The patent system is broken and in dire need of reform; so says the popular press, scholars, lawyers, judges, congresspersons, and even the President. One common complaint is that patents are now failing as property rights because their boundaries are not as clear as the fences that demarcate real estate—patent infringement is neither as determinate nor as efficient as trespass is for land. This Essay explains that this is a fallacious argument, suffering both empirical and logical failings. Empirically, there are no formal studies of trespass litigation rates; thus, complaints about the patent system’s indeterminacy are based solely on an idealized theory of how trespass should function, which economists identify as the “nirvana fallacy.” Furthermore, anecdotal evidence and other studies suggest that boundary disputes between landowners are neither as clear nor as determinate as patent scholars assume them to be. Logically, the comparison of patent boundaries to trespass commits what philosophers call a “category mistake.” It conflates the boundaries of an entire legal right (a patent), not with the boundaries of its conceptual counterpart (real estate), but with a single doctrine (trespass) that secures real estate only in a single dimension (physical fences). As all law students learn in their first-year Property courses, estate boundaries are defined along the dimensions of time, use, and space, as represented in doctrines like future interests, easements, nuisance, and restrictive covenants, among others. The proper conceptual analog for patent boundaries is “estate boundaries,” not fences. In sum, the trespass fallacy is driving widely accepted critiques of today’s patent system that are empirically unverified and conceptually misleading.
November 2014, Vol. 66, No. 6
Lily Kahng, The Taxation of Intellectual Capital