Eminent Domain, Software Patents, and Central Planning

by on July 17, 2007 · 27 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.

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

    Disney, which gave us the “Sonny Bono Copyright Term Extension Act is also active at stifling the free market when it comes to real estate. By way of a quick summary, it appears that Disney believes that it has a right to change the zoning laws to quash a proposed residential development that it does not like.

    The New York Times reported on May 20, 2007 in “A Housing Plan Turns Disney Grumpy” that SunCal Companies, a developer based in Irvine, signed a contract to buy 26 acres of land to build 1,300 condominiums and 225 rental units on the site. Disney does not want a residential development next to its park since Disney believes that it will discourage tourism.

    As with copyright, Disney believes that it can change(create), at will, laws that deprive a person/corporation of its rights for the sole purpose of protecting Disney’s value. Free market systems work through competition not protectionist legislation.

  • V

    Eminent Domain has such a bad reputation in STL that I’ve seen new properties advertise that they were acquired without the use of eminent domain. It’s very reminiscent of the way music sellers can gain a lot of support just for being DRM-free. In a sense, the “fair” businesses can gain respect from consumers by toting consumer rights.

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

    Disney, which gave us the “Sonny Bono Copyright Term Extension Act is also active at stifling the free market when it comes to real estate. By way of a quick summary, it appears that Disney believes that it has a right to change the zoning laws to quash a proposed residential development that it does not like.

    The New York Times reported on May 20, 2007 in “A Housing Plan Turns Disney Grumpy” that SunCal Companies, a developer based in Irvine, signed a contract to buy 26 acres of land to build 1,300 condominiums and 225 rental units on the site. Disney does not want a residential development next to its park since Disney believes that it will discourage tourism.

    As with copyright, Disney believes that it can change(create), at will, laws that deprive a person/corporation of its rights for the sole purpose of protecting Disney’s value. Free market systems work through competition not protectionist legislation.

  • V

    Eminent Domain has such a bad reputation in STL that I’ve seen new properties advertise that they were acquired without the use of eminent domain. It’s very reminiscent of the way music sellers can gain a lot of support just for being DRM-free. In a sense, the “fair” businesses can gain respect from consumers by toting consumer rights.

  • http://weblog.ipcentral.info/ Noel

    ***a software developer shouldn’t be required to conduct a patent search before writing a new piece of software.***

    Thats funny, whenever an independent developer goes after a large firm, he’s called a patent troll. Whenever a large firm goes after the small guy, he’s called a bully. Sheeesshhh.

  • http://weblog.ipcentral.info/ Noel

    ***a software developer shouldn’t be required to conduct a patent search before writing a new piece of software.***

    Thats funny, whenever an independent developer goes after a large firm, he’s called a patent troll. Whenever a large firm goes after the small guy, he’s called a bully. Sheeesshhh.

  • http://linuxworld.com/community/ Don Marti

    Noel, both small and large trucking firms profited under the old Interstate Commerce Commission system for regulating trucking. If USPTO’s involvement brings so much to software, why not bring back the ICC for trucking?

  • http://linuxworld.com/community/ Don Marti

    Noel, both small and large trucking firms profited under the old Interstate Commerce Commission system for regulating trucking. If USPTO’s involvement brings so much to software, why not bring back the ICC for trucking?

  • http://www.pff.org Noel

    Don, I was critiquing Tim’s positioning of the patent debate as a battle between independent inventors v big firms.

    By the way, I”ve bought (real) property in planned communities. Yes, the benefits of living in a free market, socio-economic mobility, the ability to enjoy the pleasures of economic freedom.

  • http://www.pff.org Noel

    Don, I was critiquing Tim’s positioning of the patent debate as a battle between independent inventors v big firms.

    By the way, I”ve bought (real) property in planned communities. Yes, the benefits of living in a free market, socio-economic mobility, the ability to enjoy the pleasures of economic freedom.

  • http://linuxworld.com/community/ Don Marti

    Noel, I think Tim’s main point is not so much small vs. big, but politically well-connected vs. independent. If you’re big enough you can buy the political connections. But what about bringing back the ICC? If the USPTO, and property rights in algorithms, is good for software, then the ICC, and property rights in trucking routes, ought to be good for transportation, right?

  • http://linuxworld.com/community/ Don Marti

    Noel, I think Tim’s main point is not so much small vs. big, but politically well-connected vs. independent. If you’re big enough you can buy the political connections. But what about bringing back the ICC? If the USPTO, and property rights in algorithms, is good for software, then the ICC, and property rights in trucking routes, ought to be good for transportation, right?

  • http://www.codemonkeyramblings.com MikeT

    Thats funny, whenever an independent developer goes after a large firm, he’s called a patent troll. Whenever a large firm goes after the small guy, he’s called a bully. Sheeesshhh.

    Sounds like a mark of consistency because both sides are being attacked. Some of us are principled opponents of software patents, favoring the chaos of a more pure free market system with fewer restrictions.

  • http://www.pff.org Noel

    MikeT, my excerpt was aimed at Tim’s positioning of the software patent debate as David v Goliath. As Don pointed out, this was not Tim’s main point, but I still see it as a constant theme he leverages.

    I’d like Tim to explain whether the patent system has prevented any independent developers from entering a market in which they had some promising viability. My feelilng is that there are not many examples, and consequently little negative impact on innovating activity. Tim is, again, making mountains out of molehills.

    Regarding the independent v politically entrenched battle Tim has introduced, well, thats life. Because we, in the US, are given some equality in the political process, many of us *expect* the same kind of equality in the creation of culture, influence on policy, and outcome of commercial activity- and those with more expectations are often the most disappointed by the reality that inquality of many sorts exists in a free market economy.

  • http://www.codemonkeyramblings.com MikeT

    Regarding the independent v politically entrenched battle Tim has introduced, well, thats life. Because we, in the US, are given some equality in the political process, many of us *expect* the same kind of equality in the creation of culture, influence on policy, and outcome of commercial activity- and those with more expectations are often the most disappointed by the reality that inquality of many sorts exists in a free market economy.

    I would say that patent supporters in general try to impose a great deal of fairness. Tell me, Noel, where it is written in the universe that equality and fairness are part of life. While you can’t defend taking away from someone what they have earned, you can easily defend someone making better use of another person’s idea than they could themselves make.

    My motivation for supporting a weak patent system is that I don’t subscribe to a belief that life should be made fair. I fully support the right of a stronger, more intelligent person to expand on the work of a less capable person, without penalty provided they are expanding the idea and not products of the weaker person. Visceral competition was what made the IT industry strong, not the pay offs from getting the right patents.

  • http://www.codemonkeyramblings.com MikeT

    Thats funny, whenever an independent developer goes after a large firm, he’s called a patent troll. Whenever a large firm goes after the small guy, he’s called a bully. Sheeesshhh.

    Sounds like a mark of consistency because both sides are being attacked. Some of us are principled opponents of software patents, favoring the chaos of a more pure free market system with fewer restrictions.

  • http://www.pff.org Noel

    MikeT, my excerpt was aimed at Tim’s positioning of the software patent debate as David v Goliath. As Don pointed out, this was not Tim’s main point, but I still see it as a constant theme he leverages.

    I’d like Tim to explain whether the patent system has prevented any independent developers from entering a market in which they had some promising viability. My feelilng is that there are not many examples, and consequently little negative impact on innovating activity. Tim is, again, making mountains out of molehills.

    Regarding the independent v politically entrenched battle Tim has introduced, well, thats life. Because we, in the US, are given some equality in the political process, many of us *expect* the same kind of equality in the creation of culture, influence on policy, and outcome of commercial activity- and those with more expectations are often the most disappointed by the reality that inquality of many sorts exists in a free market economy.

  • http://www.codemonkeyramblings.com MikeT

    Regarding the independent v politically entrenched battle Tim has introduced, well, thats life. Because we, in the US, are given some equality in the political process, many of us *expect* the same kind of equality in the creation of culture, influence on policy, and outcome of commercial activity- and those with more expectations are often the most disappointed by the reality that inquality of many sorts exists in a free market economy.

    I would say that patent supporters in general try to impose a great deal of fairness. Tell me, Noel, where it is written in the universe that equality and fairness are part of life. While you can’t defend taking away from someone what they have earned, you can easily defend someone making better use of another person’s idea than they could themselves make.

    My motivation for supporting a weak patent system is that I don’t subscribe to a belief that life should be made fair. I fully support the right of a stronger, more intelligent person to expand on the work of a less capable person, without penalty provided they are expanding the idea and not products of the weaker person. Visceral competition was what made the IT industry strong, not the pay offs from getting the right patents.

  • http://blog.actonline.org Mark Blafkin

    “A real estate developer shouldn’t have to consult his city’s “master plan” before renovating an old house.”

    However, he should have to consult the owner of the land before he starts building on it.

    Tim, I think you have this analogy backwards, sideways, and even a bit upside down. As I wrote over at the The ACT Blog, the real parallel is between your friends in the anti-patent camp and these Soviet-style city planners.

    Like the city players, the anti-patent forces also have a vision for a better neighborhood (software industry). It is beautiful: paved in gold, based on sharing and sharing alike, and devoid of any nasty software patents.

    It’s such a beautiful vision, and the software industry now is so awful and blighted, they believe it justifies nuking the entire system of software patents.

    They chant:

    “Who cares about the thousands of companies around the world that own software patents!”

    “We are smarter and can use those ideas better! I don’t care who owns them, let’s take them!”

    “If we don’t have to worry about the property rights of others, just think of all the amazing things we could create!”

  • http://blog.actonline.org Mark Blafkin

    “A real estate developer shouldn’t have to consult his city’s “master plan” before renovating an old house.”

    However, he should have to consult the owner of the land before he starts building on it.

    Tim, I think you have this analogy backwards, sideways, and even a bit upside down. As I wrote over at the The ACT Blog, the real parallel is between your friends in the anti-patent camp and these Soviet-style city planners.

    Like the city players, the anti-patent forces also have a vision for a better neighborhood (software industry). It is beautiful: paved in gold, based on sharing and sharing alike, and devoid of any nasty software patents.

    It’s such a beautiful vision, and the software industry now is so awful and blighted, they believe it justifies nuking the entire system of software patents.

    They chant:

    “Who cares about the thousands of companies around the world that own software patents!”

    “We are smarter and can use those ideas better! I don’t care who owns them, let’s take them!”

    “If we don’t have to worry about the property rights of others, just think of all the amazing things we could create!”

  • http://linuxworld.com/community/ Don Marti

    Mark, patents aren’t property, they’re government-granted monopolies, like the old ICC trucking routes, or cable TV franchises, or sugar quotas.

    Government is empowered to grant some kinds of monopolies, but needs to back off when a monopoly would interfere with actual property or other Constitutionally protected rights.

  • http://linuxworld.com/community/ Don Marti

    By the way, Tim, next time please patent your prose analogies so that advocates of patentability creep will have to license them in order to reply to you. (There’s no fair use doctrine for patents.)

  • http://linuxworld.com/community/ Don Marti

    Mark, patents aren’t property, they’re government-granted monopolies, like the old ICC trucking routes, or cable TV franchises, or sugar quotas.

    Government is empowered to grant some kinds of monopolies, but needs to back off when a monopoly would interfere with actual property or other Constitutionally protected rights.

  • http://linuxworld.com/community/ Don Marti

    By the way, Tim, next time please patent your prose analogies so that advocates of patentability creep will have to license them in order to reply to you. (There’s no fair use doctrine for patents.)

  • venkat2009

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  • venkat2009

    Eminent Domain name Nice.If u want to create the Domain name U can Use this site http://www.tucktail.com/ For the Domain name Registration

  • venkat2009

    Eminent Domain name Nice.If u want to create the Domain name U can Use this site http://www.tucktail.com/ For the Domain name Registration

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