Perhaps the penny is beginning to drop: Our IP system is a nightmare

Prize-winning nature and wildlife photographer, paleontological impressario, molecular gourmet and Dark Lord of IP trolling: Nathan Myhrvold, Founder of Intellectual Ventures

The Economist blog ‘Democracy in America’ covers the lamentable state of IP. The problem is particularly bad with software patents because they are both so unnecessary to encourage innovation and also because there are potentially so many software patents – software is such an easy medium in which to embody productive ideas.  The recent purchase of Motorola Mobile by Google apparently to get itself a stash of patents is truly alarming, because, having spent $12 odd billion on getting the patents and with only a few parties able to marshall sufficient defensive patents to protect themselves against Dark Lord’s like Nathan Myhrvold, Google is then obliged to its shareholders to maximise the value of those patents and to maximise its profit from any mobile phones it makes. And, because of the IP nightmare only a handful of firms will be able to make such products – though only by warding off marauders with threats of counter claims for breaching their own patents.

The article points out one thing that I’d not fully appreciated – that it is precisely the unnecessary nature of the IP system – the coincidental development of the same ideas independently of each other that underpins the profitability of patent trolling.

“Julian Sanchez lucidly explains how the very existence of “defensive patents”, and of companies in the business of selling them, is proof of a badly broken intellectual property system:

[T]hink about how defensive patents work. Companies aren’t buying them—or buying into the services of companies like Intellectual Ventures—because they provide otherwise unavailable technical insights. The point, rather, is to acquire (or have access to) a bundle of patents that any potential litigant who sues you is likely to be “infringing” in their own products. …

This only works, however, if other companies are almost certain to have independently come up with the same idea. A patent that is truly so original that somebody else wouldn’t arrive at the same solution by applying normal engineering skill is useless as a defensive patent. …

[E]very patent granted for an idea that any number of suitably skilled engineers could have (and would have, and did) come up with is a patent that probably shouldn’t be granted—a pure deadweight loss that’s actually compounded by the squandering of resources on the “arms race,” with no compensating dynamic gain. Actually, there’s probably a dynamic loss: You end up creating a huge incentive for smart and skilled people to spend their time and energy not coming up with a brilliant idea that nobody else would have, but instead trying to be the first to put on paper ideas that are obvious (to a properly trained and up-to-date person) but haven’t been locked down yet—the solution, again, that almost any professional would have come up with once they were actually trying to implement the relevant technology. A sector where investment in defensive patents is so massive, then, is a sector where—even if some of them do genuinely add value—patents are probably doing more harm than good on net.

 

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21 Responses to Perhaps the penny is beginning to drop: Our IP system is a nightmare

  1. Pedro says:

    Ditto for gene patents. There should be no patents for ideas, just things.

  2. The solution is to make patents like copyrights: coverage should be automatic; patents shouldn’t protect against independent reinvention; and whether the “reinvention” was indeed independent should be a question of fact to be decided by the evidence.

  3. Nicholas Gruen says:

    Gavin, that sounds like a cockamamie idea to me. The way in which copyright automatically accrues is its own special nightmare.

  4. Funnily enough, the words “coverage should be automatic” were added last and were not as thoroughly considered as the rest.

    I presume that the “special nightmare” refers to the difficulty of getting permission from copyright holders who can’t be traced or don’t answer their correspondence.

    Conceding that point with respect to copyrights, I don’t think it’s so applicable to patents. With copyrights, the problem arises because you know you’re using someone else’s work. With patents, the problem arises because you DON’T know.

  5. Paul Bamford says:

    Once upon a time, oddly enough, software – or rather source code – was covered by copyright, rather than patents. Then the legislators got really dumb and changed the IP regime so that you could patent not just physical inventions but business methods, algorithms and even natural phenomena, such as particular gene sequences.

    The current problems seem to me to have two major causes – an environment where corporations are increasingly aggressive in defending their “intellectual property” by any and all means possible and a US Patent Office that is so institutionally dumbed down that it will grant patents on toasting bread, using a laser pointer to entertain a domestic cat and so on and so forth.

    As for the solution – I’d suggest ditching the notion of IP altogether. Replace it with the IC – the Intellectual Commons. That would put 80 Microsoft IP lawyers out of as job for every one Microsoft employee who actually knows how to change a lightbulb but where is the loss to society in that?

  6. Nicholas Gruen says:

    Gavin, why create rights when the person you’re giving them to may not even want them. Rights are not cost free you know. Creating rights in information is extremely costly because the cost of replicating ideas can be zero. Zero is a very useful thing, and having to run round asking for permission can kill any number of possibilities. Worse still, you may never know what they are, because they don’t materialise.

    Paul, I think the change to allow software and business methods patents was judge made law, not legislation.

  7. Nicholas wrote: “Gavin, why create rights when the person you’re giving them to may not even want them”?

    My “coverage should be automatic” remark was prompted by my concern that if it is in the public interest to grant a patent to an inventor, then it is not in the public interest that the inventor be deterred from seeking those rights because of up-front costs. In retrospect I concede that one can eliminate or contain those costs without exactly making coverage “automatic”.

    That said, I am surprised that nobody has taken me to task over the rest of my comment: “patents shouldn’t protect against independent reinvention; and whether the ‘reinvention’ was indeed independent should be a question of fact to be decided by the evidence.”

  8. Pedro says:

    Gavin, if a patent was like copyright, then the particular sequence of code would be covered, but not the effect in use.

  9. Nicholas Gruen says:

    Gavin, I could have taken you up on that too. It sounds like a litigious nightmare to me. The more I come to know of most intellectual property, the more dodgy it looks. It’s funny how anxious we are that things won’t happen if we don’t incentivise it – yet things happen in front of our eyes without that all the time.

    As the book Against Intellectual Monopoly outlines, whether or not it is the best possible arrangement the complete abolition of all intellectual property (other than trademarks which assists with product identification) is unlikely to generate large intractable problems (though there would be some downsides).

  10. Fabian says:

    NPR’s “Planet Money” and “This American Life” had a recent podcast on the broken state of patents and they refereneced Intellectual Ventures specifically in the podcast. Quite a good listen.

    http://www.npr.org/blogs/money/2011/07/26/138576167/when-patents-attack
    http://www.thisamericanlife.org/radio-archives/episode/441/when-patents-attack

  11. Simon says:

    “The complete abolition of all intellectual property” would, far from generate intractable problems, generate an enormous flowering of creativity and invention.

    People stand on the shoulders of giants (or in my case, the shoulders of midgets). We need to make it easier for them to do so, not harder. There is no problem of incentive – people naturally want to create new stuff, and they do it even in the absence of profit motive (not that profit motive would disappear anyway – first mover advantage is a big thing).

  12. Pingback: Backlash Against the US Patent System Grows Amid Google’s Defensive Moves | Techrights

  13. Nicholas: It seems I have a book to read. In the mean time I offer three remarks:

    (i) Yes, trademarks assist product identification. Unfortunately they also assist big Johnny-come-lately corporations to strip you of the business name that you’ve been using for 40 years. Nothing similar happens with patents or copyright, because they require priority.

    (ii) While I’ve hitherto been tolerant of copyrights in principle, I’ve always been contemptuous of long terms of protection, of extensions of terms on existing works, and of “statutory damages” in excess of actual losses for copyright infringement.

    (iii) I’m indebted to a Georgist colleague for digging up a speech delivered by Thomas Babington Macaulay in the House of Commons on 5 February 1841, arguing against extending copyright to 60 years from the death of the author, and concluding:

    “At present the holder of copyright has the public feeling on his side. Those who invade copyright are regarded as knaves who take the bread out of the mouths of deserving men. Everybody is well pleased to see them restrained by the law, and compelled to refund their ill-gotten gains. No tradesman of good repute will have anything to do with such disgraceful transactions. Pass this law: and that feeling is at an end. Men very different from the present race of piratical booksellers will soon infringe this intolerable monopoly. Great masses of capital will be constantly employed in the violation of the law. Every art will be employed to evade legal pursuit; and the whole nation will be in the plot. On which side indeed should the public sympathy be when the question is whether some book as popular as Robinson Crusoe, or the Pilgrim’s Progress, shall be in every cottage, or whether it shall be confined to the libraries of the rich for the advantage of the great-grandson of a bookseller who, a hundred years before, drove a hard bargain for the copyright with the author when in great distress? Remember too that, when once it ceases to be considered as wrong and discreditable to invade literary property, no person can say where the invasion will stop. The public seldom makes nice distinctions. The wholesome copyright which now exists will share in the disgrace and danger of the new copyright which you are about to create. And you will find that, in attempting to impose unreasonable restraints on the reprinting of the works of the dead, you have, to a great extent, annulled those restraints which now prevent men from pillaging and defrauding the living…”

  14. Nicholas Gruen says:

    Gavin, on your points

    1) Basic trademark law makes sense I think, which is not to endorse the current arrangements in all their manifestations. Trademark law should be simple and focused on aiding identification – no more than that. If you’ve used a business name for a good while you should be able to hang onto it.

    3) Nice quote. Good old Thomas Babington cobbled together a good turn of phrase – thanks.

  15. john walker says:

    Macaulay was not speaking against copyright, he was speaking against the proposed abuse of copyright law because (like all bad laws) it would bring into disrepute some thing that is very useful in moderation.

    Personally I make no use of copyright.

    There are legit situations where copyright is a very good way of setting the final price for the transfer of a private ‘idea’ to public ownership.

    And for Christs sake there is shirt loads of public domain stuff allover the place AND if its so easy to create new things then why do you need to copy ??? You can write your own masterpiece, can’t you???

  16. Paul Bamford says:

    And for Christs sake there is shirt loads of public domain stuff allover the place AND if its so easy to create new things then why do you need to copy ??? You can write your own masterpiece, can’t you???

    Maybe you should have read the blog post at The Economist that Nick linked to before you started throwing around insulting comments John. More catch-up reading here.

  17. Nothing similar happens with patents or copyright, because they require priority.

    IANAL, but my amateur investigations reveal that only the USA has “first-to-invent” provisions for their patents. Everyone else is first-to-file. Mind you, first-to-invent leads to heinous lawsuits in itself.

  18. Paul Bamford says:

    Jacques @17:

    My own amateur investigations revealed that the US Supreme Court refused to allow a patent on a computer program in 1972, because that would amount to allowing a patent on a mathematical expression. Then things seem to have gotten bollixed somewhat.

    Where the US Patent Office seems particularly slack is in recognising “prior art” that is previous inventions, patented or otherwise, that disqualify the patentor’s claims of originality. That’s why you can get patents for toasting bread or amusing domestic pets with a laser pointer.

    There are two things that we need to remember here:

    * The US didn’t produce Albert Einstein;

    * Einstein quit the Swiss Patent Office after he published those four famous papers in 1904.

  19. The USPTO has no economic incentive to reject patents. They are not funded by Congress; they rely entirely on fees.

    And yes, the USSC changed its mind on software. I think it was an extension of allowing patenting ‘business methods’. (IANAL, TINLA).

  20. Paul Bamford says:

    Jacques @ 19, Nick @ 6:

    The whole area of patent law in the US is complicated, n’est pas? However, I don’t think it’s as simple as the USSC changing its mind on software, even given that there was ample time between 1972 (Gottschalk v. Benson) and 1981 (Diamond v. Diehr) for at least one USSC Justice to run down the curtain and join the choir invisibule. it’s woeth noting that in the DvD case, the issue was whether a patent satisfied the requirements of S101 of the US’s Patents Act, so their learned justices were interpreting legislation. If the current US Patents regime is a product of judge made law, then the legislators were (possibly unwitting) accessories before the fact.

    Interesting point in your first para Jacques – link maybe? Just so I can come back to it later and expatiate on the consequences of any nation being idiotic enough to establish a self-funding National Office For the Perpetuation of Monopolies.

    Finally on “first to invent (FTI)” vs “first to file (FTF)” – FTI is an idiocy. Thanks to FTI some tosser who woke up one morning in 1998 and realised there was this thing called “The Internet” was able to patent the idea of getting your software updates off the web, claiming that he came up with it in 1993. Never mind the fact that there was “prior art” dating back to the early eighties.

  21. Look at their budgets. Congress allocates basically nothing and has in previous years raided the USPTO for funds.

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