Lately many technology stories, from search engines to telecommunications, include a discussion of a company’s ability to “control” some marketplace—in other words, lots of talk about “monopolies.” And rarely is that term used in a positive context. The news stories often spend a great deal of time considering the supposed monopoly’s effect on the company’s business rivals: Is it gaining too great a share of some market or an anti-competitive increase in market power?
So, are all monopolies bad? Are most monopolies bad? Are monopolies the end of innovation? The Department of Justice (DoJ) seems to be quite skeptical of monopolies these days.
And while the DoJ certainly has the authority to review proposed mergers for signs that the merger would be bad for consumers, some recent DoJ reviews seem downright silly.
Recently—the review was concluded this week—the DoJ used its authority to inspect bids, and bidders, for a cache of patents being sold by now-bankrupt Nortel Networks. For what reason? According to The Wall Street Journal, to determine whether patents could be used “to unfairly hobble competition.”
And yet this is how the US Patent and Trademark Office defines a patent:
- “A patent for an invention is the grant of a property right to the inventor, issued by the United States Patent and Trademark Office. Generally, the term of a new patent is 20 years from the date on which the application for the patent was filed in the United States…. The right conferred by the patent grant is, in the language of the statute and of the grant itself, ’the right to exclude others from making, using, offering for sale, or selling’ the invention in the United States or ‘importing’ the invention into the United States. “
In other words, a patent IS a monopoly. A patent’s very purpose is to “hobble” competition—temporarily, for that specific invention.
So the federal government is reviewing a transaction to see if a company will gain a monopoly by buying a patent (or a portfolio of patents), which is the federal government’s grant of a monopoly in the first place.
Just another example of your tax dollars hard at work wasting time and squandering more economic opportunities.