Patent Law: Baby Steps--Update
As noted in my previous post, the case KSR International v. Teleflex was an important patent case pending before the Supreme Court. The question involved whether it should be more difficult to obtain a patent for a claimed invention in a patent application. I was hopeful the Court would decide to narrow or drop the TSM (teaching, suggestion, or motivation) test, wich makes it harder to overturn patents that were too obvious to have been granted. And, today, the Supremes decided, in a unanimous opinion, to do the right thing. (Opinion)
Interesting to me, as I noted before, was that the companies who were on the "right side" of this issue included tech companies such as Intel, Microsoft, Cisco, and GM, worried that liberally granted patents cost them too much to defend; and while while those on the "bad side" included pharmaceutical and biotechnology research-based companies such as GE, Johnson & Johnson, 3M, DuPont, who were worried that tightening up the obviousness standard might damage their patent holdings and make it more difficult to stop generic pharmaceuticals from competing with them.
The end result is that it will now be slightly more difficult to get a patent, and slightly easier to challenge an issued patent in court. A mild improvement in general--and sure to generate more work for patent lawyers, since, although the Court basically expanded the ways in which a patent may be found to be "obvious," the standards for these tests remain very non-objective. The ruling does, perhaps, provide a glimmer of hope for Vonage. As the articled first linked above notes, the new standard "may be good news for Vonage in its appeal of a court's decision that its VoIP service infringes on three Verizon patents. Our analysis of the patents indicates that they, too, may fail the obviousness test."
In another patent case decided today, Microsoft v. AT&T, the Supremes, in a 7-1 decision, restricted the global reach of US patent law. As a general rule, no infringement of a US patent occurs when a patented product is made and sold in another country. One exception to this rules is provided in Section 271(f) of the Patent Act, adopted in 1984, which provides that infringement does occur when one “suppl[ies] … from the United States,” for “combination” abroad, a patented invention’s “components.” The question was whether software sent from the US for installation on foreign computers is a "component". The Court decided that Microsoft was not liable since the software sent overseas "is never installed on any of the foreign-made computers in question. Instead, copies made abroad are used for installation." It is those copies, made overseas from the master copy sent from the US, that becomes a component. But the component itself is not exported from the US; rather, a master file which is used to create the component (software copied onto the foreign PC) is what is exported, which is not covered by that provision.
As I previously noted,
it's somewhat ironic to see Microsoft arguing that the intangibility of its software makes it different from normal, physical property for purposes of a US patent law provision that makes an exporter of technology liable for patent infringement if the thing exported is combined outside the US with a computer to result in a device covered by a US patent. In other words, Microsoft wants to have it both ways: software ought to be covered by copyright, even though software is not tangible. Yet, because it's not tangible, it should not be counted like a tangible component would for purposes of the patent-export law.
Looks like Microsoft gets to have it both ways.
Comments (22)
KAZ
The problem is the very concept of intellectual monopoly laws in the first place. The use of the word "property", in "intellectual property", fools people into thinking that patent and copyright laws are somehow pro-liberty or a part of private property, when in fact they are a violation of those things.
REAL property is a matter of physics:
There's a tree...will it be cut down for firewood, used to make furniture, or left to grow apples? Some entity has to have the authority to decide. Preferably, a private one, ergo private property.
If your neighbor owns the tree, he gets to decide to make a chair out of it. If you want to burn it for firewood, instead, then it's his property rights that should decide which happens. Burning the wood would deprive him of his chair.
But a copyright or patent actually violates the tree owner's private property rights. YOU own a tree. You see your neighbor make a nice chair out of his. You decide to make a chair that looks just like it. HE goes to the government and has them force you to not make the chair, because he "owns" the idea of that kind of chair.
He was not actually losing access to or control of his property via your making the chair, but YOUR access to and conrol of your property were violated, by the imposition of the intellectual monopoly, the "patent".
IP was a really, really bad idea that, by horrible chance, just happened to be trendy when the Constitution was created. It was still never intended to go anywhere near as far as it did, but the whole thing was a wash from the start.
Published: April 30, 2007 5:39 PM
Peter
I saw this somewhere:
Voodoo: if you make a doll, you can control anyone who looks like your doll.
IP: if you make a doll, you can control anyone who's doll looks like your doll.
Published: April 30, 2007 8:53 PM
Libby
Our patent laws worked well, but needs to be updated thanks to the technology revolution. I agree that certain concepts like "the idea and process to sell X over the internet" shouldn't be patentable. But certainly people who create content deserve to be paid for their efforts. A movie studio spends $50 million to make a film, how would he be able to recoup his costs without protection?
As for your example, designs can't be patented or protected unless they are trademarks. That's why people can copy designer clothes as soon as they come out, and the guy who owns the tree is free to make any kind of furniture he wants with it. I'd say that's pretty balanced.
Published: May 1, 2007 4:38 AM
Björn Lundahl
Stephan Kinsella
I am in the process, because of you, to reconsider copyrights regarding third parties and also trade marks. Patent laws I have not supported because of Rothbard. Thanks for so intensely bringing this subject up. Let the best arguments win!
Björn Lundahl
Published: May 1, 2007 5:44 AM
Jesse
Libby: "A movie studio spends $50 million to make a film, how would he be able to recoup his costs without [an aggressive monopoly]?"
Ignoring for the moment your sudden switch from patents to copyrights: if the funds can't be raised then perhaps there won't be any more $50 million films; that isn't necessarily a bad thing. Monopolies -- including copyrights and patents -- distort the market. Sometimes that results in expenditures on products that would not justify their costs in a free market. This excess production is a net loss when one considers the full costs. Anyway, one can entertain just as much without spending $50 million up front on production.
As for the chair example, I do believe that if that was the first chair ever made (as the example implied) then the chair-maker would be able to get a patent, thus preventing his neighbour from making another chair with his own tree. It's the concept of the chair itself that is under discussion, not the design of that particular chair. In any event trademarks should be included alongside patents and copyrights to the extent that any non-fraudulent uses of the trademarks are prohibited; I believe that would include the "design" trademarks you mentioned, provided the buyer is made aware of the fact that they aren't originals.
Published: May 1, 2007 9:29 AM
Joe Calhoun
It seems to me that this ruling is merely restoring the patent system to an earlier incarnation where truly novel ideas are rewarded. Patent trolls have always been around as there have always been those who wish to profit from others ingenuity. More recently though the courts have just been too lenient in the granting of these types of add on patents.
Unlike most here, I tend to think that granting a monopoly for a truly novel idea does result in more innovation. The patent period is probably too long (20 years), but it seems obvioius to me that this monopoly incentive must have an impact on those inclined to produce truly innovative products.
Published: May 1, 2007 10:18 AM
Jesse
Joe Calhoun: ". . . it seems obvioius to me that this monopoly incentive must have an impact on those inclined to produce truly innovative products."
Perhaps so, but those who frequent these discussions ought to know better than most that subsidizing the production of specific commodities results in a net loss of wealth. The amount that people are forced to give up under threat of coercion is always more than what they receive in exchange; this is just as true in regards to patents as it is for e.g. agricultural subsidies, or any other form of theft-funded subsidy or aggression-backed monopoly. Patents (and copyrights, etc.) are each just one more way to circumvent the price system, with predictably inefficient results.
Published: May 1, 2007 10:44 AM
rtr
Joe Calhoun: "Unlike most here, I tend to think that granting a monopoly for a truly novel idea does result in more innovation."
It's praxelogically provable that granting a monopoly for a truly novel idea results in less innovation. By preventing others from copying, others are violently forced to be deaf, blind, and dumb to hearing, seeing, and understanding the world around them, whether that world is objective scientific principles or subjective valuations of demand.
Also there's a clear disincetive to innovate beyond what is covered by the monopoly grant. More work leading to a better product than the monopoly grant covered product would only devalue the value of the monopoly grant. That's a clear disincentive to innovate beyond the monopoly grant. Add that to the force preventing possibly *foundational* copying of the protected monopoly grant and you're talking a massive order of overall technological stagnation (for very similar if not exactly the same reasons as technological stagnation exists under socialism), and subsequent wealth loss for society as a whole, causesd by patent and copyright protection.
The incentive is to block others from working, to force them to pay you for the ability to work, or to prevent free market competition. There is an incentive to sloppily and hurriedly claim innovation over as many multitude of possible technological innovations to harness the potential work of others under servitude to the monopoly protected. What results is a jumbled mess of a classical midevil guild system, no matter how pure the intentions may even be to originally only cover just the arbitrary "trulely novel ideas".
People are motivated to discover, to create, and to profit through exchange, to increase their subjective value by actions which bring them to a state of lesser dissatisfaction from a state of greater dissatisfaction. That's just as true as when one copies nature, or copies another human. This is true for someone trying to cure himself or another of cancer, even if his method was discovered and he could not prevent others from copying him. It's true for ideas. It's true for fiction. It's true for absolutely everything which is done, all action.
Patent and copyright protection thus cause technological stagnation and poverty.
Published: May 1, 2007 1:29 PM
Joe Calhoun
Jesse:
I'm not sure about the overall loss of wealth. If the monopoly grant encourages more people to work on novel ideas, doesn't that imply that we end up with more new products than otherwise? I'm not sure you can measure whether there is more or less wealth.
rtr:
There is nothing that keeps one from improving on an existing product, patented or not. The patent holder may demand compensation, but why shouldn't that be true? If I create something unique of value, don't I have a right to derive value from that invention? I agree that the recent emergence of the patent troll industry is destructive to innovation, but is that reason to eliminate the entire incentive structure to produce novel products of unique design? Who will risk their own capital for invention when whatever you produce is instantly devalued?
I understand that everything being equal, the lack of copyright and patent protection would produce more innovation. But if you take away the patent and copyright protection, everything isn't equal is it? If the lack of patent protection means fewer people try to invent, isn't it possible that there is an overall loss of wealth?
Published: May 1, 2007 2:37 PM
Joe Calhoun
rtr:
In the interest of moving toward an ideal libertarian world, would it not be a good compromise to reduce the monopoly period from the current 20 years to say 5 or 10 years?
Published: May 1, 2007 2:53 PM
rtr
Joe Calhoun: "The patent holder may demand compensation, but why shouldn't that be true?"
The patent holder may demand your improved product, or its absense in competition. Granting mere monopoly protection enables that possibility.
Joe Calhoun: "I agree that the recent emergence of the patent troll industry is destructive to innovation, but is that reason to eliminate the entire incentive structure to produce novel products of unique design?"
Step back, I'm saying it's praxelogically *proved* that the alleged "incentive structure" is a disincentive structure. By preventing people from copying you are necessarily forcing them to be deaf, blind, and dumb to what exists. If you disagree, you may as well start by showing my state of the art proof wrong. But this is as rock solid as any praxelogical proof gets.
Joe Calhoun: "Who will risk their own capital for invention when whatever you produce is instantly devalued?"
Those who compete must compete to offer the absolute best terms possible. That necessarily includes improved quality of goods offered, improved technology, invention. Thus, rather than likely having massive inefficient super sized bundles of capital competing for all or nothing monopoly protection, all capital would be marginally more innovative in it's everyday use due to the absence of violent force preventing its innovation. I.E., instead of Drug Company A and Drug Company B both ponying up $800 million apiece in an all or nothing competition for a monopoly protection (necessitating that all those who lose in the arbitrary "race" "end line" have the value of their capital investment completely destroyed by arbitrary monopoly protection), you would likely have far more numerous smaller capital investments which occured far more frequently. There would never be roadblocks which prevented further innovation and improvement upon fundamental reference points of technology or culture.
Thus you will upbraid your own products through the necessity to offer the absolute best terms possible because of free market competition. If you have an idea to offer a better product or a lower priced product, that's technological innovation. You will employ that technology for the short-term profit advantage it gives you over your competitors, whether that's a fictional adventure of a character, a marginally cheaper drug, or anything whatsoever. In fact you can never create anything of truely innovative value than you recieve in return for "free" because of competition, by definition of free trade and the division of labor. /claim Nobel Prize #10 with that last sentence.
Joe Calhoun: "If the lack of patent protection means fewer people try to invent, isn't it possible that there is an overall loss of wealth?"
Why would fewer people try to invent? Would nobody walk to point B from point A if it wasn't patentable or copyrightable? The purpose of every action is to bring oneself to a state of lesser dissatisfaction from a state of greater dissatisfaction. Every form of labor, every form of investment, every form of technological innovation results from the economic profit which results from every action. No, it is not possible that there is an overall loss of wealth from eliminating monopoly patent and copyright protection, it is *proved* that there is an overall loss of wealth because of patent and copyright monopoly protection.
Published: May 1, 2007 3:20 PM
rtr
Joe Calhoun: "In the interest of moving toward an ideal libertarian world, would it not be a good compromise to reduce the monopoly period from the current 20 years to say 5 or 10 years?"
Of course, just as it would be in the interest of moving toward an ideal libertarian world, it would be a good compromise to reduce the prision sentence for tax evasion from the current X years to say some lesser V or W years.
Published: May 1, 2007 3:24 PM
rtr
rtr: "In fact you can never create anything of [more] truely innovative value than you recieve in return for "free" because of competition, by definition of free trade and the division of labor. /claim Nobel Prize #10 with that last sentence."
Remind me to call that chapter, "There is a Free Lunch!" I'm sure the Chicago School will love it!
Published: May 1, 2007 4:19 PM
Pedant
rtr: You have abused the terms "praxelogically" and "provable".
"innovative" and, a fortiori, "innovative value" are inherently subjective.
Published: May 3, 2007 12:16 AM
Jonathan Bostwick
Patent protection does not promote invention, it discourages it. If someone invents the wheel and can patent it they can produce that same wheel as is until that patent expires. If someone invents the wheel and gets no patent then everyone in the world will try to improve on it to get a piece of the profits.
People know when they open a grocery store that they will have competition, yet people still open grocery stores. You don't need to use monopolies to trick people into investing.
Published: May 3, 2007 1:30 AM
averros
As any real inventor (as opposed to a patent troll who just happened to file for a patent on something everybody else considered obvious) can attest, patents have nothing to do with their desire and ability to innovate.
In fact, most of those who actually patented something novel came to loath the patent system. Just talk to a bunch of above-mediocre engineers.
Published: May 3, 2007 2:01 AM
averros
...hint: that's why corporations are bribing engineers into patenting stuff with bonuses and cash handouts. Because they wouldn't do that otherwise.
Published: May 3, 2007 2:03 AM
Pedant
Kinsella: You have worn me down (this latest mostly value-free non-ad hominem post was pleasant and informative to read).
Here's a take on 'intellectual property':
3rd party use of a dicovery/creation = positive externality.
state enforcement of 'intellectual property' = an attempt to maximize this positive externality.
(in much the same way that state control of 'public goods' is an attempt to maximize another kind of positive externality; in fact I would go so far as to say that 'intellectual property' = 'public good' in terms of both their concepts and intents)
Debating whether or not the state is successful at increasing 'innovation' is a red herring, because, quite simply: one man may prefer bread to innovation.
(in much the same way that arguing that artificially reducing interest rates benifits future capital growth is a side issue; because, quite simply: one man may prefer bread now to bread later)
There's a value judgement implicit in the discussions on this site: that how a person chooses to use their resources is implicitly better than any choice that might be coerced. Consequences and how this effects 'the public' be damned (seatbelts, pension tax, etc... ad nauseum). And I tend to agree.
Debating 'intellectual property' in terms of 'innovation' breaks down because of this. For one 'innovation' is subjective (there is no objective standard for declaring one thing 'more innovative' than the next), but more importantly, a coerced 'innovation' (not the individual 'innovative' widget, but that large amorphous society-wide 'public good' concept called 'innovation') violates the above ethical position, so 'intellectual property' becomes unsupportable by 'innovation' when debating libertarians (or worse).
(in much the same way as in a debate about tax subsidized scientific research... the parallel being that if a person has to pay to use an idea, and if this is a violation of natural law, then this consitutes a transfer of wealth from it's natural ends, the individuals' uncoerced choices, to the subsidized group... which we are _defining_ as a loss of wealth, in both cases)
But here is where it gets hairy, how do we know that whether 'intellectual property rights' consitutes a part of natural law (any more than 'physical property rights').
In the above argument I could substitute 'physical property' for 'intellectual property' and something like the tragedy of the commons (in reverse) for 'innovation', and I would have a counter argument to any utilitarian claims about the 'rightness' of 'physical property' rights.
In any argument claiming that 'physical property' rights (my pen, my paper) trumps 'intellectual property' rights, I could claim that my self-ownership trumps your 'physical property' rights (and that I have the god given right to walk where I want, even if this means 'trespassing' on 'your' land).
(but these weren't good arguments to begin with, so little is accomplished by counter argument)
Some people say that the fuzzyness of 'intellectual property' vs. the concreteness of 'physical property' differentiates the two.
Sure, for already-claimed physical property (where we accept the claim), this is quite simple and concrete: land is bounded, things have edges, property is exchanged in some sense by contract (however informal). There are disputes, but only in practice, they are easily resolved in theory - theoretically the dispute is already resolved, but in practice we must discover the facts.
However for unclaimed land (initial ownership), a claim constitutes 'mixing labor with nature'. What is this? How much labor? Can I just fence off some land? What about an intent to labor? What about defecating on some empty land (once, in the name of fertilizing it) and then claiming as far as the eye can see? It's a horribly vague concept - it's _all_ grey area!
Personally I like the concept of 'first dibs' for it's clarity (no labor at all - first to claim the moon gets it), and I trust the free market to ensure a sufficiently efficient distribution eventually.
So how do we decide what consitutes initial ownership of physical property (assuming you accept the concept of physical property), and whether intellectual property right even exist?
The problem is that these aren't economics problems, they don't fall under the domain of 'science'.
I have a somewhat different concept of natural law (but I think it might be borrowed from Hayek or someone, I've lost track) - I think natural law is whatever social construction worked sufficiently well that evolution has ingrained it in our genetic code in the form of 'something that instinctually seems natural' (in the same way that we become afraid of potentially poisonous animals more easily than nonpotentially poisonous animals, or that we generally don't need to be taught sex).
In trying to resolve the a priorism of human action to myself, I came to a similar conclusion - I can understand why Mises viewed human action as true a priori, I couldn't put it on a different 'level of truth' than the rules of logic... but the conclusion I came to was different, the rules of logic and human action are both true _empirically_ but are both so true and useful that evolution has bestowed them to us as genetic knowledge (it might not have been possible to discover anything at all without a few seemingly 'a priori' starting points, but it's possible that the rules of logic and/or human action fail to hold true in some other 'universe', making them an empirical fact about ours... or us).
I posit that our instinctual understanding of natural law (i.e. our feelings of 'mine', and 'yours' which corresponds to whatever social construct worked well enough to become ingrained in us) have not caught up with our technological progress. And we will have to wait at least a few hundred years for some resolution. But even then we won't have a definite resolution - look at the continued fight/debate over physical property and we've already had millennia for that one (altough admittedly some of that is no doubt just a blatant attempt at thievery). I think this is how it plays out (or played out), an idea, a concept, a law, lives or dies based on the people who believe it living or dying (natural selection... but fortunately we have an advantage, 'cultural natural selection', people don't actually have to believe something to their bitter end).
The problem with state created laws ('public law') is that they're based on the subjective preferences of whoever is in power (whether tyrant or mob). And ultimately benifit those favored by whoever is in power (assuming those in power are clever - a disaster if they aren't). There are no useful selection pressures behind 'public law', besides 'benifiting the favored the most' (this is all even democracy ever was - benefiting the majority the most, even in the most short sighted way - there's more to be said about this below)... in the same way as the lack of selection pressure in state run industries or economies.
I don't believe we'll ever get any 'good' law concerning 'intellectual property' (whether it's eventually no law, or whatever) out of 'public law', look at the poor job they've done on the seemingly simple 'physical property' laws.
Law seems to be beyond and outside the individual, in much the same way that economics is (inherent failure of planned economy = inherent failure of planned law). I think this is why democracy doesn't even seem to do a good job benefiting the majority (even at any cost to the minority)... in much the same way that a democracy couldn't plan an economy (even assuming that all they were concerned about was maximizing the benefit of the majority).
Competing interests, differences, conflict seems to be necessary in establishing 'good' law as well as a 'good' market. I think they're fundamentally the same thing, I think they're both a projection of evolution into a more efficient and less brutal space (firms and ideas live and die, instead of people and societies... and on a much faster time scale). I think this is the fundamental difference that has accelerated us so far beyond the animals (beyond in terms of technology/knowledge, even though we still seem so close to them in terms of brutality and shortsightedness) - non-genetic evolution in different domains.
So, I think we need private law (i.e. anarcho-capitalism) to properly establish what of 'intellectual property'.
Personally, I think 'intellectual property' seems plausible to me intellectually, yet I have no qualms about any kind of IP theft (for reference: I return money when cashiers unknowingly give me back too much).
Published: May 3, 2007 4:02 AM
TLWP Sam
Heh heh. I argued about the concept of land property rights and I.P. rights too awhiles back. I'd have to guess that if it's ok for someone to have a monopoly ownership over a piece of land it's because ultimately such people would be able to be more productive than if no one could own land and were therefore nomadic. Likewise therefore would the case for I.P. rights be one of whether people are more productive and innovative because of these rights or whether I.P. rights stifle innovation and production except for the chosen few?
Published: May 3, 2007 8:27 AM
rtr
Pedant: "rtr: You have abused the terms "praxelogically" and "provable".
"innovative" and, a fortiori, "innovative value" are inherently subjective."
Really? I'm afraid I need more than a mere 'claim' of "abuse". I've abused plenty of false notions as I've unpraided knowledge. So if you care to explain?
If something is "innovative", it's objectively determinable whether or not it is new. It's a simple yes/no question of whether this thing, idea, method ... existed before or was used in a particular way before, or not. Every innovation has subjective value, at least to the innovator at the time of innovation, by definition of it being innovated, which is action, which does not occur unless it is subjectively valued.
If you could create anything of more innovative value than you receive for free in return by observing and existing in society, society and trade would not exist. Just as the division of labor *proves* that more material wealth for society as a whole is created than if each person tried to do everything on their own, so too does the existence of society *prove* that more copyable actions and ideas exist than could be possessed by a sole individual.
If you could create anything of more innovative value than the value of all other subjetive value which exists (of both the tangible and intangible), then you would never trade that innovative idea to anyone else for anything (including the theoretically possible everything), and a patent or copyright upon that innovative idea would be ridiculous for that idea could *only* be "copied" if the innovator intentionally gave it away, which he could only give away if still increased his subjective value by intentionally giving it away, or still increased his subjective value in spite of the risk that unintentionally someone else might observe and copy him.
And by definition of trade, that which is received is valued more than that which is given away in exchange, which means it is *proved* you can never create anything of [more] truely innovative value than you recieve in return for "free", for if it was not necessarily so what was created would never be voluntarily traded for absolutely everything of subjectively value which exists, and a patent or copyright would still be superfluously ridiculous.
Not to mention any claims or actions could only be communicated in a common language of cognitive understanding, and thus a copyright or patent claim would by definition be a contradictory hypocricy of any claim to unique ownership of intangible non-material non-property. Thus, you could not even create anything of more innovative value than you recieve in return for free, which could even be *expressed* as a potential claim. You would necessarily have to be a hermit speaking in gibberish understood by nobody else to even begin to have the fundamental non-agression claim of property worthy of respect by others, and even then I could still prove the claim of the hermit speaking gibbersih understood by nobody else, invalid.
Published: May 3, 2007 8:58 AM
Francisco Torres
By preventing others from copying, others are violently forced to be deaf, blind, and dumb to hearing, seeing, and understanding the world around them, whether that world is objective scientific principles or subjective valuations of demand.
Correct. A cleverer person that can come up with an improvement to a previously created thing would be refrained from doing so because of patent law, leaving the world with a little LESS progress that it could actually receive. It is by the process of adding and improving things that we progress as humans. Patent law and other Letters of Marque granted by the "Goons with Guns" (i.e. the government) stifles this progress.
Published: May 3, 2007 9:15 AM
Kevin B.
Pedant,
"Intellectual property" exists within physical property. An idea is within someone's brain or on paper, etc. Ideas are transferred by physical property. The ability to measure physical property is how we know that any value, even an idea, has been transferred.
It is a silly argument that one's ideas may be stolen. It could not have been ideas, but measurable physical property, that was stolen, if so. If your physical property rights have not been violated, then the only possible means of theft of rights has been avoided.
It is nonsensical to claim that intellectual rights exist apart from physical property rights.
Published: May 3, 2007 2:05 PM