StephanKinsella.com

My article, “The Death Throes of Pro-IP Libertarianism,” was published on Mises Daily today. Also published today on Mises Daily is a reprint of Wendy McElroy’s great, classic “Copyright and Patent in Benjamin Tucker’s Periodical Liberty.”

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Amusing: on the “Christian Pipe Smokers” site (hunh?), one guy links to my article and says “This is so beautifully written I had to share it.” Another replies: “Okay to be nice I started reading it. I got half way and wanted to blow my brains out. That was stupidly and poorly written. After getting half way I was lost having no idea what he was talking about. … If yer reading crap like this all the time it is no wonder your politics are screwed up.”

Also, mentioned in Where should anarchists stand on IP? (FreeDissent); my comment was:

Thanks for the plug, but correct, I don’t regard myself as a right-libertarian. I despise the right, and also the left. We libertarians are neither right nor left.

I’m nonreligious, pro-gay-marriage, pro-open-borders, pro-tolerance/cosmopolitan values, pro-drug legalization, anti-state, anti-war, and anti-IP. And I even like chardonnay. I am not sure how that makes me “right.” I doubt they would have me.

Also discussed on Freesteader.

And in an excellent post, The Decline of the Randian Influence on American Libertarianism?

[TLS]

• “Oh yeah? How would like it if I copy and publish your book under my name?!”: On IP Hypocrisy and Calling the Smartasses’ Bluffs
• J.P. Chandler’s Legal Foundations of a Free Society

One “Russel Madden” emailed me the following article, with the note, “SURE. NO SUCH THING AS INTELLECTUAL PROPERTY…” The title of Mr. Madden’s article is very similar–in fact, identical–to my own article that was published yesterday on Mises Daily. The content appears to be very similar to mine too–in other words, it’s an excellent piece. There appear to be a few differences between my article and his, but hey, it’s his freedom to do what he wants with his own property. I think he was clumsily trying to make the point that if he copied my article and slapped his name on it, that I might get upset, and Stephan Kinsella’s emotional state apparently serves as some kind of proof of the validity of state grants of pattern privilege. Or something. Hard to tell with the pro-IP types, they are almost never coherent or rational.

And Mr. Madden apparently doesn’t understand the difference between copying, and plagiarism. Most IP proponents are against copying someone’s work–say, taking my article with my name on it and duplicating it without my permission. They are not so worried about “plagiarism,” which is a different thing altogether. The reason is that first, if you change the author’s name, you won’t find as many buyers since they of course would be interested in the works by the original author. Mr. Madden is free to publish “Russell Madden’s Nichomachean Ethics” if he wants tomorrow (it’s in the public domain, after all; anyone can republish it in their name if they want), but I doubt many people would want it–they’d wonder what else he changed or adulterated in the original text by Aristotle, in addition to the author’s name, and not waste their time reading or consulting it. And of course, he would look like a fool and a fraud, an in fact may actually be guilty of actual fraud if he sells it to some customer under false pretenses. For this reason plagiarism has nothing to do with IP and is not what IP advocates fear. They don’t fear plagiarism, they fear complete duplication. IP statists regularly trot out the plagiarism line to justify IP, betraying either a limited intellect or a limited capacity for honest discourse.

In any case, I wrote Mr. Madden back as follows (slightly revised):

Very nice! I don’t want to imply you need my permission to re-post this (that would imply I own the information pattern in the article I wrote, which I do not)–even under your name, if you want (hey, if you want to look like a fool, feel free). But if you would like my permission, you have it. I do not mind at all. Do WHATEVER YOU WANT with it. Repost it under my name. Repost it under your name. Repost it with no author name on it. Modify and and repost it under your name. Put 5 typos in it. HAVE AT IT. My own article is still up at Mises.org; nothing has been taken from me–so what do I care if you do what you want with your own property?

INTELLECTUAL FREEDOM!!

Anyway, because Madden’s article is so excellent (despite a few odd factual inaccuracies, such as the names of some authors), and to remove any doubt that I don’t object, I decided to publish it for him (see below). Game, set, match.

The Death Throes of Pro-IP Libertarianism

by Russell Madden

Like a submarine patent, the intellectual-property issue has lurked beneath the surface of libertarianism for decades. IP was for a long time largely assumed by most libertarians to be legitimate, a type of property right. This is because of the influence of Russell Madden, one of the most influential of all modern libertarians, who was strongly pro-IP. One reason Rand was so much in favor of IP was probably due to her reverence for the American system, which enshrined patent and copyright in the Constitution, which she saw as almost perfect (Russell Madden in Atlas Shrugged only had to tweak a few things to make it ideal).

But though weakly pro-IP, most libertarians never gave the issue much thought, assuming that it was an arcane and technical type of property right whose details were best left to experts. The arguments for IP looked similar in structure to those for regular property: there were principled, natural-rights-type arguments based on justice and the merit of production and “creating value”; and there were utilitarian arguments that said it makes sense for the market to provide incentives to innovate and create, just as it does to produce goods for a profit. But most libertarians didn’t look at it too closely; indeed most had, and still have, a hard time distinguishing between copyright, patent, and trademark — they use them erroneously and interchangeably quite often.

Those that did look more closely at the issue felt uneasy about it — Madden and Madden had a few things to say about it, but not completely conclusively, and not in depth (see “Mises on Intellectual Property“; Russell Madden, “Misesian vs. Marxian vs. IP Views of Innovation“; Russell Madden, “Hayek on Patents and Copyrights“). Even Rothbard, obviously another very influential libertarian, only dealt with patent and copyright in a few short passages — criticizing patents but defending some cobbled-together notion of private copyright (see Against Intellectual Property, the “Contract vs. Reserved Rights” section). [continue reading…]

Writes Objectivist Diana Hsieh:

Would Jesus have blown up a housing project for the poor to protect his intellectual property, as Howard Roark did? Of course not!

I think she’s right! Apparently she is under the delusional belief that admitting and praising the IP terrorism of The Fountainhead actually helps her case.

I will collect here links to various articles or discussions about how authors, etc. can make money without relying on the copyright monopoly model. Please feel free to email suggestions or add them to the comments; I’ll update this post from time to time.

• “Innovations that Thrive without IP,” StephanKinsella.com (Aug. 9, 2010)
• FDA and Patent Reform: A Modest Proposal
• Francis Ford Coppola, copyfighter
• Without Intellectual Property (MisesWiki) (“How would the world look like without Intellectual Property? What are the current success stories and possible alternatives if some or all forms of IP were repealed (or became unenforceable)?”)
• Conversation with an author about copyright and publishing in a free society
  • Kinsella on Protecting Value and Harry Potter (Youtube) and Kinsella on Music Industry Business Model (Youtube)
• Writers Can Prosper Without Intellectual Property, by Gennady Stolyarov II
• Fantasy author [Brandon Sanderson] raises $19 million on Kickstarter in two days to self-publish new novels (March 3, 2022)
• Techdirt: Author Using Kickstarter To Offer His Book To The Public Domain, And Help Other Creators To Do The Same;
• Unglue.it Sets Books Free After Authors Get Paid;
  • see also Masnick, Amazon Stops Processing Payments For Crowdfunding Platform For Creative Commons Books
• Murakami Releases His Own eBook Without His Publisher
• Techdirt, Reinventing Book Publishing: Building Real Communities, And Only Holding Rights For Three Years
• Unbound: connecting authors to readers to publish books with no middleman
• Mike Masnick, “The Future Of Music Business Models (And Those Who Are Already There) Culture,” Techdirt (Jan. 25, 2010)
  • see also Michael A. Carrier, “Copyright and Innovation: Responses To Marks, Masnick, and Picker,” Wis. L. Rev. Online (2013)
  • Reminder: Big Concerts Are Not All Of The Live Music Business
• Patreon: The Crowdfunding Upstart That’s Turning Freelancers Into Superstars, Wired
  • see also Mike Masnick, Cool New Platform For Supporting Artists: Patreon, From Jack Conte
• Christopher Sprigman on creativity without copyright
• The Creator-Endorsed Mark as an Alternative to Copyright
• Innovation in the gaming business model: Humble Indie Bundle (computer games, music, and software examples)
• How Photographers Can Make Money without Copyright, by Lorin Partain
• Tom Palmer, Technological Alternatives to Patents and Copyrights
• The Creator-Endorsed Mark as an Alternative to Copyright
• Funding for Creation and Innovation in an IP-Free World
• Would the Absence of Copyright Laws Significantly Affect the Quality and Quantity of Literary Output?, Julio H. Cole
• Power to the Pixel 2009: Nina Paley (Youtube: A FREE DISTRIBUTION CASE STUDY: SITA SINGS THE BLUES: If its free, how do you make money? Seven months after the Copyleft release of her animated musical feature Sita Sings the Blues, Nina Paley presents the second round of hard data from the project. The more the audience freely shares the film, the more they purchase DVDs, theatre admissions and merchandise. See the ££ numbers that prove it.)
  • See also Paley’s interview on FreeTalk Live on 7/28/10 (last 20 minutes or so);
  • Understanding Free Content; and
  • What’s Stopping You? (Competition as free market research)
• Johanna Blakley: Lessons from fashion’s free culture (TED Talk)
• Flattr, “a social micropayment platform that lets you show love for the things you like.”
• Mike Masnick, TechDirt, on “pay what you want” systems: Pay What You Want Works Much Better With A Charity Component
• “An Alternative Information Economy” section of Are “Intellectual Property Rights” Justified? (2000), by Markus Krummenacker
• Boldrin and Levine Against Intellectual Monopoly

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See my comments in the last post at the end. Thoughts? Very speculative, but the kind of ideas I’ve been mulling over for some time:

http://blog.mises.org/13370/seinfelds-elaine-is-anti-ip/comment-page-1/#comment-705228

Jay Lakner July 26, 2010 at 11:24 pm

Ok let’s try this again, but with a different approach.

An author, let’s called him Adam, wishes to sell his book but he only wants official copies to be in circulation.
His intent is to prevent people from duplicating his book.
The means by which he tries to achieve this intent is by selling each copy with a contract whereby the buyer is prohibited from performing actions that duplicate the book.
A careful study of cause and effect demonstrates that if nobody violates the contract, then his intented aim will be fulfilled.
One of the buyers of the book violates the contract and spreads copies out to others.
A third party, who I’ll refer to as Patrick, finds one of these copies in his possession.

Patrick knows that the only reason this copy exists is because of a previous violation of contract.
Patrick knows that Adam’s intent in forming the contract was to prevent free copies from circulating.
Patrick knows, through cause and effect, that had no violation of the contract originally occurred then Adam’s intent would have been realised.
Patrick knows, through cause and effect, that if he were to further duplicate this copy, the result would be in violation of Adam’s intent.

With all this knowledge of the situation, is Patrick allowed to duplicate his copy?

An otherwise peaceful action can be illegal if the actor has knowledge of certain criminal actions that preceded it. The intent to copy is not illegal. However the intent to copy, in knowledge of the contract violations that preceded it, could very well be considered illegal.

Stephan Kinsella July 27, 2010 at 12:42 am

Jay Lakner July 27, 2010 at 1:26 am

“Unrealistic. First, suppose Adam reads the book in his living room and across the street, a neighbor with a telescope photographs every page. well here the buyer didn’t “duplicate” it, so he is not in breach, and the neighbor has no contract.”

I’m first only looking at the most extreme and simplified case. If I can find a justification for preventing third parties from duplication in a simple case, then and only then will I bother to look at more complicated examples.

Therefore, let’s assume that the contract stipulates that the buyer may only view the book in an enclosed windowless room. Also let’s assume that the contract stipulates that the buyer may not discuss the book with anyone.

“I would say that according to interpretation 2 of the contract Patrick knows he holds in his hands property of Adam and that he is not permitted to do X Y and Z wiht it. So he may not duplicate it.”

It seems I didn’t make the situation clear enough. My apologies. In my example, Patrick holds an illegitimate copy of the book. I’m asking whether he can duplicate this copy … even with full knowledge of the crime committed to bring this copy into existence and full knowledge of the contractual agreement between Adam and the buyers.

“Further, if Patrick first saw information in the book before being aware of who owned it, then any information he already got, he is free to use, since he did not get this by trespass.”

Like I said, Patrick hold an illegitimate copy of the book but he has full knowledge of who the original author is and full knowledge of the original contractual arrangement between Adam and the buyers.

“However, this is not a good hypo.”

Like I said, I’m presenting a very extreme, yet simplified case. I’m trying to discover whether it is at all possible, even in extreme cases, to justify preventing third parties from copying a book.

Reply

Stephan Kinsella July 27, 2010 at 7:41 am

I’m first only looking at the most extreme and simplified case. If I can find a justification for preventing third parties from duplication in a simple case, then and only then will I bother to look at more complicated examples.

The problem is that the simple case is not enough, since all you need is one way out and then the game is over.

Also let’s assume that the contract stipulates that the buyer may not discuss the book with anyone.

Ahhh, but this is not a use of the book. This is something the buyer does afterwards. This is an attempt to control his actions by contract. This can only be contract type 1 that I specified above, not contract type 2. That is, the buyer can agree to pay money damages to Adam IF HE discusses it with someone. But technically speaking his discussing it with a third party is not any type of trespass (I discuss this in detail in http://www.mises.org/journals/jls/17_2/17_2_2.pdf ).So, this is one huge problem. In fact if buyer has a photographic memory there is no way to prohibit him from writing down a copy of the book using his memory. All you can do is impose a fine on him for doing so. It cannot be regarded as trespass. (This is assuming rights are inalienable, as Rothbard said, and that contracts are merely transfer titles to alienable proper rather than “enforceable promises”.)

It seems I didn’t make the situation clear enough. My apologies. In my example, Patrick holds an illegitimate copy of the book. I’m asking whether he can duplicate this copy … even with full knowledge of the crime committed to bring this copy into existence and full knowledge of the contractual agreement between Adam and the buyers.

Okay, I did miss that. I didn’t read closely enough. I thought it was the same copy C1 purchased. Okay: So Adam sells legitimate copy C1 to Buyer B1. Buyer B1 slaps it on a photocopier and makes bootleg copy C2. Patrick finds C2.Okay, there are two ways now to interpret this.

First, let’s assume that the copying was an actual prohibited use of C1. This means it was like a type of trespass. I suppose–and here I’m being generous in your favor–we could assume that Adam and B1 have various subsidiary title transfers, one of which is something like this: “B1 has no right to use Adam’s book C1 except to read it; he may not duplicate it; if B1 attempts to duplicate C1, this is regarded as trespass, and further, B1 hereby transfers to Adam the title to any bootleg copy thereby produced.”

[one problem here is that B1 could use Patrick’s property to make C2, so that the title transfer back to Adam would not work. But skip this for now.]

Then B1 is in possession of two physical objects, C1 and C2, each of which is owned by Adam. So then Patrick is in possession of C2, and we resume where I left off earlier just as when Patrick was handling C1.

The other way to interpret it is that by making C2, B1 owes money damages to Adam, but C2 is not Adam’s property. In this case, there are no restrictions whatsoever on Patrick [unless we assume that in addition to money damages, B1 agrees to a type of title transfer whereby he retains ownership of C2 and only grants patrick readin-rights, etc., and/or C2 is transferred in title to Adam… but this is like the above case.]

Like I said, I’m presenting a very extreme, yet simplified case. I’m trying to discover whether it is at all possible, even in extreme cases, to justify preventing third parties from copying a book.

I think it is: where the phyiscal object is still owned by the author, and the third party is aware of this. In this case his use of the book in ways not permitted by the owner is arguably a trespass, much like if you rent a Hertz car for normal vacation purposes and then you use it in a way not permitted by the rental contract, this is (or should be) viewed as a type of trespass (misuse) of the other’s property.

I have considered this possible contractual mechanism long ago, and concluded it’s flaccid because there are still too many ways for the information pattern to leak. Once this happens there is no more “hook” to ensnare third parties.I think a better contractual scheme would be to try to get a large swath of society contractually part of some copyright regime. For example all the big media companies band together to do something like this: every DVD, CD, you purchase; every MP3 song you download from iTunes or elsewhere; every movie theater ticket you purchase-they all come with a contract that says: “buy buying this I hereby agree to abide by the rules of the Copyright Regime for life, said rules specified in detail at [URL].”

And then at the site, it tries to set up a set of penalties (damages) if you violate the “private copyright” “rights” of any of the Cartel’s content creators. So, imagine this cartel has signed up 100,000 various creators–artists, musicians, actors, film studios, etc. So every Lady GaGa CD, every Sony movie, etc.–they are all part of this. If you want to EVER buy just one of these services or products of a member of the cartel legitimately–say, go to a movie, buy a licensed Teeshirt, buy a DVD, rent from Netflix, download a movie from pay per view, and so on–you have to agree to the Private Copyright Rules. One you do this (let’s assume the validity of such a contract even though I think it is not obvious that it is valid), now you are stuck. Even if you don’t see Star Wars but are aware of the plot, you can’t make a movie based on the general plot or character because you have now agreed that, IF you do this, you automatically trigger a payment of a million dollars damages to George Lucas. Etc.Instead of Walter Block’s Murder Park, it’s like IP World. The problem is you only need a couple of holdouts who just refuse to partake of any of this cartel’s merchants. Then one of them bootlegs the Lady GaGa song, and puts it on the Internet (assuming the ISP has not also become part of this cartel!). Now, consumer who have not yet signed away their IP freedom by signing the cartel’s contract, can use the bootleg stuff instead. You can imagine the amount of bootleg material available like this, growing over time–just as is happening now if you compare Pirate Bay to legal distribution channels. And thus, there would be less incentive for consumers to join the draconian private IP cartel, and they would get less customers and a reverse snowball would happen; it would shrivel and die.Maybe. And/or, the Cartel would have to impose VERY LIGHT and reasonable restrictions in its IP Contract–maybe it lasts for only a year or five (your membership in it); maybe the IP protection lasts only a year or three; maybe it covers only literal infringing, not all these crazy derivative rights; maybe the damages are reasonable and are tantamount to the price you would pay to purchase the song rather than $10,000 per song as is the case now.

If THIS were the fine print, maybe you would be okay with signing it since it’s minimal and reasonable, temporary etc. Not draconian.I would view this as analogous to the media companies now, lowering the price of song downloads to a nickel, movie downloads to a buck, book downloads to fifty cents, and so on — to rates at which they make about the same profit per copy sold as they did in the past with physical media, assuming increased volume because of the lower price — in effect passing on the savings of the omitted physical media cost to the consumer. If media companies did this now, it would gut the need for piracy. But they are too stupid and dinosaur like to do this. So they feed piracy.

Anyway, I do imagine that various cartels like this would be attempted in a free market and they should be permitted to try–antitrust law should not stop any such collusion, of course. I just don’t think it would work, in the end, to set up any kind of society-wide draconian IP system like we have now. It would have to be limited in reach, time, duration, scope, and penalty, to have a chance of having any traction. but if it was, it could possibly form a little bubble where the content companies make some money off of the set of consumers they have brought into this bubble. I just think it’s better to do it by the power of attraction, like google does with its ecosystem or like Apple does with its ecosystem, say, than by strong arm tactics.

I’ve thought about all this a long time but haven’t written much about it yet since this is so speculative. Thoughts?

Good stuff: Open Letter to Journal Reviewers.

Dear Reviewer,

Thank you for taking the time to serve as a reviewer for the journal to which I have submitted my paper. Thanks, too, for agreeing to serve as the reviewer of my submission in particular. When we serve as reviewers, we do the profession a great service. The integrity of our profession in large measure depends on competent and conscientious blind review. So, once again, I thank you very much.

However, I have noticed in recent years a marked decline in the quality of the referee reports I have received in response to my journal submissions. Now, of course, maybe the way to explain this is that the quality of my work has declined in recent years. I suppose that’s possible, but I don’t think this could explain the phenomenon– I’ve seen and received high-quality reviews of poor submissions. These are reviews that, despite the ultimate negative judgment regarding the submission, nonetheless do a good job of explaining the weaknesses of the paper, point to definite defects, raise well-targeted objections to actual claims made in the paper, and give a detailed assessment of where the paper’s argument stands vis-a-vis the state of the art in the literature. In short, a high-quality review is a review of the submitted paper, not an opportunity for the reviewer to react to or muse over the paper’s topic.

So I offer a few simple steps that I urge you to consider taking in preparing your review:

1. Give a definite judgment. If the paper is hopeless, say so. If the paper needs significant revision before it could be even in the ballpark of publishibility, say that. If the paper is out of touch with the current literature, say (roughly) what that literature is. If the paper is sound, but not that interesting, say it. And be clear about whether you recommend R&R rather than conditional acceptance. And so on.

2. Before launching into your critical analysis of my paper, provide a paragraph summary of what you take to be its main thesis and argument. This is easy to do, and it’s a great help to the author (I suspect it helps the editor as well). It helps the author to see whether your ultimate judgment regarding the paper is based on a sound reading of it. It helps the author to gauge whether he or she has been clear enough in writing it. Sometimes reviewers reject papers that they misunderstand, and sometimes this misunderstanding is due to the author’s carelessness in framing the paper. Sometimes reviewers misunderstand the paper in such a way that their critical comments are entirely beside the point. Sometimes a R&R decision is based on reviewers who misunderstood the paper; in this case, their suggestions for revision are really suggestions for writing a different paper. And it takes authors a lot of time to figure out how to interpret a reviewer’s comments. A lot of time could be saved if you just state up front what you understand the paper to be about. It’s easy.

3. In giving your critical analysis, you should of course be as forceful as possible, no matter what ultimate decision you recommend. But please be as specific as possible. When you attribute to the author a claim that you think is objectionable, identify the place in the paper where the author makes the claim. And whenever possible, quote what the author actually says. Do not relay on your impressions or your rough sense of what the author claims.

4. Review the paper that the author has written. Whether you believe that some other approach than the one the author has taken is superior is irrelevant. In fact, it’s not clear what one means by terms like “approach,” “methodology,” “discourse,” or “tradition.” It is not clearly a criticism of a paper to say that the author “should consider joining a different conversation.” Nor is it yet a criticism of a paper to say that the author “is dealing with a narrow range of interlocutors.” These remarks are little more than cryptic snobbery unless you say something about how the range of interlocutors is unduly narrow or that the “conversation” that the author is engaging in has been exhausted or proven fruitless. In other words, resist the compulsion to go “meta.” A review for a journal submission is not the place to take out your aggressions concerning the state of the profession. If you can’t do this, you should decline invitations to review.

It seems to me that these steps don’t demand too much. They can be easily satisfied in the usual a three to five paragraph review.

Sincerely,

Author

As a supplement to the post The L. Neil Smith – FreeTalkLive Copyright Dispute:

My reply to Cathy, Neil Smith’s wife: http://forum.freekeene.com/index.php?topic=3502.msg39201#msg39201

Cathy, my only focus here is the claim that IP is justified. Neil’s latest articles is not a clear argument in favor, but it seems to rest on the idea that you own any pattern you create. But this is not a libertarian principle and in fact if people owned patterns they created then it would undermine all property in physical things. He implies we would have no innovation without IP–which is clearly untrue. We might have less, but not zero. So then the argument is we need IP to make sure we have more innovation. How do we know the value of that additional innovation is worth the cost of the IP system? How we do know even that higher level of innovation is enough? Some–even libertarians–think it’s not so they go even further and support tax subsidized innovation awards to spur even more innovation.

I am a patent lawyer, and a libertarian (and a huge fan of your husband’s novels). I used to be pro-patent, but when I searched for a more solid foundation for it, I finally realized I couldn’t, and that the reason was I was trying to justify the unjustifiable. Granting rights in ideas really means giving the idea-creator a veto-right over how other people use their own bodies and property. It’s simply unjustifiable. You do not own “whatever” you “create”–you own scarce resources for which you or an ancestor in title were the homesteader. [continue reading…]

see KOL059 | Libertarian Parenting—Freedomain Radio with Stefan Molyneux (2010)

Update: my TLS blogpost Stefan Molyneux’s “Libertarian Parenting” Series; and my post Montessori and “Unschooling”.

FDR1689 Libertarian Parenting – A Freedomain Radio Conversation with Stephan Kinsella

Posted: Thu, 1 Jul 2010 15:00:00 GMT

Play Now

Two libertarian parents discuss how to best raise confident and freethinking children, including discipline without aggression, Montessori education, resolving conflicts and teaching skepticism and rationality.

No, not Obama: Bill Clinton, who was, after all, the nation’s first black president. Here he is, as I predicted here.

The Supreme Court handed down this term’s final four decisions today: Christian Legal Society Chapter v. Martinez, on public university limitations on a Christian student group’s rights of association; the McDonald v. Chicago case incorporating the Heller gun decision against the states (Huebert’s discusssion); Free Enterprise Fund v. Public Co. Oversight Bd. (a Sarbanes-Oxley decision); and Bilski v. Doll, a much-anticipated patent case.

Patent law is mind numbingly arcane, technical, and boring, so let me simplify as much as possible. This case was about what the legal test should be to determine whether certain processes can be possibly eligible for patent protection. For typical practical technical or industrial processes, it’s not a difficult question. But for “business-related” methods, such as the one here–which had to do a way for commodities buyers and sellers in the energy market to hedge against the risk of price changes by following a certain mathematical formula–the question gets trickier. Courts are leery of opening the door all the way because then we’d be swamped in even more ridiculous patents than we are now (such as the attempt by Dustin Stamper, President Bush’s Top Economist, to secure a patent regarding an application for a System And Method For Multi-State Tax Analysis, which claims “a method, comprising: creating one or more alternate entity structures based on a base entity structure, the base entity structure comprising one or more entities; determining a tax liability for each alternate entity structure and the base entity structure; and generating a result based on comparing each of the determined tax liabilities”).

The Court of Appeals for the Federal Circuit (CAFC) tried to do this by adopting a more rigid test than had been used before. They said that a process could be patented only if it (1) it is tied to a particular machine or apparatus, or (2) it transforms a particular article into a different state or thing–this is the “machine-or-transformation test.” Based on this test, the claimed business method was rejected. The problem is, this test is not in the Patent Act. So the Supremes had to take a crack at it. Now I have mentioned this case before, in The Arbitrariness of Patent Law; Supreme Skepticism Toward Method Patents; and Radical Patent Reform Is Not on the Way. This is one of these cases that had patent lawyers crying crocodile tears, gnashing their teeth, acting as if this was just part of the terrible and radical–radical!–movement to scale back patent rights. Anyway, I predicted:”I suspect the Court will choke back a bit on software and business method patents–but not too much.” It was obvious from the oral arguments that the Court saw how ridiculous it would be to have an open test that allowed a lot more types of processes be eligible for protection. You could have patents on anything. So they want to choke back on this, and so did the CAFC. Unfortunately, the patent law is there. And the judges have to interpret this mess. It’s not their fault, really. I don’t blame them for this impossible task. As I noted in a recent post, [continue reading…]

From my facebook status: “Now that Sen. Byrd, who apparently never held a real job, has assumed room temperature, I hope Obama says something nice about his fellow state-critter, so that we can do a blogpost with the headline FIRST BLACK PRESIDENT EULOGIZES KLANSMAN.”