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Source link: http://archive.mises.org/11076/common-misconceptions-about-plagiarism-and-patents-a-call-for-an-independent-inventor-defense/

Common Misconceptions about Plagiarism and Patents: A Call for an Independent Inventor Defense

November 21, 2009 by

Defenders of patents commonly say they are against innovators’ ideas being “stolen” or “plagiarized.” This implies that patents simply permit an innovator to sue those who copy his idea. This position betrays either disingenuity or ignorance about patent law. Let me explain.

Under copyright law, someone who independently creates an original work similar to another author’s original work is not liable for copyright infringement, since the independent creation is not a reproduction of the other author’s work. Thus, for example, a copyright defendant can try to show he never had access to the other’s work, as a defense. The reason for this is that the fundamental copyright is, well, a right to copy one’s original creative work. By the nature of creative works that are subject to copyright, it is very unlikely someone would independently create the same novel, say, or painting, as another author. (And if copyright only protected literal copying, it would be much less a problem; but unfortunately it protects a bundle of rights including also the right to make “derivative works“.) But, in the rare case where author 2 independently creates a work very similar to that of author 1, it is not an infringement of author 1′s copyright, since author 2 did not copy anything.

Patent law is different. Very different. Most defenders of IP do not seem to be aware of this difference–one reason they should not be opining in favor of legal regimes they know little about. When patent defenders say that patent abolitionists are in favor of plagiarism and idea theft, they imply that patent law is like copyright law–that it simply prevents people from copying others’ ideas.
Not so. To prove copyright infringement you have to show an actual copying of the work. But to prove patent infringement, the patentee need only prove that the accused infringer makes, uses, sells, or offers to sell, or imports the patented invention–that is, a device or method that is described in at least one of the “claims” of the patent. It doesn’t matter if the infringer invented it independently. It doesn’t even matter if the infringer invented it before the patentee. Got that? Someone who previously invented the same thing and is using the idea in secret can actually be liable for infringing the patent granted to the second inventor. If a later person independently invents the same idea that was previously patented by another, this is also no defense. Prior use or independent invention are not a defense.

Obviously, it should be. The Intellectual Property and Communications Omnibus Reform Act of 1999 did add a limited first inventor (prior user) defense for prior commercial users of “business methods“–see 35 U.S.C. § 273–but not a general one. Justice obviously requires that, at the very least, a general independent inventor defense be added to the patent system. To blunt its sharp, unjust edges. In particular, a defense should be provided for those who are prior users of, or who independently invent, an invention patented by someone else. This would greatly reduce the cost of the patent system since one difficulty faced by companies is that they do not know what patents they might infringe. If someone learns of an invention from another’s patent, at least they are aware of the risk and can possibly approach the patentee for a license. But quite often a company independently comes up with various designs and processes while developing a product, which designs and processes had been previously patented by someone else. If the goal of patent law is to reward invention, it should be sufficient to permit patentees to sue people who actually learned of the idea from the patent–just as copyright infringement exists when someone reproduced another’s work but not when it is independently created. A broad prior user right defense should be established, as well as an independent inventor defense that even a later inventor could use. (Pending patent reform legislation originally proposed to broaden the existing prior user defense by eliminating the business method patent limitation so that users of all types of inventions would have been able to use the defense, but this was removed from later versions of the bill. The Council on Foreign Relations study, “Reforming the U.S. Patent System: Getting the Incentives Right,” recommends a prior-user right be adopted; James Bessen & Michael J. Meurer, Patent Failure: How Judges, Bureaucrats, and Lawyers Put Innovators at Risk (Princeton University Press, 2008), recommend an independent inventor defense–see the Introduction.)

Even pro-IP libertarians usually reluctantly agree that independent invention should be a defense, once you dispel their ignorance about the system they for some reason support (well, the reason is not that hard to see–it’s lingering state-indoctrination, or some form of statism such as minarchism, or some unprincipled, incoherent grounds like utilitarianism). This is one of the aspects of arguing IP policy that infuriates me. Whenever you point one of these things out to a libertarian defender of IP, he will usually say, “well, I don’t support that.” So you say, “well, what do you support?” The answer is basically, “Hey, I’m not a patent lawyer; that’s just a detail.” I.e., they are in favor of some ideal patent system; not the current, statist one (though they oppose abolishing it or weaking it!), but a “libertarian” one (as if one could imagine a patent system concocted by decentralized courts without legislative power! [on this see my Legislation and the Discovery of Law in a Free Society]). In other words, they don’t know what in the heck they are even talking about. They can’t describe the system they favor, and are not willing to abandon a statist system they admit is unjust.

And they seem blithely unaware that removing the obvious, “problematic” features of patent law would largely gut it, resulting in an emaciated, weak patent system–a change that would be attacked by mainstream IP advocates as “harming innovation,” in the same way that these libertarian patenteers criticize us patent abolitionists. Libertarian IP advocates are schizophrenic. They shy away from the obvious injustices of patent law, and would favor reforms that most normal IP proponents would recoil in horror from; while they try to maintain the facade that they support IP because they support innovation and inventors’ “rights”, even though they cannot tell you what their ideal libertarian patent system even looks like.

Don’t believe me that providing an (obviously just) “independent inventor” defense would gut the patent system? I’ve been practicing patent law since 1993. I have lost count of the number of times I’ve been called upon by a client to analyze a patent that has come to the client’s attention, that concerns it. What typically happens is this. Company A is producing or developing a product. They hear a rumour from a customer “Hey, I think that Company B has a patent on something similar to this.” Or, they get a letter from Company B saying, “Hi, we attach a copy of our latest patent for your interest! If you want to discuss licensing, give us a call! <smiley face! we’re all friends! it’s all good! Don’t file a declaratory judgment action against us, please! We wouldn’t want to give you cause to sue us first, robbing us of the chance to choose the venue! <double-smiley-face> Love, Company B”. So Company A calls me, says, “can you take a look at this patent? Are we in trouble? Are we infringing? Is the patent valid? If so, can we change our design to get around it? We’ll be happy to pay your $30k fee for an analysis and opinion.” Such a productive use of precious capital!

Now, what I want to emphasize here is that: in all the umpteen times I’ve done this over the last 15 or so years, I have never, ever, even once, seen a case where the client’s engineers copied the patented invention. In every case that I can recall, the company designed its product on its own–using available technology, to meet the market demands–and then only later were made aware of some patent buried among millions in the bowels of the patent office. Then they panic, worrying that they might be shut down by an injunction by a competitor, or sued into the ground (for examples see my Radical Patent Reform Is Not on the Way).

No doubt in some cases there is copying. An entrepreneur espies a popular product, and makes a similar one; lo and behold, it turns out there were some patents, and so he is sued. Still unjust–what is wrong with emulation, competition, and learning?!–but still, sure, in some cases, there is copying. But there can be no doubt that millions and millions of dollars are lost on attorneys’ fees alone, not to mention the cost of changing designs to avoid infringement, or foregoing development in a field crowded with patents or rife with uncertainty, in cases where the victim was not copying or even learning anything from the company that just happens to hold a red-ribbon adorned manilla certificate issued by a technocratic bureaucracy of the criminal central state. Add an independent inventor defense, and a lot of the work done by lawyers like me would dry up–meaning a more efficient economy, lower priced goods, more competition and innovation, more innovative freedom, more breathing room.

This is a type of reform that most libertarian patent advocates, in my experience, begrudgingly agree to. And it would gut the patent system. The caterwauling of the patent bar, deprived of half their federal law-sponsored teats, would reach a deafening crescendo. Large companies that rely on the inchoate threat of patent lawsuits to squelch competition and keep small innovators down, would increase their bribes to DC, fearful of barriers to entry falling.

So why not come all the way with us, my fellow libertarians? You see the injustices of the patent system, and usually agree with our concrete criticisms of them. You are not sure of what a good patent system would even look like. The current one is undeniably a mess. And it’s just an arbitrary fake-law scheme enacted by an obviously incompetent, evil, illegitimate, and criminal state. Why in the world would a libertarian support this? Besides, by advocating such reforms you are going to be lumped in with us “enemies of innovation” by the vested IP interests. So if you are doing the time, you might as well do the crime.

Update: See Mike Masnick’s excellent posts, Calling For An Independent Invention Defense In Patents and If Patents Are Supposed To Support The Independent Inventor, Why Isn’t There An Independent Invention Defense?, the latter of which mentions a great post by Joe Mullin, Patent defendants aren’t copycats. So who’s the real inventor here?

{ 54 comments }

Jay Lakner November 29, 2009 at 4:26 am

Can someone point out to Andras that, in my line of logic, it is implied that both A an B were researching the same technological breakthrough.
He has therefore not refuted my claims and my proof stands.

It is no surprise that the drug industry has set up an efficient system around the existing patent legislation to minimise the loss of investment. But there still is loss of investment. Time, wages, capital, etc are still consumed and irretrievably lost when business A discovers the very technology that business B was close to discovering.

In the absence of patent laws, there is no loss of investment because business B is not excluded from utilising the fruits of their research.

Andras November 29, 2009 at 12:34 pm

Can someone teach Jay the basics of pharmaceutical research? Can someone teach what he is against? You can not patent “technologies”! You can only patent applications. You can buy these patents or their licenses. And you can wait till the patent expires. Furthermore, not only your competitor’s but your research is also backed by patents. They will need your licenses as well (if you were so close). Nothing is lost due to IP. What potentially lost is due to mismanagement and that is not unique to IP driven businesses. Moreover, under no-IP schemes lots of resources has to be allocated to ensure secrecy. You literally have to build a gulag for it. And your product is also burdened by extra features to accommodate the new situation.
Jay and Newson you are stuck in the macroeconomic level of calculations, a common mistake of desk economists. Try to imagine the micro level where two or more researcher has to collaborate and have to find their way to allocate their time and resources in the absence of property right allocation because the first physical property is the end product. Without understanding and solving these there is no macro level.
When I mean calculation problem I refer to these.
Guys, you don’t understand the IP system, you don’t know the pharmaceutical industry but you have the arrogance to blanket obliterate IP.
Right now, the only industry in the US that leads the world is biotech and material sciences. They both heavily rely on IP. Pull the rug from under and you can replace the with the other leading US industries, security and military.
And Newson, big pharma does not do much research. They are only marketing houses. Biotech is doing the lifesciences.
And my recollection from the communists is that they were not really for properties, any type of properties. No website will change that.

newson November 29, 2009 at 8:30 pm

to andras:
the micro environment is a function of the macro settings. companies adapt to meet the regulatory framework. peter klein’s done a lot of work in this area on company size being a function of regulatory burden.

the military industry is parasitic. anything that shrinks the power of the state is a direct threat to its health. so i don’t think we can be dogmatic about what industry would predominate, free of ip monopoly.

i raised the existence of ip legislation in the ussr, because those against ip legislation are often accused of being some sort of marxists.

Jay Lakner November 30, 2009 at 3:13 am

Andras wrote:
**********
Nothing is lost due to IP.
**********

I find it interesting that Andras can even attempt to make this claim. Consider the following:

Business A is a drug research company.
Business B is an individual who has set up a laboratory in his back shed.
A and B are both independently researching the same problem.
The undiscovered drug X solves this problem.
A discovers drug X first and patents it.
One week later, B discovers drug X.
Due to the patent on drug X, B is forbidden from using it without paying the monopoly price stipulated by A.
B’s investment is therefore lost.

Even if the loss of investment is relatively small, it is still a loss of investment. Hence my arguments in the above posts are still unrefuted.

Andras also wrote:
**********
You can buy these patents or their licenses. And you can wait till the patent expires. Furthermore, not only your competitor’s but your research is also backed by patents. They will need your licenses as well (if you were so close).
**********

With patents, researchers have to work out how much to invest by factoring in the price of existing licenses.
Without patents, working out how much to invest is far easier because their are no existing licenses and hence no additional costs of using their own resources.
Hence calculation is hampered by patents.
I would have thought it was obvious that the less factors of production, the easier calulation becomes.

Andras also wrote:
**********
Moreover, under no-IP schemes lots of resources has to be allocated to ensure secrecy.
**********

The premise that patent legislation decreases the need for secrecy is completely unfounded. Throughout the research phase, the promise of monopoly to the first discoverer would increase the need for secrecy, not decrease it. Is Andras really trying to argue that cutting edge drug research is not currently shrouded in a cloud of secrecy?
It would only be during the testing phase that one could possibly argue that secrecy needs to increase. It is impossible to make a general determination of the overall costs/savings (it will be different from case to case). Therefore, one cannot use the argument of ‘decreased secrecy costs’ to justify patent laws.

Andras may have a lot of specific knowledge about the current drug patent system. However this seems to be limiting his ability to view the ‘unseen’ effects of that system. I liken it to someone who has great knowledge of the current minimum wage laws but is unable to see their true effects because they can only recognise the ‘seen’ effects and are unable to recognise the ‘unseen’ effects.

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