As many are probably aware, conservative columnist George Will recently renounced his membership in the Republican Party and announced that he will not support, or vote for, Donald Trump in the fall election. Many are probably less aware of Will’s recent article, brought to my attention by Peter Harter (hat tip), in which he explained that Mitch Daniels is the President America really needs. Here Will reminds us of President Obama’s infamous statement about entrepreneurs not being responsible for building their businesses, but rather government being responsible because after all “you didn’t build that…” Clearly, Will is leaving the Republican Party not because he is enamored with the Democrats, but because the Republican Party has left him.
In touting Daniels, Will’s article goes on to quote the former Indiana Governor, now the President of Purdue University, telling the graduating class of 2016: “I hope you will tune out anyone who, from this day on, tries to tell you that your achievements are not your own.” Obviously, Daniel’s remark is directed at President Obama and those who share his belief that the government is responsible for prosperity rather than individuals.
Since taking over at Purdue Daniels has emphasized commercialization of research and has led Purdue to record numbers of new patents, record numbers of technology licenses and record numbers of start ups based on Purdue University innovations. Such an aggressive pro-innovation, pro-patent agenda creates a stark contrast between his philosophical approach to innovation and the one currently favored by the White House, many Members of Congress, and perhaps even the United States Supreme Court.
Daniels would go on to concede that luck can no doubt play some part in success, but also reminded the students that individual work ethic is what determines outcomes. Daniels quoted Thomas Edison: “Opportunity is missed by most people because it is dressed in overalls and looks like work.” And movie pioneer Samuel Goldwyn: “The harder I work, the luckier I get.” And Frederick Douglass: “We may explain success mainly by one word and that word is work.”
Daniels, Edison, Goldwyn and Douglass are all correct. A little luck never hurts, but relying on luck is hardly a winning strategy. Indeed, the best definition of luck is this: “Luck: when opportunity meets preparation.” Of course, work precedes preparation, which in turn precedes success.
Unfortunately, this “you didn’t build that” belief system seems to permeate President Obama’s thinking with respect to innovation, and has trickled down within the Administration. This view is also shared by many in Congress too. Sadly, this fatalistic view removes the virtues of work and ignores the sacrifices it takes to succeed. Worst, such a world-view belittles risk taking, which is an absolute prerequisite to business success, particularly with respect to innovation.
Believing that innovation does not come from risk taking inventors, entrepreneurs, start ups, or even from the likes of Silicon Valley, is naïve in the extreme. Sure, much of the long-term advanced government spending eventually produced things like the Internet, but America has always innovated most and best when stable rules are in place that incentivize risk takers to imagine the impossible and attempt to bring it into being. Simply stated, America works best and innovates most when government stands behind a stable property rights regime and gets out of the way.
The entire premise of an intellectual property system, like the United States patent system, is that an individual will give up some of her rights (i.e., the right to keep the innovation secret) in exchange for the government enforcement of her private property rights so that society can benefit. Of course, society will benefit in multiple ways. In the near term society benefits through diffusion of the innovation by way of publication of the invention in a patent, and if the product or service is commercially desirable society reaps the rewards from availability of the technological advance, as well as jobs and the associated economic advantages. In the long term, after the patent expires, anyone will be able to freely use the innovation and all obvious variations of the innovation. With many patents lasting as little as 4 years, others only 8 years and only relatively few of the most commercially valuable lasting the full patent term, this is a great bargain for society.
Of particular interest within the industry, as has been pointed out by attorney Robert Greenspoon (see comment 8) within the 15 months all eight Justices on the United States Supreme Court have signed on to an opinion that includes a statement calling patents an important private property right. Yet, at the same time, the Obama Department of Justice (DOJ) and the Solicitor General in particular suggests patents are a public interest. So which is it?
Increasingly we hear stories that those who meet with the Obama DOJ, and other parts of the Obama Administration, get asked questions that seem to defy reality. “If your patents are so valuable to you then why are you afraid of defending them in CBMs?” “How can you tell me that America would not be better off if we did not have patents?”
It is absurd to have to answer these questions and even pretend that they are serious, well thought out, or informed questions. They are not. But let’s be clear – CBM, or covered business method review, is little more than a dog and pony show. The Patent Trial and Appeal Board (PTAB) is clearly abusing their authority and instituting CBMs on patents that clearly do not qualify as business methods and/or which have a technical component, either or both of which disqualify them under the statute.
With respect to whether America would be better off without a patent system, anyone who thinks that passes for knowledgeable or informed thought need only look around the globe and notice that where there are no patent regimes there is no economic activity. If a weak patent system were the answer you would expect countries that have a weak patent system, or no patent system at all, to have run away innovation. What you see, however, is the exact opposite. See Maximizing innovation requires a strong patent system. In fact, Professor Stephen Haber of Stanford University has found, “there are no wealthy countries with weak patent rights, and there are no poor countries with strong patent rights.” See How Strong Patents Make Nations Wealthy.
Furthermore, “numerous studies of the real-world impact of patenting on innovation and economic growth… all found that patents foster ex ante innovation — meaning, they induce people to invent because of the prospect of reward.” See Do Patents Truly Promote Innovation? Still further, there is a clear correlation between the proliferation of innovation and the protection of intellectual property rights. See IP Protection Incentivizes Innovation. Further still, study after study “confirms the value of patents as important incentives for R&D in several sectors, including pharmaceuticals, biotechnology and medical instruments.” See The Economics of Incentives.
Obviously, there is much more that could be said on this point, but given the lack of seriousness of this ridiculous and uninformed position it isn’t worth the time or effort to further rebut such provably false nonsense. If you cannot understand that people respond to incentives there really isn’t much that can be said to convince you of anything. Of course, if you believe people don’t respond to incentives then why is our tax code so cumbersome and constantly used by Congress and the President as a means for directing social policy? I can just hear the refrain from the legions of haters: Tax incentives cause people to respond, but certainly not patent incentives. That type of hypocrisy could only every possibly exist inside the beltway in Washington, DC.
There is reason to fear that the Napster generation is now getting older and taking a deeper root in our society and culture, and soon our governance. The next few years will be a pivotal time for the U.S. patent system. Will we continue down this path to oblivion, or will attitudes change?