Once again Tech Dirt proves its ignorance of patents and property rights. Let me list the inaccuracies:
1) The Industrial Revolution did not occur until there were property rights for inventors - It occurred where there were property rights for inventors, not in countries that allowed unlimited copying. Tech Dirt is so biased it can't see what is obvious on its face.
2) Reforms: While I don't agree with Judge Micheal, Tech Dirt rolls out its usual non-sense about trolls. The Patent System was designed so that you could have a division of labor between inventors and manufacturers. Tech Dirt shows a surprising ignorance of economics in it is complaint about this division of labor. It also perpetuates the bad patent argument - which is always repeated by people who do not understand how the patent system works, can't read claims, make outrageous comments about what patents cover and are inherently opposed to patents under any circumstances.
3) Tech Dirt set up a straw man argument that companies should get patents to promote innovation. People get patents because they want to protect their investment in creating and marketing new technologies. They do not want thieves to be able to free load off of their hard work. They are not getting patents to promote innovation any more than Tech Dirt exists to promote the first amendment or the useful arts.
4) Tech Dirt does not understand Property Rights: The crux of Tech Dirt?s argument against patents is that they are against property rights. Patents are property rights. Whenever property rights are instituted you see an increase output, when modern patent systems were instituted there was an explosion in innovation called the Industrial Revolution. Those countries with weak or non-existent patent systems live on the edge of starvation and have no innovation (see North Korea, much of the Middle East and Africa).
TECH DIRT?s position inconsistent with the facts, history, reason and logic.
It would be nice if you did a preliminary check of your facts before you made broad pronouncements. In the 1970s when the US was also worried about falling behind technologically, the number of patents issued to US inventors declined. In the 2000-2010 decade, when the US is again worried about falling behind technologically, the number of patent issued to US inventors has declined. The industrial revolution began when modern patent systems (property rights for inventions) were created. A strong patent system does equal innovation.
All net new jobs created in the US were created by start-ups since 1977 ? See Kauffman Foundation Study. Startups are also the major creator of new revolutionary disruptive technologies. In order to obtain funding these startups require property rights in their inventions. Henry Nothhaft, a billionaire serial technology entrepreneur, has shown that each patent granted translates to about 3-5 jobs.
Unfortunately, you will probably get your wish for a weaker patent system, since Kappos and company are trying to weaken our patent system so that it favor large companies ? see patent reform now called America Invents Act.
The so called friction problem ignores the investment problem. The biggest limitation, after talent, to invention is investment. Without property rights it is impossible to finance a house or finance software development or other inventions. The open source community has been around for over a decade and its record of innovation is weak at best. Most of the open source software is an extension of existing software. Most notably Linux is just UNIX that has been updated and ported to other platforms. Open source’s record of innovation is mainly the sort of incremental innovation that you would expect from a large company. Open source has not transformed the software industry, it has not created significant wealth or jobs, it has not lead to any revolutionary applications. However, it has shifted wealth from software inventors to finance and management.
Innovation prizes have always been the substitute for a patent system as a way of spurring inventions. Unfortunately, they tend to become politicized and are much more expensive than a patent system. For instance, see the excellent book Longitude: The True Story of a Lone Genius Who Solved the Greatest Scientific Problem of His Time. In that case, the brilliant clock maker was squeezed out of winning the prize for accurately determining longitude by the politically more connected astronomy community. The patent system is self funded and provides infinitely more return than innovation prizes, such as the NSF, NIH, etc. Unfortunately, Congress has stolen over $1Billion in user fees from the Patent Office over the last couple of decades. As a result, the Patent Office is understaffed and now takes around three years to provide an initial examination of a patent application. Instead of spending money on innovation prizes, the White House should return the $1Billion in user fees with interest back to the patent office.
Anonymous Coward is wrong that the patent system routinely makes the mistake of issuing patents for inventions that can be found in the prior art.
Excellent points. The telecom deregulation was poorly thought out and only a bureaucrat would have thought it represented deregulation. However, the recessionary bump that the telecom bill and Greenspan’s Y2K pumping of money caused would have been minor but for the over reaction of Sarbanes Oxley and other little known bad policy decisions. Technological innovation is the only way to increase real per capita income. Unfortunately, since 2000 we have passed a number of laws and regulations that are killing innovation in the US. (see www.hallingblog.com) The incredible innovation of the 90s was based on technology start-up companies built on intellectual capital, financial capital, and human capital. All three of the pillars have been under attack since 2000. Our patent laws have been weakened reducing the value of intellectual capital. Sarbanes Oxley has made it impossible to go public reducing financial capital for start-ups and the FASB rules on stock options have made it harder to attract human capital to start-ups. The Decline and Fall of the American Entrepreneur: How Little Known Laws and Regulations are Killing Innovation http://www.amazon.com/Decline-Fall-American-Entrepreneur-Regulations/dp/1439261369/ref=sr_1_1?ie=UTF8&s=books&qid=1262124667&sr=8-1, explains these problems in more detail.
The Amazon one click patent covers a real innovation, despite the nonsense to the contrary. A number of competitors had copied Amazon’s one click ordering system and shortly after the patent issued, Amazon.com sued Barnes and Noble for infringement. Industry studies showed that between sixty and sixty-five percent of online shopping baskets abandon before they checked out. The primary reason for abandoned internet shopping carts seems to be buyer confusion and annoyance with the online purchasing process. Presumably, many of those abandoned shopping carts represent lost sales. The goal of the one click method for online shopping was to make the process simpler, faster, and more secure, thereby capturing some of that lost business. Barnes and Noble’s Express Lane (one click shopping system) was evidently successful, since a large percentage of their customers had chosen to utilize the Express Lane rather than the shopping basket.
The sad and ironic component to this controversy is that it is easy to design around the claims of the “one click” patent. “Design around” means to invent an alternative to a patented invention that does not infringe the patent’s claims. In this case, all Barnes and Noble or any other online retailer had to do to design around the claims of the “one click” patent was have a “two click” ordering system. However, few of the critics of Amazon.com or the “one click” patent mentioned this simple solution. Nor was there any complaint that Barnes and Noble was essentially too lazy to spend the time and effort to come up with this simple design-around solution. One of the functions the patent system promotes is alternative designs to problems by creating an economic incentive to create alternative designs.
The Director of the Patent Office David Kappos is arguing that patent reform will be good for independent inventors.
I disagree that patent reform is good for independent inventors or the US economy.
1) Damages – I believe that the patent reform bill still has the provision that reduces damages for infringing. As long as this provision is in the patent reform bill it will damage small inventors and the US economy.
2) First-to-File: I understand and have made the point that very few cases are won by the second to file. However, a first-to-file system is a first step in eliminating the inventor from the patent process. The next step will be to issue patents to entities, why name the inventors since we are not serious about the true inventors anyway. A first to file system is a fraud. It rewards not inventors but people who are skilled at gaming the system.
This is similar to the publication rule. Most patent applications were being published at 18 months anyway and if you did not want to foreign file you could avoid publication. But, publication is a breach of the social contract between the inventor and society. Society gets the benefit of disclosure but the inventor may never receive his part of the bargain. Note that immediately after this breach pendancy times expanded and the allowance rate fell off a cliff. Ron Katznelson has done a study showing that pendancy times always expand, usually by a factor of two, when a country adopts publication.
3) Publication: I believe that the present bill requires the publication of all patent applications. As stated above this is a clear breach of the social contract between the inventor and society. Publication discourages people from inventing and filing for patents. If an invention can be kept a trade secret, more people will chose this right to the detriment of everyone. We tried the trade secret route in the middle ages and the level of innovation was pitiful. If an invention cannot be kept a trade secret, investors will be less willing to back a company whose inventions are known to the whole world before the company even gets protection in their own country.
Real Patent Reform
Here are my suggestions for real patent reform that would not only help small inventors but the US economy.
1) Repeal Publication: This would restore the social contract
2) Repeal KSR: A subject standard of patentability just increases costs and uncertainty associated with the patent process
3) Repay PTO: Congress should repay the over $1B it stole from inventors with interest.
4) Regional Offices for PTO: This would ensure steady funding of the PTO and increase examiner retention
5) Repeal eBay: This decision is logical absurdity. If a patent give you the right to exclude, then if you win a patent infringement case you must be able to enforce your only right – the right to exclude
6) Eliminate “Combination of Known Elements”: The fact that the Supreme Court does not understand that every invention in the history of the world is a combination of known elements is high of ignorance. Have they ever heard of “conservation of matter and energy”?
Dale B. Halling, Author of the “Decline and Fall of the American Entrepreneur: How Little Known Laws and Regulations are Killing Innovation.” http://www.amazon.com/Decline-Fall-American-Entrepreneur-Regulations/dp/1439261369/ref=sr_1_1?ie=UTF8&s=books&qid=1262124667&sr=8-1
I suggest you back to school and study logic. See Occam's razor and David Hume's rule that extraordinary claims require extraordinary evidence.
I am amazed that you can ignore the obvious evidence that patents promote innovation.
1) Stronger Patent System: You cannot find a single country whose economy has been hurt because they have too strong a patent system, but you can find numerous examples of countries whose economies have been hurt because of weak patent systems.
2) Feasibility: Land does not have boundaries and those boundaries are not obvious – just ask the American Indians. It is definitely feasible to determine if your product infringes someone else patents. You are either misinformed on this point or you do not want to take the time to determine if you are stealing someone else’s technology.
3) Innovation and Progress: Tools are not the end game either. Power plants are not the end game either. Adam Smith showed that division of labor is key to economic progress. Today many brilliant inventors are stifled. Instead of inventing these brilliant engineers are forced to be managers to get a pay raise or forced to study marketing, sales, finance, etc to get paid for their efforts. Our economy will prosper if we provide property rights for our inventors and allow them to do what they do best, which is invent.
4) Correlation: Occam’s razor says the simplest answer is probably right. Every bit of evidence shows that patents encourages innovation. You have not provided any contrary evidence. In addition, every property right has always encouraged improvement of the underlying property. Since you are suggesting the contrary, which is an extraordinary claim, you have to provide extraordinary evidence. See David Hume and Thomas Paine
The level of misunderstanding in this article is incredible. First patents are legal title to inventions. Stocks are legal title to a part of a company. It is not surprising that patents have some of the characteristics of stocks. If a secondary market is created for patents, this means that inventors who are not successful in commercializing their inventions will be able to obtain some return for their efforts. Without a secondary market for stocks any purchase of a company’s shares would be locked up forever. This would discourage investment in companies. Similarly, a lack of a secondary market in patents reduces the investment in technology.
The evidence that patents encourage innovation is overwhelming if you open your eyes. Those countries with the strongest patent laws have the fastest rates of innovation and diffusion of innovation. Those countries with weak or non-existent patent laws have the weakest patent laws. Before patent laws became widespread in the western world, the rate of innovation was slow enough that the per capita income of the west had not changed in centuries. Note that many of the other conditions of a free market, such as low taxes, property rights, etc existed for centuries before per capita income started to increase in Europe. If you believe this is just correlation, the burden is on you to prove it since all the evidence is against you.
Clearly, our patent system has problems. The average time it takes to obtain a patent is over three years. If it took three years to obtain title to your house or shares in a company you would assume you were living in a third world country. Patents need the equivalent of title insurance for real property. Before title insurance you had to pay an attorney a lot of money to do a title search to make sure you were going to obtain clear title to your house or land. In addition, you had to pay a surveyor to determine the boundaries of your land. The boundaries were not obvious at all and our ancestors were very litigious over the boundaries of their property.
Despite these problems, the US has strong economic growth when we have strong patent laws and systems and weak economic growth when we have weak patent laws. Antitrust laws were used to weaken our patent laws in the 1930s and 1970s and we had extended economic downturns. Our patent laws were strengthen in the 1980s and strong in the 1990s and we had strong economic growth. The only way to increase real per capita income is by increasing our level of technology. Patents clearly encourage advances in technology, which results in real economic growth.
Dale B. Halling, Author of the “Decline and Fall of the American Entrepreneur: How Little Known Laws and Regulations are Killing Innovation.” http://www.amazon.com/Decline-Fall-American-Entrepreneur-Regulations/dp/1439261369/ref=sr_1_1?ie=UTF8&s=books&qid=1262124667&sr=8-1
This is an example of how people do not understand patents. Edison clearly invented the “high resistance filament” incandescent light bulb. Historians give Edison credit for inventing the light bulb, because it was his contribution of a high resistance filament and better vacuum that made the incandescent light bulb a commercial reality instead of a laboratory curiosity. For more information see http://hallingblog.com/2009/07/20/did-edison-invent-the-light-bulb/.
Dale B. Halling, Author of the “Decline and Fall of the American Entrepreneur: How Little Known Laws and Regulations are Killing Innovation.” http://www.amazon.com/Decline-Fall-American-Entrepreneur-Regulations/dp/1439261369/ref=sr_1_1?ie=UTF8&s=books&qid=1262124667&sr=8-1
There are numerous errors in Levine and Boldrin's editorial. For instance, they misinterpret the Constitution. They mischaracterize patents and IP as a monopoly. Their comments on the incentives provided by patents is historically inaccurate. They whine about the cost of the drugs for AIDS, while ignoring the development costs and the fact that without the inventors there would be no AIDS drugs. This is a typical parasite argument. The mistakes and misrepresentations in the editorial are so numerous for supposedly distinguished professors of economics that the only conclusion is that the authors are more interested in pushing a political agenda than finding the truth. For more information see http://hallingblog.com/2009/12/09/levine-boldrin-argue-the-u-s-should-end-the-patent-system/
Your article insinuates that it is absurd that the movie could violate patent 7,107,286, but it is clear that you did not actually read the patent or did not understand the patent. Since you did not read the patent and probably do not know how to read the claims, the rest of your article is clearly nonsense. It is amazing the number of people who refuse to read patents, let alone actual understand the claims that seem to think they are qualified to determine whether a patent is infringed or valid.
While I do not know if the patent was violated, I can give you numerous examples of how a movie could violate a patent – as opposed to your obviously contrived example. For instance, a movie could violate multiple patents owned by Dolby for sound recordings. A movie could violate patents on computerized animation. In this case, it is possible that the movie used the technology of the patent in question to create scenes related to satellite images. Reading patents and interpreting the claims is hard work. Since you are either of unwilling or incapable of undertaking this work, you should not insinuate that it is absurd that a movie could violate a patent.
The term patent trolls is usually applied to companies that enforce patents that they are not practicing. These Non-Practicing Entities (NPEs) include companies specifically organized for this purpose such as Intellectual Ventures. However, it also includes Universities and divisions of most large corporations such as IBM. Many of these corporations complain about NPEs. However, any consistent definition of a NPE (troll) would include these hypocrites.
The moral argument against NPEs is that they are not practicing their patents, so they are not entitled to enforce them. The U.S. has consistently rejected a working requirement for patents. The only time the U.S. had a working requirement for patents, was in early 1800s and only for English inventors. We do not argue that a landowner has to work his land in order to keep his property rights in the land.
From an economic point of view patent trolls are the beginning of a secondary market in patents. Most of these companies got their start in the failed companies of the dot.com bust. These patent investing companies bought the patents of failed dot.com companies. This reduces the cost and the risk associated with R&D. The VC’s I knew were going to let these patents expire, resulting in zero return to the investors. Patent investing companies should not be vilified, but appreciated for the valuable secondary market they are creating. Like all new markets, the pioneers took enormous risks but also paid very little for the assets they acquired. Their success will encourage other entrepreneurs driving up the prices for patents (excess R&D). This will reduce the cost and risk associated with R&D, which will result in more investment in high technology start-up companies.
Vilifying patent investment companies is like vilifying investors in the physical assets of failed enterprises. These investors recycle assets and make them part of the productive economy again. While it is sad to see a business fail, failure is part of the innovation process. Putting the assets of a failed enterprise back to work as soon as possible would be considered a humanitarian effort if performed by a non-profit. However it is just as valuable or more valuable to the economy when done by a for-profit enterprise.
Intellectual property is the free market method of encouraging innovation. Innovation is the only way that per capita income can increase. (see http://hallingblog.com/2009/07/08/is-innovation-the-key-to-growing-the-u-s-economy/). This is great news for the world economy that the EU is waking up to the fact that there patent laws are too weak, too complicated, and too expensive.
Division of labor is a good thing and helps innovation, see Adam Smith. The next logical step in the division of labor is the separation of production from invention. Forcing innovators to be in organizations that are focused on marketing, production, accounting, etc. inhibits innovation.
Poor Toyota wasn’t able to just steal other people’s innovations. Stealing other people’s innovations does not increase innovation anymore than stealing peoples’ automakers’ cars encourages production of cars. It is both wrong morally to steal other peoples innovations and bad for the economy.
The patent thicket argument is complete non-sense, with absolutely no evidence. The patent thicket proponents point to the software industry and the biotech industry, but the emprical evidence all supports the conclusion that patents have spurred growth in this industries. For more information see http://hallingblog.com/2009/05/18/intellectual-property-socialism-part-iv-uspto-takes-aim-at-innventors/
Patents do not provide a monopoly. They provide a right to exclude, not a right to use or a right to a market. A legal monopoly is a right to a market. The countries with the weakest patent laws innovate the least, countries with the strongest patent laws innovate the most. But may be that is just coincidence?
Techdirt has not posted any stories submitted by Dale B Halling.
Tech Dirt Display Ignorance of Patent System
Once again Tech Dirt proves its ignorance of patents and property rights. Let me list the inaccuracies:
1) The Industrial Revolution did not occur until there were property rights for inventors - It occurred where there were property rights for inventors, not in countries that allowed unlimited copying. Tech Dirt is so biased it can't see what is obvious on its face.
2) Reforms: While I don't agree with Judge Micheal, Tech Dirt rolls out its usual non-sense about trolls. The Patent System was designed so that you could have a division of labor between inventors and manufacturers. Tech Dirt shows a surprising ignorance of economics in it is complaint about this division of labor. It also perpetuates the bad patent argument - which is always repeated by people who do not understand how the patent system works, can't read claims, make outrageous comments about what patents cover and are inherently opposed to patents under any circumstances.
3) Tech Dirt set up a straw man argument that companies should get patents to promote innovation. People get patents because they want to protect their investment in creating and marketing new technologies. They do not want thieves to be able to free load off of their hard work. They are not getting patents to promote innovation any more than Tech Dirt exists to promote the first amendment or the useful arts.
4) Tech Dirt does not understand Property Rights: The crux of Tech Dirt?s argument against patents is that they are against property rights. Patents are property rights. Whenever property rights are instituted you see an increase output, when modern patent systems were instituted there was an explosion in innovation called the Industrial Revolution. Those countries with weak or non-existent patent systems live on the edge of starvation and have no innovation (see North Korea, much of the Middle East and Africa).
TECH DIRT?s position inconsistent with the facts, history, reason and logic.
Patents & Innovation
It would be nice if you did a preliminary check of your facts before you made broad pronouncements. In the 1970s when the US was also worried about falling behind technologically, the number of patents issued to US inventors declined. In the 2000-2010 decade, when the US is again worried about falling behind technologically, the number of patent issued to US inventors has declined. The industrial revolution began when modern patent systems (property rights for inventions) were created. A strong patent system does equal innovation.
All net new jobs created in the US were created by start-ups since 1977 ? See Kauffman Foundation Study. Startups are also the major creator of new revolutionary disruptive technologies. In order to obtain funding these startups require property rights in their inventions. Henry Nothhaft, a billionaire serial technology entrepreneur, has shown that each patent granted translates to about 3-5 jobs.
Unfortunately, you will probably get your wish for a weaker patent system, since Kappos and company are trying to weaken our patent system so that it favor large companies ? see patent reform now called America Invents Act.
The Investment Problem
The so called friction problem ignores the investment problem. The biggest limitation, after talent, to invention is investment. Without property rights it is impossible to finance a house or finance software development or other inventions. The open source community has been around for over a decade and its record of innovation is weak at best. Most of the open source software is an extension of existing software. Most notably Linux is just UNIX that has been updated and ported to other platforms. Open source’s record of innovation is mainly the sort of incremental innovation that you would expect from a large company. Open source has not transformed the software industry, it has not created significant wealth or jobs, it has not lead to any revolutionary applications. However, it has shifted wealth from software inventors to finance and management.
Prizes Poor Substitute for Working Patent System
Innovation prizes have always been the substitute for a patent system as a way of spurring inventions. Unfortunately, they tend to become politicized and are much more expensive than a patent system. For instance, see the excellent book Longitude: The True Story of a Lone Genius Who Solved the Greatest Scientific Problem of His Time. In that case, the brilliant clock maker was squeezed out of winning the prize for accurately determining longitude by the politically more connected astronomy community. The patent system is self funded and provides infinitely more return than innovation prizes, such as the NSF, NIH, etc. Unfortunately, Congress has stolen over $1Billion in user fees from the Patent Office over the last couple of decades. As a result, the Patent Office is understaffed and now takes around three years to provide an initial examination of a patent application. Instead of spending money on innovation prizes, the White House should return the $1Billion in user fees with interest back to the patent office.
Anonymous Coward is wrong that the patent system routinely makes the mistake of issuing patents for inventions that can be found in the prior art.
Misallocation of Capital
Excellent points. The telecom deregulation was poorly thought out and only a bureaucrat would have thought it represented deregulation. However, the recessionary bump that the telecom bill and Greenspan’s Y2K pumping of money caused would have been minor but for the over reaction of Sarbanes Oxley and other little known bad policy decisions. Technological innovation is the only way to increase real per capita income. Unfortunately, since 2000 we have passed a number of laws and regulations that are killing innovation in the US. (see www.hallingblog.com) The incredible innovation of the 90s was based on technology start-up companies built on intellectual capital, financial capital, and human capital. All three of the pillars have been under attack since 2000. Our patent laws have been weakened reducing the value of intellectual capital. Sarbanes Oxley has made it impossible to go public reducing financial capital for start-ups and the FASB rules on stock options have made it harder to attract human capital to start-ups. The Decline and Fall of the American Entrepreneur: How Little Known Laws and Regulations are Killing Innovation http://www.amazon.com/Decline-Fall-American-Entrepreneur-Regulations/dp/1439261369/ref=sr_1_1?ie=UTF8&s=books&qid=1262124667&sr=8-1, explains these problems in more detail.
Amazon Deserves Patent
The Amazon one click patent covers a real innovation, despite the nonsense to the contrary. A number of competitors had copied Amazon’s one click ordering system and shortly after the patent issued, Amazon.com sued Barnes and Noble for infringement. Industry studies showed that between sixty and sixty-five percent of online shopping baskets abandon before they checked out. The primary reason for abandoned internet shopping carts seems to be buyer confusion and annoyance with the online purchasing process. Presumably, many of those abandoned shopping carts represent lost sales. The goal of the one click method for online shopping was to make the process simpler, faster, and more secure, thereby capturing some of that lost business. Barnes and Noble’s Express Lane (one click shopping system) was evidently successful, since a large percentage of their customers had chosen to utilize the Express Lane rather than the shopping basket.
The sad and ironic component to this controversy is that it is easy to design around the claims of the “one click” patent. “Design around” means to invent an alternative to a patented invention that does not infringe the patent’s claims. In this case, all Barnes and Noble or any other online retailer had to do to design around the claims of the “one click” patent was have a “two click” ordering system. However, few of the critics of Amazon.com or the “one click” patent mentioned this simple solution. Nor was there any complaint that Barnes and Noble was essentially too lazy to spend the time and effort to come up with this simple design-around solution. One of the functions the patent system promotes is alternative designs to problems by creating an economic incentive to create alternative designs.
Patent Reform and Independent Inventors
The Director of the Patent Office David Kappos is arguing that patent reform will be good for independent inventors.
I disagree that patent reform is good for independent inventors or the US economy.
1) Damages – I believe that the patent reform bill still has the provision that reduces damages for infringing. As long as this provision is in the patent reform bill it will damage small inventors and the US economy.
2) First-to-File: I understand and have made the point that very few cases are won by the second to file. However, a first-to-file system is a first step in eliminating the inventor from the patent process. The next step will be to issue patents to entities, why name the inventors since we are not serious about the true inventors anyway. A first to file system is a fraud. It rewards not inventors but people who are skilled at gaming the system.
This is similar to the publication rule. Most patent applications were being published at 18 months anyway and if you did not want to foreign file you could avoid publication. But, publication is a breach of the social contract between the inventor and society. Society gets the benefit of disclosure but the inventor may never receive his part of the bargain. Note that immediately after this breach pendancy times expanded and the allowance rate fell off a cliff. Ron Katznelson has done a study showing that pendancy times always expand, usually by a factor of two, when a country adopts publication.
3) Publication: I believe that the present bill requires the publication of all patent applications. As stated above this is a clear breach of the social contract between the inventor and society. Publication discourages people from inventing and filing for patents. If an invention can be kept a trade secret, more people will chose this right to the detriment of everyone. We tried the trade secret route in the middle ages and the level of innovation was pitiful. If an invention cannot be kept a trade secret, investors will be less willing to back a company whose inventions are known to the whole world before the company even gets protection in their own country.
Real Patent Reform
Here are my suggestions for real patent reform that would not only help small inventors but the US economy.
1) Repeal Publication: This would restore the social contract
2) Repeal KSR: A subject standard of patentability just increases costs and uncertainty associated with the patent process
3) Repay PTO: Congress should repay the over $1B it stole from inventors with interest.
4) Regional Offices for PTO: This would ensure steady funding of the PTO and increase examiner retention
5) Repeal eBay: This decision is logical absurdity. If a patent give you the right to exclude, then if you win a patent infringement case you must be able to enforce your only right – the right to exclude
6) Eliminate “Combination of Known Elements”: The fact that the Supreme Court does not understand that every invention in the history of the world is a combination of known elements is high of ignorance. Have they ever heard of “conservation of matter and energy”?
Dale B. Halling, Author of the “Decline and Fall of the American Entrepreneur: How Little Known Laws and Regulations are Killing Innovation.” http://www.amazon.com/Decline-Fall-American-Entrepreneur-Regulations/dp/1439261369/ref=sr_1_1?ie=UTF8&s=books&qid=1262124667&sr=8-1
Patents and the recession
Anonymous Coward,
I suggest you back to school and study logic. See Occam's razor and David Hume's rule that extraordinary claims require extraordinary evidence.
I am amazed that you can ignore the obvious evidence that patents promote innovation.
1) Stronger Patent System: You cannot find a single country whose economy has been hurt because they have too strong a patent system, but you can find numerous examples of countries whose economies have been hurt because of weak patent systems.
2) Feasibility: Land does not have boundaries and those boundaries are not obvious – just ask the American Indians. It is definitely feasible to determine if your product infringes someone else patents. You are either misinformed on this point or you do not want to take the time to determine if you are stealing someone else’s technology.
3) Innovation and Progress: Tools are not the end game either. Power plants are not the end game either. Adam Smith showed that division of labor is key to economic progress. Today many brilliant inventors are stifled. Instead of inventing these brilliant engineers are forced to be managers to get a pay raise or forced to study marketing, sales, finance, etc to get paid for their efforts. Our economy will prosper if we provide property rights for our inventors and allow them to do what they do best, which is invent.
4) Correlation: Occam’s razor says the simplest answer is probably right. Every bit of evidence shows that patents encourages innovation. You have not provided any contrary evidence. In addition, every property right has always encouraged improvement of the underlying property. Since you are suggesting the contrary, which is an extraordinary claim, you have to provide extraordinary evidence. See David Hume and Thomas Paine
Patents are Legal Title to Invention
The level of misunderstanding in this article is incredible. First patents are legal title to inventions. Stocks are legal title to a part of a company. It is not surprising that patents have some of the characteristics of stocks. If a secondary market is created for patents, this means that inventors who are not successful in commercializing their inventions will be able to obtain some return for their efforts. Without a secondary market for stocks any purchase of a company’s shares would be locked up forever. This would discourage investment in companies. Similarly, a lack of a secondary market in patents reduces the investment in technology.
The evidence that patents encourage innovation is overwhelming if you open your eyes. Those countries with the strongest patent laws have the fastest rates of innovation and diffusion of innovation. Those countries with weak or non-existent patent laws have the weakest patent laws. Before patent laws became widespread in the western world, the rate of innovation was slow enough that the per capita income of the west had not changed in centuries. Note that many of the other conditions of a free market, such as low taxes, property rights, etc existed for centuries before per capita income started to increase in Europe. If you believe this is just correlation, the burden is on you to prove it since all the evidence is against you.
Clearly, our patent system has problems. The average time it takes to obtain a patent is over three years. If it took three years to obtain title to your house or shares in a company you would assume you were living in a third world country. Patents need the equivalent of title insurance for real property. Before title insurance you had to pay an attorney a lot of money to do a title search to make sure you were going to obtain clear title to your house or land. In addition, you had to pay a surveyor to determine the boundaries of your land. The boundaries were not obvious at all and our ancestors were very litigious over the boundaries of their property.
Despite these problems, the US has strong economic growth when we have strong patent laws and systems and weak economic growth when we have weak patent laws. Antitrust laws were used to weaken our patent laws in the 1930s and 1970s and we had extended economic downturns. Our patent laws were strengthen in the 1980s and strong in the 1990s and we had strong economic growth. The only way to increase real per capita income is by increasing our level of technology. Patents clearly encourage advances in technology, which results in real economic growth.
Dale B. Halling, Author of the “Decline and Fall of the American Entrepreneur: How Little Known Laws and Regulations are Killing Innovation.” http://www.amazon.com/Decline-Fall-American-Entrepreneur-Regulations/dp/1439261369/ref=sr_1_1?ie=UTF8&s=books&qid=1262124667&sr=8-1
Edison - Understanding Patents & Inventions
This is an example of how people do not understand patents. Edison clearly invented the “high resistance filament” incandescent light bulb. Historians give Edison credit for inventing the light bulb, because it was his contribution of a high resistance filament and better vacuum that made the incandescent light bulb a commercial reality instead of a laboratory curiosity. For more information see http://hallingblog.com/2009/07/20/did-edison-invent-the-light-bulb/.
Dale B. Halling, Author of the “Decline and Fall of the American Entrepreneur: How Little Known Laws and Regulations are Killing Innovation.” http://www.amazon.com/Decline-Fall-American-Entrepreneur-Regulations/dp/1439261369/ref=sr_1_1?ie=UTF8&s=books&qid=1262124667&sr=8-1
Errors in Editorial
There are numerous errors in Levine and Boldrin's editorial. For instance, they misinterpret the Constitution. They mischaracterize patents and IP as a monopoly. Their comments on the incentives provided by patents is historically inaccurate. They whine about the cost of the drugs for AIDS, while ignoring the development costs and the fact that without the inventors there would be no AIDS drugs. This is a typical parasite argument. The mistakes and misrepresentations in the editorial are so numerous for supposedly distinguished professors of economics that the only conclusion is that the authors are more interested in pushing a political agenda than finding the truth. For more information see http://hallingblog.com/2009/12/09/levine-boldrin-argue-the-u-s-should-end-the-patent-system/
GIGO
Your article insinuates that it is absurd that the movie could violate patent 7,107,286, but it is clear that you did not actually read the patent or did not understand the patent. Since you did not read the patent and probably do not know how to read the claims, the rest of your article is clearly nonsense. It is amazing the number of people who refuse to read patents, let alone actual understand the claims that seem to think they are qualified to determine whether a patent is infringed or valid.
While I do not know if the patent was violated, I can give you numerous examples of how a movie could violate a patent – as opposed to your obviously contrived example. For instance, a movie could violate multiple patents owned by Dolby for sound recordings. A movie could violate patents on computerized animation. In this case, it is possible that the movie used the technology of the patent in question to create scenes related to satellite images. Reading patents and interpreting the claims is hard work. Since you are either of unwilling or incapable of undertaking this work, you should not insinuate that it is absurd that a movie could violate a patent.
In Defense of Trolls
The term patent trolls is usually applied to companies that enforce patents that they are not practicing. These Non-Practicing Entities (NPEs) include companies specifically organized for this purpose such as Intellectual Ventures. However, it also includes Universities and divisions of most large corporations such as IBM. Many of these corporations complain about NPEs. However, any consistent definition of a NPE (troll) would include these hypocrites.
The moral argument against NPEs is that they are not practicing their patents, so they are not entitled to enforce them. The U.S. has consistently rejected a working requirement for patents. The only time the U.S. had a working requirement for patents, was in early 1800s and only for English inventors. We do not argue that a landowner has to work his land in order to keep his property rights in the land.
From an economic point of view patent trolls are the beginning of a secondary market in patents. Most of these companies got their start in the failed companies of the dot.com bust. These patent investing companies bought the patents of failed dot.com companies. This reduces the cost and the risk associated with R&D. The VC’s I knew were going to let these patents expire, resulting in zero return to the investors. Patent investing companies should not be vilified, but appreciated for the valuable secondary market they are creating. Like all new markets, the pioneers took enormous risks but also paid very little for the assets they acquired. Their success will encourage other entrepreneurs driving up the prices for patents (excess R&D). This will reduce the cost and risk associated with R&D, which will result in more investment in high technology start-up companies.
Vilifying patent investment companies is like vilifying investors in the physical assets of failed enterprises. These investors recycle assets and make them part of the productive economy again. While it is sad to see a business fail, failure is part of the innovation process. Putting the assets of a failed enterprise back to work as soon as possible would be considered a humanitarian effort if performed by a non-profit. However it is just as valuable or more valuable to the economy when done by a for-profit enterprise.
IP Laws too weak in EU - Good News
Intellectual property is the free market method of encouraging innovation. Innovation is the only way that per capita income can increase. (see http://hallingblog.com/2009/07/08/is-innovation-the-key-to-growing-the-u-s-economy/). This is great news for the world economy that the EU is waking up to the fact that there patent laws are too weak, too complicated, and too expensive.
Patents
Division of labor is a good thing and helps innovation, see Adam Smith. The next logical step in the division of labor is the separation of production from invention. Forcing innovators to be in organizations that are focused on marketing, production, accounting, etc. inhibits innovation.
Poor Toyota wasn’t able to just steal other people’s innovations. Stealing other people’s innovations does not increase innovation anymore than stealing peoples’ automakers’ cars encourages production of cars. It is both wrong morally to steal other peoples innovations and bad for the economy.
Weak IP?
Staff1 agreed.
The patent thicket argument is complete non-sense, with absolutely no evidence. The patent thicket proponents point to the software industry and the biotech industry, but the emprical evidence all supports the conclusion that patents have spurred growth in this industries. For more information see http://hallingblog.com/2009/05/18/intellectual-property-socialism-part-iv-uspto-takes-aim-at-innventors/
Re: Re: you cannot spout anti-patent rhetoric
Patents do not provide a monopoly. They provide a right to exclude, not a right to use or a right to a market. A legal monopoly is a right to a market. The countries with the weakest patent laws innovate the least, countries with the strongest patent laws innovate the most. But may be that is just coincidence?