This article was published in the Spring 1996 issue of Formulations
by the Free Nation Foundation
The Intellectual Property Debate
 by George Winborne

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In the Autumn 1995 issue of Formulations, Roderick Long presented several criticisms of legal protection of so-called intellectual property and in particular patent law [*]. These comments are not intended as rebuttal, but to just correct one error in the author's portrayal and otherwise provide some supportive observations.

Professor Long asserted that there was injustice in a system which allowed a person who applied for a patent before another person who was actually the first to invent the thing to get exclusive rights over the product. However, this injustice does not exist in U.S. patent law, and it never has. Unlike most of the rest of the world, we have a "first-to-invent" rather than a first to "first-to-file" system for priority. That is, in theory if I invent a device and then you later invent the same thing or see mine and run to the patent office to apply for a patent before me, I still get the patent instead of you.

There are some complex tests imposed to insure that I did not "abandon" the device or fail to be "diligent" and to insure that you are not trying to patent something which has become public knowledge. Also, in so called "interferences," when two applicants claim the same invention, there is some extra weight given to the first one to file. However, the U.S. still generally says the first person to actually produce something is its inventor and deserves the patent. The resolution of these matters can get complicated since competitors can get into contests over research results from notebooks and testimony all claiming to show who "invented" first.

Most other countries have disposed of these debates by saying that a properly filed application is what proves invention and all else is irrelevant. Under those systems the question of priority reduces in large part to looking at documents on file in the patent office.

The U.S. has negotiated with other countries to try to bring uniformity and harmony to patent laws on the notion that it benefits all economically. However, for various reasons the switch to "first-to-file" has broken down in the U.S.

Note that under either system if I show that you did not "invent" a device but stole the idea from me then you don't get the patent. Under the "first-to-file" system, though, I might have more trouble in getting the patent myself. At any rate, if the U.S. does move toward complete "patent harmonization," Professor Long's criticism of this particular aspect of the patent law will be more accurate.

Philosophers, economists and legal scholars have for centuries struggled to provide a logical basis for having or not having intellectual property systems. The discourse, in my view, does not reach definite conclusions. I defer an analysis of the philosophical views to Professor Long but present here some comments on the economics and practice of intellectual property law.

Many economic theories have been proposed to explain the patent system in particular. The traditional premise is that by providing the incentive of a limited monopoly to inventors the patent system encourages innovation in a manner which exceeds the costs of the monopolies and on balance increases general welfare. The traditional view is thus utilitarian in nature. The problem is that the premise is unproved and perhaps unprovable. The few empirical studies which have attempted to determine the effect of the patent system on the rate of technological advancement are generally inconclusive.

It is difficult to measure the effect of a patent system where one already exists in a highly developed economy such as the United States'. Researchers face a fairly bad instance of the problem of hypothetical inquiries. Poll respondents may be inventors or potential inventors who are asked to state what inventions they made or were discouraged from making due to the patent system and for which they would have done otherwise in its absence. Predicting what would be done in the complete absence of a patent system requires significant speculation. For those who say they would not have made something without a patent it has to asked if they can take into account not just their own inability to patent but also everyone else's. Inventors might have less direct incentive but they might have more access to the knowledge of others for use in their own endeavors. However, the absence of patents might encourage more information to be kept secret so there would be less actual dissemination of information. Also, for those who answer that they were deterred by a patent, they can truthfully only respond with what they might have tried to invent. Gauging their hypothetical success is speculative, particularly in light of the countervailing trends for information dissemination mentioned above.

The conclusion which is often reached by scholars of law and economics is that an existing patent system should not be dismantled, but that where one does not exist there are probably not sufficient intrasociety reasons to implement such a system. However, the realities are that most of the major world economies have intellectual property systems and are anxious to make sure that undeveloped economies adopt similar systems. The rationale is two-fold. First, what is good for us must be good for them. This assumes the unproved premise that intellectual property systems are actually good for us. Second, what is "good" for them is good for us. This is a more Machiavellian notion that since the major economies generally have more intellectual property which could otherwise be appropriated without compensation, instilling intellectual property systems in less developed countries allows our firms to collect rents which would otherwise be foregone. Witness our efforts to attack the huge Chinese industry in "piracy" of software and sound recordings. D


The commentary presented in this article is editorial in nature and does not purport to be
a complete statement of the relevant law.


George Winborne of Hillsborough, NC, formerly a physicist, is a second-year law student at the University of North Carolina School of Law preparing for a practice in intellectual property law.



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Roderick Long responds:

I am grateful to Mr. Winborne for correcting my error. While my remarks on first-to-file were directed to patent law in general, not specifically to the domestic American case, I was indeed under the mistaken impression that American law took a first-to-file approach. (As was Ayn Rand also, apparently.)

I wonder, though, how much difference the distinction in theory between first-to-invent and first-to-file makes in practice. I asked a friend of mine who specializes in intellectual proprty issues, and he told me: "In practice, first-to-file is the rule unless chicanery can be shown. And whoever gets the patent gets the full monopoly right. The burden of proof is on the other person to show independent invention, which can be damnably difficult." D

[* Web Editor's Note: "The Libertarian Case Against Intellectual Property Rights", Formulations Vol III, No.1 (Autumn 1995)]

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