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by Mike Masnick

Thu, Mar 20th 2008 11:46am

Why Do Patents Tend To Cause More Harm Than Good?

from the monopoly-economics dept

Continuing my series of posts on some of the basics behind intellectual property, I wanted to delve further into the discussion I kicked off last week about judging the harm vs. benefit of intellectual property, and being able to properly balance the two. As we pointed out last week, nearly all of the economic evidence shows that patents tend to do more harm than good. Researchers James Bessen and Michael J. Meurer (perfect timing again) have gone into a little more detail as to how much damage is done, but I wanted to focus on why the downsides to patents are so often worse than the upsides.

At one level, it goes back to basic fundamental economics. Any given monopoly is going to be bad. There are economic rents associated with a monopoly. It limits the supply available and increases the cost, acting as a deadweight loss to society. That's absolutely true with patents as well (as much of the research has shown). However, there are a few more reasons why patents tend to be a net negative. First, let's focus on why the reasons in favor of patents aren't particularly strong.

The first is that it should act as an incentive to create the product. Yet, as the research has shown, that's almost never true in practice. More innovation tends to happen with weaker patent laws, and when stronger patent laws are put in place, the pace of innovation decreases. The reason is that real innovation almost never happens because of patents. Very few people invent stuff "to get a patent," but because there's a need in the market and they can help solve it. That's true with, or without, patents. Furthermore, it's that need in the market that is the real incentive for innovation. If you can serve a market, there's a way to make money from that market, and that acts as plenty of incentive.

The fears that an "easily copied" product will damage the original inventor are also wildly overblown. Study after study after study has shown that there is a distinct first mover advantage, and even things that are easily "copied" doesn't mean that the copycats get success in the market. People put a premium on buying from the original creator. Furthermore, they often believe (correctly in many cases) that the original creator has a better understanding of the market, and is likely to continue to innovate faster and with better solutions. Finally, in the worst case scenario, where a copycat is able to do a better job, that's also not a bad thing, because the societal benefit is still a better product. It's called competition, and is generally considered a good thing in a market economy.

Another popular claim is that patent benefit us via "disclosure." Because patents require the inventor to "disclose" the invention, the idea is that these patents will spur additional innovation as others learn from the patents and build on them. The idea is that there's obvious benefit in keeping the idea secret, so in exchange for disclosing the idea, the government gives the inventor a monopoly. However, this is easily shown to be false. First, very few patents these days are written to the point where they actually disclose enough to be useful. They tend to be broadly written in a way that can cover as much as possible. However, there's an even better simple logical rationale for why disclosure is a myth when it comes to patents. If the inventor truly believes there's tremendous value in keeping the idea secret, he or she will still keep it secret. There's no real benefit to disclosing it to get the patent. You get just as much benefit from keeping it secret. The only benefit is if you think that others will be able to figure out the same concept in less time than it takes for the patent to expire. In other words, if you realize that others will be able to come up with the same thing in that amount of time. So getting a patent prevents others from doing that. But if you truly believe that it would take longer than the length of the patent to figure out its secrets, then you'll keep it quiet anyway.

As for why the downsides to patents are almost always present, it's based on a fundamental understanding of how innovation works. If most innovation was a single burst of inspiration, then patents could make sense. However, in a scenario where innovation is an ongoing process of building, trying, adjusting, building, trying, adjusting -- then patents are likely to be harmful. They add a cost and a hassle at many of the steps along the way. They add a series of hurdles that involve time, money and effort for each step of that process. That, alone, significantly slows down innovation. Studies have shown, in fact, that most innovation is an ongoing series of innovations rather than a single burst of inspiration. Furthermore, great breakthroughs tend to come not from a single mind, but in different people looking at the same problem, learning from each other and building on each other's work. By throwing tollbooths into that process, you slow down the innovation.

Thus, the supposed benefits of patents rarely are all that beneficial, and yet the downsides to patents are quite large and show up quite often. So, it should be no surprise that the research shows patents tend to do quite a bit to slow down innovation, rather than accelerate it.

Links to other posts in the series:

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by Anonymous Coward on Mar 20th, 2008 @ 12:50pm

Mike, after reading your past article, it seems you have backed off your earlier claims of patents not being beneficial in the pharmaceutical industry? Is that a fair assumption to make?

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Mikey's riding a dead horse, AGAIN ! by angry dude on Mar 20th, 2008 @ 12:56pm

Gee, mikey

you are riding a dead horse again

Your cited "research" is completely bogus - paid for by large patent-averse corporations

Before any "independent" research is published a source of funding should be announced
Also, I'd like to know the source of YOUR funding, buddy
But we all know it already, don't we ?
Follow the money, dude
Always follow the money

P.S. Why don't you stop shitty blogging and run for US Congress ?
I'm sure you'll do well - you have a natural talent for demagogy

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Perfect Example by Killer_Tofu on Mar 20th, 2008 @ 1:01pm

An excellent example of the first to market, since somebody undoubtedly try to shoot Mike down on that one, is the iPod.
No, it wasn't the first MP3 player to the market.
But it was definitely one of the first to do everything that people actually wanted them to be able to do.
There are plenty of other MP3 players out now that do much of the same functions and more, yet Apple still dominates the MP3 player market.

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Pharma disagrees by Jonah on Mar 20th, 2008 @ 1:04pm

Overall there are some excellent points in this post. I would however like to raise one objection which is not adequately covered. The current US patent system provides companies and individuals in high risk and expense R&D in fields like pharmaceuticals the opportunity to recoup that initial investment without competitors running out equivalent products without the cost of research.

Patients (and profit hungry insurance companies) will always choose a low cost generic if it is available. Where insurance mandates the lowest cost option… there can be no first mover advantage.

As DiMasi of Tufts university (the universally agreed expert in the field of pharmacoeconomics) indicates the cost of bringing a new drug to market (2003 estimates) is $403 million dollars. Out of every 10 drugs which are even approved for clinical testing, only one will be a commercialized product. The cost of design and proving bioequivalence of a generic drug to compete is less then $5 million.

I would argue that the length of patent protection is currently an excellent drive of innovation within the market. The “blockbuster” drug only has 7 years on market (tops) before patents expire. This drives pharma to create news drugs to guarantee future revenues streams to their shareholders. The one concern here is the need to replicate the blockbuster in order to maintain shareholder value. A longer patent might create a market for further development in unmet medical needs (such as disease with 100,000 to 250,000 cases a year). These disorders will not produce the blockbuster profits but will pat the bottom line of an otherwise well of company.

I don’t think disclosure is an applicable discussion point with regards to this industry due to the involvement of the Food and Drug Administration. The drug must be well understood and characterized in order to meet regulatory guide lines for safety and efficacy. Most generic drug makers know the formula (either through the patent, or reverse engineering from package inserts and journal articles) prior to loss of patent protection.

While in many cases your argument is based soundly in facts, I don't think you will find a company willing to invest this amount of money in life saving treatments without the guarantee of profit from sale (at least until cost of R&D is covered).

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Re: Mikey's riding a dead horse, AGAIN ! by sonofdot on Mar 20th, 2008 @ 1:06pm

Seriously, butthole, if you hate Mike's writing so much, and can't stand any of the topics, SHUT THE FUCK UP! Go away, quit reading and commenting here -- you're wasting valuable bits.

You never have anything constructive to offer, and you never offer any facts with your childish attempts to refute Mike's arguments.

If you have some evidence, some facts you can site, then do it. Otherwise, STFU and go away.

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by Anonymous Coward on Mar 20th, 2008 @ 1:10pm

Jonah, in one of the reference articles, Mike states that "besides pharma" so maybe he does not feel that pharma should be included in this conversation, but I can't speak (or write) for him.

Indeed, R&D is high, but I also think that the Tufts numbers are high due to the fact that they include "lost opportunity costs" which I don't think should be there. Right now Tufts pegs the cost of R&D at over a billion dollars, even without opportunity costs, its still a really big number.

Also, pharma has gotten better at bringing a drug to market, so you see patent protection more along the lines of 10-12 years, not just 7 anymore. Of course, with the FDA becoming more cautious, that may indeed come back down in the near term future.

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Re: Re: Mikey's riding a dead horse, AGAIN ! by angry dude on Mar 20th, 2008 @ 1:12pm

Ho-Ho-Ho

One of Mike's lemmings has spoken
Ligten up dude
it's just internet
anything goes even shit like this blog
you can browse porn sites or read techdirt comments
Whatever makes you happy dude

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Re: Pharma disagrees by Jake on Mar 20th, 2008 @ 2:17pm

I would strongly suggest that medical research -among other things- ought to be undertaken for reasons other than profit, by institutions answerable directly to the government, but that's another debate altogether.

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Re: Re: Re: Mikey's riding a dead horse, AGAIN ! by Anonymous Coward on Mar 20th, 2008 @ 2:18pm

hey angrydude how's your patent application going?

http://www.metacafe.com/watch/281402/a_peek_into_the_future/

http://techdirt.com/articl es/20070614/130621.shtml

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Re: Re: Re: Mikey's riding a dead horse, AGAIN ! by sonofdot on Mar 20th, 2008 @ 2:19pm

I disagree, this isn't an anything goes free-for-all. The Internet can be, and generally is, a civil place. Then again, there are weasels like you, who make the Internet a pretty shitty place most of the time. A few people try to have an intelligent conversation, and we're interrupted by someone with Tourette's syndrome of the keyboard.

Each of your posts proves that you're socially-challenged and poorly educated. But I guess you have nothing better to do than post asshole comments on blogs, but only because you can't masturbate 24 hours a day. But I think you should give it another try -- it'll keep your hands off the keyboard.

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The Powerful "Anti Patent Lobby" by Derek Kerton on Mar 20th, 2008 @ 2:34pm

Angry Troll Dude,

"Large Anti-patent corporations"? Is there such a thing? Who exactly is in this shadow "anti patent lobby"? I know big business, big oil, big pharma, telecom, etc. I am familiar with the powerful lobbies of the NRA, the Jewish leagues, religious right, weapons makers, etc. But excuse me if I'm not so familiar with which big, monied interests are anti-patent.

You say "Follow the money" with such enthusiasm. Pray, tell, have you done this? What did you find is funding this anti-patent movement? A bunch of libertarians, hippies, freethinkers, economists, patriots, right AND left wingers, and basically a grassroots movement of people willing to re-think our goalposts, and put them back where the founding fathers placed them? Wow, sounds like it might just be the voice of the people, making a little bit of noise among the thunder of the pro-patent lobby.

Keep following the money. Where does Techdirt's money come from? Well, a look at the banner ads is one indication. I see Intel and Motorola ads on this page as I type. Hmmm, do you think those two companies are anti-patent? You have to be a complete idiot if you do. The fact that you're wrong is staring you in the face as you rant.

Techdirt sometimes takes positions AGAINST the people who are funding it. Other clients for Techdirt are private equity houses, which invest frequently in patent portfolios. Techdirt does private research for numerous companies that file and protect IP with patents. Why do these people still pay Techdirt despite this rift? Because they also get solid, unbiased, straight-up honest advice of the sort you seldom get from the top Consulting/analyst firms (who bias their results to make the paying clients happy).

It's something called integrity. You may have integrity for all I know, but from what I can tell, you could use a few more sandwiches before calling yourself a picnic.

And yeah, my firm is a Techdirt partner, and I disagree with about 20% of what I read here, too. But I sure can't ever question the integrity of a blog that takes positions that harm its economic interests just because they actually studied the issue, and print what they believe.

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point of order by andy on Mar 20th, 2008 @ 2:45pm

your efforts are appreciated, but please don't feed the trolls, sonofdot.

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Bogus Research by Willton on Mar 20th, 2008 @ 3:06pm

This "little more detail" that Messrs. Bessen and Muerer do has a fatal flaw: it only focuses on publicly traded firms. I don't think anyone should be all that surprised that firms like Microsoft, Yahoo, Cisco, and Google don't benefit from the patent system: those companies aren't developing cutting-edge technology anymore. Bessen and Muerer's research takes in no input from small start-up companies, who use patents to get a foothold in the market and protect their R&D investments against poaching by the the large firms analyzed here.

Perhaps the authors should compare their estimated value of patents with the amounts paid by these same publicly traded firms to acquire patents over the same period of time. I suspect that the guys in the trenches buying patents are much more in touch with the value of patents than the ivory tower economists.

Here's my favorite quote from these guys: "When an innovator commercializes a new technology there is a risk that a patent owner will assert a patent against the innovator."

Well, then I guess the "innovator" is not so innovative, is it?

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More Flaws in "Patent Failure" by Willton on Mar 20th, 2008 @ 3:20pm

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More Flaws in "Patent Failure" by Willton on Mar 20th, 2008 @ 3:25pm

Sorry for the double post.

http://www.patentlyo.com/patent/2008/03/the-costs-and-b.html#comment-107738998

B&M� �s notion that acquisition costs of patent rights required by a firm to sell its products should be in line with some nominal fraction of its R&D spending is absurd. This follows from the simple realization that the less a firm invests on its own R&D, the more expenses it is likely to incur for acquiring patent rights arising out of the R&D fruits of OTHERS. By their distorted logic of using R&D spending as some proxy, B&M demonstrate a lack of understanding of basic aspects of licensing and how innovations come to market. B&M’s findings that publicly traded companies which they tracked from 1984 to 1999 make lower R&D investments in relative terms compared to their costs for infringing patents of others is no evidence of “patent failure”. B&M’s inference of “failure” cannot be considered as scholarship but as mere advocacy. B&M merely advocate the position of firms that seek to weaken the U.S. patent system. In a rare candid passage, B&M identify such a firm as “the average public firm outside the chemical and pharmaceutical industries [that] would be better off if patents did not exist”.

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Re: by Mike on Mar 20th, 2008 @ 3:39pm

Mike, after reading your past article, it seems you have backed off your earlier claims of patents not being beneficial in the pharmaceutical industry? Is that a fair assumption to make?

No. I still think they're harmful in the pharma industry, but I'm saving that discussion up for another time. :) The story in pharma is a bit different. I'll get to it...

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Patents by Greg on Mar 20th, 2008 @ 3:41pm

Sure, your right. I can't wait to develop something and give it away. After all, I don't really deserve anthing for all my time, effort, and money spent.
perhaps we should do away with copyrights also and pay someone ele less to write this same artice.

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Re: Mikey's riding a dead horse, AGAIN ! by Mike on Mar 20th, 2008 @ 3:46pm

Your cited "research" is completely bogus - paid for by large patent-averse corporations

Actually, almost all of the cited research is peer-reviewed academic research. I've yet to come across any research supporting this position that is corporate-backed.

But you know that.

Also, I'm unaware of many "patent-averse" corporations. I know of many who dislike how patents are used, but most of them are strongly pro-patent themselves.

Before any "independent" research is published a source of funding should be announced

As I said, nearly all of it is academic research by well known and well respected economists.

What's YOUR funding?

Also, I'd like to know the source of YOUR funding, buddy

There's no secret there either. Techdirt makes its money providing services to many companies -- though all of it is for their internal use. We do not do any public advocacy work at all. We don't do any work currently having to do with patents. You know this. You've been told this. But because you fail to have an actual argument (you know, with evidence) you spout lies.

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Re: Pharma disagrees by Mike on Mar 20th, 2008 @ 3:52pm

I would however like to raise one objection which is not adequately covered. The current US patent system provides companies and individuals in high risk and expense R&D in fields like pharmaceuticals the opportunity to recoup that initial investment without competitors running out equivalent products without the cost of research.

This is a pretty common argument, and some find it persuasive. I, however, do not. As I mentioned in a comment above, I'll address the pharma situation later. However, the research there also suggests patents are unnecessary.

The Italian example is rather instructive here, in that Italy did not allow pharma patents, but still had a very productive and competitive pharma industry. Once they did allow pharma patents, that industry shrunk.

As DiMasi of Tufts university (the universally agreed expert in the field of pharmacoeconomics) indicates the cost of bringing a new drug to market (2003 estimates) is $403 million dollars. Out of every 10 drugs which are even approved for clinical testing, only one will be a commercialized product. The cost of design and proving bioequivalence of a generic drug to compete is less then $5 million.

I'd suggest you look at the research of Merrill Goozner who has done a fantastic job looking at the real cost of developing new drugs.

I would argue that the length of patent protection is currently an excellent drive of innovation within the market. The “blockbuster” drug only has 7 years on market (tops) before patents expire. This drives pharma to create news drugs to guarantee future revenues streams to their shareholders. The one concern here is the need to replicate the blockbuster in order to maintain shareholder value. A longer patent might create a market for further development in unmet medical needs (such as disease with 100,000 to 250,000 cases a year). These disorders will not produce the blockbuster profits but will pat the bottom line of an otherwise well of company

Again, the research suggests something else entirely. The monopoly rents from patents on pharma set in process bad innovation decisions, such as efforts to make "me too" drugs that can be granted a new patent and new monopoly rents. Meanwhile, actual breakthroughs are rare from industry. Almost all are from gov't funded institutions.

While in many cases your argument is based soundly in facts, I don't think you will find a company willing to invest this amount of money in life saving treatments without the guarantee of profit from sale (at least until cost of R&D is covered).

Again, look at Goozner's work. The real costs are quite different than you assume.

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Re: Mikey's riding a dead horse, AGAIN ! by Anonymous Coward on Mar 20th, 2008 @ 3:56pm

Ignore the troll

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Re: Bogus Research by Mike on Mar 20th, 2008 @ 3:57pm

This "little more detail" that Messrs. Bessen and Muerer do has a fatal flaw: it only focuses on publicly traded firms.

This post did not focus on their research. And, the research they pointed to last week was not their own, but a LOT of studies by other economists showing quite consistently the problems patents cause. So highlighting problems with this particular report isn't particularly convincing.

I don't think anyone should be all that surprised that firms like Microsoft, Yahoo, Cisco, and Google don't benefit from the patent system: those companies aren't developing cutting-edge technology anymore.

Really? You clearly have no clue what goes on at firms like Microsoft, Yahoo, Cisco and Google if you think they aren't developing cutting edge technologies any more.

Bessen and Muerer's research takes in no input from small start-up companies, who use patents to get a foothold in the market and protect their R&D investments against poaching by the the large firms analyzed here.

Then you clearly have little exposure to startup companies. It's quite rare for startups to use patents to "gain a foothold in the market." Besides, why should we grant them a monopoly to gain a foothold in the market? What's wrong with just letting them compete?

As the research has shown time and time again, there's little evidence that patents lead to greater innovation.

Perhaps the authors should compare their estimated value of patents with the amounts paid by these same publicly traded firms to acquire patents over the same period of time. I suspect that the guys in the trenches buying patents are much more in touch with the value of patents than the ivory tower economists.

The value of patents is not indicative of their economic benefit.

Here's my favorite quote from these guys: "When an innovator commercializes a new technology there is a risk that a patent owner will assert a patent against the innovator." Well, then I guess the "innovator" is not so innovative, is it?

Well, this shows a basic misunderstanding between invention and innovation. Patents protect invention, not innovation. And, yes, there is tremendous risk that an innovator -- one who successfully brings a new product to market -- will have a patent asserted against him. It's either because an inventor who FAILED in the marketplace (i.e., FAILED to innovate) is suing him, or it's because someone has a patent so broadly worded or on such an obvious idea that they can apply it to real innovation.

You don't think that's a huge problem? The economic evidence suggests you are wrong.

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Re: Patents by Mike on Mar 20th, 2008 @ 3:59pm

Sure, your right. I can't wait to develop something and give it away. After all, I don't really deserve anthing for all my time, effort, and money spent.

Greg, at no point did I say that people don't deserve anything for their time, effort or money spent. In fact, if you bothered to read the post, I note that there are plenty of ways to get rewarded for the time, effort and money spent -- it's called the marketplace. Selling an actual product to people who demand it.

perhaps we should do away with copyrights also and pay someone ele less to write this same artice.

As I've made clear, I don't believe that copyrights are necessary either. So I'm not sure what point you think you're proving.

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Re: Bogus Research by Kiba on Mar 20th, 2008 @ 4:09pm

Tell that to the various Free software folks who done without software patents.

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Re: Re: Pharma disagrees by Anonymous Coward on Mar 20th, 2008 @ 5:07pm

I look forward to that, as for Italy, I would argue that their government price controls had more to do with their pharma industry's fall (and the overall fall of their healthcare) than patents did.

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Re: Re: Patents by Greg on Mar 20th, 2008 @ 6:16pm

I just don't believe that, because I don't have a great deal of development money I automatically should lose out completely to someone who does. As I understand you, someone who can't get his new invention (etc.) out to the world immediately should stand back and let the big companies make the money because they can distribute the invention much more widely, much more quickly.

I'm a small businessman so I deserve nothing? Why should I spend all the time and effort for development to give it to the big companies? I couldn't afford to do that if I wanted to.

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Re: Re: Bogus Research by Greg on Mar 20th, 2008 @ 6:30pm

Software would fall under copyright, not patent laws. Many people put out "free" software (like games) to allow users to debug their early programs; Then charge for the improved program. Others let people play the software games while they download spyware on their computer. Everybody makes money somehow, or they don't eat.

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Re: Re: Re: Patents by Mike on Mar 20th, 2008 @ 6:51pm

I just don't believe that, because I don't have a great deal of development money I automatically should lose out completely to someone who does. As I understand you, someone who can't get his new invention (etc.) out to the world immediately should stand back and let the big companies make the money because they can distribute the invention much more widely, much more quickly.

You understand wrong. Read the 4th paragraph again. I say that the smaller company is often more likely to do a better job with the product. If you can't beat a big company, you shouldn't be in the market.

I'm a small businessman so I deserve nothing? Why should I spend all the time and effort for development to give it to the big companies? I couldn't afford to do that if I wanted to.

No. Again, that's not what I said. I said the smaller company has a better chance of winning in the market place. If you don't think you can beat the big company, you're doing something wrong.

And, remember, patents aren't welfare for small companies.

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Claiming vs. Disclosing by Stephan Kinsella on Mar 20th, 2008 @ 7:10pm

Mr. Masnick: great stuff. However I think one of your comments is not quite correct: "very few patents these days are written to the point where they actually disclose enough to be useful. They tend to be broadly written in a way that can cover as much as possible." As much as I'm opposed to patents, for all the reasons you give, and others (I'm a practicing patent lawyer), I don't quite agree with this. Say what you will about patents, but the disclosure requirements are pretty strict. What you are talking about, I think, is how the claims are drafted. Yes, they are written as broadly as possible. But no matter how broadly they are written, the disclosure must both enable the claimed invention, and must disclose the best mode. Failure to do so is very serious. It might be engaged in on occasion by pro se applicants, but most patent practitioners I'm aware of are scrupulous about complying with this.

I agree with all of your other comments, however.

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Re: Re: Re: Bogus Research by Kiba on Mar 20th, 2008 @ 7:54pm

I am not talking about proprietary software or freeware for that matter.

What I am really talking about is software that offer freedom to modify, run, distribute, among others. These kind of software are open to competition and are not under the protection of copyright law. Instead, copyright law is hacked to provide a different kind of benefit to their users.

Yet people who dare make free software for a living were able to thrive anyway.

Freewares and proprietary software are certainly not exposed to competiton.

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Re: Re: Re: Re: Bogus Research by Anonymous Coward on Mar 20th, 2008 @ 7:55pm

Correction: Err, freewares and proprietary software on the other hand try to limit competition.

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Re: Re: Re: Re: Re: Bogus Research by Kiba on Mar 20th, 2008 @ 7:56pm

Above comment is mine

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Re: Claiming vs. Disclosing by angry dude on Mar 20th, 2008 @ 8:33pm

Ho-Ho-ho

some familiar fellas here:
a patent attorney who hates patents

same as full-time butcher taking part in animal rights movement..
or a life-long hooker publishing "the joy of celibacy" magazine...
way to go, little stephan, way to go...

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Re: Re: Claiming vs. Disclosing by Anonymous Coward on Mar 21st, 2008 @ 6:03am

hey angry dude, does your mommy know you're back on the computer again?

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by stv on Mar 21st, 2008 @ 7:11am

What is a patent troll?

According to some a patent troll is a firm who licenses patents they do not themselves commercialize. Yet many of the large firms who are most critical of the practice do it themselves. Out licensing is now an important profit center of most every firm. Often, as a result they end up licensing out patents covering technologies they themselves do not use as they are not consistent with their corporate plan. Rather hypocritical isnt it?

Still, there is nothing illegal or unethical about a small entity only licensing or selling their inventions. In fact, the traditional approach for many if not most independent inventors is to solely license or sell the rights to their invention. This is because most inventors, while they may be quite creative and even have genius in their field, are not always so adept at business, such as marketing or manufacturing, or simply lack the money. Inventors frequently find they are better off leaving the business end of it to someone else. Then again, some just love inventing and don't want to be bothered with the business end of it so that their time is fully focused on invention, not on business. Edison himself, one of the world's most prolific inventors, most often sold or licensed his patents to others that they might commercialize his inventions. No one derided him as a "patent troll". Many times when he attempted to manufacture and/or market his products himself he struggled with profitability. Therefore, the argument by large multinationals and other parties that there is something wrong with inventors solely selling or licensing their inventions is mere dissembling or only signals a lack of understanding in invention and inventors. So they should stop this childish name calling.

Sadly, some legislators and other parties have been duped by these slick firms and their well greased lawyers, lobbyists (some disguised as trade or public interest groups), and stealth PR firms. Don't be surprised to find the Washington lobbyist scandal spreading into the patent deform proceedings.

All this talk of "patent trolls" is then but a red herring fabricated by a handful of large tech firms as a diversion away from the real issue...that they have no valid defense against charges they are using other parties' technologies without permission. The objective of these large firms is not to fix the patent system, but to destroy it or pervert it so only they may obtain and defend patents; to make it a sport of kings. Patents are a threat against their market dominance. They would rather use their size alone to secure their market position. Patents of others, especially small entities, jeopardize that. For example, the proposed change to eliminate the use of injunctions would only further encourage blatant infringement. Any large company would merely force you to make them take a license. They would have little to lose. Everything would be litigated to death -if a small entity can come up with the cash to pursue. That's what these large multinationals are betting against. This legislation in regressive, not progressive.

Actually, even the present threat of injunction is not sufficient to deter would be infringers. Just look at the Blackberry case. RIM had to have known they were infringing or likely so and yet they still held out to the bitter end. They took the nuclear option and guess what...they got nuked. If anything, we need harsher penalties to force large aggressive firms into thinking twice before thumbing their nose at small patent holders. I recently noticed one country is considering jail time for infringers. That sounds like a great solution to me. "Don't bother to pack boys, we've got your suits all ready...pinstripes!"

The problem is that companies who are using your technology aren't so genteel as to stop using it merely because you politely ask them to do so. Invention is rough and tumble. The fact is, a patent is merely a right to sue someone to not make your invention without permission. Unless you have the will and money to sue them, they will turn a deaf ear. Unless you have a good patent, you will not get the money. It's sad, but it's the reality of business. All this talk about patentees gaming the system with bad patents is then a hoax. Why do these detractors never identify these supposed bad patents? Surely if they exist they can be identified?

If anyone is gaming the system, it is large multinationals. After losing in court they coerce the Patent Office into conducting a reexamination on the patents they have been found guilty of infringing. That is pure abuse of process!

The fact is, there is no systematic abuse of the patent system by patentees which would require an overhaul of the system. To the contrary, there is a reason why the patent system works the way it does. We didn't get here by accident. That's because of past abuse of the system by large companies who used their wealth to give inventors the run around and make a sham of the system. Take a look at the RCA/Armstrong case of years ago on FM radio. RCA ruined Armstrong with a legion of attorneys. They so destroyed Armstrong and made a mockery of the patent system that he committed suicide. Check out Tom Lewis's "Empire of the Air", chapter 10, p313 and p356. Part of RCA's outrageous conduct was to string Armstrong along making him think they were interested in his invention only to copy his work and file patent applications of their own. Later they then entered into an interference against him at the patent office -a fraudulent act. RCA committed similar abuses of the patent system against electronic television inventor Philo Farnsworth. See "The Boy Who Invented Television" by Paul Schatzkin.

As to the quality of patents; based on court rulings of the last several years, roughly half of all litigated patents are upheld in court. That's pretty balanced and suggests there is no problem with patent quality. Further, seldom do cases ever make it to trial as the parties settle out of court. The facts do not support the contention that there is a patent quality issue. Still, with almost half a million patent applications filed each year a few are bound to be issued that shouldn't. However, rarely are they ever an issue because you can't enforce them without money and you wont get the money unless you have a good patent. Keep in mind it costs the patent holder about as much in a patent suit as it does the accused infringer. Investors are not stupid. If they don't have confidence in your patent, they will not invest. It's that simple. Bad patents do not get funded.

If there is a problem with the patent system, it is not that patents are issued too hastily but rather that many are issued too slowly. Witness the current backlog and pendency. I for example have applications with a pendency of 15 years! In one instance it took 3 years just to get a first office action. With this kind of pendency by the time an inventor gets their patent their technology is of no value. That is the problem everyone should be focused on -not this imaginary issue of patent quality trumped up and propped up by large multinationals as a way to stifle innovation and further cement their market control. Can you say "monopoly"?

Further, certain large multinationals speak of the need for harmonization. Why is that necessary? If others are backward would we want to modify our system just to match theirs? When one looks at the efficacy of patent systems throughout the world the US patent system has produced far more innovation than those of other countries over the last several decades. If anything, other countries should be changing their systems to get inline with ours. Rather what's going on is these large multinationals and those they have duped are using specious arguments to get what will benefit them personally. The rest of the country be damned.

Ours is a finely tuned patent system developed over 200 years which has led to US dominance in technology. We had better think carefully and move cautiously lest we create more problems than we solve and reap unintended and unforseen consequences.

All this is then not about present abuse of the system by inventors or a need for patent reform, but rather systematic past and present abuses by large companies. Witness the present conduct of firms like RIM in using the courts to drag out a final verdict. The judge in that case remarked about how delays frustrate justice. Also, look at the exploitations and predations of Medtronic.

Even worse; not only is there no need for reform, but the proposed changes will actually damage our functional system.

When corporate America agrees to not use our inventions without consent, American inventors and small entities will agree to stop suing them.

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Re: by DanC on Mar 21st, 2008 @ 8:55am

Just look at the Blackberry case. RIM had to have known they were infringing or likely so and yet they still held out to the bitter end.

I love the illogical conclusion you draw here. Here's reality: RIM held on to the end precisely because they didn't believe themselves to be infringing on NTP's patents. They obviously had a very good reason for believing this, as all five of NTP's patents were issued rejections by the USPTO.

If there is a problem with the patent system, it is not that patents are issued too hastily but rather that many are issued too slowly

As previously discussed, the real problem is patent quality. Speeding up the patent process at this point would only serve to aggravate the current problems with the patent system.

Can you say "monopoly"

Sure. A patent is a temporary monopoly, which you obviously support, so why you're trying to use the term "monopoly" in a negative light is confusing.

If anything, other countries should be changing their systems to get inline with ours.

Which is what the U.S. is unfortunately trying to do through international trade treaties. Why other countries should be forced to bend to U.S. IP laws is beyond me. Luckily, some countries are standing up to us, like Israel. If another country tried to do this kind of thing to the U.S., they'd be ignored or rebuked for attempting to encroach on sovereignty.

The judge in that case remarked about how delays frustrate justice.

That would be the judge who refused to wait for the patent office to review NTP's patents. Since each patent was rejected by the patent office during examination, that doesn't exactly sound like justice was served. The 'delays frustrate justice' complaint is a weak argument typically put forth by those who don't want to allow the defendant the time to properly defend themselves.

Even worse; not only is there no need for reform, but the proposed changes will actually damage our functional system.

Saying that there is no need for reform is an exercise in ignorance. There's obviously a problem; both large and small companies (and everyone's favorite 'little guy' inventors) are filing broadly worded patents. This leads to frivolous lawsuits where the outcome seems to rely more on where the case was filed than on the strength of the case.

but rather systematic past and present abuses by large companies.

Abuse happens on both sides of the fence. This isn't a 'david vs. goliath' problem where the evil, corrupt 'big guys' are infringing on the poor, innocent 'little guys' rights. You don't have to be a big, successful company to abuse the patent system, so please stop spreading this myth that big corporations are responsible for the current state of the patent system.

(reply to this comment) (link to this comment)
Re: by Mike on Mar 21st, 2008 @ 9:35am

According to some a patent troll is a firm who licenses patents they do not themselves commercialize. Yet many of the large firms who are most critical of the practice do it themselves. Out licensing is now an important profit center of most every firm. Often, as a result they end up licensing out patents covering technologies they themselves do not use as they are not consistent with their corporate plan. Rather hypocritical isnt it?

Um. stv, you are the first person to mention patent trolls on this page. It's not about patent trolls at all. It's about patents.

And when big companies act in the same way, abusing the patent system, we're just as quick to point it out. So I don't think the distinction matters. The only one making it here is you.

Still, there is nothing illegal or unethical about a small entity only licensing or selling their inventions. In fact, the traditional approach for many if not most independent inventors is to solely license or sell the rights to their invention. This is because most inventors, while they may be quite creative and even have genius in their field, are not always so adept at business, such as marketing or manufacturing, or simply lack the money.

This is why we have wonderful capital markets that can help fund a business. That doesn't require licensing.

Edison himself, one of the world's most prolific inventors, most often sold or licensed his patents to others that they might commercialize his inventions.

This is a rewriting of history. Edison was not much of an inventor, but was a prolific marketer. We were just discussing this the other day:

http://www.techdirt.com/articles/20061219/014818.shtml

So, you got that story backwards. Edison took the ideas of others, and was a successful marketer. Part of that marketing was to convince others that he was the inventor when he was not.

And, trust me, while the term patent troll wasn't in existence in his time, people RAILED against Edison for his abuse of the patent system. The whole reason Hollywood is in Hollywood was to avoid Edison's overbearing use of patents.

Sadly, some legislators and other parties have been duped by these slick firms and their well greased lawyers, lobbyists (some disguised as trade or public interest groups), and stealth PR firms. Don't be surprised to find the Washington lobbyist scandal spreading into the patent deform proceedings.

Again, as I have pointed out, I don't like the patent reform bill that's up for vote either.

You seem to be setting up red herrings. You claim we're talking about patent trolls. WE are not. You claim we're supporting patent reform as written. We are not.

All this talk of "patent trolls" is then but a red herring fabricated by a handful of large tech firms as a diversion away from the real issue..

Actually, we've pointed to the evidence showing that patent infringement cases from non practicing entities has become a huge burden on the system.... but, I see you don't like to deal in facts.

For example, the proposed change to eliminate the use of injunctions would only further encourage blatant infringement. Any large company would merely force you to make them take a license. They would have little to lose.

This is also factually incorrect. There is no attempt to ELIMINATE the use of injunctions. It merely gives the judge discretion in determining if an injuntion is appropriate.

Do you always make stuff up?

Everything would be litigated to death -if a small entity can come up with the cash to pursue.

Actually, as you see, what's happening now is the threat of injunctions on minor parts of a larger invention is leading to the opposite problem. Many companies are simply paying up to avoid having to go to court, even if no infringement takes place. This has resulted in MORE bogus patetns being file and MORE bogus patent lawsuits being filed.

It's taking money AWAY from actual R&D and giving it to lawyers and bogus patent holders. That is dangerous and hugely damaging to our economy.

RIM had to have known they were infringing or likely so and yet they still held out to the bitter end.

You're talking about the NTP patents that the USPTO rejected? You're talking about the NTP patents that were so broadly written as to cover "wireless email." Once again, rewriting history...

RIM fought to the end because it believed (correctly, according to the USPTO) that those patents were invalid, and that if it didn't fight, it would lead to more baseless infringement lawsuits (again, correctly).

If anything, we need harsher penalties to force large aggressive firms into thinking twice before thumbing their nose at small patent holders.

Even for patents that are shown to be invalid?

Unless you have a good patent, you will not get the money. It's sad, but it's the reality of business.

So you ADMIT that bad patent holders deserve to get money?

Why do these detractors never identify these supposed bad patents? Surely if they exist they can be identified?

We point them out all the time. There's a thing call a search engine. Use it and you'll find a long list of bad patents.

If anyone is gaming the system, it is large multinationals. After losing in court they coerce the Patent Office into conducting a reexamination on the patents they have been found guilty of infringing. That is pure abuse of process!

As we just pointed out the other day, over 75% of reexams result in reducing the number of claims approved. In other words, those reexams ACCURATELY are showing problems in the patent approval process. How is that abuse?

Clearly, the USPTO is not doing a good job the first time around, which even they admit. Why do you not?

Further, seldom do cases ever make it to trial as the parties settle out of court.

That evidence does not support your position. The reason parties settle out of court is that it is often cheaper to do so than to fight a bad patent in court. And, that only encourages more bogus patent infringement lawsuits.

Bad patents do not get funded.

You are apparently unaware of companies like Acacia and GPH?

Further, certain large multinationals speak of the need for harmonization. Why is that necessary?

Clearly you do not read what I wrote. I agree with you. I am no fan of harmonization. Again you incorrectly seem to think I am arguing in favor of the patent reform before Congress.

I am not. I think it will make many things worse. Just for different reasons than you. But that's because I am not rewriting history, as you are, and I have looked at the actual research and numbers, which you clearly have not.

Ours is a finely tuned patent system developed over 200 years which has led to US dominance in technology. We had better think carefully and move cautiously lest we create more problems than we solve and reap unintended and unforseen consequences.

And this shows you clearly do not know what you are talking about. In the last 60 years, we have made a large number of hasty changes to the patent system, most of which have had unintended and unforeseen consequences that have made things worse. To claim that the system is finely tuned over 200 years shows an ignorance of the recent history of the patent system.

All this is then not about present abuse of the system by inventors or a need for patent reform, but rather systematic past and present abuses by large companies. Witness the present conduct of firms like RIM in using the courts to drag out a final verdict. The judge in that case remarked about how delays frustrate justice. Also, look at the exploitations and predations of Medtronic.

Again, you seem to think that we're siding with large companies over small. We are not. We have equally trashed both RIM and Medtronic for their abuses of the patent system as well.

When corporate America agrees to not use our inventions without consent, American inventors and small entities will agree to stop suing them.

And when the patent system has been shown to actually encourage innovation, rather than stifle it, then we will stop complaining about it.

(reply to this comment) (link to this comment)
kidding us ? by angry dude on Mar 21st, 2008 @ 10:30am

"And when the patent system has been shown to actually encourage innovation, rather than stifle it, then we will stop complaining about it."

Ha ?
You'll stop complaining about patents when your corporate daddies stop sponsoring your shitty blog

(reply to this comment) (link to this comment)
Re: kidding us ? by Mike on Mar 21st, 2008 @ 11:25am

Angry dude,

I have asked you repeatedly to back up your statements. You cannot, because they are lies.

There is not a single company we work with who supports changing the patent system the way we propose. For you to suggest otherwise is an outright lie. Furthermore, we do no public advocacy work. We help companies understand trends -- we do not promote anything.

I ask you, once again, to retract your lies.

So, we have no "corporate daddy's" sponsoring this blog, and yet we still keep writing about patents. You are easily shown to be wrong.

Please retract your lies.

And, while you're at it, learn how to craft an actual argument.

(reply to this comment) (link to this comment)
Once again you've missed the point by mjr1007 on Mar 21st, 2008 @ 1:00pm

This really does get tedious and tiresome.

All discussion about patents in the US should start with Article I Section VIII clause 8 of the US Constitution.

To promote the progress of science and useful arts, by securing for limited times to authors and inventors the exclusive right to their respective writings and discoveries;

Nowhere is the word market mentioned. Not competing in the market not letting the market decide.

Nowhere is the word products mentioned.

Nowhere is corporate profits mentioned.

Yet somehow these topics come up over and over again. It really does seem rather pointless. Unless you are proposing a constitutional amendment then try staying within the law.

There was a great article a few months back about a CEO of a tech company saying that unless you can figure out a way to monetize an advancement then all you really have is an expense.

The point here is that corporations are only interested in one thing, profits. Ever here the term fiduciary responsibility? Image the CEO of any tech company going to the board and saying "we lost our shirts this quarter but we put out some great technology". It would never happen.

Look at big Pharm. Supposedly they spend more on advertising then research. With all the ED drugs being advertised during sporting events I wouldn't doubt it. Besides exactly how many different blockbuster ED drugs do we really need.

Also is it really necessary to thing drugs are the only way to get health. Anyone hear of diet, exercise and a good nights sleep?

Mike, it seems to have gotten cause and effect back asswards. Patents don't cause companies to suddenly stop being innovative it merely gives them a tool to do what they always wanted to do anyway. Companies use their patents to eliminate competition and ignore them when they don't hold them. Recently Intel got sued for just that. There is also the case of the intermittent windshield wipers. That inventor, who by all accounts really did come up with a great idea spent the rest of his life suing the automakers rather then continuing to invent great new things.

As far a competition is concerned it's the sort of thing that companies hate. They want to dominate their markets not compete in them. This leads to all the anticompetitive behavior you always hear about.

Adam Smith of "Wealth of Nations" fame correctly point out "Monopoly is the enemy of good management".

I think we can all agree we need to encourage the developments in the useful arts and sciences, the question is what is the best way?

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Re: Once again you've missed the point by Mike on Mar 22nd, 2008 @ 9:29am

All discussion about patents in the US should start with Article I Section VIII clause 8 of the US Constitution.

Um, mjr1007, this conversation DID start with that. Did you not read the first post in this series:

http://www.techdirt.com/articles/20080220/020252302.shtml

Nowhere is the word market mentioned. Not competing in the market not letting the market decide.

Nowhere is the word products mentioned.

Nowhere is corporate profits mentioned.

Nor have I said they were. However, what you are missing is that it very clearly says "TO PROMOTE THE PROGRESS..."

If patents are NOT promoting the progress, then they clearly do not fall under this clause of the Constitution. What I am showing is the evidence that they do not Promote The Progress, and thus, are unconstitutional. And to do that, you show how they do not help a market grow, they hurt competition and they generally slow down innovation.

Yet somehow these topics come up over and over again. It really does seem rather pointless. Unless you are proposing a constitutional amendment then try staying within the law.

Nope. We're very much correct within the terms of the constitution as is.

The point here is that corporations are only interested in one thing, profits. Ever here the term fiduciary responsibility? Image the CEO of any tech company going to the board and saying "we lost our shirts this quarter but we put out some great technology". It would never happen.

Again, you seem to be confused. Did you even read the research I pointed to? The evidence suggests that companies DO NOT make bigger profits thanks to patents. They make a smaller profit. Why? Because the market develops much more slowly. So the whole POINT is that these things align. You can promote progress and you can do away with most patents, and you still get progress and profits.

Look at big Pharm. Supposedly they spend more on advertising then research. With all the ED drugs being advertised during sporting events I wouldn't doubt it. Besides exactly how many different blockbuster ED drugs do we really need.

Also is it really necessary to thing drugs are the only way to get health. Anyone hear of diet, exercise and a good nights sleep?

You seem to be arguing my point here. But I'd argue differently at the end. It's not just about diet, exercise and sleep. It's about realizing that pharma is quite inaccurate, and newer technologies can be much more effective.

Mike, it seems to have gotten cause and effect back asswards. Patents don't cause companies to suddenly stop being innovative it merely gives them a tool to do what they always wanted to do anyway. Companies use their patents to eliminate competition and ignore them when they don't hold them.

What's backwards about that? That's basically what I said patents do.

Adam Smith of "Wealth of Nations" fame correctly point out "Monopoly is the enemy of good management".

Again, you're agreeing with me.

I think we can all agree we need to encourage the developments in the useful arts and sciences, the question is what is the best way?

Well, from the historical evidence, making it much more difficult to get patents seems to have been effective...

(reply to this comment) (link to this comment)
Re: Re: Once again you've missed the point by mjr1007 on Mar 22nd, 2008 @ 12:55pm

mjr1007 wrote:
All discussion about patents in the US should start with Article I Section VIII clause 8 of the US Constitution.

Mike responded
Um, mjr1007, this conversation DID start with that. Did you not read the first post in this series:

http://www.techdirt.com/articles/20080220/020252302.shtml

mjr1007 responded
Seems like you are living up to the title (missing the point). The intent was to list the clause at the beginning of every post, not just at the beginning of a series of post. It also seems odd that in you editing you once again left out the actual content. Don't worry Mike it's not copyrighted.

To promote the progress of science and useful arts, by securing for limited times to authors and inventors the exclusive right to their respective writings and discoveries;

mjr1007 wrote:
Nowhere is the word market mentioned. Not competing in the market not letting the market decide.

Nowhere is the word products mentioned.

Nowhere is corporate profits mentioned.

Mike responded
Nor have I said they were. However, what you are missing is that it very clearly says "TO PROMOTE THE PROGRESS..."

If patents are NOT promoting the progress, then they clearly do not fall under this clause of the Constitution. What I am showing is the evidence that they do not Promote The Progress, and thus, are unconstitutional. And to do that, you show how they do not help a market grow, they hurt competition and they generally slow down innovation.

mjr1007 responded
This right here, what you just say is EXACTLY what I'm writing about. In case anyone missed it I will copy and paste it on a separate line.

Mike wrote:
"And to do that, you show how they do not help a market grow"

You've just conflated progress with market growth. They are not the same thing stop writing as if they are!!!!

On a personal note I would like to thank you for proving my point better then I ever could. Now back to the bickering. 8-)

mjr1007 wrote:
Yet somehow these topics come up over and over again. It really does seem rather pointless. Unless you are proposing a constitutional amendment then try staying within the law.

Mike responded:
Nope. We're very much correct within the terms of the constitution as is.

mjr1007 responded:
Not if you keep talking about markets instead of progress. Progress in the useful arts and science would be new discoveries and new technology, not new markets or products.

mjr1007 wrote:
The point here is that corporations are only interested in one thing, profits. Ever hear the term fiduciary responsibility? Image the CEO of any tech company going to the board and saying "we lost our shirts this quarter but we put out some great technology". It would never happen.

Mike responded
Again, you seem to be confused. Did you even read the research I pointed to? The evidence suggests that companies DO NOT make bigger profits thanks to patents. They make a smaller profit. Why? Because the market develops much more slowly. So the whole POINT is that these things align. You can promote progress and you can do away with most patents, and you still get progress and profits.

mjr1007 responded:
Mike at the risk of beating a dead horse, yes that is beating and not riding. Beating a dead horse is pointless, riding one would be ghoulish if not impossible.8-) Anyway, you just can't help yourself can you? Markets and profits are not the way to measure progress in the useful arts and sciences discoveries and breakthroughs are. It's does seem nice to have that little old Constitutional quote near by doesn't it. 8-)

mjr1007 wrote:
Look at big Pharm. Supposedly they spend more on advertising then research. With all the ED drugs being advertised during sporting events I wouldn't doubt it. Besides exactly how many different blockbuster ED drugs do we really need.

Also is it really necessary to thing drugs are the only way to get health. Anyone hear of diet, exercise and a good nights sleep?

Mike responded:
You seem to be arguing my point here. But I'd argue differently at the end. It's not just about diet, exercise and sleep. It's about realizing that pharma is quite inaccurate, and newer technologies can be much more effective.

mjr1007 responded.
Once again please refer to the original title of the article. The point I'm actually arguing is that companies are not interested in progress in the useful arts and sciences, only profits. One ED drug is a breakthrough several are just variations of a theme. It would be interesting to see what would happen if the second and third ED drugs didn't get patents. Might stop a lot of this me-too-ism.

mjr1007 wrote:
Mike, it seems to have gotten cause and effect back asswards. Patents don't cause companies to suddenly stop being innovative it merely gives them a tool to do what they always wanted to do anyway. Companies use their patents to eliminate competition and ignore them when they don't hold them.

Mike responded:
What's backwards about that? That's basically what I said patents do.

mjr1007 responded:
The point here is that patents don't do anything, companies do things with patents. Also have you ever written about corporations knowingly infringing real patents or driving innovative companies out of business by monopolistic behavior? If so please, please post the URL to that. If not it seem intellectually dishonest not to talk about abuses on both sides.

mjr1007 wrote
Adam Smith of "Wealth of Nations" fame correctly point out "Monopoly is the enemy of good management".

Mike responded:
Again, you're agreeing with me.

mjr1007 responded:
No, actually I'm agreeing with Adam Smith. The quote has nothing to do with patents.
The problem here is that you believe the only form of IP rights is to grant a monopoly. Probably got that idea from some crazy old document somewhere. 8-)

Oddly enough compulsory licensing, for music anyway, has been around for almost a century. It seems the latest incarnation can be found at:

http://www.law.cornell.edu/uscode/17/usc_sec_17_00000115----000-.html

This first came up in the 1909 copyright law.

There is also an interesting proposal from the EFF at

http://www.eff.org/wp/better-way-forward-voluntary-collective-licensing-music-file-sharing

No w I'm in favor of allowing anyone to license either copyright or patents, trademarks seem very different. I'm a computer geek not a legal geek so I guess I don't really have to understand it, but for the life of me I can't see how they got there from Article I Section VII Clause 8. Be that as it may they did seem to get there. Why not discuss this sort of thing rather then continue to beat that same monopoly. no patent dead horse. There is a world of ideas on how to improve IP law, try exploring them.

Here are some interesting ones.
Companies must submit complete build trees for their software. If they are convicted of anticompetitive behavior they loose their copyright and anyone can build and sell their software.

Pornography is not useful and should not receive copyright protection. This would eliminate the profit motive while maintaining free speech.

(reply to this comment) (link to this comment)
Re: Re: Re: Once again you've missed the point by Mike on Mar 22nd, 2008 @ 2:30pm

The intent was to list the clause at the beginning of every post, not just at the beginning of a series of post. It also seems odd that in you editing you once again left out the actual content. Don't worry Mike it's not copyrighted.

I'm afraid I don't understand what you are saying here. You expect me to repeat the clause with every post? Why would that possibly be necessary? I discussed the clause in the first post of the series and most normal people can remember it.

You've just conflated progress with market growth. They are not the same thing stop writing as if they are!!!!

Well, on this we disagree. I absolutely believe that economic growth and progress are synonymous. I'm curious as to why you would claim otherwise. I can't come up with any argument where economic growth is not considered progress.

Not if you keep talking about markets instead of progress. Progress in the useful arts and science would be new discoveries and new technology, not new markets or products.

Not at all. No way, no how. New discoveries and new technology are not a measure of progress at all. I can make a million new discoveries a day, but if they're useless, and there's no market for them, there's no progress.

Markets and profits are not the way to measure progress in the useful arts and sciences discoveries and breakthroughs are. It's does seem nice to have that little old Constitutional quote near by doesn't it.

Yes, let's go back to that Constitutional quote:

"Promote the progress of Science and the Useful Arts."

To me that's clearly stating anything that causes economic growth. USEFUL arts. This is not about just coming up with something new. It's coming up with something that BETTERS society. That means creating economic growth.

This is rather fundamental stuff.

The point I'm actually arguing is that companies are not interested in progress in the useful arts and sciences, only profits. One ED drug is a breakthrough several are just variations of a theme. It would be interesting to see what would happen if the second and third ED drugs didn't get patents. Might stop a lot of this me-too-ism.

We agree on this. I'm not sure why you think we disagree.

Also have you ever written about corporations knowingly infringing real patents or driving innovative companies out of business by monopolistic behavior? If so please, please post the URL to that. If not it seem intellectually dishonest not to talk about abuses on both sides.

You seem to be confused. The only monopolistic behavior we've seen lately is using patents. Patents are a monopoly. And, yes, they've driven innovative companies out of business by using those monopolies to stop competition.

No, actually I'm agreeing with Adam Smith. The quote has nothing to do with patents.

Again, the monopolies we're talking about are patents. Adam Smith points out that monopolies are bad. i.e., patents are bad.

The problem here is that you believe the only form of IP rights is to grant a monopoly.

Can you point out to me how a patent is not a monopoly?

trademarks seem very different. I'm a computer geek not a legal geek so I guess I don't really have to understand it, but for the life of me I can't see how they got there from Article I Section VII Clause 8.

Trademarks aren't from that clause. Trademarks are a consumer protection issue, and from the Lanham Act.

There is a world of ideas on how to improve IP law, try exploring them.

I have. In great detail. For over a dozen years. And I've discussed many different ideas and pointed to tons of research. Why do you think otherwise?

Companies must submit complete build trees for their software. If they are convicted of anticompetitive behavior they loose their copyright and anyone can build and sell their software.

What possible benefit is that?

Pornography is not useful and should not receive copyright protection. This would eliminate the profit motive while maintaining free speech.

Again, huh? Who are you to determine what kind of speech is useful and what isn't?

I'm afraid I have trouble understanding where you are coming from.

(reply to this comment) (link to this comment)
Re: Re: Re: Re: Once again you've missed the point by MLS on Mar 22nd, 2008 @ 3:56pm

It is difficult to have a cogent discussion on this subject as long as a clear distinction is not drawn between what a patent is and what a copyright is. The arguments seem to wax and wane in a manner that seamlessly combines the two, which only adds to reader confusion.

BTW, copyrights are a creature derived from Article 1, Section 8, Clause 8, and reach all manner of original works of authorship. Personally, I have never seen a poem, which is protected under copyright law, expand the "poem market". To equate "progress" with "economic expansion" seems to fall a bit short as a strong argument with regard to much subject matter protected under copyright law.

A final BTW, just for the sake of accuracy, trademarks are protectable at both the state and federal level, with the authority for federal protection falling under what is known as the "Commerce Clause".

(reply to this comment) (link to this comment)
Re: Re: Re: Re: Once again you've missed the point by mjr1007 on Mar 22nd, 2008 @ 4:08pm

mjr1007 wrote:
The intent was to list the clause at the beginning of every post, not just at the beginning of a series of post. It also seems odd that in you editing you once again left out the actual content. Don't worry Mike it's not copyrighted.

Mike replied:
I'm afraid I don't understand what you are saying here. You expect me to repeat the clause with every post? Why would that possibly be necessary? I discussed the clause in the first post of the series and most normal people can remember it.

mjr1007 replied:
Actually you seem to grasp the concept just fine. You just don't seem inclined to follow the suggestion. Might be because it would make it more difficult for you to stray from it.

mjr1007 wrote:
You've just conflated progress with market growth. They are not the same thing stop writing as if they are!!!!

Mike resplied:
Well, on this we disagree. I absolutely believe that economic growth and progress are synonymous. I'm curious as to why you would claim otherwise. I can't come up with any argument where economic growth is not considered progress.

mjr1007 replied:
Good rhetoric but faulty reasoning. It the old all birds are not cardinals fallacy. All cardinals are birds but not all birds are cardinals. Here it would be all growth is progress but not all progress is growth. But once again you have added words that were not in the constitution. It says progress in the useful arts and sciences. No mention of economics, either growth or progress.

mjr1007 wrote:
Not if you keep talking about markets instead of progress. Progress in the useful arts and science would be new discoveries and new technology, not new markets or products.

Mike replied:
Not at all. No way, no how. New discoveries and new technology are not a measure of progress at all. I can make a million new discoveries a day, but if they're useless, and there's no market for them, there's no progress.

mjr1007 replied:
Ok then, what your saying is that despite the fact that there is no mention of economics or market or profits in the clause that's how we should interpret it? Could you please give some reason for this? This is actually fundamental to your argument and just doesn't seem to be supported by the clause.

mjr1007 wrote:
Markets and profits are not the way to measure progress in the useful arts and sciences discoveries and breakthroughs are. It's does seem nice to have that little old Constitutional quote near by doesn't it.

Mike replied
Yes, let's go back to that Constitutional quote:

"Promote the progress of Science and the Useful Arts."

To me that's clearly stating anything that causes economic growth. USEFUL arts. This is not about just coming up with something new. It's coming up with something that BETTERS society. That means creating economic growth.

This is rather fundamental stuff.

mjr1007 replied
Fundamentally wrong. What may be clear to you is completely wrong to me. It seems that originally the useful part was to prevent people from trying to patent laws of nature and such, not some side reference to economics. Besides it is modifying what is to patentable not how to judge the effects of patents. All of this really seems not to be supported in the clause itself.

mjr1007 wrote
The point I'm actually arguing is that companies are not interested in progress in the useful arts and sciences, only profits. One ED drug is a breakthrough several are just variations of a theme. It would be interesting to see what would happen if the second and third ED drugs didn't get patents. Might stop a lot of this me-too-ism.

Mike replied:
We agree on this. I'm not sure why you think we disagree.

mjr1007 replied.
Your editing here is misleading. You originally stated that companies make bigger profits without patents. Which was irrelevant to the point, which is companies are not interested in progress, only profits. I'm glad you agree with this point but it certainly wasn't what you posted.

mjr1007 wrote:
Also have you ever written about corporations knowingly infringing real patents or driving innovative companies out of business by monopolistic behavior? If so please, please post the URL to that. If not it seem intellectually dishonest not to talk about abuses on both sides.

Mike replied:
You seem to be confused. The only monopolistic behavior we've seen lately is using patents. Patents are a monopoly. And, yes, they've driven innovative companies out of business by using those monopolies to stop competition.

mjr1007 replied:
Thanks but I'm not confused. I didn't only say monopolistic behavior I also said infringing on patents. It's the same rhetoric device you used earlier. All monopolistic behavior is abusive but not all abusive behavior is monopolistic. But there was some monopolistic behavior by MS against Netscape which wasn't patent inspired. Or did this happen is some alternate reality.

mjr1007 wrote:
No, actually I'm agreeing with Adam Smith. The quote has nothing to do with patents.

Mike resplied:
Again, the monopolies we're talking about are patents. Adam Smith points out that monopolies are bad. i.e., patents are bad.

mjr1007 replied:
You really seem to like that rhetorical device. All patents are monopolies but not all monopolies are patents. Which was the point I was trying to make. There are other types of monopolies as well. I was merely pointing out that I was agreeing with Smith in the broader sense.

mjr1007 wrote:
The problem here is that you believe the only form of IP rights is to grant a monopoly.

Mike responded.
Can you point out to me how a patent is not a monopoly?

mjr1007 replied:
Actually I already did, but somehow it was edited out in your response. Funny how that seems to happen. Did you not understand the part about compulsory licensing? You own the IP but must let others use it for a fee. Maybe it's just me but I'm thinking once you are forced to license it to others the whole monopoly thing just doesn't seem to fit. Or do you have some argument which states that when lots of people can offer products based on the same IP it's still a monopoly. Gee what are the chances this little bit will make it into your next selective edits. Probably a little better now that I pointed it out.

mjr1007's comments were taken out of context:
trademarks seem very different. I'm a computer geek not a legal geek so I guess I don't really have to understand it, but for the life of me I can't see how they got there from Article I Section VII Clause 8.

Mike replied:
Trademarks aren't from that clause. Trademarks are a consumer protection issue, and from the Lanham Act.

mjr1007 replied:
The original context was talking about extending compulsory licensing to patents. Trademarks where thrown in for completeness. To summarize the big 3 of IP copyright and patents yes on compulsory licensing, trademarks no.

Probably should have started a new paragraph after that. The whole point was I can't see how they got to compulsory licensing of copyrights. Even though it's a good ideas I'm not sure why it doesn't conflict with the Constitution.

These were two separate ideas not sure how you managed to conflate them.

mjr1007 wrote:
There is a world of ideas on how to improve IP law, try exploring them.

Mike replied:
I have. In great detail. For over a dozen years. And I've discussed many different ideas and pointed to tons of research. Why do you think otherwise?

mjr1007 replied:
Because all of you post seem to have this very narrow focus and sameness about them. Which is probably why the troll started off with riding a dead horse post.

mjr1007 wrote:
Companies must submit complete build trees for their software. If they are convicted of anticompetitive behavior they loose their copyright and anyone can build and sell their software.

Mike replied:
What possible benefit is that?

mjr1007 replied:
I just find it rather ironic that a legal monopoly would be voided for illegal monopolistic behavior. I think it's called thinking outside the box, try it some time, you might like it.

mjr1007 wrote:
Pornography is not useful and should not receive copyright protection. This would eliminate the profit motive while maintaining free speech.

Mike replied:
Again, huh? Who are you to determine what kind of speech is useful and what isn't?

I'm afraid I have trouble understanding where you are coming from.

mjr1007 replied:
Mike I never said I would determine that it's something the courts would have to decide. It was posed as an interesting idea, just thinking outside the box again. It has the benefit of allowing all speech but not allowing commercial speech offensive to the community to have commercial protections.

I'm also afraid you are having trouble understanding where I'm coming from.

Just looking for an honest and intelligent discussion of the ideas.

Hope that helps

(reply to this comment) (link to this comment)
Re: Re: Re: Re: Re: Once again you've missed the p by Mike on Mar 23rd, 2008 @ 10:44am

BTW, copyrights are a creature derived from Article 1, Section 8, Clause 8, and reach all manner of original works of authorship. Personally, I have never seen a poem, which is protected under copyright law, expand the "poem market". To equate "progress" with "economic expansion" seems to fall a bit short as a strong argument with regard to much subject matter protected under copyright law.

Really? I would think that every new poem expands the poem market? Why do you not think so?

(reply to this comment) (link to this comment)
Re: Re: Re: Re: Re: Once again you've missed the p by Mike on Mar 23rd, 2008 @ 11:08am

Actually you seem to grasp the concept just fine. You just don't seem inclined to follow the suggestion. Might be because it would make it more difficult for you to stray from it.

Ok. So you actually did think I needed to include it in each post. Well, when you run Techdirt, you can decide what goes in each post. Until then, you don't.

I tend to think my readers are smart enough to either know the clause or go back and read it again.

I tend to think that they would be both annoyed and insulted if I started each and every post with it.

You, clearly, feel differently. Luckily, you can start your own blog, and we'll see who does better.

Here it would be all growth is progress but not all progress is growth. But once again you have added words that were not in the constitution. It says progress in the useful arts and sciences. No mention of economics, either growth or progress.

Nor does it say, as you claimed, "new discoveries and new technology" so I'm afraid that you are equally as incorrect.

It all depends on how you define promoting the progress of the sciences and useful arts. To me, that's clearly an economic phrase. To you, it's not. We can argue this all day, but in the end, I'm pretty sure I win. Why? Because the point of the document was to help provide a path for the advancement of society. And you do that through economic growth. Without economic growth there is no progress.

Ok then, what your saying is that despite the fact that there is no mention of economics or market or profits in the clause that's how we should interpret it? Could you please give some reason for this? This is actually fundamental to your argument and just doesn't seem to be supported by the clause.

I repeat my statement above. You claim that it's new discoveries and new technologies, despite NO support for that in the clause. Yet, if you look at the history and the discussion between Jefferson and Madison, you see they were VERY MUCH concerned with economic growth (even if that phrase wasn't known or thought about, it was the concept they discussed).

Progress is economic growth. I don't see how you have progress without economic growth.

It seems that originally the useful part was to prevent people from trying to patent laws of nature and such, not some side reference to economics. Besides it is modifying what is to patentable not how to judge the effects of patents. All of this really seems not to be supported in the clause itself.

Clearly, we interpret the clause differently. I see no possible way to read the clause the way you have.

Nowhere do they say or reference anything about patenting the laws of nature. Nowhere is that even implied. Yet, what they do imply, quite frequently, is the question of economic growth. I'm sorry. You are simply incorrect.

You originally stated that companies make bigger profits without patents. Which was irrelevant to the point, which is companies are not interested in progress, only profits.

But if profits and progress are tied together, it does matter very much.

I didn't only say monopolistic behavior I also said infringing on patents. It's the same rhetoric device you used earlier. All monopolistic behavior is abusive but not all abusive behavior is monopolistic.

I agree. I didn't say otherwise. There is monopolistic behavior that is not about patents. But I was asking for an example, because the only things we had discussed to date that involved monopolies was patents.

You are saying that infringing on a patent is monopolistic? How do you figure? It would seem to me that infringing on a patent is the opposite of monopolistic behavior, because it adds a competitor against a monopoly.

But there was some monopolistic behavior by MS against Netscape which wasn't patent inspired.

Well, again this is a point of debate, but when you look at the details I do not believe MS's behavior against Netscape was monopolistic. I believe that there was a combination of competition and some incredibly dumb mgmt moves on the part of Netscape. It wasn't MS's "monopoly" that did in Netscape. It was its own mgmt not understanding the marketplace. Microsoft just did a better job competing.

There are other types of monopolies as well. I was merely pointing out that I was agreeing with Smith in the broader sense.

If so, then why are you in favor of patent monopolies? If you support Adam Smith, I can't see how you also favor patents.

Did you not understand the part about compulsory licensing? You own the IP but must let others use it for a fee. Maybe it's just me but I'm thinking once you are forced to license it to others the whole monopoly thing just doesn't seem to fit.

Not at all. That's still very much a monopoly, because the only one who can sell that particular product is you, by law. That's a gov't granted monopoly. Whether the price is compulsory or not makes no difference to the fundamental monopoly.

Or do you have some argument which states that when lots of people can offer products based on the same IP it's still a monopoly. Gee what are the chances this little bit will make it into your next selective edits.

There is still a monopoly on the original piece, because all payments need to go back to that original creator. All of those payments are a deadweight loss to society. Look at your basic economic supply and demand curve. Because the price is higher than the point at which supply = demand (in this case, at a price of $0), there are monopoly rents being charged here. In the most basic economic sense, there is a huge monopoly problem here.

The original context was talking about extending compulsory licensing to patents. Trademarks where thrown in for completeness. To summarize the big 3 of IP copyright and patents yes on compulsory licensing, trademarks no.

As I said, it's unfair to link trademark to the other two. They are completely different animals, and it makes no sense to bring trademarks into the discussion.

Probably should have started a new paragraph after that. The whole point was I can't see how they got to compulsory licensing of copyrights. Even though it's a good ideas I'm not sure why it doesn't conflict with the Constitution.

You can read up on the history of compulsory licensing if you want. There's plenty of info out there...

I just find it rather ironic

Why Do Patents Tend To Cause More Harm Than Good?

from the monopoly-economics dept

Reader Comments (rss)

by Anonymous Coward on Mar 20th, 2008 @ 12:50pm

Mikey's riding a dead horse, AGAIN ! by angry dude on Mar 20th, 2008 @ 12:56pm

Perfect Example by Killer_Tofu on Mar 20th, 2008 @ 1:01pm

Pharma disagrees by Jonah on Mar 20th, 2008 @ 1:04pm

Re: Mikey's riding a dead horse, AGAIN ! by sonofdot on Mar 20th, 2008 @ 1:06pm

by Anonymous Coward on Mar 20th, 2008 @ 1:10pm

Re: Re: Mikey's riding a dead horse, AGAIN ! by angry dude on Mar 20th, 2008 @ 1:12pm

Re: Pharma disagrees by Jake on Mar 20th, 2008 @ 2:17pm

Re: Re: Re: Mikey's riding a dead horse, AGAIN ! by Anonymous Coward on Mar 20th, 2008 @ 2:18pm

Re: Re: Re: Mikey's riding a dead horse, AGAIN ! by sonofdot on Mar 20th, 2008 @ 2:19pm

The Powerful "Anti Patent Lobby" by Derek Kerton on Mar 20th, 2008 @ 2:34pm

point of order by andy on Mar 20th, 2008 @ 2:45pm

Bogus Research by Willton on Mar 20th, 2008 @ 3:06pm

More Flaws in "Patent Failure" by Willton on Mar 20th, 2008 @ 3:20pm

More Flaws in "Patent Failure" by Willton on Mar 20th, 2008 @ 3:25pm

Re: by Mike on Mar 20th, 2008 @ 3:39pm

Patents by Greg on Mar 20th, 2008 @ 3:41pm

Re: Mikey's riding a dead horse, AGAIN ! by Mike on Mar 20th, 2008 @ 3:46pm

Re: Pharma disagrees by Mike on Mar 20th, 2008 @ 3:52pm

Re: Mikey's riding a dead horse, AGAIN ! by Anonymous Coward on Mar 20th, 2008 @ 3:56pm

Re: Bogus Research by Mike on Mar 20th, 2008 @ 3:57pm

Re: Patents by Mike on Mar 20th, 2008 @ 3:59pm

Re: Bogus Research by Kiba on Mar 20th, 2008 @ 4:09pm

Re: Re: Pharma disagrees by Anonymous Coward on Mar 20th, 2008 @ 5:07pm

Re: Re: Patents by Greg on Mar 20th, 2008 @ 6:16pm

Re: Re: Bogus Research by Greg on Mar 20th, 2008 @ 6:30pm

Re: Re: Re: Patents by Mike on Mar 20th, 2008 @ 6:51pm

Claiming vs. Disclosing by Stephan Kinsella on Mar 20th, 2008 @ 7:10pm

Re: Re: Re: Bogus Research by Kiba on Mar 20th, 2008 @ 7:54pm

Re: Re: Re: Re: Bogus Research by Anonymous Coward on Mar 20th, 2008 @ 7:55pm

Re: Re: Re: Re: Re: Bogus Research by Kiba on Mar 20th, 2008 @ 7:56pm

Re: Claiming vs. Disclosing by angry dude on Mar 20th, 2008 @ 8:33pm

Re: Re: Claiming vs. Disclosing by Anonymous Coward on Mar 21st, 2008 @ 6:03am

by stv on Mar 21st, 2008 @ 7:11am

Re: by DanC on Mar 21st, 2008 @ 8:55am

Re: by Mike on Mar 21st, 2008 @ 9:35am

kidding us ? by angry dude on Mar 21st, 2008 @ 10:30am

Re: kidding us ? by Mike on Mar 21st, 2008 @ 11:25am

Once again you've missed the point by mjr1007 on Mar 21st, 2008 @ 1:00pm

Re: Once again you've missed the point by Mike on Mar 22nd, 2008 @ 9:29am

Re: Re: Once again you've missed the point by mjr1007 on Mar 22nd, 2008 @ 12:55pm

Re: Re: Re: Once again you've missed the point by Mike on Mar 22nd, 2008 @ 2:30pm

Re: Re: Re: Re: Once again you've missed the point by MLS on Mar 22nd, 2008 @ 3:56pm

Re: Re: Re: Re: Once again you've missed the point by mjr1007 on Mar 22nd, 2008 @ 4:08pm

Re: Re: Re: Re: Re: Once again you've missed the p by Mike on Mar 23rd, 2008 @ 10:44am

Re: Re: Re: Re: Re: Once again you've missed the p by Mike on Mar 23rd, 2008 @ 11:08am