Federalist Society Panel: Undermining or Preserving Property Rights? The New Administrative Patents

by Stephan Kinsella on January 12, 2013

Update: KOL235 | Intellectual Property: A First Principles Debate (Federalist Society POLICYbrief) and James Stern: Is Intellectual Property Actually Property? [Federalist Society No. 86 LECTURE]

Patent and copyright are now among one of the most egregiously unjust and harmful of modern statist policies.¹ Utterly evil, tyrannical, life-destroying,² wealth- and innovation-impeding,³ it is a prime candidate for immediate and outright abolition, right after the drug war, taxes, government education, the fed, and war. It is one of the top priorities of any radical (read: principled and consistent) libertarian. We must abolish IP.

But not all libertarians see it this way, unfortunately. Witness a recent Federalist Society panel, featuring Richard Epstein, Adam Mossoff, and Randall Rader, Chief Judge of the main patent appeals court (CAFC), discussing the recent patent reform law, the America Invents Act, or AIA. (Undermining or Preserving Property Rights? The New Administrative Patents 11-15-12.) As is depressingly common when any mainstream thinkers comment on patents and patent reform, whether conservative, liberal, or even somewhat libertarian, the entire discussion is presented in utilitarian terms; the only subject under discussion is how to tweak the patent system, never questioning whether it is fundamentally justified or not and never entertaining the possibility of patent abolition.

One would not expect the chief federal patent judge to do anything but support the state’s IP system, and law professors Richard Epstein (a libertarian) and Adam Mossoff (an Objectivist) are both pro-patent. The entire discussion is surreal: the participants repeatedly talk about various cost-benefits, without ever producing any studies with real numbers, even though the burden of proof is clearly on them to justify the system they support on utilitarian grounds.⁴

Epstein’s approach to policy is thoroughly utilitarian; it informs his political theory in his book Takings, but at least in that book he argues that only laws and policies that are shown to generate net wealth (so that there is a surplus from which the expropriated parties can be compensated) are justified. He puts the burden of proof on those arguing for state regulations and laws that prima facie impinge on common law property rights. They can’t just say that a given regulation generates net societal welfare gains; they must show it. In Takings, Epstein argues that there are a few narrow areas where there is such an obvious “market failure” or “public good” issue or “free-rider problem” that state policies (like public roads) clearly generate enough surplus to compensate those expropriated and leave more left over for society as a whole, thus making us better off. But in the field of IP he supports it based only on hypothetical arguments—if patent and copyright stimulate enough extra innovation (more than that which is distorted or suppressed) and if the value of this net innovation is greater than the cost the system imposes on society, then we are all all, on the whole, better off. Yet neither he nor his pro-IP comrades show that the if is satisfied. They produce no data; they don’t tell us the value of this net innovation, or even that there is net innovation (that it’s a positive number), nor that it’s greater than the cost of the system. Their case is hypothetical, yet they support IP categorically.⁵ What is a bit amusing is to see various empiricist-utilitarians accusing each other of not having any evidence, though why they think this is scoring any points is a mystery, as they usually admit, if pressed, that they don’t have any evidence either. But we have Geoffrey Manne accusing Alex Tabarrok of making a “silly” argument about optimal patent terms, because Tabbarrok has no evidence,⁶ and alluding to Epstein’s similar criticism of Judge Richard Posner,⁷ while Manne himself admits he has no evidence.⁸ And come to think of it, where is Esptein’s evidence?⁹ None of these commentators, who claim that patents are justified if and to the extent they produce net social innovation gains, even attempt to prove that patents do this.

Mossoff’s Objectivist approach to IP (though he seems to nod to the utilitarian justification for IP in most of his talks about it with non-Objectivists) is also deeply flawed, as I have pointed out previously.¹⁰ His argument is a strange admixture of utilitarian arguments, Randian “creationist” property principles, and legal positivism (as when he argues that the Founders or Locke viewed IP as a natural or property rights, or that patent and copyright “can” be viewed as property rights; the correct response to which is: so what?).¹¹

Judge Rader then weighs in with:

Are you aware of any empirical study that validates the idea that the patent system or any series of patents have stifled rather than encouraged innovation? … It’s a trick question. There is none.

This formulation attempts to switch the burden of proof: if the patent opponents can’t prove that patents are harmful, then we have no complaints. But it’s just the opposite: this scheme facially limits property rights and competition on the free market; proponents of these derogations from free market competition and traditional private property rights claim that it is justified because it does make us all better off by stimulating net innovation. Surely the burden is on them to show that these laws do what they claim they do.¹² As Tom Bell observed in a recent book review of a pro-IP book:

The burden of proof should fall on those who advocate such legislative privileges in derogation of our natural and common law rights—a burden that Laws of Creation picks up, but does not fully carry.¹³

Yet they do not even attempt to make their case. In fact, contrary to Rader’s claim that there is no evidence that patents stifle innovation, there is plenty; see The Overwhelming Empirical Case Against Patent and Copyright; also Legal Scholars: Thumbs Down on Patent and Copyright.