Ayn Rand would weep over our fraying IP laws

Despite the popularity of Ayn Rand’s Atlas Shrugged, which tells the tale of greedy politicians left with nothing to plunder after innovators and producers go on strike, society seems to miss that essential message and find a way to mimic scenes from the book.

For instance, there is a real legal debate going on right now regarding allowing a company to use technology even though it has been found to infringe on another company’s intellectual property.

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No company should be allowed — and encouraged — by the government to infringe on another company’s intellectual property.

Intellectual property is what gives companies and innovators the incentive they need to innovate. Without strong and enforceable intellectual property, our world would look very different than it does today. 

The financial incentive to invest in pharmaceutical research wouldn’t exist. The infrastructure and research funding to build out many medical device companies wouldn’t be available. The biggest breakthroughs making our lives easier today might not exist.

If the case mimicking the scene from Atlas Shrugged is decided incorrectly, the way we connect in the future might be different.

Qualcomm is currently being forced to defend their patented technology in the U.S. The case is currently being considered by the U.S. International Trade Commission (ITC) and in late September the administrative law judge (ALJ) assigned to the case issued his final initial determination regarding a section 337 trade violation.

Section 337, of the 1930 Tariff Act was designed to protect companies from the importation of products that infringe on their intellectual property.

Under section 337, the USITC determines whether there is unfair competition in the importation of products into, or their subsequent sale in, the United States. Section 337 declares the infringement of a U.S. patent, copyright, registered trademark or mask work to be an unlawful practice in import trade. 

The administrative law judge found a 337 violation in this case. But, in a virtually unprecedented move, he decided not to recommend the commission issue a limited exclusion order (basically an injunction against importation), despite finding Apple infringed Qualcomm’s patented technology.

The judge decided not to recommend the requested limited exclusion based on very questionable “public interest” grounds, couched as “national security."

He expressed concern that excluding devices that used modems made by Intel would create a monopoly for Qualcomm and push Intel out of the modem market and in turn this would force Intel to abandon its investments in the developing 5G ecosystem. 

In an instant, this judge is undermined the whole patent and IP system. Ruling that a company has infringed someone’s patented technology but then not imposing any remedy sends a terrible message to all inventors. 

Funny, this is happening at the same that same time that China is actually standing up for intellectual property — for Qualcomm!

This isn’t just about a phone, and the fight isn’t even about 5G. The ITC case is really about future technological leaps like 6G or 7G. Is Qualcomm — or the next Qualcomm — going to make the next big investment into the next giant leap?

Will they invest just as much in 6G as 5G knowing that the government will assist their competitors no matter what their competitors do? How about if they know that no matter how advanced their research is they won’t own the result or be able to appropriately enforce their rights? 

The problems presented by the ALJ’s recommendation are numerous, and they are all tragic. Qualcomm will get hurt, but more importantly and troublesome future innovation will be slowed.

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As an inventor and someone who has studied what makes businesses succeed, I know how critical it is for companies to have a certainty that they can own their ideas and creativity and have the chance to profit from those ideas.  

If we continue to undermine IP protection, we will take away the incentives to create the critical next generations of technology like 5G.

A country built on innovation is slowly giving back our lead to the rest of world by turning our backs on the policies, people and innovations that got us here. However, Ayn Rand already did make up the story. Maybe people will start taking it to heart before we lose all of our innovators. 

Despite the ALJ’s recommendation, hopefully the commission will make the right decision. The government’s defense of intellectual property is what allowed U.S. innovators to build the U.S. into an economic superpower. The commission should defend intellectual property, not infringers.

Charles Sauer is president of the Market Institute, an organization that advocates on behalf of business and limited government intervention. Previously, Sauer worked for Gov. Jeb Bush (R-Fla.) on federal labor, tax and immigration policy. He is the author of the book, "Profit Motive: What Drives the Things We Do."