State of Innovation

Patents and Innovation Economics

Another Confused Libertarian on Intellectual Property

Timothy Sandefur is another Libertarian confused about intellectual property – see his article.  He suggests that Adam Mossoff’s article on Natural Copyrights and Ayn Rand’s thoughts on intellectual property are incorrect.  Mossoff and Rand have the better argument.  First of all it is clear that intellectual property rights are consistent with Locke’s view of property rights.  You own yourself and therefore you own the product of your labor mental or physical.

Portuguese Claim to Sea

The argument about the Portuguese claim to the sea is an attempt to condemn Locke by a misapplication of Natural Rights theory.  The Portuguese did not improve the sea.  According to the Portuguese argument when I drive over the road I own the road or if I walk over land I own the land.  Using a misapplication of Natural Rights theory is a red herring argument.

Non-Exclusive Nature

Patents do not keep you from thinking about the invention and in fact it is a purpose of patent law to encourage the dissemination of knowledge associated with inventions so that other inventors can improve upon these inventions.  Patents only restrict you from making a physical version (or threatening to do so – offer for sale).  An infringer of a patent is no longer making a non-exclusive use of the invention when they make it.  They have taken a part of the potential market for the invention.  This market is neither unlimited or non-exclusive.

Your argument about two people having two separate copies of the invention ignores the property right involved in patents.  The property right is not in the physical item.  When you steal my invention by making an unauthorized copy, you have initiated force not the patent holder.  This is similar to me stealing apples from your orchard.  I have not initiated any force against you, it is only when you call the police or come out with your shotgun that force is initiated.

The exclusive nature of real property is illusionary at best.  You only occupy and exclude the space you are presently in.  You do not occupy your whole apple orchard all the time.  If I take an apple from your orchard that you are not presently holding or eating then there is nothing “naturally” exclusive about your ownership of that apple.  If you own more land than you can farm or otherwise take advantage of and I decide to plant crops on that land I have not hurt you.  You have initiated force against me when you kick me off your land and you inhibit productive enterprise.

The non-exclusive nature of intellectual property is a confused argument.  If you are talking about physical exclusion then you should only own real and personal property that you are presently using, which would destroy the concept of  property rights generally.  If you are talking about the legal right to exclude others from using your property, then you have to be consistent with your definition of the legal right involved.  Intellectual property is not about physical ownership, so making a copy of another invention is a clear breach of the property right.

Simultaneous Invention

In your statement about “innocent” simultaneous inventors that, “but because you make it to the patent office first, you get the patent on that thing, and can therefore forbid the other person from making or selling his thing” is wrong.  The US is a first to invent country (at least so far) not a first to file country.  So just because someone beats you to the patent office does not mean they receive the patent.  However, you do make a strong point for why we should not change our patent laws to a first to file system.

More generally, the definition of an inventor is the first person to discover a new invention.  Only the first person adds to the store of human knowledge.  The second person is just clever.  If a person living in India rediscovers Calculus he is not the discoverer of Calculus because he did not add anything to the store of human knowledge.  In addition, there are an infinite number of potential inventions and increases in technology are the only way to increase our standard of living.  As a result, we want people to invent not to copy other people’s inventions.

Fair Use

Copyrights protect the artistic expression of an idea.  They do not protect every component of a written work for example.  Fair use is just a statement of this fact.  So copying a small portion of work is not a violation of the owner’s copyright because you have not taken their expression of the idea.  This is why one of the factors of fair use is how much of the work did you copy.

Intellectual Property and Free Markets

You state, “natural copyright is very dangerous to the free market, in that it proposes to forbid entrepreneurs from legitimate and praiseworthy uses of their liberty.”  Actually, the exact opposite is true.  By undermining intellectual property you are undermining the very basis of property rights and liberty.  The empirical evidence also shows that whenever a government refused to protect intellectual property rights they also do not respect other property rights or the mechanisms of a free market.

Locke’s Natural Rights

Natural rights theory is not only the historical and logical basis for property rights but explains most common law crimes.  The natural rights labor theory of property explains why slavery is immoral.  If you own yourself, then no one else has the right to own you.  It also explains why murder and manslaughter are immoral, why stealing is immoral, why assault and battery are immoral and why we have laws against all these actions.  The natural rights labor theory defines how property should be allocated and how people come into possession of property morally and legally.  The labor theory explains all of our basic criminal law and all of our basic property laws.  What does scarcity explain?  It offers no justification for why slavery, murder, manslaughter, assault and batter and theft are immoral, except that they are inefficient at allocating resources.  Thus, all of these crimes would be allowed if they were efficient at allocating resources.  Scarcity does not explain who has ownership in property or why they should have ownership in property.  It merely explains that private property ownership is an efficient manner in allocating scarce resources.

In science, the theory that has the greatest ability to explain the widest number of facts is considered to be the correct or better theory.  Here the “scarcity” theory of private property requires the additional assumption that it is preferable to have efficient allocation of resources.  However, it fails to explain how the resource should be initially distributed, it does not explain how property law determines ownership and has no power to explain criminal law.  Trading scarcity for the labor theory of property is like trading the theory that “what goes up must come down” for Newton’s Law of gravity.  The fact of the matter is that the proponents of scarcity have confused cause with effect.  A system of private property results in efficient allocation of resource, but it is not the reason for private property – it is the effect of private property.

For more information see Scarcity – Does it Prove Intellectual Property Rights are Unjustified?


March 1, 2010 Posted by | Patents | , , , , , , , , | 8 Comments

Mancow Radio Experience

I (Dale B. Halling) will be appearing on the Mancow Radio Show Monday, February 8th, between 6-6:30AM, MST.  Mancow and Cassidy can be heard around the country including on AM 890 WLS.   I will be discussing how to create high quality jobs.

February 6, 2010 Posted by | Uncategorized | , , , , , | Leave a comment

Book Review By Pat Choate: Understanding How to Get the U.S. Economy Moving Again

This is a copy of Pat Choate’s review of The Decline and Fall of the American Entrepreneur: How Little Known Laws and Regulations are Killing Innovation.  Dr. Pat Choate, economist, former Vice Presidential running mate of Ross Perot 1996, Director of the Manufacturing Policy Institute, Phd. Economics University of Oklahoma.

I do not review books on the Net unless I find them well-written and especially informative, which certainly applies to Dale B. Halling’s The Decline and Fall of the American Entrepreneur.

Nonetheless, I do have a criticism directed towards the publisher. My copy did not contain a vita of the author, which in this case is a major omission. Mr. Halling is a physicist, lawyer and an expert on patents and entrepreneurship, all of which comes through in his book. This author delivers the goods. A vita in subsequent printings would be useful.

Mr. Halling combines two topics — the impediments to entrepreneurship that have been created by the U.S. government as an unintended consequence of its pursuit of other goals and the systemic weakening of the U.S. patent system by the U.S. Supreme Court and the Congress.

The resulting technological stagnation is a major reason the U.S. has gone from producing 25 percent of the World’s Gross Product in the mid 1990s to about 20 percent today. The loss is significant – about $3 trillion of U.S. GDP in 2009 alone.

He demonstrates in clear terms the linkages between economic growth, productivity, and income. And he lays out how technological advancement has always been the American advantage in global competition, an advantage that the U.S. is squandering.

He explains how the Sarbanes Oxley Act cut off the waves of venture investment that did so much to stimulate U.S. growth in the 1980s and 1990s, and he also explains how shifts in accounting rules as per stock options directed many of our most creative people into less than innovative activities.

His final chapter contains some straight forward recommendations that involve no direct-cost regulatory changes that would once again stimulate more innovation, investment and job creation in America. Amazingly, Congress is now considering a so-called “patent reform” legislation that would further diminish U.S. innovation. The author convincingly explains how this would damage U.S. innovation. He also explains the consequences of recent Supreme Court decisions on patent law. My observation is that the Roberts Court is the most anti-patent set of Justices in U.S. history. Once Congress understands what the Court has done, their decisions need to legislatively overturned.

In sum, this is well-written, jargon-free, 137-page book that is a quick read. It evidences smart and practical thinking by an author with real world experience. I highly recommend it.

January 15, 2010 Posted by | Uncategorized | , , , , , , | 1 Comment

Colorado Innovation: Terratec

Terratec’s AggreScreed was named one the top innovations by the magazine Equipment World .  The AggreScreed allows a contractor to lay a gravel road of a set depth without the cost and time of placing survey stakes.  This invention saves contractors time and money by eliminating survey costs, reducing wasted aggregate, and eliminating rework.  This is exactly the sort of technological innovation for which the patent system was designed.  Unfortunately, it took Terratec around four years to obtain its patent.  This in not untypical and it points out that the US patent system is broken, but not for the reasons suggested by those people pushing patent reform.  The Patent Office is hopelessly backlogged but Congress will not fully fund it.  The Supreme Court’s recent decision have increased the uncertainty over whether a patent will be held valid or approved by the patent office.  We need real patent reform that provides the Patent Office the funding they need to do their vital job and provides an objective standard for which inventions are patentable.

January 15, 2010 Posted by | Uncategorized | , , , , | Leave a comment

Innovation Expert Ignores Inventors & Patents

There is a great post in IPBiz, “Mentioning Innovation with Mentioning Patents“, how CBS Sunday Morning had a whole show about the lack of innovation but never discussed patents or inventors.

One of my colleagues is always pointing out the people who use the word innovation discuss it in a disembodied way.  They never discuss inventors or patents.  Specifically, he states:

Say yes to inventors. Say no to “ignore-&-evasion”.

The full-truth word is “invention”, not inno-evasion.

He makes excellent points – at least on how the word innovation has been perverted.

January 11, 2010 Posted by | Patents | , , , , | Leave a comment

Understanding the Non-Obviousness (35 USC 103) Patent Requirement

In order to obtain a patent your invention has to be useful (35 USC 101), novel (35 USC 102), and non-obvious (35 USC 103).  The goal of this post is to explain the non-obviousness requirement in terms that are clear to engineers and scientists. Continue reading

August 12, 2009 Posted by | -Law, -Philosophy, Patents | , , , , | 2 Comments

A Short History of Innovation in the United States

            The U.S. has been the most innovative country in the history of world.  “Virtually every major development in technology in the twentieth century – which was far and away the most important century in the history of technology – originated in the United States or was principally industrialized and turned into consumer products here.”[1]  The economic success of the U.S. is due to its technological innovation.  The first colony was only possible because of two new technologies – the full-rigged sailing ship and the joint-stock company.  This inventive spirit has continued to the present with the Information Age, which was founded in the U.S. and based on the internet (ARPANET) invented in 1969.  Continue reading

August 9, 2009 Posted by | -Economics, -History, Innovation | , , , , , , , | Leave a comment

Understanding Patent Novelty (35 USC 102) for Inventors

In order to obtain a patent your invention has to be useful (35 USC 101), novel (35 USC 102), and non-obvious (35 USC 103).  The goal of this post is to explain the novelty requirement in terms that are clear to engineers and scientists. Continue reading

August 4, 2009 Posted by | -Law, -Philosophy, -Prosecution, Patents | , , , , , | 3 Comments