Against Monopoly

defending the right to innovate


Monopoly corrupts. Absolute monopoly corrupts absolutely.

Copyright Notice: We don't think much of copyright, so you can do what you want with the content on this blog. Of course we are hungry for publicity, so we would be pleased if you avoided plagiarism and gave us credit for what we have written. We encourage you not to impose copyright restrictions on your "derivative" works, but we won't try to stop you. For the legally or statist minded, you can consider yourself subject to a Creative Commons Attribution License.

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The written description requirement for patents

The Washington Legal Foundation reports on an (admittedly small) step in the right direction to counter overly broad patent claims.

Read it here:



The Amazon one-click patent examination is now over - you can read here what our friend igdmlgd who forced the reexamination has to say about it. I think there are a couple of lessons here. First the patent office is hopelessly corrupt. This is an expected consequence of a regulatory system - money talks. Second, it is possible for a determined and principled individual to have an impact - even if igdmlgd didn't get the patent properly overturned, he was able to limit some of the ill-effects. In the end - the system just doesn't do what it is supposed to - which is why it would be best to do away with it.

Is this just a patent troll or a new way to extract money from everybody?

Steve Lohr writes in the New York Times about a highly secretive company, Intellectual Ventures, that claims it is trying to create a market for patented inventions link here. It has been in existence for ten years, already is heavily capitalized at $5 billion and controls 30,000 patents, and seems to be dominated by other patent-owning companies--"strategic investors"--including Microsoft, Verizon, Intel, Nokia and Sony. It is big into lobbying and has a large staff of engineers and engineers as part of a staff of 650.

Nathan Myhrvold, former CTO of Microsoft, runs it and has written a long piece in the Harvard Business Review, most of which is behind a paywall link here. His complaint about patents in the current market place is that big companies rip off the inventors by not paying them and suing them into submission. He lobbies against large company backed legislation which would make it more difficult for inventors to collect damages.

It doesn't sound to me like Myhrvold has much interest in the poor inventors. Rather, he just seems to want their patents so he can make piles of money suing manufacturers. But then, what are all those manufacturers involved as strategic investors? A clever device to take a cut from both inventors and users?

Just asking ....

Reponse to Levine & Boldrin

The Christian Science Monitor published this response to David and Michele's op-ed (sorry if it's already been posted):

Reform, but don't destroy, patent law

In their commentary, "The patent system: End it, don't mend it," David K. Levine and Michael Boldrin propose wiping out centuries of Anglo-American legal heritage in intellectual property (IP) rights because they don't like some features of the current American patent system. This radical proposal is based on an erroneous understanding of patent law's history and the economics of innovation. It would be akin to tearing down a house because the hot water heater broke.

The Founders explicitly recognized the advantages of using intellectual property rights national in scope to replace the state-granted rights that existed under the Articles of Confederation. As James Madison wrote in Federalist No. 43 "[t]he utility of [the IP clause] will scarcely be questioned. The copyright of authors has been solemnly adjudged, in Great Britain, to be a right of common law. The right to useful inventions seems with equal reason to belong to the inventors. The public good fully coincides in both cases with the claims of individuals."

There is no question that patent law provides critical incentives for innovation. Without the potential economic rewards and ability to facilitate commercialization patents provide, who would invest the millions of dollars needed for the development of new drugs, medical equipment, and medical devices? It is thus patent-driven innovation that creates the drugs that Messrs. Levine and Boldrin claim are locked away from the world's poor. It would be sadly ironic if an effort to provide access to essential medicines by eliminating patent rights destroyed the system whose incentives yielded those medications.

Levine and Boldrin also misunderstand the point of the Constitution's IP Clause. The issue the IP Clause settled was not whether there should be patents and copyrights, but which government would provide them. The expensive litigation the state IP system had spawned in the 1780s persuaded the Founders to adopt a national system. Even Thomas Jefferson, initially the Founder most skeptical about intellectual property, quickly changed his views and played a prominent role in the early development of American patent law. The system worked: Americans were inventing and patenting at a rate that astonished European observers within a few decades of the first patent act.

While the heart of the incentive provided by patents is restricting others from using an inventor's invention, this right to exclude is limited in time and scope. As a result, it balances rewarding early innovators and enabling later ones to create improvements. Patents' limited scope means they rarely provide their owners with an economic monopoly as there are almost always viable substitutes. Nor are patents "simply a ticket to lifelong litigation against a giant," as only 1.5 percent of patents are litigated.

Patents also provide more than incentives for innovation. Recent studies of start-up companies reveal that patents can play an important role in securing venture capital, capturing revenue through licensing, and enhancing reputational value. And patents serve as coordination tools among private parties, thus preventing many of the problems Levine and Boldrin identify.

For example, in information technology and life sciences, patent holders engage in considerable licensing activity, privately solving the problem of access. A recent National Academies of Science survey concluded that in both ‘‘the number of projects abandoned or delayed as a result of technology access difficulties is reported to be small" and that few investigators had to "revise their protocols to avoid intellectual property complications or pay high costs to obtain access to intellectual property.''

Patent law can undoubtedly be improved. But destroying widely held and valuable property rights in pursuit of short-term gains would truly be a case of killing the goose that lays the golden eggs. Neither the American economy nor the world's poor could afford such an ill-conceived up-rooting of rights deeply embedded in Anglo-American jurisprudence.

Craig A. Nard, Professor of Law, Case Western Reserve University Cleveland, Ohio

Andrew P. Morriss, Professor of Law & Business, University of Illinois, Urbana-Champaign Urbana, Ill.

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