In EE Times: Opinion: Engineers should stage a patent strike, I noted an op-ed by Rick Merritt in EETimes, "Opinion: Engineers should stage a patent strike."

A Mr. J. C. Cooper, of Pixel Instruments Corp., replied with a letter to the editor in defense of the patent system. My reply is reprinted below:

***

Mr. Cooper writes:

"Your articles in the April 20 edition of EE Times ["Dealing with Mad Patent Disease"] which portray the U.S. patent system as broken and worse seem terribly biased. I wonder where you are getting your information. Surely you don't have any direct experience with patents, e.g. using a patent to protect a money making invention, or you would be able to formulate a more balanced viewpoint."

I'd like to respectfully disagree with some of Mr. Cooper's contentions. As a preliminary matter, I disagree that only those with a lot of experience in patenting are entitled to have an opinion, or ought to be accused of being "biased" if they dissent on the mainstream viewpoint on IP rights. that said, I am a practicing, registered patent attorney, with BSEE and MSEE degrees. I've represented many clients and obtained hundreds of issued patents over the last 15 or so years.

Mr. Cooper writes,

"The patent system could use some tweaking but it is far from the "mad patent disease" you describe. The U.S. needs a stronger patent system, not weaker .... The only way that innovation, and its industry, can be protected is with intellectual property, i.e. patents. To weaken the patent system at the urging and benefit of a few large multinational corporations (most of which have been found guilty in court of stealing the property of others) runs the risk of destroying that one remaining thriving U.S. industry."

There are a few problematic assumptions and chains of reasoning here. I agree that innovation is good, but Mr. Cooper's assumption that "The only way that innovation, and its industry, can be protected is with intellectual property, i.e. patents" is unwarranted. There are of course other ways--exclusion methods; first-to-market; trade secrets, and so on. And there are other methods discussed extensively in Boldrin and Levine's Against Intellectual Monopoly. No one can seriously argue there would be no innovation without patents. At most, you can argue there is more innovation under a patent system.

But the patent system obviously has costs. So the argument that we need a patent system to encourage more innovation assumes that the value of the extra innovation induced by a patent system is greater than the costs of the patent system. But as I note in my article "There's No Such Thing as a Free Patent" (links below to this and others mentioned here), no one has ever been able to show this. In fact, most studies and analyses I'm aware of conclude that if anything, the cost of the patent system is greater than the value of any extra, marginal innovation stimulated. Some analyses even conclude that there is less innovation overall under a patent sytem, than there would be without one--so that added to the undeniable cost of the patent system is the cost of the lost innovation.

If Mr. Cooper is aware of information no one else seems to have--what is the net value of the patent system (i.e., what is the value of the extra innovation induced by the patent system, minus any lost innovation, minus other costs of the patent system), I and others would love to see this data.

Mr. Cooper implies that those opposed to IP rights are biased, or not "balanced," or are mainly "a few large multinational corporations (most of which have been found guilty in court of stealing the property of others)." But surely individuals and even companies are entitled to their viewpoint. It can easily be argued that those who can profit from the patent monopoly granted to them by the state are also biased, and are willing to argue in favor of the patent monopoly system--that they do not really care whether the system is a net benefit to the economy overall--that they are happy to have it exist so long as they benefit from it, even if this is at the expense of overall innovation and growth. Certainly, the deafening silence of advocates of IP to provide any data that supports their contention that patents indeed spur innovation worth more than the cost of the system, casts suspicion on their sincerity. (And is it really that surprising that patent attorneys are almost uniformly pro-IP rights?)

Mr. Cooper's aside that most of the "large multinational corporations" complaining about patents "have been found guilty in court of stealing the property of others" begs the question of whether IP is, or should be, recognized as a legitimate form of property rights, by calling it "stealing" of "property". The question is whether patterns of information are, or ought to be ownable as property. In my view, not only does the patent system cause overall economic damage in the billions of dollars, but patent and copyright are not legitimate forms of property rights--in fact, patent and copyright are contrary to, and undermine, private property rights. As I argue in my book Against Intellectual Property, a free market relies on private property rights being respected, which means scarce resources are owned by the original homesteader of the property, or that person's descendant in title. But to grant a patent to someone who finds a new way to use their own property, is to grant that person some rights in how other people use their own property--this is redistribution from owners, to outsiders. As an example, if the state granted me the right to prevent Mr. Cooper from using his car to transport passengers--if I had this type of veto right--then I could demand he pay me a royalty for my permission to let him carry passengers. I would be a partial owner of his car--where before, he was the full owner, now he is only a part owner. This would be a type of theft of Mr. Cooper's rights in his car, a transfer from him to me. This is what the patent system does, and it is ethically unjustified and contrary to the sanctity of private property rights.

It is understandable that technology companies take advantage of the state's patent system; they have virtually no choice, if only for defensive reasons. And it is understandable they become used to this model, and cannot imagine how their business model would change if the state did not intervene in the market with IP law. But this does not mean IP law is justified.

For those interested in further reading on this (and for links to some of the sources mentioned above), I recommend:

1. The superb new book Against Intellectual Monopoly, by economists Boldrin and Levine.

2. Jeff Tucker's excellent commentaries on Boldrin and Levine.

3. Some of my material, many on Mises.org. Such as: my little book, Against Intellectual Property, my article "There's No Such Thing as a Free Patent," and my presentation, "Rethinking IP Completely," all available here.

4. Mike Masnick's frequent and excellent anti-IP commentary on Techdirt.

There are many other excellent anti-IP pieces, but this is a good starting point.

Looks like Great Depression II has helped forced the parties to a gargantuan, long-standing patent battle to the negotiating table. From The American Lawyer: Litigation Daily:

Looking back, we knew this day would come. For the last four years, Broadcom and Qualcomm have been litigating against each other with the chess-match strategic intensity of Cold War rivals, as we learned when we spent a few months in the fall of 2007 reporting and writing an American Lawyer cover story on the epic litigation. Trust us, these companies don't like each other. But we knew they couldn't sustain the pace and expense of litigation that literally spanned the globe. Qualcomm, which seemed to get beat up in case after case by Broadcom, simply could not justify paying hundreds of millions of dollars to the likes of Cooley Godward Kronish, DLA Piper, and Cravath, Swaine & Moore.

And so, on Sunday night, the two announced they had reached peace, agreeing to drop all litigation against each other. That's going to leave a gaping hole in the dockets of the International Trade Commission, the federal district court in Santa Ana, Calif., the European Commission, and the Korea Fair Trade Commission. The deal includes a multiyear patent agreement and requires Qualcomm to pay Broadcom $891 million over a four-year period. ... Qualcomm insists that nothing in the Broadcom settlement agreement will affect its highly profitable business model of licensing its technology. "We will be able to continue to operate as in the past," Qualcomm's general counsel, Don Rosenberg, told The San Diego Tribune. "But we're not standing around here thumping our chests."

Rosenberg said cutting legal costs was "clearly a factor" driving settlement talks. According to one estimate, Qualcomm was spending $100 million annually in its fight with Broadcom. ... "It's not unusual in a case like this, as you get near settlement, for there to be negotiated reductions in legal expenses," French said. "It's a natural course. If a company does not get its optimum desired result, needless to say, it is looking for how to minimize its total financial exposure."

Hundreds of millions of dollars down the rathole, and hundreds of millions more to be paid in the future--what a productive use of resources the patent system "stimulates". And to think--some pro-patent types want to foist this system on China -- one patent hawk raves: "The quality of patents issued in China is also improving. Revisions to the patent law that take effect in October strengthen the requirement for a patent's novelty, bringing it up to global standards. Stronger patents are easier to enforce, opening the door to more lawsuits." And that's a good thing? China, do not listen to Americans! on Tax policy, antitrust, or IP!

Following up on David's 'Innovation and Copyright' post below, Christopher Breen explains why the RealNtework DVD case is so important, and why judges unfortunately tend to avoid the big issues in copyright cases.

The March 30, 2009 episode of Free Talk Live discusses this topic (around 00:11:00).

Hat tip to Manuel Lora.

An ars technica post, Study: free markets superior to patent monopolies, reports:

Our economic system is based on the expectation that markets can provide optimal solutions more efficiently than monopolies, with one glaring exception: patents, which are structured in a "winner takes all" manner. A study appearing in today's edition of Science suggests that markets might work here, too.

Now, I know, there are many problems with even evaluating an IP system on utilitarian grounds; but the purported innovation-spurring effects of an IP system are what its advocates usually claim in support of having it. So it's natural to ask: well, where's the proof? Never is it provided. Study after study concludes that an IP system's costs are about equal to, or greater than, any benefits it provides. (See my There's No Such Thing as a Free Patent; What are the Costs of the Patent System?.) So it's no wonder yet another study concludes this.

[Cross-posted at Mises Blog.]

Patent Baristas has a Book Review of the new book Driving Innovation. It's interesting to me that patent lawyers seem to be beginning to begrudgingly acknowledge that the patent system has costs:

"The duality of intellectual property is that it is a source of wealth and a source of an equal and opposite cost. That is, IP brings wealth only through a hidden tax whether on competitors or consumers. So it is with IP rights, they inherently set up a tension between the pharmaceutical company enforcing rights and the patients wanting greater (read: less costly) access to medicine. A technology company wants to build and market a product but is forced to pay licensing fees to a patent holder."

What is bizarre here is the blithe assumption that the costs of IP are "equal and opposite" to its benefits. First, they can never be equal, due to the subjective, ordinal, and interpersonally incomparable nature of value. Second, even if they can be compared, there's no reason to think that they are equal--one is likely to be greater than the other. Third, even if you assume they are equal--then why have an IP system? I mean why even bother, if it all balances out? (See my There's No Such Thing as a Free Patent; What are the Costs of the Patent System?)

But even though they acknowledge the system has costs that might offset or even exceed the purported benefits, do they want to probe into whether IP is legitimate or should exist? No, explicitly not: "This book is not about what the IP should be or how it could be changed but is about how to survive in a global system when IP rights have developed."

Ah well, baby steps.

[Cross-posted at Mises Blog.]

Note from a reader (see also my post Copyrights and Dancing):

Dear Mr. Kinsella,

I have yet to read your book or the Boldrin and Levine book, but just reading your blog posts [e.g. There are No Good Arguments for Intellectual Property; What's Wrong with Theft?] and the discussions they generate has convinced me of your position. It seems to me that the only question worth considering is Are ideas property? If an IP proponent could give a good answer to this question, we could have a good debate. But the replies to your argument seem desperate and incoherent. I'm an amateur choreographer so I know that IP is not necessary for creation. Dancers take movement where ever we can find it. The first person to get a copyright on walking would own the dance community and the world, in fact. The first routine I put together used movement from several other performers. If IP were to apply to dance, all dance communities would die the next day. The dance community is experiencing the wrath of IP regarding music, however. We have had problems with the music that we use. Promoters who videotape our performances are reluctant to sell the DVDs because the artists might sue the promoters if their music is used. YouTube is censoring videos in which it can recognize the music in the background. I find this ridiculous. If I have already paid my $0.99 for your song and created a visual expression of the music, from whence do you get the right to now "own" my expression of your song? I think that my dance experience instilled in me a skepticism about IP, but still I find your intellectual arguments indisputable.

Yours,

[C.E.]

[cross-posted on Mises Blog]

I'm reading a great book, Einstein's Mistakes (google version), by Hans Ohanian. Extremely intelligent physicist and fun writer--very opinionated and spins great narratives of Galileo and Newton as a prelude to discussing Einstein. The book is about all the mistakes Einstein made in his discoveries and papers, how he made his great insights sometimes despite the mistakes, and even sometimes because of them.

Ohanian acknowledges Isaac Newton as "the greatest physicist of all times" and "the greatest genius the world has ever known", albeit a "mad scientist" and "the most awesome and the most aful physicist of all times." I was struck by this fascinating account of Newton's views on credit for scientific discoveries (pp. 62-63):

Newton held the odd notion that whenever he discovered some new result in physics or mathematics, it became his personal property, which he was entitled to keep as a secret for as long as he chose, without any need to publish it to establish his priority. If another scientists later made the same discovery independently and published it first, Newton regarded this as trespass and as theft, and he would indignantly refuse to allow such a scientist any share of the credit. ... In Newton's days, the criterion for credit for a discovery was not yet rigidly established. Claims for unpublished discoveries were sometimes accepted, especially if the scientist had the vociferous support of influential friends and patrons--sometimes the early bird got the worm, and sometimes the squeaky wheel got the grease.

Newton's secretiveness about his discoveries led him into many silly but savage disputes with other scientists about what they knew and when they knew it. Driven by his intense paranoia about his scientific accomplishments, he accused Robert Hooke, Gottfried Leibniz, and other scientists and mathematicians of stealing ideas from him. In his treatment of these scientists he was vicious and vindictive. Hooke was a talented scientist, best known for his investigations with microscopes, but he was a dwarfish man, with a stooped back. When Hooke asked for an acknowledgment that he had anticipated some of Newton's investigations of the colors in sunlight, Newton wrote a sarcastic refusal, in which he made an oblique reference to Hooke's diminutive size: "If I have seen farther, it is by standing on the shoulders of Giants."

The German mathematician and philosopher Leibniz discovered the calculus independently, and, in contrast to Newton, he published his discoveries--by the modern criterion, Leibniz would have had full credit for the calculus and Newton none. But when Leibniz asked a committee of the Royal Society to prepare an impartial report judging his share in the invention of the calculus, Newton not only packed the committee with his cronies, but he also wrote the report himself, and then wrote a favorable anonymous review of the report. In his private journal he gleefully recorded that he had bested Leibniz and "broke his heart."

As can be seen from these remarks, Ohanian is delightfully opinionated. For other examples, see his snarky coments on Aristotle (pp. 39-40), where he says that Aristotle was popular because middle ages scholars confused quantity with quality--he ridicules Aristotle's misconceptions about the animal kingdom, and his assertions about the speed of falling bodies being proportional to their weight, without ever simply dropping two different weight objects from his hands to test out this theory. On p. xii, he acerbically criticizes botched translations of Einstein's German writings; on p. xi, he refers to the mistakes "misguided souls imagine they perceive in [Einstein's] theories of special and general relativity"; on p. 9 and elsewhere he skewers Creationists as adherents of "delusional pseudoscientific theories"; and on p. 59 he refers offhandedly to "the usual eccentricities of Englishmen."

And I love this comment about Galileo: according to Ohanian, "Galileo had a talent for making enemies--as Koestler said, he provoked 'the cold, unrelenting hostility which genius plus arrogance minus humility creates among mediocrities.'" (p. 40)

On tonight's FreeTalkLive (from about 1:06:55 to 1:38:22, again from 1:51:52 and following) the hosts discuss and read Jeff Tucker's entire article Does Innovation Require Property in Ideas? on the air (Tucker's article discusses Boldrin & Levine's Against Intellectual Monopoly). A very lively discussion ensues including--surprise!--a patent lawyer who calls in to meekly support patent law (and also some kind of limits on how much money doctors can spend on marketing... hunh?). (HT to Manuel Lora.)

(Cross-posted on Mises Blog.)

From Joe Schembrie to Jeffrey Tucker to me, a quote from the autobiography of Steve Wozniak, co-founder of Apple Computer and designer of the Apple I and II computers.

"It's funny, I think back on it now -- the Apple II would turn out to be one of the most successful products of all time. But we had no copyrights or patents at all back then. No secrets. We were just showing it to everybody." (p.195)

Do we want people to make products or engage in legal shenanigans? Although who knows...maybe the legal minds invested in patent law would be out running Ponzi games if they weren't so busy figuring out how to steal other people's inventions.