In Part One, I addressed the argument by some libertarians that so-called “traditional property rights in land” are based in inductive, ground-up “common law court decisions,” but that intellectual property (IP) rights are top-down, artificial statutory entitlements.  Thus, for instance, libertarian law professor, Tom Bell, has written in the University of Illinois Journal of Law, Technology & Policy: “With regard to our tangible rights to person and property, they’re customary and based in common law. Where do the copyrights and patents come from? From the legislative process.” 2006 Univ.Ill. J. L. Tech. & Pol’y 92, 110 (sorry, no link).

Read the full piece here. 

In libertarian critiques of intellectual property (IP) rights, such as copyrights and patents, it’s common to the hear the claim that “traditional property rights in land” is based in inductive, ground-up “common law court decisions,” but that IP rights are top-down, artificial statutory entitlements.  Thus, the argument goes, property rights in land are rooted solely in court decisions arising from facts of the world, but IP rights are state-created monopolies that mostly serve the interests of rent-seeking special interests exploiting access to unbounded legislatures.

For those who may think that this is an improper characterization of this widespread claim about IP rights need only have attended the “Copyright Unbalanced” event at the Cato Institute on December 6, in which copyright was attacked in precisely these terms.

This oft-made contrast by libertarians between so-called “common law property in land” versus “statutory IP” is a myth that has no basis in the reality of how common law property rights in land evolved in England and then in the United States of America.

This is important, because history is very informative and provides importance evidence for inducing principles in both ethical and political theory, but when myth is passed off as history, these ersatz “historical” claims undermine clear thinking and perpetuate falsehoods.  This is especially important when these mythical claims are advanced in the policy debates, as this misleads commentators and decision-makers about the true nature of our property rights and the true foundations of our political and legal institutions.

With respect to IP rights as property rights, I and others have been explaining in our academic law journal articles for years that these “historical” claims are a myth, but we have focused only on the IP side of the myth.  For instance, I have shown with my substantial research into primary historical documents how the history of patents evolved under the guiding hand of natural rights philosophy, both in America and in England.  I have also explained, contrary to claims by Tom Bell, Jerry Brito and other libertarians, how John Locke expressly endorsed copyright in his writings and positively referred to “inventions and arts” in his natural rights justification of property in the Second Treatise (you can read my article here). Professor Justin Hughes has uncovered similar historical evidence on the side of copyright law (you can read his article here).

But I have never addressed why the libertarian argument advanced by Tom Bell, Jerry Brito and others is entirely a myth even in its claims about the historical legal development of common-law property rights in land (at least not in public, as I have done this in private email exchanges.)

First and foremost, I know it’s a myth because I teach the Anglo-American evolution of property rights in land every year in my Property class (what we call the 1L year in law school).  But I’m not unusual, as this information is in all of the Property textbooks used by property professors in every law school.  As all law students learn each year in their Property classes, the foundation of the “fee simple” in land is not court decisions, but rather a statute passed by Parliament: the Statute Quai Emptores of 1290.  This statute is explicitly identified in all Property textbooks as the foundation of the entire Anglo-American property system in land; as the most famous and widely used property textbook states, “By the end of the thirteenth century, Quia Emptores settled that the fee was freely alieneable,” and thus it explains that it was this statute that first established that “the [originally feudal] relationship between tenant and lord was basically an economic one.”

What followed in the ensuing decades and centuries were more and more statutes enacted by Parliament, further defining the scope and boundaries of many of the rights that constitute property rights in land. Here are just a few of the prominent statutes (there are far too many to effectively list all of them in a blog posting):

Statute of Gloucester (1278) (creating rights against life estate owners by the owner of the follow-on future interest or broader estate)

Statute of Uses (1535) (creating many future interests in land)

Statute of Wills (1540) (securing and creating conveyance rights in land in wills)

Tenures Abolition Act (1660) (eliminating feudal services associated with property rights in land)

Of course, the common law courts extended and applied these statutes, and developed in classic common-law fashion more legal doctrines that defined and further secured property rights in land, but it is simply an historical myth that common law property rights in land were entirely fashioned by courts, contrary to the legislatively created IP rights in patents and copyrights.  (In fact, the English common law system was heavily influenced by the Roman Law and the natural law philosophers working within the Roman Law, and of course all property rights in Roman Law were based in statutes as well.)

This same pattern in the creation and enforcement of property rights in land continued in the early American Republic. For example, early American state legislatures enacted statutes defining and securing the rights of adverse possessors, creating title recordation requirements, defining and securing property conveyance rights, defining and securing wills and the creation of future interests in land, as well as adopting statutes eliminating English common law property rights, such as the fee tail, among many others.  This pattern has continued today; for instance, most states have adopted statutes eliminating the famous property doctrine of the Rule Against Perpetuities (creating much happiness among property lawyers and law students alike), replacing it with a doctrine that goes by the acronym of USRAP (Uniform Statutory Rule Against Perpetuities). Of course, these statutes have all been interpreted, applied and extended in common law fashion by American state courts in the same way that the English common law courts did so with Parliament’s statutes.

In short, the libertarians advancing the false distinction between “common law property in land” versus “statutory IP rights” are misstating what it means when we all say that the Anglo-American property system is rooted in the “common law.”  In the technical sense of this term, the Anglo-American property system is a common law system insofar as courts have developed the law and the rationale for their decisions without having to validate these decisions by reference to a particular statute.  This is in contrast to the “civil law” system in Europe, in which all judicial decisions must ultimately refer back to a statute as the validating source of the judicial decision itself. But to say that the Anglo-American property system is a “common law system” does not mean, of course, that there weren’t statutes that were interpreted, applied and extended by courts, and as a straightforward historical fact there were many statutes enacted by Parliament that defined the foundational rights in Anglo-American property law.  The fact that statutes weren’t mandated by the Anglo-American legal system as an institutional requirement for valid court decisions does not mean that statutes did not play a substantial historical role in the creation and enforcement of property rights in land.

In sum, it’s a complete myth for libertarians to argue that IP rights are “different” from property rights in land because property rights in land developed in “common law” as opposed to “statutory” IP rights.  But it’s even worse than a myth, because this is not a false claim made in the ivory tower in a dispute between academic historians. Rather, this false historical claim is asserted in the policy debates today to advance an anti-IP agenda. Thus, it’s important to call out this misleading historical myth, as it’s being used to leverage misleading attacks on copyright and patents.  I don’t mind engaging in bracing public policy debates about whether IP rights are right or wrong — I love these debates, especially with people who share my own commitment to free market principles — but let’s at least get the basic historical facts correct in these debates.  These are facts that are not in dispute and are well known, including even to the libertarians who survived their 1L Property classes in law school and are now speaking on these issues in the academy and in think tanks.

(In my next blog posting on this topic, I’ll address how there was the exact same interplay between statutes and common law decision-making in the courts in the development of patent and copyright law.)

UPDATE: For Part 2, see here.

UPDATE: I made a few, minor copy-edits to this posting.

Filed under: truth on the market

Today, thirty-one prominent deans, professors, and former government officials who specialize in law and economics and antitrust submitted a letter to the Senate Commerce Committee supporting Josh Wright‘s nomination to be a Commissioner at the Federal Trade Commission.

The letter, which is addressed to Chairman John D. Rockefeller IV and Ranking Member Kay Bailey Hutchison of the United States Senate Committee on Commerce, Science and Transportation, strongly urges confirmation of Josh, praising him for his knoweldge and his many accomplishments.  Here’s just a small snippet:

As a young professor, Josh has a well-deserved reputation for producing rigorous, high-quality scholarship that explores important issues in competition and consumer protection policy.  His scholarly work reflects that rare professor who possesses impeccable academic and intellectual integrity in combination with thoroughgoing knowledge in economic theory, econometric and empirical skill, and knowledge of relevant legal institutions. The rigor of his scholarly work is second to none, because it is truly bottom-up, data-driven in its conclusions. As a result, his scholarly output at this early stage in his academic career, in terms of its quantity, quality, and impact, is unsurpassed within his field.

. . . .

As a result of his rigorous and scrupulous analysis of data according to well-established empirical and economic methodologies, Professor Wright is widely regarded as a top antitrust law scholar of his generation, and his scholarly efforts have had a significant impact in the academic and public policy debates.  Top antitrust and law and economics scholars, moreover, consistently cite his scholarship, and Professor Herbert Hovenkamp, the author of the leading antitrust treatise, has described Josh as a “top scholar of competition policy and intellectual property.”

I can attest that this is all well-deserved praise, as I have learned much from Josh in the years that we have been colleagues at George Mason.  I will be very sorry to lose him as a colleague, but I can think of no other better person for this position.  I wish him all the luck in his confirmation hearing tomorrow, but he doesn’t need it, because as the letter rightly concludes, his is “an easy case for the Senate’s approval of his nomination.”

Read the whole letter here.

Filed under: federal trade commission, george mason university school of law

It’s almost impossible to read an article or blog posting today about patents that doesn’t complain that “the patent system is broken.”  It’s especially prevalent in reports on high-tech patents, software patents, or the “smart phone wars.”  (I’m not hyperlinking here, because there’s just too many examples to choose between.)  In fact, the din on the increasingly clichéd statement that “the patent system is broken” is really reaching histrionic proportions.  It’s even prompted Patent Commissioner David Kappos to appeal to “those reporting and commenting on the smartphone system patent wars” to “move beyond the flippant rhetoric and instead engage in thoughtful discussion.”

Read the full piece here. 

Last week, I participated in a panel discussion on standard essential patents and antitrust at the Washington Legal Foundation.  The panel was entitled, “Standard Essential Patents: Where do IP Protections End and Antitrust Concerns Begin?”  It was a great panel, and I think everyone did a really good job at avoiding any unnecessary technical jargon in discussing what is a very complex issue.

You can read about the panel in this blog posting by WLF’s Chief Counsel of its Legal Studies Division, Glenn Lammi (who also moderated the panel discussion).

Even better, you can watch the video of the panel here.

Filed under: antitrust, federal trade commission, intellectual property, patent, truth on the market

Mark Schultz, law professor and specialist in copyright law, has written an excellent response to the Republican Study Committee policy brief on copyright law that has been making the rounds on the Internet the past several days.  Although the RSC promptly retracted the policy brief, the blogosphere has erupted in commentary on what appeared to be a radical shift in IP policy by one of the explicitly free market caucuses of GOP members.

Mark’s response is a tour-de-force, if only because in a very brief blog posting, he reveals that much of the RSC policy brief is, at best, based on assumptions about copyright that really require a lot more analytical heavy lifting than anything attempted by its author, or, at worst, simply a highly tendentious reading of copyright law and policy.

Here’s just a small taste of some of Mark’s response:

Some also see copyright as a morally suspect interference with economic freedom because they reject the contention that copyright is property. They instead vilify copyright as an odious monopoly or a government-granted privilege or subsidy.

The monopoly accusation is an elementary and persistent error in the economic analysis of intellectual property, as Edmund Kitch once explained in an article with that very title. Edmund W. Kitch, Elementary and Persistent Errors In The Economic Analysis Of Intellectual Property, 53 Vand. L. Rev. 1727 (2000). Dozens of scholarly articles, hundreds of court cases, and thousands of economics classes have repeated the claim that intellectual property grants a monopoly. As Kitch points out, the persistence of the claim does not lessen the error.

Ownership of a property right alone does not accord the owner a monopoly. The hallmark of a monopoly is market power. Owning something that is unique—whether it is a song, a story, or a house—does not give one that kind of power. Even a beautiful house in a nice location cannot command monopoly prices. The same is true of copyrighted works.

There’s more, including a great discussion about whether copyright really is justified, either morally or constitutionally, as only a social utility enhancing monopoly grant, something near and dear to my own scholarly work in the related field of patent law.  Mark concludes his response with a brilliant exposition on how, contrary to the RSC policy brief author’s claim that copyright violates laissez faire capitalism, copyright in fact makes it possible for private ordering to develop and to take root in a flourishing free market.

As Instapundit likes to say: Read the whole thing!

DISCLOSURE: Mark’s response is posted on the blog for the Copyright Alliance, and Mark and I are both members of the Academic Advisory Board of the Copyright Alliance.

Filed under: constitutional law, copyright, economics, intellectual property, law and economics, politics

When I speak on today’s “smart phone war,” I often point out to the surprise of my audience that such patent wars are nothing new.  Patent scholars call these wars by the more boring label of a “patent thicket” (proving once again that geeks like us just don’t know how to coin a good phrase).  My research into the very first patent thicket — the Sewing Machine War of the 1850s — has made me the “sewing machine guy” in the patent and tech law world.  I don’t mind; as I recently pointed out, as have others, there have been many patent wars since the 1850s, including the “diaper wars” and “stent wars” of the 1980s, which are all very well known within patent law circles. I must admit that I prefer being the “sewing machine guy” to being the “diaper guy.”

Read the full piece here.

The claim that there is a “patent litigation explosion” is a myth, but there’s a related patent litigation myth that has proven cantankerously resilient in the patent policy debates — there’s an “explosion” of patent-owners racing to the International Trade Commission (ITC) who are obtaining exclusion orders against infringers.

Well, this argument has crashed and burned against the hard facts of the actual numbers, but even before patent filings at the ITC dropped, this argument was still problematic.

The reason is that it was an example of a great game that we all learn in college: fun with statistics!  It’s the old rhetorical saw: If actual numbers don’t make something look bad, then just reframe the point as an out-of-context statistical claim and now it sounds like a complete disaster that demands immediate action by everyone—by Congress, by courts, and, given that the season is almost upon us, by Santa Claus (who should punish these allegedly rent-seeking patent-owners with coal in their stockings).

You may think I jest, but it’s common fare for commentators and academics to paint the situation in the ITC entirely in terms of statistical increases by patent-owners.  To take but one representative example from a 2009 academic article:

The ITC has become a popular forum for enforcing patents, with the number of actions increasing by nearly 80% since 2003.

An 80% increase in patent filings in six years!  This is clearly a litigation hurricane of historic proportions!  We must do something about this before the ITC is flooded like New York City was by Hurricane Sandy!

Yet, when one looks behind the statistics at the actual numbers, it’s almost laughable that numerous law journal articles, newspaper articles, and blog postings are breathlessly reporting on this as if this is a pressing policy problem in both the patent system and the ITC.  Congress even spent more taxpayer dollars holding hearings this past summer on this allegedly pressing problem, and what a waste of time this was.

Here’s the actual numbers behind the statistics: From 2003 to 2009 (fiscal year), patent filings in the ITC increased from 19 to 29.  In the ten years from 2001 to 2011, patent case filings in the ITC went from 29 to 70.  (Note the drop between 2001 and 2003, a drop that has occurred again and to which we will return shortly.)

So, commentators and academics want Congress to change the law to make it harder for patent-owners to seek relief at the ITC because patent filings increased in ten years from 29 cases to 70 cases.  Alas, 70 total cases doesn’t sound too bad, especially when hundreds of thousands of lawsuits and other regulatory cases are filed annually.  So, the easy answer to this problem is to reframe rhetorically the total cases: the shift from 29 to 70 cases is an increase of 141%!  In ten years!  Yep, fun with statistics.

But even if one thinks for some strange reason that 70 cases is a huge number of filings at the ITC, this is still an out-of-context assertion that doesn’t mean anything.  As empirical economists and statisticians always ask: What’s the baseline?

One good baseline is to compare ITC filings to patent infringement cases filed in plain-old-vanilla federal court. How many patent infringement cases are filed each year in federal court?  In 2010, the total number of patent infringement lawsuits was 3,605 cases.  Yes, you read that number right: 3,605 cases.  (That’s the last year for which we have numbers.)  And before readers jump to the conclusion that 3,605 cases is an unmitigated patent litigation explosion, this would be incorrect as well — as I explained in a previous blog posting, patent litigation rates today are approximately the same or less than the patent litigation rates from 1790 to 1860.

In sum, we’re supposed to be filled with shock and awe by the 70 patent cases that were filed in the ITC in 2011, as compared to the 3,605 cases filed in federal court.  These 70 patents cases at the ITC, we’re told, demand immediate congressional action to impose a regime change on the ITC in limiting its jurisdiction over patents.  To put it bluntly, people are getting their patent policy knickers in a twist because 1.94% of total patent infringement cases are also being filed in the ITC.  Yep, fun with statistics.

And as Billy Mays would say: But wait, there’s more!  (That OxiClean was definitely worth it.  My sneakers were never so clean.)

Lest one still thinks that the number of patent filings in the ITC is a problem, the ITC released last month its fiscal-year 2012 report on patent filings — a report that got about as much attention as a report on dryer lint accumulations in fiscal-year 2012.  Given the ongoing uproar over patent filings in the ITC, one would expect that the ITC’s report would be have been trumpeted in news articles, blog postings, and by the commentators and academics who have been singing this tune for the past several years.

Nope, not a single peep about this report has been made in the more-than-30 days since its release.  Why the silence — the deafening silence — about the most recent data from the ITC on patent filings?

The reason is simple: the facts in the latest ITC fiscal-year report don’t fit the policy narrative.  The ITC reported that patent cases filed in the ITC dropped from a high of 70 cases in 2011 to a total of 48 cases in 2012 (fiscal year).  In the statistical terms loved so much by the critics of patent filings at the ITC, patent filings dropped by 31.4% between 2011 and 2012 (fiscal years).  Now that’s an interesting statistical number about which much could be said — or, as is the case, not said and ignored in the hope that it’ll just go away.

So, what happened to the loud, incessant complaints about skyrocketing patent filings in the ITC?  Well, to paraphrase the old man at the end of every Scooby Doo episode: And I would have gotten away with it, too, if it wasn’t for you meddling facts!

UPDATE: I made some minor copy-edit changes to the text after I posted it.

Filed under: intellectual property, international trade, litigation, patent

A nice way to take a break from Election Day stress about this fingernail-biting-close election is to listen to some panelists talk about something that is truly important — software patents!

It a great panel, notwithstanding my participation, and it promises to be a lot of fun and informative.  So, call in for the teleforum and even ask a question or two of us while you’re at it.  Here’s the information:

Boon or Bane for Technological Innovation?: Software Patents

Intellectual Property Practice Group Teleforum

Although pure software patents are only a couple decades old, they have become the focus of a heated innovation policy debate. On the one hand, new technological innovation once imagined only as science fiction is now a commonplace feature of our lives—tablet computers, smart phones, wireless telecommunication, cloud computing, and streaming television, movies and songs, to name just a few of our modern marvels.  On the other hand, the high-tech industry seems awash in patent litigation, especially in the “smart phone war” between Apple, Samsung, Google, Microsoft, and other high-tech firms.  As a result of this extensive litigation, commentators in newspaper articles, in blogs, and at conferences now complain about the “problem of software patents.” Conventional wisdom seems to be quickly gelling around the proposition that software patents are a problem that demands a solution from Congress or the courts. This Teleforum panel will consider whether software patents advance development of new technological innovation or hinder this vital innovation. The panelists represent all viewpoints on this topic, and they bring their extensive academic, legal and industry experiences to bear on this increasingly important issue in the innovation policy debates today.

Featuring:

• Mr. Robert R. Sachs, Partner, Fenwick & West LLP
• Prof. Adam Mossoff, George Mason University School of Law
• Prof. David Olson, Boston College Law School
• Moderator: Prof. Mark Schultz, Southern Illinois University School of Law

Agenda:

Call begins at 2:00 p.m. Eastern Time.

Registration details:

Teleforum calls are open to all dues paying members of the Federalist Society. To become a member, sign up here. As a member, you should receive email announcements of upcoming Teleforum calls which contain the conference call phone number. If you are not receiving those email announcements, please contact us at 202-822-8138.

Filed under: truth on the market