C4SIF.org

So a DuPont employee leaves, and DuPont sues Kolon, a company working with the ex-employee, for “trade secret theft” of information regarding its Kevlar product. DuPont wins almost a billion dollar judgment. (Hey, I can round up, right?)

Kolon is now exploring using anti-trust law against DuPont.

What a great example of the “free market” in action: A uses state IP law against B; B uses state antitrust law against A.

Methinks the only winners are the state, and lawyers. And maybe A and B, who don’t now have to compete with little guys C, D, E who are afraid to get into this hornet’s nest…

From Inside Counsel: “Auto Completion Solutions (ACS), based in Frisco, Texas, has filed suit against some major technology companies. In its suit, ACS claims that Google, Facebook, Yahoo! and LinkedIn violated the patent it holds on auto-completion for Internet searches.”

Apparently, ACS bought these patent rights for the purpose of collecting licensing fees (i.e., it’s a “patent troll”).

One of my favorite podcasts, Triangulation, featured in the latest episode an interview with the great John Perry Barlow–former member of the Grateful Dead (an innovator in viral marketing), IP opponent and activist for Internet freedom. (See his classic 1994 Wired article,”The Economy of Ideas: A framework for patents and copyrights in the Digital Age,” discussed here on the Mises blog; also in Cat-v: “The ‘intellectual property’ oxymoron”.) Barlow there observes that before the Internet and digital age, copyright “worked” (whatever that means) because it was hard to make copies: to print books, make tapes and LPs, etc. But that  the mid 1990s, that all changed when it became easy and essentially costless to make perfect copies of such items. And that this is one reason copyright no longer works. The state is less and less able to easily police and regulate emulation and copying, because its nature has changed, so it responds by escalating its punishments and fines.

Of course, this will not work any more than the draconian sentences imposed for use or sale of narcotics will stop drug use. It occurred to me that envisioning changes in the area of narcotics similar to those that have occurred in the field of informational goods can help illustrate how absurd copyright law is in the digital age. At present, illegal drugs such as cocaine and marijuana are produced from physically grown crops by criminal syndicates, refined into consumer drugs, shipped at great risk to the western markets for these drugs, sold in shady transactions, etc., with individuals at all stages of this chain subject to severe punishment by the state. The state is able to interfere enough with various stages of the drug production and consumption chain to raise prices and drive it underground, and to sustain its own lucrative role in the everlasting “war on drugs.” This is somewhat analogous to the state copyright was in before the Internet, when “copies” meant physical objects like paper books, vinyl LPs, and the like.

Now imagine if some kind of change in the production of drugs occurred analogous to the transformation that has occurred with informational goods. Before, to make a book or audio recording, a physical good had to be produced; copying was laborious or expensive; middlemen and studios were involved. Now, it’s easy to copy books or songs, and the copies can be perfect; and the author or artist can increasingly avoid the studios and publishing houses. Now imagine that the field of 3D printers evolves to the point where narcotics and other drugs such as pharmaceuticals can easily be produced by a consumer, on his own, with a little “pharmaceutical printers” — in essence, millions of consumers could own little private narcotics fabricators. Not only would there be no middle man, there would be no supplier. No sales of drugs, no marijuana fields, no transportation and distribution networks. Sitting next to your laser printer/book binding machine, which you use to fabricate whole bound books on the fly, and your 3D printer, which you use to make little gadgets and items, you have a pharmaceutical printer. Sure, most people use it to make a cheap version of cough medicine and pain medicines, and cheaper versions of highly regulated and patent-protected prescription medications. But some would use it to generate narcotics.

In such a world, surely the bluenoses would be driven almost insane by the thought of their neighbors secretly being able to produce and consume drugs in the privacy of their own homes. But imagine how nearly impossible any enforcement effort in the drug war would be come. The drug war has already led to severe encroachment on civil liberties, but in the new drug-printer age the only way to make even a slight dent in the new private drug production and consumption practice would be to have ultra-invasive searches and seizures, constant monitoring of personal web traffic to detect when drug-printer  “recipes” were searched for or downloaded over the Internet, and so on. Still, the drug war would be even more futile than it is now, and would cause ever more damage to people’s lives, homes, property, freedom, and civil liberties.

And this is exactly the position copyright’s war on information and knowledge finds itself in now. Penalties are ramping up, the law’s scope and term keeps expanding. Copyright propaganda is on the increase, with Big Brother warnings ominously imposed in unskippable warnings at the beginning of DVD and Blu-Ray movies, and public service ads in magazines and comic books and TV’s warning kids that it’s “not cool to steal”. Western nations, as the home of the Big Film and Big Music and Big Publishing interests, are twisting the arms of other nations such as Russia, India, and China to adopt draconian Western-style copyright enforcement. At the same time, with the rise of torrenting and encryption, the attempt to enforce these laws becomes ever more futile. We can only hope its futility is recognized, and this relic of thought control and censorship of ages past is scrapped, before the Internet and our lives and liberty are ruined in the name of “intellectual property rights”.

[mises]

In The Hidden Truth behind the Merger Block, Justin T.P. Quinn provides a nice overview of how Alexander Graham Bell and his use of patents set back the advance of telephone technology and adoption for 25 years.

Fantastic article by Jeff Tucker, The Inventor of the Digital Age, about Michael S. Hart (March 8, 1947 — September 6, 2011), the visionary founder of ebooks and Project Gutenberg.

Austrian economist Dan D’Amico¹ provides an interesting IHS/LearnLiberty talk (apparently at Cato): An Economist’s Look at Intellectual Property Law. Abstract:

Prof. Daniel D’Amico discusses several arguments for and against government enforcement of intellectual property, including trademarks, patents, and copyrights. He explores both moral arguments (deontological) and cost benefit arguments (consequential), dedicating most of his time to consequential arguments. He finds that, in general, intellectual property is difficult to enforce and is inherently an anti-rival good. As a result, he finds no compelling case for government established intellectual property law.

1. I’ve blogged about D’Amico before: Prisons and IP: Tucker Interview with Dan D’Amico; Austrian economics program denied at Loyola New Orleans. [↩]

See Adam Mossoff’s Healthcare Reform’s Impact on Drug Patents. Of all the grounds on which to oppose the creeping socialism of Obamacare, this has got to be the weakest. If anything, this is a silver lining.

Mossoff worries that pressure to reduce costs in the healthcare system may lend support to laws permitting drug reimportation; also to price controls.

As for drug reimportation: I still find it astounding that a libertarian/Objectivist could oppose free trade. But I suppose if you are in support of state-granted monopolies, which are incompatible with competition and free trade, you have to choose. After all, reasonable libertarians are in favor of reasonable amounts of competition, but not, heavens to betsy, unbridled competition!¹ So here Mossoff joins the chorus of other pro-patent libertarians (e.g. Richard Epstein, Doug Bandow, and Michael Kraus) worried about the free trade of drug reimportation undermining government granted patent rights.²

As for the possibility of “price controls,” Mossoff regards this as a “taking” of Big Pharma companies’ “property rights in their drugs”–i.e., their so-called “intellectual property” rights granted by the state in the form of anti-competitive, monopolistic patent privileges (yes, granted by the same criminal, socialized state foisting Obamacare on us). These complaints are reminiscent of confused, hypocritical Tea Party types who pretend to be anti-government when they say “Keep your cotton pickin’ hands off my Social Security!” Indeed!

But as I’ve argued elsewhere,³ if the feds are going to steal from taxpayers in a socialized medical scheme to force them to fund pharmaceutical purchases for “beneficiaries” of the system, the theft is made worse when the prices are made artificially high due to the patent monopoly. I.e., the federal government is spending billions of taxpayer dollars on prices inflated by federal government laws. If the feds insist on stealing out money to purchase drugs for seniors, the least it can do is buy them at the cheapest possible price. One way to do this would be to simply issue compulsory licenses to generic drug manufacturers for any patented drug covered by Medicare. (The feds can license third parties to manufacture patented articles, without patent infringement liability; this was threatened in the Cipro anthrax drug a couple years ago. Yes, the feds have to pay “compensation” to the patent holder, but the level of compensation is bound to be less than the monopoly profits normally reaped by Big Pharma.) Or the state could weaken, or just take away their patent rights altogether. Patentarians would argue that this is a “taking” of a property right, but of course it’s not: it’s removing or weakening an unjust monopoly privilege.

On a similar note: while federal antitrust law is an abomination, it is less unjust when aimed at monopolies actually created by the state. Which is one reason why some of the same pro-IP libertarians noted above are concerned not only with free trade (reimportation) and socialized medicine undermining patent rights, but FTC antitrust actions as well.⁴

[Mises]

1. See Ayn Rand’s Anti Dog-Eat-Dog Rule and Intellectual Property. [↩]
2. See: Ideas Are Free: The Case Against Intellectual Property; Pilon on Patents; Drug Reimportation; Cato on Drug Reimportation; and Patents, Prescription Drugs, and Price Controls. [↩]
3. Price Controls, Antitrust, and Patents. [↩]
4. See Pro-IP Libertarians Upset about FTC Poaching Patent Turf; also, When Antitrust and Patents Collide (Rambus v. FTC); Price Controls, Antitrust, and Patents; Intellectual Property and Economic Development.; also IP vs. Antitrust; State Antitrust (anti-monopoly) law versus state IP (pro-monopoly) law; The Schizo Feds: Patent Monopolies and the FTC; The Schizophrenic State; Intel v. AMD: More patent and antitrust waste. [↩]

See Authors Guild sues universities over online books (h/t BK Marcus). See also Mike Masnick’s Techdirt post, Why Does The Authors Guild Hate Education So Much? Sues Five Universities For Providing Access To Orphan Works.

The stupidity and maliciousness of the Authors Guild here is staggering. Some university libraries are participating in an Orphan Works Project, an attempt to scan, save and make available older books for whom the author can no longer available–unless the copyright holder shows up, in which case the work is removed. And the Authors Guild is suing them for this? As Masnick writes:

In other words, the only way a book gets displayed through this system is if no copyright holder is found after a fairly extensive process. And if the copyright holder ever shows up, the work is immediately removed. All of this makes me wonder if the Authors Guild can really prove it has standing in this case. If the actual copyright holders cannot be identified, how can the Authors Guild claim standing over these works?

Either way, this is yet another in this long line of disputes in which the Authors Guild is coming out on the wrong side. It’s not helping authors, it’s doing the exact opposite, by acting like a massive luddite, attacking any form of innovation or any system that encourages the reading of books and the sharing of knowledge. Shame on the Authors Guild, who seems to only be living up to the reputation of guilds from the Middle Ages, which were focused on economically-suicidal protectionism, rather than innovation.

Vin Suprynowicz, a libertarian columnist for the Las Vegas Review-Journal, which has collaborated with copyright troll righthaven, gives his view of how people who … use information they learned from others … ought to be dealt with:

I have a far lower opinion of thieves than you appear to have. In fact, watching them copy my columns while interpolating their own content and pretending it’s mine, watching them throw small merchants on the verge of bankruptcy by switching price tags and otherwise stealing merchandise below cost, I hate them with a passion. Lawsuits? They should have their goddamned hands cut off and nailed to the wall of City Hall.

The copyright and patent wars are doing what the War on Terror did: separating the real libertarians from those clinging to state institutions.

Admirable attempt by Cato, Reason Foundation, and CEI to argue on technical, statutory grounds that the courts should “restore the original meaning of patentable ‘process’ and reverse an expansion of patentable subject matter that has discouraged innovation and harmed U.S. industries.”

It’s great that Cato, Reason Foundation, and CEI all oppose the expansion of patents here and recognize its incompatibility with free markets and freedom of speech. Reason Foundation participated because of its “commitment to ‘Free Minds and Free Markets'”; CEI because of its view that state efforts to protect patent rights “must protect freedom of thought and preserve a rich public domain”; and Cato because the attempt to cover medical diagnostic processes by patents “implicates an overreach of the federal power to es-tablish patents, thus stifling free markets and in-fringing on individual liberty.”

Mayo v. Prometheus Labs

by Ilya Shapiro, Jim Harper and Timothy B. Lee

Doctors and researchers regularly perform blood tests to determine the effectiveness of various drugs. The resulting correlations between the test results and patient health have recently become the subject of numerous “process” patents. That these patents have been upheld by the U.S. Court of Appeals for the Federal Circuit represents a dangerous expansion of traditional patent law. This expansion threatens to stifle free markets and infringe on individual liberty. In Mayo v. Prometheus, the Court will address the important question of whether someone can patent the process of observing correlations between blood test results and patient health. The primary legal issue here is whether naturally occurring correlations are patentable as “process” patents simply because the methods used to administer prescription drugs and test blood may involve “transformations” of body chemistry. Cato’s amicus brief, joined by the Reason Foundation and the Competitive Enterprise Institute, argues that these patents are not “processes” as the term was originally understood in the Patent Act of 1952. We liken medical-diagnostic patents to other abstract-process patents — such as software and business-method patents — that have resulted in financial losses for firms and discouraged innovation, and argue that enforcing these patents “will only serve to further slow the economy, retard technological innovation, distort the free market, and place human health at risk.” Moreover, upholding the patents at issue will impermissibly restrict public-domain activity because the final step in a medical-diagnostic patent is an entirely mental one that will be violated whenever a doctor performs a previously public-domain medical test after learning about the patented correlation. Our brief thus closes by arguing that the Court should also consider the profound First Amendment implications in allowing processes whose final step is entirely mental to be patented. “The Court has repeatedly recognized that the First Amendment protects freedom of thought as well as freedom of speech.” Unlike copyrights, patents lack traditional free-speech safeguards (such as exceptions for “fair use”) and, therefore, the Court should reject medical-diagnostic patents as impermissibly restricting the freedom of thought.

Download the PDF (218 KB)
View this Legal Brief in HTML

Timothy Lee is not completely opposed to IP (as noted here, Lee “can’t agree … that all copyright and patent monopolies are illegitimate”), but glad to see he is on the right side here (as he has been on software patents in general—see A Patent Lie: Software Patents and “Defensive” Patenting; Timothy Lee: “The Supreme Court Should Invalidate Software Patents”; Shock, awe: British government agrees that copyright has gone too far).

Curious to me that while the brief argues that the patent clause might be incompatible with the First Amendment, it does not make the argument that the First Amendment came later than the patent clause, and thus takes precedence to the extent of any incompatibility. (See Copyright Censorship versus Free Speech and Human Rights; Excessive Fines and the Eighth Amendment; Judge Rules EA has “1st Amendment Right” to Depict College Football Players.)

Update: see also “Copyright is Unconstitutional” (Nov. 27, 2011), and, in particular: An argument by the court as to why software patents also limit free speech: Here’s Why Software Patents Are in Peril After the Intellectual Ventures Ruling, Fortune, Oct. 3 2016

From the Supreme Court case Graham v. John Deere Co. (1966):

[Jefferson believed] [t]he patent monopoly was not designed to secure to the inventor his natural right in his discoveries. Rather, it was a reward, an inducement, to bring forth new knowledge. The grant of an exclusive right to an invention was the creation of society—at odds with the inherent free nature of disclosed ideas—and was not to be freely given.

While Jefferson’s earlier views favored patents (“the benefit even of limited monopolies is too doubtful to be opposed to that of their general suppression”),

His views ripened, however, and in another letter to Madison (Aug. 1789) after the drafting of the Bill of Rights, Jefferson stated that he would have been pleased by an express provision in this form:

“Art. 9. Monopolies may be allowed to persons for their own productions in literature & their own inventions in the arts, for a term not exceeding – years but for no longer term & no other purpose.” Id., at 113.

Too bad this language did not make it into the Constitution. This would have capped the copyright term to some finite number, so that Disney could not have it extended all the way to over 100 years now.

As a practicing patent attorney I’m on a few email lists. I received the other day an email on such a that urged fellow patent practitioners to support legislation to prevent “patent fee diversion,” as if this political goal is an obvious and uncontroversial one for patent attorneys to support. This and other assumptions of the email bugged me, so I replied. The email, and my response, are below.

There is a significant chance of amending the patent reform bill (America Invents Act) so that it does not continue to allow patent office fee diversion. It is now clear that Senator Coburn will offer an amendment to end fee diversion.  Essentially everybody agrees that fee diversion, the raiding of fees paid into the patent office is a bad thing and should be ended. The Senate voted 95-5 in March to end fee diversion. But the bill that eventually passed the House ( H.R. 1249) continues to allow fee diversion. The Senate should continue to stand by its original vote to end fee diversion by supporting the Coburn amendment.

Fee diversion should be formally ended by statute: there have been vows by Congress to end fee diversion before, but the practice has continued for about 20 years. Fee diversion has been largely responsible for crippling the patent office and causing a huge backlog of patent applications, an inadequate examiner corps and outdated computer system.

My reply:

It is not true that everybody agrees fee diversion is a bad thing. The money collected by the PTO is somewhat arbitrary given the monopoly power (to grant monopoly patent grants) given to it by the state, and given that the PTO is basically “owned” by fedgov. Just as a parent company may do what it likes with a subsidiary, so here. It is not clear at all that all of the “profits” of the subsidiary-PTO are necessary to fund its operations. Suppose Congress ordered it to quadruple patent filing fees tomorrow. This may well result in a huge windfall. It is not immediately obvious that all the surplus profit would need to be diverted to the PTO for spending on operations. The idea that all of the fees the PTO generates (using the state monopoly granted to it) need to be kept by it to fund operations presupposes that it will never make a profit.

The opposition to fee diversion also rests on other controversial assumptions–namely, that it is good that the PTO be well-staffed and funded; and that the PTO itself is a good thing. For someone who believes patents are harmful and a plague that should be ended (and believe me there are many companies besieged by patent assaults who think this), they might prefer the PTO to be starved of funds to hasten its demise and/or the reduction in the perception of patent quality/legitimacy.

In short I think it is inappropriate for patent attorneys to automatically urge a political stance to their fellows based solely on their status as recipients of the patent system. It is an outright political stance and ought not to be characterized as anything else; the “should” in the comments below belies this. It is not something “everyone agrees to”; and I fail to see why a list of patent practitioners is to be used to push any political stance here any more than it ought be used to favor Republicans over Democrats or vice-versa. Or, if the list is to be used for political views, I’d like to urge everyone here to consider urging their lawmakers to severely curtail the anti-property, anti-market, anti-competition patent monopoly privileges that the unjust patent system generates.

I received no reply. Hmm, I’m thinking my fellow patent lawyers don’t like me very much…

Related posts:

• Patent Lawyers Who Don’t Toe the Line Should Be Punished!;
• Is It So Crazy For A Patent Attorney To Think Patents Harm Innovation?.

Progress! More rights is better, right?

EU passes extended copyright protections for musicians
European musicians awarded 20 additional years of music protection