Mises Wire

The Schizo Feds: Patent Monopolies and the FTC

The Schizo Feds: Patent Monopolies and the FTC

Controls breed controls, as Mises (I believe) noted. Is it surprising that when the state grants a monopoly in the form of a patent, and also regulates the living hell out of monopolies in its antitrust law, that conflicts in the law are bound to arise? (See the post IP vs. Antitrust.) As one commendator noted in that thread, “It is amusing, watching one agency of government applying a system whose entire purpose is the creation of monopolies, and then another agency tasked with preventing monopolies turning up and trying to do something about it.” (And yes, patents are monopoly grants--see my first comment to the post The Three Stages of Invention.)

Similarly, as noted in The Schizophrenic State, the state tries to keep pharmaceutical companies from charging too-high prices for drugs like Cipro--prices which are too high because of the state’s artificial patent monopoly system in the first place; so the state threatens same companies with the loss of the state-granted monopoly if the companies actually use this monopoly when it would embarrass same state.

Yet another entry from bizarro fed-land is the persecution of Rambus, the computer memory chip developer.Rambus took advantage of the state’s patent office--a unique agency, open to the public, which hands out state monopolies for a modest fee. Now Rambus stands accused by the FTC of having “unlawfully monopolized markets for four memory chip technologies“ (2). And how did they do this? Well, Rambus became a member of an industry standards committee “working on standardization of DRAM chips.” And while it was a member of this committee, Rambus “continued to file and prosecute certain patents and patent applications related to the technology under review by” the committee. So, when the standard was released, it was covered by Rambus’s patents.

Hey, pretty creative business move by Rambus, wouldn’t you say?

But not so fast. As a remedy to the sin of actually applying for the monopoly grants the government offers, the FTC wants to “bar Rambus from enforcing any existing licensing agreements, along with certain patents.”

Ah, what the state giveth, the state taketh away.

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