Another View On The Patent Trolling Situation: Patent Trolls Expose The Weaknesses Of The Patent System

Legal Issues

from the things-get-worse-before-they-get-better dept

The post we had about patent trolls on Friday sure kicked off a lively debate both here and various other places in the blogworld. Over the weekend, James McDonough, a law professor student at Emory University, also wrote in to point us to his own paper on patent trolls. He sent a very detailed response, which I’ve included entirely below the fold (if you’re reading on the front page of Techdirt or via an RSS reader, click “read more” to see his full response). His paper is very interesting and highlights a few important points. First, while he uses the phrase patent troll, he suggests a more accurate name would be “patent dealers.” I’m not a fan of the phrase “patent trolls” (which is an unfairly negative phrase), and tend to use “patent hoarders” instead — but patent dealers is a good phrase that has little that could be interpreted by anyone as implying anything negative.

McDonough does argue that “patent dealers” are a good thing — but for a very different reason than the lawyer we wrote about on Friday. McDonough’s argument is that the patent dealers are highlighting some fundamental flaws in the patent system, and that’s a good thing. The problem however, is that so far the response has been to try to stomp out patent trolling, rather than fix those fundamental flaws — something I completely agree on. McDonough sees the two fundamental flaws of the patent system to be: 1) the USPTO issuing questionable patents to anybody who wants one and 2) the incentives that companies have to patent first and ask questions later, thereby leading to a patent thickets problem. Patent trolling exposes both of those — but it’s not the fault of the patent dealers, but the system that allows those patents to be so valuable in the first place. McDonough is also correct that the solutions being presented to block patent trolls don’t really address those problems. They do try to get at the first problem by making it easier to provide prior art and to challenge a patent after its granted. The Supreme Court may also help if they change the rule for “obviousness” in patent evaluation. However, the patent reform being proposed actually tends to make the second situation worse, not better.

Following this, McDonough then attempts to defend the process of patent dealing in the absence of those problems with the system, and suggests that they generally benefit society, by creating a market for something where no market existed before. This is a common response — and an interesting one, but does not hold up under scrutiny. Just because you can create a market in something does not necessarily make it more efficient. As we’ve pointed out, you could create a market for air — something that people find very valuable — but that’s not going to make the market more efficient. It’s going to create quite a net negative on society. That’s because air is abundant, and trying to falsely limit it creates a huge amount of waste. People will need to pay for air to survive, and that money could better be served investing in other scarce things. The same is true for ideas. As Thomas Jefferson famously stated:

That ideas should freely spread from one to another over the globe, for the moral and mutual instruction of man, and improvement of his condition, seems to have been peculiarly and benevolently designed by nature, when she made them, like fire, expansible over all space, without lessening their density in any point, and like the air in which we breathe, move, and have our physical being, incapable of confinement or exclusive appropriation. Inventions then cannot, in nature, be a subject of property.

The patent system is trying to take an idea and limit it, and the overall impact, even though it creates a market, is similar to trying to create a market for air. The net impact is negative, because people need to spend extra where otherwise there would be no need to. You can pass an idea around and no one is any worse off. We can all breathe the air and no one is any worse off. So the idea that just because patent dealers create a market that’s a benefit is not a compelling argument.

Finally, McDonough, in his comment to Techdirt, takes issue with our complaint that often the patent lawsuits that most upset us are cases where the invention was developed independently. He falls back on the law, saying that’s not a defense under the law — which is true (and which we’ve discussed in the past). The problem, however, is that this seems to go against the very nature of the patent system. As we’ve discussed recently there are some very compelling arguments as to why independent invention should be a viable defense against patent infringement. If the patent system is only supposed to promote progress of arts and sciences where it wouldn’t occur naturally in the market, then you only want to protect non-obvious ideas (in fact, the patent system clearly states that it’s only for non-obvious ideas). If multiple parties are developing the invention simultaneously, that suggests no government protection is needed — as multiple parties all saw the market demand for the product and moved towards developing it. They can compete in the marketplace for their reward. So, no, independent invention is not protected by the current legal system — but it should be. McDonough’s followup claim that it would be impossible to determine independent invention is also not compelling. As with any other legal standard, you can provide all kinds of proof and evidence so that a judge or jury can determine if it’s likely that an invention was independently developed or not.