MODIFICATIONS OF THE PATENT SYSTEM.
The following paper on Patent Monopolies is reproduced from the Liverpool Courier, partly for the sake of presenting a past phase of opinion with respect to the means of mitigating the injurious influence of the exclusive privilege contained in Patents:—
At the Social Science Congress at Sheffield, in 1865, Mr. Macfie read a paper on the following subject: “Long Restrictions on the Use of Inventions, and Obligation to make heavy Payments to Patentees, incompatible with free and fair trade.” He said:—
That the inventor has a right of use or property in his invention we do not dispute; what we dispute is his exclusive right. To give one inventor such a right is to subvert the principle by denying the right of other inventors, who may be as original, and have worked as hard, and spent as much, but who, owing to a desire to perfect their achievement a little more, or because they live in the provinces,—a day’s journey further off,—come some hours behind, and so are only second or third applicants for the coveted privilege. The State ought not, and cannot in strict justice, give a right of exclusive property; that is, power to meddle with others, and forbid them to use their valuable knowledge; except in cases where common use and enjoyment would diminish public wealth or harm a previous possessor. If the land of England were constituted common property, its productive value would be lessened, and the present possessors would be harmed; therefore, it legitimately is property. Knowledge may be, with the greatest benefits to mankind, common. God has drawn this distinction between things material or measurable (in which classification I include labour), and things mental: between land, ploughs, and the like, and the art or knowledge how to manage or make them,—that the one cannot be appropriated, and the other cannot be unappropriated, without loss to our race. En passant, do we conform to the spirit this constitution of nature may be held to commend to man?
I will not detain you by controverting the arguments of those plausible reasoners who class Patent-right with Copyright. Both, indeed, are creations of enacting law. But there is this obvious and broad distinction between them: that to grant exclusive privileges to an author interferes with nobody else’s compositions, whereas to grant them to an inventor continually conflicts with what others have done and are doing. Nor shall we spend time in discussing the merits of inventors. These, we allow, may be great, and deserve public acknowledgment. What ought rather to be discussed is the kind of acknowledgment that is most expedient. At present a very primitive mode of rewarding inventors is alone the rule—monopoly. In old times, when political economy, like the other sciences, was unknown, it was the easy, but at the same time costly, way of endowing a court favourite to grant him an exclusive right to sell or make some commodity. When, in the beginning of the seventeenth century, all other monopolies were prohibited by law, those in favour of introducers of new manufactures were spared. This exception has been found or made so expansible, that it is ruled to extend to minute processes or instruments in existing trades, so that what was intended to promote manufactures is now too frequently a hindrance. Thus the avowed object of the exception, public good, is on the whole counteracted. What we maintain is, that, admitting the monopoly attains to some extent that object, the disadvantages preponderate over the advantages. We connect this charge with another which is still more condemnatory, viz., that these advantages, limited as they are, are obtained by compromise of sound principle and by positive acts of unfairness, such as cannot be alleged against our view of the case, which is, that these exclusive privileges should be abolished.
The title of this paper says almost all I care to occupy your valuable time with. It speaks of restrictions in the use of inventions. Patents impose restrictions, nay, prohibitions. They give an absolute monopoly. Nobody but a patentee has a right to use a patented invention. It speaks of long restrictions. Patents impose their restrictions, or rather prohibitions, for the long period of fourteen years, with occasional prolongations of the term. To be denied the use of an invention for such a length of time is, now-a-days (whatever it may have been of yore), much like being denied it altogether. The title speaks of payments to patentees. These are made in all cases where the patentee allows others to use his invention. It speaks of heavy payments, because he has the right to make them heavy, and he, in practice, makes them as heavy as he can. It speaks of an obligation, and rightly, because a manufacturer who uses a patented invention is under the necessity to pay whatever the patentee demands or a jury awards, and competition may frequently compel him to use it, under penalty of losing his profits of trade, or his trade itself. It speaks of the payees as patentees, not as inventors; because in many cases (how large a proportion I cannot say) the rights are conferred on mere importers or appropriators of other people’s inventions. The title further speaks of free-trade. This freedom, which is something different from mere libre échange, ought to extend to manufacturing and all kind of labour, as well as to commerce, for, according to the great lexicographer, trade is “employment, whether manual or mercantile.” Of course it does not so extend when labour is not free, but restricted and burdened. And it speaks of fair trade—fairness is about as important as freedom. Will anybody say it is fair to tax one manufacturer and let another go free? Yet this is what Patents do. Those whom the patentee favours, or fears, or forgets, he does not tax, or taxes lightly, while on others he lays a heavy hand. But, worst of all, under the open competition to which the British manufacturer is now exposed with all the world, he often has to pay heavy Patent fees—often four, and sometimes, as I know, five, and even six, figures deep—while his foreign rivals wholly escape. How can any statesman, or member of a Chamber of Commerce, defend or palliate such gross and grievous inequalities? Unfortunately, the start that the United Kingdom has got in manufactures and shipping has done much to blind us, and keep us from seeing the strides that neighbouring nations are making, and has emboldened our legislators and financiers to make treaties, in which we consent, as a nation, to run the race of manufacturing industry weighted. The wise will call this impolicy, perhaps conceit. Let us not deceive ourselves; peculiar burdens on British traders are incompatible with free-trade; more, and worse, they are flagrant inconsistencies, subversive of our character for good sense, incompatible with reasonable ground for expecting manufacturing prosperity. The cry and principle so popular this day is belied when there is not a fair field, and there is the opposite of favour. The cause of all these evils and wrongs is the sticking to the exploded and illogical system of monopoly, as if that were the best, instead of being, as we believe, the very worst form in which acknowledgment can be made. We say enough in condemnation when we characterise it as despotic, inasmuch as it hands over British manufacturers, absolutely and without appeal, to the exactions or prohibitions of patentees and assignees of Patents; as erratic, inasmuch as in one case it occasions not gain but loss to the favourite, in another it overpowers with enormous profit, frequently the ill-luck falling to the most ingenious, and the extravagant remuneration to men of slender claims; as retarding, inasmuch as it often causes great delay in the introducing of inventions into use; as preposterous, inasmuch as it hinders the perfecting of new inventions by preventing the combination of the further improvements that others than the patentee devise or might devise; as illogical, in this among other respects, that through the far larger share which capitalists or purchasers of Patents often get beyond the pittance that may or may not reach the poor inventor, its action is but indirect and small compared with its cost as a means of rewarding and stimulating inventors; as inquisitorial, for it justifies the hiring of informers to report who and where are infringers; as unnatural, for it takes away a person’s attention from his own legitimate business, and divides it with the businesses of other people whom he must watch or teach; as cruel, for the unhappy patentee is continually liable to be engaged in costly, often ruinous law pleas, far away from home, in order to establish the validity of his Patent and to prevent infringements; as extravagant, because it gives patentees, or rather costs the public (for it is but a small proportion of the burden imposed that is the nett profit of the patentee) much more than a better system would. It is also partial, as has been stated, for its incidence is not equal on all British manufacturers, and it inflicts on them the hardship of peculiar burdens not borne by rivals abroad; and in this respect, as in the rest, it is irremediable, for equal treatment is morally impossible at home and abroad. It is quite out of the question to expect rectifying amendment in this particular, seeing only some States grant Patents at all. Among those which do, some grant sparingly or only to their own inhabitants; and to take Patents in all places where they are granted would involve the command and risking of so very much capital that few indeed, if ever any, would embrace the whole field; and, if perchance they did, the labour of superintending a business so vast, in languages so diverse and many, would require superhuman powers. The right to demand “compulsory licences” as a mitigation was suggested at the Liverpool Congress. They would be an improvement, and should be practicable, seeing something of that nature exists elsewhere, although the Royal Commission has reported against the plan. But it would be a serious mistake to anticipate from their adoption as a reform any very important relief. I hope it is possible to propose some substitute which will not be liable to these reproaches, one which will give rewards having proportion to merit, which will give them within a reasonable period, which will entail little trouble or distraction on the nation’s assumed protégé, the inventor; one which, being regulated by fixed principles and controlled by officers who will sift the wheat from the chaff, will satisfy the yearnings after awards having some proportion to merit, which now are disregarded; and which, above all, will elevate the inventor from what you will surely allow me to call his present equivocal position—that involves little or no honour, and too generally something approaching the very reverse—to a position that implies merit and gives status. I do not speak of mere honours, whether in the form of certificates or medals, or trifles, although all of these I recommend. What I have submitted already to the association, in a paper to be found in the Edinburgh volume, I repeat as still in my opinion practicable and expedient—viz., to grant national rewards in money. I would allow these to be claimed immediately after inventions are specified. It would be the duty of a competent board, after due consultation and inquiries, to award each a fair sum, within certain limits, such as prudence, combined with liberality, would prescribe for their regulation. Or, the patentee might prefer postponement of the adjudication for three years. This should be allowed, or even encouraged, in order that time may be gained for practical expression of the benefit conferred by actual use of the invention. In that case, the reward should be ampler.
This system, I am persuaded, would be found in practice much less expensive to the nation than the present system. So slight are the merits of the majority of Patents that the State would have comparatively little to pay; but the relief to manufacturers and the gain to commerce would be very great; for, however unprofitable a Patent is, it may be very effectual as a restraint and a burden. Such a system would sweep away every hindrance to the immediate enjoyment by every one of every invention, and to the combining with it every cognate improvement; a great emancipation and stimulus would at once be felt to operate. If other nations adhere to the antiquated Patent system which they have borrowed from us, we would be happily invested, in competition with them, with the immense advantage which the Swiss, for instance, enjoy over their rivals, that of being free from Patents, yet knowing the inventions of all other nations. But they would not adhere; on the contrary, they would either totally free themselves from the encumbrance, and leave us to pay the rewards, or (and this is more probable and would be more honourable) they would join in international arrangements, in virtue of which, every State contributing a little, inventors would receive large emolument, and trades would rejoice with them in the advent of an invention millennium, in the bliss of which workmen would share,—on whose interests, by preventing them from benefiting by use of the knowledge they acquire, Patents, I apprehend, act unfavourably.
I am aware that to persuade Government and Parliament to adopt national grants would involve indefinite, perhaps long, postponement of the happy year of release. Therefore I repeat another proposition, also already submitted to you. It is this: To grant Patents much as heretofore (not resisting any reformation that may appear expedient); but to enact that, on the demand of any manufacturer, after three years of monopoly, any invention may be valued—not, of course, on the basis of the return which it might bring—but on that of its originality, the cost incurred in working it out, its advantage, &c., whereupon it shall be lawful for a Patent Board to extinguish the grant in any of the following circumstances: 1. If the patentee’s books (which he should be obliged to keep in all cases where his fees from any individual exceed £100 per annum) show that he has already received in fees the valuation price. 2. If manufacturers and others interested unitedly pay as much as will make the price up. 3. If the State pay the remainder of the price, purchasing the invention for the nation. And I would include a condition that any one may obtain exemption for himself or his firm, by paying, say, a tenth of the price.
And now, a kind word to the amphibious class of persons whom we style inventors (we are most of us inventors, more or less, in some form or other). Try to meet the legitimate demands of manufacturers; act in consonance with the spirit of the age and the requirements of the time; and remember how, by resisting conciliatory propositions, the great agricultural, sugar-producing, and shipowning interests had to succumb to enlightened doctrines, and accept a settlement far less accordant with their pretensions. Manufacturers (with whom, as in like manner liable to be affected, I class miners, farmers, shipowners, &c.) who employ inventions in their businesses on a right system, ought not to regard the patentee, still less the inventor, as an intruder and an obstacle in his path. Yet that they in general do so regard these reputed benefactors and auxiliaries is, I fear, too true. It is the fault of the system. Let us be well disposed to a better, in which the interests and feelings of both sides—for opposite sides they appear to be—shall harmonise. Either of the plans I sketch would, partially at least, bring them into unison. The only objection that I anticipate is that the amount to be received will not reach the often, it must be admitted, extremely high ideas of inventors. In so far as this objection is well founded, in consequence of the rare merit of any particular invention—a case that does not arise every year—it can be met by special votes, which I would be far from excluding.
It may be regretted that the investigations of the recent Royal Commission to inquire into this subject (most significant against the present system is their report) were not more extensive and radical. This arose from the purposely defective terms of appointment. The Liverpool Chamber of Commerce has consequently asked Government, through the Board of Trade (that department calculated to be so very useful, but somehow in these days jostled aside, and scarcely seen or heard of in deeds), to appoint a fresh commission which shall inquire into the policy of Patents. This request has had the honour of public endorsement (either in that form or in the form of a Parliamentary Committee) by no less an authority than the Right Hon. Chairman of the Commission, who also stated to the House the remarkable and most encouraging fact, that doubts like his own had sprung up in the mind of that eminent lawyer, Sir Hugh Cairns, the very member who, almost in opposition to the late Mr. Ricardo, a decided opponent of the monopoly, moved the address to the Crown for the Commission. On the other side of the Speaker’s chair we have law officers of the Crown, if I mistake not, impressed with the same dislike, and among the Radicals we know that equally opposed were Mr. Bright and the late pure and noble patriot Mr. Cobden. It is within my own observation that candid inquirers, preimpressed though they may be in favour of inventors’ claims and monopolies, reach the same conclusion. As to the Continent, M. Chevalier, Swiss statesmen officially consulted, and the German Congress of Political Economists, have strongly declared that they are utterly opposed. The Social Science Association can, and I hope will, as in the past so in the future, lend important aid to the cause. Nobody is better fitted to reconcile those interests that unnecessarily conflict, and to emancipate productive industry from trammels so hard to bear, while also promoting invention.
The reader is also referred to the following lapsed
Scheme submitted to the International Association for the Progress of the Social Sciences at Brussels in 1863.
1. The principal States of Europe and America, with their colonies, to unite and form a Patent Union.
2. Every capital to have a State Patent-office, in correspondence with the offices in the other capitals.
3. Every invention patented in one of these offices to be protected in all the associated States.
4. Each State’s Patent-office to receive copies of Patent specifications lodged in the Patent-office of every other State, and to translate and publish within its own territories.
5. The Patent to confer exclusive privileges for three years.
6. With these privileges is conjoined the right of granting licences.
7. An agent or assignee, fully empowered to negotiate for the patentee, must reside in each State.
8. Commissioners shall appraise each invention at the end of the second or third year (or later, if deemed advisable).
9. In estimating the value, the Commissioners shall be entitled to claim the advice of practical men, and may take into view all circumstances affecting value—such as the originality of the invention, and its importance; the probability of its being soon made by another; the expense and hazard of preliminary experiments and trials; the benefit it is calculated to confer; the gain which use and licences during the three years will bring the patentee.
10. If the patentee resign his monopoly before its term expires, this concession to the public shall be regarded in the price.
11. The Commissioners shall adjudicate in what proportions each State shall pay the price fixed, on the basis of population, revenue, or commerce.
12. They may recommend a further grant, as an honorarium, in special instances of singular merit.
13. Their valuation and grants must be framed on the basis of a total yearly expenditure on inventions of not more than one million pounds sterling at the utmost, from all countries of the union, of which sum, however, no one country can be called upon for more than £100,000 in one year, nor more than £1,000 for one invention.
14. The Commissioners shall be entitled to recommend for honorary medals, ribbons, or certificates, real inventors of strong claims, especially such as voluntarily shorten, or never exercise, the exclusive use of important inventions.