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RIM was Wronged

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For the last few years we’ve been reading that Research in Motion’s popular mobile-email service, BlackBerry, may be shut down because the company “infringed the patents” of a company called NTP. That’s all the newspapers said.

Curious readers would want to know more. Did black-clad RIM operatives break into NTP’s office safe and steal the idea for mobile email? Did RIM spies tap the phones at NTP? Did RIM gumshoes tail NTP’s engineers and eavesdrop on confidential conversations?

No, nothing like that. “There was never any dispute that Research in Motion Ltd., the Canadian firm that introduced the world to the BlackBerry in 1999, came up with its own technology to power the wireless e-mail device,” the Washington Post writes. But the BlackBerry resembled something already patented by NTP. It doesn’t matter that RIM formulated its similar idea independently. Under the law, that’s enough to get RIM into trouble. And trouble it indeed got into. After years of legal tangles including a jury trial, a lost appeal, and an injunction threat, it finally agreed to pay NTP $612.5 million to settle the case.

NTP doesn’t make a product that competes with BlackBerry. It doesn’t make anything. NTP is a patent-holding company, a lawyer’s office in Virginia. The company was started by an attorney and an inventor, the late Thomas Campana, to “manage” Campana’s patents — not to make products. According to the Wall Street Journal, Campana “worked on ways to send emails wirelessly. In 2001, NTP sued RIM saying it held patents covering the ‘push’ aspect of wireless email.” “Push” is the feature that lets emails automatically appear on a BlackBerry.

To recap: RIM created a successful product and service that in some way is similar to ideas another inventor had patented but never implemented. As a result, it was forced to pay a lot of money or shut down. What’s wrong with this picture?

I know the U.S. Constitution gives Congress the power “to promote the Progress of Science and useful Arts, by securing for limited Times to Authors and Inventors the exclusive Right to their respective Writings and Discoveries.” But I’m not talking about what’s law. I’m talking about what’s right, and something is wrong when the government can grant someone a monopoly over an idea and threaten to punish anyone else for using similar ideas.

Some software engineers can’t understand why Campana got his patents in the first place. As BusinessWeek reported, “Not all of Campana’s associates support his legal battle. [Murali] Narayanan [formerly of Bell Labs] ended up testifying on behalf of RIM. ‘I was surprised [Campana] got the patents,’ he said. ‘As a computer guy, putting e-mail and paging together seemed obvious to me.’” In other words, the U.S. Patent Office’s criteria for granting or denying patents are arbitrary. There are no clear “boundaries” between ideas. Thus an innovator can’t know if he’s violated a patent until a judge or jury says so — a practice that conflicts with the objective rule of law.

What’s more, the Patent Office has been reconsidering, and preliminarily decided to withdraw, NTP’s patents. According to ComputerWorld, the patents received “nonfinal rejection” because “something similar had been described in print at least a year before the patent was filed.” Yet RIM was forced to surrender $600 million or see its business devastated.

As this case makes clear, patents don’t stimulate innovation; they stifle it. How many useful products aren’t being made because developers fear the kind of extortion RIM just submitted to? As the Washington Post reported, “Intellectual property attorney Donald R. Steinberg said the size of the settlement might spur more lawsuits from patent-holding companies, but that in most cases a settlement is often desirable because it limits risk on all sides.” More extortion; more tribute.

The notion of “intellectual property rights” is spurious. The principle of property is needed for physical objects because they are finite; hence property rights prevent conflicts over the use of things. But ideas can be reproduced infinitely and used simultaneously without conflict. Hence, as Thomas Jefferson realized, “Inventions then cannot, in nature, be a subject of property.”

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    Sheldon Richman is vice president of The Future of Freedom Foundation and editor of FFF's monthly journal, Future of Freedom. For 15 years he was editor of The Freeman, published by the Foundation for Economic Education in Irvington, New York. He is the author of FFF's award-winning book Separating School & State: How to Liberate America's Families; Your Money or Your Life: Why We Must Abolish the Income Tax; and Tethered Citizens: Time to Repeal the Welfare State. Calling for the abolition, not the reform, of public schooling. Separating School & State has become a landmark book in both libertarian and educational circles. In his column in the Financial Times, Michael Prowse wrote: "I recommend a subversive tract, Separating School & State by Sheldon Richman of the Cato Institute, a Washington think tank... . I also think that Mr. Richman is right to fear that state education undermines personal responsibility..." Sheldon's articles on economic policy, education, civil liberties, American history, foreign policy, and the Middle East have appeared in the Washington Post, Wall Street Journal, American Scholar, Chicago Tribune, USA Today, Washington Times, The American Conservative, Insight, Cato Policy Report, Journal of Economic Development, The Freeman, The World & I, Reason, Washington Report on Middle East Affairs, Middle East Policy, Liberty magazine, and other publications. He is a contributor to the The Concise Encyclopedia of Economics. A former newspaper reporter and senior editor at the Cato Institute and the Institute for Humane Studies, Sheldon is a graduate of Temple University in Philadelphia. He blogs at Free Association. Send him e-mail.