Patent rights, Taxes, and Printing Money

by Dennis Crouch

One reason that patents remain a popular government program is that the system does not require any collection of taxes from the populace.  Rather, the government gives away property rights to individuals (or their corporate assignees) who prove themselves worthy by disclosing a new and useful invention and who pay fees to run the system.  The patent-give-away is different than the land-giveaway associated with American Westward Expansion (often known as “Land Patents”). Although the American West (and Midwest) is vast, it eventually proved finite. And, the space was already occupied by humans who were violently displaced.

Despite the oft quoted statements of Commissioner Duell, the patent space is not showing any signs of being limited in the conceivable future.  And, because a patent must be directed to a new invention, the rights only cover fields not previously occupied at the time of patent filing.

As a non-finite resource, we might also think of granting patents as akin to printing money — something that we know can create macroeconomic challenges.  But with patents, the government is not printing a commodity like money.  What we’re printing is an analogue of private property rights in the form of a right to exclude.  Each is different and unique, like a plot of land.

The right to exclude brings us back to the land patent analogy.  Here, is where those who complain about invention patents have some meat to chew on.  While land rights are limited to the physical bounds of space, a patent right pervades all corners of the country with a silent enforceable covenant to limit actions of the rest-of-the-people.  Even if I own the raw materials and embody the skill to work those materials, I cannot legally combine those in ways that fit the definition of another’s exclusive patent rights (without license).   This exclusivity is tempered by the 20-year timeline (unlike land patents that last throughout time), which many of us feel is enough to justify the exclusive rights in exchange for the social benefits of the invention and disclosure. Of course, in recent years patents have become more akin to paper dragons that may look dangerous but are regularly defanged by the Courts and the PTAB. In the end, these analogies all fail, but perhaps they help take us a step further in understanding.

Tracing the Quote: Everything that can be Invented has been Invented

6 thoughts on “Patent rights, Taxes, and Printing Money

  1. 1

    The key is the quality of the patent- akin to the location and value of the land.

    Mid Nevada scrub is worth barely a few hundred dollars an acre. Midtown Manhattan hundreds of millions of dollars per acre.

    When a patent is truly inventive and extremely valuable, the cost benefit ratio is very favorable, both for the public and the patentee. When the patent is banal and useful only as a cudgel to litigate against random unlucky entities going about their usual business, the cost benefit ratio is terrible.

    Congress and the courts are the actors responsible to police quality, and over the years, there have been ups and downs. The information age has brought challenges to quality that have not been handled well.

    1. 1.1

      Except for the fact that any view of “quality” as a function of value cannot be known a priori.

      Take for example, the ‘oops’ style of inventions, that if you attempted to ‘value’ at first instance, would have never made it out of the waste receptacle.

      ED drugs, post-in notes,….

      Take for another example, that items that DO become ‘of value’ may or may NOT have a direct relation to ANY level of actual innovation.

      Take for yet another example, the nature of the patent right is expressly a negative right – and NOT a positive right of actually DOING (or making) anything that may be covered by the patent right.

      You cannot play the game that you appear to want to play.

      For a variety of reasons in this terrain.

    2. 1.2

      “Congress and the courts are the actors responsible to police quality, and over the years, there have been ups and downs. ”

      Yes….and we are at an extreme bottom of the cycle of being able to ENFORCE the patent right due to the leverage that the CA-based tech community has over both the politicians (and the PTAB) and I fear the new admin will push us ever lower.

      1. 1.2.1

        Do NOT forget that there are multiple forces out there seeking to diminish the power of personal property that is the patent right.

        As I have phrased it (admittedly not perfectly, but there be poetic license):

        Patents are under attack from BOTH the Left and the Right.

        The Left is symbolized by the anti-property aspects and “Common” (as in, the same root of communism) views that have permeated a heavy dose of the Supreme Court.

        The Right (in this instance – and this is where more of the poetic license comes in) is symbolized by the anti-“anybody ELSE have property that gets in our way” aspects of Efficient Infringers – those entities that would rather compete on other factors outside of innovation, and who
        the disruptive power of even a single patent.

        Your CA-based tech community has primary drive from the Right (but may ALSO have some tendencies ‘borrowed’ or merely being strategically leveraged with the Left).

      2. 1.2.2

        The problems with enforcement stem directly from mass issuance of unenforceable patents. Courts will find a way to prevent obnoxious injustice one way or another, because the ends of justice do exceed the means of legal formalism.

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