The Wall Street Journal on Patents

[michael perelman <michael@xxxxxxxxxxxxxxxxx>]

I rarely look at the editorials, but here is one that is solid.  Maybe
they read my book.  Yeah ....


Editorial. 2006. "The Problem With Patents." Wall Street Journal (29
March): p. A 18.

"The Supreme Court will consider its second big patent case in a week
today when oral arguments are heard in eBay v. MercExchange.  While a
technical case in some respects, the dispute is more important as
another sign that there's something rotten in the U.S. patent system."

"The Constitution grants Congress the power to protect the rights of
patent and copyright holders, but only "for limited times" and to
"promote the progress of science and useful arts."  It does not, by
contrast, grant Congress the power to confer the right to real or
personal property "to promote the cultivation of land" or "the
accumulation of wealth.."  This distinction is important because royal
patents in Britain were often granted to provide the favorites of the
crown with a legal monopoly, and the Founders did not want Congress in
that business.  Patent rights are good insofar as they are useful, and
the analogy with real or personal property goes only so far."

A patent system, in turn, is only as good as the quality of patents
that issue from it.  If bad or dubious patents proliferate, they can
have the opposite of their intended effect, which is to promote and
reward innovation.  Some of our free-market friends are so attached to
patents as a vanguard of private property in theory that they ignore
that the Patent Office is vulnerable to the usual failings and perverse
incentives of any other government bureaucracy."

"The Patent Office is issuing an ever-increasing number of patents, and
judicial discretion can be a useful constraint on patent abuse,
especially when injunctions may cause undo harm to businesses and
consumers. That is what we hope the Court will conclude.  Bruce Lehman,
Patent Office commissioner through much of the 1990s, once summed up the
problem when he said, "We are the patent office, not the rejection office"."

"The Patent Office itself gets paid when it grants a patent, creating
pressure on the staff to keep the money coming in.  Patent examiners'
bonuses are also based in part on the number of files they close in a
year.  But the only way to close a file for good is to grant the patent
because an application that's been denied can always be modified and
resubmitted, and frequently is.  So examiners have a direct financial
stake in closing application files by green-lighting the patent.  Today
the Patent Office grants so many patents that half of the fees it
generates are given back to the Treasury to spend on other things."

--


Michael Perelman
Economics Department
California State University
michael at ecst.csuchico.edu
Chico, CA 95929
530-898-5321
fax 530-898-5901