When Governments Attack the Private Sector
The World’s Departments of Bureaucracy. And Compliance. And…
Your average government – anywhere in the world – has more resources at its disposal than just about any private company on the planet.
So when a government sets its sites on making a private company’s life miserable – it almost always can. Because it can put the full weight of the Leviathan behind the push – and it is spending Other People’s Money to do it.
The private company is not only spending its own coin to fend off the attack, they are in many cases also helping to fund their attacker – with the copious taxes their attacker has conscripted.
Governments wield woefully huge bureaucratic apparatuses. They have countless agencies, commissions, departments and boards – all of which can be brought to bear on their targets.
They can rain down a hurricane’s worth of regulations and unfavorable rulings. And they can use their piles of confiscated cash to hire armadas of attorneys to litigate their opponents into oblivion.
It’s bad enough when government does this as Crony Socialism – at the money-backed behest of Big Companies looking to sic the Big Government attack dog on their competition.
It’s even worse when Big Government does it unilaterally – abusing its gi-normous power to benefit itself. Behold:
Patent trolls are a hazard in the U.S. marketplace…buy(ing) up patents…and aggressively accus(ing) others of infringing them.
Now let’s be abundantly clear. If a patent claim is legitimate – the patent holder(s) absolutely should be paid. Otherwise, we undermine private property rights – a free-society-foundational tenet.
Unfortunately, it’s looking more and more like these patent claims are going to be anything but legitimate.
Recently, foreign governments have begun founding their own patent trolls. France Brevets, Intellectual Discovery in Korea, and Innovation Network Corp of Japan are examples of these troubling entities. China is headed toward similar “investment service platforms.”….
So-called “patent trolls” can earn millions of dollars by being a costly thorn in the side of companies.…
“(P)atent trolls”…siphon money from large corporations…that sell products and services.
An intellectual property firm can accuse such companies of violating the patents they own, and can secure licensing deals or even file patent infringement lawsuits to obtain cash.
Ah yes – the “sue and settle” approach – so popular with the likes of our domestic Left-Environmental Protection Agency (EPA) cabal.
These governments aren’t doing it just to illicitly pocket coin – they will also use it as backdoor, pernicious protectionism for their domestic companies.
There is the natural tendency to favor domestic industries over foreign ones. This natural tendency can develop into protectionist policies akin to the industrial policies of many 19th-century governments.
There is also an incentive for states to use the patents to defend key domestic companies by attacking foreign companies and raising their costs. This would encourage anti-competitive behavior in industries where technology is critical.
And of course there is an inherent conflict of interest when a government is charged with patent enforcement – while itself owning patents. It’s like a baseball umpire owning one of the teams playing the game he’s umping.
The (South Korean) government-backed company has purchased more than 200 U.S. patents, and has said it plans to use those patents to protect other South Korean companies that might be targeted by a lawsuit.
There are legitimate reasons for foreign businesses to be concerned about patent litigation – and they should purchase the protective patents themselves. Not have Government Warbucks buy them to play Crony Socialist protectionist favorites.
There is a Yellow Pages Rule: If you can find it in the Yellow Pages – the government shouldn’t do it.
If we want a legitimate, freer global marketplace – and the true private-property-protection legitimate patent enforcement provides – we need to have the world’s governments serve as cops non-prejudicially walking the beat.
Not setting up storefronts and manning the shops. And then hiring slip-and-fall lawyers to harass their competitors.
You can have enforcement authority or skin in the game – not both. These governments all have the former – they should absolutely stay out of the latter.
Editor's Note: This first appeared in Red State.