compulsory licences over those foreign technologies it believed were vital to its national interests. Over the course of the twentieth century, antitrust law has been intellectual property’s constant regulatory shadow. For significant periods of the twentieth century it was a shadow that loomed over intellectual property owners to check the exclusionary uses of their monopoly powers. There is a resilience to antitrust principles in the US that should never be underestimated.

Mr. Drahos solution to an inventive China is to ignore property rights either with compulsory licensces or antitrust law.  Modern antitrust law is anti-property rights and turned the law against monopolies on it head.  The Statute of Monopolies of 1623 limited the power of the Crown (government) to interfere with private property rights.  The Statute of Monopolies excluded patents for inventions because they result from the creative effort of the inventor and therefore are property rights.  On the other hand modern antitrust law increases the power of government to interfere with private property rights.  The underlying theory of antitrust law is the efficient market hypothesis.  This hypothesis postulates that wealth is created by falling prices for existing goods and services and this is the result of competition to sell existing goods and services.  However, this is incorrect and inconsistent with modern economic research.  Increases in per capita income are the result of increases in technology – inventions.  Antitrust law undermines the incentive to create and invest in new technologies and therefore hurts our economic health.

When the US was facing an economic and technological challenge from Japan in the 1970s, the answer was to strengthen US patent law.  It worked spectacularly.  The US regained both its economic and technological leadership in the 1980s and 1990s.  Then the US started weakening its patent laws around 2000 and has continued to do so.  Once again the US is stagnant technologically and economically.  The clear answer to a technological challenge by China is for the US to strengthen its patent rights and all property rights not to resort to antitrust law, which is what the US did in the 1970s.

 

 

Let’s deconstruct Mr. Drahos paper.  He hates patents and does not think they should exist.  His citation of Michele Boldrin and David K Levine, who have written a book suggesting the elimination of patents, demonstrates this point.  Mr. Drahos has argued elsewhere that patents are not “property”, which is consistent with his ‘monopoly’ analysis.  But Mr. Drahos isn’t just against patents, he is against property rights generally.  For example he quotes Fidel Castro with approval.

Fidel Castro in a speech at a G-77 Summit in Havana in 2000 claimed that developed countries ‘control 97% of the patents the world over and receive over 90% of the international licenses’ rights’. He went on to observe that the ‘new medications, the best seeds and, in general, the best technologies have become commodities whose prices only the rich countries can afford’.  Castro finished with a strong appeal for unity and cooperation amongst the G-77.

Castro as a communist is against all property rights.  Mr. Drahos concern in this paper is not that the US might fall behind technologically, it is that other countries might adopt a strong property rights legal system that including patents.  The patent discussion in this paper is just a crutch from Mr. Drahos to push a radical Marxist ideology.  It is an embarrassment that this paper is considered academic or scholarly research and that Mr. Drahos has a job as a professor of law and chair in intellectual property.

 

The US, China and the G-77 in the era of responsive patentability  Queen Mary Journal of Intellectual Property, Vol. 2 No. 4, pp. 315–328.

 

 

 

 
Hyperloop – Mr. Musk Represents Everything that is Wrong with the US Economy.

At first glance Elon Musk appears to be the sort inventor-entrepreneur I would celebrate on this site.  He helped create PayPal, he has had a big hand in Tesla, Space X, and Solar City.  Now he is touting his Hyperloop which is supposed to be ten times cheaper than present day high speed rail projects, such as the proposed line between LA and San Francisco.  But a closer look shows that Mr. Musk is more a PR genius and government parasite than an inventor or entrepreneur.  By all accounts, Paypal was a legitimate private business, but the rest of his businesses are built on smoke and mirrors and your tax dollars.  Hyperloop appears to be another scheme for Mr. Musk to get rich off your tax dollars.  Elon does not appear to be much of an inventor either.  He is a named inventor on only four issued US utility patents and none of them have anything to do with his signature businesses.

Mr. Musk, being the master manipulator, announced that he would not be seeking any patents for Hyperloop – blessing mankind with his altruistic ‘open source’ brilliance.  However, it is clear that his present design is likely not patentable.  In addition this sort of project, in today’s USA, would require government approval, involvement, and financing.  (Note the New York subway was built by a private entrepreneur – only after regulating it into oblivion did New York become the owner)  Mr. Musk plans on receiving his funding from the government; his protection from competitors not from patents but from his government contracts and contacts.

Tesla has been one of the biggest PR smoke screens in decades.  The only reason this company exists is because of government loans in the neighborhood of half a billion dollars.  Tesla’s business model is predicated on a California requirement that automotive companies sell a certain percentage of electric vehicles.  It collects credits and sells them to other car manufactures, for more information click here.  On top of it electric vehicles are not more environmentally friendly, even by environmentalists’ skewed standards.  See Wreck the environment – drive an electric car.

Space X is another business dependent on government funding according to Tesla Motors (TSLA): Shorts Have Been Bloodied, But They’ll Be Back.  The private funding for Space X only came in after a large infusion government money.  Space X also appears to be more PR stunt than a real business.  Solar City is also based on government tax credits and appears to be cratering.

Our society celebrates Mr. Musk, who appears to be more PT Barnum than Edison, while vilifying the real inventors behind Myriad’s genetic testing for breast cancer or Claudio Ballard of Data Treasury, who invented a system that saves banks $2 billion a year.

 

Adam Mossoff has an excellent post on the lies about patent litigation explosion.  He explains

Contrary to the much-hyped claim today that patent licensing companies are the primary cause of most patent lawsuits in district courts in 2012, other serious and more careful reviews of the litigation data have shown that the primary culprit is not patent licensing companies, but rather the America Invents Act of 2011(“AIA”). The AIA created numerous new administrative proceedings for invalidating patents at the Patent & Trademark Office, which created additional incentives to file lawsuits in certain contexts.  Moreover, the AIA expressly prohibited joinder of multiple defendants in single lawsuits.  Both of these significant changes to the patent system has produced the entirely logical and expected result of more lawsuits being filed after the AIA’s statutory provisions went into effect in 2011 and 2012. In basic statistics terms, the effect of these statutory provisions in any study of patent litigation rates that does not take them into account is referred to as a “confounding variable.”

For more information see The Myth of the “Patent Troll” Litigation Explosion

 
Pendulum of Justice Coming Soon

Pendulum of Justice is my first novel, written with my wife.  This novel dramatizes many of the points made in my non-fiction book The Decline and Fall of the American Entrepreneur: How Little Known Laws and Regulations are killing Innovation.  The Kindle edition of the book will be released in late August with the paper version of the book appearing in October.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Here is the back cover:

All that is necessary for the triumph of evil is that good men do nothing.

With two high tech start-ups going gangbusters, former cyber warrior Hank Rangar has finally “made” it.  His lab, “Made By Man,” has revolutionized cardiac procedures, potentially saving millions of lives and billions of dollars.  But, the most important person in his life is very sick and his technology is suddenly stolen.  Hank discovers two things: This lifesaving procedure may be the only way to save his sister AND Big Washington will stop at nothing to bury it.

 

Pendulum of Justice reads like a book on anti-gravity: impossible to put down!  My main complaint is how come the next book in the series isn’t out already.”

Peter Cresswell

Publisher of NotPC

 

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