Intellectual Property Law Causes Wealth Disparity

[TwiceHorn 31280]

Saw this article from The Nation. https://www.thenation.com/article/economy/inequality-patents-taxes-copyright/

I think there are some mistaken premises in there, but it is provocative.

Primarily, he correlates changes in patent law in the 80s to extend patents to software (Diamond v. Diehr) and to life forms (Diamond v. Chakrabarty), and the somewhat contemporaneous extension of copyright term to the wildly increasing wealth gap.

I would submit that rather than causing or really contributing much to the wealth gap, those changes in IP (save copyright term extension, which is nakedly anticompetitive), simply reflect the ascendancy of two capital-intensive and relatively new technologies (software and biotech) that signaled a shift in the US and world economies from manufacturing/industrial areas into "service" areas that are dominated by an intellectual elite.

Ironically, he says something to the effect of "Bill Gates would just be another geek in a cubicle if not for IP law."  I think that is counterfactual.  Microsoft didn't really use IP until it was already a monopolist.  To the extent IP law entrenched Microsoft (and Apple, and Google, and Amazon), it shows its effect as an equalizer as much as anything.

Edited February 9, 2021 by TwiceHorn

[DalTxHornFan 3085]

If IP law protections weren't around, it would be the equivalent of just letting errbody use Henry Ford's factory to make their own products without compensation being paid to him.  Dumb article.

[TwiceHorn 31280]

6 minutes ago, DalTxHornFan said:

If IP law protections weren't around, it would be the equivalent of just letting errbody use Henry Ford's factory to make their own products without compensation being paid to him.  Dumb article.

I think it's a little more subtle than that, but maybe not.  The patent system, particularly the courts, went a little overboard with software and biotech and has been in full retreat for about a decade.  Mostly because they didn't understand what they were doing, either time, particularly the courts.

Ultimately, as the name indicates, IP is just another form of property right.  Property rights are mostly neutral, but they do tend to favor those with property and the wealthy have a lot of property.

 

[DalTxHornFan 3085]

6 minutes ago, TwiceHorn said:

I think it's a little more subtle than that, but maybe not.  The patent system, particularly the courts, went a little overboard with software and biotech and has been in full retreat for about a decade.  Mostly because they didn't understand what they were doing, either time, particularly the courts.

Ultimately, as the name indicates, IP is just another form of property right.  Property rights are mostly neutral, but they do tend to favor those with property and the wealthy have a lot of property.

 

Perhaps, but Bill Gates may have been somewhat privileged due to his family upbringing, etc., but was certainly not wealthy before he and his compadres developed the (intellectual) property that made them all wealthy.  Would you advocate that folks other than the creators should reap the rewards of their efforts?

[TwiceHorn 31280]

9 minutes ago, DalTxHornFan said:

Perhaps, but Bill Gates may have been somewhat privileged due to his family upbringing, etc., but was certainly not wealthy before he and his compadres developed the (intellectual) property that made them all wealthy.  Would you advocate that folks other than the creators should reap the rewards of their efforts?

No, not at all.  

Fair point that occurred to me about Gates and starting on second or third.  Same I think is largely true of Bezos.  Don't think Brin and Google founders were particularly privileged, though.

Software and biotech are controversial areas of patenting because in many respects, they are just commercial applications of "natural laws," e.g. mathematics and biology.  And it has long been a tenet of patent law that natural laws and the discovery of aspects of them are not patentable.  Thus, they are controversial in that they may erect a property "fence" around things that "naturally" belong to all mankind.

The patent system temporarily lost sight of the point where human intervention and ingenuity transformed these natural things into something patentable.  But that's a fringe issue that probably doesn't bear much on the inordinate accumulation of wealth.

[Fudge Nuggets 19151]

This is the first ever I heard software described as capital intensive.

[TwiceHorn 31280]

2 minutes ago, Fudge Nuggets said:

This is the first ever I heard software described as capital intensive.

Fair point.  But as practiced by "technology" companies since the advent of the internet, labor and capital intensive.  And bigtech has been hypocritically anti-IP.

By and large, they got their starts without employing IP much at all, other than licensing their products.  

[BillyBadAss 189]

Pretty poorly supported article, imo. At least on the IT side it gave very few examples. Take Amazon. What patents are they holding that got Bezos rich by stifling competition? There are plenty of e-commerce companies, and Azure and Google and others have competing cloud services. The barriers to entry in those areas aren't, to my knowledge, around IP that nobody else can recreate. Bezos got rich by innovation and common practices in all industries where the big guys buy or bury their competition.

I'm sure there are some cases where a questionable patent or copyright stifled competition, but I don't see it being a major factor.

 

[Mrs Whiggins 13049]

I'm dropping this here as a ICYMI since it's quasi related to your interests; it's about twenty tweets, so rather than spoiler the whole thing here, just click on the tweet and read on; it was interesting to a layperson and I thought you might have some thoughts regarding his summary.

 

[TwiceHorn 31280]

8 hours ago, BillyBadAss said:

Pretty poorly supported article, imo. At least on the IT side it gave very few examples. Take Amazon. What patents are they holding that got Bezos rich by stifling competition? There are plenty of e-commerce companies, and Azure and Google and others have competing cloud services. The barriers to entry in those areas aren't, to my knowledge, around IP that nobody else can recreate. Bezos got rich by innovation and common practices in all industries where the big guys buy or bury their competition.

I'm sure there are some cases where a questionable patent or copyright stifled competition, but I don't see it being a major factor.

 

Yep.  That's the crux of it.  An interesting case study would be of patent trolls.  That's a highly anomalous situation, but it propelled some people from middle or upper-middle class to fuck you money.

[Onboard 2.0 9083]

This is typical BS take from those who can create, innovate, develop, and give it to those who won't or can't.  

[TwiceHorn 31280]

13 minutes ago, Mrs Whiggins said:

I'm dropping this here as a ICYMI since it's quasi related to your interests; it's about twenty tweets, so rather than spoiler the whole thing here, just click on the tweet and read on; it was interesting to a layperson and I thought you might have some thoughts regarding his summary.

 

I was unaware that Duke was a particular trademark abuser.  Most universities are pretty aggressive about their brands, including UT.

Because trademarks only protect or "monopolize" business or product names, rather than the products themselves (as do patents and copyrights), they don't have the potential for "economic harm" that patents and copyrights do.

Any aggressive rights holder, whether the right be IP or some other property right, can be a royal pain in the ass and expensive to deal with.  But that is, in the main, a different problem than being the cause of mass wealth transfer.

[BehoId, The Underminer! 11668]

Quote

In the case of patents, the TRIPS provisions of the World Trade Organization, which went into effect in January 1995, extended the length of patent monopolies from 17 years from the date of issuance to 20 years from the date of filing. 

not a good start, argument making person.  that's not an extension.

[TwiceHorn 31280]

1 minute ago, BehoId, The Underminer! said:

not a good start, argument making person.  that's not an extension.

Good point.  Yeah, that actually weakened patents slightly.

[BehoId, The Underminer! 11668]

Quote

In 1982, Congress established a special patent-friendly appellate court to hear cases on patent disputes. 

show your work, argument making person.  the fed circuit is inherently patent-friendly (as opposed to it just being a matter of the individual judges)? you've built in patent friendliness in there somehow without changing a single substantive law?  

[Mrs Whiggins 13049]

1 minute ago, TwiceHorn said:

I was unaware that Duke was a particular trademark abuser.  Most universities are pretty aggressive about their brands, including UT.

Because trademarks only protect or "monopolize" business or product names, rather than the products themselves (as do patents and copyrights), they don't have the potential for "economic harm" that patents and copyrights do.

Any aggressive rights holder, whether the right be IP or some other property right, can be a royal pain in the ass and expensive to deal with.  But that is, in the main, a different problem than being the cause of mass wealth transfer.

I agree that it is a different problem, it didn't seem to warrant a separate thread.

[BehoId, The Underminer! 11668]

I give it a C.  IP makes rich people rich. None of the changes cited in the 3rd paragraph are responsible. What is responsible is the IP system we have always had, paired with the type of economy we have today.  It results in people being able to protect their IP, in a world where IP is more important every day.

[TwiceHorn 31280]

2 minutes ago, BehoId, The Underminer! said:

show your work, argument making person.  the fed circuit is inherently patent-friendly (as opposed to it just being a matter of the individual judges)? you've built in patent friendliness in there somehow without changing a single substantive law?  

Well, the CAFC is more patent friendly than the regional circuits were. He's got that right.  But it has cycled back and forth over the years.

The goal of the Federal Circuit was to make patent law more uniform and predictable across the country.  Because a lot of the regional circuit law was just bad law, it got trashed and patents got stronger sort of automagically.

[TwiceHorn 31280]

There's a recentish story of a guy from North Texas that invented a little device to help fill water balloons.  He got knocked off, and sued, and was in line to receive a substantial sum of damages, as well as maintain his "monopoly" on the product.

But a recently enacted procedure invalidated his patent(s) because they referred to filling the balloons "substantially full," which was alleged to be indefinite, as in "how full is substantially full."  

It's a convoluted story, but the guy was being abused by infringers and by legal procedures implemented at least in part in response to lobbying by certain segments of big business (big tech) to weaken patents.

So there's a story of a little guy using the patent system as intended to get rich and getting screwed over by big business and their intentionally weakened patent system.

He ultimately collected about $30M in damages and kept his patents intact, so it had a happy ending for him, mostly.

[NotActuallyALonghorn 4968]

I like the point he brought up about how tax policy doesn't really do much to address income inequality because our laws are structured to allow some people to become ridiculously wealthy. If you have an idea and spend the time and money to developers that idea into something innovative enough I have no problem with you getting wealthy off of it. But when you become so wealthy off of it that you can buy politicians accross the board it is problematic. I definitely think some restructuring of our IP laws could be beneficial for society. I especially think the whole employer employee relationship needs some reform. I do R&D in the plastics industry for a living. I technically work for one company, but everything I do is for a tenant company who bought the plant from the parent company. A hugely significant portion of anything we come up with is due to me, but because of the way things are structured the likelyhood of me benefitting from it are negligible. 

[wildcat09 29255]

Dean Baker has been on a bit of a crusade against IP law for years but I've only ever really skimmed most of his arguments. I think he's probably got a good argument that they've played a significant role in the huge increase of drug prices, but I don't really know enough about IP law to evaluate most of his broader arguments. A short article in the Nation is probably not the right venue to make them, though.

[TwiceHorn 31280]

1 hour ago, NotActuallyALonghorn said:

I like the point he brought up about how tax policy doesn't really do much to address income inequality because our laws are structured to allow some people to become ridiculously wealthy. If you have an idea and spend the time and money to developers that idea into something innovative enough I have no problem with you getting wealthy off of it. But when you become so wealthy off of it that you can buy politicians accross the board it is problematic. I definitely think some restructuring of our IP laws could be beneficial for society. I especially think the whole employer employee relationship needs some reform. I do R&D in the plastics industry for a living. I technically work for one company, but everything I do is for a tenant company who bought the plant from the parent company. A hugely significant portion of anything we come up with is due to me, but because of the way things are structured the likelyhood of me benefitting from it are negligible. 

This is an interesting angle.

Currently, ownership of inventions, as between employers and employees, is an issue of state law.  In most states, the obligation of an employee.to assign invention or patent (or copyright) rights to the employer is done by employment contract.  It's not, therefore, a creature of federal IP law.

Some countries, Germany among them I believe, reserve some royalty interest in favor of the employee even when the employer owns and controls the patent rights.

For your particular case, I might suggest attempting to restructure your employment contract so that you receive a royalty interest on sales of your inventions.  That is not unheard of here, where an employee's inventive contributions are substantial.

[TwiceHorn 31280]

49 minutes ago, wildcat09 said:

Dean Baker has been on a bit of a crusade against IP law for years but I've only ever really skimmed most of his arguments. I think he's probably got a good argument that they've played a significant role in the huge increase of drug prices, but I don't really know enough about IP law to evaluate most of his broader arguments. A short article in the Nation is probably not the right venue to make them, though.

Not much has changed in the field of "pharma" IP.  Some of the Bayh-Dole stuff is relatively new, but pharmaceutical and chemical companies have sought and received and enforced patents skillfully for most of the 20th and 21st centuries.

What has changed is the amount invested to bring a pharmaceutical to market.  Pharmas, therefore, are even more incented to protect their inventions aggressively.  The most objectionable thing about pharmas is not so much the IP, but the marketing practices, see, for example, Purdue Pharma.

[NotActuallyALonghorn 4968]

1 minute ago, TwiceHorn said:

For your particular case, I might suggest attempting to restructure your employment contract so that you receive a royalty interest on sales of your inventions.  That is not unheard of here, where an employee's inventive contributions are substantial.

Yeah, that's not gonna happen because I am technically just an operator and nonexempt, plus the whole tenant company relationship thing. I foolishly decided to go to school for forestry and wildlife because I didn't want to mess with a bunch of math in college, but it turned out there was plenty of math in those disciplines as well. I ended up in the plastics industry, but despite the fact that I pretty much pull an engineer's weight as far as what I do, I'm at a glass ceiling. Luckily I still make pretty good money, but it still sucks sometimes thinking about how I could just be coasting along doing basically nothing that requires a whole lot of critical thinking and making the same money.

[elfenix 34171]

in an economy increasingly about rent seeking, patent law enables more of it.   the math in the article may be bad but i don't think the premise is objectively wrong. 

Edited February 10, 2021 by elfenix

[BrickHorn 18194]

IP is similar to other forms of property. Protecting property rights encourages economic development, up to a certain extent.

Let landowners reap the benefits of their investment and you’ll inspire economic development. But allow a tiny minority to control all the land forever and you end up with a banana republic economy of artificial scarcity.

A similar analysis applies to IP. The trick is to find the right balance.

Edited February 10, 2021 by BrickHorn