Fixing US Patent Eligibility Is an Easy Win for Innovation

How serious is the situation? Will the latest legislation improve things?

"America was the first country to recognize copyrights and patents in its constitution, and industries built on intellectual property produce over 40 percent of US GDP whilst supporting tens of millions of jobs.

Now, however, a handful of Supreme Court decisions have excluded entire categories of invention from patentability. US investment in diagnostic technologies fell $9.3 billion below expected levels, as a result of depriving American innovators of rights and protections enjoyed by their counterparts in Asia and Europe. 

In one much-cited example, a molecular diagnostics company developed non-invasive prenatal testing that allowed fetal DNA to be collected from the mother’s blood, replacing invasive in-utero testing that risks pregnancy loss. The judge called it a “meritorious invention” but was compelled to invalidate patents because the circulating DNA is a natural phenomenon, and the test was well understood. The discovery was beyond the reach of patent eligibility. Competitors were immediately empowered to duplicate the technique.

The result has been a decline in innovation, ceding America’s global leadership in critical areas like medical diagnostics to our foreign partners and rivals. The bipartisan Patent Eligibility Restoration Act of 2025 (PERA) attempts to rectify this by clarifying what inventions can be protected under the US Patent Act Section 101. PERA is before the Senate Judiciary Committee and would define clear statutory exceptions to patentable subject matter that would replace broad and vague judge-made exceptions.  ..."

Fixing Patent Eligibility Is an Easy Win for Innovation | The Daily Economy "Restrictive patent eligibility has pushed investment in key technologies overseas, weakening one of America’s historic competitive advantages. Congress can still reverse course."

Apple Stops Selling Latest Apple Watch Models in the US because of patent infringement with Palki Sharma

Looks like a black eye for Apple! Will also older models be affected or watches sold outside of the U.S.?

Targeting costly medications, Biden admin asserts authority to seize certain drug patents. Really!

Dangerous stuff! Most likely unconstitutional! Big government infringing on property rights!

What do you expect from a senile, demented and corrupt 46th President!

There are other, better ways to introduce more competition into market of medications. E.g. more imports, more generic drugs, shorter patent lifetimes, faster drug approval etc. 

"The Biden administration has determined that it has the authority to seize the patents of certain high-priced medicines, a move that could open the door to a more aggressive federal campaign to slash drug prices.

The determination, which was described by three people familiar with the matter, represents the culmination of a nearly nine-month review of the government’s so-called march-in rights. Progressives have long insisted that those rights empower the administration to break the patents of pricey drugs that were developed with public funds, in an effort to create more competition and lower prices. ..."

Targeting costly meds, Biden admin asserts authority to seize certain drug patents - POLITICO The decision could give the president another tool to use in his effort to lower drug prices.

Chart of the day

Patent registration for electric vehicles world wide! Notice how strong China is, ranked no. 3 after Japan and Germany.

Credits: E-Mobilität: Deutschland ist Patent-Weltmeister

The Invention Of The Telephone Or Why Patents Are Bad

Posted: 8/1/2018

Introduction

I have written several posts regarding intellectual property rights (see bottom of post) and why they really are not a good idea. Intellectual property rights e.g. should be entirely abolished or considerably shortened!

How Many Roughly Simultaneous Inventors?

Today, I came across this article The Game of Telephone That Became a Battle History books may credit him as the sole inventor of the modern device, but Alexander Graham Bell was only part of the story that mentions Elisha Gray and an Italian named Antonio Meucci.

Since I was born and grew up in Frankfurt am Main, Germany, we celebrate yet another inventor of the telephone, our Philipp Reis. According to this Wikipedia article about Reis, there were perhaps even others planning to or inventing the telephone.

There is no need to go into the details of each of these telephone inventors for the purpose of this blog post.

Something Was In The Air

What is clear is that around 1850-80 it was imminent that something like a telephone would be invented. So it happened that perhaps as many as half a dozen inventors in three or four different countries developed a telephone within this period of time.

Only because one of them (i.e. Graham Bell) was very clever, if not worse, faster to the patent office, and a better businessman than perhaps the other co inventors, one man and his company were awarded with the patent …

Conclusion

The invention of the telephone is probably one of the best examples why intellectual property rights are actually harmful to humanity. More competition would certainly be better for technical and human progress!

My Previous, Related Blog Posts

1. Pastiche In Classical Music
2. Abolish Copyrights
3. Intellectual Property Rights Are Not Exclusive
4. Was Amadeus Mozart A Plagiarizer?
5. Challenging Innovation Is Expensive, Imitation Is Cheap, And Exclusion Is Difficult
6. Urgent Reform Of Copyrights
7. What Is Wrong With Intellectual Property Rights?

Intellectual Property Rights Are Not Exclusive

Posted: 10/28/2014

Preamble

Anyone, who follows my blog is aware that I have a very critical disposition towards IP rights. I have addressed IP in several, previous blogs.

One Of Several Flaws Of The U.S. Constitution

There are a number of serious flaws to be found in the U.S. Constitution (in no particular order and the list is certainly not exhaustive):

1. The silly establishment of a postal service
2. The omission of strict limits on taxation
3. The missing prohibition of public sector deficits and indebtedness unless under extraordinary circumstances and only with the approval of a supermajority of elected member of Congress
4. The omission of strict term limits for everyone in public service, i.e. elected representatives, federal government employees, judges and so on
5. The inclusion of intellectual property rights and the omission of well defined short time limits on such rights

An Invention Or Innovation Is
Often Not The Product Of A Single Human

Nearly all inventors or innovators (including the arts and literature) had predecessors or contemporaries from whom they borrowed ideas etc. Just because someone raced to be the first to the patent office or to published a work of art  should not establish a right like intellectual property.

Many Inventions Were Discovered Multiple Times About The Same Time

Here is a short, and very incomplete list:

1. Telephone
2. Transistor
3. Incandescent bulb
4. Balloons to transport humans (e.g. hot air balloon)

Unfortunately, I do not have the time to research in more depth the details of these roughly synchronous, parallel developments.

Again, the question is should only the first one who secures government enforced legal rights to such discoveries be protected and enjoy monopoly rights to exploit a discovery?

Intellectual Property Rights Stymie Progress

I am convinced and I would argue any time that IP rights have probably slowed down human progress by decades if not centuries.

We Would Still Be Living In Caves

Had intellectual property rights been developed before or at the time of cavemen, we would still be living in those caves.

Had not discoveries preceding the establishment of enforceable IP righs been shared, traded, and reverse engineered among humans, we would indeed be living in a very different time.

How NSA Drives Technological Progress

Trigger

Just read “Spinoffs from Spyland/How America’s eavesdropping agency commercializes technology.”

Commercialization By NSA

Here is a quote from the article (emphasis added):

“More than 4,000 programmers work at the NSA, in addition to 960 PhDs and some 1,000 mathematicians known internally as the “math mafia.” Like other federal agencies, the NSA is compelled by law to try to commercialize its R&D. It employs patent attorneys and has a marketing department that is now trying to license inventions like tamper-­proof bags, secure manhole covers, and a “dispersion system” to make sure shredded documents can’t be pieced back together. One startup, Integrata, based in Maryland, exclusively licensed a patent on how to detect intruders on wireless networks.”

According to the article above the NSA holds about 170 patents and the NSA has contributed 100,000s of lines of source code to the open source community.

Patents Ad Absurdum

Trigger

Just (12/2/2013) read “Google’s Growing Patent Stockpile/The search giant says patents are rubbish. Yet it’s accumulating more of them than ever” in the MIT Technology Review.

“But data from the U.S. Patent & Trademark office shows that Google has been working very, very hard to win more patents on its own ideas. It has accelerated its activity to such a degree that Google inventors—among them founders Sergey Brin and Larry Page—are now winning 10 patents every day the patent office is open, covering everything from automated cars to balloon-based data networks. For comparison, consider that in all of 2003, Google was awarded four patents.  … Google says it now controls more than 51,000 patents and patents pending.” (Emphasis added)

Google claims it is only for defensive purposes like the purchase of Motorola Mobility with a portfolio of 17,000 and more patents in 2012.

The article does not fail to mention “a typical smartphone could be covered by as many as 250,000 patents, but that, like most patents, they are “largely questionable” and for the most part “dubious.””.

Questionable And Dubious Inflation Of Patents

The above article also contains a chart showing how many patents per year are awarded to top IT companies in the U.S. by the U.S. Patent & Trademark Office.

Can you believe that a company like IBM has about 6,000 innovations per year that deserve a patent? Or Microsoft about 3,000 per year?

Patentable is legally defined as a non-obvious novelty. Do all these patents meet these criteria or are they being granted too easily? I am afraid it is the latter.

Previous, Related Blog Posts

Here (this post contains links to other related posts of mine).

A World Without Any Intellectual Property Rights

Prolog

Here is an interesting article along the lines of my blog. Here is an interesting website dealing with this issue.

Here is the link to my earlier blog post on intellectual property.

What Is Wrong With Existing Intellectual Property Rights?

·         It is a government granted exclusive, artificial monopoly for extended periods of time

·         Too many frivolous, trivial patents

·         Terms of protection are way too long in many cases

·         Patent trolls

·         Lawsuits to intimidate competitors or to interfere with competition

·         Impediment to human progress

To use hyperbole, what are Apple and Samsung fighting over in court? Rounded square button icons?

Reverse Engineering

In a competitive world with intelectual property rights one has to suspect that competitors are constantly reverse engineering any new or modified product or service from any other competitor as soon as it hits the market or even earlier, which, I suppose, is a legal activity.

I suppose also that competitors quickly try to replicate new and successful features etc. to the extent as not to infringe on intellectual property rights.

Tabula Rasa

I like thought experiments and to start with a blank slate given a thorny issue like intellectual property rights in the 21^st century. Unfortunately, I am not an expert in the history of such rights and how they came about over the centuries.

Whatever were the reasons that governments became involved in granting and enforcing such exclusive monopoly rights, the question is whether from today’s perspective such rights still make sense and can be justified.

Do intellectual property rights improve human progress and technological innovation more than what would be the case without it? Do we have empirical data to corroborate that?

Benefits Of No Intellectual Property Rights

·         Cheaper products

·         Less government bureaucracy and litigation

·         More intense competition

·         Possibly more and better competitors

·         Possibly more specialization and differentiation among competitors

·         Possibly more dynamic markets

·         Better first mover and inventor advantage

·         Accelerated innovation and technological progress

·         Free market contractual protections instead of government granted one size fits all monopolies

Clearly, the first mover would be ahead of its competitors for some time before they catch up. The first mover would also have a strong incentive to keep improving or differentiate their products and to sell other services etc. related to their original invention. Similar holds true for authors and artists.

A Two Way Street

In a world without intellectual property rights any competitor can imitate anything another competitor has come out with and, very important, vice versa.

Once a competitor adopted a new feature by imitation, the competitor then can try to add new variations or a completely different feature and be the first to market and so on.

Counter Arguments

Capital as well as research & development investments by Companies would be reduced. In my estimation this is a myth or a red herring. Before a first mover can sell a new product on the market before anyone else, the first mover needs to make some kind of investment.

The profit motivation would be eliminated or greatly reduced. In my estimation this is another myth or a red herring. A first mover will in most cases make some profit or he can sell his invention to the highest bidder etc. The inventor or author has expert knowledge that his rivals very likely do not have to the same extent for some time.

Excessive Intellectual Property Rights Have Become An Obstacle To Human Progress

Statement Of The Problem

Intellectual property rights grant an exclusive man-made monopoly for a limited time to the originator. They have become to some extent anachronistic and need to be seriously reviewed. In my opinion the originator has the benefit to make money through other services or products even when their original product is in the public domain or accessible through fair use (see open source software or musicians who publish their music on the Internet). The originator always has the advantage of the first mover and being the original.

Over history IP rights were expanded as if on autopilot for its own sake and as it appears without critical review. In our time, IP rights have become more like sinecures for certain industries or rent seekers.

Like lifetime tenure, unreasonable intellectual property rights are to be seriously reformed or abolished.

Over History The Limited Time Period Became Too Long

Over history, the limited duration of such rights was extended to ridiculous length. As if rent seekers/lobbyists were successfully at work.

The limited duration of copyrights were extended from 28 years from the date of publication in 1710 to lifetime of the author plus 50 years in 1976 to lifetime plus 70 years in 1998. If the creator is a corporation, then the term is now 95 years from publication or 120 years from the date of creation, whichever is shorter. Such a long protection is sheer nonsense.

The first known patent to be granted was in 1421 in Florence for merely three years. In 1623 it became 23 years. In modern times it is somewhere between 16 and 20 years. This is not as extreme as copyrights, but a critical review is overdue.

More And More Products And Services

Were Covered By Intellectual Property Rights

Over time, it was argued that commercially significant changes in technology or new forms of useful arts made it necessary to expand intellectual property rights.

Some Historical Background

According to the Encyclopedia Britannica:

- In the beginning e.g. copyrights were granted as royal patents not to protect the author or publisher rights, but to raise government revenues and to give government control over the contents of publications.

The Founder Of The United States 

Would Be Unpleasantly Surprised

The copyright and patent concepts were both included in the U.S. Constitution. Under Article I, Section 8, Clause 8, of the Constitution, "The Congress shall have Power … To promote the Progress of Science and useful Arts, by securing for limited Times to Authors and Inventors the exclusive Right to their respective Writings and Discoveries."

Now almost 250 years later, the Founders would probably be shocked to see what has evolved.

Flawed Thinking

Government established monopolies of any kind are never good for science and useful arts or a free market economy. Reverse engineering allows any competitor to learn about the secrets of a product or service. More competition is the way to go.