Are Patents Monopolies? It Depends on the Relevant Century

Guest Post by Charles Duan of Public Knowledge

The question of whether patents are monopolies is one of ongoing debate. But an important aspect of that debate is the correct meaning of the word “monopoly.” A change in the word’s meaning over the last few centuries can explain at least some of the differing opinions on the question.

Today, the word “monopoly” refers to a concentration of economic market power in a single firm or entity. But up through the early 19th century, that was not the accepted definition. In that time period, a monopoly was a government grant of an exclusive right, more akin to a franchise or government contract.

COkeThe leading definition comes from the English jurist Sir Edward Coke. (The commonly used style “Lord Coke” is incorrect for reasons given in note 3 of this brief.) Coke was the author of the English Statute of Monopolies and expounded upon the law in his 1644 Institutes on the Laws of England as follows:

A monopoly is an Institution, or allowance by the King by his Grant, Commission, or otherwise to any person or persons, bodies politique, or corporate, of or for the sole buying, selling, making, working, or using of any thing, whereby any person or persons, bodies politique, or corporate, are sought to be restrained of any freedome, or liberty that they had before, or hindered in their lawfull trade.

This definition carried over to America. George Mason, for example, objected to the proposed federal Constitution on the grounds that “the congress may grant monopolies in trade and commerce”—an objection that makes sense only if a monopoly is something that “the congress may grant.”

Under Coke’s definition, patents for inventions are almost certainly monopolies, albeit not “odious” monopolies. Colonial statutes of Massachusetts and Connecticut provided that “No monopolies shall be granted or allowed amongst us, but of such new Inventions”; the exception for inventions suggests that invention patents would otherwise have been proscribed monopolies. English and American cases also treated patents as monopolies, under this older meaning. See, e.g.Turner v. Winter, 99 Eng. Rep. 1274, 1276 (K.B. 1787) (“[E]very patent is calculated to give a monopoly to the patentee . . . .”); Wilson v. Rousseau, 45 U.S. (4 How.) 646, 678, 681–83 (1846). And of particular importance, the Framers agreed: As Walterscheid explains in detail, both Madison and Jefferson referred to invention patents as monopolies, but disagreed on how problematic the monopolies would be in practice.

To be sure, there were some who argued that patents for inventions were not monopolies, on the grounds that, being directed to new inventions that did not exist previously, those patents do not “restrain[] of any freedome, or liberty that [the people] had before.” This view, reviewed by Giles Rich in 1942, is perhaps subject to debate on the merits, but does not appear to take serious hold until the later 19th century—about the time that antitrust law and the modern definition of “monopoly” would have arisen.

And, more importantly, this older ground of debate has little to do with the modern question of whether patents are antitrust-style monopolies, which deals in considerations of market power or economic concentration. The modern question is interesting and important as well, but the authorities discussing the historical definition shed little light on the modern question, and vice versa.

This change in the meaning of “monopoly” from government decree to economic condition is likely familiar to many, but I had not seen it so far in my reading. The most recognition of the distinction that I can find is a footnote to a Federal Circuit opinion (by Judge Rich) noting “that ‘monopoly’ is used in different senses in patent and antitrust law,” but he gives no further explanation. And relevant today, none of the briefs in the Oil States case so far explicitly note the historical definition of “monopoly,” and at least one brief cites the modern definition in a historical context.

22 thoughts on “Are Patents Monopolies? It Depends on the Relevant Century

  1. As has been noted many times, a patent is not normally a monopoly because it is normally too narrow in scope to preclude commercially valid alternatives. To put it the usual way, a patent does not normally provide monopoly power over a properly defined “relevant market.” Nor is a patent enforced by the sovereign, as historic monopolies were.

    1. P.S. I am surprised the author did not find authority on this issue. See especially Illinois Tool Works, Inc. v. Independent Ink, Inc., Supreme Court No. 04-1329, proceedings below sub nom Independent Ink, Inc. v. Illinois Tool Works, Inc., 396 F.3d 1342 (Fed. Cir. 2005) (Dyk. J.).

    2. Nice posts, Paul.

      (no snark)

  2. From the Casey of Monopolies:

    “[T]he said grant to the plaintiff, of the sole making of cards within the realm, was utterly void; and that for two reasons. First, that it is a monopoly, and against the common law. Secondly, that is against divers acts of Parliament. Against the common law for four reasons. As the first ground, 1. All trades, as well mechanical as others, which prevent idleness (the bane of the Commonwealth), and exercise men and youth in labor, for the maintenance of themselves and their families, and for the increase of their substance, to serve the Queen when the occasion shall require, are profitable for the Commonwealth; and therefore the grant to the plaintiff, to have the sole making of them, is against the common law, and the benefit and liberty of the subject, as was adjudged in this court in Davenant v. Hurdis; where the case was, that the company of merchant tailors in London, having power by charter to make ordinances for the better rule and government of the company, so that they are consonant to law and reason, made an ordinance, “that every brother of the same society who should put any cloth to be dressed by any cloth-worker, not being a brother of the same society, should put one half of his cloths to some brother of the same society, who exercise the art of a cloth-worker, upon pain of forfeiture of ten shillings, etc.; and to distrain for it, etc.,” and it was adjudged that this ordinance, although it had the counotenance of a charter, was against the common law, because it was against the liberty of the subject. For every subject, by the law, has freedom and liberty to put his cloth to be dressed by what cloth-worker he pleases, and cannot be restrained to certain persons, for that in fact would be a monopoly, and therefore such ordinance by color of a charter, or any grant by charter to such effect, would be void.

    As the second ground, the sole trade of any mechanical artifice, or any other monopoly, is not only a damage and prejudice to those who exercise the same trade, but also to all other subjects, for the end of all these monopolies is for the private gain of the patentees

    And therefore there are three inseparable incidents to every monopoly against the Commonwealth; the price of the same commodity will be raised, for he who has the sole selling of any commodity may and will make the price as he pleases; that after the monopoly is granted the commodity is not so good and merchantable as it was before, for the patentee, having the sole trade, regards only has private benefit and not the Commonwealth; that it tends to the impoverishment of diverse artificers, and others, who before, by the labor of their hands in their art or trade, had maintained themselves and their families, who will now of necessity be restrained to live in idleness and beggary. And the common law in this point agrees with the equity of the law of God, as it appears in Deuteronomy 24:6 [“No man shall take the nether or the upper millstone to pledge: for he taketh a man’s life to pledge.”] and with the civil law.

    As the third ground. The queen was deceiving in her grant; for the queen, as by the preamble appears, intended it to be for the weal public, and will be employed for the private gain of the patentee, and for the prejudice of the weal public. Moreover, the queen meant that the abuse should be taken away, which should never be by this patent, rather the abuse will be increased, for the private benefit of the patentee; and therefore, as is is said in Earl of Kent’s case, this grant is void jure regio.

    As to the fourth ground. This grant is prima impressionis , where no such was ever seen to pass by letters patent under the great seal before these days, and therefore it is a dangerous innovation, as well without any precedent or example as authority of law or reason. And as to what has been said that playing cards is a vanity; is true if it is abused; but the making of them is neither a vanity nor pleasure, but labor and pains. And it is true that none can make a park, chase, or warren, without the king’s license; for that is called quodam modo to appropriate those which are ferae naturae et nullius in bonis to himself, and to restrain them of their natural liberty, which he cannot do without the king’s license; but for hawking, hunting, &c., which are matters of pastime, pleasure, and recreation, there needs no license, but every man may, in his own land, use them at his pleasure, without any restraint to be made, unless by parliament. And therefore it was resolved, that the queen could not suppress the making of cards within the realm, no more than the making of dice, bowls, balls, hawks-hoods, bells, lewers,
    dog-couples, and other the like, which are works of labour and art, although they serve for pleasure, recreation, and pastime, and cannot be suppressed but by parliament, nor a man restrained from exercising any trade but by parliament.

    1 WPC 1, 2-4

    From Darcy v. Allin (another report of the same case)

    Now therefore I will show you how the judges have heretofore allowed of monopoly patents ; which is, that where any man, by his own charge and industry, or by his own wit or invention, doth bring any new trade into the realm, or any engine tending to the furtherance of a trade that never was used before, and that for the good of the realm, that in such caes the king may grant to him a monopoly patent, for some reasonable time, until the subjects may learn the same, in consideration of the good that be doth bring by his invention to the commonwealth, otherwise not.

    1 WPC 5, 6

    1. At the end of day Ned, any justice worth their salt can figure out how to hold IPRs are Constitutional or not. So, this will likely be decided on policy grounds.

      1. “deciding” statutory law on policy grounds practically guarantees an unseemly legislating from the bench.

  3. Typo correction:

    “And [ir]relevant today, none of the briefs in the Oil States case so far explicitly note the historical definition of ‘monopoly,’ …”

  4. the modern question of whether patents are antitrust-style monopolies, which deals in considerations of market power or economic concentration.

    The question is what to do about the ritual abuse of the patent system by a wealthy entitled class of b0 t t0m feeders who relentlessly attempt to solely control (or “monopolize”) subject matter that is either non-inventive or isn’t eligible for patent protection on its own terms.

    The self-serving argument from that class of people is that if we don’t tolerate them and their abuse then the world will stop turning and we’ll all turn into the Amish and revert to the bronze age and, as a result, the Chinese will take over. It’s a laughable myth but we live in a world where laughable myths coming from the mouths of rich old white dinosaurs simply must be taken seriously. Because they’re so serious! Just look at them.

    1. Your attempted thread hijack (as well as your feelings) is noted.

      1. Mississippi GOP Sen. Thad Cochran insists that he is not retiring from Congress, despite widespread speculation about the veteran lawmaker’s health and political future.

        The 79-year-old Cochran appeared frail and at times disoriented during a brief hallway interview on Wednesday. He was unable to answer whether he would remain chairman of the Appropriations Committee, and at one point, needed a staffer to remind him where the Senate chamber is located.

        Very serious people! We must all look the other way while they collect money for their rich friends and Make America White Again.

        1. Your reply to my comment is a non sequitur.

          How “very serious” is that?

          1. It’s not a non-sequitur. This is an unusual moment in history, “anon”, at least for the U.S. All of these events and players are related, especially at the Federal government level.

            Maybe you don’t realize that for some reason. Or maybe you just don’t like talking about it. That’s your problem.

            [shrugs]

            I’m going to keep putting the puzzle pieces in front of you, and connecting them where I think it’s most helpful. But you should learn to add 2+2. And get the right result.

            1. Is this one of your “examples” of your 2+2 postings….?

              Stultifying.

    2. “the Chinese will take over.”

      It could happen in the next hundred years or so. Your lefty news says they’re colonizing Africa as we speak, since europeans more or less left. If they succeed that would make them one step closer.

      link to nytimes.com

      link to harvardpolitics.com

      1. It could happen in the next hundred years or so.

        We need a zillion more logic and “do it on a computer” patents now!

        they’re colonizing Africa as we speak

        If only Africa had the logic patents necessary to stop this menace! Oh, Atlantis! There aren’t enough bar codes to stop this evil.

        1. Not “we,” MM. China.

          Can you imagine the Chinese economy grinding to a halt with every Tom, Dick and Harry Wong obtaining injunctions preventing every other Chinese from doing business using computers?

  5. To be sure, there were some who argued that patents for inventions were not monopolies, on the grounds that, being directed to new inventions that did not exist previously

    LOLOLOLOLOLOLOLOLOLOLOLOLOLOLOLOLOL

    What about the patents for non-inventions? You know the ones that are allegedly given more protection under the Constitution than your typical brown person driving a car?

  6. In that time period, a monopoly was a government grant of an exclusive right, more akin to a franchise or government contract.

    Luckily for us, the concept of the King or State “granting” rights was abandoned after the discovery that individuals having rights, and that the State’s proper role is to protect and secure them.

    1. the discovery that individuals having rights

      Too funny.

  7. Remember when someone here suggested that judges who used the term “monopoly” in their patent decisions should be impeached? I do.

    I also remember his name and a lot of other facts about that very very silly person.

    He’s a denizen of Big Jeans Pant Wetters Club.

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