The Hoover Institution poses as a quasi-libertarian group interested in fostering “the free society,” and in favor of “The principles of individual, economic, and political freedom; private enterprise; and representative government”.
Yet in The Perils of Patent Reform, Hoover Senior Fellow F. Scott Kieff, a “member of the Property Rights, Freedom, and Prosperity Task Force,” argues against the pending patent reform bill, the America Invents Act. Well so do I. (See Patent Reform is Here! O Joy!.) But I argue against it because it does not significantly weaken the patent system, and in facts increases patent extortion in some ways. Is that Kieff’s objection? Noooo. It is because he thinks the patent system is an important part of our “free enterprise” system, and that the Act would harm that system. He is wrong on both counts.
First, the patent system if a blight on free enterprise. In the name of private property and free enterprise, the state grants monopolies that protect favored recipients from competition. This is the antithesis of the free market. It is a travesty to group free markets with state granted monopoly privileges.
Second, the America Invents Act will NOT harm the patent system. It will only slightly reduce patent abuse, but it will make it worse in other ways. In either case it is not radical or significant (see my Radical Patent Reform Is Not on the Way). Kieff writes that the Act “will at best gum up the patent system”. If only! No it won’t. “The bill would frustrate the ability for small and medium sized innovators to bring innovations to market, and block the opportunities they would create for capital formation and jobs.” What harms small and medium sized innovators is the patent system itself (see, e.g., Patent Cross-Licensing Creates Barriers to Entry).
Kieff writes, “Critics of the modern patent system tell countless ghost stories of the fear inflicted on everyone from basic scientists to large corporations by the demon artfully named a patent troll. Yet when asked to precisely define who this ogre is in reality, it often boils down to whoever successfully sued some sympathetic defendant or whoever is presently suing the speaker. While the ever-present threat of patent enforcement is said to be causing immense gridlock in our economy, we are never told what exactly is so precarious about this state of affairs and why some patent lawsuits would disrupt it.” You are in fact told all the time, by a bunch of people, including me (see e.g. Costs of the Patent System Revisited, and the resources on C4SIF).
Writes our clueless author: “Indeed, each of those just recited modern marvels of technology—jncluding the airplane—was rich with patents.” He should take a look at Boldrin and Levine’s book Against Intellectual Monopoly for a discussion of how James Watt and the Wright brothers actually impeded progress for many years, because of the mercantilist patent system; see also Mike Masnick’s Once Again: The Great Inventors Often Were Neither Great, Nor Inventors.
Incredibly, he says “In the software industry, the absence of patents led to the development of a monopoly.” Incredible–Microsoft gained its monopoly due to one state IP–copyright–which it has used to acquire patents to further cement its monopoly. (See my post Microsoft Copyrights –> Patent Dominance; and Government and Microsoft: A Libertarian View on Monopolies, by François-René Rideau.)
And “When patents facilitate good market coordination, they foster competition and innovation.” A patent protects an innovator from competition. It does not foster competition, it protects companies from competition. And when you have a monopoly and are free from competition, you can rest on your laurels rather than continuing to innovate.