Is “intellectual property” either?

BY CCIA Staff
February 2, 2010

Yesterday we mentioned a little-noticed story from last week – overshadowed by the State of the Union, the iPad launch, and here in DC, the State of the Net– in which Google was exonerated by a jury in Marshall, Texas from allegations of patent infringement.

Worthy of further note is that at the end of the two-and-a-half-year case, the patent holder’s lawyer argued:

“If someone drills oil on your property, they are responsible for paying royalties whether they knew it was your property at the time or not.”

This is wrong, and most IP lawyers know it.  “Intellectual property” is very much unlike real property.  True, the word ‘property’ is in the name, but if you think that makes IP property, first consider whether the PATRIOT Act regulates patriotism.

Many reasons why IP isn’t property are ably recounted by noted lawyer and law professor Mark Lemley here.

This is also why, incidentally, the Supreme Court held that infringement isn’t the same as “theft.”  Nevertheless, when talking to non-lawyers – particularly when representing a plaintiff, IP lawyers don’t always shoot straight about this.  The urge to mislead the public with the property metaphor is overwhelming.  Protecting “property” is good.  People worry about government taking property.  (Nevermind that patents are handed out by the government in the first place.)  The word pushes emotional buttons.  The problem with the “property” metaphor is that it breaks down faster than a thin-skinned American Idol contestant.

Take the oil-drilling example here. The boundaries of real property tend to be self-evident.  Someone lives on it. Or perhaps there’s a fence.   And even if there isn’t, the state knows who owns what in case they may want to tax land or regulate nuisances.  Someone knows who owns what.  So you can go down to the county assessor and ask, “who owns that land?” Try that at the PTO and they might laugh at you.

In patent law, no one knows for certain who owns what.  Not even the PTO.  Unlike the boundaries of real property, which can be surveyed for a reasonable cost, you can’t see the boundaries of intellectual property, and the best you can get in the way of a survey is an opinion letter from your lawyer.  That could run upwards of $25K per patent, and there are good odds your lawyer might turn out to be wrong.  And since – at least in technology markets – we’re talking about dozens or even hundreds of patents at a time, the cost of the survey will often be greater than the value of the property itself.

If someone abandons real property, the state will eventually claim it.  If patents sit undeveloped for years, however, functionally abandoned by their rightsholder, nothing happens.  Innovation stalls until the patents expire.

Real property doesn’t lend itself to ambush, either.  You would never see hundreds of people traveling down a freeway, only to find that someone has erected a toll at the last off-ramp, and is charging everyone extortionate tolls to get off.  But this happens with troubling frequency in patent law, such when industries adopt an open standard, and then some enterprising outfit comes along and secretly patents the standard.  Once you’ve invested in redesigning your product, retooled your factory, and retrained your engineers, not paying the toll may not be an option.

Merely because we call patents and copyrights by the name ‘intellectual property’ doesn’t magically transform them into property, any more than the term “IP” makes the latest chart-topping pop music hit ‘intellectual.’

It is easy to forget this, however, when doing so might help you win a $600 million dollar judgment.

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