Arnold Kling  

The Blackberry Patent Dispute

Happiness Research: Get Used t... Licensed to Rent-Seek...

I offer my two cents.

Some of the problems with patent laws could be fixed by developing standards for "fair use." Under a "fair use" standard, there would be circumstances where one company could use another company's patented ideas in a way that constitutes limited infringement (with a low ceiling on damages) or no infringement at all.

...The "fair use doctrine" would continue to protect ideas that are difficult to develop and easy to execute. However, it would provide less protection to concepts that are not embedded in working products.

Read the entire essay--it's short. Would my suggestion improve patent law?

UPDATE: I received a lot of pushback on this, so I've written

I think my starting position, based on my experience in business, is that pure inspiration is rarely very important. I believe it was Thomas Edison who said that invention is 1 percent inspiration and 99 percent perspiration. I strongly agree with that.

The notion that "I came up with a brilliant idea, so I deserve to be rich," strikes me as wrong. Ideas are rarely that brilliant. Maybe I'm uncreative, but I cannot think of a single idea that I've had that was not close to something that somebody else in the field had thought about.

Lots of people want to be rewarded for creativity. Rock musicians, writers, and so on. My view is that if you want to be creative, do it for your own satisfaction. If you happen to make money, consider yourself lucky, but don't expect society to arrange it so that you get rich.

There is a really long, complex value chain involved in creating a marketable product. If you are a pure inventor, and other companies control most of the value chain, you can whine and moan all you want, but you have to deal with reality. Part of the job of being an inventor is finding partnerships that will enable you to turn your concept into a product.

If we don't have patents to protect extensive research, then we will lose out on important innovations. But if your flash of inspiration does not earn a patent, that's no loss.

John Locke said that the right to property came from "mixing the fruits of your labor." If you don't try to implement your inspiration, you don't have much of an ownership claim.

Having said all that, I think that intellectual property is a tough issue, and I don't promise that the position I take on it today is the position that I will hold forever.

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The author at RevolutionCalling in a related article titled Fair use for patent law writes:
    Everyone (except the rent-seekers) can see that the patent system (not to mention intellectual property law in general) is badly broken. Arnold Kling of EconLog suggests that the fair use doctrine from copyright law might help the patent system. I am g... [Tracked on March 2, 2006 1:08 PM]
COMMENTS (9 to date)
Bill Stepp writes:

There is no place in a free society for intellectual monopolies (copywrong and patents) as well as compulsory downstream licensing of one's own property.
The copy I made yesterday of the WSJ patent op-ed by copying and pasteing it into my browser and forwarding it to a friend is my property, not Dow Jones'. (Let 'em sue me!)
The solution you proffer would be subject to endless litigation, as copywrong is now, and assumes the legitimacy of the copywrong capo, the patent police, and the license raj, criminals all.
"Intellectual property" is just rentk-seeking, pillage-brokering, theft, call it what you will.
It impedes innovation and investment, contrary to its apologists, as Michele Boldrin and David K. Levine show in their forthcoming book, as and Kal Raustiala and Chris Sprigman show in a recent working paper (for the fashion industry).
Indeed the latter two authors identify what they term the "piracy paradox," the phenomenon of "piracy" spurring innovation.

The WSJ op-ed bashes lawyers, as that publication is wont to do. But lawyers are just doing their job (admittedly, it's almost like saying concentration camp guards are just doing their job). The problem is not lawyers; it's the "intellectual property" regime--in this case patents--and the federal enforcement of this corrupt and frankly criminal system.

This sounds wise. The only problem that I see is the continuing efforts to remove fair use even from copyrights: under this assault, is there any chance of the idea getting a foothold in other applications?

Brad Hutchings writes:

I may be wrong, but I think you have stated the concept of Fair Use in copyright incorrectly. It is my understanding that Fair Use is a legal defense against a copyright infringement lawsuit, not a blanket legal right to copy for personal use. In fact, the "right" to copy a CD onto your hard drive or your iPod is not a "Fair Use" right, but one explicitly granted to you by the copyright holder under license. See this item on the RIAA website. But also see this alert by the EFF (for facts, not spin), to see that the RIAA's position is that just because they grant blanklet personal use rights on their CDs doesn't mean all CDs have to come with the same license.

I think the key recommendation of your proposal is a commercialization test. The goal of the commercialization test ought to put patent portfolio rent-seekers out of business. We don't need a specialization of "inventors" who just invent. We need inventors that bring products to market. I would also like to see patent applicants have to suggest a damages cap on their prospective patent. The higher the cap demanded, the more time and effort will be put into the review cost, and the higher the fee. Although the fee for the highest cap should still be in reach of small inventors, perhaps in the $100K range for a $1B cap on that patent. The cap would more clearly define the scope of the limited monopoly granted.

Josh writes:

I believe that copying a cd to one's hard drive is indeed "fair use" which was won initially when RIAAish types tried to stop the production of cassette decks with recording capability. When purchasing a cd or record, you are purchasing the music, as odd as it sounds. The idea that a person is buying a license to play music under certain terms, rather than the music itself, is what iTunes, etc. do. I can sell you a cd I own should I decide to. I cannot, however, legally sell you a song I purchased from iTunes (even if I delete it from my hard drive) because that is explicitly prohibited in the licensing agreement.

In fact, according to several sources, including this Boing Boing post, the RIAA is now positing that making a copy of a cd is not "fair use", which is true in the UK.

Dezakin writes:

The best solution for patents is to eliminate them. In modern society it encourages rent seeking only in the best circumstances, and in most you end up with a new idea that no one uses for 20 years. Its a net drain on society, impedes innovation, ties up the courts.

But like farm subsidies, we'll never be free of patents or copyright with money flowing into politics from rent seekers and litigants.

Phil writes:

It seems to me that fair use works better for copyright than patenting. For copyright, if you claim fair use and the copyright holder disagrees, you can usually reduce the length of the quote or something in order to comply. Also, the copyright holder usually has little financial incentive to object anyway.

But in a patent case, I use your technology in a way I think is fair use. You object, but I've invested thousands of dollars in my product. You now have an incentive to sue me, knowing that I will pay you nuisance damages just to get rid of you. In Blackberry's case, they might be more likely to win a lawsuit than they already are, but they must still be wary.

So a "fair use" patent law would have to be very specific in order to avoid this kind of dispute in a way that copyright law need not be.

Seems to me, anyway.

Chris writes:

The problem with the current patent system is that it is granting patents on very broad concepts as to concrete implementations. Sending email to wireless devices and clicking a button to buy something should not be patentable. I have a hard time being convinced that software should even be patentable. If the patent office sets the bar a bit higher on granting patents this mess would be completely irrelevant.

Dan Hill writes:

We need to get back the fundamental purpose of the patent system. We grant a a monopoly which we generally regard as a bad thing (Members of Congress should be forced to write "a monopoly is a bad thing" a thousand times before any future consideration of intellectual property law) solely in order to provide a return on the investment required to come up with truly innovative ideas. It's not meant to be a lottery - I had a great idea and now I'm rich.

NTP seem to have invested very little and Blackberry a whole lot - who do we want the patent system to reward if we want to continue encouraging real innovation?

Last point, and I know this has no basis in legal or economic theory, but can't we invoke the "evil and opportunistic bunch of %^&**$" clause against NTP?

I like the idea of a tiered patent system. The patent author pays all the expenses for everything. For a basic filing, there is an administrative fee. For a second level filing, there is a prior-patent search (this is what they do now, basically) that the author pays for. Next up involves review by paid experts (hired by patent office, paid by patent filer). Next is all the previous plus review by a judge.

The more levels you pay for during the application, the harder it is to overturn. Also, infringement penalties are smaller for less reviewed patents, bigger for more reviewed ones.

I think in this scenario patents would be much more efficient. You start with the first level, then as the idea becomes more important economically you pay for more and more levels. Conversely, your competitors could also pay for the extra levels if they want to invalidate the patent, or at least be sure it actually is valid.

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