4 ms·

I wonder why we don't implement a Georgist tax on 80%-100% of the value of a patent to discourage patent hoarding and incentivize building on top of patents hel

I wonder why we don't implement a Georgist tax on 80%-100% of the value of a patent to discourage patent hoarding and incentivize building on top of patents held. The intellectual property market would become a lot more efficient and productive.

thechao 5y ago
I like this. We should do the same for copyright: the owner of the thing (patent; trademark; copyright) declares a value, then they pay a tax on the value; anyone else can “pay the balance” to buy off the monopoly.
- gameman144 5y ago
  The issue here is that the value of things is not universal, nor is the means to pay such a tax. For instance, I may discover a manufacturing machine that cuts the cost of building semiconductor chips in half. My options under this model, though, are to either price it low enough that I can actually afford to build up a business on top of it (in which case a bigger company can swoop in, buy the rights from me, and destroy my business) or price it high enough that the incumbents can't afford to buy me off (in which case, the proposed tax will be large enough that it'll stifle my business, and the incumbents can just wait until my business dies on its own.) The current system is far from perfect, but it does favor upstarts and entrepreneurs' ability to build business rather than incumbents. The big thing I'd love to see is a shortening of the patent exclusivity period before becoming public domain.
  - karlkeefer 5y ago
    > The current system is far from perfect, but it does favor upstarts and entrepreneurs' ability to build business rather than incumbents. I think exactly the opposite is true. Patents are one of the primary ways that incumbents are able to rent seek on their inventions for decades. These large companies hoard patents, and are legally granted monopoly on a given technology, making direct competition on their invention illegal. A world without patents would be more enabling to small entrepreneurs, because the amount of things they are allowed to attempt is so much higher than in our current world.
    - HWR_14 5y ago
      Let's suppose you had some novel idea that would greatly increase the value of a social network, idea X. In the current system, you can patent it, build a working version, and then either sell out to FB or another major tech company (ala Instagram) or go public (like Snapchat). Without patents at all, FB sees your app start to take off, looks at it's key feature, assigns N engineers to duplicate it and rolls it out to billions of users. Your app then is a sad knockoff of FB's shiny new feature, withers and dies. Meanwhile, with a Georgist tax, either you have to raise hundreds of millions just to pay the tax when created, or FB buys your patent for peanuts.
      - michaelt 5y ago
        Has anyone ever had a novel idea for a social network, patented it, and been paid for it by FB? Because it seems to me, the way the patent system is supposed to work, and the way it actually works in practice, are very different.
    - gameman144 5y ago
      > Patents are one of the primary ways that incumbents are able to rent seek on their inventions for decades. These large companies hoard patents, and are legally granted monopoly on a given technology, making direct competition on their invention illegal. Totally agreed, and the solution there is (in my opinion) to reduce the duration of such patents to the point where newcomers have a reasonable chance to bootstrap a business based on that patent, but not so long that patents bar competitors from coming to market down the line. Value-based taxation will always favor those with deep pockets who can afford to pay top dollar to scrape the cream off of small businesses.
  - thechao 5y ago
    Geoist taxes are always problematic for this reason. I suspect that if the tax valuation is phased in slowly it'd have a good trade-off.
    - gameman144 5y ago
      I'm curious what you mean by phasing these in slowly. I've seen the issue crop up in every Georgist or valuation-based tax proposal I've seen, but I'd love to learn more if there are reasonable ways around these bad incentive structures.
      - thechao 5y ago
        I haven't thought about patents. But, for copyrights, I think there should be two "schedules": 1. A fixed original-author schedule which is 28 years, tax free; and, 2. A "work for hire" schedule which is 70+ years, where the Geoist tax is free for the first 7 years, then increases by 1% every 7 years. Again, the rule is this: you self appraise, and pay your tax. Any other entity can pay the balance due (in my opinion, to the Treasury: the monopoly is granted by the people, not the copyright owner), and it places the copy into the public domain. For patents... I'd probably say its "free" unless you enforce its monopoly. Then, if you value the patent at "100 million$" you owe the government N-years X percentage X 100 million. Obviously, the valuation isn't the infringing value — infringement is a fraction of its value. That means a patent only "has value" when it's used to enforce its monopoly.
- kmeisthax 5y ago
  Part of copyright is the right to exclude. Adding a compulsory buyout provision would make copyright so unrecognizable as to not be a copyright anymore. Imagine the Hobson's Choice you just offered small-time artists. If you don't want to work with a large publisher, you either have to overvalue your copyright to the point of being buried by ruinsome, confiscatory taxes... or, if you don't want the taxes, then a large publisher can buy you out for pennies on the dollar. What that would mean is that you would lose the legal right to write your own work anymore. Large publishers would benefit handsomely, as they'd be able to buy into a new market of hilariously undervalued work. You would turn every independent creative endeavor into the highly exploitative contracts that the average record label M&A lawyer writes on a day-to-day basis. Meanwhile, because these companies are already rich and powerful, they can just afford to pay the tax to overvalue their copyrights. So the end result would be a transfer of wealth from artists to publishers. Furthermore, what happens to any existing licensing agreements? What happens if Microsoft buys out Linus Torvalds or the FSF with the intent of making Linux or GNU proprietary software? Does the GPL still hold, or does the buyout override the licensing agreement? The latter is bad for obvious reasons. The former would allow the use of improper transfers and creative accounting to partially evade the taxation regime. Hold your copyright personally, exclusively license it to an LLC on very generous terms, and then undervalue the copyright on your taxes. If someone does buy you out, they can't terminate the license for at least 35 years - upon which most of the copyright's value will have already been exploited. What you seem to be asking for is a way to attack large companies for being large. The answer to your question is not to break copyright and patent law (more than it already has); but to actually enforce antitrust law, and reduce the scope and scale of copyright back to something reasonable.
  - kfprt 5y ago
    If you set a price and multiple people are willing to pay it then it can't be exclusive.
  - thechao 5y ago
    First, I'm restricting this to the US! I replied elsewhere, but will reply here, as well. I think there should be two "schedules": 1. A private schedule, which is tax-free which terminates at 28 years or upon any (or all?) of the authors' death, whichever is first; and, 2. A work-for-hire schedule, which begins at 0% tax, and increases by 1% every 7 years after that. A "private" copyright can be converted to a "work-for-hire" by paying past taxes. A work-for-hire may not be converted to private. First, when a copyright is "bought out", the payment is made to the Treasury — the copyright is granted by the people via the US government, that is the beneficiary of the buyout. Second, the buyout places the work into the public domain; this is not a transfer sale! Third, the copyright owner can increase the value whenever they feel like, but the valuation can never decrease. For example: the owner could value the copyright at 50 gajillion dollars; at the end of 7 years, if they can't pay the tax on the 50 gajillion dollars, the copyright lapses. For patents, I think a tax is owed when the patent is enforced in a court of law. I don't know the schedule for that.
missedthecue 5y ago
Georgist taxes are taxes on uncreated property i.e. land. Intellectual property is created property, it's just intangible.
- xxpor 5y ago
  Granted, the original idea was on real property. But practically speaking, is there much difference with the way IP law works in the US? Patent trolls are essentially rent seekers, with similar economic effects. Even worse, it's much harder to realize you're infringing a lot of the time. At least with land there are lines in the sand you can look up at a county clerks office.
  - missedthecue 5y ago
    Practically, enforcement of property rights when it comes to IP is messy, but philosophically, IP is much different than a parcel of land.

thechao 5y ago

I like this. We should do the same for copyright: the owner of the thing (patent; trademark; copyright) declares a value, then they pay a tax on the value; anyone else can “pay the balance” to buy off the monopoly.

gameman144 5y ago
The issue here is that the value of things is not universal, nor is the means to pay such a tax. For instance, I may discover a manufacturing machine that cuts the cost of building semiconductor chips in half. My options under this model, though, are to either price it low enough that I can actually afford to build up a business on top of it (in which case a bigger company can swoop in, buy the rights from me, and destroy my business) or price it high enough that the incumbents can't afford to buy me off (in which case, the proposed tax will be large enough that it'll stifle my business, and the incumbents can just wait until my business dies on its own.) The current system is far from perfect, but it does favor upstarts and entrepreneurs' ability to build business rather than incumbents. The big thing I'd love to see is a shortening of the patent exclusivity period before becoming public domain.
- karlkeefer 5y ago
  > The current system is far from perfect, but it does favor upstarts and entrepreneurs' ability to build business rather than incumbents. I think exactly the opposite is true. Patents are one of the primary ways that incumbents are able to rent seek on their inventions for decades. These large companies hoard patents, and are legally granted monopoly on a given technology, making direct competition on their invention illegal. A world without patents would be more enabling to small entrepreneurs, because the amount of things they are allowed to attempt is so much higher than in our current world.
  - HWR_14 5y ago
    Let's suppose you had some novel idea that would greatly increase the value of a social network, idea X. In the current system, you can patent it, build a working version, and then either sell out to FB or another major tech company (ala Instagram) or go public (like Snapchat). Without patents at all, FB sees your app start to take off, looks at it's key feature, assigns N engineers to duplicate it and rolls it out to billions of users. Your app then is a sad knockoff of FB's shiny new feature, withers and dies. Meanwhile, with a Georgist tax, either you have to raise hundreds of millions just to pay the tax when created, or FB buys your patent for peanuts.
    - michaelt 5y ago
      Has anyone ever had a novel idea for a social network, patented it, and been paid for it by FB? Because it seems to me, the way the patent system is supposed to work, and the way it actually works in practice, are very different.
  - gameman144 5y ago
    > Patents are one of the primary ways that incumbents are able to rent seek on their inventions for decades. These large companies hoard patents, and are legally granted monopoly on a given technology, making direct competition on their invention illegal. Totally agreed, and the solution there is (in my opinion) to reduce the duration of such patents to the point where newcomers have a reasonable chance to bootstrap a business based on that patent, but not so long that patents bar competitors from coming to market down the line. Value-based taxation will always favor those with deep pockets who can afford to pay top dollar to scrape the cream off of small businesses.
- thechao 5y ago
  Geoist taxes are always problematic for this reason. I suspect that if the tax valuation is phased in slowly it'd have a good trade-off.
  - gameman144 5y ago
    I'm curious what you mean by phasing these in slowly. I've seen the issue crop up in every Georgist or valuation-based tax proposal I've seen, but I'd love to learn more if there are reasonable ways around these bad incentive structures.
    - thechao 5y ago
      I haven't thought about patents. But, for copyrights, I think there should be two "schedules": 1. A fixed original-author schedule which is 28 years, tax free; and, 2. A "work for hire" schedule which is 70+ years, where the Geoist tax is free for the first 7 years, then increases by 1% every 7 years. Again, the rule is this: you self appraise, and pay your tax. Any other entity can pay the balance due (in my opinion, to the Treasury: the monopoly is granted by the people, not the copyright owner), and it places the copy into the public domain. For patents... I'd probably say its "free" unless you enforce its monopoly. Then, if you value the patent at "100 million$" you owe the government N-years X percentage X 100 million. Obviously, the valuation isn't the infringing value — infringement is a fraction of its value. That means a patent only "has value" when it's used to enforce its monopoly.
kmeisthax 5y ago
Part of copyright is the right to exclude. Adding a compulsory buyout provision would make copyright so unrecognizable as to not be a copyright anymore. Imagine the Hobson's Choice you just offered small-time artists. If you don't want to work with a large publisher, you either have to overvalue your copyright to the point of being buried by ruinsome, confiscatory taxes... or, if you don't want the taxes, then a large publisher can buy you out for pennies on the dollar. What that would mean is that you would lose the legal right to write your own work anymore. Large publishers would benefit handsomely, as they'd be able to buy into a new market of hilariously undervalued work. You would turn every independent creative endeavor into the highly exploitative contracts that the average record label M&A lawyer writes on a day-to-day basis. Meanwhile, because these companies are already rich and powerful, they can just afford to pay the tax to overvalue their copyrights. So the end result would be a transfer of wealth from artists to publishers. Furthermore, what happens to any existing licensing agreements? What happens if Microsoft buys out Linus Torvalds or the FSF with the intent of making Linux or GNU proprietary software? Does the GPL still hold, or does the buyout override the licensing agreement? The latter is bad for obvious reasons. The former would allow the use of improper transfers and creative accounting to partially evade the taxation regime. Hold your copyright personally, exclusively license it to an LLC on very generous terms, and then undervalue the copyright on your taxes. If someone does buy you out, they can't terminate the license for at least 35 years - upon which most of the copyright's value will have already been exploited. What you seem to be asking for is a way to attack large companies for being large. The answer to your question is not to break copyright and patent law (more than it already has); but to actually enforce antitrust law, and reduce the scope and scale of copyright back to something reasonable.
- kfprt 5y ago
  If you set a price and multiple people are willing to pay it then it can't be exclusive.
- thechao 5y ago
  First, I'm restricting this to the US! I replied elsewhere, but will reply here, as well. I think there should be two "schedules": 1. A private schedule, which is tax-free which terminates at 28 years or upon any (or all?) of the authors' death, whichever is first; and, 2. A work-for-hire schedule, which begins at 0% tax, and increases by 1% every 7 years after that. A "private" copyright can be converted to a "work-for-hire" by paying past taxes. A work-for-hire may not be converted to private. First, when a copyright is "bought out", the payment is made to the Treasury — the copyright is granted by the people via the US government, that is the beneficiary of the buyout. Second, the buyout places the work into the public domain; this is not a transfer sale! Third, the copyright owner can increase the value whenever they feel like, but the valuation can never decrease. For example: the owner could value the copyright at 50 gajillion dollars; at the end of 7 years, if they can't pay the tax on the 50 gajillion dollars, the copyright lapses. For patents, I think a tax is owed when the patent is enforced in a court of law. I don't know the schedule for that.

missedthecue 5y ago

Georgist taxes are taxes on uncreated property i.e. land. Intellectual property is created property, it's just intangible.

xxpor 5y ago
Granted, the original idea was on real property. But practically speaking, is there much difference with the way IP law works in the US? Patent trolls are essentially rent seekers, with similar economic effects. Even worse, it's much harder to realize you're infringing a lot of the time. At least with land there are lines in the sand you can look up at a county clerks office.
- missedthecue 5y ago
  Practically, enforcement of property rights when it comes to IP is messy, but philosophically, IP is much different than a parcel of land.