I seem to have started a firestorm by writing a post openly questioning how a patent attorney (i.e., Stephan Kinsella) could be of the opinion that it is preferable to have weak patent rights. I openly questioned how and why any individual or corporation would hire a patent attorney who does not believe in the patent system and seems to think that patents are bad, perhaps even evil, and certainly the preferable model would be to have exceptionally limited rights. I appreciate the debate that is ongoing in the comments to that article, but I remain extremely confused regarding the irrational arguments being made. It seems facts are largely being ignored, and when they are being used they are distort reality, history and truth. When I make direct statements about facts and history off handed non-responsive and dismissive statements are made along the lines of “if you hold that belief it is obvious you don’t understand.” Saying that is fine, but that needs to be backed up with facts and argument, which is not happening. We all know why that isn’t happening, namely because there are no facts or legitimate arguments that can be made to counter what I am saying, so rather than addressing them an artificially zen approach to deflecting and recasting, even ridiculing, is preferred. Notwithstanding, below are my thoughts regarding some of what is being said.
Before getting into the substance, allow me to address what many will wonder. Whenever I do this I receive e-mails from folks who agree with me asking why I even engage with those who clearly have no interest in engaging and refuse to actually have a fact-based, reality-based, historically accurate debate. My primary answer is simple. Not addressing these issues and the falsehoods thrown around to masquerade as truth allows those who are less knowledgeable and less informed to inaccurately conclude that the nay-sayers are correct, or at least have a legitimate and unassailable point of view. Of course this is not true. While they may have a point of view, and some of the nay-sayers are very well informed, articulate and to be taken seriously because they debate on a substantive level, the overwhelming majority, and I dare say the largest segment, simply speak loudly and they are heard. The lack of merit to their arguments is secondary.
We are at a pivotal point in the historical development of the US economy, and getting things wrong will be a disaster. The only long term viable industries that will create widespread jobs are those that leverage technology and innovation. Gone are the manufacturing jobs, and as anyone in Florida knows service industry jobs are low paying and very unstable, hanging on the thread of the overall economic strength of the nation so there are those who can afford non-essential services. There are many influential individuals who read this blog, some of who are patent/innovation industry insiders, and some who are casually interested but have great power. Some of these folks are Reporters, scientists and government officials. It is desperately important for those and others to learn the truth and see that the overwhelming body of evidence is against those who argue against a strong patent system. On top of that, there is no support or justification for the suggestion, which I fear could gain strength, that the answer is to abolish the patent system altogether.
Without further ado, here are some reactions to the comments.
“[H]ow do you know patents encourage innovation? I’m serious–how do you know?”
This is in reply to my comment that patent encourage innovation and provide incentive. In making this comment I pointed out that even for simply kitchen gadgets it can easily cost $500,000 to go from idea to market, and easily cost well in excess of $500,000,000 (perhaps close to double) to get a drug to market. It is logical to assume that this investment would not occur without exclusive rights because of what is known as the free rider problem, or perhaps better cast as a corollary thereto. The person who creates spends whatever funds are necessary to create and those costs become akin to a weight around the neck of the creator. It only makes sense to spend that money to create if that money can be recouped, so price is fixed so as to not only meet the marginal cost of production, but to recoup the laid out expenditures and also provide enough profit to make it all worthwhile, knowing there is substantial risk that any product or service may never recoup these costs and result only in overall losses.
So, first it is logical, but what proof do I have that it is real? Anyone in the patent and/or innovation industry knows or should know of the literally thousands of companies that have been held hostage by the Dudas era Patent Office. The Patent Office became a place where patent applications went to die. The allowance rate sank, time to get a final decision exploded and this caused inventors and businesses to both not be able to acquire funding, and to lose funding they had already secured. Whether anyone like it or not, it is 100% true that most investors, and in particular the sophisticated investors that are needed to make a business succeed, demand exclusive rights. They understand the premise that without exclusive rights others can simply copy you and sell for less because they did not have the research and development costs. So every patent attorney and patent agent I know has clients that could not get investment, could not get a licensing deal despite interest and/or had investors walk away or refuse additional rounds of funding.
The evidence is enormous on this point and on my side. No one ever address this, and the reason is because if the nay-sayers acknowledge the truth and facts they lose on this point. Those who may be predisposed to believe a weak patent system or no patent system at all is the answer, I ask you to demand a fact based answer to what I raise. Investors simply do not invest without exclusive rights, and capital is necessary for a start-up business, for a business to expand and to seed the development that will lead to jobs.
“Coming back to your comments about economics–you seem to think that if one understands economics, it is obvious why patent law is justified. (Am I incorrect in this assumption?) The problem is, as I pointed out in my links above, that study after study, based on standard economic paradigms and assumptions, does not conclude what you do. I’d sincerely be curious to know why you disagree with all these economic studies, and how you know that the patent system is indeed justified.”
This relates to my saying that there is a point at which price can be set to lead to a demand that will maximize profits. I was summarily rejected by being told that this proved I didn’t know anything about economics, no substantive reply followed. Although the comment above was longer, I still do not see a substantive response. It is challenging to reply to this because I just do not know how to respond to those who ignore accepted reality. There is indeed a price point that will create the demand at said price point that results in maximization of profit. The point I was making is that there is a point at which the proper incentive is provided to yield the maximum innovation. To much protection is unnecessary and goes against the Constitutional objectives. To little protection means we don’t get as much innovation because no one will fund it.
“Even you said 20 years is too long–presumably this means you think the benefits gathered from a 20 year term don’t justify the costs of the patent system… but a shorter term, say 5 years, would. How do you know this? I don’t know it. No patent attorney I know, knows it, as far as I can see. How do you?”
It is silly to have software patent term be 20 years from filing because if the software is 20 years old it won’t operate anyway. For crying out loud, Vista is incompatible with stuff that is 2 or 3 years old. On the other hand, if we want the pharmaceutical industry to work on truly life saving drugs, vaccines and treatments rather than focusing on lifestyle drugs that cannot be misappropriated under TRIPs, we may need longer protection. This is a valid point, based on universally true economic principles. I don’t care whether the Pope says there is not a maximal price-quantity point, because whoever says it is wrong. To think there is not a maximal price-quantity point is to ignore reality and think a thought experiment is more correct that what actually occurs. Everyone who runs a business knows there is a sweet spot for price-quantity, and an incentive based intellectual property regime should focus on finding the sweet spot to foster what we want, which is innovation. The dirty little secret that Thomas Jefferson understood is that we hate monopolies, but if they result in a positive outcome for society then they should be tolerated. Use and manipulate the greed predisposition in people for the benefit of society, that is what the patent system does and it is effective.
I don’t claim to know what the right patent term is, but a one size fits all patent term is just flat out stupid. Why can’t we realize the obvious? Protecting something for so long that it is technologically irrelevant is a waste. Tying innovations up in the Patent Office until they are technologically irrelevant is even more stupid. If we are going to be true to the principles set forth in the Constitution then we need to acknowledge reality and ask the question, namely how long should patent protection be if we want to maximize innovation. The reason nay-sayers don’t want to address this is because while some inventions might deserve less than 20 years, a lot of inventions will require more than 20 years because the risk is so high and the amount at risk is unbelievably high. So when they refuse to engage in the discussion be suspicious.
“I’ve read tons of studies on patents and innovation, and never seen any that shows patents lead to more optimal innovation.”
Would you please stop reading studies and look at history! Studies are done by academics with an agenda, are based on thought experiments, do not take into consideration important factors and are preconceived in order to come out with a particular answer. These same folks that look at studies will absolutely and correctly point out that when something is funded by industry and supports industry it should be taken with a grain of salt. Yet, when those with an anti-patent agenda do a study that concludes patents are bad, evil or simply not supported they are hailed as heroes for conducting truly independent and impartial research. Get a grip!
The facts are clear, no studies are necessary. When patent rights are strong industry that requires those rights forms. When rights are weak industry does not form. When rights transform from strong to weak industry leaves. Look at the pharmaceutical industry. A clear majority of the world-wide industry is located in the US, and because India has become a major player over the years Indian law was changed to protect pharma. Pharma is leaving Europe, and is found no where the rights are weak or non-existent. Also look at China. Since the Chinese have taken steps to take patents seriously and steps to at least start to or occasionally crack down on copyright piracy and trademark counterfeiting, investment is flowing into China and companies are seeking Chinese patents. That is not accidental, it is causal. Also look at the countries, such as India and South Africa, that have taken steps to mimic US Bayh-Dole legislation, where government provides seed money, Universities do basic research and own rights and then license out to industry. Everyone, including Vice President Joe Biden, acknowledges that Bayh-Dole is the most successful piece of legislation in the post World War II era. It created no problems or unrest, and simultaneously provided enormous benefit to society, industry and the US economy.
I could go on and on and on, but it won’t matter. These facts will be ignored, argued around or deflected and used to ridicule. The reality, whether anyone chooses to accept it or not, is that history is filled with hard, indisputable evidence that shows the positive effects of a strong patent system. History is completely absent of any proof that abolition of patents would be a good idea, or that weak patent rights are preferable.
“I have been a software engineer my whole career (a bit of businessman too), and I have some amount of formal education in economics and law too. As far as I know, neither copyright nor patents were at any stage relevant for me for earning money. Does this baffle you? I simply use a different business method than a monopoly rent. That’s all.”
This does not baffle me at all, nor does it contradict anything I have ever said or written. First, those who seek to obtain a patent on the hopes of licensing it to make money are fighting an uphill battle and overwhelming odds against them. There are those who succeed, and will in the future, but it is a lot of work and there are just not a lot of success stories, although those who are successful can be very successful.
Second, if you are making money on an invention that is when a patent has its most value. I tell people I prefer to work with those who will make money on their inventions even without a patent. A patent is not a panacea, it is a tool. If you have something that will make you money the laws of economics correctly state that there will be market entrants. If you can make it difficult for there to be market entrants, or put up hurdles, that provides a business advantage.
Finally, if you are in the software industry and you do not have patents you are naive. Who cares whether the patent is valid at the end of the day? No one in the software industry, I can tell you that for certain. If you are in the industry and have no patents you are a target, and targets get shot. If you have a patent then you are respected. Big companies do not sue little companies for infringing software patents, small companies sue big companies. Big companies can and do push little companies around if they do not have patents, but fear them if they have patents. A patent is the great equalizer in the software space. It is an insurance policy, shield, sword and deterrent all at the same time. So I would not be proud of not having any patents. You don’t have to use them, and you should hope you never need to use them. But when you don’t have them because of a philosophical aversion you need to realize you are not being responsible and building on a house of cards.
Join the Discussion
72 comments so far.
Gene QuinnOctober 24, 2009 09:25 pm
I think you are responding to me Kathleen, but my name is not Glenn.
Ad hominem attacks? Is that what you think my reply was? You made an extremely sweeping statement that is simply not supported by facts or evidence. Perhaps you should give context in the comment rather than forcing people to visit your website.
kathleen fasanellaOctober 24, 2009 07:54 pm
Glenn, you might consider adding a widget so people are notified when a comment has been added. I had no idea you’d responded. Btw, yours was kind of funny. And kind of sad (resorting to ad hominem attacks). And before you attempt to impute someone’s credibility, at least visit their url to get some semblance of context.
Hey, good luck on your upcoming debate!
Gene QuinnOctober 6, 2009 08:46 pm
You are entitled to your opinion, no matter how wrong they are. Frankly, your reply wreaks of someone in the product development, marketing and packaging line. Many times folks in these areas do not want people to pursue patents because if you do the responsible thing you don’t have funds available for their services. If folks fall into that category they really should ask why they are pursuing their invention in the first place.
You obviously are not as sophisticated as you claim to be, and I hardly think you are a technical expert. You are talking about start-ups wanting to license their “usually lame idea.” It sounds to me like you do not deal with start-ups at all, nor do you deal with businesses. Start-up companies are those with investors, technology and a product or service. If those folks do not obtain IP they will fail, pure and simple.
Even your comment is full of tell-tale signs that you are a pretender. A start-up company in the bio-tech sector that does not pursue patents will not be viable for long, and will either never obtain investors or lose the investors they have. The same can be said for any high-tech start-up. Despite you talking in such global terms, which are obviously uninformed, you seem to be focusing on products, perhaps gadgets and then generalizing to absurd levels. You also then conclude that patent are ridiculous in your industry, but never say what your industry is.
If you are eating from the innovation plate I suspect you go hungry often. Folks are free to follow your advice if they like, and I suspect many unsophisticated inventors and entrepreneurs will, to their own peril.
Finally, developing a product that anyone can copy without penalty is an extraordinarily generous gesture to mankind. If that is what folks want to do then by all means do not get a patent and let the fruits of your labors inure to the benefit of society, who will copy you and prevent you from recouping your expenditures.
kathleen fasanellaOctober 6, 2009 08:26 pm
You mention jobs, manufacturing jobs. I know a lot about that with 25+ years experience in the apparel industry, 14 of which I’ve focused on helping entrepreneurs to launch new products. I EAT from the innovation plate.
Now let me tell you something, the start ups who obsess over IP? They don’t go anywhere. They blow all their money on legal stuff and have nothing left over for product development or production. Nobody wants to license their (usually lame) idea. Ideas are a dime a pallet in this business and just as valuable. Execution is everything. It’s at the point that if someone says they have a patent, people snicker. Nobody is going to front you production, you have to either pay up front but at delivery at the latest. The thinking is, if you’re so dumb to have patented something so obvious or existing that it’s been used already for 30 or more years, nobody trusts you. You have limited exposure to the industry and you make lousy decisions. If you pursue a patent, your costs are going to be triple that of anyone else and that’s even assuming your product has legs. Meaning, apparel is seasonally (trend) driven. Miss the boat on a trend and you’ll have to wait 30 years for a reset. Problem is, patent seekers can’t respond in a timely way.
To recap, I EAT from the innovation plate. I’m 100% behind whatever is in the best interests of my clients because that’s what pays my bills. Unfortunately, that isn’t patents (and I’m a technical expert). In this industry (manufacturing and jobs, remember?) patents make one a laughingstock. And besides, here’s another factoid for you. MOST of the people who seek patents don’t care about jobs. At least not domestically. They’re price shopping in Asia so nobody in the US gains from it. And you know, some of those people get knocked off by their foreign contractor or rather, it’s more likely the contractor is cashing in on a trend that already existed prior to the patent effort but the “innovator” hasn’t shopped the market well enough to know that. Maybe patents are great in other industries but they’re ridiculous in mine.
Karl Enevold, PhDOctober 6, 2009 08:30 am
I, for one, can not believe how many Bozo’s are out there. Capitalism dictates profit, patents protect innovation, innovation drives investment from investors, and investors obtain profit from their risk. This has always been clear in my mind. As an inventor, I thought it was a step backward when patents changed from the 17 year rule. Now I see there are more idiots out there who could never innovate themselves. The publication of applications gives me years to come up with a better way to accomplish the same task, in a better way.
AdamOctober 5, 2009 11:30 am
You could do a modified version of a formal debate. Here’s an example format off of the top of my head:
1) A question is posed. Each side has 1 day to answer it independently in written form and send the answer to the moderator. Each answer may be a maximum of 1,000 words.
2) The question and both answers are published simultaneously on a web page.
3) Each side has 1 day to craft a response and send it to the moderator. The response may be a maximum of 500 words.
4) Both responses are published simultaneously as an update to the page with the original responses.
5) A new question is posed, starting over at step 1. This is either repeated a set number of times (e.g. 5) known from the start, or the debate ends when one party declares he or she doesn’t want to participate further.
Gene QuinnOctober 4, 2009 06:55 pm
You are right, but how would one do that over the Internet? I would love to do a “real” debate, and what I envisioned would be a series of follow ups. What I really want though is some kind of even situation where folks can figure out for themselves who answers the question and who has the superior answer. The anti-patent crowd typically does not provide much more than conclusions and insults. So I am game for whatever and find it insulting for Kinsella to lie about what I offered.
Thanks for reading, and if you have any ideas on how to pull this off I would love to hear it. I would also be willing to appear live for a debate if it can be pulled off.
FrankOctober 4, 2009 06:46 pm
Gene, I’m on your side of this argument but what you are suggesting is not a debate. Any real debate on the issue would allow each of you to counter the other’s arguments. What you are proposing does not appear to allow for that.
Gene QuinnOctober 4, 2009 06:31 pm
Just to let everyone know exactly what I offered to Mr. Kinsella via private e-mail communication — you can see a screenshot of my message to him 5 days ago. I have since repeated this in answering comments, and again earlier today in a blog post. Mr. Kinsella does not want a point by point debate where the same question is answered and readers can decide. Not surprising at all. He has no problem reaching conclusions that my positions are “fumbling” and my arguments “eviscerated” but he has to lie about what has been proposed in order for him to save face. Truly unfortunate.
Notice I deleted the e-mail address, and I have only presented what I said so as to not compromise the private communication of others, or to open e-mails up to spam.
Gene QuinnOctober 4, 2009 06:14 pm
Actually I have offered this, specifically and repeatedly, and in private e-mail communications you and I have had. To be honest, I didn’t think you were a liar, but now it is clear that you are. I have offered this very thing over and over again, and now that you cannot hide from the offer any more you elect to run and hide and call my arguments “fumbling.” If they are fumbling then you should have no trouble “eviscerating” me in public. Everyone knows why you won’t agree, and your attempts to continue to cast me in a negative light are pathetic.
I am glad that you see no reason to continue and hope you never visit IPWatchdog.com again. I have no use for liars.
Stephan KinsellaOctober 4, 2009 05:12 pm
“I have offered a point by point debate where everyone answers the same question in 300 to 500 words”
No, Gene, you have not. And this is evident to anyone who reads your fumbling attempts at argument. I see no reason to continue to discuss this with you.
Joff WildOctober 4, 2009 02:20 pm
Stephan #54, I am not sure that Mike Masnick does “eviscerate” Gene in the blog that you link to. No-one is claiming that the current patent system is perfect, but if you believe that innvators will simply pay for innovaiton without the patent system, you are asking us all to take one hell of a big step on trust.
You may not like the argument, but it is a pretty clear one to understand and does not seem that problematic to me: we know where we have got to today with the patent system that we have; we have absolutely no idea what may have been achieved without it. It could be that, as the arguments you and Mike make imply, we would have had more innovation and even more exciting and powerful products across a range of technologies. But what if you are wrong?
What if funding to start-ups and SMEs – so frequently the source of disruptive technological progress – dries up because VCs and other investors will not back companies that cannot protect their innovations?
If these start-ups and SMEs do manage to get a product to market, what happens when it is copied and sold more cheaply by a bigger competitor with stronger supply lines and the ability to take a hit unti the start-up/SME folds because it just canot match the big company price?
What happens if drugs companies decide they no longer want to spend billions on R&D because as soon as they come up with something worthwhile generic companies will be at perfect liberty to produce and sell copies at much lower prices because they have not had to invest in the R&D?
What happens if companies from the developed world stop transferring technology to the developing world because they no longer have any kind of certainty the technology will not just walk out of the door?
If we are going to get rid of patents, we need a lot more from the anti-patent side than a few economic studies tat may seem to suggest patents are a drag on innovation – especially when you go into these studies and look at some of the mis-assumptions about patents and the way they are used that underpin them. In any case, it is not as if economists have a flawless record in predicting the future. If they did, we would not just be coming out of the worst financial meltdown the world has been through in the last 80 years.
As I said, we know where we have got to with the patent system. And we have not done too badly. Maybe we could have done better without patents. But the onus has to be on those who believe so to demonstrate this absolutely, because if what you want is done and it turns out you were wrong everyone on this planet is going to lose an awful lot.
Windbag MeterOctober 4, 2009 02:15 pm
Larry N. Martin,
Are you obtuse? Do you not recognize the purpose fo the Windbag Meter posting?
While a usual gambit in the arena of public opinion manipulation, an avalanche of dogma makes for a weak legal argument.
David KoepsellOctober 4, 2009 02:11 pm
Sorry, Gene, then I’ll stop whining and pay my property “fees” and the fees levied on my income to pay for all those wonderful services the government provides for me. It sounds to me like the solution for the budget shortfall would, in your mind, be to simply allow more patents, then they could collect all the more fees, and then the PTO would be rolling in money, except they cannot keep up with the workload as it is now, so the bureaucracy will have to grow, and then they’ll need more money, etc., etc.. It’s a Ponzi scheme, and we all pay since innovation is actually hindered in the process, as numerous studies presented by Stephan and Mike have demonstrated.
Who will pay for innovation? Why do you assume that entrepreneurs won’t choose to do what Peter does, and innovate, release good products to market, and choose to operate without IP protection? Consumers will pay for innovations they value, and smart businesses will create ever better products and gain customer loyalty. This is how innovation worked for ages, and whether you believe it or not, you may not be necessary for that process. Not everything in life needs some kind of lawyer exacting expensive hourly fees for it to work.
I have proposed a modest experiment to test this theory, although there is plenty of evidence supporting the notion that innovation not only might not require patents, but might be speedier and more efficient without them. No one has responded to my comments about the mess that patents have resulted in for big Pharma… Nor has anyone explained to me how patents are not a socialist institution, a form of corporate welfare, or a government subsidy. I assume no one has any good responses then to these claims.
We have answered the claim that somehow history “proves” that patents are necessary for innovation. History proves no such thing, and you can only point to correlations. Moreover, there is good evidence that the opposite is true, although you choose to dismiss those studies and that evidence, replying instead on your allegation that “history” provides all the proof. Our studies are flawed, but your recourse to “history” is ample proof? Which takes us back to square one.
I must modify my earlier claim that these are simply religious viewpoints, because in the course of this discussion a number of apparent converts to the anti-IP side have emerged, so I see that some people, when faced with the evidence will change their minds. I will hold out hope that you too might someday set aside your religious belief, ditch the propaganda, and look carefully and objectively at the evidence, Gene. Meanwhile,
Gene QuinnOctober 4, 2009 12:55 pm
I have offered a point by point debate where everyone answers the same question in 300 to 500 words, and as yet I have no takers, yet you contend I am completely outmatched. That is obviously not the case, and you and everyone else is obviously afraid to answer questions one at a time and let readers figure out who is and who is not outmatched. No point proving in a straight forward manner that it is Kinsella who is outmatched. That is the only reason no one will take me up on my straight forward proposal.
Your cowardice is astounding, particularly given how you conclude I am eviscerated and outmatched. I say let the evisceration and outmatching begin and let folks figure out who is willing to talk substance and who is just blowing smoke. Of course, you won’t take the challenge because you know as well as I do where you fall on that spectrum and you would rather others not be able to figure it out so easily themselves.
I also find it exceptionally ironic that you expect me to answer your questions and Masnick, yet you refuse time and time again to answer a simple question at the heart of the matter. You conclude innovators pay for innovation, but cannot bring yourself to even acknowledge the free-rider problem. How can you think you know anything about economics? Your ignorance is almost unbelievable. I don’t think for a minute you are ignorant, which has to mean you have an agenda. God help those who listen to you. Your arguments tend to help big-tech and continue the subjugation of individuals and small businesses.
Stephan KinsellaOctober 4, 2009 12:37 pm
“I am growing tired of your ignorance.”
I think you are getting tired of being completely outmatched. It is evident to everyone who reads this that you are responding in a bizarre fashion.
“If you want a debate lets start with the simple question you keep ignoring. Who pays for innovation if we do away with the patent system, and will there be enough money to yield the same level of innovation that the patent system provides?”
Gene, how does your posing-a-question serve to justify IP law? The question is: is patent law justified? If you think it is, mount a case. Tie it in to your question about “who pays for innovation”? I mean the answer is obvious: innovators pay for it. You think the missing steps between your half-rhetorical question and your conclusion are obvious; they are not. If you will try to flesh them out you’ll see why. Go ahead.
Gene QuinnOctober 4, 2009 10:07 am
I am growing tired of your ignorance. I offer to debate on terms where specific questions are asked and those same specific questions are answered by whoever is interested. Masnick does nothing to “eviscerate” me, and if you don’t know that then you are rather lost. So if you want a debate lets get to it. Since you, Masnick, Koepsell and others have completely refused to address the first point I raised I see no reason to respond to the diatribes that you and others are spewing.
If you want a debate lets start with the simple question you keep ignoring. Who pays for innovation if we do away with the patent system, and will there be enough money to yield the same level of innovation that the patent system provides? Of course we all know the answer, and we all know why you, Masnick, Koepsell and others refuse to answer this very simple question. If you are right then why be so afraid to answer the question?
I have no interest in educating you any further. My time is precious and I charge by the hour. So if you choose not to engage in a point-to-point debate as I suggest and start with answering the question you and others continue to dodge there is no point in going forward. There is simply no point in engaging in diatribe after diatribe and then claim that ill formed and illogical statements and arguments “eviscerates” anyone.
So why are you afraid of picking several questions and debating point by point with 300 to 500 word answers? You are afraid that in such a controlled experiment it will be to easy for everyone to identify the winner based on who answers the question and from those who actually answer the question (which would almost certainly only be me) who presented the best argument.
Gene QuinnOctober 4, 2009 10:01 am
This will probably come as a shock to you, but a fee for a service is NOT a tax.
On top of that, I believe we are now at over 50% of the users of the USPTO not being US citizens and/or US corporations. So those folks who do not pay US taxes are not US taxpayers. This seems pretty fundamental and obvious to me.
As for the budget shortfalls, they exist because of terrible mismanagement of the USPTO during the last 5 years of the Bush Administration. Innovations that should have been patented were rejected and big companies were able to obtain patents on a variety of crap. The allowance rate was driven down to 42% and the Patent Office obtains 70% of its revenue from continuing payments to keep a patent enforceable (i.e., maintenance fee payments). There are no maintenance fees paid on patent applications that are rejected once and for all and never issue.
You are finally right about something. The patent system has been a drag on the economy because the USPTO has not granted enough patents and forced a lot of start-up and small businesses to lose investors. I know you are saying that a functioning patent system is a drag on the economy, which is false pure and simple. No one has “elucidated” otherwise.
I find it odd that you and others who are railing at me keep ignoring the central question that I have asked repeatedly. Obviously you have no interest or ability to answer the question because you and others know if you did you would have to acknowledge I am correct and you are wrong.
Finally, all of the mistakes you make in this short comment demonstrate that you do not know what you are talking about. Opinions are fine, but uninformed opinions are dangerous, and your is terribly uniformed. Did you even know that those who are not US taxpayers use the US patent system? Do you realize how ridiculous it is to say a fee for a service is a tax? Do you know that almost no patents enjoy their full term because of failure to pay maintenance fees? Do you know that many patents enjoy a term of ONLY 4 years? Do you know many more enjoy a term of ONLY 8 years? Your arguments are based on incorrect and incomplete information, yet you have the audacity to question the truth of what I am saying? Why not try and inform yourself before you make such factually ridiculous statements.
Stephan KinsellaOctober 4, 2009 12:49 am
“So, when a peaceful company, minding its own business, independently creates various products and services, and is sued out of the blue for patent infringement based on a patent they never heard of, based on ideas they independently came up with, they are wrong-doers? they are tortfeasors?”
“ANSWER: Absolutely. Just because you do not like the law doesn’t mean it is not the law.”
Gene, of course it’s the law. But not ever violation of the law is a tort. What, exactly, is the “tort” committed when someone runs afoul of statist patent law? Are you sure you are a licensed attorney?
“Patent laws do not allow for independent creation as a defense.”
Except for when they do, as in the prior user defense for business methods.
Anyway, why shouldn’t the law allow for this?
“Nothing you are I say will change that,”
Yes, Gene, I am aware that I am not Emperor of North America and that my “sayings” don’t “change” the law.
“Independent creation is not a defense and wishing it were and acting like it is demonstrates an extremely naive view of the world.”
Who does? Is your position so weak that you can do nothing but embarrass yourself by attacking strawmen?
“You cannot begrudge others from using the tools at their disposal,”
Yes…that’s why I help others get patents. Which you seem to begrudge me of.
” and that is what the anti-patent crowd does. If they don’t want patents fine, they will simply be targets. That is their choice.”
Yes, targets of the statist, immoral, unjust law that you support. How magnanimous of you.
“ANSWER: Of course there are costs brought to bear by the patent system. Even if those costs are more than the benefit I would not agree with your view, partly I think because we are looking at it from different perspectives. We can conduct the analysis you suggest, and we should do just that. But we should also analyze what it would cost in order to come up with the innovation we want as a society absent a patent system. The cost of government funded innovation would be enormous.”
So… even if the costs exceed the gains, you would still be in favor of the patent system. Check.
I appreciate your comment, but I do disagree. Ask around about me. I have very few friends in big-tech and for most of the last 5 years I had few friends at the USPTO or in Congress. I continually write the patent system is broken, needs to be fixed and is not accomplishing the Constitutional mandate. I don’t think anyone that looks at my body of work could fairly say I have a biased view of the patent system, save one situation. I do admit to being strongly against doing away with the patent system.”
oh, just that? Wow. I see.
“Lets get on with the debating.”
You keep saying this while refusing to engage. Masnick has it right–he eviscerates you, and nails you completely to the wall: http://techdirt.com/articles/20090930/0158056366.shtml
David KoepsellOctober 3, 2009 08:40 pm
You mixed up what I said. Those who use the system pay a fee, which is a tax. Are they not taxpayers? Aren’t we all also clearly subsidizing the entitlements of all the bureaucrats at the PTO as well? Why is there a budget shortfall? The fees aren’t working. The systems costs a lot, and furthermore, it is drag on the economy, as elucidated so clearly by others above.
My mind is intact, thanks.
Gene QuinnOctober 3, 2009 07:05 pm
Please clarify what the fees are. I understand that fees are a tax, but saying taxpayers pay a fee is not true or at the very least exceptionally misleading.
As far as comparing patent attorneys to personal injury attorneys, I think you have lost your mind.
David KoepsellOctober 3, 2009 06:32 pm
Of course taxpayers fund the system, it’s a governmental bureaucracy, driven by fees, but “fees” are a form of tax (or maybe you think a govt run health insurance system supported by “fees” would cost us nothing?) Fees are a form of tax. The fees might in a good year barely cover the operating budget, but will they cover the pensions for the thousands of additional government employees, and their health insurance? The PTO is backlogged and underfunded, and runs at a deficit as noted by the folks at Inventive Step: http://inventivestep.net/2009/03/23/pto-budget-shortfall-could-have-profound-effect-on-patent-system/ where they half-jokingly suggest a bailout…
Moreover, this bureaucracy is a gate-keeper for innovation, creating a racket that market participants must either pony up and pay for, or risk the likelihood of a infringement suit tying up their business, and forcing a sale or a settlement. Patent attorneys are no better than tort lawyers, eeking out fees for a service that they convince people they somehow need, even when they don’t, thus skewing market prices, slowing down innovation, all because they can lobby for ever increasing expansions of their domains….It was Microsoft, after all, that recently called for a “world-wide” patent system. Hasn’t government screwed up markets sufficiently? Can’t we learn anything from the economic downturns? Governments are poor predictors of value, and even worse managers of markets.
That government is best which governs least…
or not at all.
Gene QuinnOctober 3, 2009 09:33 am
It is hard to take what you write seriously when you start with “none of the people [I] deal with deal with the cost side of the patent system…” You do realize that is not accurate and borders on the absurd. Everyone I deal with deals with the cost side, as do everyone and every business that every patent attorney or patent agent works with. I do a patent search and tell folks they cannot obtain a patent as broad as they would like, there is less room, little room or no room to operate, etc. So if you really think that patent attorneys do not deal with the cost side of the patent system you are sadly mistaken and ill informed.
You also say that taxpayers finance the system, which is 100% completely wrong. Taxpayers do not finance the patent system. The US patent system has funded taxpayers, not the other way around. The Patent Office is a fee based system, that receives no government subsidies and over they years has paid billions back to the general treasury. So when you say this you lose a lot of credibility.
Excuse me for noticing, but it is not my responsibility to convince you of anything. I set forth my position and explained why I would not agree with Stephan even if what he said was true. Let me try and explain why in terms that you will understand— BECAUSE HE IS ASKING THE WRONG QUESTIONS. I apologize profusely to you and others for having independent thought and being willing to back up my positions with facts and rational argument. Obviously, none of that matters and until I am willing to accept only your side you will not believe I am anything other than an IP proponent. The truth is, however, that you are the one who is the ideolog, not me. I don’t suspect you will ever understand that or admit it, which makes it all the more obvious. Really, the nerve you have! Unless I agree with you then I am not worthy. Then stop reading IPWatchdog and go elsewhere where your style of debate is heralded as enlightened. Here we keep it real and call folks out when they are not ready for prime time and are unable to articulate facts, the facts they do articulate shows they do not know what they are talking about and are arrogant in their ignorance.
Peter SurdaOctober 3, 2009 04:58 am
none of the people you deal with deal with the cost side of the patent system though. This is a classical fallacy of biased sample.
Who deals with those costs are:
– people that cannot participate in the business due to inflated entry barriers
– consumers paying inflated prices
– taxpayers financing the system
– opportunity cost of inventions that cannot be invented because the investment flowed elsewhere. Due to their nature, you obviously cannot talk to people that are affected by this.
If you want to make me seriously believe that you are not (just) an ideological IP proponent, you need to state your theories in a falsifyable manner. So far, you have done exactly the opposite. You have stated that your belief wouldn’t be shaken even if whatever Stephen says was true. That is an indication of ideological approach.
So, what if it was shown that patents prevent more inventions that they encourage? What if the net society benefit was negative? What if there was no difference between patents and racketeering? Would you still hold your beliefs?
You write: “I continually write the patent system is broken, needs to be fixed and is not accomplishing the Constitutional mandate.”
How do you know that it is not achieving it now and that if you “fix” it, it will achieve it?
David KoepsellOctober 3, 2009 02:03 am
It is encouraging to see that people like you have “converted” and lost your faith in IP. Some people, when confronted with evidence, do indeed lose their religion and embrace reason and rationality. I won’t hold my breath, however, waiting for more patent attorneys to follow suit. Still, one can hope.
Gene QuinnOctober 2, 2009 05:29 pm
I appreciate your comment, but I do disagree. Ask around about me. I have very few friends in big-tech and for most of the last 5 years I had few friends at the USPTO or in Congress. I continually write the patent system is broken, needs to be fixed and is not accomplishing the Constitutional mandate. I don’t think anyone that looks at my body of work could fairly say I have a biased view of the patent system, save one situation. I do admit to being strongly against doing away with the patent system. I am against software not being patentable subject matter. I am in favor of the patent system working as the law says it should, which does not happen all that often unfortunately. There is nothing wrong with software being patentable subject matter, but everything wrong with software that is not enabled being patented, or software that shows no innovative contribution being patented.
To the extent folks are judging me based on this thread or these couple articles, I understand why you think what you do. That is why I would really like to engage in an Internet debate on the Lincoln-Douglas scale. I fundamentally disagree with where Stephan and others arrive, but I wonder how fundamentally we disagree with basic premises. I think it is fair to say we all think the patent system is broken, needs fixing and does do harm. I think we have different opinions on how to fix the system and what would happen if the system just disappeared.
Lets get on with the debating. I propose we start with a basic topic or two and get views on the table, and I would love to have folks disagree with me and then say why they disagree rather than resorting to the “if you think that then” crap. I have gained tremendous respect for Stephan and others who are engaging.
Gene QuinnOctober 2, 2009 05:21 pm
You say: “So, when a peaceful company, minding its own business, independently creates various products and services, and is sued out of the blue for patent infringement based on a patent they never heard of, based on ideas they independently came up with, they are wrong-doers? they are tortfeasors?”
ANSWER: Absolutely. Just because you do not like the law doesn’t mean it is not the law. Patent laws do not allow for independent creation as a defense. Nothing you are I say will change that, not at least in the US. So if companies want to believe that is the law they are wrong. They can believe that it should be the law, but it is not. Independent creation is not a defense and wishing it were and acting like it is demonstrates an extremely naive view of the world. You cannot begrudge others from using the tools at their disposal, and that is what the anti-patent crowd does. If they don’t want patents fine, they will simply be targets. That is their choice.
You say: “Gene, surely you acknowledge that the patent system has costs, correct?”
ANSWER: Of course there are costs brought to bear by the patent system. Even if those costs are more than the benefit I would not agree with your view, partly I think because we are looking at it from different perspectives. We can conduct the analysis you suggest, and we should do just that. But we should also analyze what it would cost in order to come up with the innovation we want as a society absent a patent system. The cost of government funded innovation would be enormous.
One of the things that is exceptionally difficult for me in this debate is everyone is ignoring the reality that it takes $500,000 to get a simple kitchen gadget from idea to market. It takes 1,000 to 2,000 times that amount to get a drug from idea to market. Where does the money come from innovation if not from greed? No government could pay for innovation at anything near the levels we have now. So while we ask what the costs are vs. incentives gained, we need to ask what the costs of achieving those same innovation benefits would be for a different model. My guess is everyone wants new drugs, better treatments and technological advances. If we plot innovation to be achieved vs. cost using a government funded model I suspect virtually everyone would opt for the system we have, even if there are higher costs for the life time of the patent than we would like.
One final thought. Software is the 1600 pound gorilla in the room. I almost think we need to have a software only debate. Software, unlike any other area of innovation that I can think of, does seem to move forward absent patent rights. There are many folks who will make software even if they do not get paid. The costs associated are very low though, and the marginal cost of production approaches zero. So that is a very different animal than drugs, machines or other tangible items.
I personally think far more software has been patented than should, and I think the big companies are the ones to blame. They patent crap, and for reasons not fully know to me (although I can guess) the US Patent Office has issued those crappy patents while holding up patents on far more important and even revolutionary innovations by small companies. I do not have a problem with software patents per se, and I think the test in the US is all wrong. It should not be unpatentable subject matter, but it should be an innovation, which means it needs to solve a problem not heretofore solved.
Insofar as patent term is concerned, I do not buy into your 0 or forever approach. I do think that the basic agreement between the government and inventor/company is that you get exclusive rights so that society will benefit from the freedom to use the invention after the term expires. With software does that ever really happen? Sure it happens with drugs that have generics, with devices that have a long relevance, but does any software really ever get to be used by the public after the patent expires? This is a legitimate question and continued “one-size-fits-all” patent term and policy is ridiculous. I have written about that for years. I would rather fix the problems and actually get a working patent system rather than throw it away. If you are wrong the costs would be enormous. So why not fix what we have before we say the entire concept can’t work?
Gene QuinnOctober 2, 2009 05:01 pm
You do realize you are not adding to the debate in any way, correct? Attacking me personally is a tired tactic of those who really have nothing to say. Would you care to debate me one on one regarding substance? I would be happy to prove to everyone which one of us is not understanding. Let me know, and we will set it up. Of course, I am not about to hold my breath.
Larry N. MartinOctober 2, 2009 04:58 pm
Yes, Windbag, Peter and Stephan are throwing way too many words out there, because clearly Gene is either not reading them or not understanding them.
Windbag MeterOctober 2, 2009 02:30 pm
Viewing only those who have post on this and the sister thread more than three or more times, the official Windbag meter presents the average lines per post:
Peter Surda – 11.3
Stephan Kinsella – 10.2
Gene Quinn – 5.3
Mike Masnick – 4.7
David Koepsell – 3.7
American Cowboy – 2.7
Peter and Stephan – try to sharpen your arguments as you are just throwing way too many words out there.
Stephan KinsellaOctober 2, 2009 01:02 pm
“No one seems to want to address the primary aspect of patents that encourage innovation.”
Gene, surely you acknowledge that the patent system has costs, correct? If so, how do you know the value of the innovation created due to patent incentives (minus the value of innovation lost due to patent effects–e.g.. a company resting on its laurels and slowing the pace of innovation once it gets a patent it can use to protect its market for 17 or so years) exceeds these costs? What if the costs are greater? What if the patent system imposes $40B in cost and only incentivizes $15B in net innovation gains… ? Would you support the patent system even then? If not, how do you know the net is positive, not negative? If you claim to know that it’s positive, what is the number? If you ignore these questions this is just confirmation you are not serious about discussing this matter.
“I detest mega-giant companies who think they have a right to infringe and are trying to stack the deck against the little guy by weakening the patent system.”
let’s assume you are right about how big companies abuse the patent system. Okay, but you are in favor of putting the patent system in place–of having a system-to-abuse. You remind of advocates of welfare who then whine about how people abuse welfare. If you set up such a system people will respond to it and use it.
“They ignore that they are tortfeasors and are infringing. They are the wrong-doers, not the companies that sue them.”
So, when a peaceful company, minding its own business, independently creates various products and services, and is sued out of the blue for patent infringement based on a patent they never heard of, based on ideas they independently came up with, they are wrong-doers? they are tortfeasors? So RIM deserved to have $600M extorted from it? Because it had the audacity to … design a good smartphone and sell it to millions of people?
Peter SurdaOctober 2, 2009 12:41 pm
just a short response. You are accusing others of ideological bias. Undoubtedly, there are IP opponents like that. Just like you are an ideological IP proponent. Your sentences consist of:
– unsupported claims
– glorification of the patent system
– claims omitting the cost effect that would work equally well if you replaced the word “patent” with the word “racketeering”
I understand your bias as a result of your occupation. You are in contact with people that are expecting money due to the patent system and want to spend it. You are not in the contact with people that lost their money as a result of the patent system, and the businesses that were never created because patents made them impossible. You have not analysed the opportunity costs of the patent system, because from your perspective, everything is revenue.
It is very natural for people to have belief in what they do. Defending your beliefs argumentatively is very difficult, time consuming and unrewarding (because of cognitive dissonance). What if you participated in a proper debate and came to the realisation that all this time, you have been wrong? I suspect your whole life would crumble.
Anybody can fall into this trap. I used to be an ideological IP proponent. Because that’s what the propaganda says. However, the more I was trying to defend this position to myself, the more obvious it became that my defense is insufficient. The realisation was gradual. For example, it was only a posteriori that I realised that copyright was not relevant for me earning money, after many many years.
This has nothing to do with IP or patents. That’s simply how human mind works. Having a belief gives you a drive and allows you to achieve higher goals. However, it doesn’t make your beliefs true.
I write this because I believe that you are not actually evil or incapable of arguing, but that your beliefs have got the best of you. I do not believe that with your approach I would be able to persuade you of being wrong. But maybe I can make you appreciate that some of your opponents might be more rational than you originally assumed.
Gene QuinnOctober 2, 2009 11:43 am
The poll is not at all shocking, and is why patent pools are common. You don’t have to get a patent for the purpose of suing others, but not everyone agrees as indicated in the poll. I suspect a good many people who didn’t respond to the poll would not give up rights. So those that do not want to get a patent are simply a target for those that do. The rules allow patents, and if you are not going to get a patent then you walk around with a bulls-eye.
This poll also has nothing to do with whether patents encourage innovation. No one seems to want to address the primary aspect of patents that encourage innovation. Because patent rights are strong and infringement is not a viable business option people need to figure out ways to do things that do not infringe. That is the march of innovation.
I detest mega-giant companies who think they have a right to infringe and are trying to stack the deck against the little guy by weakening the patent system. They ignore that they are tortfeasors and are infringing. They are the wrong-doers, not the companies that sue them. They are seeking to upset the apple cart and turn the patent system into one that does not encourage innovation. When folks are free to use the work of others what is the point in creating truly revolutionary advances? Isn’t that exactly what we have seen with so many wanting to work with the Microsoft borg rather than working against them? Isn’t this why open source has caught on? There has to be a better way than giving in and making a deal with the monopoly. When the deal with the monopoly is done there is no reason to want to advance.
Stephan KinsellaOctober 2, 2009 11:27 am
Incidentally, some here may find this of interest: Patent Rights Web Poll http://blog.mises.org/archives/005410.asp
Would you give up your right to sue others for patent infringement in exchange for immunity from all patent lawsuits? [250 votes total]
Yes (195) 78%
No (55) 22%
Gene QuinnOctober 2, 2009 11:26 am
If you think I am getting owned or pounded then you really should read what is going on.
A debate is one in which facts matter. When I set facts out and they are ignored in favor of “if you believe that there is no point talking” then that shows I have won on every level.
The reality is that patents do not harm innovation, they encourage innovation by forcing inventing around. Patents are fragile, and if there is a patent you don’t like then box in the owner of the patent and force a deal to be made. Very simple business concepts are being ignored as a result of hatred of patents.
Those in the anti-patent movement usually (and I am not saying you do this) read the title, the Abstract and look at the pictures and then throw up their hands. None of those things are relevant, and unless and until you do a detailed analysis of the claims you don’t know what a patent covers. Most in the anti-patent movement think they understand patents and patent law and it is their ignorance of the truth and law that causes them to believe that they are being limited.
There is no doubting that patents are a real barrier to entry, and they can cause modification of behavior. This very characteristic that you and others don’t like is exactly why patents foster innovation. The trouble with the debate that is ongoing is pretty much everything that is being said against me supports my position.
I would prefer a more structured debate where we can pick an issue or question and drill down on that going back and forth and be forced to stay on topic. Then move to the next topic, and so on. I also think that if we were really to engage in a fair debate all of the mischaracterizations of my positions and what I stand for would slow, at least to some level. I am a huge critic of the patent system, but I do not think patents are the evil. Certainly there is good and there is plenty of bad in patents as well. I write about that all the time. The trouble becomes when there is a mixing of apples and elephants. Some patents are very bad, ridiculous and should never have been granted. I think many software patents fall into that category. The law was ignored when they were issued, and that is problematic on an extreme level. That, however, does not mean that software patents are evil and should not be allowed. It means the law should be followed. Likewise, the fact that there are bad patents doesn’t mean that the system that has been set up is not one that encourages innovation, it means that there is some kind of defect in the implementation.
In mature markets patents simply do not harm innovation, they encourage innovation. On the other hand, in an immature market patents can cause difficulties for new entrants, but this is only on the first level. In the tech world those who are new to the market typically come with a benefit not previously provided. If those market entrants are philosophically opposed to patents and do not seek their own patents, which happens a lot in some technology areas, there is a break down in the model and trappings of a mature industry may never completely develop. That is not a patent system problem, that is a problem that is cause by those who would prefer not to have patents and do not seek their own patents. If individuals and companies make that choice they can hardly claim the patent system is at fault. The willing decision to not participate has made them targets to be pushed around. The solution is not to abolish patents, have 0 term patents or otherwise limit patentability. Life is full of choices and choices come with consequences. The rules are what they are, and the rules are set up to lead to more innovation on a macro level, not a micro level. There is simply no justification for throwing out patents or the patent system when those who are most affected in negative ways have brought upon them their own troubles by failure to play by the governing rule book.
JulesOctober 2, 2009 10:42 am
“I will address it and explain why you are incorrect on each and every point.”
This is one reason logical debate is not possible with you Gene. Hubris, anyone? I can only imagine how you would have fared in the Old West.
Stephan KinsellaOctober 2, 2009 10:35 am
D. Kerton–your post is fantastic and thorough. It completely eviscerates Gene Quinn. It is evident to almost anyone reading this that Quinn is not up to the task or not serious.
A few comments on your post. First, not only are Quinn’s repeated personal attacks on Kinsella-as-patent-lawyer bizarre, and irrelevant to boot, they would even apply to him. After all he has said that the patent term for some types of inventions is too long. Does this mean no one should hire him to pursue a patent for the current 20 year term that Quinn does not himself believe in? I suppose any patent practitioner who wants any reform to the current system should not be hired to pursue patents under the current system–after all, he doesn’t believe in the current system if he thinks it should be changed!
How manifestly absurd.
“Do you think Stephan Kinsella’s personal ethics or politics ARE relevant to optimal public policy on IP? Or are you just trying to silence dissent among the barristers?”
I think he is doing the latter, which I detected immediately and pointed out in my very first response to him–which he then took umbrage with, and then proceeded to do it again and again. It is astonishing to me that Quinn seems so threatened by the complaints of a minority position; when Quinn is *getting his way*–he believes in a patent system (or says he does–I’m not sure any patent lawyers really believe it in; they are in favor of it, for obvious reasons, and pretend they believe in it to help prop it up) and he has one in place. He should be happy. His side has won. I have a feeling his side is concerned because they know our arguments are appealing and our numbers are growing, because the rickety system he supports is undefendable.
“Gene, your “history” proves nothing. Yet Stephan cites numerous studies and books on the subject full of evidence that patents may be a net drain on innovation. You brush those off…well, you don’t really even do that…you just ignore that they were even mentioned.”
Yes, he is completely ignoring the challenge to simply tell us what the net benefit it, how he knows this, or even that it’s positive; he ignores the studies; etc.
“Some on Gene’s side of the debate, and Gene himself, have said that it is impossible to change people’s minds about this issue. An anti-IP commenter mentioned that it was a religious debate. I disagree. I, like many people on the less-IP side of this issue tend to have started out on the pro-IP side. We are indoctrinated with the notion that patents and invention go hand-in-hand long before history or college studies. We have stories of Edison, of Watt. We see biographies of inventors on the History channel and patents are always mentioned in a positive light. We have board games linking patents to innovation, endless stories like the recent movie Flash of Genius. We have an IP industry singing the praises of IP. In Silicon Valley, we had VCs saying that startups needed good IP portfolios to be worthy of funding. It is only our willingness to think dispassionately about the issue that has brought us to the less-IP side of the debate. Until as recently as 9 years ago, I pretty much assumed patents = good. But 13 years in Silicon Valley, and the application of the principles of my Economics degree to the subject have led me to revise my position. Many republicans or democrats grew up in a “democrat household”, or a “Christian household” or whatever, and learned their views from their parents, and pass them along to their kids. That is seldom the case with anti-IP people. Pro-patent upbringings were almost universal in the US in the post 1940s. We are not the religions ones. We HAVE been willing to change our minds. Present us with good arguments and convincing data, and we’re likely to change them back.”
I agree–in my experience there are lots of people moving from the pro-IP to an anti-IP or more anti-IP position; and this trend is only increasing, as far as i can tell. I cannot even keep count of how many people have told me personally or by email etc. that they have changed their minds on this issue. If I am not mistaken, Boldrin and Levine themselves started looking into this issue, assuming they would show IP promotes innovation; but then realized the evidence pointed the other way — it may be in this interview http://blog.mises.org/archives/010001.asp
“Hardly surprising, of course, that most IP lawyers end up as cheerleaders, though, since that’s how their bread is buttered. In fact, it’s funny when IP lawyers believe that they are uniquely qualified to participate in this debate. I would say they are uniquely qualified to recuse themselves from the discussion for two reasons: 1) they have bias, 2) it is an economics discussion, not a legal one.”
I agree. I am willing to consider anyone’s arguments on their own merits, but Quinn’s attempts to accuse *me* of hypocrisy are bizarre; if anything, it is the pro-patent patent attorney whose motives should be questioned, not the one who questions it at cost to himself (a cost Quinn seeks to increase in an apparent attempt to punish dissent).
“Regarding the discussion of upon whom rests the burden of proof:
Gene argues that since Stephan wants to change the system, as the provocateur, he needs to prove his point (ironically, he then launches ad hominem attacks on Stephan for so doing.) Gene also points out that his view is the majority opinion, and the onus is on the minority to prove their point.
Stephan argues that since it is the pro-patent camp that seeks to distort a normally free market and impose statist policy, the onus is on them to prove their case.
Those, frankly, are both valid arguments. I think it’s safe to say that in any debate, one should be prepared to bring a qualified argument, backed with research, fact, and logic.”
This reminds me economist Fritz Machlup’s comments about the patent system: (quoted in my post
Revisiting some problems with patents http://blog.mises.org/archives/006930.asp
“”No economist, on the basis of present knowledge, could possibly state with certainty that the patent system, as it now operates, confers a net benefit or a net loss upon society. The best he can do is to state assumptions and make guesses about the extent to which reality corresponds to these assumptions. … If one does not know whether a system “as a whole” (in contrast to certain features of it) is good or bad, the safest “policy conclusion” is to “muddle through”–either with it, if one has long lived with it, or without it, if one has lived without it. If we did not have a patent system, it would be irresponsible, on the basis of our present knowledge of its economic consequences, to recommend instituting one. But since we have had a patent system for a long time, it would be irresponsible, on the basis of our present knowledge, to recommend abolishing it.” (see pp. 79-80)”
I don’t agree with his status-quo orientation, but this position is quite interesting and shows the defense of the current patent system is pathetic and gasping for air.
Peter SurdaOctober 2, 2009 09:44 am
what do you consider a “debate”? As D. Kerton pointed out, the debate is happening right now, and you’re getting pwned.
If I may give a recommendation, you can write a blog entry about the cost side of patents (which you so so far have been graciously ignoring), and explain why they are lower than the revenues (which is a prerequisite for a utilitarian defense of patents).
As I said, your business doesn’t experience the cost (at least not directly, it is not on the “battle front”) of the patent system. What if there were patents that regulated how you can conduct your business and one of your competitors used it to drive you out of business. Would you still hold it “evident” that patents are beneficial, now that your “shield” has been broken?
Gene QuinnOctober 2, 2009 09:21 am
Then debate me. Lets go for it. I note that on your blog in the comments you seem fearful of debating me and said that maybe if we were in the same place at the same time you would consider it.
If you want to debate me and set out your “historical” evidence then I will address it and explain why you are incorrect on each and every point.
Peter SurdaOctober 2, 2009 06:36 am
I decided to make another post. Since dry economic arguments do not seem to stir a reaction, I’m making it into a story.
Imagine that the government created a new law that would legalise racketeering business. This, undoubtedly, would lead to the creation of a reputable job of racketeering consultants.
Now, a businessman would stand up and say: I don’t need to use racketeering in order to make money. In fact, for all we know, it could very well decrease my profits. What arguments do you have that this is good?
One of the consultants would say:
You are naive. Racketeering gives you a business advantage. It is like a shield and sword. If you use it, it will get you respect.
Another one would say:
Even if you do not understand all the economic or structural issues that effect your business, you can still make money with racketeering.
Both of these arguments are of course correct. But they also omit something very important and therefore are insufficient to prove that racketeering is good.
Mike MasnickOctober 2, 2009 04:20 am
“Through size comes a lot of advantages, and those advantages can be so much that a small company could never hope to compete. ” — Gene
Never? Really? Hmm. Oh, look. Small Google came from nowhere and beat “big” Yahoo, and now seems to be taking on “big” Microsoft. Oh, and Microsoft? It came from nowhere and beat “big” IBM.
Small companies *regularly* beat out big companies, and they do so by being disruptive. It has nothing to do with patents.
Big companies have scale, but they also have significant disadvantages when it comes to innovation — mainly all of their legacy systems. Look at how innovative startups are running rings around newspapers these days. According to Gene’s logic, that’s impossible because the newspapers were big.
I’ve yet to see a “big” company that is so big that a disruptive innovator couldn’t beat it.
Gene, for someone who supposedly represents small inventors, it’s troubling that you seem so down on their ability to disrupt. Why would any inventor hire a patent attorney such as yourself who doesn’t believe in the ability of the companies he represents to actually build a good product and win in the marketplace? It seems to me that such inventors would be *better* off hiring a patent attorney who believes in their ability to succeed by competing, not running to the gov’t for a monopoly.
Mike MasnickOctober 2, 2009 04:13 am
“Why would we look at studies when history is full of information that those who are anti-patent simply dismiss.” — Gene
Stunning. You posted this AFTER my post on Techdirt which highlighted tons of historical evidence showing you are wrong, which you have totally ignored.
Tough to take you seriously when you use debate tactics like that.
Peter SurdaOctober 2, 2009 02:43 am
Dear Dr. Halling,
allow me to respond. Your argument is valid, but misses the point. Indeed, it may be possible that having a different business model, one that depends on copyright and or patents, I would be able to earn more money. But it also possible that I would earn less! The result of IP is not only revenue, but also costs. There is no way to make an apriori claim that either of them would happen. You need to have a more solid argument to defend IP.
My argument is that IP is not necessary to make money off immaterial goods. That’s all. I do not deny that IP can make some business models more profitable, or even profitable at all. But that also means that it makes some business models less profitable and drive some out of business completely. It is merely a giant redistribution scheme.
I guess IP lawyers are confused because to them IP only results in revenue and not in cost. Whether someone is using patents to attack or to defend, you get your cut. Try to understand please that you cannot generalise this experience.
D. KertonOctober 1, 2009 11:00 pm
Gene et al,
In this debate across two posts on this site, and one on Stephans, I noted that Stephan and you both have views with which I ardently disagree. However, on the topic of this debate, I think you have experienced what the online community refers to as pwnd.
Stephan has repeatedly responded to your arguments, while occasionally adding some anarchist tangents. But he has refuted your logic and presented you with counter-arguments that you seem unable to understand, based on the fact that you fail to paraphrase them when you cite Stephan. You don’t seem to be able to follow his logic. Perhaps your accusation that he is dancing around the issues stems from the fact that you can’t keep up.
Gene, you also repeatedly revert back to the issue of how Kinsella can practice IP law, given his politics. You seem to take jabs at his livelihood by suggesting the folly of clients that engage him. This is akin to bringing his mamma into it. It’s personal, it’s an attack, it’s ad hominen, but most importantly, it has nothing to do with the debate. Stephan explained at least twice how he can practice: Since he lives in a world not of his making he functions within its rules. You don’t have to love the rules to follow them. But what makes you seem just mean-spirited is that you keep bringing it up, despite the fact that Stephan points out to you no fewer than three times, he may or may not be ethical, but it is not related to the issue. Do you think Stephan Kinsella’s personal ethics or politics ARE relevant to optimal public policy on IP? Or are you just trying to silence dissent among the barristers?
You keep saying “history” and facts are on your side, and that you are stating the “obvious”. Well, you have failed to present ANY such history or facts that aren’t simply co-incidental events – in the sense that they happened at the same times with no indication of causality. You cited America’s rise to wealth as the result if IP, yet as a economist, I could point you towards a handful of more likely causes, all with numerous numerical and academic indications of causal relationships. (Access to capital, freedom, natural resources, and the industrial revolution to name a few). Gene, your “history” proves nothing. Yet Stephan cites numerous studies and books on the subject full of evidence that patents may be a net drain on innovation. You brush those off…well, you don’t really even do that…you just ignore that they were even mentioned.
Some on Gene’s side of the debate, and Gene himself, have said that it is impossible to change people’s minds about this issue. An anti-IP commenter mentioned that it was a religious debate. I disagree. I, like many people on the less-IP side of this issue tend to have started out on the pro-IP side. We are indoctrinated with the notion that patents and invention go hand-in-hand long before history or college studies. We have stories of Edison, of Watt. We see biographies of inventors on the History channel and patents are always mentioned in a positive light. We have board games linking patents to innovation, endless stories like the recent movie Flash of Genius. We have an IP industry singing the praises of IP. In Silicon Valley, we had VCs saying that startups needed good IP portfolios to be worthy of funding. It is only our willingness to think dispassionately about the issue that has brought us to the less-IP side of the debate. Until as recently as 9 years ago, I pretty much assumed patents = good. But 13 years in Silicon Valley, and the application of the principles of my Economics degree to the subject have led me to revise my position. Many republicans or democrats grew up in a “democrat household”, or a “Christian household” or whatever, and learned their views from their parents, and pass them along to their kids. That is seldom the case with anti-IP people. Pro-patent upbringings were almost universal in the US in the post 1940s. We are not the religions ones. We HAVE been willing to change our minds. Present us with good arguments and convincing data, and we’re likely to change them back.
Stephan takes the rational stance that there are costs and benefits to the patent system, and says that if we have utilitarian goals, we should seek to measure the costs and benefits and calculate the net effect. Gene, meanwhile, argues constantly about the “obvious” benefits of the system, cites personal examples (weak debate style), and often uses tautological views to support the status quo. Gene, from what I have read, seems to choose to completely deny the possible existence of societal costs of patents. How is that rational? I mean, certainly we can honestly debate whether the net effect is ‘better’ or ‘worse’ with or without patents, but there can be no rational debate if the pro side refuses to acknowledge that there are costs, frictions, distortions, social taxes and other ill effects of instituting a goverment-sanctioned monopoly on an idea. This is not honest debate. If you are so polarized that you can only appreciate one side of this issue, then you are a cheerleader, not a debater.
Hardly surprising, of course, that most IP lawyers end up as cheerleaders, though, since that’s how their bread is buttered. In fact, it’s funny when IP lawyers believe that they are uniquely qualified to participate in this debate. I would say they are uniquely qualified to recuse themselves from the discussion for two reasons: 1) they have bias, 2) it is an economics discussion, not a legal one.
Economists are the ones who are trained to study the issues of which policies will result in which desired outcomes. The debate about optimal patent schemes is one of monopolies, wealth, incentives, technology change, costs, benefits, profits, investment, future value of money, expected values, supply, demand, and policy. Tell me why this sounds like fodder for lawyers? In a perfect world, where people fit in neat boxes, economists would set the policy, and the lawyers would work on translating the policy into law. Gene is overstepping his bounds, and talking about matters which he little comprehends. Stephan seems to have the chops to sip tea with Galbraith and Varian. By the way, I know that everyone has an opinion about economics, and that’s OK. But before you engage in serous debate about it, study up just a little. You wouldn’t advice me to just start practicing law because I think I know a little about it, and I would offer you the same advice.
Regarding the discussion of upon whom rests the burden of proof:
Gene argues that since Stephan wants to change the system, as the provocateur, he needs to prove his point (ironically, he then launches ad hominem attacks on Stephan for so doing.) Gene also points out that his view is the majority opinion, and the onus is on the minority to prove their point.
Stephan argues that since it is the pro-patent camp that seeks to distort a normally free market and impose statist policy, the onus is on them to prove their case.
Those, frankly, are both valid arguments. I think it’s safe to say that in any debate, one should be prepared to bring a qualified argument, backed with research, fact, and logic.
To Gene, who seems to like the obvious, I’ll close with some. Gene says:
“By the way, I challenge anyone to a debate on this topic anywhere, at any time, to be moderated by a mutually agreed panel or moderator. I know as well as everyone here that I will never be taken up on that offer.”
Gene. Are you not aware of what constitutes a debate? It just happened. You and Stephan faced off, went back and forth. You took positions, cited evidence, and had the chance to rebut one-another. Gene follows:
“If I am so stupid and irresponsible and ignorant then someone take me up and prove to the world I am as such.”
What would it prove it the tree fell in the forest, and you didn’t hear?
GilgameshsoulOctober 1, 2009 04:18 pm
Gene: Look, I don’t necessarily disagree that patents encourage innovation, but I just don’t think it’s helps your argument to say “ignore all studies because they are biased”. The question of whether it is good legal advice to tell your client to obtain a patent is a different one than whether patents in general encourage innovation.
David KoepsellOctober 1, 2009 02:39 pm
Noise continues to read every third word, and fails to grasp any… How are patents a free market device? Shouldn’t capitalism embrace free markets? My love for free markets is what drives me to hate patents, since they skew markets, are a state-granted privilege accorded for no better reason than beating someone else to filing something with bureaucrats, and inhibit free, unfettered competition, which is what capitalism ought to encourage rather than hinder.
Patents are more socialist than capitalist. They get the state into the business of marketplaces, of determining what technologies ought to succeed or fail, of boosting patented tech over non-patented tech, rather than encouraging the market to select for the best products and drive pricing. It’s a lot closer to five-year plans than what I envision, which is a market without any state involvement at all.
Of course, as Gene says, “even socialism makes sense” so maybe that’s why Noise and Gene and other pro-IP folks embrace the crutches the state offers, instead of letting a free market prevail.
Me, I’ll take free, unfettered markets any day.
Gene QuinnOctober 1, 2009 01:56 pm
Couldn’t agree more. There are a lot of business people who make money despite themselves and not because of their business acumen. Being in the software industry and having no protection means you are really in the service industry. More specifically, in the service business of providing competitors the ability to compete without developing.
Gene QuinnOctober 1, 2009 01:53 pm
Does it sound like I am kidding? Which part of what I said exactly sounded like I was kidding? You do realize that asking the question you do does not add to the debate and provides no substance, right? You are at least that sophisticated, correct?
Why would we look at studies when history is full of information that those who are anti-patent simply dismiss. Repeatable patterns throughout history are evidence, and studies that are skewed to achieve the outcome desired prior to the start of the study are useless. That is true whether you want to believe it or not. What is also true is that ignoring reality and facts, playing games saying correlation is not causation, etc. etc. gets old quickly when I am trying to deal in facts myself.
Gene QuinnOctober 1, 2009 01:50 pm
I was probably careless with the use of the term “natural monopoly, ” which I know has concrete meaning in antitrust terms and in economic terms. What I was referring to was the inherent advantage that large companies enjoy due to their size, funding, ability to make mistakes over and over again without going out of business, distribution chain, etc. etc. Through size comes a lot of advantages, and those advantages can be so much that a small company could never hope to compete. A patent could start to level the playing field, particularly today given that there are an increasing number of patent litigators willing to take patent infringement cases on a contingency basis. So if there is a little company with a patent and that is being infringed, if the market and/or damages are large enough small company can mount a credible fight and win. So it is no surprise that large companies want to weaken the patent system. Their dominance is not based on patents any more, and they achieved size/dominance through intellectual property rights. They know how it can be done and would love to prevent the next generation of small company from taking them on and becoming a large competitor.
I appreciate the invitation to provide you with analysis, but India is not my area of expertise. I am happy to hear your analysis though.
Amused observerOctober 1, 2009 01:36 pm
“They hate patent trolls, but they sure love their natural monopoly, which incidentally was built on patent rights that are now believed to be evil”
What natural monopoly are you referring to here, Gene?
“If only Congress and the Courts had listened to the mega-giant companies in the 60s and 70s! None of the mega-giants today would have ever existed. Do you suppose that has anything to do with the view of corporations and in house folks now?”
Look at the largest companies in India and explain how is it that they became that large without using patents. Arcelor Mittal can be your starting point. Thanks.
GilgameshsoulOctober 1, 2009 12:54 pm
“The facts are clear, no studies are necessary.”
You’ve got to be kidding, right?
step backOctober 1, 2009 12:36 pm
Stephan K (at comment #17)
Thank you for posting links to other parts of the debate.
As one who stepped in at midstream, I had no idea where you guys (you and Gene) were coming from.
Have not read the older posts yet, but it appears at first blush that you, Stephan are more skilled in debating techniques because you point out Gene’s use of the “appeal to authority” tactic (using “industrialized countries” as a proof of theory).
On the other hand, you Stephan are making unfair use of ‘economic framing’ as your tactic.
So let me point out an alternate reality for you Stephan.
We are in 9th grade algebra class. Steven (not to be confused with Stephan), is picking at his zit-infested face and watching the spitballs fly across the room while Mr. Wizard, the math teacher continues to pontificate, with back turned to the class, on the beauty of the substitution principle. Blah, blah, blah. OMG. Can you make it any more boring? Steven thinks to himself: I hope I never become a math teacher.
But what do I want to be when I grow up? Should I become a cocaine-dealing rap singer or a computer scientist? Let me rationally examine the “economics” of the situation. Where is return on investments (ROI) for each scenario? With Congress planning to kill off property rights for the work done by computer scientists, that’s going to be an all-work and little-reward proposition. On the other hand, a cocaine dealer addicts his customers and gets everlasting property rights in their addiction and their need for him to keep supplying. And the work, although at times a bit more risky, is way easier than getting a PhD in computer science and staring at code your whole life. In the movies, the coke dealers get all the babes and cool cars. So yeah, I think I’m going to become a cocaine-dealing rap singer.
//end of “economics” lesson
DanielOctober 1, 2009 12:11 pm
Dale, the SE could easily have released the copyright in his work by stating so in writing (e.g. with a GPL license or similar “copyleft” statement). There may be rights that can’t be waived in some way, but most property rights (whether real or intellectual) don’t fall into that category.
Dale B. HallingOctober 1, 2009 11:44 am
Gene, this is in response to the software engineer (SE) who states that he is making money in software without copyrights or patents. First of all, the SE has a copyright in his work whether he knows it or not. Second, it is not uncommon, even for sophisticated business people, to not understand the economic or structural issues that effect their business. For instance, an owner of a trucking company may not know that a major oil pipeline burst causing the price of gasoline to increase, but they still are affected by the event. A more recent example is that most the “fix and flip” people in real estate in this decade did not understand that their business was built on cheap money from the Federal Reserve. They also probably do not understand how fractional reserve banking works and provided the cheap money. Despite this, a number of these people made money in this market.
Stephan KinsellaOctober 1, 2009 11:13 am
“As a neutral observer in this debate, I have to say that Gene has far better arguments than Stephan K and Auberon. Auberon’s I am too smart to actually give an argument strategy didn’t refute a single of Gene’s points. And Stephan K’s list of noxious government practices is laughable.”
Gene appealed to what “industrialized nations” believe as support for his position. I pointed out that industrialized nations believe lots of evil things, to show that it’s flawed to appeal to state views to support one’s own. What is wrong with my reasoning here?
“Where did this debate start? I want to see the anti-patent arguments made to refute Gene. Hopefully there was more than vague statements about a consensus on patents and references to studies that are not identified.”
I have written *extensively* on this. See my various writings at http://www.stephankinsella.com/publications/#IP — in partiuclar my monograph Against Intellectual Property http://www.stephankinsella.com/publications/#againstip and most recently (today) I published Radical Patent Reform Is *Not* on the Way http://mises.org/story/3702 . The current “debate” started when Gene Quinn attacked me, called me a tool, etc., here http://ipwatchdog.com/2009/09/29/reality-check-anti-patent-patent-musings/
“I would love a debate. I would love for folks to come up with a list of questions. I will answer them as directly as I can, and those who disagree can answer them as directly as they can and let folks decide.”
“Stephan: Why don’t we each come up with questions for the other, perhaps written ourselves or solicited from others/readers. For round one how about we keep it to something like 3 or 4 questions, that way answers can range from 300 to 500 words or thereabouts, keeping articles to a manageable size for readers. If it goes well I am willing to do this on a periodic or even regular basis. We exchange questions then on a date certain we can both post our answers to our respect blogs with cross links.”
Do you mean in writing? I am concerned you would fail to address the key questions that would be directed at you, as you have done here (e.g. your ignoring the mountain of studies against you). We need a live debate so you can be cornered.
Noise above LawOctober 1, 2009 09:50 am
I think you do get it – what’s your’s IS mine, because after all, Ideas are of the mind and are our last bastion….(complete with your own diatribe)
Communism, Socialism, Paternalism,…
…anything but capitalism.
Gene QuinnOctober 1, 2009 09:38 am
Why don’t we each come up with questions for the other, perhaps written ourselves or solicited from others/readers. For round one how about we keep it to something like 3 or 4 questions, that way answers can range from 300 to 500 words or thereabouts, keeping articles to a manageable size for readers. If it goes well I am willing to do this on a periodic or even regular basis. We exchange questions then on a date certain we can both post our answers to our respect blogs with cross links.
Gene QuinnOctober 1, 2009 09:35 am
Thanks for your comment. The argument/debate started with my posting this:
I would love a debate. I would love for folks to come up with a list of questions. I will answer them as directly as I can, and those who disagree can answer them as directly as they can and let folks decide.
Gene QuinnOctober 1, 2009 09:33 am
Thanks for your comment, and it is not my intention for this to come off as harsh, so please understand that. Having said this, you really are completely misinformed.
You say: “That is why the big companies are poring money into the politicians’ pockets in order to secure stronger and longer lasting patent rights.”
This is simply false. The big companies are the ones leading the drive to reform the patent system in ways that would make patent rights far weaker. The reason is they do not want small businesses and individuals to obtain patents because if they do they are a threat. Small business win patent infringement lawsuits against big companies all the time. Large companies want to be able to infringe without paying, and what better way to do that than to weaken patent rights. They have their monopoly, which is no longer based on patent rights, but rather based on size and market penetration. They built this on patent rights and know that history shows that small businesses with an aggressive patent position and a good technology become large companies and major competitors.
In terms of Microsoft suing TomTom, I wouldn’t call that big vs. small, I would call that giant vs. larger than small and smaller than big. I don’t mean to be cute here, but this sort of thing is not about winning, it is about creating leverage. If you have no patents yourself then it becomes about winning. If you have patent assets yourself then any lawsuit becomes about forcing parties to the table to resolve a business dispute. Over 96% of all patent litigations are settled, and that is what business litigation is about. But you need to have a bullet in the gun to have any chance of winning the battle.
Simply, if big business wants weaker patents then why in the world would individuals or small businesses support the same thing? Be suspicious, become informed and if you look into it you will be amazed at what is really happening right out in the open and behind closed doors.
In terms of patents doing more harm then good, that is not true. I can understand why you would think that, but you do not have to use a patent if you don’t want. Open source folks are getting patents in order to create swords that can be used if they are attacked. Even if you hate patents, are philosophically opposed to patents or perhaps only against software patents you NEED to have patents yourself. Think of them like a business insurance policy, that is what software patents are.
Thanks for reading.
Peter SurdaOctober 1, 2009 08:35 am
Just one more addition. They say a picture is worth a thousand words. Since you seem to be so fond of “economic laws”, I prepared a couple of hypothetical graphs that display the result of IP from a business perspective. As I said, IP applies both the the revenues and the costs (the second fact you seem to be ignoring). The difference being profits.
I do not claim that these graphs represent actual empirical data. They are just examples to demonstrate my arguments. The graphs depict the length of the IP monopoly (e.g. patent) on the X axis and the monetary representation (revenue, cost & profit that result from this monopoly) on the y axis, as seen from a perspective on a some hypothetical company attempting to sell a product (or service).
The first picture: http://shurdeek.shurdix.org/tmp/ip-profitability1.gif demonstrates that maximum profits and maximum revenues could happen at different patent length. So, any argument for IP must consider both costs and revenues, not just one of them separately.
The second picture: http://shurdeek.shurdix.org/tmp/ip-profitability2.gif demonstrates a case where any monopoly length other than 0 would decrease the profits. So, any argument for IP must consider that introduction of IP might make some business models unviable.
In my opinion, these two graphs refute any claim that the benefits of IP are “obvious”. A pro IP argument requires a more solid basis. A utilitarian defense of IP must tackle the problem of profits (as a result of both revenues and costs), and of opportunity costs.
David KoepsellOctober 1, 2009 06:09 am
this is funny:
“They hate patent trolls, but they sure love their natural monopoly, which incidentally was built on patent rights that are now believed to be evil.”
umm, then in what possible sense is such a monopoly “natural” since it was built upon governmentally-granted monopoly rights? It is conceivable, isn’t it, that absent such rights to begin with, there would be more competition and fewer non-competitive “natural” monopolies, isn’t it?
step backOctober 1, 2009 05:54 am
“why I even engage with those who clearly … refuse to actually have a fact-based, reality-based, historically accurate debate. My primary answer is …”
Before getting into the topic of “Why Bother?”, it may be of interest to note this recent snippet from CNN about stealing ideas in the workplace:
“There is a misguided belief that ideas, and credit, should be hoarded as a kind of career currency,” Gallagher says. “In reality, ideas flourish when fertilized by the input of an entire team. People who worry too much about idea ownership are often putting self-interest ahead of the good of the entire workplace, an attitude that can hurt your career.” (the rest of the article may be found here:
My point in raising this snippet is that there is a growing and pervasive propaganda campaign in the media to discredit the need for giving proper attribution (and compensation) to those who come up with the ideas in the first place.
This is pure and simple communism. Yet the purveyors of the campaign would have you believe the exact opposite. What’s yours is mine and what’s mine is mine. Isn’t that the way it works?
Peter SurdaOctober 1, 2009 05:32 am
I apreciate you read my argument and replied to it. I just wish you would have read the part where I talk about costs more carefully, because it explains that costs alone cannot confirm the advantage of such a solution. It ignores:
– internal effects on costs (enterpreneurial skill)
– external effects on costs (IP also applies to inputs)
– opportunity costs as an effect on the market structure (broken window fallacy)
Still you replied:
“This does not baffle me at all, nor does it contradict anything I have ever said or written. ”
It contradicts the notion that patents are necessary to make money (off inventions). If they are not necessary, then why have them at all?
You also write:
“If you have something that will make you money the laws of economics correctly state that there will be market entrants. If you can make it difficult for there to be market entrants, or put up hurdles, that provides a business advantage.”
Exactly. Now, if you follow your own arguments further down the road, you would notice that this not only applies to the market for your outputs, but also to the market for your inputs. Just like you can prevent (or make it more costly for) other people from competing with you, other people can prevent, or make it more costly for, you to compete with them. The only way to make sure that the difference is positive is not to have any inputs that are affected. i.e. become a patent troll. Any other action would increase the risk of profitability of your business.
You also write:
“Finally, if you are in the software industry and you do not have patents you are naive. Who cares whether the patent is valid at the end of the day? No one in the software industry, I can tell you that for certain.”
Again, you neglect to see the whole picture. There are countries where software patents are not enforceable. My company and my customers reside in such countries. So from my current standpoint I don’t care if a software patent is valid or not, because the business effect on me is zero. Now, if I wanted to expand into the US, in my opinion it would make more economic sense to become a patent troll. I would be able to extort money from US companies without actually offering anything! And, you could have your cut too! Offering products or services would be associated with higher costs and lower marginal revenue. Also the business risk of being a patent troll would be lower. Since I wouldn’t be offering anything, I couldn’t be countersued.
You see, it is all about economics! If it is more profitable to be a patent troll than offering products and services, than the industry would move into that direction. In the above example, the consumers in the US would be worse off than the consumers in countries that do not have software patents. They former would have fewer choices and higher prices.
In addition to that, I was actually speaking about IP in general. Patents are not relevant for me anyway because they are not enforceable. But looking back, it turns out that copyright, although enforceable, was also not necessary for me to earn money. There was a time when I thought that copyright is good and patents are bad, but gradually came to the conclusion that their economic characteristics are the same.
SAL-eOctober 1, 2009 04:25 am
I am in the IT business for many years and seeing how the patents are used let me to conclusion that patents do more harm then good. At least in Software Business. Like you I like facts. I would like you to comment on several facts:
1. In your response about software patents you have stated that: “Big companies do not sue little companies for infringing software patents, small companies sue big companies.”, but here is the fact: Microsoft sues TomTom after fail attempt to buy them out. The outcome was that TomTom had to settle out of court. That is what is happening. The big company can put small company out of business with single lawsuit. The only small companies that succeed in suing the big companies are the non-practicing entities a.k.a. Patent Trolls. On paper the patent should protect the small garage inventor, but in reality patents protect the big companies from emerging competition.
2. Lets take for example “Against Intellectual Monopoly” by Michele Boldrin and David K. Levine. They start with telling the story about James Watt. It is story how the patents are used to stifle the competition and holding the development of the steam engine for many years. Is their story not a fact? I would like to see your version of the same story.
You say: “Mega-giants do not innovate. The[y] steal from others and vilify anyone who has the audacity to sue them for infringement. Never mind that they are infringing. It is their god given right to infringe and why don’t we all just see that!” You got this right. That is why the big companies are poring money into the politicians’ pockets in order to secure stronger and longer lasting patent rights. They know that patent system caries big cost for their competition and ensures that they will have advantage in any dispute. Unfortunately the real victim here is the innovation, the same innovation that supposed to be protected by the patent system.
JimOctober 1, 2009 03:11 am
As a neutral observer in this debate, I have to say that Gene has far better arguments than Stephan K and Auberon. Auberon’s I am too smart to actually give an argument strategy didn’t refute a single of Gene’s points. And Stephan K’s list of noxious government practices is laughable. If somebody wants a serious debate, as it seems Gene does, I would think that two guys that are so sure of their positions could at least attempt to refute his arguments. Gene, it seems you were right-on in your post.
Where did this debate start? I want to see the anti-patent arguments made to refute Gene. Hopefully there was more than vague statements about a consensus on patents and references to studies that are not identified.
Stephan KinsellaOctober 1, 2009 01:36 am
Gene, I accept your challenge–see my post here . http://blog.mises.org/archives/010746.asp
I think we should do an Internet debate, professionally handled. I’m open for suggestions.
Stephan KinsellaOctober 1, 2009 12:47 am
“Given that my position is the accepted world view by all industrialized nations I guess that means you and those who think like you are ignorant. Thanks for pointing that out.”
Gene, you do realize that industrialized nations almost universally agree on a host of noxious propositions, don’t you? Including: the right to tax; to conscript; to regulate businesses; to jail people for victimless crimes such as drug use, prostitution, “obscenity,” tax evasion, and offering to hire someone for less than a state-decreed minimum wage; to kill tens of thousands of civilians indiscriminately by means of bombs and wars; and so on. You do realize states are nothing but criminal mafias. I would be careful associating myself with their odious views. The state is the last authority I’d appeal to.
“Seriously people, being outside the mainstream is fine, arguing a position is fine, but I am not the one outside the mainstream here and you all are acting as if I am.”
Well, it is true there is a growing realization that IP is ludicrous, but we are in the minority. It seems to me you are acting like you are outside the mainstream–otherwise why are you so threatened by a bunch of carping dissidents? You have won; you have your statist system; it is forced on all of us, even though we disagree. We have to comply with it–can’t we at least complain about it?
“Those who hire a patent attorney who think 0 years of term is appropriate should get exactly 0 years of term. Hiring the fox to guard the hen house is just plain irresponsible, reckless and stupid.”
So not only should I be punished for daring to break the union line–by my clients and employers should too. Wow.
“By the way, I challenge anyone to a debate on this topic anywhere, at any time, to be moderated by a mutually agreed panel or moderator. I know as well as everyone here that I will never be taken up on that offer. I wonder why? If I am so stupid and irresponsible and ignorant then someone take me up and prove to the world I am as such. Of course there will be no takers because in a true debate none of the nay-sayers stand any chance and would be exposed for what they truly are. Nevertheless, the challenge is made. I am sure the silence will be deafening. Or wait, even better… the response will be “there is no point in debating you because you are .” We all know that is what they are going to say, and rational people will understand that to be nothing more than cowardice. ”
Gene, if you think I am too cowardly to debate you, you are mistaken. I would only be afraid the audience would be bored with your arguments and start to pity you. But I am invited on occasion to speak or debate IP, and in the latter case I am often asked to recommend a pro-IP person. I often wrack my brains because it’s almost impossible to think of a good advocate of the IP side. I don’t think you are at all, in fact I honestly think you damage your cause with your weak arguments–there are much stronger ones, though they too are flawed, just not as obviously so–but sure, next time something comes up, your name’s in the hat. (You might want to try reading a few things first.)
Gene QuinnSeptember 30, 2009 11:36 pm
Of course I am out of my league because I don’t agree with you!
One thing is for sure, I agree with you about it being wholly irresponsible to state an ignorant position. Given that my position is the accepted world view by all industrialized nations I guess that means you and those who think like you are ignorant. Thanks for pointing that out.
Seriously people, being outside the mainstream is fine, arguing a position is fine, but I am not the one outside the mainstream here and you all are acting as if I am. This started because I had the audacity to observe the obvious. Those who hire a patent attorney who think 0 years of term is appropriate should get exactly 0 years of term. Hiring the fox to guard the hen house is just plain irresponsible, reckless and stupid. Saying that the choice is between forever and 0 years is intellectually dishonest and childish. Excuse me for noticing.
By the way, I challenge anyone to a debate on this topic anywhere, at any time, to be moderated by a mutually agreed panel or moderator. I know as well as everyone here that I will never be taken up on that offer. I wonder why? If I am so stupid and irresponsible and ignorant then someone take me up and prove to the world I am as such. Of course there will be no takers because in a true debate none of the nay-sayers stand any chance and would be exposed for what they truly are. Nevertheless, the challenge is made. I am sure the silence will be deafening. Or wait, even better… the response will be “there is no point in debating you because you are .” We all know that is what they are going to say, and rational people will understand that to be nothing more than cowardice.
AuberonSeptember 30, 2009 11:23 pm
Gene, you are well out of your league here. Seriously.
To paraphrase one economist, It’s no crime to be ignorant of a subject, but to loudly proclaim an opinion on the matter while in that state of ignorance is wholly irresponsible. Go back and at least try to comprehend some of the suggested writing before commenting further.
anonSeptember 30, 2009 09:51 pm
“I mean, the hardware has all been made, and the innovation is in software and the application of systems and processes.”
Can you qualify this statement with something factual? Innovation in software and applications, sure. But the hardware has all been made? We’re done making better computers?
Gene QuinnSeptember 30, 2009 02:54 pm
Yes, you and others do exist, but it is self serving, is it not? If we do away with software patents and business method patents then why not do away with all technology patents. I mean, the hardware has all been made, and the innovation is in software and the application of systems and processes. So if we are not willing to protect the true innovation in the industry why protect the dumb hardware that is created solely to enable the true genius?
Everyone has self serving views. High tech companies hate Bayh-Dole because universities have rights to what they create. They hate patent trolls, but they sure love their natural monopoly, which incidentally was built on patent rights that are now believed to be evil. If only Congress and the Courts had listened to the mega-giant companies in the 60s and 70s! None of the mega-giants today would have ever existed. Do you suppose that has anything to do with the view of corporations and in house folks now?
Mega-giants do not innovate. The steal from others and vilify anyone who has the audacity to sue them for infringement. Never mind that they are infringing. It is their god given right to infringe and why don’t we all just see that!
Alan McDonaldSeptember 30, 2009 02:29 pm
I’ve been an in-house patent counsel for over 30 years and you know where I stand:
1. Stricter enforcement of Rule 11 sanctions against patent infringement suits without basis.
2. Stricter enforcement of inequitable conduct.
3. No software patents.
4. No business method patents.
We do exist.