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Topic: Government

The Roberts Court innovation tax

Summary: By refusing to do its job there is a Roberts tax on all innovation, payable to the patent bar, until someone can knock heads together there and get them to provide clarity.

Dana Blankenhorn

By Dana Blankenhorn for Linux and Open Source |

By refusing to rule on whether software or business method patents are constitutional in the Bilski case, the Supreme Court under John Roberts has, in effect, taken ownership of an enormous tax on innovation. (Picture from Wikipedia.)

That's right kids, a tax. Any fee required by government is descried by conservatives as a tax on business.

By refusing to do its job (four wanted to say the patents are no good, one wanted to say they're good, and four including Roberts opted for a shoulder shrug) there is a Roberts tax on all innovation until someone can knock heads together there and get them to provide clarity.

It's an unusual tax. It goes to lawyers and law firms, not directly to the government. But the Justices are all lawyers, so maybe that's no surprise.

How much is the tax? That's another fun point. We don't know. You can get hit with it at any time, from any quarter, as in these examples ripped from today's headlines:

  • Patent troll NTP, the folks who nearly sank the Blackberry, have now sued all the smart phone makers, claiming they invented mobile e-mail. These are the same patents that eventually won NTP a $612 million judgement from RIM.
  • Apple is claiming only it can make a smartphone with an interface that uses two fingers. Its suit against HTC has been expanded, and never mind that Google was working on Android years before the iPhone appeared.
  • Frontier, a phone company, now claims to own all Voice over IP, and has sued Google. This claim of "irreperable harm" came the day its idiot patent was approved, and many years after VOIP became a standard feature. (Russell's rolling in his grave over that one.)
  • Salesforce.com and Microsoft are suing each other, both claiming to essentially own the cloud. Money is raining on both sides' counsels.

How bad is it? So bad that Technology Review now says seed and venture funding in software should move abroad en masse to avoid the Roberts tax. Maybe they should.

It's true that bad cases make bad law, but in this case a good case made no law, because our highest court decided that the bank accounts of patent attorneys were more important than those of the software industry.

Something y'all can discuss while I take a needed weekend off.

Topics: Government, Banking, Government US

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26 comments
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  • Wrong as usual

    A fee required by the government and PAYABLE to the government is a tax. A royalty payment is not a tax.

    But, of course, you already knew this. Just like you knew that it requires 4 justices to agree to hear a case before it is picked up by the court, and that Roberts does not sit on a throne, picking and choosing what the court hears.

    But, then, truth to a liberal is like a cross to a vampire.
    frgough
    Reply Vote

    • Funny thing about truth...

      The "conservatives" claim that government mandates on insurance is a tax. That money isn't going to the government, it's going to insurance companies, so I'm glad to see you roundly thump conservatives for taking such an idiotic stance. Bravo.
      jasonp@...
      Reply Vote

      • funny thing about FUD

        @jasonp@... <br><br>Funny, I've never heard ONE conservative say that it's a tax, just that it's unconstitutional for the government to compel a citizen to buy from private companies. Nice try though!
        bclark2008
        Reply Vote

      • Hmmmm...

        They have successfully managed to hide these statements on the internet...

        Republican strategist Brad Blakeman - "The president cannot orate himself out of this one. If it feels like a tax
        , it says it's a tax -- Mr. President, it's a tax,"

        WSJ Senior Editor Joe Rago - "Right, this is a mandate disguised as a tax. "

        Florida Attorney General Bill McCollum - "...asserts that such a mandate violates any exercise of Congress's authority under Commerce Clause and its power to levy taxes as well."
        jasonp@...
        Reply Vote

      • Witness the withering logic of the typical Obama voter

        who cannot discern the difference between paying a royalty on a voluntary transaction and a state-ordered expenditure.

        Yes, an insurance mandate is the moral equivalent of a tax because what used to be a voluntary transaction has now become state-ordered on penalty of fine or incarceration.

        No, paying royalties on a patent is not a tax because the transaction is a voluntary one between the parties concerned. Unless one party tries to use the patent without paying royalties. Which, in the law, is called theft.

        I tried to use small words.

        Yes, I have run out of patience with fools.
        frgough
        Reply Vote

      • RE: The Roberts Court innovation tax

        @jasonp@...
        Natanael_L
        Reply Vote

      • RE: The Roberts Court innovation tax

        @frgough: "unless one party tries to use the patent without paying royalties. Which, in the law, is called theft."

        http://thepriorart.typepad.com/the_prior_art/2009/02/copying-in-patent-law.html

        BTW, it's not called theft, you liar, it's called patent infringement if you use a patented idea.
        Theft is to take something away, but if you use a patent you just add (make) something similiar or identical but without permission.

        Also, not paying royalties is NOT optional. You do it or get sued, just like you either stop at red lights or end up in jail. Just because it might be technically possible to do, it's not a real option.
        Natanael_L
        Reply Vote

      • RE: The Roberts Court innovation tax

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        musdahi
        Reply Vote

      • RE: The Roberts Court innovation tax

        Four wanted to say the patents are no good, one wanted to say they???re good, and four including Roberts opted for a shoulder<a <div href="http://www.mechamochi.com/"><font color="light&amp;height"> home</font></a> of google update <a <div href="http://www.ittot.us/"><font color="light&amp;height">site</font></a> compare with linux <a <div href="http://www.doubletapblog.com/"><font color="light&amp;height">contact site</font></a> from another big company <a <div href="http://www.nelotteryapps.com/"><font color="light&amp;height">website</font></a> which upgrade always <a <div href="http://www.virgo-blackstilettos.com/"><font color="light&amp;height">home page</font></a> is the best shrug.
        Juliety
        Reply Vote

      • RE: The Roberts Court innovation tax

        Sure, it's nice to have a good debate on these questions of what is or isn't a tax, but the point of my piece is that the court didn't really tell us anything, which is the job of the Supreme<a <div href="http://www.fromgaza.com/"><font color="light&amp;height"> home</font></a> of google update <a <div href="http://www.billdavisphotography.com/"><font color="light&amp;height">site</font></a> compare with linux <a <div href="http://www.logmyblog.net/"><font color="light&amp;height">contact site</font></a> from another big company <a <div href="http://www.sponsoredfan.com/"><font color="light&amp;height">website</font></a> which upgrade always <a <div href="http://www.yadiario.com/"><font color="light&amp;height">home page</font></a> is the best Court.
        zdnet lover
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    • RE: The Roberts Court innovation tax

      @frgough It's nice to have a good debate on these questions of what is or isn't a tax, but the point of my piece is that the court didn't really tell us anything, which is the job of the Supreme Court.
      DanaBlankenhorn
      Reply Vote

  • The whole patent system needs revision

    The problem is that our patent system has not kept pace with the technological advance of our society and needs serious reworking. Many call for patents to be done away with, which is silly, because no one would invest the time and risk in new products and technology if they could be immediately copied. But on the other hand, you have companies like NTP who in my opinion, are the equivalent of cyber-squatters, people who used to buy domain names and hold them for ransom.

    While I think it's OK to criticize the court for this, I prefer to blame the legislators who need to make better law.
    jgpeters
    Reply Vote

    • RE: The Roberts Court innovation tax

      @jgpeters Part of my problem with what you say is that the legislature did not create software or business method patents. Courts did.

      I agree that the legislature should revisit patent law. Part of the problem is found on my other ZDNet beat, healthcare. Patented compounds or devices are pretty straightforward -- they're not placed inside other things -- so the patent law works well for those industries.

      The EU manages quite well without software patents. Business method patents are something I never understood. Neither seems to promote innovation, and the promotion of innovation should be the test.
      DanaBlankenhorn
      Reply Vote

  • Wow what a lame post. youre really trending downhill...

    First this would have been completely out of the scope of the case and the majority opinion recognized that very obvious fundemental fact. An idea isn't a business method.

    Second it's not a tax. No one is required to license any patents, nor obtain any. Any one can make anything unpatentable either inventing it first making it public domain and/or patenting it and making it royalty free. Anyone can acquire anything thats already patented and make it royalty free as well.

    Third it doesnt matter how many people were working on anything for "years before". If they didnt apply for a patent on it or make it publicly available "before" then (they were stupid and) they need to license, find another mechanism, or make something completely independent. It's their choice, there's no government requirement involved.
    Johnny Vegas
    Reply Vote

    • RE: The Roberts Court innovation tax

      @Johnny Vegas The tax is the cost of litigation in the absence of a clear holding either way. As noted elsewhere in this thread, many conservatives have caused the purchase of health insurance a "tax." If that's a tax, why isn't the requirement for innovators to continually re-litigate because the court won't do its job and tell them what the law means not a tax?
      DanaBlankenhorn
      Reply Vote

      • Considering the court costs are paid by the litigants

        what precisely was your point? Oh, yeah. You don't like patents because capitalists are greedy S.O.B.s while you wanting all that work for free is noble and altruistic.
        frgough
        Reply Vote

  • The SC is not the place for this

    I forgive you for your liberal misconception, but it is not the Supreme Court's job to make law, only to rule on the Constitutionality of existing law. This is a matter for the Legislative branch to tackle, not Judicial. I agree with your premise that our patent system is in dire need of modernization, just not that it up to the courts to do so.
    itpro_z
    Reply Vote

    • RE: The Roberts Court innovation tax

      @itpro_z The court's function is to explain what the law means. And in this case it's especially urgent, because the legislature did not create software or business method patents. They were created entirely by courts.

      Now if courts shouldn't be making law, then shouldn't the Supreme Court have gotten rid of these court-created laws? I think so.
      DanaBlankenhorn
      Reply Vote

      • Uh, no.

        The court's responsibility is to determine whether or not law has been broken.

        Another thing you are totally ignorant on: the constitutional role of the judicial branch.
        frgough
        Reply Vote

      • RE: The Roberts Court innovation tax

        @DanaBlankenhorn Interpreting the law is essential to telling whether it has been broken. You're making a distinction without a difference.

        The tech industry will spend many millions on lawyers and at the end of the day we will still need the law interpreted so as to know whether it's been broken.

        The Supreme Court failed both sides in this case, and will cost everyone a lot of money until a 5th vote can be secured on either side of the question.

        The Chief Justice heads the court, and the failure to find consensus is his failure.
        DanaBlankenhorn
        Reply Vote
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