State of Innovation

Patents and Innovation Economics

Everything Wrong With Patent Law Can Be Found in the Koontz Case

At first glance the Koontz v. St. Johns River Water Management District case does not appear relevant to patent law.  It is a Fifth Amendment regulatory takings case revolving around wetlands and private property.  But as I will explain in more detail below the underlying problem in both these cases is a lack of understanding of property rights.  The facts of the Koontz case according to Fox News are

 Coy Koontz in the 1970s bought a parcel of land, the majority of which later was classified a wetland. When he sought a permit to develop a portion of it in the 1990s, the Florida agency in charge of the area said Koontz would need to take steps to remediate the damage he would cause.

Koontz offered to give the agency 11 of the 15 acres, in exchange for a permit to develop the remaining land. In addition, the state government said he would need to undertake other improvements. Options ranged from numerous changes to the original plot to paying for enhancement of 50 government-owned acres miles away from the Koontz plot.

Though Koontz continued to offer the 11 acres, he refused to go along with the government’s other requirements and decided to sue.

Antonin Scalia’s comments at oral argument illustrate this lack of understanding of property rights.  “I can’t see where there’s a taking here,” Scalia said, adding, “Nothing’s been taken.”  Ronald Reagan must be rolling over in his grave – he appointed Scalia (For more of  Scalia’s outrageous thoughts see The Soviet Union’s Constitution Was ‘Much Better Than Ours’).  Scalia’s thought process, as best I can understand it, is that Koontz still has legal title to his land and his land is still there – it was not taken.  Judge Scalia seems to not understand the difference between property rights, possession, and the object.  (For more information click here)  Property rights define a relationship between a person and an object or thing.  When Mr. Koontz acquired title to the land, it did not have lien or an easement that required him to give up a part of land or pay for the enhancement of government land.  The government changed his rights in the land.  The Fifth Amendment states “nor shall private property be taken for public use, without just compensation.”  Mr. Koontz right to develop his property and his right to enjoyment of his property have clearly been altered without compensation.  The government has taken these rights in his land for public use, so it is clearly a taking.

Scalia has also shown an appalling lack of understanding of patent law and it is because he does not understand property rights.  Property rights derive from the fact that a person owns their self and therefore they own those things they create.  Patents are property rights that the inventor gets because they created a new invention.

Mr. Koontz attorneys work for the Pacific Legal Foundation.  This group does good work protecting economic freedom, but they also do not understand property rights either.  At least one of their lead attorneys believes intellectual property should not exist – see Another Confused Libertarian on Intellectual Property .  These people believe that property rights exist or should exist only because they result in more optimum economic outcomes.  Really, they should call they them ‘property privileges’ or ‘property expediencies.’  Their commitment to so-called property rights only lasts until they are convinced they know what better to do with your property.

So what we have is a case in which the supposed defenders of property rights do not understand them.  What do you think the likely outcome will be?


Patent and Property Rights

When the so-called defenders of property rights, believe they are just a political expediency that produces the best outcome for the collective, you can bet they will never support patents, which are property rights in an invention.  I have seen patent attorneys attempt to use this line of reasoning with patents.  They are happy to have people characterize patents as a monopoly, but think this is irrelevant because they can show patents are good for the economy.  These people do not understand the philosophical battle over patents or the definition of a monopoly.  They believe that because the anti-property rights crowd believe in monopolies for electrical and water systems, they will be in favor of monopolies for inventions.  However, they forget that in the electrical and water systems case the anti-property rights crowd supports this because it increases government power, not for the bogus efficiency argument.  But patents increase the power of the individual, not the state.  So it does not matter how well you can show that patents are important for economic growth and improve everyone’s life, they will not favor it because it increase the power of private citizens.

Property rights are derived from the right to own oneself.  If you do not own yourself, you are not free and do not live in a free society.  If you own yourself, then you own that which you produce, including inventions.  The patents are monopolies argument is without any merit from a historical, definitional, and empirical point of view.  Understanding that patents are property rights is the key to both solving the patent problem and the Koontz case.


For more on patents and monopolies see.


Monopoly/Rent Seeking vs. Property Rights/Intellectual Property .

This post explains the characeristics 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.

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.

More on the Myth that Patents are Monopolies.

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

Property Rights, Possession and Objects

This post explains the difference in the concepts of property rights, possession, and objects.  Most economists and patent detractors confuse these concepts.  The origin, definition, and legal basis of property right are explained.

 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.



January 25, 2013 Posted by | -Legal, News, Patents | , , , , | 5 Comments