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Does Public Choice Explain Patent Law?

What explains the evolution of patent law in the United States? My current and former colleagues, Craig Nard and Andrew Morriss, think that an interest group-based analysis provides the answer, and make the case in "Institutional Choice & Interest Groups in the Development of American Patent Law: 1790-1870." I don't know enough about patent law to know whether they're right, but I think it's an interesting thesis. Here's the abstract of their paper from SSRN:

This paper analyzes the evolution of U.S. patent law between the first patent act in 1790 and 1870, the passage of the last major patent act of the nineteenth century. During most of the nineteenth century, patent law developed in the courts, and instrumental to this development were a relatively small patent bar, a subset of the judiciary, and several repeat parties who played a role in a significant proportion of patent cases. Yet at several junctures, most importantly with the major changes introduced in 1836, but also through minor statutory changes throughout the nineteenth century, Congress intervened to alter the patent statute.

We argue that this evolution is best understood through an interest group-based analysis, focused on the question of the choice of which institution interest groups select in their efforts to alter the law. The courts and Congress each present interest groups with a different menu of costs and benefits. Although the federal courts have generally been viewed as relatively costly to capture, we argue that the nineteenth century federal bench was less costly to influence than Congress in many instances. A relatively few judges heard the vast majority of patent cases, allowing the patent bar to seek change through the courts.

There were two major and several minor patent statutes, as well. Interest groups turned to Congress for two reasons. First, despite the general agreement among bench and bar on the appropriate evolutionary path for patent law, there remained in American law a powerful strain of anti-monopoly thought, hostile to patents. Although most patent cases ended up litigated before sympathetic judges by the skilled patent bar, not every patent case did so and the proportion being litigated outside the small strata of experienced judges grew over time. And, because of the "democratic" nature of patent practice, patent law touched individuals spread across the country and made litigation before judges with an anti-monopoly orientation a real risk. Interest groups therefore turned to Congress on occasion to "lock in" changes in the law that they had achieved through the courts. They also sought Congressional aid in correcting occasional dead-ends reached in the law's development.

FlimFlamSam:
I'm not sure it's all that complicated. People knew long ago that (a) people will invent cool stuff if they will get paid for doing it and (b) people will have a hard time getting paid for the cool stuff they invent if just anybody can make the same cool stuff and sell it but (c) the person who originally made a cool thing shouldn't only have it to himself for a limited time so other people can make cooler things. I understand the academic need to make everything fit into some theory, but I really think that can be overcomplicating.
9.6.2008 1:50pm
Michael F. Martin (mail) (www):
Thanks for the summary. This looks like a very useful contribution. Could they bring their analysis up to the present in a sequel paper?

The biggest thing that seems to have changed in interest group politics in patent law since the 19th Century is that inventors and entrepreneurs no longer have a strong voice. Venture capitalists and academics make poor substitutes. People like Steve Rearden at Rearden Labs were key to stalling what was really to one-sided a reform bill in the last session. Here's to the hope that more inventors will make it to the table in the next round of negotiations.
9.6.2008 1:50pm
Jon Roland (mail) (www):
Yes, public choice theory generally, but more specifically, rent seeking behavior.

The Framers' obvious intent was to allow a monopoly just long enough to give the creator an opportunity to capture a return on his investment sufficient to provide an incentive to other creators. However, they never contemplated making a patent or copyright an entitlement or estate that could be bequeathed or conveyed to non-creators, especially any that would use the statutory right to keep the creation off the market, or to extend it to nearly a century. However, they left to Congress the discretion to decide how many years, and therein lies the problem, because once powerful corporations become players, they can and will influence legislation more that individual entrepreneurs can, and while the creative life of an individual may be short, the life of a corporation is endless.

As an aside, and to provoke discussion, from the power to promote or to create a monopoly one cannot, logically and by original meaning, derive a power to impose criminal penalties for violations. That is an application of the Necessary and Proper Clause that is unnecessary and improper.
9.6.2008 2:11pm
MLS:
As an aside, and to provoke discussion, from the power to promote or to create a monopoly one cannot, logically and by original meaning, derive a power to impose criminal penalties for violations. That is an application of the Necessary and Proper Clause that is unnecessary and improper.



I am not quite sure about this since the Copyright Act of 1790 followed by only a few months the adoption of the Constitution, and that the original copyright act did provide for what can be termed criminal penalties. Of course, the severity of such penalties has increased over time.
9.6.2008 3:43pm
Bruce Hayden (mail) (www):
Let's keep patents and copyrights straight here. It is copyright term that seems to expand infinitely in order to keep the original Mickey Mouse copyright in force. Patent term was 17 years from issue date for a long time, and only recently went to 20 years from priority date, which works out roughly the same. Patent reform of a decade or so ago, when this changed, went a long way in eliminating the sort of infinite length patents made famous by Jerome Lemelson (ok, to be more accurate, the last Lemelson patent to expire will likely be a bit over 50 years from the original filing date of its earliest parent).

What has happened most recently to the patent arena is that patents are getting much harder to obtain. This has, I believe, two interrelated primary causes. First, the Supreme Court's KSR decision made showing nonobviousness much, much, harder. Secondly, the USPTO, aggressively interpreting this decision in order to significantly reduce allowance rates in a misguided attempt to increase quality. Misguided because their concentration on allowance rates seems to often result in worthy applications being rejected as obvious. It is rumored that the allowance rate in some mechanical art areas has dropped to somewhere around 10%.

Let me add that I think that much of the later problem is a direct result of the present Administration putting non-patent practitioners over at least the patent side of the USPTO (in direct contravention of the Patent Act). These non-practitioners seem to listen more to academics than those who have spent their lives in the field, and as a result miss important ramifications of their attempts to fix the system (and as a result, making it worse instead of better).
9.6.2008 4:21pm
Andrew P. Morriss (mail):
Michael Martin asks if we can update to the present - this is part II of a larger project that will do just that (Part I is available here and covers Venice in 1474 to the 1790 Patent Act.

Mr. Martin also puts his finger on the big change after 1870 - before that time, there were few interest groups like today's pharmaceutical industry that had industry-specific interests in patent law. Indeed, the striking characteristic of American patent law in the 19th century is what Zorina Khan calls the "democratization of invention" in her excellent book of that same name. Our next paper will look at 1870-1952 and there likely will be 2 more after that bringing the interest group story up to the present.
9.6.2008 5:14pm
PersonFromPorlock:

As an aside, and to provoke discussion, from the power to promote or to create a monopoly one cannot, logically and by original meaning, derive a power to impose criminal penalties for violations. That is an application of the Necessary and Proper Clause that is unnecessary and improper.

I imagine something could be done with the Commerce Clause. As the USSC would say, "Heck, why not?"

The real effect of the patent system now is to discourage the creation of new products by anyone except well-capitalized (and generally well-established) businesses, and civil enforcement of patents plays an important role in keeping the less well-heeled out. A triumph of rent-seeking, I suspect.
9.6.2008 5:33pm
zippypinhead:
Our next paper will look at 1870-1952 and there likely will be 2 more after that bringing the interest group story up to the present.
Fascinating project. I hope you can address the interesting post-1870 populist tensions that arose between the aims and purposes of patent laws versus what became the antitrust laws. Over the decades one side or the other has been ascendant. To this day the tension between intellectual property rights and antitrust continues, as do efforts to reconcile the objectives of the two regulatory schemes.
9.6.2008 8:23pm
Eli Rabett (www):
Among other things an important driver in US patent law was the desire to rip off European technology. (See for example Samuel Slater).
9.6.2008 10:51pm
Roger Schlafly (www):
US patent law did not rip off Euro technology. Just the opposite. Most of the good inventions have been American, and US patent law lets the Europeans use them for free.
9.6.2008 11:32pm
devil's advocate (mail):
PFP,


civil enforcement of patents plays an important role in keeping the less well-heeled out. A triumph of rent-seeking, I suspect.


your comment seems a double edged sword to me. You are always more likely to prevail in civil disputes if you have the money to see through litigation. But that doesn't really seem to represent capture to me. Maybe in the sense of strategic court actions that would seek to set larger policy as the abstract seems to suggest. I guess the jury is out on whether patent law can be cornered like the silver market. I'm not quite that cynical yet.

But, my intuitive feel for this arena is that enforcement co-option , e.g. drug companies turning government employees into their pinkerton's running about trying to stop drug reimportation from Canada on the premise of public health concerns that isn't even the thinnest of beards, is the less attenuated version of rent seeking on display in patent law. This is really a problem with the executive and not judiciary branch.

I don't get the feeling that the granting of patents in the pharmaceutical realm is some kind of founders dream run amok, but I wonder whether the framers imagined that such recognition would provide other than a cause of action for the patent holder to enforce themselves.

My grasp of the purpose of constitutional recognition and statutory enactments with regards to intellectual property suggests it was to supplant common law in this arena where it fell short by comparison to real property.While it is true that government occasionally enforces against tresspass, more often where some other vandalism or mischief is associated with or draws attention to the tresspas. But, in the majority of analogous real property claims you don't see government enforcement but only the provision of judicial forum for private resolution, i.e., the government doesn't go around opposing adverse possession actions and the like once made aware of encroachments by some property owner. The government doesn't survey boundaries to settle private disputes. When you evict someone from your property you actually have to pay the government agent who removes tenant after having secured an order from the court.



Bruce:

I have long thought that obviousness was not obvious enough when it came to patents (come on, one click ordering!) so I'm not particularly chagrined at a higher barrier of KSR (those who think the electric gas paddle nonobvious probably haven't used a household dimmer - well what with all the holier than though flourescent bulbs lately dimmers ain't obvious they're obsolete -- but wait you can pay $10 a bulb for the privilege).

Notwithstanding my belief that more is obvious than meets the eye, so to speak, the sense that KSR should be manifest in some specific low allowance percentage would be a typical LCD bureaucratic approach to smooth the curves in what surely would otherwise be a more chaotic manifestation of allowance rates. And I'm certainly open to whether the KSR approach as in the more 'flexible' standard decried by Richard Epstein (and I always have to think twice or twenty times when I find myself on the opposite side of some argument from Richard)is problematic, albeit how is sticking to 10% allowance rates flexible? And whatever happened to the peanut butter jelly case, i.e. with a name like Smuckers its got to be patentable?

Brian
9.7.2008 11:03am