Trump Administration Weighs Patent System Overhaul to Raise Revenue
wsj.com
wsj.com
I've long thought that'd be a good idea: The government practically gives away these legal monopolies — but really, they're like hunting licenses, allowing patent holders to try to levy (what amount to) taxes that are paid indirectly by the public. So it doesn't seem unreasonable that the public should get its cut.
Yes, sometimes a patent holder really is providing a benefit to the public in exchange — but not always.
What are you referring to here? The premium that a patent holder (one who created or purchased novel, valuable IP) is able to extract?
This is a reward for taking risk in R&D and for sharing the result with the public via patent disclosures, not a tax.
You say potato .... The "reward for risk-taking and sharing knowledge" is a nice story, and sometimes it even matches the reality. But all too often it's a malign fantasy. That's especially true given that it's been a long time since patent filings were a significant channel for disseminating new knowledge. (How often do people look up patent filings when researching how to do something?)
Source: In an earlier career phase, I was a partner in one of the U.S.'s biggest IP-litigation boutique law firms. I spent a good deal of my time representing tech companies you've definitely heard of, busting bullshit patents that were being asserted against them by people who naively imagined — or cynically insisted — that they'd come up with Something Really Great and had their hands out looking for a huge, undeserved payday. "Nice little business you have there — it'd be a pity if a court granted a permanent injunction that put you out of business."
The incentives and legal structure are all in favor of filing patent applications on everything you can think of and seeing what you can wheedle out of an overworked patent examiner — then after your patent is issued, you go hunting to see what you can get from companies in the way of settlement deals to pay you to go away. By no means are all patents this way, but it happens often enough to be a problem.
That's why Congress passed legislation such as the amendment establishing "IPRs," inter partes reviews. Those are essentially a way to have a three-judge panel within the USPTO take a fresh look at a challenged patent's validity. They're contested proceedings where the challenger gets to introduce evidence and make arguments.
> But all too often it's a malign fantasy.
All too often to severely destroy the incentive to invent new drugs? Yeah, gonna need a better source than your intuition as a patent lawyer to substantiate that.
You're assuming that "deployed to the market" means "actually making things that people want." That's sometimes the case, but far from always.
You're probably familiar with the term "non-practicing entities" in the patent world. (They go by other names as well.) Some NPEs are entirely legitimate, e.g., universities and other major research centers that actually do research and discover useful things. Other NPEs, though, are more-vulgarly but aptly known as "patent trolls."
Right, I'm aware there's a spectrum from bullshit patent owners to non-bullshit patent owners. Why would you write a tax code to punish the latter while doing effectively nothing to the former?
You're fixating on the existence of bullshit patents which no one disputes. The question is whether this policy is a sensible way to address that, and you continue not to substantiate (or even articulate) any of your disposition toward that.
Would that be an exercise of raw political power? Yup.
(The older I've gotten, the more I've drifted into the camp of the folks who think that society was better off when we had top marginal tax rates in the 80% to 90% range: Back then, your salary, your bank balance, and your yacht size weren't the most important metrics with which to measure your success in life. That's because, once you hit a certain compensation level, the government took most of the incremental increases. Innovators and business execs weren't notably less motivated back then.)
Or how about this: After an initial period of low taxation, we should heavily tax all patents. The idea would be to encourage owners of low-value patents to let them expire early for failure to pay the increased taxes. That would allow independent reinventors (of whom there are many) and copiers to do their own thing without having to worry that, if they make it big, the owner of a zombie patent won't suddenly appear with their hand out, demanding a cut. (Believe me, that happens.) That's kind of how patent "maintenance fees" are supposed to work now, but the amounts involved are utterly trivial and should be dramatically increased.
Yes, I know ALL about the economic rationale for having a patent system to mitigate the free-rider problem that discourages innovation. I also know all about how people work very hard to game the system. They're aided and abetted by patent lawyers who fervently believe in patents — and who of course want the paying work. (I knew an old-time patent lawyer, now long dead, who would sometimes tell clients — only half-jokingly — "If you paint it purple, I can probably get you a patent on it.")
It seemed like you were suggesting that a property tax (which does not function how you just described) was a good idea, based on your initial comment which called it a good idea.
This is a stupid proposal.
That money never comes out of the top level legal fictions. It's always the consumer.
The consumer will bear the burden. Either in higher end prices, or less patented things actually being made because "the market" (read: bunch of guys in suits at investment banks) decided the profitability wasn't where they wanted it.
The invisible hand has an effective address these days, in case you didn't notice.