Why Does The US Gov't Get To Patent Research Paid For By Public Tax Dollars?

from the questions,-questions... dept

An anonymous reader links us to a report from The National Institute of Standards and Technology (NIST), which came out earlier this year, that highlights how, in 2008, the US government brought in $170 million (pdf) by licensing federally (i.e., taxpayer-funded) technology and patents to private companies. It details which agencies are getting how many patents, showing that the government appears to get, on average, between 1,000 and 1,500 patents per year. Now, to be clear, I think it’s a good thing that the government is looking to move some of these technologies into the private sector, but it does raise questions about why taxpayer funded research gets locked up behind a patent. In the US, federal government created works are not allowed to be protected by copyright protections, as people realized that it was ridiculous to lock up content created by their own government. Why doesn’t the same apply to patents as well? If the goal is really to get the technology out to the private sector, why lock it up and look to license it? That makes it more expensive and less accessible. The report highlights how the government has been ramping up these efforts, such that it grew “revenues” from this licensing program by 46% from 2004 to 2008. This is one situation where it seems like a profit-motive might be quite misplaced.

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Comments on “Why Does The US Gov't Get To Patent Research Paid For By Public Tax Dollars?”

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63 Comments
Hulser (profile) says:

Devil's advocate

If the goal is really to get the technology out to the private sector, why lock it up and look to license it?

If I were a government official, I’d explain that the reason is to ensure that the technology gets out to the private sector of the United States and not to other countries who could use it to compete with us.

As for the real answer to the question, it’s so that government can exert more control of course. (But you knew that already.)

Anonymous Coward says:

“The statistical data provided in this report are a snapshot of the level of activity at federal labs. Overall, the data indicate that licenses and license income trended upward between 2004 and 2008. The number of licenses jumped to 11,098, an increase of 46.6 percent, and the number of income bearing licenses increased to 6,444, a 35 percent rise. From fiscal year 2004 through fiscal year 2008, federal revenues from these licenses grew to $170.9 million, a 71.7 percent jump, and total earned royalty income reached $117.6 million, a 121.5 percent gain. The total number of patent applications submitted by internal research programs among the 11 agencies rose to 1,938, an increase of 9.6 percent.”

http://www.nist.gov/public_affairs/techbeat/current.htm

Ryan says:

Same Logic, Different Venue

This isn’t at all specific to patents, it’s just the same logic applied to rationalize all marginal wealth transfers from productive private sectors to the government. Rather than seeing it correctly as the government first taking funds from the country and then redistributing it elsewhere for less productive uses, I’m sure anybody defending this would state that federal patents “produce” $170 million annually for the government to utilize in providing services to citizens that, of course, we would no doubt be unable to provide much more efficiently ourselves in the the absence of interference.

Anonymous Coward says:

Re: Same Logic, Different Venue

“Rather than seeing it correctly as the government first taking funds from the country and then redistributing it elsewhere for less productive uses”

They are taking funds from the public to fund R&D, funds that themselves can be used for other purpose, then they are getting monopolies on the proceeds, and then they are selling those monopolies to the private sector.

“I’m sure anybody defending this would state that federal patents “produce” $170 million annually for the government to utilize in providing services to citizens that, of course, we would no doubt be unable to provide much more efficiently ourselves in the the absence of interference.”

Monopolies always produce less than their absence. The whole alleged rationale behind patents was to give incentive to fund R&D, not provide monopoly rents to special interest groups. The overall economic effect of all this, from an economics perspective, is an absence of aggregate output and a dead weight loss to society.

Ryan says:

Re: Re: Same Logic, Different Venue

They are taking funds from the public to fund R&D, funds that themselves can be used for other purpose, then they are getting monopolies on the proceeds, and then they are selling those monopolies to the private sector.

Yep, that about sums it up. We agree regarding the state of the status quo. I take issue with the government charging the public an aggregate total of $170 million for something we should already have free access to, seeing as how we paid for it.

Monopolies always produce less than their absence. The whole alleged rationale behind patents was to give incentive to fund R&D, not provide monopoly rents to special interest groups. The overall economic effect of all this, from an economics perspective, is an absence of aggregate output and a dead weight loss to society.

Again, we pretty much agree here. Maybe you misinterpreted my post? My criticism was directed toward the government taxing/licensing/etc. the hell out of the private sector, not patents. But I do agree that the patent system is royally screwed up.

Jake (user link) says:

Re: Same Logic, Different Venue

“…services to citizens that, of course, we would no doubt be unable to provide much more efficiently ourselves in the the absence of interference.”
You mean education, law-enforcement, public highways etc?

Personally, I don’t really see governments holding and licensing patents on research that was funded by the taxpayer as a problem; it can offset direct taxation and ensure a measure of democratic accountability in industries wanting to use that technology. It’s the patent system itself that’s the problem, through major function-creep (or function decay) and a review process that’s no longer remotely fit for purpose.

Ryan says:

Re: Re: Same Logic, Different Venue

Yeah, most of our wealth is not being confiscated for those things so much as for Medicare, Social Security, the staggering overhead of the federal bureaucratic behemoth, etc.

We sure as hell don’t need the government for education; education was overwhelmingly private for the majority of our history and has become phenomenally inefficient in the last few decades – basically a boondoggle for teachers’ unions. We would be well-served to privatize much of highway building/maintenance, and then law enforcement is one of the very few things government is actually created to provide(a monopoly on force). Unfortunately, we seem to spend quite a bit of time/money/effort criminalizing absolutely everything and then fining the “offenders” or just throwing them in prison. After all, politicians need their moral crusades and lawyers need their money.

Jake (user link) says:

Re: Re: Re: Same Logic, Different Venue

“Yeah, most of our wealth is not being confiscated for those things so much as for Medicare, Social Security, the staggering overhead of the federal bureaucratic behemoth, etc.”
I’ll grant you the last one, but if you’ve never needed the first two then you are exceedingly lucky. Find yourself having to depend on them to not die for a few months and then complain about how your hard-earned cash is being used to keep the feckless poor on the gravy train.

“We sure as hell don’t need the government for education; education was overwhelmingly private for the majority of our history and has become phenomenally inefficient in the last few decades…”
I’m pretty sure there’s a gap between when it became available to everyone regardless of family income and when it became phenomenally inefficient. I’m pretty sure a lack of free-market capitalism is not the problem with the US education system.

Ryan says:

Re: Re: Re:2 Same Logic, Different Venue

I’ll grant you the last one, but if you’ve never needed the first two then you are exceedingly lucky. Find yourself having to depend on them to not die for a few months and then complain about how your hard-earned cash is being used to keep the feckless poor on the gravy train.

Are you joking? We didn’t have Medicaid until 40 years ago, and the vast majority of the population is not on it. It’s actually made many people dependent upon it and is a large factor is driving up health care costs for multiple reasons. Some people may depend on it to live in the same way that crack addicts depend on crack to avoid withdrawal. Practically a quarter of it goes to fraud. Social Security is just a Ponzi scheme. And it’s a moot point anyway, because they are both completely unsustainable.

I’m pretty sure there’s a gap between when it became available to everyone regardless of family income and when it became phenomenally inefficient. I’m pretty sure a lack of free-market capitalism is not the problem with the US education system.

Why are you so sure of that? Do you have an actual reason?

I say it has become massively inefficient in the last few decades…because we began massively raising federal expenditures on education about 40 years ago to the point that we are spending over three times what we did then, for approximately zero measureable progress. Schools funded by tax credits perform markedly better for markedly less money. School unions are a massive roadblock preventing progress.

Aaron T (profile) says:

SOP for the gov't

Realize this is the same gov’t which taxes corporate income, and then taxes you when they distribute that income via dividends and then taxes that a 3rd time when you give it to your children when you die via the estate tax. So the fact that they take our money to create things only to sell it back to us shouldn’t be surprising. Gov’t need scams like this so that the deficit isn’t even worse then it already.

Anonymous Coward says:

Re: Re: SOP for the gov't

Except then you’d be wrong and making an illogical argument. The same proceeds brought into a corporation (taxed) are paid to individuals and taxed. This reduces the net amount of money to be paid out to individuals by twice. All corporate profits are someone’s income or investment gain… and they are effectively taxed twice. To think otherwise is silly. A corporation is NOT someone (and frankly it is falling into a serious trap to think that way).

Anonymous Coward says:

It’s amazing. I remember during the Obama vs McCain campaign debates one of the things McCain said was that the federal government should fund more R&D and hand over the results to the private sector. I believe Obama contested this in the debate and now he’s doing exactly what he said he wouldn’t do. Then again, it can be argued that Obama doesn’t absolute have control of everything, but the democrats are also the ones in office/congress.

iamtheky (profile) says:

How many patent infringement lawsuits has the US gov’t. filed, that is the only number I would be concerned with?

Does it matter if they get 100,000 patents a year if they are allowing free development and research based off those? Just because you sell a license to a large corporation for millions does not preclude you from licensing to a non-profit for a dollar.

Maybe they have determined that the best way to combat trolling and future litigation that would only hinder progression is to clearly identify and register the tax-payer supported invention. Patents for defensive purposes would be shockingly….dull.

bigpicture says:

Patents?

Do you know anything about patents at all? Now-a-days technology has to be patented to prevent someone else from patenting it, and then everyone having to pay toll to use it. Government patents don’t restrict usage for non commercial purposes, and the licensing for commercial use recovers some of the research tax money.

Because of the broken patent system, the Government has to have a protection portfolio just like everyone else. The “cold war” mentality is still around, and patents are about MAD. (Mutually Assured Destruction)

Steve says:

And what’s wrong with this?

The government taxes it’s citizen’s and conducts research. When the research is “successful” it patents the results. It the licenses those patents to the private sector to recoup some of the money it spent.

Would you prefer:
The government taxes it’s citizen’s and gives it to a private entity to conduct research. If it is “successful” the entity patents the results. The private entity profits from research funded by the public.

Anonymous Coward says:

Re: Re:

“And what’s wrong with this?”

The public gets the worst of both worlds. They fund the R&D and then, on top of that, they have to pay monopoly prices to benefit from the proceeds of this R&D. Having the government fund R&D defeats the purpose of patents to begin with, and then to force the public to pay patent prices on the results is even worse.

nasch (profile) says:

Re: Re:

I would prefer either: private companies do the research, take the risks, spend the money, and try to recoup their costs in the marketplace,

OR

the government taxes its citizens, conducts research, and if it’s successful, gives it away to anyone to make use of. That way the benefit is 1) as wide as possible and 2) produces a potentially competitive marketplace with multiple providers trying to make the best use of the research, rather than one licensee extracting monopoly rents.

Hulser (profile) says:

Because of the broken patent system, the Government has to have a protection portfolio just like everyone else.

The fault in your logic is that “the Government” dictates what the rules are, so if there was really the will, they could change the rules to obviate the need for government-held patents. In other words, coming from an organization that could change the rules if they wanted to, “Hey, I’m only following the rules” sounds quite hollow.

It seems to me that all it would take is for the addition of a kind of public domain patent and the whole MAD issue would be moot.

Anonymous Coward says:

“The fault in your logic is that “the Government” dictates what the rules are, so if there was really the will, they could change the rules to obviate the need for government-held patents.”

I think it should be obvious that whomever you were responding to was being sarcastic. Nobody can be that dumb as to not get this. Unless you understood the sarcasm and just wanted to clarify its fallacy as a serious argument.

Daniel says:

seems to me this is okay as long as the government doesnt make more money from the patents than it spent to do research. The companies licensing the tech will charge more for their product, but then only the people who directly benefit from the tech will be paying anything, and the net research spending of the govt would be lower.

Anonymous Coward says:

Re: Re:

“but then only the people who directly benefit from the tech will be paying anything”

But at monopoly prices fewer people will benefit and they will benefit less because they can afford less. So everyone pays for it and only a few people benefit, instead of allowing it to optimally contribute to our economy at non monopoly prices and produce more aggregate output.

Mark Peskin (profile) says:

Re: Re: Re:

Realize there’s a big difference between licensing and patent and selling it. If the government is licensing patents, they’re not granting a monopoly to anyone – they’re quite free to license the patent to as many different companies as they want.

Frankly, while using the crappy patent system may not be the best way to go about it, it’s perfectly reasonable for the government to recoup licensing revenue to compensate taxpayers for government funded research. Otherwise, government funded research would turn into a pure corporate subsidy. We have too many of those already…

Anonymous Coward says:

Re: Re: Re: Re:

So the taxpayer has to pay twice. They have to pay once to fund the R&D and then, on top of what they contributed in tax dollars, business have to pay again to be able to sell products that benefit from this R&D and consumers have to pay monopoly prices to these businesses to use these products that benefit from the R&D that they already paid for. How is any of this even fair?

Anonymous Coward says:

It is not possible to provide any meaningful comment without a copy of the report in hand. The NIST page has a link to the report, but all that happens when clicking it is a window saying to the effect that the page cannot be found.

It is possible, however, to at least make one point. With some exceptions, federal laboratories are typically run under contracts by private companies, with the people working in the labs being employees of such companies. The DOE is a prime example with its labs at Livermore, Los Alamos, Oak Ridge, etc.

maclizard (profile) says:

Oddly, I support this.

I agree whole heartedly that the government is misusing tax dollars by funding patented research that cannot be easily or cheaply accessed. However, this country is in BAD financial shape and I don’t think anyone would disagree that $170 million that is most likely coming from profitable companies is a good thing.

If patents (and I think the current patent system sucks) can help to prevent tax hikes for most of America maybe this could be an acceptable trade-off; albeit the kind of thing that should probably be put to a vote.

Ryan says:

Re: Oddly, I support this.

However, this country is in BAD financial shape and I don’t think anyone would disagree that $170 million that is most likely coming from profitable companies is a good thing.

I would disagree. I would strongly, strongly disagree actually. Jealously of wealthy individuals does not suddenly entitle anybody to their property, and confiscating their wealth (that would otherwise be saved, invested, spent on innovation, – you know, the things “profitable companies” and their shareholders tend to do – and other things that benefit the country and our general progress) to be wasted propping up deadweight government bureaucracies, invested in failed companies or unproductive individuals, cronyist subsidies for politicially connected individuals, etc. is a terrible idea, in my opinion. It’s certainly not good for the long term health of the country.

The country is in BAD financial shape because the government can’t stop spending, borrowing, and interfering in the market. So…stop doing all of that.

Jeff Gladnick (user link) says:

I actually think this is more fair

Lets say taxpayer dollars goto research for genetics. The american people just subsidized the genetics industry, so its only fair that genetics companies pay to access this. Since the tax dollars do not deliver benefit equally, it seems fair they should charge for access to them.

The other option is not to have the government fund research in the first place, and let the people invest their tax dollars in companies doing the research if they so choose.

Ryan says:

Re: I actually think this is more fair

And the people involved in the genetics companies aren’t American people?

Anyway, I generally disagree with using federal funds for research(in other words, the second option you cite), but regardless this here is not a subsidy for specific entities – it is an investment in a technology. That technology can then be utilized for free in the absence of patents by anybody that wishes to offer it. There should be benefit to the consumer in that the increased competition and decreased overhead should decrease prices.

Jose_X (profile) says:

Re: Other Countries maybe ?

But once these other countries pass us generally and start demanding we pay them for ideas they described to their patent offices first, then we will realize how stupid and stifling patents can be.

“Hey, I have this great puzzle, but if anyone can describe the solution in general terms, they get to control who else can solve the puzzle over the next 20 years. And it doesn’t matter if you don’t really know the optimum solution or even a great or good solution. Just describe some features of the solution and you can bar anyone else from coming up with a solution that also has those features.”

Anonymous Coward says:

what is wrong with the government actually trying to get income from other methods than draining your wallet? if the taxpayers pay to create something, they should benefit from it as well. otherwise, one group pays for it, say only in the us, and the rest of the world gets a free ride? the argument here is very weak, if you pay to create it, you own it, even if the you is the taxpayers.

Anonymous Coward says:

Re: Re:

“if you pay to create it, you own it, even if the you is the taxpayers.”

How do taxpayers own it when they sell it to private entities. The taxpayer not only pays to fund it, they then have to turn around and pay monopoly prices to benefit from what they already paid to fund. How is this fair?

dnball (profile) says:

Why license? Because the US Govt spends hundreds of millions of our dollars every year in attorney fees to acquire patents on government-created or government-funded inventions.

The NIH alone spends about $75 million per year. See the NIH’s latest ten year patent prosecution contract awards [totally $782 million] here: http://j.mp/1pZUM4 .

Mike Masnick (profile) says:

Re: Re:

Why license? Because the US Govt spends hundreds of millions of our dollars every year in attorney fees to acquire patents on government-created or government-funded inventions.

Uh, that doesn’t answer the question. That just adds yet another reason why the gov’t SHOULD NOT be getting patents on federally funded research. Why isn’t it public domain, as with written material?

dnball (profile) says:

Re: Re: Re:

You’re position naively ignores Civics 101. The federal government seeks patent protection for the inventions created with taxpayer dollars because licensing those patents IS WHAT JUSTIFIES spending the dollars.

Your position assumes, wrongly, that it’s the proper role of the federal government to perform research costing the taxpayers billions of dollars. Uh, no it’s not.

Targeted government R&D for defense, health, and the environment to supplement private sector research, sure, as long as there’s a potential financial return on that investment.

I’ll even grant that it’s proper to fund — but not perform — some basic research with no foreseeable application. But funding R&D at present levels with NO expectation of a financial return in exchange for the taxpayer dollars spent is so far outside the proper role of government that it’s silly even to discuss the matter. Which is why no one does.

As for the rule that the federal government cannot copyright its works of authorship, that’s not as absolute as you may think — it does not apply at all to any state or local government nor to the works of authorship created by federal government independent contractors. And the non-copyrightable works that are created by federal government employees are nearly exclusively reports on government functions.

Mike Masnick (profile) says:

Re: Re: Re: Re:

You’re position naively ignores Civics 101. The federal government seeks patent protection for the inventions created with taxpayer dollars because licensing those patents IS WHAT JUSTIFIES spending the dollars.

I’m sorry, Dan, but this is not even close to true. The US gov’t is not a for-profit entity and does not justify its research budget based on how much MONEY it brings back. The entire point of US investment in R&D is to increase the *findings* in order to get them out for more widespread benefit of the US people. And locking them under patents does the opposite of that.

Targeted government R&D for defense, health, and the environment to supplement private sector research, sure, as long as there’s a potential financial return on that investment.

Again, please go back to that Civics 101 class you pointed me to, and let me know where there’s a chapter on the gov’t only doing stuff because of the potential financial return on investment. That’s so wrong it’s almost funny. If there’s a potential financial return on investment that’s almost always a sign that the US gov’t is supposed to *stay out of it* and let the private sector handle it.

In fact, most in the gov’t argue that the only times it makes sense for the US gov’t to get involved is when there WILL NOT be a financial return on investment — which is WHY the gov’t needs to get involved.

I’ll even grant that it’s proper to fund — but not perform — some basic research with no foreseeable application. But funding R&D at present levels with NO expectation of a financial return in exchange for the taxpayer dollars spent is so far outside the proper role of government that it’s silly even to discuss the matter. Which is why no one does.

Uh, again, I’m afraid you are exceptionally wrong on this. I mean, laughably so.

As for the rule that the federal government cannot copyright its works of authorship, that’s not as absolute as you may think — it does not apply at all to any state or local government

Dan. I said “federal government.” That means NOT state or local gov’ts.

Either way, you seem to be missing the point — yet again. The reason that the federal gov’t cannot get copyright on works it creates is because those works are paid for by the public and thus deserve to be in the public domain.

That rationale also should apply to research.

dnball (profile) says:

Re: Re: Re:2 Re:

Debating with you, Mike, is frustrating because your interests and passion are often on track but your arrogant, self-righteousness prevents you from engaging in an intelligent discussion. Which is fine — this is your forum. You’re certainly free to be as intellectually shallow and as snarky as you like. Just don’t pretend that you’re saying anything useful.

Mike Masnick (profile) says:

Re: Re: Re:3 Re:

Debating with you, Mike, is frustrating because your interests and passion are often on track but your arrogant, self-righteousness prevents you from engaging in an intelligent discussion. Which is fine — this is your forum. You’re certainly free to be as intellectually shallow and as snarky as you like. Just don’t pretend that you’re saying anything useful.

Dan, I respond in kind to those who comment, based on how they start it. You claimed, falsely and in a snarky manner that I was naive about civics 101. I am not. You were wrong, and I pointed that out.

The fact that you choose not to reply to the actual arguments I made, but instead chose merely to toss (misguided) insults my way seems to only confirm that I was, in fact, right, and you don’t want to admit it.

Fair enough.

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