Patents vs. the Rule of Law

by on April 19, 2007 · 16 comments

The other thing that occurs to me as I study Verizon’s patents is that patent law presents some huge problems from the standpoint of the rule of law. We libertarians frequently hammer home the importance of having laws that are clear and predictable. On network neutrality, for example, we point out that no one has been able to come up with language that unambiguously elucidates what is and isn’t allowed.

Yet every single patent is a miniature government regulation. If the FCC had issued regulations that looked like this, we libertarians (myself included) would be kicking and screaming about how unfair it is to expect people to comply with such vague requirements. Yet Vonage has had to stake the future of its company on correctly predicting how the courts will interpret phrases like:

software running on the central processing unit, causing the server to formulate and transmit a reply to a query for translation of a name specified in a second protocol received via the interface, wherein the software controls the central processing unit to include an address of a destination terminal device conforming to the first protocol associated with the name if the server receives the query for translation within a predetermined time window.

…and it goes on for pages and pages. That’s as bad as anything you’ll find in Snowe-Dorgan.


Yet for reasons that are opaque to me, because they’re issued by the USPTO rather than the FCC, and because we call them “patents” rather than “government regulations,” many libertarians don’t seem to find them troubling. But I don’t see a principled difference. If Verizon used its army of lobbyists and lawyers to push regulations through the FCC that drive Vonage out of business, that’s obviously a terrible outcome from a libertarian point of view. But if the company uses its army of patent lawyers to push a lot of overly broad patents through the patent office, and then proceed to sue Vonage out of existence for violating them, is that any better? It’s hard to think of anything the FCC has done in the last few years that’s been as detrimental to competition in the VoIP market as Verizon’s lawsuit promises to be.

So what’s the difference? One obvious difference is that patents are submitted and litigated by private parties rather than the USPTO itself. But it seems to me that if anything, this makes them even worse. Rent-seeking is a constant problem with any regulatory scheme. The FCC is deluged by telecom lobbyists trying to get them to insert this or that provision in the latest regulations. But the patent system cuts out the middleman and lets the rent-seekers write the regulations directly, with very little oversight by the bureaucrats. That means that the rent-seekers don’t have to even pretend their regulations are in the public interest.

I’m not sure what policy conclusions follow from this little rant. There do seem to be some types of patents—notably pharmaceutical patents—where the line-drawing and rent-seeking issues aren’t quite as severe. It certainly seems like the chemical formula of a drug would offer an good way to draw the clear lines that are essential for any genuine property right. After looking at a few dozen software patents, I’m convinced that drawing clear lines is impossible there, but I don’t know enough about other categories of patents to draw any broader conclusions.

  • http://booksdofurnisharoom.blogspot.com X. Trapnel

    Come over to the dark side of patent-abolitionism. You know you want to! =)

  • http://www.blogger.com/profile/14019452 Steve R.

    I believe that you may be pointing to two policy implications.

    1. The “Rule of Law” (including a respect of property rights) will only work if the members of society believe that the law is really working for the benefit of society. If the law is viewed as a vehicle to solely further the goals of special interests, then the populace will feel minimal obligation to comply with the law. Given this scenario, those who are technologically savvy would not only feel free to break technological roadblocks, but would also consider it to be their civic duty.

    2. One aspect that I feel that has not been adequately explored (even by me) is the mindset of the elected officials who make the laws. It seems, to me, that many members of Congress have apparently lost the concept that they have a civic responsibility to promote the public interest. When members of Congress are approached by the lobbyists they should have the ethical strength to tell the lobbyists to take a hike.

    You stated that drawing clear property lines is nearly impossible. I agree. What we are seeing is the aggrandizement of property rights by the content creators. Today we have patents being granted on very subjective and abstracts concepts such as business models. The content creators are in a feeding frenzy of claiming “rights” that they never held before. Unfortunately, the “Rule of Law” has not yet risen to protect the public interest from this “seizure”. It is no wonder that drawing a clear property line that would be respected by society is now becoming impossible.

  • http://booksdofurnisharoom.blogspot.com X. Trapnel

    Come over to the dark side of patent-abolitionism. You know you want to! =)

  • http://mcgath.blogspot.com Gary McGath

    Software patents are always written in that unreadable way. I think it’s to obfuscate the fact that they’re patenting algorithms, which is legally prohibited.

  • http://www2.blogger.com/profile/14380731108416527657 Steve R.

    I believe that you may be pointing to two policy implications.

    1. The “Rule of Law” (including a respect of property rights) will only work if the members of society believe that the law is really working for the benefit of society. If the law is viewed as a vehicle to solely further the goals of special interests, then the populace will feel minimal obligation to comply with the law. Given this scenario, those who are technologically savvy would not only feel free to break technological roadblocks, but would also consider it to be their civic duty.

    2. One aspect that I feel that has not been adequately explored (even by me) is the mindset of the elected officials who make the laws. It seems, to me, that many members of Congress have apparently lost the concept that they have a civic responsibility to promote the public interest. When members of Congress are approached by the lobbyists they should have the ethical strength to tell the lobbyists to take a hike.

    You stated that drawing clear property lines is nearly impossible. I agree. What we are seeing is the aggrandizement of property rights by the content creators. Today we have patents being granted on very subjective and abstracts concepts such as business models. The content creators are in a feeding frenzy of claiming “rights” that they never held before. Unfortunately, the “Rule of Law” has not yet risen to protect the public interest from this “seizure”. It is no wonder that drawing a clear property line that would be respected by society is now becoming impossible.

  • colorless green ideas

    “There do seem to be some types of patents—notably pharmaceutical patents—where the line-drawing and rent-seeking issues aren’t quite as severe”

    huh? rent seeking is not severe in pharmaceutical patents?? wow, we must be living in different worlds.

  • http://mcgath.blogspot.com Gary McGath

    Software patents are always written in that unreadable way. I think it’s to obfuscate the fact that they’re patenting algorithms, which is legally prohibited.

  • http://www.techliberation.com/ Tim Lee

    CGI,

    I meant that it’s far easier to define the boundaries of a drug than it is to define a software “invention.” Obviously, the pharmaceutical industry does engage in a lot of rent-seeking, but I don’t think it engages in the specific kind of rent-seeking I was talking about, in which patent applicants push the boundaries of what’s patentable in the hopes of being granted overly broad patents.

    But maybe I’m wrong. I don’t really know much about pharm patents, so if this does, in fact, happen, I’d love to hear more about it!

  • colorless green ideas

    “There do seem to be some types of patents—notably pharmaceutical patents—where the line-drawing and rent-seeking issues aren’t quite as severe”

    huh? rent seeking is not severe in pharmaceutical patents?? wow, we must be living in different worlds.

  • http://www.techliberation.com/ Tim Lee

    CGI,

    I meant that it’s far easier to define the boundaries of a drug than it is to define a software “invention.” Obviously, the pharmaceutical industry does engage in a lot of rent-seeking, but I don’t think it engages in the specific kind of rent-seeking I was talking about, in which patent applicants push the boundaries of what’s patentable in the hopes of being granted overly broad patents.

    But maybe I’m wrong. I don’t really know much about pharm patents, so if this does, in fact, happen, I’d love to hear more about it!

  • Doug Lay

    I agree with the overall thrust of your thinking, Tim, but are you sure you want to classify patents as (ideally) some sort of genuine property right? It seems that the metaphor of “intellectual property” with the implication of a badrock right of exclusion, is increasingly unworkable in our increasingly integrated, interlocked digital world. Moreover, it seems like the Supreme Court acknowledged as much in the Ebay decision (referred to as the “Ebay disaster” by many members of the Patently-O crowd).

    Anyho, I’m looking forward to reading your Verizon-Vonage article and forwarding it to as many folks as possible.

  • http://www.techliberation.com/ Tim Lee

    Doug: I agree that classifying it as a genuine property right is problematic. What I meant was that if we want to treat patents as a “property right,” as many libertarians do, we need to have rules that clearly delineate where those property rights begin and end. Personally, I agree that the analogy to physical property ends up being more misleading than helpful.

  • Doug Lay

    I agree with the overall thrust of your thinking, Tim, but are you sure you want to classify patents as (ideally) some sort of genuine property right? It seems that the metaphor of “intellectual property” with the implication of a badrock right of exclusion, is increasingly unworkable in our increasingly integrated, interlocked digital world. Moreover, it seems like the Supreme Court acknowledged as much in the Ebay decision (referred to as the “Ebay disaster” by many members of the Patently-O crowd).

    Anyho, I’m looking forward to reading your Verizon-Vonage article and forwarding it to as many folks as possible.

  • http://www.techliberation.com/ Tim Lee

    Doug: I agree that classifying it as a genuine property right is problematic. What I meant was that if we want to treat patents as a “property right,” as many libertarians do, we need to have rules that clearly delineate where those property rights begin and end. Personally, I agree that the analogy to physical property ends up being more misleading than helpful.

  • http://www.manifestdensity.net tom

    It certainly seems like the chemical formula of a drug would offer an good way to draw the clear lines that are essential for any genuine property right.

    It’s not just the formula, though. It’s frequently specific steps in the synthesis, as well.

    At any rate, the vast profitability of the pharmaceutical industry relative to other patent-using fields strongly implies to me that the balance between innovation-spurring patent protection and commons-benefiting public domain releases may be more out of whack than usual in this arena.

  • http://www.manifestdensity.net tom

    It certainly seems like the chemical formula of a drug would offer an good way to draw the clear lines that are essential for any genuine property right.

    It’s not just the formula, though. It’s frequently specific steps in the synthesis, as well.

    At any rate, the vast profitability of the pharmaceutical industry relative to other patent-using fields strongly implies to me that the balance between innovation-spurring patent protection and commons-benefiting public domain releases may be more out of whack than usual in this arena.

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