Conservatives Should Have No Part of Patent Reform
This interview with ACRU Policy Board Member J. Kenneth Blackwell by Gene Quinn was published February 24, 2015 on JPWatchdog.com.
Ken Blackwell has been a public servant for many years. He has served as mayor of Cincinnati, Treasurer and Secretary of State for Ohio, undersecretary at the U.S. Department of Housing and Urban Development and as U.S. Ambassador to the United Nations Human Rights Commission. As a contributing editor for Townhall.com, and a public affairs commentator for the Salem Radio Network, Blackwell is a leading conservative voice in America. His commentaries have been carried in major newspapers and websites across the United States, including The Wall Street Journal, USA Today, The New York Times, The Washington Post, Investor’s Business Daily, and FoxNews.com.
In recent months Blackwell has also become a vocal critic of patent reform. In December 2014, Blackwell wrote The Conservative Case Against Patent Reform, where he argued that patent reform is just another example of crony capitalism. Then at the end of January 2015, the Washington Examiner published a letter Blackwell sent to 75 leading conservative leaders arguing that it would be extremely unwise to rush to pass patent reform as an attempt to prove Republicans can govern responsibly. Both times Blackwell cited the revolving door between Google and the Obama Administration, questioning why Republicans would want to provide Obama and Google with a legislative victory.
I recently had the opportunity to interview Blackwell. During our interview we discuss patent reform, property rights in general, the Constitution, politics and jobs.
Without further ado, here is my interview with Ken Blackwell.
QUINN: In your recent letter to conservative leaders you took a pretty hard stance against patent reform, saying that patent reform will not be good for the U.S. economy. I happen to agree with you, but would love to hear more about why you think patent reform is a mistake.
BLACKWELL: Unnecessary reform is always a mistake. And it is an even bigger mistake when it threatens the very foundation upon which our country was built —- a foundation of entrepreneurship and innovation. This so called patent reform initiative does exactly that. Our founding fathers understood the importance and sanctity of property rights. So much so, that the constitution directly protects this right in Article 1, Section 8. Today, political expediency and corporate interests are forcing this initiative even though it is unnecessary, and frankly, harmful.
The unfortunately reality is that many congressional leaders —- including Chairman Darrel Issa of the House Subcommittee on Courts, Intellectual Property, and the Internet —- are treating this legislation as a fait accompli. My letter urges Congressional leaders to resist the undoubtedly strong corporate pressure from entities like Google to simply move forward on this bill without considering the substantial harm it would impose on American inventors and our market economy. The need for congressional action is overstated and if the bill moves forward as-is, it will most certainly be a mistake.
QUINN: I know you also mentioned in your letter that patents are a constitutionally protected property right and that patents are critical to promoting innovation. There are many who simply don’t believe patents are even necessary, let alone critical, to promoting innovation. They claim patents get in the way of innovation. What is your response?
BLACKWELL: Look, there is nothing mystical or complicated about patents. Patent rights are a form of property right because a person can have ownership in something for which they worked for and invested their time and energy into. And this right goes back to a basic principle: human behavior is driven by incentives and, as such, incentives matter. The founding fathers understood that intellectual property is as critical to protect as physical property.
For example, if a person works hard to come up with a new idea or a better way of making something work, they are going to want to reap the rewards of their efforts. That is just common sense. Again, incentives drive behavior. Now, let’s say you suddenly take away the right of a person to profit from their years of hard work. What message does that send? To put it a different way, to say that patents are unnecessary is like saying to a farmer who owns a small parcel of land —- sure, spend your time exploring innovative ways to maximize your crop yield through crop rotation, hybrid plantings, and balanced nutrient feeds. But if you succeed, then we are going to give away your strategy to all the farmers with whom you compete to make a living. It is obvious as day that the farmer would not spend his days toiling away trying to find a way to be better, faster, and more efficient than his competitors if at the end of it all —- he wouldn’t be able to gain anything from it. And if you do that on a large scale, then you can suddenly have a situation where everyone is waiting around for some other person to put in all the time to come up with the next bright idea but no one does and innovation stalls. And that hampers our competitiveness not just at home, but abroad.
QUINN: Very little is actually known about why patents and copyrights were inserted into the Constitution. Most of our knowledge comes from correspondence between James Madison and Thomas Jefferson. There are no notes from the Constitutional Convention on Article I, Section 8, Clause 8. In Federalist Paper No. 43, Madison did, however, explain that the usefulness of the Congresses power to award both patents and copyrights “will scarcely be questioned.” Well, now they system is being questioned. What has happened to allow us to stray so far from the beliefs of Madison and other Founding Fathers to a point where we are questioning what they believed was self-evident?
BLACKWELL: At the time of our nation’s founding, our leaders understood that America’s greatness was linked to the principles of freedom, independence, and innovation. They took care to safeguard these values and ensure they would be cherished and protected against corruption.
Today, however, these values are under attack by companies who would benefit from driving down the value (and cost) of patents to maximize their own profits. This is short-sighted, and frankly, dangerous. For short-term financial gains, our nation’s principles are being auctioned off. The reality is that the number one corporate cheerleader for patent reform has been Google. And the Obama administration is one of Google’s strongest supporters —- so much so that there has practically been a revolving door between Google and the White House. If you agree it is a bad idea when corporate interests are in the front seat driving government policy, then you should be worried about the administration and Congress acting so aggressively to overhaul the patent system to advance the financial interests of Google and others.
QUINN: For a long time I’ve been arguing that modern day erosion of patent rights traces to the Supreme Court decision in eBay v. MercExchange. Prior to that decision victorious patent owners who proved that a valid patent had been infringed were entitled to a permanent injunction largely as a matter of right. When the Supreme Court did away with a permanent injunction as a matter of right they turned the patent system into a compulsory licensing system, which is antithetical to a property rights based system. Republicans, and in particular Conservatives, are normally champions of individual property rights, but they have been completely silent on this critical issue. Why have they been absent, or even complicit, as we watch the continued erosion of patents as a property right?
BLACKWELL: The erosion of patent rights has been slow and insidious, up until this recent turn. Whereas in the past corporate interests whittled away these rights over time, in recent years, corporations have become more aggressive and expansive in their demands. Today, corporate interests have the entire incentive structure for innovation in their cross-hairs as opposed to addressing specific areas that might need reexamination. For example, we just passed the American Invents Act in 2011. But instead of giving the system time to sort itself out, these corporations are back in Congress, hungry for yet another bite at the apple. They are well-organized, savvy, and sophisticated —- and not shy about knocking on doors to squeeze even more privileges at the expense of the rights of the American inventors. In an environment with competing demands on time and resources, many in Congress —- including Republicans —- are abdicating their responsibility to take a measured and thoughtful approach to these issues, and instead are basing decisions off of slick talking points pushed by these corporate interest groups.
QUINN: Why do you think Republicans view patent reform as tort reform?
BLACKWELL: As I just noted, the well-funded corporations behind this aggressive push for patent reform are shrewd and savvy. They know it is easy to get folks to rally behind “tort reform” because tort reform is a popular platform —- we can all agree that an overly litigious society is bad for America. And many conservatives have joined this bandwagon and are parroting patent reform as tort reform. But let’s be clear. Patent reform is not tort reform. Merely dressing a wolf in sheep’s clothing doesn’t transform the wolf into a sheep. Patent litigation has already significantly over the past year and is at a five year low. The rate of patent lawsuits has averaged around 2% of all patents for decades. As a number of experts have pointed out, this debate is not about tort reform, its about defending property rights.
So let’s call a spade for a spade. Here, we have corporate interests masquerading the drastic overhaul of the patent system as mere tort reform. Nothing could be farther from the truth. By crafting the fiction of a “litigation explosion” —- which has recently been debunked —- and linking it to tort reform, these corporate interests are cleverly trying to create a sense of inevitability. And of course it is tempting to join this popular bandwagon especially in the current Congressional climate where leadership and members alike are looking for quick wins and low-hanging fruits to demonstrate to their constituents back home that Congress is working in some areas. But this political expediency should not be at the cost of a carefully calibrated system that has withstood the test of time for hundreds of years. It makes no sense to undermine long-standing property rights to address a supposed litigation explosion that doesn’t exist with a supposed tort solution that doesn’t apply. Conservatives should have no part of this.
QUINN: How do those opposed to patent reform convince Republicans patent reform is not tort reform? How do they frame the discussion in a way to appeal to traditional, core conservative principles?
BLACKWELL: The patent system is not perfect. The reality is that there are valid concerns around bad actors, frivolous lawsuits, etc. And the way to deal with those concerns is to develop specific and targeted solutions. Overall, however, the reality is the system generally works. In fact, just in the last few weeks, a number of legal scholars and economists have published studies, articles, and opeds that counter the misinformation that the system is broken and can only be fixed by a legislative overhaul. And that is exactly what the current legislative proposals do —- they unnecessarily overhaul the entire system. Just like the other big government overhauls, this would target the whole incentive structure for innovation —- with unintended consequences – rather than address specific areas needing reform.
Traditional, conservative values include advancing free markets and minimal government interference. This so-called patent reform runs completely counter to these values. I think we need to expose the proponents of legislative overhaul for this truth. These are well-entrenched, politically connected special interests intent on pushing these initiatives for their vested financial gain. They are willing to do so at the expense of our nation’s principles, at the expense of our market economy, and at the expense of minimizing government intrusion. This message needs to go out to our conservative colleagues in Congress loud and clear.
QUINN: I don’t know about you, but I sometimes I feel that “Conservatives” forget what it means to be “conservative.” A small-c “conservative” philosophy would be to tread lightly, act cautiously, and focus on small reforms that would have the maximum positive impact, not on sweeping changes that upend the system. Make small changes and then step back and observe, making additional changes if and only if necessary. A small-c “conservative” approach in the patent area would seem to focus specifically on litigation abuse, which exists because nefarious actors are taking advantage of inefficiencies in the judicial process. There seems to be near universal support for doing something to eliminate fraudulent and misleading demand letters, which could help, but instead both Republicans and Democrats seem intent on much broader reform efforts. Why?
BLACKWELL: I couldn’t agree more. Conservatives have historically stood for minimal government intrusion. And when government involvement is necessary, we tend to support small, incremental change so that we don’t inadvertently create a precedent of government overreach. But these values have flown out this window on the topic of patent reform. As conservatives, we’ve seen firsthand, over the last few years what happens when Washington rushes in with a big government overhaul like ObamaCare and Dodd-Frank. Without a doubt, the proliferation of cease-and-demand letters is a serious nuisance. No argument there. So let’s solve that problem. Not try to dismantle the entire system. Especially a system that is designed to protect and advance innovation.
QUINN: What do you specifically think about fee-shifting provisions? It seems to me that rather than have a discussion about whether it is necessary we skipped straight to a discussion about the mechanics, as if it is obviously the appropriate thing to do.
BLACKWELL: Fee-shifting provisions is a great example of what is happening with this piece of legislation overall. Without fully understanding the intended and unintended consequences, Republicans and Democrats are tripping over themselves trying to rush to the finish line and pass this legislation without taking a moment to truly question whether it is necessary, useful, or effective. Even during the hearing last week, Congressman Bob Goodlatte and Bob Taylor engaged on whether or not there is a presumptive shifting of fees in the legislation. Although the face of the legislation suggests that there will be a shifting of fees unless the court determines otherwise, Goodlatte took pains to suggest otherwise. We all need to take a step back and really think hard about answering the “why” and the “what” before jumping into legislating the “how” and “when.”
QUINN: I know in a recent article you made the case that intellectual property theft is rampant in China, which is impossible to argue. But China’s growth presents interesting issues for the United States in both the geopolitical context and in an economic context. I personally think the Silicon Valley elite corporations that are supporting patent reform have far more to fear from Chinese corporations than they do from patent trolls. Would you agree?
BLACKWELL: With this bill, we will be doing a huge favor to countries like China who do not respect intellectual property rights and instead have built micro-economies based on stealing American innovation and producing on the cheap, thus undercutting hard-working Americans inventors. We need to be strengthening our patent system and protecting our inventors; instead we are essentially handing over our intellectual property to China a silver platter. Without a doubt, this bill undermines property rights. Without a doubt in my mind, countries like China will be anxious to see Congress push this legislation forward without realizing what a boon it will be to those who cannibalize American innovation for foreign gain.
QUINN: Shifting gears a little, you’ve probably seen the article by Jim Clifton, who is Chairman and CEO at Gallup, where he says that the 5.6% unemployment figure is a “big lie.” Clearly, there are a lot of Americans who are unemployed or severely underemployed who are not counted. Clifton says that we need a bare minimum of 10 million new, good jobs to have any hope of rebuilding the American middle class. We all know that start-ups are where those new jobs disproportionately come from, and historically high-tech start-ups and Research and Development companies provide high paying jobs. But our patent policies and initiatives seem to be favoring big-tech and punishing small business and start-ups. That strikes me as a recipe for disaster. This makes the Republican response to patent reform all the more confusing. I’d like to get your thoughts on this, and I’d also like to know what you think we should be doing from a policy or legislative perspective to help those with entrepreneurial aspirations.
BLACKWELL: Going back to one of my first points, our nation was built on a foundation of innovation and entrepreneurship. The individual inventor, the bold start-up, the daring scientist —- these are all part and parcel of the American dream. The irony is that many of the big corporations pushing this bill, which effectively dilutes patent rights, were once start-ups themselves. They benefited from the very system they are now trying to dismantle. But because it is now more lucrative to stand against patent rights than for patent rights, they are pushing Congress to pass this bill quickly and without any thoughtful review.
We need to take a strong stand against this. In order to help those with entrepreneurial aspirations, we need to put in place the right incentives to encourage risk-taking. Great ideas are often born from great sacrifice and sometimes even greater risk. Our patent system should motivate, encourage, inspire —- by protecting the fruits of the inventor’s labor and ensuring that they are able to reap the rewards of their efforts. America was founded on these very principles, and we have a duty to uphold them for generations to come.
I close by noting that several leading conservative organizations and legal scholars have expressed grave concerns about the consequences of this legislation. Without fail, this bill stifles innovation, weakens property rights, surrenders our advantage to China, and rewards Obama’s leading corporate supporters. I hope our conversation today raises awareness and encourages people to oppose big government patent overhaul.