5 ms·

This is why it seems to me that the core problem with the current patent system is that it's too cheap to obtain and hold large patent portfolios. There's an a

This is why it seems to me that the core problem with the current patent system is that it's too cheap to obtain and hold large patent portfolios. There's an analogy here to land ownership. Land is a public good. It is owned collectively by the nation-state that contains it, and the people rent exclusive rights over parcels of land. I'm talking here about the difference between allodial title (typically owned by the state) and fee simple title (owned by individuals). We do this so that the owners have an incentive to use and improve it, and everyone benefits when it owned by the people who can best do so. Patents are similar in many ways, since inventions are also a public good. That's why patents exist in the first place: to promote the advance of our technology for the benefit of all, by granting exclusive rights to the use of a technology. And, like land, you want patents to be owned by the people who can best use it.However, in order for the system to work, there needs to be a cost to holding rights to the property to encourage people to sell the rights to someone else. With land, this is property tax; land owners have to pay a percentage of the land's value each year for the continued right to use the land exclusively. We need a property tax for patents. Patents should have an assessed market value, and a patent owner should have to pay a percentage of that value yearly as 'rent' on the exclusive use of the invention. If they no longer feel that it's worthwhile to pay that tax for the benefit they get from holding the patent, then they can sell it to another party. It could be (and probably should be) a closed system, where all taxes collected should be put into a fund that the government uses to buy patents itself. When it does so, the patent gets returned to the public domain, and anyone can use it from then on. In that way, you may be able to get rid of patent term lengths.

SilasX 12y ago
IMHO, that doesn't address the real problem, of patents that shouldn't have been granted (because anyone faced with the same problem does the same thing without being helped by the patent description). In fact, it makes that problem worse, because the assessed or hypothetical market value of the obvious, or "too old" invention is much higher. For example, what happens if someone is (by foolishness) granted a patent on fire or the wheel? They'd pay a higher tax, but be entitled to a much bigger "extortion" from the economy. So it would "turbocharge" the incentive to slip undeserved patents through. IMHO, the real problem goes away when patents only go to legitimate "oh my word I wouldn't have thought of that in a thousand years" innovations, at which point it would be much harder to say, "why should anyone have to pay to use that?"
- kansface 12y ago
  Sure, but legislation that throws out 99% of existing patents will never fly because legitimate businesses who have spent billions of dollars on them. The only possible political solution is to filter out trolls.
  - narag 12y ago
    Would it be technically possible in the USA to create a special jurisdiction for patents? That could prevent a number of the current problems: certain states particularly kind with patent suits, some judges ignoring higher courts resolution...
    - chc 12y ago
      A special court for patents already exists in many places. In the US, it's the Federal Circuit Court of Appeals.
      - narag 12y ago
        Appeals, that't not what I mean, but a system where patent demands need to be started out of ordinary courts.
EGreg 12y ago
There is a major difference between land and patents, though. With land, it's clear which land I am on at any given moment, and I understand that there might be an owner. With patents, it's not clear at all that I'm infringing on something someone somewhere declared, and someone somewhere granted, perhaps erroneously. So that introduces a cost which outweighs the benefit in fast-moving industries, in my opinion. The cost is borne in lawsuits and out-of-court settlements.
notahacker 12y ago
Taxing patents might pay for some of the costs of better oversight on the part of the patent office and deter some frivolous patents, but it would make the litigation and troll problem worse, by orders of magnitude. Suddenly the incentives to extort every possible violator of a patent get bigger because patents are expensive to hold onto. Companies in the business of making stuff and very seldom suing their competitors or even considering asking for licensing fees would suddenly find high quality "defensive" patents on their technology result in a bigger tax bill. Enter the troll, willing to take the patent and its associated tax bill off their hands for a nominal fee (perhaps then getting its taxable value reassessed based on its diminished market value) and then setting to work threatening litigation against everyone else in the industry. If they win enough settlements their patent might get reassessed at a higher value for a bigger tax bill, but they're still raking in plenty of cash on top, and able to source better patents from people that would never have considered selling their patents. Sure, the government could buy up unwanted patents and release into the public domain indiscriminately (in which case they'll end up subsidising patent creation) or they could buy up unwanted patents discriminately... i.e. at the behest of industries most adept at lobbying, but if patent offices can't even consistently make good decisions on whether companies should be issued with patents, the last thing I'd give them is a budget to buy back the ones that might have been mistakes.
fred_durst 12y ago
Exactly. And this is why all property must be taxed on a periodic basis. There should always be an incentive and pressure on asset holders to put their assets to work.
- Pxtl 12y ago
  What makes sense would be to tax based on its usage of a limited space. Land is exceptionally limited, especially in urban environments, so taxing its use makes sense. The space of inventions is also obviously limited, since it's often extremely challenging to work around a technical patent. But is music a limited space? Prose? Software? In those cases it seems like the benefits of a "property tax on copyright" would be minimal.
  - dragonwriter 12y ago
    Note the "especially" part here: > Land is exceptionally limited, especially in urban environments Which basically emphasizes that while the space is limited inherently, the key part is that the subspace that is in particular demand at any given time (the place where people want it, and which is therefore as densely populated as it will support) is particularly limited. > But is music a limited space? Prose? Software? Even if the overall space of each isn't particularly limited, the subspace that is in demand at any given time is particularly limited. There wouldn't be value to copyrights on these things in the first place if that wasn't the case -- there would be no value in excluding people from the particular niche you develop if there were an infinite array of equally-easy-to-develop, equally-valuable niches within the same space available. The entire value proposition of copyright is the same limited-space proposition that you say makes taxation make sense.
Pxtl 12y ago
How do you consider the investment costs involved in developing a patent? This is where things get challenging. The software industry could probably get along without patents altogether. The pharma industry, on the other hand, absolutely depends upon them. When a new drug is discovered and patented (which is part of the problem - drugs are discovered, not invented, which makes patenting seem a bit odd in the first place) the drug company has a 25-year window of time to develop it. This is actually a tight deadline as studies take a long time and often can face major back-to-square-one setbacks in the form of unexpected complications. All of this costs millions upon millions of dollars. Now obviously drug companies would be willing to pay a handsome sum to keep ahold of their patents. But if you tax based on value, the value of a proven drug patent would be obscene, and that would cut deeply into the payoff for these pharma companies.

SilasX 12y ago

IMHO, that doesn't address the real problem, of patents that shouldn't have been granted (because anyone faced with the same problem does the same thing without being helped by the patent description). In fact, it makes that problem worse, because the assessed or hypothetical market value of the obvious, or "too old" invention is much higher. For example, what happens if someone is (by foolishness) granted a patent on fire or the wheel? They'd pay a higher tax, but be entitled to a much bigger "extortion" from the economy. So it would "turbocharge" the incentive to slip undeserved patents through. IMHO, the real problem goes away when patents only go to legitimate "oh my word I wouldn't have thought of that in a thousand years" innovations, at which point it would be much harder to say, "why should anyone have to pay to use that?"

kansface 12y ago
Sure, but legislation that throws out 99% of existing patents will never fly because legitimate businesses who have spent billions of dollars on them. The only possible political solution is to filter out trolls.
- narag 12y ago
  Would it be technically possible in the USA to create a special jurisdiction for patents? That could prevent a number of the current problems: certain states particularly kind with patent suits, some judges ignoring higher courts resolution...
  - chc 12y ago
    A special court for patents already exists in many places. In the US, it's the Federal Circuit Court of Appeals.
    - narag 12y ago
      Appeals, that't not what I mean, but a system where patent demands need to be started out of ordinary courts.

EGreg 12y ago

There is a major difference between land and patents, though. With land, it's clear which land I am on at any given moment, and I understand that there might be an owner. With patents, it's not clear at all that I'm infringing on something someone somewhere declared, and someone somewhere granted, perhaps erroneously. So that introduces a cost which outweighs the benefit in fast-moving industries, in my opinion. The cost is borne in lawsuits and out-of-court settlements.

notahacker 12y ago

Taxing patents might pay for some of the costs of better oversight on the part of the patent office and deter some frivolous patents, but it would make the litigation and troll problem worse, by orders of magnitude. Suddenly the incentives to extort every possible violator of a patent get bigger because patents are expensive to hold onto. Companies in the business of making stuff and very seldom suing their competitors or even considering asking for licensing fees would suddenly find high quality "defensive" patents on their technology result in a bigger tax bill. Enter the troll, willing to take the patent and its associated tax bill off their hands for a nominal fee (perhaps then getting its taxable value reassessed based on its diminished market value) and then setting to work threatening litigation against everyone else in the industry. If they win enough settlements their patent might get reassessed at a higher value for a bigger tax bill, but they're still raking in plenty of cash on top, and able to source better patents from people that would never have considered selling their patents. Sure, the government could buy up unwanted patents and release into the public domain indiscriminately (in which case they'll end up subsidising patent creation) or they could buy up unwanted patents discriminately... i.e. at the behest of industries most adept at lobbying, but if patent offices can't even consistently make good decisions on whether companies should be issued with patents, the last thing I'd give them is a budget to buy back the ones that might have been mistakes.

fred_durst 12y ago

Exactly. And this is why all property must be taxed on a periodic basis. There should always be an incentive and pressure on asset holders to put their assets to work.

Pxtl 12y ago
What makes sense would be to tax based on its usage of a limited space. Land is exceptionally limited, especially in urban environments, so taxing its use makes sense. The space of inventions is also obviously limited, since it's often extremely challenging to work around a technical patent. But is music a limited space? Prose? Software? In those cases it seems like the benefits of a "property tax on copyright" would be minimal.
- dragonwriter 12y ago
  Note the "especially" part here: > Land is exceptionally limited, especially in urban environments Which basically emphasizes that while the space is limited inherently, the key part is that the subspace that is in particular demand at any given time (the place where people want it, and which is therefore as densely populated as it will support) is particularly limited. > But is music a limited space? Prose? Software? Even if the overall space of each isn't particularly limited, the subspace that is in demand at any given time is particularly limited. There wouldn't be value to copyrights on these things in the first place if that wasn't the case -- there would be no value in excluding people from the particular niche you develop if there were an infinite array of equally-easy-to-develop, equally-valuable niches within the same space available. The entire value proposition of copyright is the same limited-space proposition that you say makes taxation make sense.

Pxtl 12y ago

How do you consider the investment costs involved in developing a patent? This is where things get challenging. The software industry could probably get along without patents altogether. The pharma industry, on the other hand, absolutely depends upon them. When a new drug is discovered and patented (which is part of the problem - drugs are discovered, not invented, which makes patenting seem a bit odd in the first place) the drug company has a 25-year window of time to develop it. This is actually a tight deadline as studies take a long time and often can face major back-to-square-one setbacks in the form of unexpected complications. All of this costs millions upon millions of dollars. Now obviously drug companies would be willing to pay a handsome sum to keep ahold of their patents. But if you tax based on value, the value of a proven drug patent would be obscene, and that would cut deeply into the payoff for these pharma companies.