The patent views of Peter Thiel and what they mean for the Trump Administration

By Gene Quinn & Steve Brachmann
November 21, 2016

Peter Thiel.

Peter Thiel. Berlin, Germany, March 19, 2014. Hy! Summit – Image by Dan Taylor. www.heisenbergmedia.com

As the hours waned on the evening of Tuesday, November 8th, the United States went to sleep despite the seismic wave sent rumbling through the political world. Virtually no one predicted that Donal Trump would prevail, which meant few had seriously considered what a Trump Administration might look like, who might formally and informally advise a President Trump, who might be nominated to the thousands of positions that will soon become open, what his agenda might be and where his priorities would lie.

Since the morning of November 9, individuals from virtually every industry have been asking questions, seeking insights and wondering what a Trump Administration will mean not only for the country, but for their specific interests. 

Although the tech industry is big in America, the industry itself was not big on the idea of a Trump presidency. Trump, however, did have one very vocal supporter from the tech community: German-American entrepreneur, billionaire venture capitalist and PayPal co-founder Peter Thiel. About week before the presidential election, Thiel made a speech to the National Press Club in which he defended his support for Trump as a presidential candidate: “It’s not a lack of judgment that leads Americans to vote for Trump; we’re voting for Trump because we judge the leadership of our country to have failed.” This summer, Thiel also made a speech supporting Trump at the Republican National Convention, where Trump was named as the Republican nominee for U.S. President.

Thiel’s position within the Trump Administration has further solidified with the announcement on November 11th that Thiel will be joining the transition team for the president-elect. Being perhaps the only Silicon Valley voice within the Trump camp, Thiel’s views could very well affect how Trump considers matters of innovation policy, including patent reform, which has simmered on Capitol Hill for much of the last decade.

There is little in the printed record which allows us to parse Thiel’s views on patents. In September 2014, The Wall Street Journal published an excerpt from Zero to One, Thiel’s book on business startups, which makes one mention of patents. It seems fair to conclude that, while Thiel doesn’t seem to be vocal about patents themselves, he could be open to listening to arguments for respecting the rights of patent owners. “Creative monopolies aren’t just good for the rest of society; they’re powerful engines for making it better,” according to Thiel. Although he notes that it’s fair to question whether someone should receive a monopoly “simply for having been the first to think of something,” in the next breath he acknowledges that the type of monopoly afforded by a patent is not anathema to innovation: “Apple’s monopoly profits from designing, producing and marketing the iPhone were clearly the reward for creating greater abundance, not scarcity: Customers were happy to finally have the choice of paying high prices to get a smartphone that actually works.” The dynamic nature of Apple’s new monopoly on mobile devices was able to topple the old monopoly of desktop computing which was the rich province of Microsoft, IBM and others. Thiel reportedly echoed his sentiment that the U.S. system of intellectual property was one that rewarded innovation with monopoly during an October 2014 address at the University of Chicago Booth School of Business.

The use of the word “monopoly” to describe patents, or copyrights, is unfortunate. While the Supreme Court has historically used the word “monopoly” or the term “limited monopoly,” and those who oppose the patent system have long sought to tie patents to monopolies, a patent does not and never will confer a monopoly right.

Certainly there can be foundational technologies that are of extreme importance, but those types of inventions are rare.  Most inventions are improvements or incremental advances of different magnitudes. Furthermore, patent rights are fragile. When you have an innovation and you are making money basic laws of economics suggest that there will be others who will seek to enter your marketplace and compete, and they do.

Today giant tech corporations just engage in efficient infringement, which is a sanitized way to say they just steal the rights without paying, and others will engineer around your solution. So a patent does not guarantee you the right to a market, but rather gives ostensibly exclusive rights that need to be enforced by the owner. Unfortunately for patent owners the ability to enforce patents has continually eroded over the past decade as it has become easier to challenge patents in administrative proceedings, the Supreme Court has continued to render more and more patent ineligible, damages have evaporated and an open hostility toward patent owners and innovators has taken root and has been destroying the patent system.  See here, herehere, here, here, herehere and here.

At best a patent provides the potential to collect monopoly profits, but that rarely happens because of market entrants, market leaders failing to continue to innovate, and paradigm shifting innovation that can instantly make current technologies outdated. If you don’t believe me just ask Kodak. They invented the digital camera and now own virtually none of the marketshare. Kodak is not unique. Neither are disruptive technologies.

Thus, Thiel’s description of a patent as monopoly is a gross oversimplification and shows a fundamental misunderstanding about patents. What is interesting, however, is that in his Wall Street Journal essay, titled Competition is for Losers, he seems to suggest that it is perfectly appropriate, if not absolutely desirable or even necessary, for companies to identify a space where they can obtain a competitive advantage and exploit that advantage to the greatest extent possible. Thus, to the extent that he considers patents a monopoly this may not be troubling in the same way that so many others who have used the pejorative term have meant it to be in the past. Further, if Thiel can be persuaded that legislative patent system reform would hurt new monopolies in favor of old ones, a Trump Administration may decide that reforms that favor the entrenched would get in the way of a growing economy. Certainly the Trump Administration will owe no favors to the entrenched powers in Silicon Valley as did President Obama. 

There might be other conclusions to draw on how Thiel could be persuaded to view patent-related issues based on his legal activities, specifically his bankrolling of Hulk Hogan’s lawsuit against the online news site Gawker. The case was a deeply personal cause for Thiel, who had personal information revealed by Gawker against his wishes. Much like in his support of President-elect Trump, Thiel took a highly principled stand, regardless of how those principles were viewed. In a New York TimesDealBook article published this May, Thiel indicated that he was taking a moral stand on Gawker’s activities and was not simply looking for revenge. He acknowledged that others, not just Hulk Hogan and himself, had been victimized by Gawker’s successful model of “getting attention by bullying people even when there was no connection with the public interest.”

While Thiel’s grievance with Gawker is personal, and deals with privacy, it is hard not to notice in his comments the sounds of someone who is tired of bully tactics. Whether that would trickle down to innovators who are vilified and mocked as “patent trolls” remains to be seen because, like so many things in life the issue is complicated. There are certainly patent owners who have been guilty of abusing their power and attempting to bully others, including small businesses and individuals. But lumping all patent owners into one group and calling everyone a “patent troll” is simply not helpful, a conclusion recently reached by the Federal Trade Commission. Thiel has no reason to listen to the rest of Silicon Valley, and by and large he’s earned that right, so he could very likely be dubious of the “patent troll” debate. But where will he come down in the “patent troll” debate and how nuanced will his view of patents be?

There are inklings that the patent troll narrative might actually have sway with Thiel, despite his Silicon Valley outsider status. An article published in September 2014 by Bloomberg pertaining to a corporate restructuring of Intellectual Ventures (IV), a Patent Assertion Entity (PAE) often portrayed in the media as a patent troll, provides some clues. Thiel is quoted as saying: “I think IV is basically a parasitic tax on the tech industry.” That quote should give patent owners reason to worry as it reflects a revulsion to the commercialization and monetization of intellectual property. It also reflects the fact that people tend to like the law when it is on their side. As a tech investor, it’s highly likely that Thiel has experienced some form of patent litigation and it seems obvious that he or his companies have been approached by IV at some point in time to pay a license that he didn’t want to pay, or perhaps didn’t think he needed to pay.

At first glance Thiel’s comments about monopolies and competition being for losers and companies needing to find and exploit a competitive advantage are not easy to reconcile with calling IV a parasite. The way they could be reconciled, however, is by treating classes of patent owners differently based on whether they innovated and are an operating company seeking to exploit that innovation versus those who acquire patents. This differentiation is how at least some in the tech industry would like to define the issue, presumably because it would mean they could get and keep their own patents while preventing aggregators such as IV from acquiring and enforcing patents. This view, while perhaps appealing to some, becomes complicated when you try and figure out on which side Universities belong, as well as companies that engage in research and development as a business model and for the sole purpose of inventing and then licensing out to others.

As Trump’s top insider from the tech world, Thiel makes for a somewhat encouraging, albeit enigmatic figure for small players in the patent universe. By and large, the jury is still out on how he’ll affect the Trump Administration’s stance on patents. But it seems reasonable to assume that Thiel’s views while potentially favorable to some patent owners could well be quite unfavorable to others. 

The Author

Gene Quinn

Gene Quinn is a Patent Attorney and Editor and founder of IPWatchdog.com. Gene is also a principal lecturer in the PLI Patent Bar Review Course and an attorney with Widerman Malek. Gene’s specialty is in the area of strategic patent consulting, patent application drafting and patent prosecution. He consults with attorneys facing peculiar procedural issues at the Patent Office, advises investors and executives on patent law changes and pending litigation matters, and works with start-up businesses throughout the United States and around the world, primarily dealing with software and computer related innovations. is admitted to practice law in New Hampshire, is a Registered Patent Attorney and is also admitted to practice before the United States Court of Appeals for the Federal Circuit. CLICK HERE to send Gene a message.

Gene Quinn

Steve Brachmann is a writer located in Buffalo, New York. He has worked professionally as a freelancer for more than a decade. He has become a regular contributor to IPWatchdog.com, writing about technology, innovation and is the primary author of the Companies We Follow series. His work has been published by The Buffalo News, The Hamburg Sun, USAToday.com, Chron.com, Motley Fool and OpenLettersMonthly.com. Steve also provides website copy and documents for various business clients.

Warning & Disclaimer: The pages, articles and comments on IPWatchdog.com do not constitute legal advice, nor do they create any attorney-client relationship. The articles published express the personal opinion and views of the author and should not be attributed to the author’s employer, clients or the sponsors of IPWatchdog.com. Read more.

Discuss this

There are currently 26 Comments comments.

  1. angry dude November 21, 2016 12:16 pm

    Well, as Paypal and Facebook co-founder and investor, Thiel had no use of patents

    He should try to invest in tech startups which develop something actually useful to people 🙂 (something like Dyson vacuums or Segways or VR headsets etc etc)

    I am not saying that Paypal is useless or bad (aside from the fact that any smart 12-year old can open a paypal account and abuse Ebay – I had a BIG problem with that a few years back) – but it’s trivial, it would have come in one form or another regardless of Peter Thiel or Elon Musk

    Bottom line: if you feel that you invented some unique and commercially viable technology you will not publicly share it with others unless there is at least some promise of eventual reward for your efforts
    US patent system today is worse than complete lack of promise or incentive: individual patent holders are treated like Ebola carriers (actually even worse because there is no compassion from general public)

    I am wondering if Peter Thiel understands how these realities can shape the future (or rather lack of it) of this country

  2. Edward Heller November 21, 2016 5:58 pm

    I wonder if either FaceBook or PayPal would have gotten off the ground without patent protection?

  3. Anon November 21, 2016 6:23 pm

    Any animus against “acquirers” flies in the face of the bedrock nature of patents as personal property with Fully alienable rights.

  4. angry dude November 21, 2016 7:49 pm

    Edward Heller @2

    “I wonder if either FaceBook or PayPal would have gotten off the ground without patent protection?”

    Sure they would – as none of them embody any technical invention of any kind (in overall concept, not in actual implementation)

    Facebook started as a college networking app where kids posted their faces and stats hoping to get laid or whatever

    Paypal just optimizes financial transactions between individuals without paying all the fees and taxes they would have to pay otherwise

  5. angry dude November 21, 2016 8:01 pm

    Anon @3

    “Any animus against “acquirers” flies in the face of the bedrock nature of patents as personal property with Fully alienable rights”

    Those corporate dudes from SV and elsewhere will never go against “fully alienable rights” cause they appropriate those same rights from actual inventors they employ right after those inventors sign an IP clause in their employment agreement with their corporate masters

    But God forbid if an independent inventor sells his patent to some NPE or whatever money-making entity

    Hypocrisy runs deep in this society

    It has to stop

  6. angry dude November 21, 2016 8:20 pm

    To put it in perspective, Peter Thiel and Jeff Bezos and zillions of other SV “luminaries” owe their fortunes to secure ecommerce technologies made possible by SSL and underlying concepts like Public Key Cryptography, RSA etc etc
    – all patented “software” inventions they despise so much (because those are real technical inventions not some bs like paypal or facebook)

  7. Gene Quinn November 22, 2016 12:28 pm

    Edward-

    We know Google wouldn’t have gotten off the ground without patent protection, and we know that they know that as well. They filed 2 patents before they even acquired the domain name Google.com. Shows you how important they deemed that property at the outset.

    -Gene

  8. Edward Heller November 22, 2016 6:40 pm

    angry dude, from my recollection, the Winklevoss’s sued their ex-employee/programmer Zuckerberg for stealing their idea to provide a social network within Harvard. Zuckerberg did all the code, but Zuckerberg clearly used the social networking idea of the Winklevoss twins.

    In the end, the Winklevoss twins made out pretty well with their settlement with Zuckerberg. This begs the question of whether they could have have made out better had they filed a patent application describing their social network application and naming themselves as inventors. As you say, beyond the idea of the social network, there apparently was little invention in the initial programming.

  9. angry dude November 23, 2016 11:33 am

    Edward Heller @8

    If Winklevoss twins had a patent issued on that idea they would be ridiculed, laughed out of court and called “trolls” in the current anti-patent climate.
    And their patent would be nullified even if it described some patentable technical implementation details

  10. Edward Heller November 23, 2016 3:12 pm

    angry dude @9. Of course. An the PTAB in a CBM would also say that the hooking up going on was incidental to a “financial” transaction.

  11. staff November 23, 2016 6:54 pm

    ‘The use of the word “monopoly” to describe patents, or copyrights, is unfortunate’

    Politely, we completely disagree. The Constitution says…

    ‘To promote the Progress of Science and useful Arts, by securing for limited Times to Authors and Inventors the EXCLUSIVE Right to their respective Writings and Discoveries;’

    That inventors have exclusive rights to their inventions -in other words a ‘monopoly’, of that there can be no doubt. Don’t be confused by large multinational invention thieves and their Chinese style propaganda machine.

    For our position and the changes we advocate (the rest of the truth) to truly reform the patent system, or to join our effort, please visit us at https://aminventorsforjustice.wordpress.com
    or, contact us at aifj@mail.com

  12. Gene Quinn November 24, 2016 3:07 pm

    Staff-

    You can disagree if you want, but a patent is not a monopoly and you make a huge mistake saying that it is. First, those who hate patents want others to incorrectly believe a patent is a monopoly in order to regulate it under the Antitrust laws. Second, a monopoly only exists if there is a market. Too many inventors make the mistake that getting a patent means that there will be riches appear. 98% of patents cover inventions that make no money. There simply is no market for most inventions, so no monopoly. Third, a single patent on an invention will never create a monopoly once additional innovation and improvement occurs. So patents offer incredibly important rights to inventors and they should be strong and come with meaningful rights to exclude that are honored in the courts and by the USPTO that issued them, but monopoly is not the right word to use to describe patents.

    -Gene

  13. staff November 25, 2016 4:52 am

    Gene, thank you for responding. We welcome the opportunity to engage in open public debate on this important issue. Open debate has been something patent law has largely been devoid of with infringers (thieves) apparently controlling the publications on many sites and access to Congress. We are changing all that. For example, that is why we created our site so that open debate can occur.

    To be clear, we are not saying inventions are monopolies. Rather inventions are property and like other forms of property they come with certain rights. In this instance the right we were referencing was the right to exclude others, such as from making, using, or selling the invention -the right of exclusivity.

    Do you agree inventors have the right of exclusivity?
    regards,
    staff

    (Ps, we will run by our group for feedback to this post and update any changes on our site and attempt to do so here)

  14. vic kley November 25, 2016 9:47 am

    This speculation about what Thiel may or may not do as empowered by an appointment in the Trump Administration suggests a power not well delineated by this discussion.

    Any administration can appoint directors of the USPTO and encourage the AG to aid or oppose litigation involving small, and large entities.

    The president can also approve or reject legislation from congress related to patents.

    That’s it.

    Discussion about a loosely defined patent monopoly is not related to what powers Thiel may have in regard to the patents.

    An article extracting the real value of patents under AIA and the sum total of recent Supreme Court decisions would be welcome. Perhaps a fight about the meaning of monopolies would be appropriate there.

  15. Gene Quinn November 25, 2016 2:10 pm

    Vic-

    You say: “Discussion about a loosely defined patent monopoly is not related to what powers Thiel may have in regard to the patents.”

    If Thiel is able to convince Trump that patents are monopolies that are harming innovative companies I think you will see why this discussion was relevant.

    -Gene

  16. Anon November 25, 2016 2:55 pm

    staff,

    Your position would be taken with more regard if you dropped the rather pretentious self-referral in the plural.

  17. staff November 25, 2016 4:34 pm

    Anon, please be specific so we can follow you. thx.

  18. staff November 25, 2016 4:46 pm

    Anon, on second thought we will postpone any response to yours and all other posts until our question for Gene is concluded…does he agree inventors have the right of exclusivity?

  19. Anon November 25, 2016 7:58 pm

    staff,

    The right to exclusivity is what is recognized as a negative right.

    Monopoly on the other hand is recognized as a positive item; that is, it is an item with objective (or positive) attributes.

    While aspects of the two may seem similar, the two are simply not the same things, and referring to them as if they were only confuses an area of law that those not respecting patents would delight in having more confusion.

  20. vic kley November 26, 2016 10:57 am

    Gene,

    Not only do you likely have no idea what if any patent related agenda Trump or his support group have, you have no idea what if any interest Thiel has in pursuing this issue. In the event Thiel does pursue I suspect you do not know what direction he is likely to take.

    If I’m wrong about your FACT knowledge of the latter matters please share your information with us all.

  21. Gene Quinn November 26, 2016 11:41 am

    Vic-

    You seem to be extremely FULL of yourself.

    I recommend you read our coverage of Thiel and Trump, which is full of both FACTS and ANALYSIS. You might actually learn something.

    -Gene

  22. angry dude November 26, 2016 4:46 pm

    Guys,

    I think we can at least agree on two points:

    The good one: whatever Trump may do to patents he will not pay much attention to SV corporate “luminaries”, not even to Peter Thiel (who never founded a company based on patents)

    The bad one: no matter how pro-patent Trump may be, the damage done to US Patent system over the last 10 years is so extensive and fundamental in nature that it will take many years to restore some semblance of balance… at the very least it will require repelling AIA and overturning some Scotus decisions

  23. Gene Quinn November 26, 2016 6:46 pm

    Angry Dude-

    Google was never going to have the warm relationship even if Hillary won. With a Trump Administration there is no chance that Silicon Valley will get whatever they want like they did during the Obama years.

    We certainly need to overturn or at least severely limit some SCOTUS decisions. There is a lot that a new pro-patent owner PTO Director can do nearly immediately to minimize some of the worst effects of the AIA and through rule making dramatically soften the PTAB even without a repeal of the AIA. While I continue to think and believe that post grant procedures were ill conceived and shouldn’t have been enacted, repealing them is not the only way to bring balance back. And repealing the AIA would be a very heavy lift. Changing the regulations that govern the AIA is a MUCH easier lift.

    -Gene

  24. angry dude November 27, 2016 5:46 pm

    Gene @23

    From Hillary’s “program”:

    “The Obama Administration made critical updates to our patent system through the America Invents Act, which created the Patent Trial and Appeals Board, and through other efforts to rein in frivolous suits by patent trolls. But costly and abusive litigation remains, which is why Hillary supports additional targeted rule changes. She supports laws to curb forum shopping and ensure that patent litigants have a nexus to the venue in which they are suing; require that specific allegations be made in demand letters and pleadings; and increase transparency in ownership by making patent litigants disclose the real party in interest.”

    And give us many more H1B visas for indian “tech workers” of course…

    Same old, same old…

    Good thing she is gone

  25. staff November 28, 2016 5:16 pm

    From Gene’s last response to one of our posts…

    ‘So patents offer incredibly important rights to inventors and they should be strong and come with meaningful rights to exclude that are honored in the courts and by the USPTO that issued them, but monopoly is not the right word to use to describe patents.’

    So it appears we are in agreement. Inventions are property and similar to most all other property they include the right to exclude others from making, using or selling.

    As to the rest of your response…

    ‘98% of patents cover inventions that make no money. There simply is no market for most inventions, so no monopoly. Third, a single patent on an invention will never create a monopoly once additional innovation and improvement occurs. ‘

    No doubt it is a steep climb for inventors to benefit from their creations and discoveries. It always has been. But in the present American patent system it is nearly impossible. We have no fair chance. When PTO management actively obstructs our obtaining and enforcing patents to our inventions, how can we? When we have to fight to get and keep our patents we go out of business. The system is terribly stacked against us. When the very federal government that was created to award and enforce patents for our inventions refuses to carry out its duties and when some in it actively collude with thieves, we and America lose.

    Historically, a single patent or a family stemming from a single application has dominated and even controlled various fields. Elias Howe had his sewing machine patents. Gordon Gould had his laser patents. There are many others. But today many of us have been stonewalled by PTO management straight from infringer central so we wait for our patents or a time when they can be enforced in courts that actually respect property rights unlike so many today who clearly do not. We are working with our friends in Congress diligently on it. When thieves win, America loses.

  26. vic kley December 3, 2016 1:04 pm

    Gene,

    Your ad hominem attack is inappropriate. However your provision of what you call “facts and analysis” is helpful in understanding your position vis a vis the trumpet Thiel.

    So why did you not include it for your readers?
    Inventors like me need to see and understand points, news and discussion about the law pertaining to our field of endeavor so I am happy to overlook your proclivity to go personal on your readership.

    Here is the reference Gene sent me for any who might be interested:

    Permalink: http://www.ipwatchdog.com/2016/11/21/patent-views-peter-thiel-mean-trump-administration/id=74741/