State of Innovation

Patents and Innovation Economics

Yale Law Professor’s Attack on Patents: A Comedy, Farce and Tragedy All Rolled into One

An article on Cato Unbound entitled, “What’s the Best Way to Fix the Patent System’s Problems?” by law professor Christina Mulligan, argues for two different solutions of what she perceives are problems with software patents.  One solution advocated by Eli Dourado is to eliminate all software patents (See CATO and Mercatus Center: Another Flawed Study on Patents).  The other solution, advocated by John F. Duffy, is a more rigorous application of the obviousness standard.  Ms. Mulligan comes down on the side of Eli Dourado’s solution of eliminating patents on software.

What is amazing is that Ms Mulligan never even addresses the inherent contradiction that if you are going to eliminate patents of software you have to eliminate all patents on electronics.  Of course this may be because Ms. Mulligan does not have a technological background, she is not a patent attorney nor is she legally or factually competent to be a patent attorney.  Software is a way of wiring an electronic circuit.  Any invention implemented in software executed on a computer can be implemented in hardware (i.e., an electronic circuit) as any competent electrical engineer knows.  In fact, this is exactly what happens when software is executed, it is converted into a series of voltage levels that open and close switches in a general purpose electronic circuit called a computer to create a specific electronic circuit.

Ms. Mulligan quotes the clearly incorrect statement that:

Many software patents are merely mathematical formulas or abstract ideas and should not be considered patentable subject matter because they remove too much “raw” material from the public domain.

This statement confuses two separate points.  One point is that many software patents are merely mathematical formulas or abstract ideas.  The second point is that software patents remove too much raw material from the public domain.  The idea that any software patent is a mathematical formula is complete and obvious nonsense to anyone who has worked with computers.  While it is true that software often uses mathematical formulas, so do electronic circuits, radar, rockets,  mechanical systems, chemical processes, in fact almost every area of technology.

Ms. Mulligan does not define what she means by an abstract idea.  In one sense every invention in the history of the world is an abstraction.  Inventions define a class of things.  For instance the invention of the incandescent light bulb is not a specific incandescent light bulb, but the class of these objects.  The only logical definition of an abstract idea is “a thought or conception that is separate from concrete existence or not applied to the practical”.  Every invention that meets the requirements of 35 USC 112 first paragraph is not an Abstract Idea, since this section requires that the invention be described in a manner so one skilled in the art can practice the invention.  Something that can be built and used (practiced) is concrete and applied, therefore it is not an abstract idea.  Clearly software patents are not abstract ideas because they are concrete and applied to a problem of life.  If they did not solve a problem of life, then no one would care, because no one would want to practice their invention.

The second point is that they remove too much raw material from the public domain.  This is a bald statement without any support.  In fact, patents do not remove any material from the public domain.  They secure the property rights of an inventor to their invention that did not exist before they created the invention.  To suggest that this removes anything from the public domain would make even the most strident Marxist blush.

Ms. Mulligan attempts to use Ayn Rand in support of her position.

Even Ayn Rand sidestepped suggesting a length for intellectual property terms, stating that if intellectual property “were held in perpetuity . . . it would lead, not to the earned reward of achievement, but to the unearned support of parasitism.

Of course she forgets to mention that Rand stated “Patents and copyrights are the legal implementation of the base of all property rights: a man’s right to the product of his mind.”[1]  You can see from this statement that it is very unlikely that Ayn Rand would have supported Ms. Mulligan’s position.

More importantly, all property rights are term limited.  A dead person cannot own property.  Property is a legal (moral) relationship between a person and something.  Once the person is dead they cannot have a legal relationship to something on this Earth that would be a contradiction.  There is only a question of what happens to property relationship when someone dies.  But no property rights go on forever.

Ms. Mulligan also ignores the obvious Constitutional problems with a law prohibiting patents on software or any other group of inventions.  Article 1, section 8, clause 8 requires that the right of inventors to their inventions be secured.  There is no basis under the Constitution to discriminate between securing the rights of inventors for chemical inventions, but not to software inventions for instance.  Ms. Mulligan may argue that the preamble to article 1, section 8, clause.8[2] is a limit on patents, but this is a clear misinterpretation of a preamble under legal construction.  Preambles are never considered limiting in law.  In addition, if the founders intended such a limitation then they would have said Congress can take whatever steps they believe will promote the sciences and useful arts.

Ms. Mulligan’s arguments do not stand up to scrutiny.  Part of the problem may be that Ms. Mulligan is not a patent attorney.  But some of the problems are so outrageous, especially for someone who is a Yale Law professor that the only conclusion is that she has a political agenda.

The United States of America created the strongest patent system in the world.  Most of the greatest inventors in the history of the world, Edison, Tesla, Bell, etc. lived and worked in the United States.  In less than 100 years, they created the most technologically sophisticated country ever.  Almost every modern product you use today was subject to a patent or a patented processes at some point.  Your cell phone is the subject of hundreds of patents.  The same is true of your computer, the Internet, the power system, the medicines your take, the car your drive, even your glass windows (Venice patent system), even cement.  For Ms. Mulligan to suggest that patents on software or anything else inhibit the progress of technological is an extraordinary claim and requires extraordinary evidence.[3]  Ms. Mulligan has failed to provide even a scintilla of evidence and logic for her position.

[1] Rand, Ayn, Capitalism: The Unknown Ideal, Signet, New York, 1967, p. 130.

[2] “To promote the Progress of Science and useful Arts, by securing for limited Times to Authors and Inventors the exclusive Right to their respective Writings and Discoveries”

[3] Thomas Paine.

November 20, 2014 Posted by | -Philosophy, News, Patents | , , , , | 6 Comments

Another Libertarian Argument Against Patents Bites the Dust

Libertarians and Austrians, including such organizations as the CATO Institute, Von Mises, and the Wall Street Journal, have put forth a number of arguments against patents and intellectual property.  These arguments include that ideas (an invention is not just an idea, but I will let that go) are not scarce and therefore patents are not real property rights, patents are monopolies, patents inhibit the growth of technology, patents require the use of force to enforce one’s rights, patents are not natural rights and were not recognized as so by Locke and the founders, among other arguments.  I have discussed most of these arguments earlier and will put the links in below.  One of their favorite fall back arguments is that patents limit what I can do with my property.  For instance, a patent for an airplane (Wright brothers) keeps me from using my own wood, mechanical linkages, engine, cloth, etc. and building an airplane with ailerons (and wing warping).  This according to the libertarian argument is obviously absurd.  After all it is my property.  Here is an article Scarcity, Monopoly, and Intellectual Property on the Von Mises website where you can see almost every variation on the arguments mention above either in the article itself or in the comments.

Can I do whatever I want to with my property, or are there restrictions?  Well when I buy a book, a movie, or a song, it does not give me the right to make unlimited copies of them.  I have a property right in the physical book, but not the rights (copyrights) to make copies.  Of course, many Libertarians think copyrights are absurd also, so let’s look at another example.  Let’s assume you own your house and land outright.  Does that give you the right to do whatever you want to with you land?  Most likely, your land has easements for utility lines, such as water, gas, sewer, electricity.  You are not allowed to do anything that interferes with those easements.  You might object that I don’t own the easement, so this is a bad example.  So let’s say you own a bulldozer, does that give you the right to bulldoze my apple orchard and build a house there?  It is your property after all and according to the libertarian argument you are allowed to do whatever you want to with your property.  You might object, that of course the libertarians did not mean that you could take advantage of my property to build on.  Of course that begs the question, what is property?  If a patent and copyright are property rights, then this is exactly the same situation.  Another example where you are prohibited from doing something with your property, is in the case of water drainage.  In particularly wet areas of the US you are prohibited from moving the earth on your land so water drains onto your neighbors property more freely – and no this is not an EPA rule, this is common law property rights.  In parts of the country where water is scarce you are prohibited from damming up water on your land.  If you buy land in a residential neighborhood you are prohibited from setting up a pig farm.  Just because I own a gun, doesn’t give me the right to go around shooting people.  The libertarian argument that patents are not real property rights because they prevent others from doing something with their property fails even the most cursory review.

One of the common themes that runs throughout all Libertarian arguments against patents is that Libertarians’ do not seem to know what property rights are, or how they arise.  Here is a post on point, Property Right, Possession, and Objects; this post not only explains the proper basis of property rights, but why the Libertarian point that property requires possession is a fallacy.  Libertarians have failed to provide a clear definition of what property rights are and how they arise.  In fact, most anti-patent libertarians believe property rights are a useful social convention for distributing scarce resources.  This is interesting, because they can become so adamant about what is their property.  But nothing in this concept of property has anything to do with RIGHTS.  If another, better system comes along for distributing scarce resources, then your property is gone.

Property rights do not give the owner the right to do whatever they want with their property.  The source of property rights is creation, not the idea that it is a socially useful convention.  Patents recognize the metaphysical fact that the inventor is the creator of his invention and are completely consistent with other property rights in prohibiting an owner of other property from using it to build his invention.



Below is a list of other Libertarian arguments against patents and why they fail.


Inventions are not scarce:

Scarcity – Does it Prove Intellectual Property is Unjustified? 


Patents are monopolies

Patents: Monopoly or Property Right a Testable Hypothesis 

If patents are a monopoly, as some suggest, then it should led to certain outcomes.  A close examination shows that none of the supposed monopoly effects result from granting patents.


Monopoly/Rent Seeking vs. Property Rights/Intellectual Property

This post explains the characteristics of a monopoly and a property right and poses three questions to show the difference.  Patents fit all the characteristics of a property right and none of a monopoly.  Note that professional license, such as a law license has some of the characteristics of a monopoly.


More on the Myth that Patents are Monopolies 

This post contains a number of quotes from philosophers explaining that patents are not monopolies.


The Myth That Patents are a Monopoly 

This post compares the definition of a monopoly to the rights obtained with a patent.  It shows that the rights obtained with a patent do not confer a monopoly.


Patents are Natural Rights 

This post traces the ideas of Locke and William Blackstone to show patents and copyrights are natural rights.


Patents inhibit the growth of technology:

Source of economic growth

This post shows that those countries with the strongest patent systems are the technological leaders of the world Patents: Monopoly or Property Right a Testable Hypothesis


Patents require the use of force

This is one of the more absurd arguments by libertarians.  All property rights are enforced by the government’s use of force.  If someone trespasses on your land or steals your car, the government threatens or uses force to get it back.  The same is true for patent, which are property rights in inventions.


April 20, 2014 Posted by | -Philosophy, Patents | , , , , , , , | 2 Comments

Ayn Rand on Intellectual Property

There seems to be a lot of confusion about Ayn Rand’s position on intellectual property both by her supporters and her detractors.  For instance, the Cato Institute  considers it almost a prerequisite to have read Atlas Shrugged to work there.  However their position on patents and copyrights  is in direct contradiction to Ayn Rand’s position. 

 The following quote from Atlas Shrugged, should give you a hint at Ayn Rand’s position on intellectual property:

“Man’s mind is his basic tool of survival. Life is given to him, survival is not. His body is given to him, its sustenance is not. His mind is given to him, its content is not. To remain alive he must act and before he can act he must know the nature and purpose of his action. He cannot obtain his food without knowledge of food and of the way to obtain it. He cannot dig a ditch––or build a cyclotron––without a knowledge of his aim and the means to achieve it. To remain alive, he must think.”  Rand 1992, p. 1012.

 Ayn Rand devotes a whole chapter, Chapter 11, in Capitalism: The Unknown Ideal to patents and copyrights.  The first sentence makes her position crystal clear.  “Patents and copyrights are the legal implementation of the base of all property rights: a man’s right to the product of his mind.[1]  “What the patent and copyright laws acknowledge is the paramount role of mental effort in the production of material values: these laws protect the mind’s contribution in its purest form: the origination of an idea.”[2]

 After pointing out that intellectual property is the source of all property rights, she clarifies the distinction between the idea and the physical embodiment.  “What the patent or copyright protects is not the physical object as such, but the idea that embodies it.  By forbidding an unauthorized reproduction of the object, the law declares, in effect, that the physical labor of copying is not the source of the object’s value, that the value is created by the originator of the idea.”[3]  “Thus the law establishes the property right of the mind to that which it has brought into existence.”[4]  She then points out that “patents and copyrights only pertain to the practical application of knowledge, to the creation of a specific object which did not exist in nature.”[5]

 Next, she tackles the whole question of whether a patent is privilege (in the modern sense of a gift)[6] or is a right.  According to Rand, the government does not grant a patent, in the sense of a gift, privilege of favor, but recognizes the originator of the idea and protects their rights in the idea.[7]

Rand has a very interesting take on the reason for limited terms of patents and copyrights.  She analogies a patent or copyright to a debt owed to the inventor/author by people that copy the inventor’s invention or author’s book.  Debts are not and cannot be perpetual, so this is why the term of patents and copyrights are limited according to Rand.  I will note that real property rights are actually time limited also.  A person only has a property right in real (personal) property during their lifetime.  How can someone who is not alive own something – this would be a logical absurdity.  However, real property is passed on to the person with the next best title to real property upon a person’s death.  In the case of intellectual property, no one person has better title to intellectual property than anyone else so upon the expiration of its term it becomes free for all mankind to use.  Or as Rand explains, real property “can be left to heirs, but it cannot remain in their effortless possession in perpetuity: the heirs can consume it or must earn its continued possession by their own productive effort.”[8]  In contrast, “Intellectual property cannot be consumed.  If it were held in perpetuity, it would lead to the opposite of the very principle on which it is based: it would lead, not to the earned reward of achievement, but to the unearned support of parasitism.”[9]

Rand seems to anticipate the patent thicket discussion and suggests that this is the reason for shorter terms of patents than copyrights.[10]  She also suggests that it is very difficult to correctly define the limits of a patent boundary.[11]  Here, she is mistaken.  There is no evidence of a patent thicket ever existing on a macroeconomic level, only evidence of people who do not want to compensate an inventor for using their technology.  The boundaries of patents are no more difficult to define than those of copyrights or land before GPS and title insurance.  However, patents will be more useful as the equivalent of title insurance for invention is created.  

 I will end this post with a particularly prescient quote from Rand: 

Today, patents are the special target of the collectivists’ attacks . . .[12]


[1] Rand, Ayn, Capitalism: The Unknown Ideal, Signet, New York, 1967, p. 130. 

[2] Id. 

[3] Id. 

[4] Id.

[5] Ibid. p. 131.

[6] See Adam Mossoff’s excellent paper “Who Cares What Thomas Jefferson Thought About Patents?

Reevaluating the Patent “Privilege”, where he points out that historically a privilege is a right that can only be secured in society, essentially synonymous with what we would call a “civil right” today.

[7] Rand, Ayn, Capitalism: The Unknown Ideal, Signet, New York, 1967, p. 131. 

[8] Ibid. p. 131

[9] Ibid. p. 131

[10]Ibid. p. 133

[11]Ibid. p. 133

[12]Ibid. p. 133

February 28, 2010 Posted by | Uncategorized | , , , , , , | 33 Comments

Scarcity and Intellectual Property: Empirical Evidence of Adoption/Distribution of Technology

A number of scholars[1] have suggested that the logical basis for property rights is scarcity.  Property rights efficiently allocate these resources and avoid conflicts.  These scholars argue that ideas and inventions are not subject to scarcity and therefore intellectual property rights should not exist.  These arguments seem to be particularly prevalent among Libertarians, including the Cato Institute and Von Mises Institute, and the open source community.  Continue reading

June 25, 2009 Posted by | -Economics, -Legal, -Philosophy, Innovation, Patents | , , , , , , , | 13 Comments

Scarcity – Does it Prove Intellectual Property is Unjustified?

A number of scholars[1] have suggested that the logical basis for tangible property rights is scarcity.  Property rights efficiently allocate these resources and avoid conflicts between competing rights of individuals.  These scholars argue that ideas and invention are not subject to scarcity and therefore intellectual property rights should not exist.  These arguments seem to be particularly prevalent among Libertarians, including the Cato Institute and Von Mises Institute, and the open source community.  Continue reading

June 22, 2009 Posted by | -Law, -Philosophy, Innovation, Patents | , , , , , , , , , | 4 Comments



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