Topic: Telecom, Internet & Information Policy

Patent Rent-Seeking

When I worked in Cato’s DC offices a couple of years ago, I always found it kind of depressing to go to lunch on K Street and see thousands of smart, attractive young men and women crowded around me, the vast majority of whom worked as lobbyists. They were people who otherwise might have been entrepreneurs, journalists, accountants, or doctors, creating wealth and improving society. But instead, they were enticed by the fat paychecks to come to Washington, where their talents are devoted to finding clever ways to enrich their clients at the expense of taxpayers and consumers.

I had a similar sinking feeling when i read this article (via Techdirt) about the flood of young scientists and engineers who are leaving the lab for careers as patent lawyers:

Demand for these specialists is being driven by an explosion in patent applications in recent years and a growing need for lawyers to protect old patents or challenge new ones. The U.S. Patent Office estimates 450,000 patent applications will be filed this year, up from about 350,000 five years ago.

Law professors say they’re seeing more students with strong science backgrounds make the leap to law, where recruiters are snapping them up.

For at least some students who might otherwise gravitate toward a science career, the promise of much bigger paydays is a powerful lure. Others say the opportunities in academia are not as certain as they once were.

“It’s an exciting area of legal practice right now,” said University of Pennsylvania law professor R. Polk Wagner. “Every year I see more and more people coming into law school with technical backgrounds.”

“It almost scares me,” said Wagner, whose proteges include Weathers. “Who’s left in the lab?”

Who indeed?

Now, I believe that some degree of patent protection is beneficial, especially for capital-intensive fields like pharmaceuticals. But we are now far past the point where the marginal patent, or patent lawyer, spurs economic growth. Quite the contrary, in recent years, the patent office has lowered patent standards so much that for the most part, obtaining and litigating over patents has become little more than a form of rent-seeking. A company obtains a patent that covers a broad category of innovation and then uses it to blackmail other companies that have succeeded in the marketplace.How else do we explain a company with no products winning a $612 million settlement from the company that pioneered wireless email? Or the company that pioneered Internet telephony fighting for its life against Verizon, a company that’s not exactly known for its innovative Internet applications? I could bore you to tears with examples of attempts to extort money from productive companies using the patent system. Every single one of those controversies was carried out by bright, ambitious individuals like those in the USA Today article, being paid six-figure salaries to find ways to obtain advantages in the courtroom where they weren’t able to prevail in the marketplace.

The Supreme Court’s recent Teleflex decision should reduce this problem somewhat by raising the bar for patent obviousness. But more fundamental reforms are needed as well. For a start, we should be asking whether certain categories of innovation require patent protection at all. Software and business methods are two obvious choices. Neither category was eligible for patent protection before the late 1980s, and there was certainly no shortage of innovative new software or business models during that time period.

REAL ID Update

Lots of interesting things continue to happen with the REAL ID Act, America’s faltering national ID law. Passed in May 2005, it would have states issue drivers’ licenses and IDs to federal standards by May of next year.

The count of states rejecting implementation of this federal surveillance mandate has now reached 11, with Missouri, Georgia, and Nevada most recently joining the list of states opposed.

Interestingly, Department of Motor Vehicle bureaucrats in Nevada continue to move forward with REAL ID planning, despite the opinions of the state’s legislature. According to a Federal Computer Week article posted today, “Nevada’s Department of Motor Vehicles … is investigating facial recognition and various methods for sharing driver’s license information with other states and the federal government.” This, despite the legislature consistently cutting funding for implementation and passing legislation urging Congress to repeal REAL ID. But what’s a legislature to stand in the way of bureaucrats doing what they want to do?

Activity in other states continues. In Michigan, Rep. Paul Opsommer (R-DeWitt) has introduced a resolution urging Congress to repeal REAL ID. This has earned him plaudits from Lansing State Journal columnist Derek Melot, whose recent blog post about Opsommer’s bill was called “Somebody gets it.” Indeed Opsommer does. (Be sure to read the comments. Someone with behind-the-scenes knowledge has offered his take.)

At the federal level, Title III of the ballyhooed immigration reform bill might as well be called REAL ID II. It would spend $300 million trying to get states to implement the REAL ID Act. (This is both too much and too little. Too much, because REAL ID shouldn’t be implemented. Too little because implementation will cost the states and people over $17 billion dollars.) Most importantly, possession of a REAL ID-compliant license or ID card will be a condition of getting federal permission for working if Title III passes as written. The Department of Homeland Security is using immigration reform to try to resurrect its failed national ID plan, described by Senate Homeland Security Chairman Lieberman as “unworkable” when it originally passed.

Immigration Reform = National ID?

Yesterday’s “breakthrough” on comprehensive immigration reform is indeed salutary. But as the Washington Post editorializes this morning, “It’s critical that in addressing one set of immigration problems, the legislation doesn’t create a new set.”

One potential problem is the creation of a national ID in the process of expanding worker surveillance for intensified internal enforcement. This was the subject of a hearing in the House Immigration Subcommittee at which I recently testified.

Like many, I’ll be watching carefully to see if a national ID system is part of the ineluctable logic of the immigration reform deal that has been struck. Ineluctably, I’ll be calling it like I see it.

REAL ID Is a Dead Letter

Ten states have now passed legislation rejecting the REAL ID Act, the national ID law Congress passed without a hearing in May 2005.

Massachusetts may be next. According to the Boston Globe, the registrar of motor vehicles in that state issued scathing comments to the DHS on the regulations implementing the law. Apparently, there were 12,000 comments in total – quite a few of them negative, I’ll wager.

I have testified on REAL ID twice in the U.S. Senate, both times calling the law a “dead letter” – once in the Committee on Homeland Security and Governmental Affairs and once in the Judiciary Committee.

The White House Privacy Board Hasn’t Gotten Everything Right

In a recent post, I lauded the White House Privacy Board for its use of an analytical framework similar to the one I helped produce for the DHS Privacy Committee. It wasn’t a total endorsement, and I covered my … tracks by saying, “This doesn’t mean the White House Privacy Board has gotten everything right, of course. I have no doubt that they could have done better.”

Someone else shares that view, someone who should know. Lanny Davis, the lone Democrat on the Board, has resigned. Newsweek reports that he complains of “substantial” edits of the board’s report in his resignation letter.

Davis charged that the White House sought to remove an extensive discussion of recent findings by the Justice Department’s inspector general of FBI abuses in the uses of so-called “national security letters” to obtain personal data on U.S. citizens without a court order. He also charged that the White House counsel’s office wanted to strike language stating that the panel planned to investigate complaints from civil liberties groups that the Justice Department had improperly used a “material witness statute” to lock up terror suspects for lengthy periods of time without charging them with any crimes.

I am not a bit surprised. Serving as I do on a similar board, I am keenly aware of the pressures to conform the group’s findings to the prevailing view at the sponsoring agency. So far, the DHS Privacy Committee has been pretty good at resisting that, but it is not fully independent by any stretch.

This all is a reminder: Privacy will never be protected by government-constituted boards or officials. It is a product of individuals having the power to control information about themselves and exercising that control consistent with their interests and values. Don’t ever think you’ve got privacy because there is a White House Privacy Board or a DHS Privacy Committee.

As If Canada Were a Separate Country

Jim Harper adequately documents (1) how the State Department is bungling my wife’s application for a new passport, which one now needs to fly to Montreal (for some reason), and (2) my appeal to the opposite sex. 

I would add only that, while David Boaz is correct that a fence between the U.S. and Mexico is not exactly Berlin Wall-esque (“The Berlin Wall was designed to keep citizens in”), this bone-headed rule that one cannot fly to Canada without a passport might be: it actually does make it more difficult for American citizens to leave.