Posts Tagged ‘Great Depression’

Economic Crisis, Patents, and the Public Trust

Saturday, November 22nd, 2008

I read recently (and I would link it but I haven’t been able to find it again) that financial panics nearly always reveal an important new technology to replace an obsolete old technology and that in the process of the changeover, economic recovery is achieved.

That being the case, it seems to me that economic salvation will be found down at the U.S. Patent and Trademark Office in the form of some technology that either is already patented or that is working its way (perhaps tortuously as one of the few remaining “submarine patents“) through the system. We already have one example of a suite of technologies that are under patent and not in current wide use that could obviously be of help but which are being kept off the market by a major player with a vested interest in burying them. Those are the electric vehicle patents obtained by General Motors in connection with the EV-1 program but which were sold to Chevron when the program was scrapped. There is some controversy over whether Chevron is a villian in the matter (they do license the technology to Toyota, for example), but can anyone be blamed for thinking that a company that is in the business of selling gasoline won’t make it as easy and cheap as possible to license a technology that reduces the amount of gasoline sold?

What people keep forgetting is that patents are property, and as such they are subject to the state’s eminent domain power under the Fifth Amendment. Although I was viscerally opposed to the Supreme Court’s recent Kelo decision, one unintended consequence of it was likely to make patents subject to governmental taking that would transfer them into private hands, just as Kelo  allowed cities to hand neighborhoods over to developers. We already do control patents to the extent that important cryptological discoveries cannot be patented, rather the U.S. government takes them and makes them secret and provides some compensation for the discoverer (and probably a job at the NSA, too) … and if you do otherwise you at least face a harrowing investigation for violating munitions export regulations.  

Another good example of a technology that has been stymied from coming to market is SED flat screen televisions. SED technologies promises a flat-screen TV with a CRT tube at every pixel and clear advantages over existing technologies. It was developed by Nano-Proprietary Technologies Inc. here in the U.S. and licensed to Canon, which partnered with Toshiba because while Canon could further develop the technology it couldn’t actually manufacture the sets. That’s when things got murky and NPT sued because apparently Canon had no right to sublicense. The result is that there are no SED sets down at your local Best Buy, despite the fact that they would have a better picture and cost less to make. Had the U.S. condemned the patent, the technology could have been on the market today.

In the current crisis, it would make sense to appoint a blue-ribbon panel to review which valid patents should be licensed on a more open basis in order to stimulate the U.S. economy, and those patents should be condemned and taken from their owners and just compensation should be paid. Once the government takes the rights to the patents, a licensing agency can be set up to promote the licensing and use of the patents, and payments to the former owner could be either a lump sum or a series of payments under a forced licensing arrangement, or a combination of both. Patents discovered by the panel to have serious questions with respect to their validity should be put on a fast track to litigation, with the government mounting a direct challenge rather than waiting for private-sector companies to either take the calculated risk to infringe or to step up and sue before using the technology.

In 1984, Walter Mondale ran for president on a platform that included creation of a domestic version of Japan’s MITI under the rubric of “industrial policy”. It’s time for a new administration to take a new look at the idea, not to pick winners and losers among companies, but to pick the technologies that will drive our country forward and over this economic pit, and to obtain those technologies from the private hands they rest in now and make them available to the entrepreneurs who will make them flourish.

Great Depression II? Or a bump in the road?

Friday, October 10th, 2008

As I write this the Dow is at approximately 8360 (This is October 10, 2008). We are at the bottom that Jim Cramer so recklessly proclaimed Monday on the Today show. Stock markets around the world have just endured punishing days of mounting losses, or have had to stop trading entirely. The central bankers have decided (to paraphrase Ben Franklin) that they will all have to stick together because separately they’re all stuck. We have lost Countrywide, Bear Sterns, Wachovia, Merrill Lynch, Washington Mutual, Lehman Brothers, had to rescue Fannie, Freddy and AIG (’cause it’s the CIA’s insurance company, don’t you know) and it looks like Morgan Stanley will go down as well, not to mention the small fry. Plus, Bank of America has plenty of hot paper on its books and is surviving by pursuing a “Much Too Big To Fail” strategy of gobbling up troubled financial giants so that half of Congress will be in its pocket and tarred with scandal should it go under. Citicorp will survive by a slightly different strategy, it’s Robert Rubin being a co-chair of the Council on Foreign Relations and thus such a heavy hitter his company can get what it wants both here and abroad.

Is this the end of the world as we know it? Are we looking at the prologue montage of Mad Max 2: The Road Warrior where “Their leaders talked and talked” but ultimately civilization spiralled downward toward anarchy? I don’t believe so, but that is for us to choose. What I do know is that we are witnessing the end of a cycle. These cycles go by many names, some of the popular names for them are Kondratieff or Elliot Waves, or generational “turnings” (this is the “Fourth Turning”) that predict massive changes in attitudes from generation to generation as ways of thinking that prove successful for a time play themselves out and are replaced by long-discarded ideas in an eternal round-robin.

As Dickens said, it is the best of times and it is the worst of times. Or one could look to Yeats’ poem “The Second Coming”. In any case, don’t let your life be ruled by how GM is doing, or by whether there even is a GM. America’s past is full of industrial behemoths that either had to be broken up or that failed spectacularly. The bankers may have beggared the country for a time, and they may even have beggared you personally. But no matter who you are or where you are, if you focus on what is eternal and not what is temporal, and you join hands with your neighbor instead of pushing away, we can only emerge stronger and more interdpedendent from what has happened to us lately through our own shortsightedness, greed and inattention (and those who saw this coming far enough back to be really ready are few and far between). The time is now. Never give up, and never give in.