MLM Directory

Are Patents “Monopolies”?

On occasion you get some defender of patents who is upset when we use the m-word to describe these artificial state-granted monopoly rights. For example here one Dale Halling, a patent attorney (surprise!) posts about “The Myth that Patents are a Monopoly” and writes, ” People who suggest a patent is a monopoly are not being intellectually honest and perpetuating a myth to advance a political agenda.” Well, let’s see. First, see my post Epstein and Patents, noting that the pro-patent Epstein writes: Patented goods are subject to a lawful monopoly created by the state in order to induce their creation. No one thinks that new pharmaceutical drugs will be invented by private firms that cannot receive a rate of return sufficient to recover [various costs]. … The legal monopoly granted by the patent is the only mechanism that allows the producer to recover those fixed costs…. Is the pro-patent Epstein being dishonest? And see my comments (1, 2) on The Three Stages of Invention post, excerpted below:First, as to whether patents are monopoly grants–hell, even the feds admit this: “Section 154 and related provisions [e.g. Sec. 271] obviously are intended to grant a patentee a monopoly only over the United States market….” U.S. Supreme Court, Deepsouth Packing Co. v. Laitram Corp., 406 U.S. 518 (1972). See also: King Instr. v. Perego, by the Court of Appeals for the Federal Circuit (“Congress made the policy choice that the “carrot” of an exclusive market for the patented goods would encourage patentees to commercialize the protected inventions so that the public would enjoy the benefits of the new technology during the patent term in exchange for granting a limited patent monopoly. In other words, the public expected benefits during “‘the embarrassment of an exclusive patent as Jefferson put it.’” Graham v. John Deere Co., 383 U.S. 1, 10-11 (1966).) See also Engel Ind. v. Lockformer Co. (“We hold that the disputed royalties provisions do not inappropriately extend the patent monopoly to unpatented parts of the patented system”); Carborundum Co. v. Molten Metal Eq. Co. (“A patentee, in demanding and receiving full compensation for the wrongful use of his invention in devices made and sold by a manufacturer adopts the sales as though made by himself, and therefore, necessarily licenses the use of the devices, and frees them from the monopoly of the patent.”) http://blog.mises.org/10272/are-patents-monopolies/ P:S: Well I always knew and believed that patents were part of a Monopoly scheme. So this cements it for me I am definitely an Austrian Economist.

Public Comments

1. Yes, they are. Intellectual property can't be "stolen" because the originator always retains the original idea, technically-speaking. Give credit where credit is due, but copyrights and patents are government-issue monopolies.
2. Somewhat, but they are allowed for a short time only
3. Yes, they're (temporary) monopolies. Sometimes patents monopolize parts of the market that nobody has any business monopolizing, like tax strategies. There are a finite number of tax laws on the books and strategies are just interpretations of existing laws, but people have actually patented these strategies.
4. Yes, Rothbard covers this extensively in Man, Economy, and State and makes quite a case. Copyrights are acceptable but patents are just ludicrous.
5. Of course, if an idea exists and some entity says you can't use it because you didn't originate that idea is not just a monopoly, but a protected monopoly.
6. I think the question becomes whether one has the right to solely profit off of their intellectual property for a certain amount of time, and I think they do, so I don't have much problem with how the system is set up now.
7. Of course patents are monopolies. That's exactly how they're intended to function--as temporary monopolies. But without the opportunity to have such a monopoly, what would be the incentive for private enterprise to incur the huge R&D expense over many years that is necessary to develop new ideas and inventions? Why would Pfizer, for example, bother to spend billions developing a new cancer drug if it knows that the product will be copied by another company that made no R&D investment? The drafters of our Constitution expressly intended to create temporary monopolies through patents so as to encourage innovation. It was one of their best ideas, and this country has benefited enormously from it.
8. Ah, George Washington, you apparently do lie. This question was plagiarized, which is outrageously ironic in light of the topic. See the original article by Steven Kinsella of Mises.org: http://blog.mises.org/10272/are-patents-monopolies/ After submitting my answer, I planned on reporting this as abuse. But in the spirit of Kinsella's outlook on IP, I'm letting the question stand.