After reading Mike Masnick’s story in TechDirt complaining about the bad effect on the economy of Toyota patents on hybrids, I posted some Comments responding to it on their site. Here is what I’ve said so far:

57. In a dynamic economic system, patents are a good thing
by TechLaw_Elman (profile) – Jul 9th, 2009 @ 10:39pm

It seems to me that Mike Masnick is misled by the 18th Century European approach to economics (The Wealth of Nations by Adam Smith) vhich views the economy statically as a vehicle to allocate among members of the population goods and services available at any one time. But when one looks at the economy as a dynamic system that brings into existence over time better and more efficient products and services, the fallacy is exposed. Indeed the Founding Fathers of our Country took a dynamic view of the innovation economy and wrote into the Constitution Article 1, sec. 8, clause 8. In the following century, Abraham Lincoln, himself a patentee, said: “The patent system . . . secured to the inventor, for a limited time, the exclusive use of his invention; and thereby added the fuel of interest to the fire of genius, in the discovery and production of new and useful things.” Second Lecture on Discoveries and Inventions, Jacksonville, Illinois, February 11, 1859.

Consider the originator of such a product. Why take the risk to invest in an innovation unless the originator can reasonably expect a reward that outweighs the risk?

Consider the subsequent adopter of the innovation. If he could reap the rewards of marketing the improved product in an established market without sharing the burden and risk of the originator, then his expected reward is greater than the originator’s. In such an economy, everyone would be incentivized to play “after you Alphonse,” and one would expect a lower rate of innovation than in an economy supported by a viable patent system.

For a more comprehensive demonstration of this proposition, accompanied by evidence a viable patent system encourages innovation, read The Invisible Edge by Blaxill & Eckardt (March 2009)

And follow me on Twitter @TechLaw_Elman


So what is the alternative?
by John Doe – Jul 8th, 2009 @ 12:16pm

Far be it for a company to actually compete on product quality/performance/price. Instead, they compete in the courts. It is a sad state of affairs with no end in sight.

58.Re: So what is the alternative?

by TechLaw_Elman (profile) – Jul 9th, 2009 @ 11:06pm

Methinks thou puttest the cart before the horse.

My view is that strong patents make strong economies.

See one writer’s take on poet laureate Robert Frost’s immortal words “good fences make good neighbors,”

If you know and respect the boundaries of my land (real property) you’ll keep off the grass voluntarily and I’ll have no need to sue you for trespassing. If, for your own convenience, you choose to cut across my lawn to shorten your path between your home and work, I’ll ask you to desist. If you are honorable, you will do so. But if (heaven forbid) you’re dishonorable, I may need to avail myself of the judicial system. Society encourages resolving our dispute that way rather than my using a shotgun to make you look like Fearless Fosdick.

To operate the “levers” of the legal system, I’d need to get a lawyer. But that expedient would be necessitated by your choice to disregard my rights and trample the grass.


by Duane – Jul 8th, 2009 @ 1:15pm

It’s not creative or innovative unless they build off your work and better it. In which case, it’s both.

Also, the real problem is that people are patenting everything but breathing air, and the patents are so broad that anything you do is violating their patents. Don’t kid yourself, no company today’s wants to compete on innovation and creativity if they don’t have to. Lawsuits are cheaper.

59.Re: Re: “Lawsuits are cheaper” ?

by TechLaw_Elman (profile) – Jul 9th, 2009 @ 11:13pm


Gee, I dunno about that. These days, as reported by the survey conducted biennially by the American Intellectual Property Law Ass’n, it may cost millions of dollars to take a typical high-tech patent lawsuit through the numerous stages of a court battle.

As I say in another comment in this overall thread, if you act honorably and respect my right to the invention as defined by the claims of the patent, I won’t have to sue to keep you off my property.

For further discussion, see ya on Twitter. @TechLaw_Elman