Rather Than Giving Banks A Patent Exemption, Why Not Fix The Patent System?

from the still-wondering... dept

Back in February, we wrote about how some folks in Congress had hidden a sneaky bit of legislation into a bill that would exempt banks from a particular patent on automated check scanning. This was a terrible abuse of Congressional power, that would only lead to more similar actions. But the real problem isn't Congress trying to protect banks from a bad patent (and rest assured, it's a ridiculously broad patent on an obvious idea), it's that they're trying to create a specific exception, rather than fix the entire system.

However, no matter how ridiculous this particular "exception" is, Tom Giovanetti's latest article complaining about it has numerous problems. First, he starts off by suggesting that traditional property and patents are similar, and that they're there to "protect the little guy." Unfortunately, patents and property are quite different, and patents were never designed to "protect the little guy," but to promote the progress, which again is entirely different. Giovanetti then claims that: "there is something heroic, even romantic, about the small inventor who comes up with a breakthrough idea." Yes, there is something romantic about it -- but perhaps that's why it's generally a myth. There are very few stories of small inventors coming up with breakthrough ideas. Most of the stories you can think of are actually revisionist history of those who actually copied the ideas of others, and were better marketers (and able to abuse the patent system to their own advantage).

So, yes, this particular exception is bad, even if it's for the right reasons. The patent itself is quite questionable and covers a broad and obvious topic. The company has done little to commercialize the offering itself and has been looking to sit back and cash in. But, the idea that this is an affront to "small inventors" making "breakthrough inventions" is a myth that's better left by the wayside. This is merely yet another example of a broken patent system and Congress' unwillingness to fix the root causes of the problem, preferring instead to treat the symptoms.


Reader Comments (rss)

(Flattened / Threaded)

  1.  
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    Anonymous Coward, Apr 1st, 2008 @ 10:25am

     

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  2.  
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    MLS, Apr 1st, 2008 @ 10:44am

    After having read many articles over the past few weeks, I do have to ask "Is there any invention you have ever seen that meets the criteria you believe should be used to determine what is protectible and what is not under patent law?"

     

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  3.  
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    Mike (profile), Apr 1st, 2008 @ 11:14am

    Re:

    I do have to ask "Is there any invention you have ever seen that meets the criteria you believe should be used to determine what is protectible and what is not under patent law?"

    Well, there are a few points there, that are worth discussing. Under current patent law, something that is protectable would be new and non-obvious to those skilled in the art. So, that would require it to not be something that multiple folks are coming up with at the same time, or which any skilled practitioner could create if told about the problem. So that wipes out a large portion of patents, but certainly not all. Right now, unfortunately, the USPTO doesn't do much to determine if a patent is really non-obvious, which is a significant problem (especially in software and business model patents).

    Also, the patent itself actually does need to be revealing enough that a skilled practitioner could then recreate the product just from the patent alone (which is pretty rare).

    So, yes, there are patents that are protectable under the current law.

    That said, if we go back to the question of whether or not those patents "promote the progress" we start running into more trouble -- but I'll leave that issue aside for now, and assume that's more of a question for Congress to decide than the USPTO. But if you add in that, I'm still waiting for someone to show me the market failure that requires any particular patent.

     

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  4.  
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    PidlyDink, Apr 1st, 2008 @ 11:16am

    Angry Dude

    Angry Dude, where are you? Please help with your insightful rebuttals or these pinko-commie-liberal-neofacist-pseudoneocons will have the last word!

     

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  5.  
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    Anonymous Coward, Apr 1st, 2008 @ 11:26am

    Re: Re:

    Really? You add some fancy words instead of content. Nice way to dance around the question.

     

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  6.  
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    angry dude, Apr 1st, 2008 @ 11:35am

    Stripes for those folks

    Sen. Sessions must be wearing stripes already, along with some of his buddies in banking business

    Allow a bunch of largest banks to collect underserved profits for robbing a small business and pass the final damages bill to US taxpayers, hah ?
    How is that ?
    What a bunch of kooks

     

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  7.  
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    Anonymous Coward, Apr 1st, 2008 @ 11:42am

    Re: Re: Re:

    It sounded to me like he pretty much said, "yes."

     

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  8.  
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    Anonymous Coward, Apr 1st, 2008 @ 11:49am

    Re: Re: Re: Re:

    I don't see where he did, he recited what would be required. There is nothing here specified that would qualify, giving me specs does not provide any patent he feels is valid.

     

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  9.  
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    angry dude, Apr 1st, 2008 @ 11:56am

    How bout Viagra, Mikey ?

    You aren't using it yet ? good for you
    But at some point you might need it

    Just tell me, Mikey, if you accidentally came across Viagra (and Viagra WAS an accidental discovery) would you just disclose it to the rest of the world without filing for a patent first ?
    This would be very stupid decision from the business point of view.
    And you are a bussinessman, aren't you, Mikey ?
    Without patents this would be a closely guarded trade secret
    and trade secrets do not promote progress

     

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  10.  
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    DCX2, Apr 1st, 2008 @ 12:47pm

    Re: How bout Viagra, Mikey ?

    How about the polio vaccine, angry dude?

    While being interviewed by Edward R. Murrow on See It Now in 1955, Jonas Salk was asked: "Who owns the patent on this vaccine?" Surprised by the question's assumption of the requirement of a profit-motive for his creation, he responded: "There is no patent. Could you patent the sun?"

    A stupid business decision is usually when one decides to share something with the rest of humanity without asking for anything in return. Some could consider this promoting progress. Open source software comes to mind. I'm sure other things could happen in an environment free of frivolous litigation.

    There are obviously severe flaws with the patent system. Showing that patents may be necessary for some cases (e.g. big pharma) does not demonstrate a need for the full extent of the current patent system.

    Let me repeat myself. The argument is not about whether to get rid of patents. Arguing that the patent system needs reform does not mean it needs abolished. It means there are problems to fix. The manipulation of Congress above, or the lawsuits like RIM/NTP, and so on and so forth, demonstrate clearly that there are at least some flaws.

    Quit focusing the discussion on the straw man let's-get-rid-of-the-patent-system and let's agree on how to fix a system that is plainly abused.

     

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  11.  
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    Andrew D. Todd, Apr 1st, 2008 @ 12:58pm

    Prior Art From Three Hundred Years Ago

    Angry Dude:

    Since you have admitted to being a Russian, I will quote you an example from your own country. There was an early Russian economist named Ivan Pososhkov(1652-1726). In 1724, he published an economics treatise, _The Book of Poverty and Wealth_(*), which got the authorities so upset that he was promptly imprisoned, and died soon after. Pososhkov apparently did not think very much of the moral qualities of Russians-- he assumed that they would rather steal than work. In Chapter Six, "Of Brigandage," he proposed a system of internal passports to distinguish between bandits and merchants. Someone who was going to travel for purposes of commerce would be issued an internal passport for the trip, which he would have to get endorsed at every stop along the way. Every official who endorsed the passport was to be required to make a complete copy for his register, and when the traveler returned home, he was to return the passport to the issuing authority, who again would enter everything into his register. All of these registers were eventually to be delivered up to higher authority. The idea was to provide multiple, independent sets of documents, making it practically impossible for a crooked official to fake documents. That way, if a merchant went off on a "trading expedition," but actually became a bandit, killing people and robbing their goods, the discrepancy in the papers was supposed to catch him out. Obviously, the problems of law and order in eighteenth century Russia must have been fairly severe. I haven't run across anything comparable in the roughly contemporary French or English economists I've read (Colbert, Roger Coke, Adam Smith, Malthus, Turgot, Quesnay). All of them just assumed that the king could find faithful officials who could be given general instructions and then left to get on with it, using their own judgment. Reading Pososhkov, we are dumped into the bizzaro world of Nikolai Gogol's _Dead Souls_ and _The Inspector General_. At any rate, except for the use of computers as an enabling mechanism, none of these business process patentees have much of anything to teach good old Pososhkov.

    (*) edited and translated by A. P. Vlasto and L. R. Lewitter, Stanford University Press, 1987

    It is obvious that you can computerize any system of paperwork, and students in elementary programming courses are required to do so against a time limit. The supreme court finally recognized this obvious fact in KSR v. Teleflex.

     

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  12.  
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    angry dude, Apr 1st, 2008 @ 1:30pm

    Re: Prior Art From Three Hundred Years Ago

    poor dude

    what kind of crap do you read ?

    burn your books asap

     

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  13.  
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    Anon, Apr 1st, 2008 @ 6:33pm

    Hey - I've an idea !!!

    does anyone have a patent on loaning currency over a specified period in return for same amount plus interest ?

    Maybe I should start filling out the forms.

     

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  14.  
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    MLS, Apr 1st, 2008 @ 10:09pm

    "...(and rest assured, it's a ridiculously broad patent on an obvious idea)..."

    I presume that in making this statement you took the time beforehand to:

    Thoroughly reivew the contents of the "file wrapper".

    Thoroughly review each of the references cited against the claims since the application was first filed.

    Consult with persons known as PHOSITA to which the subject matter of the invention relates.

    Consciously refrain from engaging in hindsight.

    Applied your factual findings to both SCOTUS and CAFC jurisprudence regarding Section 103 to Title 35.

     

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  15.  
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    Mike (profile), Apr 2nd, 2008 @ 12:47am

    Re:

    Actually, I used common sense, but, if you want to get pedantic about things, go ahead.

    Let's be clear here: the idea of automating check scanning is not a complex idea. Put some engineers in a room with some bankers and you'll come up with a solution before long. The idea that one company gets a full monopoly on that concept is seriously problematic.

    You can list out all of the things that the patent office goes through, but that's rather meaningless. The system itself is quite broken, and the USPTO's standards are way too low. That's the cause of most of these problems.

    In the meantime, I'll note that you didn't respond to my original response to your first question. Why not?

     

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  16.  
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    Crosbie Fitch (profile), Apr 2nd, 2008 @ 2:42am

    Patents are unethical and should be abolished

    Patents are unethical and should be abolished.

     

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  17.  
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    MLS, Apr 2nd, 2008 @ 8:21am

    Re: Re:

    I did not respond to your post because you basically answered the question I asked.

    As for "pedantic", you are discussing a system of law that is not as broad in scope as many here seem to believe. What is and what is not obvious is a factual inquiry, and absent such an inquiry broad generalizations undercut the force or your arguments.

     

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  18.  
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    MLS, Apr 2nd, 2008 @ 9:46am

    Re: Patents are unethical and should be abolished

    Never having seen an unethical patent, I presume what you meant to say is that some patentees or their assignees/licensees are inclined to operate in what you believe to be an unethical manner.

    Your statement that they should be abolished seems to suggest to you see no pros to a patent system, or that perhaps you believe that cons far outweigh the pros. Might you consider a brief elaboration?

     

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  19.  
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    Crosbie Fitch (profile), Apr 2nd, 2008 @ 2:46pm

    Re: Re: Patents are unethical and should be abolis

    All patents are unethical.

    I make no statement concerning whether the inventions, designs, or mechanisms so patented are ethical.

    http://www.digitalproductions.co.uk/index.php?id=74

     

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  20.  
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    Ronald J Riley (profile), Apr 2nd, 2008 @ 6:56pm

    Mike: More Uninformed Drivel

    Mike Masnick said: “Actually, I used common sense, but, if you want to get pedantic about things, go ahead.”

    When it comes to the patent system you show little common sense or understanding of how the process actually works.

    Also, claiming that an invention is obvious based on a superficial look as you have done with the Data Treasury patents is foolish. I suggest that if you are going to render opinions on these issues that you become informed first. As it stands your comments bring to mind the saying about opening one’s mouth and removing all doubt.

    Data Treasury’s patents have already been litigated and infringing banks have been handed their heads. One of the reasons for staggering liabilities is the banking industry’s outrageous conduct in the case.

    The significance of Data Treasury’s inventions is the complete process, especially the security aspects.

    I have been watching the Data Treasury case for some time and this case demonstrates that the banking industry is collectively a slimy bunch ranking right next to drug lords in their morals. They are willing to destroy what has made America the land of opportunity to facilitate their theft of at least ten billion dollars from Data Treasury or if they succeed in their legislative efforts from all taxpayers.

    Where do new jobs and prosperity come from? The answer is American ingenuity which is no less a natural resource than land and minerals. In fact, the only thing standing between our current standard of living and a precipitous drop is American inventiveness.

    Has it occurred to anyone that banks are being sued because they have a big appetite for other's patent property and big egos which get in the way of acquiring the rights to the patent properties they need to succeed in the market?

    Have you considered that banks are sued after they have refused a legitimate offer for a license?

    Or have you considered that the banking industry membership in the Coalition for Patent fairness and PIRACY, aka. the Piracy Coalition is a good indication that birds of a feather do flock together?

    Some companies start as inventors, and some start as parasites on those who have invented. Eventually they end up alike, one group never being inventive and the second losing the ability to invent as they age. Both will try to substitute quantity in patent filing for the quality of inventions they are incapable of producing. It does not work.

    All Piracy Coalition members fit one of these profiles. Tech companies who are past their prime, insurance and banking collectively have no shame!

    What they very good at producing is innovating media hype which obfuscates the reality of their existence. Their multi-million dollar “troll” campaign is a perfect example of this. They paint their victims as “trolls” while the courts are finding their conduct so egregious that they are handing down staggering judgments which are generally being upheld by higher courts. This is what happens to those who are caught lying, cheating, and stealing and no amount of public relations painting their victims as evil “trolls” can change the facts of these cases.

    Personally I think that it is a shame that Piracy Coalition members have failed to learn the lesson that inventors and the courts are teaching. It is all about conducting one’s business in an ethical manner!

    Ronald J. Riley,


    Speaking only on my own behalf.
    Affiliations:
    President - www.PIAUSA.org - RJR at PIAUSA.org
    Executive Director - www.InventorEd.org - RJR at InvEd.org
    Senior Fellow - www.patentPolicy.org
    President - Alliance for American Innovation
    Caretaker of Intellectual Property Creators on behalf of deceased founder Paul Heckel
    Washington, DC
    Direct (202) 318-1595 - 9 am to 9 pm EST.

     

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  21.  
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    Tom Giovanetti, Apr 2nd, 2008 @ 8:43pm

    The inanity of the anti-IP bolsheviks

    This thread demonstrates the utter lack of legal or logical credibility of the anti-IP Bolshevik crowd. You anti-IP nutters are living in a Socialist fantasy land. Your anti-property dystopia didn't work with real property (read: the 20th Century) and it won't work with intangible property, either.

     

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  22.  
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    Anonymous Coward, Apr 2nd, 2008 @ 10:08pm

    Re: The inanity of the anti-IP bolsheviks

    Mr. Giovanetti ,
    The socialists were all about monopolistic control of the market and the restriction of competition. That sure sounds a lot like patents to me, not the other way around.

    Now lets go have a look at your blog: "I'm the president of the Institute for Policy Innovation (IPI), a non-profit, non-partisan public policy think tank founded in 1987 by Dick Armey." So you run a "think tank" do you? It seems to me those things usually go around pushing hidden agendas. Is your's any different? Let's have a look.

    The IPI about page: "IPI's focus is on approaches to governing that harness the strengths of individual liberty, limited government, and free markets." Well now, that's pretty much the opposite of what patents do. Patents restrict individual liberty to use one's own ideas and create government granted monopolies to suppress competition.

    So which side are you really on? You claim to be for free markets and then come out swinging and name calling in support of patents. You say one thing and then do another. You, sir, are nothing but a hypocritical tool.

     

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  23.  
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    Mike (profile), Apr 2nd, 2008 @ 10:20pm

    Re: Mike: More Uninformed Drivel

    Ronald, I'm glad you're stopping by regularly, but you still haven't learned how to make a convincing argument. Instead, once again, you resort to insults. It's too bad.

    Also, claiming that an invention is obvious based on a superficial look as you have done with the Data Treasury patents is foolish.

    It wasn't a superficial look, but thanks for playing.

    Data Treasury’s patents have already been litigated and infringing banks have been handed their heads.

    I'm not sure that proves anything other than highlighting problems with the patent system.

    I have been watching the Data Treasury case for some time and this case demonstrates that the banking industry is collectively a slimy bunch ranking right next to drug lords in their morals.

    So nice to see that you've learned how to make a real argument without resorting to insults... oh wait.

    I don't deny that the banks are being sleazy here, but that's not really the point is it? Or can you really not resist the temptation to insult companies?

    Where do new jobs and prosperity come from? The answer is American ingenuity which is no less a natural resource than land and minerals. In fact, the only thing standing between our current standard of living and a precipitous drop is American inventiveness.

    Believe it or not, Ronald, on this we agree 100%.

    And that's why I actually took the time to understand how the patent system is *harming* American ingenuity and slowing down economic growth by LIMITING that natural resource through artificial scarcity. Ingenuity is a natural resource and a key component in driving growth, and that's why it's a terrible thing that we limit it, limiting our potential for growth.

     

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  24.  
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    Mike (profile), Apr 2nd, 2008 @ 10:26pm

    Re: The inanity of the anti-IP bolsheviks

    Gee Tom, tell us how you really feel...

    This thread demonstrates the utter lack of legal or logical credibility of the anti-IP Bolshevik crowd.

    Funny that you would say that on a post that actually agrees with your larger point, that this Congressional move is a scam.

    But as for your point about the "utter lack of legal or logical credibility" it's fun to throw around insults, but since you don't back up your statement I'm going to assume it's because you cannot. Or back in think tank school do they just teach you to shout down anyone you disagree with.

    As for "legal logic" we're discussing this from an economics perspective... and as a supposed supporter of a free market, I would think you'd be a fan of basic free market economics. Apparently not.

    You anti-IP nutters are living in a Socialist fantasy land.

    Fascinating. CNN calls me an extreme right winger, Tom Giovanetti calls me a Socialist. I'm confused.

    Tom, how is it socialist to suggest getting rid of an unnecessary gov't monopoly and letting the free market work its charms? Doesn't that seem a lot more capitalistic to you? A huge gov't bureaucracy handing out 20 year state-sponsored monopolies doesn't sound like the free market to me.

    Your anti-property dystopia didn't work with real property (read: the 20th Century) and it won't work with intangible property, either.

    We're not anti-property. Tom, I'm extremely pro-property rights. Property rights are extremely important in a free society, as you well know. But the reason they're important is to more efficiently handle resource allocation in the presence of scarcity. With IP, there is no scarcity. There need not be any property rights because ideas ARE NOT PROPERTY.

    You seem a bit confused about the purpose of property rights as well as the basics of free market economics. What kind of "thinking" do you do at this think tank of yours?

     

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  25.  
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    Crosbie Fitch (profile), Apr 3rd, 2008 @ 12:22am

    Re: Re: The inanity of the anti-IP bolsheviks

    Ideas ARE property. And ideas may well be scarce.

    We DO need property rights for ideas.

    What we don't need are monopolistic privileges such as patent that permit people to give their ideas to the public and yet still own them.

    As with any property, once you sell it to someone, it's theirs not yours. Naturally, by communicating an idea to someone you do not consequently forget the idea you still have - you still own the idea you still have - you simply do no longer own the idea that you gave to someone else and they can do with it what they want.

    However, the fact remains, that people should still not steal ideas from each other. Ideas are property. You may not burgle my workshop to steal my ideas.

    Patents suspend people's natural liberty to implement and build upon ideas they legitimately arrive at, discover, or become informed of.

    Patents are an unethical suspension of our natural right to liberty, to the free practice of our ingenuity and exchange of our intellectual labour and products thereof in a free market.

     

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  26.  
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    Anonymous Coward, Apr 3rd, 2008 @ 8:25pm

    Re: Re: Re: The inanity of the anti-IP bolsheviks

    However, the fact remains, that people should still not steal ideas from each other. Ideas are property. You may not burgle my workshop to steal my ideas.

    THIEF! THIEF! THIEF!

    I was thinking about expressing the same ideas some time ago, but now Crosbie Fitch has gone and STOLEN my ideas! Now they're worthless to me. And here he is, flaunting his stolen property. Is he nothing but a common thief? Shame on him! I bet he's got more of my ideas stashed away somewhere. Give me my ideas back! Throw Crosbie Fitch in the lockup!

     

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  27.  
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    Crosbie Fitch (profile), Apr 4th, 2008 @ 6:03am

    Re: Re: Re: Re: The inanity of the anti-IP bolsheviks

    What evidence do you have that I've stolen your ideas rather than arrived at them independently?

    Note that theft cannot occur by coincidence, and requires unauthorised access to a place where your ideas are only privately available, such that I could obtain them without your permission.

    It is the privilege of patent that causes ideas to effectively remain the property of their patentees even after publication, and prevents anyone else using an indistinguishably similar idea even if they arrive at it independently.

    Abolish patent. Restore everyone's intellectual property rights.

     

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  28.  
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    Anonymous Coward, Apr 4th, 2008 @ 3:00pm

    Re: Re: Re: Re: Re: The inanity of the anti-IP bolsheviks

    Note that theft cannot occur by coincidence, and requires unauthorised access to a place where your ideas are only privately available, such that I could obtain them without your permission.

    So, by that principle stealing a car is theft if it is taken out of a locked garage but not if taken off a public street? Baloney.

     

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  29.  
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    Crosbie Fitch (profile), Jul 14th, 2008 @ 4:01am

    Re: Re: Re: Re: Re: Re: The inanity of the anti-IP bolsheviks

    Not quite. I am talking about IP theft, not material theft.

    If you leave a manuscript in a public street and it is clearly not abandoned, yet is expected to be publicly visible (perhaps affixed to a public noticeboard) it remains your manuscript. However, it can be freely read and copied by any member of the public. Just as the car remains yours, but it can be photographed or 3D scanned (without causing damage or otherwise violating your privacy).

     

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