STAFF NEWS & ANALYSIS
Do Elites Intend to Do Away With Patents?
By Staff News & Analysis - February 07, 2013

Yet, in view of the populist skepticism about patents which has penetrated deep in the zeitgeist, the Supreme Court sharply cut back on patenting in the emerging field of personalized medicine. The Court in its recent Mayo decision cited academics and other critics to conclude that in this area patenting will actually impede innovation. – Thomson Reuters/Westlaw

Dominant Social Theme: Patents are unnecessary, impede innovation and are costly, too. Let's get rid of them and substitute stronger copyright law.

Free-Market Analysis: Anyone following the Kim Dotcom saga must be aware that copyright has suddenly been criminalized. The US government sent a posse of FBI agents over to New Zealand to arrest Dotcom.

The charge was that Dotcom's Megaupload cloud-based Internet storage company was allowing people to evade copyright protections and thus costing producers (especially of movies and songs) hundreds of millions.

The penalty – even though Dotcom had not been convicted of any crime – was to shut down Megaupload, confiscate its servers, put Dotcom in jail and freeze his assets.

While this draconian effort did have the immediate intended effect of ending Megaupload as a going concern, Dotcom has fought back. He's been freed, some of his assets have been returned and he's even founded a new version of Megaupload with stronger encryption and various additional facilities to directly promote songs and songwriters.

Dotcom is doing his best to survive in a much changed copyright environment where suddenly certain transgressions have been criminalized.

Is it possible that those behind the Dotcom attacks have decided that the 21st century is to be one featuring this sort of nuclear-strength copyright approach?

We've pointed out many times now that after the invention of the Gutenberg press, the top elites of the day used copyright law (at the time, just invented) to slow the dispersal of knowledge that was undermining their authority.

It was no surprise to us that copyright law is again being applied aggressively and has expanded in this era of the Internet Reformation.

What did not occur to us is that the top elites who want to run the world and are actively opposing the "Internet Reformation" might simply wish to do away with patents entirely.

In the past year patents have come under attack from Supreme Court decisions in the US (see above) and also – incredibly – by various articles written and published by extremely prestigious outlets, including a branch of the US Federal Reserve.

When top elite mouthpieces begin to promote certain ideas, we try to pay attention. There is always the possibility of a new promotion – a new dominant social theme that will change governance, or economic policy or the law itself.

Such changes obviously have investment ramifications, as well.

Why would the elites be interested in jettisoning patent law?

Here is a lucid, compressed explanation of the differences that we found on Yahoo, written apparently by someone who acts in a professional capacity as a "copyright advisor."

Copyright protects original 'literary, dramatic, musical and artistic works', without need of registration, as copyright protection is automatic upon creation (although registration is recommended to prove originality to either defend against or pursue an infringement claim). Protection is for the lifetime of the author and an additional 50 or 70 years (depending on the country) after the author's death. Copyright prevents others from reproducing, adapting, distributing, publicly displaying or performing a copyrighted work without permission or license from the copyright owner. Your work can be copyrighted as long as it is original. Copyrights are protected in most countries of the world.

Patents protect inventions (methods/processes or products/composition of matter, or machines). Patents require a patent application, which goes through a costly, lengthy and laborious patent examination, during which the patent application is published. Patent duration is shorter than copyrights (around 20 years, depending on the country and other factors). Patents prevent others from using, manufacturing, selling or importing the method or product without a license from the patent owner. In order for an invention to be patented, the inventor must prove that the invention is novel, inventive and useful. Jurisprudence (i.e. previous court decisions) define these requirements. The patent office determines whether an application meets these criteria. Patents are jurisdictional; your invention is protected only in the countries where you have a patent in effect. It is costly to patent in many countries.

We can see from the above (though we will not vouch for its accuracy in every measure) that in many ways patent protection is WEAKER than emergent copyright facilities. Copyright is automatic, lengthy, quite comprehensive and recognized in many countries.

Patent law is often parochial, the duration may not be long, the standards are high and the process can be intricate.

As a way of impeding information, patent law is a good deal less effective than copyright might be – were copyright strengthened by generally criminalizing it.

We weren't aware of the gravity of the attacks on patent law until recently. But a friend of ours sent us an article published last year by the Research Division of the Federal Reserve of St. Louis entitled "The Case Against Patents."

The article states in part that "there is no empirical evidence that patents serve to increase innovation and productivity, unless you use as a metric the number of patents awarded. However, the number of patents awarded, as evidence shows, has no correlation with measured productivity."

This is an absolutely true statement, so far as we are concerned, and could be applied to almost any part of government generally, certainly the US government.

What Austrian economics shows us clearly is that human action always outpaces government force. Laws, in fact, are prices fixes, mandating certain social costs and redistributing them as well – also via force.

The US government spends well over US$3 trillion a year in aggregate in such forced redistributions. In the process, civil society has been drained, comity lost, prosperity devalued and a series of rolling recessions and depressions instigated.

The more laws you have, the less wealth people will generate and retain. Getting rid of patent law would be a good first step to reigniting people's creativity and prosperity.

It is simply a myth – a dominant social theme – that people will not invent or create unless government protects their right to a certain amount of profit.

The profit will come anyway from a good invention. And almost all small inventors are actually put at a disadvantage by the patent system.

And that goes for copyright, too. If people want to enforce copyright let them do it themselves, at their own cost. There's no reason for government to be involved.

Creativity did not spring to life in human society because of copyright. And certainly not because of patent.

We are heartened by attacks on patent law. But we are suspicious of the motives. All our observations of the elite lead us to believe that they never remove one form of social or economic control without trying to substitute another one.

After Thoughts

We'll continue to observe this unfolding meme, if that is what it is. The ramifications would be significant from both a sociopolitical and economic standpoint.

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