From the Mises blog; archived comments below.
Miracle–An Honest Patent Attorney!
In this post I reprinted a letter to the editor that I sent to a patent lawyer trade journal, IP Today, in which I responded to the comments of a patent attorney to the effect that “the patent system is necessary for there to be invention and innovation.” I explained that
There is … no conclusive evidence showing that the purported benefits of the patent system—extra innovation induced by the potential to profit from a patent; earlier-than-otherwise public disclosure of innovation—exceeds the significant and undeniable costs of the patent system…. Is the patent system “worth it”? Who knows? Apparently no one does. It seems to follow that we patent attorneys ought not pretend that we do.
I received today an email from a respected patent attorney, a senior partner in the patent department of a major national law firm. This person is not a libertarian. These are just his/her honest observations based on his/her long experience in the field:
Your letter responding to Joe Hosteny’s comments on Patent Trolls nicely states what I came to realize several years ago, namely, it is unclear that the U.S. Patent System, as currently implemented, necessarily benefits society as a whole. Certainly, it has benefited [Hostey] and his [partners] and several of their prominent clients, and has put Marshall, Texas on the map; but you really have to wonder if the “tax” placed on industry by the System (and its use of juries or lay judges to make the call on often highly complex technical issues that the parties’ technical experts cannot agree on) is really worth it.
Of course, anyone can point to a few start-up companies that, arguably, owe their successes to their patent portfolios; but over the last 35 years, I have observed what would appear to be an ever increasing number of meritless patents, issued by an understaffed and talent-challenged PTO examining group, being used to extract tribute from whole industries.
I have had this discussion with a number of clients, including Asian clients, who have been forced to accept our Patent System and the “taxes” it imposes on them as the cost of doing business in the USA.
I wish I had the “answer”. I don’t. But going to real opposition proceedings, special patent courts with trained patent judges, “loser pays attorney fees” trials, retired engineers/scientists or other experienced engineers/scientists being used to examine applications in their fields of expertise by telecommuting from their homes or local offices throughout the Country, litigating patent attorneys providing regular lectures to the PTO examiners on problems encountered in patent infringement cases due to ineffective or careless examination of patent applications, and the appointment of actually qualified patent judges to the CAFC, may be steps in the right direction.
Now this is an honest patent attorney. As I told him/her,
What is worse, to me, is when patent attorneys pretend to know, but of course, do not—and they know they do not, and they do not care. It is just dishonest. I don’t mind a patent attorney being in favor of the system for the honest reason that it benefits him and his clients. Just like retired people benefit from social security even if it’s an inefficient or unethical system. Or if patent attorneys just did their job and shut up about the “benefit” of the system.
I will say that my point (not really in the letter, but expressed elsewhere — e.g., There’s No Such Thing As A Free Patent—is not only that is the system nowprobably “not worth it,” but that due to the subjective nature of value, it would never be possible to demonstrate that it is “worth it”. But that is methodological point beyond most patent attorneys, who are utterly imbued with scientism and positivism.
I always say, only those who have zero experience in the patent system can HONESTLY believe that the system does what it claims. Those who know even a little bit about it start forming grave doubts.
Another favorite of mine – (going from memory) –
“There is no empirical support for the proposition that patents encourage research and development.” – Richard Posner, The Economic Basis of Intellectual Property Law.
One of the head honchos of the Chicago School knows that there’s no support for the claims of patent proponents. So he goes on in that Chapter to tout (as Ron Bailey of Reason does) some vague benefit of disclosure from the patent. Of course, Posner knows better than to try to quantify the value of any benefit from disclosure, he just makes the broad proposition and leaves it out there. Shew, good thing Chicago School folks believe in the power of empiricism….
Published: September 8, 2006 8:01 AM
I’m surprised! Libertarians falling back on empirical research to support your arguments against the patent system? I was sure that only a priori reasoning could be justified. Readers should keep in mind that libertarians oppose patents only because the state issues them. They couldn’t care less whether they inhibit or encourage innovation. Libertarians are content to return to the Middle Ages when only the wealthy could finance R&D and they were motivated by altruism or reputation.
Empirical evidence may not exist for the proposal that patents encourage R&D. In order to have that type of evidence, you would have to compare a country that doesn’t protect patents, such as China, with one that does, such as the US. But that would be difficult because so many other factors contribute to innovation that such a study wouldn’t prove much.
At the same time, there is no empirical evidence that patent protection inhibits R&D either. It seems to me that the burden of proof lies with those who want to eliminate patent protection.
Another fallacy the libertarians try to fool people with is their attempt to equate the current US patent system with the concept of patent protection in general. They seem to want to say that if you have any patent protection at all, it will necessarily look like the current US patent system, and that’s not true. The US system may have many flaws, but they don’t disprove the validity and usefullness of a patent system in general.
Published: September 8, 2006 9:01 AM
“Libertarians falling back on empirical research to support your arguments against the patent system?”
No – Stephan has already more than adequately destroyed them from a praxeological standpoint. I’m sure he can point you to the proper articles.
What’s going on now is showing that statists who want to impose patents on unwilling innocents, have absolutely no leg to stand on, either praxeologically or empirically. In other words, they just make it up because it sounds good. Just like all other social engineers.
“It seems to me that the burden of proof lies with those who want to eliminate patent protection.”
No, it seems to me that the burden of proof lies on someone who wants impose limits on my physical property rights that the limits have some basis in praxeology or empiricism. And, as you have admitted, there is none whatsoever.
When you can establish some support for patents, whether praxeological or empirical, be sure to share it. It will make you famous, as it will be the first such support established.
Published: September 8, 2006 9:24 AM
“…it will be the first such support established.”
I think you’re skipping over a lot of history as well as previous threads on this blog. The matter is really simple: governments advocated patents as a means of protecting the investments of entrepreneurs. No one thought that the good to society would be better or worse with patents, although they assumed that patent protection would encourage R&D rather than discourage it.
“Stephan has already more than adequately destroyed them from a praxeological standpoint.” In your dreams. All Stephan has done is argue that patents are illegal because the state is illegal. No libertarian has shown that patents logically reduce R&D or that they cost more than they benefit society, only that the current US system is a mess.
Published: September 8, 2006 10:00 AM
“The matter is really simple: governments advocated patents as a means of protecting the investments of entrepreneurs”
In your dreams. They were enacted as compulsory monopolies to benefit the politically connected. But that’s irrelevant. The point which you neatly side-stepped and did not refute, even in part, is that there is NO evidence, praxeological or empirical, that they do. No respectable scholar has identified any empirical evidence, so no to that. And no Austrian scholar has made so much as a partially comprehensive attempt to refute Stephan’s article (which, BTW, you should actually read, since your description of it is patently false). Perhaps you should re-visit the subject of subjective value, so that you can understand the point Stephan made at the end of this post, as it will show just how ignorant your previous summary of his scholarship is.
As I’ve noted on other posts, I actually tend to disagree with Stephan re: copyrights – I think they could possibly exist absent the state. Patents – nope. They are nothing more than a forced subsidy incorporated (as you admit in your posts) by social engineers. There is no moral background to them that might allow them to arise naturally absent a state. Rather, patents, wherever they have occured, are always a top-down phenomenon, not a bottom up phenomenon like true property rights. Patents are nothing more than another form of mercantilism or welfare wealth re-distribution.
Published: September 8, 2006 10:19 AM
Roger M: “No libertarian has shown that patents logically reduce R&D or that they cost more than they benefit society, only that the current US system is a mess.”
Uhh, are you familiar with Rothbard’s Toward a Reconstruction of Utility and Welfare Economics–if so, do you simply disagree with it, or do you just not see how it is applicable to your comment above?
Published: September 8, 2006 10:35 AM
Disregarding for a moment Libertarian or Austrian objection to patents and just considering them as they now work.
Just by general observation, it would seem patents no longer perform their stated objective, which is to promote the advancement of useful arts and sciences. The kitchen inventor is a rare thing anymore and insignificant as far as this argument is concerned. Almost all patents originate in corporations. The actual inventor does not benefit, because all employment agreements require that all patents developed by an employee on the job belong to the company. So the employee does not benefit by them. Only the corporation. The employee would be motivated to develop new ideas by the promise of promotion, bonuses, etc, without any need for patents.
Patents are damaging in a couple of ways. First of all, companies have a long history of patenting and then burying inventions or technology that would be damaging to them. Thus society is deprived of useful inventions. Also, patents prevent standardization of technology that would make life much easier for everybody.
So I would say that, from just an observation and common sense view, without reference to Libertarian theory, that patents should be immediately abolished and all technology should immediately go into the public domain.
Published: September 8, 2006 10:37 AM
It is the advocates of patents who argue they are justified because of the net benefits. We are just criticizing their own arguments. First, because of the subjective nature of value, it could never be shown. Second, even if it could, it would not prove it was just (utilitarianism leads to unjust results). Third, even by their own terms, they have not pointed to any empirical studies that even purport to clearly show that the system is a net plus.
This is typical: when we point to many obvious problems with the patent system, libertarian patent advocates crawfish and say, well, I’m not in favor of *that*! So you ask, well, what type of patent system are you in favor of? And they never answer, or say, “well, I’m not a patent expert”. so we are left with the idea that they think they are in favor of some kind of system–not like our current one, but they are not sure what it would be like. Interesting, and hard to critique!
Published: September 8, 2006 10:40 AM
Brabson: “First of all, companies have a long history of patenting and then burying inventions or technology that would be damaging to them. Thus society is deprived of useful inventions.”
What? How do you “bury” an invention that is patented? If it’s patented it’s made public, by definition–others can make the product (at least eventually, when the patent term expires). And if the technology is valuable, the patentee would want to make it, and exploit the monopoly. Why would they bury it?
Moreover, in the strange case that someone has a patent to valuable technology yet does not want to make money off of it by selling or exploiting it, the US gov’t has the power to issue a compulsory license, as they threatened to do in the Cipro anthrax drug case (2).
Published: September 8, 2006 11:00 AM
M E Hoffer
I understand that you are a practicing Patent Attorney. And, you are in philosophical objection to “Patents”.
I was wondering why you choose to endeavor in a field that you find so questionable(?)
Personally, I can think of a few reasons why, though I thought I’d ask for your take.
Thank you very much, in advance.
Published: September 8, 2006 11:11 AM
Not a bad question, though I reject its implicit premise. I have written on this before, see various pieces here and here.
One answer is I started doing it before I changed my mind about its legitimacy. but another reason is, it’s a good living.
Published: September 8, 2006 11:24 AM
“Uhh, are you familiar with Rothbard’s Toward a Reconstruction of Utility and Welfare Economics…”
In case other readers haven’t read the Rothbard article, it doesn’t mention patents at all. It’s actually a very good article, though, and I do agree with it. I assume that Kinsella was referring to Rothbard’s point that any intevention by the government into a free market reduces the total utility of market participants. Of course, Rothbard wouldn’t argue with the state interfering with someone fencing stolen property, and that’s what patent infringement is.
Here’s a test for libertarians. Rothbard once suggested that manufacturers could put a notice on their product that informed the buyer that if he purchased the product he was agreeing not to copy it. In other words, we could eliminate state granted monopolies by resorting to contract law. If someone bought a widget then copied it and began to sell it, the producer could sue him for contract infringement. Rothbard’s idea might achieve the same results as the dreaded evil state granted monopoly patent. Would libertarians accept Rothbard’s proposal?
Published: September 8, 2006 11:38 AM
In other news, Netflix sues Blockbuster for copying its business style of mailing movies.
(via Slashdot: http://yro.slashdot.org/article.pl?sid=06/09/08/1528211)
Published: September 8, 2006 11:52 AM
“Rothbard wouldn’t argue with the state interfering with someone fencing stolen property, and that’s what patent infringement is.”
not even close. Tell, me, how have I stolen anything when I independently make the same discovery you patented yesterday? Hey, how about this – I opened a burger stand in town yesterday. In order to protect my investment, as you seem to think is very important, I should be granted a 50 mile monopoly for opening my stand for 20 years. Anybody trying to open a burger stand within 50 miles is “stealing” my property right in protecting my ROI.
Or, I bought my house because I have a nice view over undeveloped land. When that landowner develops the land, he’s “stealing” my property by reducing the value of my house.
Patents are, as you have repeatedly admitted, nothing more than social engineering. There’s no true property right involved.
Furthermore, explain to me how a contract could ever be said to preclude a third party from marketing his independent discovery, and then maybe you’ll see the base problem with patents. Of course, even Rothbard’s proposal doesn’t create a true copyright – what if the buyer discards of his book in the trash, and someone else picks it up? This third person has signed no contract, and, even under Rothbard’s version, is under no obligation to not copy the book. And that’s just the first of several differences between Rothbard’s copyright and current. In the end, Rothbard’s copyright gets you nowhere near current copyright, and is, in fact, merely a contract right, not a property right.
Published: September 8, 2006 12:28 PM
“Tell, me, how have I stolen anything when I independently make the same discovery you patented yesterday?”
Yeah, that happens all the time. Simultaneous, idnependent discoveries of exactly the same thing is what’s clogging our courts with patent claims. I don’t think so. But that it does happen occasionally only means that under a Rothbardian system of protection, the two parties would have to agree on sharing the rights, or they could go to court and offer evidence that they didn’t steal from one another.
The important point is that Rothbard recognized the need for some type of protection for inventions. He just didn’t like the state doing it. And that makes my point that libertarians aren’t concerned at all with promoting or hindering innovation, they just don’t like states. The patent issue is a red herring.
Published: September 8, 2006 1:16 PM
Roger M, independent reinvention happens all the time in the world of sofwtware. It is almost trivial. Do you support software patents ?
Published: September 8, 2006 2:38 PM
“Do you support software patents?”
Yep. I’m not saying that simultaneous, independent invention is not a problem. I’m saying it’s not such a huge problem that solutions don’t exist or that we should give up trying to protect inventions.
Published: September 8, 2006 3:01 PM
It strikes me as odd that Kinsella crusades against the patent system as vigorously as he does, for who created the current system? If I remember my single business law class, the legislature writes vague laws and lets the courts fill in the details of interpretation and implementation. Trial lawyers contribute a great deal to that body of law by the cases they take and the arguments they make in court. I would guess that most judges are former lawyers, too. So you have patent lawyers to blaim for the current mess in patent law, for the most part.
Carrying the point further, if lawyers can screw up common law as they have in the US with patent and tort laws, how much more damage could they do in an anarchic state where no constitution restrains them?
Published: September 8, 2006 3:19 PM
I think you are very wrong about Rothbards attitude toward patents:
“Some defenders of patents assert that they are not monopoly privileges, but simply property rights in inventions or even in ‘ideas.’ But, as we have seen, everyone’s property right is defended in libertarian law without a patent. If someone has an idea or plan and constructs an invention, and it is stolen from his house, the stealing is an act of theft illegal under general law. On the other hand, patents actually invade the property rights of those independent discoverers of an idea or invention who made the discovery after the patentee. Patents, therefore, invade rather than defend property rights”
He advocates contractual copyrights ( I invent a blender, I sell it to you on the condition that you will not reproduce it or show people its inner workings), but in no way supported a monopoly on a particular invention or idea.
In the end, I think you are really confused about what property rights are. A property right is the moral right to be the sole controler of something. For example, let’s say that there is a rock that we both are interested in. I think the rock is the perfect shape for skipping accross the water, and I want to use it for that purpose. Obviously, once the rock has lost sufficient velocity, it willl slip beneath the surface and be lost forever. You think it is beautiful and want to admire it in perpetuity. Obviously we cannot both enjoy the use of this rock. The property right over the rock, the moral claim to control it, is what determines who may, morally, decide to what use the rock gets put. The rock is scarce; there is only a limited supply and thus there is the potential for conflict over its use.
A patent or a copyright is a claim to control a pattern, the manner in which physical objects are arranged. Perhaps it is the pattern with which ink is drawn upon a page. Perhaps it is the relationship between bits of metal that allows them to function as a piston. Patterns are not scarce and are therefore not property! If one person makes a piston out of one bit of metal, he is not depriving another person of the ability to make an identical piston out of another bit of metal. The property right resides solely in the materials used in manufacture, not in the pattern in and of itself.
Now, it is possible that you invent a new way of working metal so that it makes a very good piston, and I cannot figure out how to do it. You then allow me to benefit from your past action (the act of inventing) by selling me the piston on the condition that I a) don’t take it appart an make my own, b) don’t show its innards to anyone else, or transfer my title to the object to someone else unless they sign a similar agreement.
Notice, there is no need for protection. If you want to prevent copying of your idea, then you can try to get people to voluntarily to commit to prevent copying it in exchange for you allowing them to purchase the object, or providing them access to plans. If someone hears about your invention, and sits down and reverse engineers it without anyone breaking an agreement that they made with you, you have not been the victim of some violation of your property.
You can continue to sell your pistons, or sell copies of the plans. Now, of course you might command a lower price than you otherwise would, or you may have trouble finding any buyer at all, but that is not because you have somehow been agressed against.
I also think you are very wrong about the nature of patent infiringement lawsuits. I am convinced that the vast majority of patent cases in the U.S. are due to independent invention. In my engineering classes my teachers taught me not to look at the patents while designing things (willful patent infringement is punished more severely than inadvertant patent infringement). My friends who worked in smaller companies also followed this rule. It was only the people who worked in firms like General Electric, who could afford licensing fees and the cost of lawsuits, who actively monitored the patent system and, in their case, it wasn’t to look for useful inventions, but as a defensive act to be able to enter into crosslicensing arragmeents out of fear of being sued. If we became aware of a patent, we’d go to grerat lengths to not “violate ” it, since the licensing fees could kill any hope of profit. In my 5 years as an engineer working in manufacturing, I did not see a single case of someone using patents as a way of helping them solve a problem that they could not solve themselves. Our inventions were arrived at on our own, and the patents in the field were viewed like indirect fire on a battlefield, something to be braved that might at any moment randomly injure one. Yet, despite the fact that my professors and coworkers all saw patents as hindrances and obstacles to building devices, despite the way we diligently avoided studying inventions published under the system to solve problems, innovations continued apace.
That fact puts lie to the notion that without patents, we would be stuck in some technological dark ages without the system.
Last but not least, in an anarchic state, judges would depend on people voluntarily choosing to use them to adjudicate disputes. A judge who was widely perceived to have made bad judgements would find that he had fewer and fewer cases to hear and would have to take up some other line of work to keep himself fed. The problems created by the judges and lawyers arise from the monopoly privilege they have in being the final arbiters of disputes. Their bad decisions are imposed on all, and they do not lose customers when they make them. Subject them tomarekt forces, and I think the tenor of their decisionmaking would turn around.
BTW, I find the notion of a court that would uphold Wickard and Raisch is somehow restrained by the U.S. Constitution to be absolutely ridiculous.
Published: September 8, 2006 6:45 PM
Published: December 8, 2006 9:55 PM
the fat tomato
1/ Mises opposed copyrights and patents for the same reasons, so why is it that so many of the current “austrian school” believe in copyrights but not patents? Might it be because as Mises implied, that copyrighters who ultimately are the opinion leaders in society need copyright to justify their living and hence have to lie to the public to justify themselves. Maybe the current “austrian school” economists ough to call themselves “neo-austrian” so everybody knows for word one that you do not represent the views of Mises.
2/ You confuse “letters patent” with “invention patent”. The original “invention patent” system was invented by an mechanical inventor who invented a new more efficient pulley system during the Italian Renaissance. “Letters Patent” were created several centuries later, and involved not invention but monopolisation of an existing industry to a court favourite, and hence are not the same as the current “invention patent” which require something new and non-obvious.
3/ As “invention patent” require novelty, and non-obviousess, it is clear that an inventor does not stop you from using your tangible resources since then they would not be the inventor you would be.
4/ Patents are protected by civil courts and the whole of the patent system is predicated on civil court negotiations, unlike the copyright system which is based on criminal law. This means that patent proterty rights are the only property rights which are predicated on civil society and on civil negotiations, which makes them the most libertarian of all the property rights that humans beings have, and the only property rights which are still entirely whole without goverment. Unless you libertarians are actually not only anachists opposed to goverment but also opposed to civl courts too?
a}Software patents are a straw man argument for the simple reason that software is also protected by Trade secret IP and copyright IP and individual contractual IP. Go and ask Bill Gates if he wants to retain his patent rights and give up the other IP rights(copyright, trade secret, contractual) and he’ll undoubtedly give up his patents.
b}Software patents are a straw man argument, because software patents do not dislcode the source code and hence fail the test of enabling disclosure which is required for valid invention patents, go and ask any software developper if they can develop Microsoft software source code from Microsoft patents and they will tell you, if you bother to ask that;
i/ they could develop similar programs.
ii/ They could not develop the exact source code, not matter how good they are,
And hence software patents are invalid in practise because of this, not because they may or may not be invalid from a property rights point of view.
Published: December 8, 2006 10:16 PM
the fat tomato
The Italian Renaissaince had patents for the inventors, which were abolished during the Dark ages, and then revived during the last period of enlightenment starting with the US.
The US is the richest country in the world and in human history, what more evidence do you need.
Published: December 8, 2006 10:20 PM
the fat tomato
MISES WAS WRONG WRONG WRONG
The entire “austrian school” and for that matter modern notions of economic thought is based on the complete and utter falsehood that human beings live in a world of SCARCITY.
Any child whos completed Physics 101, as you americans call it, will tell you that humanity actually lives in a universe of infinite resources.
And since we live in a world of infinite resources(at least one star system per person) the only wealth limiting factor is technology, our know how of how to capture for ourselves that unlimited potential wealth. Now since the Wright Brothers, who took us to the skies were inventors, and used the patent system, and since the inventor of the jet engine also used the patent system, unless one of you economists can better them i would suggest that you are like a bunch a soccer fans sitting on the side lines critising the proffesionals for not being good enough, even though in reality you are the incompetent ones, who would die of heart attack in the first minute of the game.
Published: December 8, 2006 10:30 PM
“One answer is I started doing it before I changed my mind about its legitimacy. but another reason is, it’s a good living.”
nothing wrong with that answer…
Published: May 9, 2008 1:35 PM
I completely agree with you, the system has become so comfortable with its self it doesn’t see or feel the need to keep expanding with innovative ideas. I heard there was meant to be a reform back in 2005 but nothing seems to have happened. For me the patent system is worth it but not in its current form. Keep up the good writing.
Published: September 11, 2008 8:34 AM
Feigin, Patent & Trademark Attorney
Patents create a property right like any other… you can keep people off your property, sell it, rent (license) it, and so forth… it is hard to know how much the system spurs development because we don’t have a control to compare it to!
Published: September 13, 2009 9:14 PM