Intellectual "Property Tax". Have everyone declare the value of their intellectual "property" (patents, copyrights, trademarks) - each and every item, for that year, on their tax return, and have them pay 1% of the value as "IP tax".
That amount is what one pays for a compulsory license or if successfully sued, and up to 3 times that for willful infringement, per year -- and no more. (But of course, patent owner can always negotiate a lower payment)
All of a sudden, everyone has an incentive to state a reasonable value for their patent. Copyright catalogs that are not being published (old music recordings, old books, old movies) would be assigned 0 value by copyright holder, to avoid tax - which means anyone can freely make a copy. If they believe -- at the end of the year -- that someone is making a profit at their expense, they can set the value as high as they want at the end of that year, pay the tax, and sue the profiteer.
1) Patents are monopolies to begin with. A monopoly can generally pass its costs on to the consumer. So the companies now being harassed by intellectual property leeches would just feel a bigger bits
2) The government getting revenue from patents would be an incentive for the government to expand patents.
3) It would legitimize the patents even further.
4) It would be a quick way for a company to claim a huge value. Even if it cost the company some taxes, showing a return that said "10 million dollars in intellectual property" would be a fabulous way to convince a naive investor you really had something worth 10 million dollars - that they could buy for a cheap only 1 million dollars.
I could probably go on. File under "the seductive lure of perverse incentives..."
From the time-of-day you have replied, I have to assume you are in Europe or the UK, whereas this discussion is about the US (if you are in the US, I would have to assume you were misinformed or trolling), so ...
1) Monopolies can pass costs only as so far as they have become essential monopolies - like the power company, Microsoft, US health care or phone companies. But 99.9999% of patents are monopolies on _inessential_ things, which the customer can just avoid if not competitively priced, so they CANNOT pass it on. New cheese making patent may give monopoly on a new cheese kind, but if not competitively priced would keep customers with their old Camembert.
2) that has already happened, that's why in the US, the patent office is already a rubber-stamp, patent examiners have 8 hours to review a patent, and are encouraged to accept the patent rather than reject it.
3) Patents are at the top of the legitimacy scale already in the US. Unfortunately. Which is what Cuban (the original article) is talking about.
4) Well, patents don't do that any differently than anything else. A company could just as well buy a house for $100K, claim it is worth $100M, pay property taxes to the local council, and claim "huge value". If someone is going to be this fraudulent, it doesn't matter if they do it with "house", "patent", "copyright", "trade secret", or any other "property".
You could probably go on, but nothing you mentioned is relevant to the discussion of patents in the US (which is what the original article and my proposal is about), and very little (3, maybe) has any bearing on that discussion in Europe.
You begin making a big about you (false) assumption concerning my location. That might be clue you could take a look at the world outside the one construct in your head. In any case, considering that your solution won't happening in any industrialized country, I most looked at this abstract proposal as a chance demonstrate how the intentions of would-be tax-creators often go awry. As to your arguments, the fact that we are having this debate shows that legitimizing patents is still a challenge in the US and it is Econ 101 that monopolies pass-on price increases.
Your initial false assumption might be a clue to your excessive in your own mental constructions.
1 - The point is that software are specifically on things that on can't easily work because they are so. And they sue the companies after their software is implemented.
2-3 - The fact that we're having this debate shows that the question is still in play
Considering your solution will happen in any case, my point were mostly concerning
Ok, so you say you're not in Europe, and you say you're not a troll. So I would have to assume that you are misinformed (the other alternative based on the coherence of _this_ post, is that you are drunk).
> the fact that we are having this debate shows that legitimizing patents is still a challenge in the US
No. Hackernews and reddit are two places that don't consider patents legitimate. Outside of those two, there are fewer things in the US at large that are considered MORE legitimate than patents. (If we had a discussion here discussing how evil Zebras are, would that indicate Zebra innocence is still a challenge in the US?)
> it is Econ 101 that monopolies pass-on price increases.
No. Apparently, you've failed Econ 101. There's a huge difference between essential monopolies and inessential monopolies - if I open a banana stand, I have a monopoly over selling bananas in that stand. Does that mean I can pass on any price increases? Yes, if everyone needs a banana AND there is no alternative supplier close enough (making me an essential monopoly). Otherwise, no. Patents are mostly for very limited and inessential monopolies, and they therefore CANNOT do that.
> The point is that software are specifically on things that on can't easily work because they are so. And they sue the companies after their software is implemented.
I have no idea what you were trying to say here.
The important thing to note is that the baseline is not a patent-free world. The baseline is a world in which patents are legitimate, cheap, and let the patent owner set the value (including infinite value, stopping others from using that patent) without any increase to that cheap fixed value of the patent (beyond the costs of litigation)
It sounds like a good idea, I'm not sure, however, how it would work across international borders. A physical property is clearly somewhere and that's where it gets taxed. What would stop people from "moving" their intellectual properties to "IP tax heavens"?
So, assuming that such a system was adopted worldwide, you would have to pay a tax in every country of the world if you wanted your IP to be enforceable in all territories? Because if that's the case, owning IP will be so prohibitively expensive that only large corporations will be able to afford it. I'm not sure if that would be a good thing.
Well, it's already prohibitively expensive to get patents all over the world, and -- People keep forgetting that -- a patent is an offensive measure - it gives you the right to sue and litigate, but not much else! If you don't have the money to litigate, your patent is already worthless. In some countries, litigation is cheap; but in the US, you need $200k-$500k available to have a chance to enforce your patents.
Applying for a multiple jurisdiction patent (in e.g. US, Europe and japan - which for example still doesn't let you enforce in Russia, Mexico and Switzerland) already costs upward of $50k
This might be true for patents, but don't forget that copyright is (mostly) free. If any band, indie developer, unsuccessful writer and amateur photographer would have to pay such large fees for simply owning their works, what would happen?
They simply declare them worth zero for the year, and pay nothing. They still own the copyright. And if 5 years down the line, they realize someone else is making a profit of it, they declare a reasonable value at the end of that year, pay the tax, and collect their fees (through court or otherwise).
This very much depends on jurisdiction. Certainly in California more expensive cars, which use the same roads, pay more tax. Similarly with property, where a more expensive property (perhaps with one by the harbour with the view, which has the same amount of garbage etc. pays more property taxes.
Certainly in say Sydney, property tax (goes to state government revenue, only paid by large land owners) and council rates (pays for garbage collection, paid by everyone) are separate.
Here in the UK council tax is tied directly to the value of the property too - it's not because it needs more services, just an extension of the logic behind income tax, that people who can afford to pay more, pay more.
My point remains that you can't tie a link between "if it is property, it gets taxed".
But much like local services, IP needs government services to function -- it's the customs service that stop cheap knockoff imports, it's the legal system that makes others stop using your patent or levy the rent you as a patent/copyright owner seek. (And eventually, it's the police force and prison system that underwrites the legal system's power).
So it's really no different than other "taxes for services" arrangements.
It is no worse than the existing system. If you are not aware, filing a patent costs a few thousand dollars, and after receiving a patent, you have to file "maintenance fees" which easily total tens of thousands through the lifetime of a patent.
Same incentive exists today to grant patents (government makes much less money from rejected patent than from granted patent), and to prevent them from expiring (collect more maintenance fees).
Hell, the Sonny Bono Copyright Term Extension Act (affectionately known as "The Mickey Mouse Protection Act") which extended copyright retroactively from 70 to 95 years showed that congress is all too willing to do that to help their friends in the media industry, without even requesting payments; it is definitely NOT the lack of "intellectual property tax" that stops congress from increasing the term of patents (or copyrights).
Existing maintenance and filing fees clearly have not been enough to prevent large numbers of frivolous patents. Any IP tax would have to be quite a bit larger than fees existing now to be effective.
I read somewhere that although Russia has serious problems with alcoholism, public programs trying to fight it have been handicapped because a large part of govt. revenues come from a liqour tax. I think it is at least worth considering this outcome before creating any kind of 'sin tax'.
> it gives the government an incentive to grant patents and to prevent them from expiring.
as a downside to IP tax, when said downside already exists with said system, and is not made worse by my proposal. Then you say:
> Existing maintenance and filing fees clearly have not been enough to prevent large numbers of frivolous patents.
But this does not support your earlier assertion - the existing fees actually _support_ a large number of frivolous patents, because the value of a patent is (potentially) infinite, whereas the cost is known, and not prohibitive. The existing fees were NOT designed to curb patents -- they were designed to make it profitable for the government.
> Any IP tax would have to be quite a bit larger than fees existing now to be effective."
My proposal addresses this perfectly. It puts the "cost of carry" of a patent in direct proportion to its value. It is not a "sin tax", it is a "use tax" - if you use the legal system (courts, customs) to protect your profits, you pay according to these profits.
The end result is likely to be much fewer well written patents which are non-trivial and (relatively) easy to defend in court, which will be strategically selected by the grantees. Furthermore, it puts older and newer patents on equal grounds, unlike other suggestions of "from now on ..."
It is probably possible to balance the filing fees (because of fewer patents) and the IP tax so that it doesn't reduce the government intake; This might not actually be at 1%/year, but rather at 2%/year or 0.5%/year (or some other number), so the liquor thing might not be relevant -- although I agree, in general, that the government is itself a "fee / tax" junkee and therefore cannot be trusted to do the right thing.
I like the idea. One problem would be spiking fees. Company A licenses a patent from company B for the yearly fee of $1 per instance. Company A builds a successful product with 100k units sold. The next year, Company B decides to declare a 10x value on the patent. Company A, committed to the technology, either has to pay it or start over.
I guess this could be solved by long term lock ins at specific fees.
Exactly. If you build on someone else's (intellectual) property, you better have an agreement with them. However, the ip tax would make it harder to claim an idea is worth $400,000,000 (eolas, i4i) unless it makes sense, because maintaining that claim would cost $4M a year.