Unions Make Ridiculous Arguments Against Patent Reform
from the a-little-economics-would-be-good-here dept
The latest news is that Riley has convinced the AFL-CIO to come out against the latest attempt at patent reform. Now there's a lot to dislike in the latest attempt at patent reform, and we'd be upset if it passed as is. But the two specific things that the unions are complaining about are the two most reasonable things in the reform package. The first would change how damages are calculated, so that if the infringing component is only a small piece of a larger product, the damages shouldn't be based on the value of the larger product, but the value of that small piece. That seems completely fair. Why shouldn't the damages be reflective of the actual value? It's hard to see why that's controversial, but it is if you hold completely irrelevant patents and you want to hold up those companies that are actually making useful technologies. The second complaint is with making it easier to contest a patent after it's been issued. This is also a no-brainer. Given how little review goes into a current patent, along with the fact that patent examiners are given incentives to approve, rather than reject -- combined with the length of time it currently takes to get a patent reviewed, the incredibly arcane rules that everyone is required to go through to contest a patent and the quick draw of some courts who refuse to wait for the patent office to review patents, it makes sense to have a better system to make sure a patent is valid. Why would anyone be opposed to improving the quality of patents... unless they hold questionable patents?
Unfortunately, Riley's organization appears to have blinded the AFL-CIO to what's really happening. In convincing them that this is about stopping theft, he apparently left out all the economic research showing that it would actually do plenty of harm to the industries that most employ AFL-CIO workers. That's because it would limit their ability to innovate, make it more expensive to do research, and open up opportunities for foreign companies to do a much better job innovating and beating us in the market. Of course, given the history of the AFL-CIO, they must be used to that kind of effect, because that's been the result of previous policies in previous decades. In the meantime, Riley is hoping that by getting the support of unions, Democrats will feel compelled to vote against patent reform -- and, in fact, a Wall Street Journal article on this same subject suggests that the AFL-CIO's letter has been effective in slowing the reform effort. Hopefully, though, someone will explain to both the unions and the politicians the basic economics of monopolies and how they slow competition and innovation. If the folks at the AFL-CIO would like a detailed explanation for why their letter actually goes against the best interests of the people they supposedly represent, they should give us a call.