4 ms·

I would be interested to see a patent/intellectual property system that was incorporated into a market for licensing. Taxes would be levied on the market value

by tcbawo 8y ago

I would be interested to see a patent/intellectual property system that was incorporated into a market for licensing. Taxes would be levied on the market value. You would pay taxes based on the royalties collected in the open market, or you could release intellectual property into the public domain.

patentatt 8y ago
Licensing revenue would probably be taxed as corporate income. Also, maintenance fees increase as the years go by, so it only makes economic sense to keep paying fees for valuable patents.
cameldrv 8y ago
I'd like to see something like this too, but the tax is based on bonafide offers to license the patent rather than actual licensing revenue. You don't want me to make my cool gadget that infringes on your patent? Ok, fine, but if I register an offer to you for a million dollars for a license, and you turn me down, you have to pay say, 10% as a tax. You're a small independent inventor/patent troll? Either pony up for the government keeping everyone else off your turf, or take the money and move on.
- tcbawo 8y ago
  As I mentioned, there needs to be both components, royalties and valuation. I'm not sure what the proper mix would be, but it seems like an area where a market based solution could work. You'd probably need some form of arbitration to hammer out explicitly what is novel/being licensed. Patent trolls and large IP war-chest holding companies would probably hate this.
  - patentatt 8y ago
    The thing is that patent valuation is a black art, it’s not a science. The best approach as you suggest is market based, but for a lot of IP there is no efficient market setting prices. How often do we read headlines of $X billion in damages ‘awarded’ as the result of some litigation, only to find out years later that that number was overturned on appeal and it was really much much lower in the end. It’s just an imprecise thing.
- patentatt 8y ago
  So there is the concept of the Fair, Reasonable, And Nondiscriminatory (FRAND) license that approaches some of what you’re proposing. It’s voluntary in today’s landscape, but it seems like you’re arguing for mandatory FRAND licensing for all IP? One of the reasons FRAND works is that it’s usually for IP with a large market, like industry wide standards and such. So the value is relatively easy to pin down because there is a large and active market for the IP. If it were mandated for all IP, who would set the “fair” price? Who says a million is “fair” in your example? What if you think my feature is a small part of your product/service, but I believe it’s a lynchpin type of thing? Seems ripe for abuse by the party with the deepest litigation pockets. I will say, however, that the idea of efficient infringement gets kind of close. With the bar for willfulness so high these days, a large Corp can just deliberately infringe a patent, say “come at me bro” and fight out what the damages are in court for the next decade. As long as they avoid treble damages (willfulness) then the max damages they have to pay is something basically reasonable and based on real market data. So it can be easier for an actor with a capacity to litigate to just ignore IP rights and let the cards fall where they do in court.
ABCLAW 8y ago
I have shopped this idea around. I can find funding to make it happen, but I can't find a single senior counsel who's interested in advising.
Nomentatus 8y ago
The biggest concern I would have with this is that patents exist in large part to fund very long development times, refining ideas (such as Xerox.) All in advance of production and therefore licensing or revenues from licensing. If you can interest anyone. In the case of Xerox, innumerable companies turned the invention down. A predecessor company of Xerox was willing to heavily knowing the returns would be spectacular if they were right. To work, the market created would have to avoid collusion (which is rife now and extremely hard to detect or prosecute) and taxes could not be confiscatory (which would be extremely tempting - it's already the case that the filing fee tax is so high that poor people can't afford to patent their ideas, those ideas are given to the first company to copy the idea, swear it's theirs, and file. This may be the major source of economic inequality in the U.S. now.)

by tcbawo 8y ago

patentatt 8y ago

Licensing revenue would probably be taxed as corporate income. Also, maintenance fees increase as the years go by, so it only makes economic sense to keep paying fees for valuable patents.

cameldrv 8y ago

I'd like to see something like this too, but the tax is based on bonafide offers to license the patent rather than actual licensing revenue. You don't want me to make my cool gadget that infringes on your patent? Ok, fine, but if I register an offer to you for a million dollars for a license, and you turn me down, you have to pay say, 10% as a tax. You're a small independent inventor/patent troll? Either pony up for the government keeping everyone else off your turf, or take the money and move on.

tcbawo 8y ago
As I mentioned, there needs to be both components, royalties and valuation. I'm not sure what the proper mix would be, but it seems like an area where a market based solution could work. You'd probably need some form of arbitration to hammer out explicitly what is novel/being licensed. Patent trolls and large IP war-chest holding companies would probably hate this.
- patentatt 8y ago
  The thing is that patent valuation is a black art, it’s not a science. The best approach as you suggest is market based, but for a lot of IP there is no efficient market setting prices. How often do we read headlines of $X billion in damages ‘awarded’ as the result of some litigation, only to find out years later that that number was overturned on appeal and it was really much much lower in the end. It’s just an imprecise thing.
patentatt 8y ago
So there is the concept of the Fair, Reasonable, And Nondiscriminatory (FRAND) license that approaches some of what you’re proposing. It’s voluntary in today’s landscape, but it seems like you’re arguing for mandatory FRAND licensing for all IP? One of the reasons FRAND works is that it’s usually for IP with a large market, like industry wide standards and such. So the value is relatively easy to pin down because there is a large and active market for the IP. If it were mandated for all IP, who would set the “fair” price? Who says a million is “fair” in your example? What if you think my feature is a small part of your product/service, but I believe it’s a lynchpin type of thing? Seems ripe for abuse by the party with the deepest litigation pockets. I will say, however, that the idea of efficient infringement gets kind of close. With the bar for willfulness so high these days, a large Corp can just deliberately infringe a patent, say “come at me bro” and fight out what the damages are in court for the next decade. As long as they avoid treble damages (willfulness) then the max damages they have to pay is something basically reasonable and based on real market data. So it can be easier for an actor with a capacity to litigate to just ignore IP rights and let the cards fall where they do in court.

ABCLAW 8y ago

I have shopped this idea around. I can find funding to make it happen, but I can't find a single senior counsel who's interested in advising.

Nomentatus 8y ago

The biggest concern I would have with this is that patents exist in large part to fund very long development times, refining ideas (such as Xerox.) All in advance of production and therefore licensing or revenues from licensing. If you can interest anyone. In the case of Xerox, innumerable companies turned the invention down. A predecessor company of Xerox was willing to heavily knowing the returns would be spectacular if they were right. To work, the market created would have to avoid collusion (which is rife now and extremely hard to detect or prosecute) and taxes could not be confiscatory (which would be extremely tempting - it's already the case that the filing fee tax is so high that poor people can't afford to patent their ideas, those ideas are given to the first company to copy the idea, swear it's theirs, and file. This may be the major source of economic inequality in the U.S. now.)