Patently Strategic Podcast: Why Patents Exist with Adam Mossoff

Why do patents exist in the first place? What function do they serve in society? And what is their historic origin story? In this month’s episode, with the help of Professor Adam Mossoff, we zoom way out, turn the time dial back a bit, and focus on the genesis of patents and the critical role they’ve played as the primary driver in society for encouraging innovation, promoting public disclosure, facilitating technology transfer, and stimulating economic growth.

The Fuel of Interest to the Fire of Genius

There’s a special kind of magic that happens when individual incentives align with societal good. Abraham Lincoln, who believed that the creation of the patent system was only surpassed by the discovery of America and the invention of the printing press in terms of the three greatest advancements in human history, once said, “The Patent System added the fuel of interest to the fire of genius, in the discovery and production of new and useful things.”

Recognizing and protecting mental labor and the fruits of the mind as natural property rights enabled any inventor – big or small – to profit from their discoveries and partner with those possessing the resources necessary to scale and bring new products and services to the marketplace. The exchange of this protection for an enabling public disclosure enhanced society and accelerated the pace of innovation by facilitating the open exchange of knowledge and creating the world’s greatest free library of science and technological information. And because the economy grows and society flourishes when innovation is encouraged, society was transformed in the 19th and 20th centuries as demonstrated by the scientific and technological revolutions that define our modern world and by virtue, created the greatest hockey stick graph in history.

­­Seeking the Cure for Societal Amnesia

But somewhere along the way, we lost sight of this. Patents became a victim of their own success. Their impact on society, the economy, and innovation became both ubiquitous and too often unseen at the same time. Like Adam said in our Patent Wars episode, patents have been so successful in driving innovation and being the basis of so many products and services that make up modern life that, like the air we breathe, people don’t even recognize it anymore.

This episode is the start of our effort to help undo this collective societal amnesia about the significance of patents, their inextricable link with the fundamental principles of American democracy, and how they are an essential ingredient to a flourishing society.

CliffsNotes Version of Pre-American Patent History

While not called a patent until much later, the notion of protecting an invention goes back more than 2,300 years, all the way to Ancient Greece, where inventors could receive exclusive profit rights for a year for refinements in luxury and culinary dishes. Flash forward to the 1330s, and you’ll find Medieval England getting in the game with monopolies called “letters patent” (in Latin, “literae patentes” means “letters that lie open”) being granted from the monarchy. More on this momentarily.

Jump to the mid-1400s, and the Venetians come up with the first known patent laws and a system for granting inventors – usually glass makers – exclusive rights to their inventions for a period of time, with a statute way ahead of its time featuring many elements of modern patent law like a (localized) novelty requirement, proof of usefulness, reduction to practice, and a requirement to disclose the invention to the republic. It’s believed that this idea helped catch on across Europe as glass makers emigrated and imported expectations for similar rights.

Back to England in the 15 and 1600s and the Crown (to the surprise of no one because monarchs do what monarchs do) is abusing its letters patents by granting monopolies as favors and as a way to raise money – and doing so by giving monopolies on the trade of common items like salt, soap, and playing cards. The public gets upset and forces Parliament to pass the Statute of Monopolies in 1624, which took away the Monarchy’s buddy favor system and replaced it with 14-year monopolies for new manners of manufacture. Problems with the system are many. We’ll get back to this, but this law serves as the foundation for patent law in England and across much of the world early in the Industrial Revolution.

Embedded in American Democracy

Skipping forward past a bloody but successful revolution, the American Founders are now busy forming a new government. They’re literally starting from scratch. The stakes couldn’t be higher. They just overthrew the greatest power known to humankind and now they need to come up with enduring political structures and jump-start an economy. Plenty of important things to decide, but right toward the top of that list is securing inventor rights to promote innovation.

We cover this in great detail in the episode, but it becomes abundantly clear from their focus and prioritization that the Founders’ notions of the core principles of democracy are inextricably linked with the societal good that comes from innovation and intellectual property protection.

• The Federalist Papers (1788) were written at length to lobby for support of and explain aspects of the Constitution. In Federalist 43 on Clause 8, James Madison says that exclusive rights given to creators for the progress of science and useful arts “will scarcely be questioned” and that the “public good fully coincides … with the claims of individuals”. When many other issues were hotly debated and written about at length, this natural right was self-evident to the Framers.
• Constitution (1789): America became the first country to embed the concept of IP rights into a national constitution. The Congressionally granted power “to promote the progress of science and useful arts, by securing, for a limited time, to authors and inventors, the exclusive Right to their respective writings and discoveries” is the ONLY place the word Right appears in the Constitution – and it’s capitalized.
• First SOTU (1790). President George Washington delivers the nation’s first State of the Union Address. It’s brief, registering at 833 words, but alongside talking about needs for things like a national defense and currency system, takes the time to urge Congress to enact a patent statute. He trusts it doesn’t need recommendation but says that he can’t forebear the opportunity to ask Congress to act with expediency.
• US Patent Act (1790). While busy opening up a new country and debating for weeks things like what to call George Washington, the first Congress immediately enacts the 1790 Patent Act to help jump-start the economy by protecting innovation with property rights. This was just the third act of Congress.

The Democratization of Invention

While influenced by its predecessors, the U.S. patent system was a significant break from the English system. Championed and breathed into existence by the collective wisdom of the likes of George Washington, James Madison, and Thomas Jefferson, it was part and parcel with the natural rights-inspired, Enlightenment-fueled, radical transformation that was American Exceptionalism. Notable differences we discuss include:

• Democratized and accessible. Granted patents to “he, she, or they” at a price any commoner could afford. Women and people of color couldn’t vote or own other property (tragically not rectified until much later), but they could protect their inventions. Edison had to drop out of school to support his family, but he could afford a patent. This was a stark contrast to earlier systems that were only financially accessible (app fees alone were >11 times the average British citizen’s annual income) and available to the aristocrats and established elites.
• Eliminated working requirements. Creators didn’t have to own a factory or make or sell products to protect inventions.
• Transferable property rights. Treating patents as private property rights allows for sales and licensing – the bridge to innovation from intellectual to physical capital. This starkly contrasted favors and grants from the Crown that could not be re-gifted.
• Simplified procedures and introduced the first examination system, reducing uncertainty for investors.
• First-to-invent. The American system was the first to think globally regarding true creation. England’s system was first-to-file, and other predecessors recognized anything new to the realm, not caring if it already existed elsewhere.
• Eligible subject matter. England – where you could only get patents on machines or products of machines (manufactures) – never protected processes, but the very first patent in the U.S. was for a process on potash. This was far-reaching and forward-thinking of the first Congress to recognize these as protectable inventions – creating a legal system that would allow for the protection of things that had not been conceived of yet. We’re looking at you Patent Eligibility Restoration Act (v).

Innovation Bridge or Blockade?

The fundamental debate around patents has always been whether they promote innovation or hold it back. Clearly, some of the earlier notions of patents we discussed weren’t economic accelerants and functioned more like ancestors to modern-day crony capitalism. The system designed by the Founders was something entirely different and gave rise to the wealthiest and most technologically advanced society in human history. We discuss how the differences played out internationally across the Industrial, chemical, pharma, biotech, computer, and mobile revolutions.

Trolling the Founders

Whatever you call it, even stripping the labels of “patents” or “intellectual property” so as to not be anachronistic, there were early concepts for protecting inventions going back thousands of years. It wasn’t until the U.S. added the democratized elements of accessibility, transferability, an eliminated working requirement, and a wider array of subject matter that we saw a system for protecting inventions yield this dramatic of an economic and innovative correlation. One of the things I find most offensive and historically blind about the modern arguments against patenting is that the primary attack vectors used by its opponents are actually the founding virtues and secret sauce that made the system work. These virtues of accessibility – the virtues that set the system apart from day one and have borne tremendous fruit since – are now actively under attack, pejoratively cast as patent trolling.