Depriving property rights is patently offensive      

Depriving property rights is patently offensive      

If untold millions of Americans over two centuries had benefited from a highly successful generator of innovation, would you think it wise to dismantle critical pieces of that engine of creativity and wealth creation?

Yet, that’s what some otherwise conservative people aim to do.

But for conservatives to be true to themselves and to conservative principles, they should carefully think about what we ought to conserve.

“Conventional wisdom” around patent issues has reached the realm of myth. Advocates of sweeping patent legislation claim there’s a litigation explosion in patent cases, that “patent trolls” are driving up litigation rates, and this litigation costs the economy billions of dollars.  They claim we need patent “tort reform.”

That’s not the real picture, nor is it in keeping with the Founders’ (wildly successful) vision in setting up patent rights as a property right in the first place.

First, there isn’t any patent litigation explosion. The historical average of around 1.65 cases per patent remains fairly steady over time.  There are more patents, and thus the raw number of cases has risen.

Also, the overreaching, patent-weakening, anti-inventor America Invents Act enacted in 2011 made it harder to join parties into single cases, so each one must be litigated separately. That accounts for the 2012 bump in patent cases.

George Mason Law Professor Adam Mossoff, economist Zorina Khan of Bowdoin College, and others have noted that litigation around patents always jumps with disruptive innovation, whether it be the sewing machine, the telegraph, the telephone, the light bulb or the computer. Khan finds that any uptrend in recent years is really a return to the pace of litigating patents seen in antebellum and post-Civil War times, as advancements that improve quality of life are discovered.

Second, the supposed culprit of the claimed rise in patent litigation, the “patent troll,” isn’t driving up patent litigation. Despite what researchers at Boston University, who claim patent litigation by trolls drains $29 billion a year from the economy, and at the University of California, who claim patent trolls were behind 58 percent of all patent lawsuits in 2012, may say, the Government Accountability Office called such analyses “nonrandom, nongeneralizable.” That is, these antipatent authors use suspect data and questionable methods of analysis to reach unreliable, invalid conclusions. Garbage in, garbage out.

Based on more valid data, the GAO found that “patent trolls” file only one in five patent cases. Operating companies are behind three in five to three-fourths of patent litigation. Most patent cases end in an out-of-court settlement.

And just what is a “patent troll?” The disparaging term in today’s debate applies to the “nonpracticing entity,” the research university, the private R&D lab, the independent inventor at work in the garage, the “patent assertion entity” — practically anyone who owns a patent but doesn’t manufacture his own products. That would include most of the most prolific inventors in American history, such as Thomas Edison, the Wright Brothers, Cyrus McCormick and Elias Howe.

The term includes a firm that bought or licensed a patent from an inventor or a university’s tech transfer office.  As with a house, one person may have created and then sold or rented the property.  The brokers of patents, as those of real estate, facilitate a market that benefits everyone, including the buyer who didn’t build the structure.

Khan notes, “The ‘great inventors’ of the nineteenth century, who were responsible for major disruptive technological innovations, were especially likely to be, or to benefit from, ‘nonpracticing entities.’”

A critical element of property rights is being able to enforce your property rights through legal channels. Communicating to patent infringers that they are abridging your rights is protected commercial speech. They may refuse or disagree, so litigation may follow. But justice demands that the patent owner have recourse to the courts, if necessary, to defend his or her intellectual property rights.

Sweeping patent legislation would wantonly disadvantage patent owners, weaken and devalue patents, and set up a soup-to-nuts regime where the risks and costs of litigating to protect one’s patent rights become prohibitive. The most risk would fall on small inventors, their investors and small businesses, while the unfair advantage and ability to continue commercial infringement accrue to infringers.

Only the Targeting Rogue and Opaque Letters (TROL) Act in the Energy & Commerce Committee seeks to address the abusive aspects of “demand letters” fairly. This bill takes a more focused, balanced approach that would safeguard small retail businesses while not stacking the deck against independent inventors.

A 2008 Phyllis Schlafly Report titled “What Americans Owe to Inventors” said, “The Founding Fathers also understood that securing to individual inventors the right to own and market their original ideas is just as much a part of economic freedom as any other personal labor.”  This Eagle Forum report lists a who’s who of American inventors to whom we owe a great debt for America’s standard of living.

The American patent system, including sometimes vigorous litigation and which has spurred unfathomable innovation, benefits the inventor and his or her family. It also benefits many others.

It benefits the people hired for the jobs stemming from the invention and provides their families economic well-being. Society benefits from those families having paychecks because financial pressures often delay family formation and often lie at the heart of family breakup.

Other beneficiaries:  the people who use the invention, the truckers and warehousers and brokers and shippers who transport the products derived from the invention, the merchants in whose stores the workers with those new jobs and consumers of the new product shop, the government that collects the taxes paid on the new wealth the invention creates, new innovation that the invention stimulates, people around the world as the invention diffuses into other markets.

Now would be a good time for conservatives to consider the fundamental element of a patent owner being able to exercise intellectual property rights by defending them legally.

Now is a great time to determine whether or not you truly believe in property rights. Do you believe in the market efficiencies that developed early on in the American system of patents? Do you believe in the role of civil justice against property thieves? Do you share the Founders’ vision?

James Edwards advises Eagle Forum on patent policy.  The views expressed here are his own.


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