Thursday, 7 October 2010

GUEST POST: More on the Myth that Patents are Monopolies

Guest post by patent specialist Dale Halling

David Kline, author of Rembrandts in the Attic, has added the following insights from history on the idea that patents are monopolies.

_Quote The condemnation of monopolies ought not to extend to patents, by which the originator of a new process is permitted to enjoy, for a limited period, the exclusive privilege of using his own improvement. This is not making the commodity dearer for his benefit, but merely postponing a part of the increased cheapness (or excellence) which the public owe to the inventor, in order to compensate and reward him for his service.
     - John Stuart Mill, Principles of Political Economy, 1848

_QuoteThe dawn of the right of inventors has been actually [contemporaneous] with the destruction of monopolies odious to the common justice of men; and the common sense of mankind has marked a distinction between such monopolies and the exclusive rights conceded to inventors. Their rights, under patents, are called ‘monopolies’ only from the poverty of language, which has failed to express in words a distinction which no less clearly exists.
Louis Wolowski, Chair of Industrial Economics, Conservatoire des Arts et Métiers, 1864

_QuoteHow can the exclusive right of an invention be compared with a monopoly in trade? How can the exclusive privilege to sell salt in Elizabeth’s time, which added not one bushel to the production, but which enriched the monopolist and robbed the community, and the exclusive right of Whitney to his cotton gin, which has added hundreds of millions to the products and exports of the country, be both branded, with equal justice, with the odious name of monopoly?
- George H. Knight, 1891 :

A patent is a property right, it is not a monopoly.  For more information see  my post The Myth That Patents are Monopoly.

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Dale Halling is an American patent attorney and entrepreneur, and the author of the book The Decline and Fall of the American Entrepreneur: How Little Known Laws are Killing Innovation.
Read his regular thoughts at his
State of Innovation blog.

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Blogger Owen McShane said...

The granting of a patent is actually a freely negotiated trade, just like a trade in any market.

The state letters patent grant a short term monopoly of use in a defined market in return for publishing the method IN ALL MARKETS.

Hence, if you can only afford to patent in New Zealand and Australia the rest of the world benefits by having access to your invention without restraint.

This decision as to cost and territory is a highly strategic decision best guided by commercial analysis that by legal opinion.

This trade is quite unlike a monopoly granted to an importer or supplier of any other goods or services.

People who complain that patents are a monopoly have never gone through the process.

7 Oct 2010, 12:13:00  
Blogger FreeMack said...

I think the issue in peoples minds with monopolies, is that they think of examples that are not earned by merit (i.e. a new idea) but given by government interference.
But strangely people also seem keen on these monopolies - try mentioning breaking up the ACC monopoly, or Earthquake insurance.
People are strange.

7 Oct 2010, 14:34:00  
Anonymous Fentex said...

From the article:
A patent is a property right, it is not a monopoly

This is not true. Patents are a legal right, and that right may be legally possesed but patents encompasse ideas and information not objects that may be possesed as property.

The distinction is important becvause mistaking intellectual priviledges for property leads to bad law and legal judgment.

From Owen McShane:
The granting of a patent is actually a freely negotiated trade, just like a trade in any market.

That's not true, I certainly never negotiated a trade with the patent holders who were granted patents I am legally enjoined to respect.

That one may or may not agree with that in the special case of patents coercion and mandated priviledge is appropriate does not change the fact that patents are legally mandated monopoly on ideas and information.

Arguments for them should not obsfucate reality.

7 Oct 2010, 17:15:00  
Anonymous Michael said...

patents are legally mandated monopoly on ideas and information.

Not a monopoly on ideas. You don't own an idea. You own a physical process. A patent is ownership of a thing except that thing exists in time instead of space. You created a process so you have the right to profit from it.

A rational man CHOOSES not to steal intellectual property. Its not because you're a bad man if you steal. It's because you recognize that if you steal intellectual property people wont make it. People won't produce software for you to steal if you steal it.

All this talk about rights sounds mystical when you forget that a right is a human invention in recognition of a metaphysical need for people to own the products of their minds.

That's not true, I certainly never negotiated a trade with the patent holders who were granted patents I am legally enjoined to respect.

Granting a patent is recognizing a causation. "We the United States government realize that the ipod would not exist if apple inc had not created it". The unearned is the uncaused

8 Oct 2010, 12:01:00  
Blogger Owen McShane said...

I was describing the Granting of the Letters Patent as a trade between the State and the Inventor.

The holder of the patent is then entitled to freely trade with potential users of the patent. Indeed I spent many years of my life negotiating such assignments and licences around the world.

Many inventors never work their own patents but licence others to do so. These are normally freely negotiated contracts. The exception is when the State requires that a patent be "worked" in the national interest - usually during times of war.

8 Oct 2010, 12:34:00  
Anonymous Greg said...

Oh, FFS.

9 Oct 2010, 18:44:00  

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