Intelectual Property (especially patents and copyrights) should also be taxed at 1% of their assessed/declared value. And a single infringer should never be liable for more than the assessed value.
Not because patents are empty, but because this would create the incentive for patent owners to assess a real value to them, and not "bajillion dollars", which they do now.
Even just a small, yearly flat tax on copyrights, patents, and trademarks would be enough to discourage many people and companies from holding on to useless IP.
A lot of old books or music still under copyright will never generate another penny of income, but putting them in the public domain could let them be mixed or used as a foundation for new creative works.
Great, let's put old authors into bankruptcy just because their publisher decided their work needed to be archived.
This idea is absurd. Classic copyright term limits, and patents being reserved for only specific implementations of an idea would fix these problems without taxing the hell out of everyone.
You do realize everything you write is copyrighted? This means you're going to have to file with the IRS for all your Hacker News comments on an annual basis.
You're creating a false dichotomy. No plausible copyright reform requires filing notices for every forum comment or line of code.
Lines of code : Form a corporation, non profit entity or business, then pay a yearly copyright fee and transfer all code written to the business. The cost is proportional to the value of the copyright; if it's a small or unprofitable business the fee could be waived.
HN comments : the copyright is worthless anyway, people repost content all the time. To my knowledge no one has ever been sued over it.
Books and other publications : The publishers will pay for the copyright fee. Writers could be automatically covered for a grace period before publication with no fee, say one year.
These are all hypothetical,the point is you are immediately going to an extreme without considering what actual, plausible reform would entail.
If you have to ask you have no idea how important copyright law is.
Do you really want to live in a world where someone, anyone, can take something you've done and give it away to other people without your permission, or commercialize it and leave you with zero recourse?
Most people think copyright protection is for important, significant creative works like a book or a song, but it's equally important for less visible things. For example: A single method in your code that someone else appropriates.
If you had to register copyright for every line of code you wrote, you'd never get anything done.
I'm not talking about getting rid of copyright. Of course I want copyright protection for my work, and of course I want other people to enjoy that protection as well.
I don't see any reason, however, that I need that protection for every single thing that I create. What purpose does _automatic_ copyright serve?
I stick a copyright notice in every software project already, but when I don't want the copyright I also have to explicitly disavow it. Why shouldn't the model be flipped to claiming copyright with a simple attached notice, instead of disavowing it?
You stick a copyright notice on things so people know who to contact if they need to license it. That clarifies ownership, it does not establish it.
> I don't see any reason, however, that I need that protection for every single thing that I create.
This is the social network problem. When the network starts to co-opt copyrights, demanding they're able to license the work you submit to them for any purpose, for any reason, without compensation, people understand that's a form of property theft and fight back.
The problem with "intellectual property" is it comes in forms both inconsequential and profound, and in the middle is a very, very grey area. There's been flippant comments on Reddit that have turned into screenplays. There's been stuff posted on Instagram and Pinterest that turned into a line of merchandise. These things have a way of growing in importance when you're not even looking.
Like code, where a quick throw-away hack might actually turn out to be a big breakthrough and gain popularity. This is why we have license like GPL, MIT, and CC that describe how your work can be used.
You're talking about a pre 1970 world where copyrights had to be registered, and honestly, that sucks. Can you imagine having to get each and every revision of your code officially copyrighted? What about someone stealing your idea you write about on Medium, or ripping your content wholesale and publishing a book. It's not stealing if it's not copyrighted, but thankfully it is. Automatically.
The problem with liability being < assessed values is then what's the incentive to work for a licensing deal? Why pay for a license when, worst case, you'll be taken to court to pay the same amount?
> Why pay for a license when, worst case, you'll be taken to court to pay the same amount?
First of all: I'm not a lawyer and this is not legal advice.
You don't pay the full price of the intellectual property when licencing it, do you? The value of the intellectual property should be based on it's market value which would, in a perfect world be based on the expected benefit from that property. Also, paying for the damages for unlicensed usage does not mean you can keep using it unlicensed further on.
> The problem with liability being < assessed values is then what's the incentive to work for a licensing deal?
Wut ? “assessed value” ≠ “licence fee” ! The value of Windows for Microsoft is not the same thing that the value of one licence of Windows for your company ...
The proposed mecanism would just prevent Intellectual Vulture & co to gather a lot of worthless patents and then claim millions un court for patent infrigment.
First, maintenance fees are very low compared to legal action, and independent of whether the patent is worth $10 or $10B (or you believe it does). So is is entirely unlike a property tax.
> The problem with liability being < assessed values is then what's the incentive to work for a licensing deal?
If you upload a song you like, and tax has been paid for it as worth $100,000 that year, (which would be $1000/year), and you can license it for $1, then - yes, you have an incentive to license it for $1, because you are otherwise liable for as much as $100,000 (but not more[0]).
Think this is stupid? Because under the current law, you are liable for $150,000. That's what the law says, anyway.
[0] Except for e.g. willful infringement laws, which would make you pay 3x as much potentially - another answer to your "what's the incentive".
Out of print copyrighted books which are not published as ebooks should be a very good analogue to empty homes. Tax them at 1% of the average money they make they sell books' IPs to another publisher.
Because creating an acurate valuation for IP at the time IP is created that would be accurate for the life of the IP is impossible. Moreover, it would make no sense for that made up valuation for tax purposes to determine future potential damages in IP infringement cases.
Edit: to bring the concept to perspective, imagine having to assign a valuation to new borns so in the instance they die as a result of negligence the damages are capped at the assigned valuation of the deceased at their birth.
I didn't explicitly state this here (I did numerous times before when discussing this) but property tax is annual, and I propose value assignment be annual as well. Therefore, if at the end of the year neither yourself nor anyone else had made any money from your IP, just assign zero.
At the moment, patents are cheap compared to the value they have as an offensive weapon, and this is what I hope to address with my proposal.
As for copyrights - the same framework would make infinite extension unaffordable even for Disney, so I hope we would all benefit.
>Therefore, if at the end of the year neither yourself nor anyone else had made any money from your IP, just assign zero.
If you can declare $0 and not pay taxes on the IP you are basically coming full circle to existing taxation based on the income generated by the IP. However, the more important issue with your proposal is an IP holder might not want to declare $0, despite no current revenue, because your proposal would then tie that $0 valuation to potential damages in the instance of an infringement case.
>As for copyrights - the same framework would make infinite extension unaffordable even for Disney, so I hope we would all benefit.
As both a small business owner and consumer I have always been on the other side of the Disney argument. Why do you think we would all benefit from Disney losing IP protections? Most of the time its a innovation argument, but is their really any innovation being stifled by the Mouse?
As a business owner, if my company creates some form of IP, say a cartoon mouse whom I copyright/trademark to various degrees (name, logo, color(s), etc...),the company invests capital to create a movie starring the mouse and the market votes with their wallets, which the company pays taxes on, and like Steve Jobs I am fanatical about Quality Control and just keep reinvesting in the IP, creating products with the Mouse that the market love and keep paying taxes. Why, at some arbitrary point in time, should my company lose IP protections to the cartoon Mouse and all completed works with the Mouse? As a consumer, I currently know Disney for its high quality productions and there is a lot of goodwill with the brand that has been established over a lifetime, now with the floodgates opened and everyone able to profit off Disney IP there will be confusion in the marketplace leading toward loss of goodwill with the brand.
> Why do you think we would all benefit from Disney losing IP protections?
Copyright is willingly extended by the public to private interests for the purpose of fostering innovation and creativity.
The question isn't how do we benefit by Disney losing IP protections, the question is how do we benefit by maintaining what we have graciously given them? What return on investment, if you will, is the public getting for Mickey not being in the public domain?
> However, the more important issue with your proposal is an IP holder might not want to declare $0, despite no current revenue, because your proposal would then tie that $0 valuation to potential damages in the instance of an infringement case.
For that year (alone), and I proposed you set it when you pay your taxes - that is, at the end of the year, in retrospect. In this case, there is never a reason for you to file anything other than $0 unless someone else is making money of it (if you are, then you're already being taxed on it).
> Why do you think we would all benefit from Disney losing IP protections? Most of the time its a innovation argument, but is their really any innovation being stifled by the Mouse?
It's supposed to be the other way around. We have granted Disney limited monopoly in return for wide availability. "Steamboat Willy" was released with the understanding that it will become public domain within 50 years. The question is, why on earth did we retroactively give another 100 years of that monopoly for free?
And even if it wasn't retroactive - the current 100+ years doesn't seem reasonable to me at all.
> Why, at some arbitrary point in time, should my company lose IP protections to the cartoon Mouse and all completed works with the Mouse?
The only reason they currently have these protections is that they bought them from Congress.
Why do you, as an employer, stop paying your employees a couple of months after you fire them / they quit? IP is not the same as work-for-hire, but it doesn't deserve the eternal protection it currently has. I am not aware of anyone who did NOT publish in 1930 because "I only get 50 years of copyright protection".
And ... you are arguing a strawman. I did not argue that IP should be abolished. Just introduce an economic cost to the unlimited monopoly, which is currently free.
IP protection covers three things—patent, copyright, and trademark. Patent and copyright exist to encourage people to innovate; there's less incentive for the studio to produce next summer's big action flick if it were legal to copy it as soon as it's released; and there's less incentive to figure out which of many nearly identical, but subtly different contraptions actually work if someone can then take the working one and produce a thousand at some factory.
Trademark is different. That rewards not the act of creation, but the ongoing investment in a brand. Do I want a huge quantity of something for above average quality and below average price? Buy Kirkland Signature. Do I want outdoor gear that will be covered no matter what happens? LLBean has me covered.
Disney almost surely makes almost no profit off of Steamboat Willy as a film, and in fact according to the copyright laws of the time, it wouldn't be covered today, so Walt probably didn't factor in the 21st century when amortizing his costs. Is there some teenager out there who could create some truly inspiring film by remashing clips from Steamboat Willy? I have no idea, but would love to find out. But a Mickey Mouse mug is more about trademark, and Disney should get to profit off that as long as people want to buy them. And if the teenagers film hurts the trademark, then that's something that could be resolved without an indefinite extension of copyright terms.
You can only determine the exact IP revenue when someone is paying explicitly for the use of that IP. If, however, I'm selling, say, a very complex machine, where I hold a patent over a small component of that machine, how would you determine the value of my patent?
> Therefore, if at the end of the year neither yourself nor anyone else had made any money from your IP, just assign zero
How would that solve the issue of patents being used as a offensive weapon? Under your proposal if a patent troll has thousands of patents and has made zero revenue on them, they would pay zero tax. On the other hand if they made money, they will happily pay the tax.
> where I hold a patent over a small component of that machine, how would you determine the value of my patent?
I want YOU to value that patent (and the tax just make sure it is not arbitrarily high). When you sue for damages, you must have that estimate. I just want to force that to happen in a way that discourages over estimation.
> How would that solve the issue of patents being used as a offensive weapon? Under your proposal if a patent troll has thousands of patents and has made zero revenue on them, they would pay zero tax. On the other hand if they made money, they will happily pay the tax.
Court cases take years to start (and resolve). The patent troll's leverage is "if you don't license, I'll sue". If they have to pay $10,000 for every $1M patent, they will not be able to afford their current business model - they will not be able to sue for more than they paid taxes for. (The lawsuit is likely - and perhaps should legally be required - to be filed only after tax is paid).
I think what he is getting at is if the patent owner ascribes no value to the patents for tax purposes, then the same lack of value applies if they attempt to collect damages for IP infringement.
This would force the patent troll to set the value to something balances so that they can afford the taxes while still recouping enough infringement damages.
Values are placed on people's lives all the time for insurance. I'm thinking for IP a flat tax may make most sense. It would incentivize letting go of at least some things. If it's $5 fewer things will go public than if it's $1000, for instance. It should probably be more to actually affect companies.
It would favour large institutional "inventors" and lock out individuals.
An invention and subsequent patent is only the beginning of a pretty risky endeavour. There are significant risks in bringing a new product to market, such as in funding, timing, marketing, industrial production, and so on.
Overall they will average out. Some patents will be more successful than expected, and some will bomb. Large companies will be able to make a guess, pay the tax, and overall they'll make a profit. The risk on a higher value and paying the tax isn't such a big deal for them.
Small time inventors will be unable to take the risk and be forced to undervalue their own invention lest it bomb. They'll be exploited by large companies that will just pay the limited damages and then exploit their invention.
All this would do is cap the return of small inventors, without affecting the carpet-bombing large companies.
I hate patent trolls as much as the next HNer, but I don't think this idea will work, sorry.
I'm a small time inventor with one patent filed, but I didn't pay the maintenance fees (I had to publish but didn't want to spend thousands more making it final) because it didn't make enough money so it's now in the public domain. A large company could take my work. If they make a success of it where I failed, good on them. But I'll be owed nothing (rather than a proportion), which I think would be unfair since they'd be using my work. I'm already a victim of having been unable to spread the risk in a way that large companies can do.
There is no point in getting a patent if you cannot enforce it. The current situation already favors large patent owners, and my proposal will not make that worse, I believe.
> All this would do is cap the return of small inventors, without affecting the carpet-bombing large companies.
On the contrary. IBM and MS have tens to hundreds of thousands of patents. Keeping them all "Ready to sue" would cost them billions. And .. a small inventor who can't afford $100K in court fees does not have patent protection even if they have a patent.
> If they make a success of it where I failed, good on them. But I'll be owed nothing (rather than a proportion), which I think would be unfair since they'd be using my work. I'm already a victim of having been unable to spread the risk in a way that large companies can do.
So ... if you had paid $0, then a company made money of it, increase the value that year to $1M (pay the $10K tax) and have them license or sue them. You're better off under my proposed system.
So, capping damages at the listed value of the patent basically means that you have a standing offer to sell a perpetual non-exclusive license to any one for any reason. This means that for anything truly valuable (say, medicine), the value would probably have to be assessed in the several billions. Medicine can take tens of years to commercialise, so we've just raised the cost of developing new medicine substantially.
So, rather, it would probably discourage patenting these things (in favour of keeping them deeply confidential) until their value has actually been proven, which goes against the purpose of the patent system in the first place, to encourage the disclosure of inventions in exchange for a monopoly on exploiting it.
> So, capping damages at the listed value of the patent basically means that you have a standing offer to sell a perpetual non-exclusive license to any one for any reason.
Yes. At full value PER ONE YEAR. (Property taxes are per year, and the liability limit I propose is "per infringer per year" (or "per infringement per year" if infringement is defined in a macroscopic enough sense).
Patents and trademarks maybe, but copyright? You have copyright on basically anything you create. Should I pay taxes on everything I put on github? On essays I write? What if I'm a famous artist? If I make some artwork to go in my living room, should I really pay 1% of the assessed value of that every year? If I write a book, is it not enough to pay taxes on the income I get by selling my book? Should I really have to pay taxes on it to keep it out of the public domain?
A house takes up physical space. Intellectual property doesn't.
The reason we have property taxes is because maintaining the environment around the house costs money. There's no roads and sewers and schools for books.
there are a lot of costs involved with enforcing property rights. It's not sewers but it is legal departments, customs offices and law enforcement officers.
Also, a patent takes space by disallowing me to use the same kind of invention (even if I came up with it independently). And a copyright sometimes stops me from being able to use a "cultural common". They most definitely take space. And real estate property taxes are often supplemented by "road maintenance levies". They don't directly support the property's infrastructure when you really look into it.
Patents are a fairly large investment, plus they're a fixed life-span item. Although I'm largely against patents, fiddling with the fees associated with them won't help solve any problems.
Now when it comes to copyright enforcement, 99.99% of the copyrighted material out there is never formally published. It's source code, it's email, it's creative works produced and shared but never curated or packaged. How can you possibly tax all of that?
If it's not published, its protection comes mostly from not being seen (in private setting) or from trade secrets and associated laws.
If only want to use the tax as a way to make sure orphaned works can be shared, and patent trolls become unprofitable. I believe that an IP tax can help both. I think it is essential to force proper valuation of IP, and I think tying it to recovery (upside) and taxes (downside) is likely to give a proper evaluation.
It is not my intention to try to tax your own painting on your living room. I assume, by default, anything not listed, is valued at $0 for that year.
Do you understand that, regardless for copyrights or patents, your IP is not enforceable unless you can afford the court action?
I was going to mention that the enforcement cost is largely borne by the copyright holder, so there's a built-in tax there, but don't forget mechanisms like the DMCA provisions are cheap and can be applied with a heavy hand.
There's a solution to orphaned works: Reduce copyright to something like 25-50 years (plus life of creator?) and allow for one renewal, which requires a filing fee, for another 25-50 years. That's it. Suddenly all these orphaned works are liberated because it's not worth it for people to file.
Taxing based on valuation is absolutely, monstrously ridiculous. Many people write short fiction they publish online. Are you going to suggest they need to get an appraisal on their book, and then pay taxes on it? How many millions of people are going to review this and ensure that everything's tallied up correctly.
Orphaned works are a problem, but taxing them is not a solution.
> Are you going to suggest they need to get an appraisal on their book, and then pay taxes on it?
I keep repeating (and you keep ignoring) that I want no such thing, except when they expect damages for copyright infringement.
Taxing based on valuation is what is effectively done for every kind of property. If IP is property, there is no reason it should be exempt. And if it isn't property, it's about time we stop treating it as such.
It was suggested elsewhere that you would assess the value yourself, so if the only utility of your work is to hang it in your living room, you could claim it has $0 copyright value, and thus pay no tax.
The implication is that if someone decides to copy it, your claim for damages in court is based on that $0. But if your intent is to keep a private copy in your living room without the willingness to share with the public who gave you the privilege of copyright in the first place, perhaps that still remains fair.
That is the whole point. Either you agree that IP is real property and as such it should be taxed, or you don't and and you pay no taxes.
If your property has value, then you should pay property tax. If it has no value, you cannot claim damages if someone 'steals' said property since it wasn't worth anything. You can't have your cake and eat it. If you start taxing imaginary property, this will force IP owners to consider wether their IP has actual value or not and act accordingly.
Of course. But they will still be about a hundred times smaller than they are today.
Today, someone thinks of an idea, patents it and estimates its worth at $100M. Someone else develops the same idea and assigns a value of $20K. That's the error bar TODAY.
Inventor has no incentive for realistic estimate - they will always overestimate (no penalty for that). An infringer has no incentive for a realistic estimate (no additional penalty for that if he loses in court).
An ip tax will decrease the error bars by forcing the patent owner to pay for overestimates.
In practice, a poor creator already has no recourse - enforcement is by court action, and courts are expensive. If you can't borrow 1% of the value against the asset to pay the tax, it's not worth what you think it is. Declare the value $1 for this year, pay 1 cent.
If you break through - then you'll have proof of value, be able to pay the tax, and sue/recover accordingly.
But if they had something worth keeping, they could ideally get financing from someone who'd want to own it. At least, that's what should happen in an efficient market.
A poor person will have to sell his idea or else he wont be able to patent it. What was proposed may solve some problems, but if it deepens that inequality hole I dont think its worth it.
If you own a unused property, in comparison, shows you have significant funds
A poor person already has to sell it. Patents cost a minimum of $5,000, usually not less than $20,000 and often not less than $50,000 all things accounted for. That's just filing - it can take upwards of 5 years to get approved or rejected. And then, it is STILL worth nothing because you have to sue to enforce infringement, at costs north of $100,000 more often than not.
I propose that the value of IP for tax purposes is owner assigned. If you have no money to pay the tax, just declare $1. The catch is, that would make you ineligible to recover much more than that in the case of infringement.
As far as poor people, it changes little to none. But it grounds patent valuation, which are now arbitrary.
There are a few fundamental flaws with your proposal, but namely the inventor of a patent or holder of IP generally does not just randomly assign a value to their IP and win that amount in the instance of infringement. It's sort of the whole point of proving damages, because it would be impossible to calculate future damages for a violation of IP at the time the IP was created.
For example I invent and patent the widget and assign a $1B valuation to the invention. Apple violated my patent, manufactures the widget and sells $100M. Should I sue, my potential damages have nothing to do with the $1B valuation I made up but with the damages I suffered as a result of Apple violating my patent.
Alternatively I write a book and slap $1 valuation, because I assume there is no market for my writing or to avoid the big tax until I make it big. JK Rowling Violated my copyright and slaps her name on my book and sells millions of copies, again my damages have zero relation to the valuation I created for the IP.
Property taxes are a yearly thing. I did not explicitly state that, but my suggestion (which I have made numerous times both on HN and on Reddit) is that every year one can assign a different value, which addresses the majority of your complaint.
The other part, about damages, is a grey area today. It is up to the jury/judge to decide how much value to assign to the infringement, but they start from arbitrary statements - which is why Oracle can claim 9 lines are worth $5B even though they've been giving them away for free for a long time.
Why is there a reason to tax real estate property at 1% of its valuation per year? Same arguments apply, in addition to the one I gave (grounding valuations) which you dismiss without explanation.
> Remember that patents eventually run out, in which case they are 'taxed at 100%'. :)
First of all, so what if they run out? Other kinds of property also depreciate and we still tax them.
Second, copyright has effectively ceased to run out around 1970. So there is every reason to tax IP.
"Why is there a reason to tax real estate property at 1% of its valuation per year? "
Because there is an acute supply problem in Vancouver real estate. Making them pay 1% for empty homes incents people to rent them out.
The same arguments do not apply at all to IP.
"First of all, so what if they run out? Other kinds of property also depreciate and we still tax them."
'Depreciation' and 'expiration of patents' are not the same thing at all.
A 'patent' is the exclusive right to own a piece of IP for a period of time, after which it's public domain. It's basically pointless to add on a 'wealth tax' to a patent - there is already a tax on royalties and that makes sense.
When you buy your property, it does not become 'public domain' after 10 years - it's a completely different economic vehicle.
"Second, copyright has effectively ceased to run out around 1970. So there is every reason to tax IP."
Copyright and patents are totally different things.
Someone who created a unique song, has the right to protect it for quite some time. Moreover - it was 'made famous' by them, i.e. it's a brand that is invested in.
Disney should be able to 'own' Mickey Mouse forever - they created it, and they back it. They spend billions supporting 'Mickey' and there's no reason someone else should be able to rip them off by selling clones. In much the same way fashion brands are protected.
Drugs, algorithms, other kinds of solutions, there is definitely a 'public good' in those things being public after some time, so it's fair that IP protections run out.
In New York you pay 1% property tax/year (effectively), and it is quite universal. I think vancouver's 1% on empty is an addition to any property taxes. I was referring to the prevalent 1% tax on property which is applied to cars, places with unlimited apartments etc.
Disney should be able to own Mickey trademarks for as long as they maintain them - but they shouldn't be able to tell me not to copy or remix Steamboat Willy. They got 50 years of monopoly on it they were promised when they released it. It should be public domain now.
There are property taxes everywhere, not just in Vancouver. This is what I was referring to.
And actually, there IS a crisis of intellectual property. It is not a question of affordability, but rather of frivolousness, overreach and submarining. A tax is likely to solve some aspects of that.
The tax solves nothing, just as Vancouver's tax won't actually address the problem. It'll just generate more tax revenue.
Intellectual property is such a vast, ethereal concept that even pinning it down is damned near impossible.
That picture your kid drew that's on your fridge, do you pay tax on that? What if you put it on Instagram? What if your picture goes viral? What if it's co-opted by Wal-Mart and put on a bag, so you file a cease and desist? What if you make your own merchandise? There's such a slippery scale here that to tax everything, unilaterally, is absurd, and pinning down when something is impractical.
Are you purposely ignoring the discussion? There was no one, especially not me, talking about taxing the picture your kid drew. You're arguing a strawman.
Not because patents are empty, but because this would create the incentive for patent owners to assess a real value to them, and not "bajillion dollars", which they do now.