As I noted in Against Intellectual Property, in her confused and flawed attempt to justify patent and copyright monopolies, Ayn Rand mistakenly assumed that under US patent law, the first inventor to file has priority over later filers, in the case of multiple independent inventors of the same idea. Then she bent into contortions trying to defend such an obviously unfair, and artificial and arbitrary, rule. As she wrote:

As an objection to the patent laws, some people cite the fact that two inventors may work independently for years on the same invention, but one will beat the other to the patent office by an hour or a day and will acquire an exclusive monopoly, while the loser’s work will then be totally wasted. This type of objection is based on the error of equating the potential with the actual. The fact that a man might have been first, does not alter the fact that he wasn’t. Since the issue is one of commercial rights, the loser in a case of that kind has to accept the fact that in seeking to trade with others he must face the possibility of a competitor winning the race, which is true of all types of competition.

It’s interesting that she recognizes the patent is a monopoly (see my post Are Patents “Monopolies”?), but her defense of the first to file rule makes no sense whatsoever, and she even has the chutzpah to classify as competition the race to be awarded by the state an anti-competitive patent monopoly privilege. If anything, she should have argued that where there are multiple independent inventors, this shows the invention was inevitable, that its time had come, that it is too obvious for anyone to deserve a patent in the first place.

In any case, her assumption was wrong: the US system at the time was a first to invent, not a first to file, system–unlike patent systems around the world, which she may have been thinking of. That is, if A invents X first, then B independently invents X later, and they both file patent applications for X, then in a so-called “interference proceeding,” A would get the patent, not B, even if B filed first. ((Some have argued that the US patent system briefly first to file, for a few years in its inception right after the Constitution’s ratification, until changed to the first to invent system. But it was definitely first to invent in Rand’s lifetime.)) But she thought it was first to file, so found a way to justify what she thought was the current statutory implementation of the Constitution’s patent clause. After all, the US Constitution and legal system were in her eyes almost perfect, almost Objectivist (to be fair, it’s not hard to see why she could make this naive mistake, coming from Soviet Russia, compared to which the much freer US system must have seemed like paradise)–which is why Judge Narragansett at the end of Atlas Shrugged only has to make a few tweaks to the US Constitution to make it Perfectly Rational:

The rectangle of light in the acres of a farm was the window of the library of Judge Narragansett. He sat at a table, and the light of his lamp fell on the copy of an ancient document. He had marked and crossed out the contradictions in its statements that had once been the cause of its destruction. He was now adding a new clause to its pages: “Congress shall make no law abridging the freedom of production and trade …”

It also explains why Rand initially favored eminent domain–because the Constitution implicitly authorized it (until around 1954, when Herb Cornuelle convinced her to oppose eminent domain). (I’ve been told this is indicated in Murray Rothbard’s correspondence, as I also noted in my Ideas Are Free: The Case Against Intellectual Property.)

Doubtlessly, if Rand had realized the US had a first to invent patent system, she would have found a way to justify that, and that her modern followers, realizing her mistaken assumption, are laboring to find a way to justify the first to invent system without criticizing Rand.

Well, no need to worry, modern Randian defenders of state monopoly privilege grants! For our Great Leader Obama will soon sign into law the America Invents Act, which was passed today by the Senate in an 89 to 9 vote. This patent “reform” legislation will institute a first to file system. (See the Apple Insider post US government approves patent bill in effort to reform system for the usual propaganda about how this patent reform will be good for innovation and business yada yada.) As noted in an email newsletter from the Oppedahl Patent Law Firm:

US Congress passes patent reform bill The US Senate today passed a version of the patent reform bill that had been previously passed by the US House of Representatives. The bill now goes to the White House where President Obama is expected to sign the bill, thereby enacting it into law. The bill, when enacted, will bring US patent law more nearly into harmony with the many countries around the world in which patents are awarded to the first inventor to file. (Heretofore US patent law contained provisions according to which someone who was second to file might sometimes prevail over the first filer, by showing an earlier date of invention.) The bill makes dozens of other changes to US patent law, a few of which are tied to very narrow special interests but most of which will indeed promote the progress of science and useful arts. …

Of course, this “reform” bill does not improve the patent system, nor does it make any significant changes–even the change from first to invent to first to file will make virtually no difference to inventors, and no difference to victims of patent aggression–it doesn’t matter to them whether they are sued by patentee A or patentee B for “infringing” patented invention X.

Of course the best reform would be outright and immediate abolition of both patent and copyright. But other reforms, short of abolition, could also improve matters by significantly reducing the cost of patent and copyright. Of course no such real reform is being considered, nor will the vested interests in Hollywood and Big Tech and Big Pharma allow it. On a Mises blog post last year I outlined some real reform that would actually improve matters, which I reproduce below:

January 13, 2010 by Stephan Kinsella

As I note in my article “Radical Patent Reform Is Not on the Way,” Mises Daily (Oct. 1, 2009), there is a growing clamor for reform of patent (and copyright) law, due to the increasingly obvious injustices resulting from these intellectual property (IP) laws. However, the various recent proposals for reform merely tinker with details and leave the essential features of the patent system intact. Patent scope, terms, and penalties would still be essentially the same. In the second article of this two-part series, “Reducing the Cost of IP Law,” Mises Daily, published today, I propose various reforms to the existing patent system–short of abolition–that would significantly reduce the costs and harm imposed by the patent system while not appreciably, or as significantly, reducing the innovation incentives and other purported benefits of the patent system. I list these changes below in generally descending order of importance, without elaboration, as they are discussed further in “Reducing the Cost of IP Law”:

Patent Law

Reduce the Patent Term

Remove Patent Injunctions/Provide Compulsory Royalties

Add a Royalty Cap/Safe Harbor

Reduce the Scope of Patentable Subject Matter

Provide for Prior-Use and Independent-Inventor Defenses

Instantly Publish All Patent Applications

Eliminate Enhanced Damages

Add a Working/Reduction to Practice Requirement

Provide for Advisory Opinion Panels

Losing Patentee Pays

Expand Right to Seek Declaratory Judgments

Exclude IP from Trade Negotiations

Other Changes Increase the threshold for obtaining a patent Increase patent filing fees to make it more difficult to obtain a patent Make it easier to challenge a patent’s validity at all stages Require patent applicants to specify exactly what part of their claimed invention is new and what part is “old” (e.g., by the use of European-style “characterized in that “claims) Require patent applicants to do a search and provide an analysis showing why their claimed invention is new and nonobvious (patent attorneys really hate this one) Limit the number of claims Limit the number of continuation applications Remove the presumption of validity that issued patents enjoy Apportion damages to be proportional to the value of the patent



Copyright

Radically reduce the term, from life plus 70 years to, say, 10 years

Remove software from copyright coverage (it’s functional, not expressive)

Require active registration and periodic re-registration (for a modest fee) and copyright notice to maintain copyright (today it is automatic, and it is often impossible to determine, much less locate, the owner), or otherwise make it easier to use “orphaned works“

Provide an easy way to dedicate works to the public domain — to abandon the copyright the state grants authors

Eliminate manifestly unjust provisions of the Digital Millennium Copyright Act (DMCA), such as its criminalization of technology that can be used to circumvent digital protection systems

Expand the “fair use” defense and clarify it to remove ambiguity

Provide that incidental use (e.g., buildings or sculptures appearing in the background of films) is fair use

Reduce statutory damages

Trademark