The Constitution empowers Congress to enact copyright and patent protection for the explicit purpose of promoting “the Progress of Science and useful Arts.” So copyright and patent are not rewards, not natural rights. They are incentives – private means to a public end… the scale and scope of IP rights should be determined by the degree to which they promote economic progress. Incentive theory’s incapacity to guide such determinations results in an analytical stalemate between the exclusionary rights of IP protection and the open access of free competition, a stalemate because both produce economic growth but to indeterminable degrees… taking a fall-back position, the position that maximizing the means maximizes the ends, that greater IP protection naturally leads to more invention and thus to more progress. explains the so-called propertization of IP rights, the normative shift to a Lockean entitlement from an instrumentalist (or means-ends) evaluation…
Given the indeterminate economic value of both free competition and IP rights in encouraging invention, policy analysis should begin with the presumption of free competition. In choosing between two rules or standards, policy makers should adopt the one that better expresses the policy of free competition.
When patents and other IP rights produce monopoly prices, they create welfare losses in both static and dynamic terms. In the short run, consumers pay higher prices or go to second best substitutes. In the longer run, subsequent inventors also pay higher prices or turn to second best substitutes, causing some combination of decline and path-diversion in follow-on inventive activity.In this light, a rule or policy that would strengthen IP rights should first be shown to promote greater progress than would otherwise occur.
The Federal Circuit had concluded that the Patent Act’s explicit definition of a patent as “having the attributes of personal property,” particularly “the right to exclude others from making, using, offering for sale, or selling the invention . . . alone justifies its general rule.”
“[I]n many instances the nature of the patent being enforced and the economic function of the patent holder present considerations quite unlike earlier cases.” Two examples are given: first, “industries in which firms use patents not as a basis for producing and selling goods but, instead, primarily for obtaining licensing fees;” second, “patents over business methods,” which raise significant questions of “vagueness and suspect validity.” Both examples reflect concerns that patent rights to exclude can be questionable barriers to the market entry needed for competition to flourish.
… . Product patents have been granted for purified forms of naturally occurring substances regularly since an early 20th century decision, which affirmed a grant for the purified hormone Adrenalin on the ground that it was “a new thing commercially and therapeutically.” The product patent practically encompassed the very idea of purified Adrenalin insofar as it included not only the product but its equivalents
While general information about software function has some limited value, its satisfaction of the patent disclosure requirement creates two problems. First, general claims and descriptions produce software patents that are too broad and, as a result, foreclose too much competition as functional equivalents. This problem includes treatment of business method inventions, which are typically embodied in software. Second, there is insufficient information flow for subsequent inventors. The combination is deadly: broad patent rights and little public information about them. This situation is exacerbated by the acknowledged difficulty in locating and identifying prior art in the category of computer software… The change would call for disclosure of the source code and system documentation that industry practices recognize as needed to enable subsequent work on the software.