Were the Wright Brothers Patent Trolls? One View of R Street Institute’s Capitol Hill Panel on Patents

This article has been updated to include a statement from R Street Institute.

On Tuesday, I attended a panel discussion on the National Security Implications of Patents along with my siblings, Madeline and Gideon Malone, and we were informed that inventors like the Wright brothers pose a threat to innovation. We were joined by approximately 50 attendees at the Capitol event moderated by Charles Duan from R Street Institute, along with panelists Abby Rives from Engine, Daniel Takash from Niskanen Center, and Ian Wallace from New America. They argued that patents harm innovation, and government subsidies are a better alternative to incentivize innovation. In order for R Street (a free-market think tank) to justify these blatantly anti-free-market claims, they focused on the problems with “bad patents” and how patent monopolies prevent competition. To top it all off, their example of a “bad patent” was the one granted to the Wright brothers, which the panelists felt unreasonably excluded their competitors from making improved versions of their airplane.

Frankly, we were dismayed by the poor quality of the analysis and reasoning presented by the representatives from these institutions and we sincerely hope that this is not how our national innovation policy is developed. On the other hand, it could explain the bizarre legal experience our family just endured. Anti-patent efforts such as the America Invents Act and the creation of the Patent Trial and Appeal Board (PTAB) could only have been accomplished with the help of the largely spurious patent troll narrative that has dominated the conversation on patents. We felt somewhat justified in witnessing one of the ways this narrative has been circulated. Knowing that our perspective on the patent system is not the only one, we had hoped this would be an opportunity to learn more about the other side and participate in an honest discussion between the two. We expected to be challenged with new information and cogent reasoning. Perhaps the patent system is not working as intended for some, and this seminar would inform our own efforts to improve it for inventors. Unfortunately, honest intellectual discussion was jettisoned, and the hour was filled with propaganda and disinformation.

Patents Aren’t Subsidies

The first problem with the arguments presented is the idea that patents are a form of government subsidy. The panelists from Engine and Niskanen repeatedly referred to patents as nothing more than a subsidy. Patents aren’t subsidies. Subsidies are grants the government gives to private companies, while patents more closely resemble contracts. They’re not gifts from the government but exchanges in which both parties provide value. The inventor agrees to release to the world the details of their invention in exchange for temporary ownership of the commercial rights to it. The beauty of the patent, and most likely the reason it is mentioned in the constitution, is that the benefit it gives to the inventor is directly proportional to the benefit the inventor gives society. If we relied on government money to reward inventors, we would have taxpayers’ dollars wasted on bad ideas while good ideas might be overlooked because the government failed to foresee their value. Why not let the market decide what an invention is worth?

If the Wright Brothers Were Patent Trolls, Who is a Legitimate Inventor?

A second major flaw in the panel discussion was the idea that there are countless bad patents being enforced by patent trolls. The logic is simple: examiners are human, and humans make mistakes; therefore, examiners make mistakes, and bad patents are issued; therefore inventors like the Wright brothers are patent trolls. One of the panelists actually told us that the Wright brothers were an example of patent trolls because although they invented the first type of airplane, they claimed to have the rights over all types of airplanes that followed. He claimed that because the Wright brothers enforced their patent, American aviation was lagging behind during WWI. Where would American aviation be without the Wright brothers? What planes would exist to be improved? Any fifth-grader can tell you that the Wright brothers invented the airplane. It’s absurd to claim that two of the most significant inventors in all of history were just “patent trolls.” If the Wright brothers were patent trolls, then do legitimate inventors even exist? The panelists conveniently ran out of time before we were able to ask this question.

Government Does Not Know Best

The next false claim made by the panelists is that government subsidies are a better incentive for innovation than patents. They made the claim that not only are patents one of many incentives for innovation but that patents are the most harmful and least efficient of them all, and according to Daniel Takash, it is flawed to rely on patents as a necessity for innovation. R Street, while claiming to be a free-market think tank, supports the idea of increasing government subsidies to incentivize innovation. The overall stance of the panel was that innovation will just happen anyway. If they asked an inventor maybe they would get a better understanding of how untrue that is. Inventors will not invent without patents. They cannot risk, invest, and work for free. The Wright brothers did not throw away their money and time on aerodynamic testing without the hope that they could get paid for it. But the panelists believe that government funding of the prototype phase alone would’ve been sufficient to pay the brothers for the decades of benefit society continues to enjoy. They concluded that we should abolish patents and begin centrally planning the subsidization of research and development for all innovation, all in the interests of their “free market”.

If the government has to predict future innovations in order to subsidize them, the only innovation we get in the R Street world is obvious incremental improvements. We all agree that obvious innovations should not be patentable, and yet that’s all that government subsidies would be able to incentivize. The R Street “solution” would really just contribute to the exact problems they’re complaining about.

The panel’s primary example, the Wright brothers, proves them wrong.  New ideas are unique in that they haven’t been tested in any market, yet we are expected to trust bureaucracy to predict the innovations we need, find the best candidates to create those innovations, and accurately assess the value of that non-existent invention? Interestingly, this is exactly what we tried in the case of the Wright brothers, and the government subsidized the wrong guy. This case of misguided incentives is summed up by Lee Habab and Mike Leven in their brilliant National Review article – “Who better to win the race for us, thought our leaders, than the best and brightest minds the government could buy? They chose Samuel Langley.” Contrary to the false narrative espoused by the October 15 panel, subsidies sunk Langley’s prototype in the Potomac river, and patents gave us manned flight. Of the millions of individual inventors in America, how can a giant federal bureaucracy predetermine which will succeed and how much we owe them when they do? Only a patent can do this. Anyone who advocates for the free market knows that the government can’t be trusted to plan how our economy should grow, and although they avoid saying it explicitly, R Street wants us to put future innovations in the hands of our government. As we learn from the Wright Brothers example, patents incentivize free individuals to innovate; government subsidies fail.

Not So Free-Market

It seemed to us that the entire panel discussion was just a way to convince the 50 people in that room that patents are anti-innovation. By describing patents as a subsidy, they avoided the issue of property rights and the moral wrong of stealing someone else’s invention. By telling stories of overbroad patents and constantly referring to patents as a dangerous monopoly, they created a fear around the idea of patents and a need to find an alternative. And throughout the discussion, the panelists repeatedly claimed that patents aren’t the only way to incentivize innovation. The unstated but implied conclusion is that we should work to replace privately funded invention backed by patents with centrally planned, publicly funded innovation. We expected more from R Street, given our sympathy for their mission “to engage in policy research and outreach to promote free markets and limited, effective government”.

With contributions by Madeline Malone and Gideon Malone

R Street Responds

In an email sent to IPWatchdog on Thursday, October 17, the R Street Institute noted the following errors in this article. “First, it attributes multiple statements to R Street that correctly should have been attributed to the panelists, who are not affiliated with R Street,” said Ann Phelan, Associate Director, Communications at R Street Institute. “Furthermore, the article misstates the position of R Street and the panelists by saying they ‘concluded that we should abolish patents’; the panelists expressly rejected that position during the panel.”

R Street plans to submit a guest post to IPWatchdog responding in more detail to these apparent misrepresentations of its position.
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