Eminent Domain, Software Patents, and Central Planning

by on July 17, 2007 · 0 comments

My blogging has been light the last couple of weeks because I’m busy finishing up a big study on eminent domain abuse in Missouri, which will be published by the Show-Me Institute. Obviously, most of that isn’t going to be relevant to a tech policy blog, but I have noticed an interesting parallel between the eminent domain debate and the software patent debate.

A bit of background: cities in Missouri (and in other states) have gotten used to a “clear cutting” style of real estate development in which the city council will declare an entire neighborhood “blighted” or in need of redevelopment, and then put out bids for a comprehensive re-development plan. Large developers submit re-development plans with price tags in the tens or hundreds of millions of dollars specifying which properties will be demolished, what will be built in their place, and what kinds of tenants will be sought for the new buildings. Once a plan has been selected, the city will employ the power of eminent domain to help the chose developer seize the property of anyone who refuses to sell voluntarily (and “voluntarily” is a bit of a misnomer when property owners know their land will be taken whether they like it or not). Then the developer will bulldoze most of the old neighborhood and replace it with a shopping mall, condos, or whatever else was specified in the re-development plan.

Almost all of the redevelopment plans cities pursue are done this way. City officials are absolutely horrified at the thought of letting just anyone buy property in the development area and make improvements. After all, everyone knows that without a “master plan,” neighborhoods would descend into chaos. Besides, what incentive would a big developer have to start a major development project if some other guy could open a competing business down the street?

The whole process is more reminiscent of Soviet-style five-year plans than a competitive marketplace. Firms that are too small to submit a bid for the entire area simply don’t have the option of participating, even if they would be able to renovate a few properties in the development area. Large firms have to spend a lot of time currying favor with the elected officials that select the development plans, and success is driven more by your political connections than your management skills.

It seems to me that the attitudes of patent lawyers to the software industry are strikingly similar to the attitudes of city council members toward real estate developers. Patent lawyers are absolutely horrified at the idea that we would just let programmers write any kind of software they wanted without hiring a patent lawyer first. They warn that without the guarantee of a legal monopoly, nobody would invest in new software, because somebody might just come along and develop competing software. And city council members’ infatuation with the minutia of the development process is rivaled by patent lawyers’ fascination with the minutia of patent law. When you point out that we’d all be better off if the government just let developers (of software or real estate) build stuff without their input, both patent lawyers and city officials will angrily reply that we just don’t understand the important role they play.

But a free market means that people have the freedom to enter a new market without asking permission first. A real estate developer shouldn’t have to consult his city’s “master plan” before renovating an old house. (obviously, there may be good arguments for requiring health and safety permits, but that’s different from the kind of micro-managing I’m discussing here) And a software developer shouldn’t be required to conduct a patent search before writing a new piece of software.

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