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Hsieh and Mossoff on IP and Sewing Machines

From the Mises blog; archived comments below.

In Adam Mossoff in the WSJ, Objectivist Diana Hsieh admits IP is a “thorny” issue. Progress! The WSJ piece citing Mossoff notes:1

The Sewing Machine War was the first instance of what is today called a “patent thicket.” The disputes prevented Singer from selling his invention, and tensions ran high in and out of court: When Howe personally called on Singer, Singer threatened to throw him down a flight of stairs.

But there’s a happy ending to the story, as your machine-stitched clothes evince. The Sewing Machine War ended with a just and lasting peace in 1856, when Orlando B. Potter–a lawyer representing one of the plaintiffs–suggested a solution that Mossoff calls “groundbreaking but also breathtakingly simple”: The patent-holders would combine their patents in a “patent pool” and share the profits from selling the machines. The patent pool participants lived happily and wealthily ever after—or at least until 1877, when the last patent expired.

The happy ending is that the holders of patent monopolies granted by the states pooled them to form a united front to quash competition. Thus larger companies erect barriers to entry, partially monopolizing a field, with the help of the monopolies granted by the state. Ironically, the state then turns around and uses its own antitrust law against them–as the article notes, “anti-trust legislation today would likely render a smartphone patent pool an impossibility.”2

Quoting Mossoff, the article says:

the fact remains that lawsuits are often no more than an invitation to negotiation. “Oftentimes the way a party signals to another party in one’s industry, ‘I’m serious about this–you need to speak with me,’ is by filing a lawsuit,” says Mossoff.

Ha! Extortion is an “invitation to negotiate.” The euphemisms for statist aggression are many and varied–collateral damage, and so on. (See also Patent trolls as mafioso (and that’s a compliment) and “Investment Grade Patents are not for Rent Seeking … They are for business negotiations”.)

And most companies do reach amicable licensing agreements where they use one another’s technology for a fee.

Amicable! This means friendly. Yes. Very friendly to threaten to sue someone unless they pay you not to.

The article concludes:

So while the maze of patent lawsuits might seem like wasteful litigation, Mossoff cautions that the opposite might very well be true. Those who defend the patent system and intellectual property rights argue that it encourages innovation by ensuring that inventors get their due. “What the patent system is about is not what’s happening today or yesterday, but what’s going to happen tomorrow,” says Mossoff.

This seems to recognize that IP creates injustice, but that those who favor it think it’s worth it in the long run, for the sake of higher goals. This is exactly the structure of the argument normal statists use to endorse conscription, taxation, and so on–that the violations done to individuals are “worth it” for the greater good.

[Cross-posted from Mises Blog]

archived comments


El Tonno October 31, 2010 at 11:03 am

“What the patent system is about is not what’s happening today or yesterday, but what’s going to happen tomorrow”

What does that even mean? Something is going to happen if the patent expires, but apart from that..

iawai October 31, 2010 at 10:53 pm

It means that Mossoff can’t refute those instances where the existence of Intellectual monopoly privilege actually hindered technological progress and peaceful cooperation in the marketplace. So instead of trying to explain why these might be “necessary evils” in a good system, he will only argue in the hypothetical world of “what could happen” and “what could be invented”.

Of course this takes all empirical evidence out of the debate, and leaves Mossoff only with the unfalsifiable propositions that absent the current (or a modified) version of Patent law “creators would go unremunerated” or that “creators would have no incentive to advance technology”. These propositions are easily understood to be false if you look at actual human action, where creators are always seeking to better their position – but if you cannot appeal to historical evidence you are left arguing about what some hypothetical homo inventus would do if he couldn’t rely on the brutal power of the monopoly state to limit his competitors and potential consumers.

And Mossoff, in this falsely framed debate, will always be able to come up with some situation where he wouldn’t get the invention he desired because the realities of scarcity would limit his homo inventus to choices that actually made economic sense. And from that hypothetical “market failure”, Mossoff will always argue for the socialist solution of forcing every individual into a single system where the type of invention he desires is provided “for free” (i.e. at the expense of every taxpayer, manufacturer, consumer, and rival inventor, regardless of their own internal opinions of the system).

Stephan Kinsella October 31, 2010 at 11:05 pm

I think what he means is, what is going on at any present time with the patent system might seem unjust–like if your liberty is restricted by someone’s patent–but we do this so that we get more innovation in the future. So it’s worth it. Or something. This is just a confused, not backed up utilitarian argument that denies it’s utilitarian. So what can you do with it?

Edgaras November 1, 2010 at 5:57 am

“invitation to negotiation.” just killed me… Wow…

  1. For discussion of Hsieh and Mossoff see IP: The Objectivists Strike Back! []
  2. See my posts When Antitrust and Patents Collide (Rambus v. FTC)The Schizo Feds: Patent Monopolies and the FTC; The Schizophrenic StateIntel v. AMD: More patent and antitrust waste; Are Patents “Monopolies”?; Patents, Prescription Drugs, and Price Controls. []
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