A society’s ethical behavior is shaped from the top. Unfortunately, our political body…all the way through the ranks of Congress…is riddled with corruption.
Baucus who is a member of the deficit super-committee, is a poster child of unethical behavior and abuse of power. In the 2008 financial meltdown…Baucus “stepped out of an apocalyptic meeting, picked up his phone, and put his money into funds that would rake in more if the markets tanked.”
Congress does not have insider trading laws even though they are the ultimate insiders. By why should we need such laws to regulate the behavior of our Congresspeople? Our leaders serve at our pleasure not theirs. It is an honor and a deep responsibility to serve in Congress. Unfortunately it seems that, all too often, members of Congress are using their positions of power to enrich themselves. As my father liked to say, “absolute power corrupts absolutely!” Some of the bad behavior is a consequence of our system of political campaign financing and lobbying. It is critical to reform this area of politics.
Once corruption takes hold in our highest offices and is implicitly tolerated by a quiet electorate, it’s a very short journey to third-world status. Let’s get off this path of decline now!
The US Constitution provides for the granting of monopolies to inventors in return for their teaching their inventions to society. It is a bargain society strikes with inventors to increase the overall welfare of society. How far our patent system has departed from that arrangement! We have a system in which patent trolls can hoard patents for the sole purpose of extorting profits away from the innovators and the creators of value in our society. The system is also used to block competition from start-ups rather than protecting those startups. The cost of litigating patents is too high for most startup companies to afford. Therefore the threat of litigation is enough to prevent financing of startup companies or enough to drive startup companies into bankruptcy. If that doesn’t happen then typically the defendant will cough up $300,000 to settle with the plaintiff to avoid financially ruinous litigation. This exactly what happened at the first startup company I worked for: we were sued for patent litigation by a large company that was threatened by our technology. They were not able to identity which of our products was allegedly infringing or how our products were infringing! The suit was absurd and frivolous; nonetheless, we settled.
A good snapshot into the state of our patent system is provided in this edifying transcript from This American Life.
We need to reform our patent system. A simple way to curb abuses of the patent system would be to raise the bar on what it takes to bring a patent infringement lawsuit:
A loser pays system would be useful too (see next topic).
70% of all litigation in the world happens in the
In other countries including most of Europe there is a “loser
pays” system which significantly reduces nuisance and frivolous lawsuits. There are many variations including penalties
for rejecting a settlement offer when the final outcome is less than what was
offered. The system must include payment
for the cost of lawyers and expert witnesses.
A good report on loser pays is available here.
 In order to be granted a patent, the invention must be non-obvious, novel and enabled. Enabled means that there’s enough information in the patent application so that one skilled in the art could re-created the invention. By bringing the patent to practice, the plaintiff will have demonstrated enablement.