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.
Simple, elegant, and coffer filling.
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..."
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
> 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)
Align value with cost - that's the way to properly allocate resources.
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
If you buy a £50k rolex do you have to pay tax on it every year?
In theory, they tell you it's services, etc. In practice, they rent-seek everything they can reliably lay eyes on.
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.
My point remains that you can't tie a link between "if it is property, it gets taxed".
So it's really no different than other "taxes for services" arrangements.
If they insist that its intellectual "property", then they'd best start treating it like property.
That's true. But hard-to-hide expensive stuff (houses, cars, land) IS taxed because it is hard-to-hide and expensive, and patents could equally well have the same fate.
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).
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 guess this could be solved by long term lock ins at specific fees.