22 votes

Sears Steals American Inventor's Idea

http://youtu.be/sHIktR-3Ci4

In the small town of Cabot, Pa., Dan Brown is the proud inventor of the Bionic Wrench, a product made solely in Pennsylvania.
His goal from day one was to make his invention in America.
This time last year, Brown's factory was buzzing, with his employees working overtime to fulfill holiday orders. With the help of Sears, Brown's company sold more than 200,000 wrenches at Christmas alone.

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"The most popular argument

"The most popular argument for patents among economists is the utilitarian one that a patent for a certain number of years is necessary to encourage a sufficient amount of research expen­diture for inventions and innovations in processes and products.

This is a curious argument, because the question immediately arises: By what standard do you judge that research expenditures are “too much,” “too little,” or just about enough? This is a problem faced by every governmental intervention in the mar­ket’s production. Resources—the better lands, laborers, capital goods, time—in society are limited, and they may be used for countless alternative ends. By what standard does someone assert that certain uses are “excessive,” that certain uses are “insuffi­cient,” etc.? Someone observes that there is little investment in Arizona, but a great deal in Pennsylvania; he indignantly asserts that Arizona deserves more investment. But what standards can he use to make this claim? The market does have a rational standard: the highest money incomes and highest profits, for these can be achieved only through maximum service of consumer de­sires. This principle of maximum service to consumers and pro­ducers alike—i.e., to everybody—governs the seemingly mysterious market allocation of resources: how much to devote to one firm or to another, to one area or another, to present or future, to one good or another, to research as compared with other forms of investment. But the observer who criticizes this allocation can have no rational standards for decision; he has only his arbitrary whim. This is especially true of criticism of production-relations. Someone who chides consumers for buying too much cosmetics may have, rightly or wrongly, some rational basis for his criti­cism. But someone who thinks that more or less of a certain re­source should be used in a certain manner or that business firms are “too large” or “too small” or that too much or too little is spent on research or is invested in a new machine, can have no rational basis for his criticism. Businesses, in short, are produc­ing for a market, guided by the ultimate valuations of consumers on that market. Outside observers may criticize ultimate valua­tions of consumers if they choose—although if they interfere with consumption based on these valuations they impose a loss of utility upon consumers—but they cannot legitimately criticize the means: the production relations, the allocations of factors, etc., by which these ends are served....

continued here, and you all should read it: http://mises.org/rothbard/mes/chap10e.asp#7._Patents_Copyrights

Dr. Rothbard's Commentary on Patents and Copyrights

I read section 7 as you provided. Thank you for including that.

Dr. Rothbard wrote: "Patent, then, has nothing to do with implicit theft. It confers an exclusive privilege on the first inventor, and if anyone else should, quite independently, invent the same or similar machine or product, the latter would be debarred by violence from using it in production."

I agree with his philosophy to the point about independent development of a similar device already patented. In the universe of thought, many people have independently created similar or even the same methods to build a machine that does work.

However as I wrote earlier, when a person outright steals another's invention protected by an existing patent, that is wrong.

For example; a contest is offered by a wealthy person, say Scrooge McDuck. Mr. McDuck wants a machine designed and built to accomplish some work. He puts an advertisement in various national newspapers calling on all inventors to enter the challenge with a prize awarded for the design that he thinks works the best.

Many engineers apply and put forth their efforts. Machines are built, many of which look the same and function similarly. But one stands out and McDuck awards the prize to him or her.

The engineers all apply for patents to protect their work even though the inventions function the same. Don't they deserve exclusive control of their individual design? I believe they do.

Some would argue, "If the machines operate the same, who's design should take precedent?" My opinion is, "let the free market decide that!"

Inventors have a right to protect their inventions through the patent process, even those machines that function the same as another's work.

So maybe the argument is that patent law has to change relative to the exclusivity of the final work. Plaintiffs in patent litigation have to demonstrate the defendant transgressed the original design by theft as opposed to a wholly owned and separate but similar invention.

I believe you're begging the question.

You say: "Don't [the engineers] deserve exclusive control of their individual design? I believe they do."

That's basically a restatement of the question we're arguing about, and a bare assertion of your position, given without argument or evidence. The question we're arguing about is whether or not ideas are property, or at least whether or not the government should treat them as such by assigning ownership and property rights (exclusive control) to ideas.

I've given my defense (under my "Sears didn't steal anything" post) of why ideas are not property. You've neither refuted my arguments nor given any arguments to support your own position. So you're not really engaging the question, you're just repeating your position.

So my answer to your question about the engineers is as follows. No, they don't deserve exclusive control of the designs they created, because if I see the designs they created and start to use my mental copy of their design ideas to produce my own machines, I'm not depriving them of their copies of their design ideas. All I'm doing is competing with them, and competition is the lifeblood of the free market.

Asking the government to intrude on the market by granting patents just denies me my freedom to use what's in my mind and my own hands and property to do as I please, when it doesn't harm others' freedom or property. Like all government intrusions, it harms the free market.

This is Such an Interesting Topic

I am not a devote Libertarian because there are a number of principles espoused that I don't fully understand and or currently support. I claim ignorance on my part.

One of the beliefs is that copyrights and patents are an impediment to free markets. We are told by followers of Libertarian philosophy that ideas are not real property and therefore not subject to the concept of theft. Some of my fellow DP patrons who have posted on this topic believe that duplicating an idea created by another person without permission is not depriving the creator of the idea; that such an act spurs innovation and enhances the exploration of better ideas cloned from the original. I find this concept on its face hard to accept.

Here is my reasoning.

If a person invents something, he or she does so with the intention to profit from it. Yes, there are individuals who are altruistic and create ideas to share with the world and have no desire to receive a benefit from its creation other than the adulation of society. But this instance is the exception not the norm.

The process of creative thought is one of the many natural rights we are born with into this life. For example, an engineer in some industry (e.g., science, medicine, liberal arts, etc.) uses the application of knowledge and training to observe, question, theorize and suggest solutions to the real-world needs of society. Those suggestions or ideas, are fostered by their curiosity to: build machines to do simple or complex work, to cure disease, to entertain, etc. Since our minds are not connected together as in a matrix hive, their idea belongs to them alone. If they freely choose to share it with the world, that is their right to do so. But if they desire to keep the idea secret onto themselves until such time in the future, that is their right as well.

In order for the creator’s idea to maturate, mental energy must be expended to shape the idea into a workable solution. They must raise capital for development. They must build a prototype or working copy and test or critique it rigorously. Initially, the engineer will most always experience multiple episodes of failure during evolution of the idea which translates into a loss of money. Undaunted, he or she continues to pursue the idea because of their strong belief in themselves and the potential it offers to the free market.

Now along comes a second person and by whatever means, becomes aware of the engineer’s idea. The question becomes, does this person have the right to copy the engineer’s cumulative work, create a variation of it and benefit from that modification?

The Libertarian answer is yes, they should have that right because the original idea is intangible property and thoughts or ideas have no value. But ideas do have value to the creator and no one has the right to tell another person what is valuable and what is not. If an idea is in a stage of development whose end is to become tangible property, then what right does another person have to take it? To copy or duplicate is to take and to do so without permission from the originator of the idea and without some sort of remuneration for the effort already put forth is theft.

In my opinion that is wrong and the originator has the right to sue for tort in civil court.

"Since our minds are not

"Since our minds are not connected together as in a matrix hive, their idea belongs to them alone."

its correct that our minds are not connected together (some would argue this) in a matrix, but people's ideas reside with them alone. introducing the word 'belongs' implies ownership, but that is what you are trying to prove! and simply making a declaration is not a proof!

If they freely choose to share it with the world, that is their right to do so. But if they desire to keep the idea secret onto themselves until such time in the future, that is their right as well.
yes. it is a person's right to keep whatever ideas they have in their head to themselves.

Now along comes a second person and by whatever means, becomes aware of the engineer’s idea. The question becomes, does this person have the right to copy the engineer’s cumulative work, create a variation of it and benefit from that modification?
why are you dismissing the means by which someone becomes aware of the 'engineer's idea'? is there not a difference between someone breaking into your office, thus violating your property rights, and stealing schematics and someone independantly thinking of the idea? any system of thought that cannot draw a distinction is fundamentally flawed.

I've asked below, this question...

And received no response yet. Perhaps you could enlighten us on how your side views it best to handle this problem.

Assuming said engineer from above finishes his entire 10 year process of prototyping, testing, branding, naming and puts the equipment together to begin making them. He sells his first few and some large company across the street buys one. The CTO gathers a team together to make a knock-off and rush it to market. They set up shop in a matter of days. Due to their existing and paid off larger manufacturing department, they undercut the price dramatically. So they make them and enlist their much larger marketing team to steamroll over the original creator. Their sales soar while no one feels it's a fair price to pay a premium for the original. The original creator loses his investment of money and time and sees someone else make a fortune from the theft of what he personally created.

This, to your side, is ok?

Right on!

I second this!

(It's another reason I'm not a Libertarian with a capital "L".)

Theft is theft.

Ideas and concepts do have value, and systems should be in place to protect their creators and ensure their "first crack" at capitalization.

What would the Founders do?

How can I buy a PA made wrench or two?

.

Sears did much the same thing

back in the seventies to an individual who innovated the ratchet wrench. It took almost two decades but the guy prevailed and the thieves were forced to settle up to a tidy sum for him. The best lesson from this is to never do business with these pirates. I've read the company who is manufacturing the knock off in China is owned by none other than Bain Capitol.

There are no politicians or bankers in foxholes.

Sears is another name for K-Mart,

K-Mart owns them bought and paid for with money basically stolen from individual investors. Remember when K-mart announced they would be coming out of bankruptcy. That their ship was financially straightened out. Only to pump up the amount of money in their stock. Then on the last day under bankruptcy, they absorbed all the funds. Opening up some time later under another symbol. So how could Sears be the same old Sears
2003
January 14 - Kmart completed review of store portfolio and distribution network, and announced plans to close 316 stores and 1 distribution center. The Company also announced that it had obtained a $2 billion financing commitment from GE Commercial Finance, Fleet Retail Finance and Bank of America. April 23 - The U.S. Bankruptcy Court in Chicago entered an order confirming Kmart�s First Amended Joint Plan of Reorganization, as modified, following a strong vote in favor of the Plan by the Company�s creditors. With this milestone achieved, the Company targeted emergence from Chapter 11 in early May 2003.

May 6 - Kmart completed its fast-track reorganization and emerged from Chapter 11 as a new and vital enterprise. The Company also closed on its $2 billion exit financing facility. Edward S. Lampert was elected Chairman of the new Board of Directors of Kmart Holding Corporation.

June 10 - The common stock will begin trading on the NASDAQ National Market under the symbol KMRT.

2004
May 17 - For the fourth consecutive fiscal quarter, Kmart Holding Corporation reported improved year-over-year profitability and liquidity.
November 17 - Kmart Holding Corporation and Sears, Roebuck and Co. agree to merge. The new retail company named Sears Holdings Corporation will be headquartered in Hoffman Estates, IL The combination creates the 3rd largest U.S. Retailer with $55 Billion in annual revenues and will have a broader retail presence and improved scale and operational efficiency. http://www.searsholdings.com/about/kmart/timeline.htm

I'm buying a BIONIC Wrench and Snip, Snip to that Sears CC

Audios Sears... you lost all my good will.

Yes, please BUY this wonderful libertarian BOOK! We all must know the History of Freedom! Buy it today!

"The System of Liberty: Themes in the History of Classical Liberalism" ...by author George Smith --
Buy it Here: http://www.amazon.com/dp/05211820

"Free Trade" at its Worst

For all you libertarians out there who think that "free trade" is the cat's pajamas, here is an excellent example of why it doesn't and can't work without a foundation of God and morality.

The godless system we have in place is totally in the clutches of those who can game that system.

The big secular humanist boys, who treasure profits far more than people, can and will beat the little guy every time.

Do not shop the big box stores or the department stores for your Christmas presents. Give the mom and pop stores as much of your business as possible. We need to start and economic boycott, one target at a time, and bring the system to it's knees.

Please give your biblical defense of patents

I don't believe that the Mosaic Law had the concept of patents. And of course Christ came that we may no longer be slaves to the law, but live by grace.

Can you give a defense of patents, from the Bible?

FSM

If we could only find a way to get everyone to accept the Flying Spaghetti Monster as their savior, all would be well.

Well tell me please ...

... what does the Flying Spaghetti Monster teach us about how we should behave toward one another? If it's not LOVE THY NEIGHBOR: don't steal from him, don't hurt or murder him, don't lie about him, don't even covet his stuff, because you will be held accountable for your actions and perhaps burn forever in hell, then what good is he?

I find that most libertarians are dumber than a bag of hammer handles. They cannot think past their "I gotta be me" and everyone else get outta my way mentality. Libertarians worship puny gods, themselves! Very pathetic way to live! Meaningless, in fact.

You could not be more incorrect

The Libertarian Party has an overwhelmingly huge number of members who hold university degrees in physics, engineering, chemistry and the like as compared to the Ds and the Rs.

Go back to reading Harry Potter, the Bible or some other work of fiction and leave the guidance of our nation to the educated members of society.

Glad this post

and the ensuing "debate" / discussion are here.

This is an important issue in that it pits the / a Libertarian / balls-out free market Ideology against the limits of Justice. There are issues of right and wrong, Honor and respectful conduct, "back-handedness", deception, and conniving intention. There are issues of rather gross inequality and "dog eat dog".

[I am really addressing the diverse comments resulting from the post.]

Questions:

1. Is the attitude of "Too bad for the little guy, but that's competition!" one that advances Justice?

2. Is pro-"dog eat dog" a civilized mentality / ethos?

3. May we please hear from a Ron Paul scholar / Apostle [I mean this as a compliment!] as to what His views are / voting record is with respect to this type of issue?

4. Are things intangible really not of enough value to warrant protection? Think carefully. (Poem read aloud by someone other than author who claims to be author = OK? How about blatant plagiarism? Do we sh*t-can these concerns, too?)

Lots of fine lines.

I am highly opinionated about this stuff, but I'll defer for now. I am a musician and a visual and conceptual artist. In a former life I was an officer in a start up business with some pretty legit IP. I wrote grants for funds, raised $$$, did technical writing and abstracts for our patents and for legal firms. Content generation, contract review ... yadda yadda yadda. In that experience--and due to the nature of what we did and its potential [To explain it takes too much time and isn't required for this discussion, so I'll abstain.]--we raised stoopid amts. of angel capital but also brushed shoulders with some SERIOUSLY unpleasant vulture capitalists.

Much worse VCs came around after I left (of my own accord). The inventor (not me) was far too trusting. He almost literally got F*CKED out of his own business by VCs who twisted contracts around and such.

I simply have my doubts as to how anyone can talk up (OK... more like *excuse*) such tactics--almost exclusively employed by the powerful / wealthy to take from / keep down those with less resources (but often with stronger ideas and certainly better intentions!)--in the same sanctuary where we laud Liberty, Justice, rights to pursue success by working hard and reaping rewards, and so on.

I guess this is my first truly significant moment at the DP where I have that "WHOAH!" feeling... like we need to work on us here first, before trying to do all of this saving of our country, its political system, etc.

I admit, though, I am as guided / misguided / prejudiced by my experiences (more like DEEP FRIED in this case!) as one could ever be.

What would the Founders do?

This is yet another tragedy

He really should have had a bi-directional general exclusivity clause in his contract with Sears. Ultimately, he should never have gone exclusive with just one company. The reality of his situation is that even if he had a patent, he likely would not have had a case since they followed a 60 year old patent (that obviously superceeded his) by a simple little difference. On top of that, he could not have gotten a patent that was general enough to cover their nockoff because the earlier patent was in place first.

However, unlike some comments here, it's not as simple as should we have patents or not.

The argument, like so many others, boils down to the existence of corporations and the practice of fractional banking. These two practices enable mega-conglomerates to grow large enough to outplay the small inventors, artists, song-writers, actors, software coders and other creative people. Until that scale imbalance is evened out by the elimination of the corporation and the banking games, we absolutely need patents to enforce a safe startup period of propriety for these creative outlets.

Without patents, all these endeavors will dry up immediately in today's environment. The guy with a game changing idea that takes $100M+ to develop will never raise that money. The song-writer would never be able to earn a living selling all his effort for nothing more than just the first 99 cents. Every morsel of creativity that entered the market place would instantly be bootlegged globally, thus guaranteeing the majority of profits would go directly to those best able to buy influence and speed to market.

If you really want to eliminate patents, help return markets to being local and accountable so people can compete with 'their peers'. There's simply no other way for a startup to compete with monetary influence on a global scale.

Your analysis is exactly backwards.

The reason small guys can't compete with the big players in IP-heavy industries is because all the big guys own the massive IP portfolios and the legions of lawyers to defend them.

That's the reason why the only players in smartphones are megacorps like Apple, Google (who just bought Motorola for their patent portfolio), Microsoft, Samsung, and Nokia.

Intellectual Property is just yet another intrusion of Big Government into the free market, and like all the other big government intrusions in the free market, the megacorps love it because it helps them become even more entrenched.

All innovation builds on the innovation that comes before. IP hinders that process, decreasing innovation.

By the way, I do agree that business models for innovations and art will change drastically if we were to end this government intrusion and return to the free market for ideas, and that those most able to efficiently bring innovations to market first will be the most profitable. But that's a good thing. We WANT the most efficient producers to be the most profitable.

To be fair...

here's the 'one that got away' from my talking to publicly about it. http://www.coatesengine.com/patents.html These guys got the patents and then built it into a company.

My beef isn't that they beat me to it but that they can't seem to get it through their head that their target market should be existing domestic V8 engine upgrades. There are literally hundreds of millions of polluting, wasteful old vehicles that could cheaply be upgraded to today's standards and that would avoid replacing many of those entire vehicles just because of their engines. Instead, they are focused on motorcycles (tiny market) and stand-alone, medium electrical generators (another small market that's set to be replaced very soon.)

Even so, if that idea was to be made public, I can't see anyone putting the development money into the machinery to make cylinder heads when they know that someone else could push them out of the market. These things cost 8-9 figures to develop.

Your analysis is the one that's exactly backwards

As a proven engineer, designer, inventor and entrepreneur, I can tell you flat out, I have fought only one roadblock at every turn. That is funding.

Of course, one could blame this on the monetary system in play (and I very much do) but in this current system, we are forced to at least partially cater to their whims. That means that our business model must guarantee our future market being sufficient to repay the terms of the investment. Read that again with an emphasis on the word 'guarantee'. Those guys don't do anything with any risk involved at any level, period, point blank. I can't stress this enough. It is why only creative financing will fund the newest advances. Believe me, I know.

Reference http://www.google.com/patents/US5368490 and you'll see a pretty good idea for improving the safety and convenience of wall power outlets. When I undertook that one 20 years ago, it would have taken $300k for the molds to make just the UL test prototypes to be destroyed and that was just using cheap molds that had a <100 use capacity. There was no online crowd to go to for this funding so I was forced into the normal channels. Unfortunately due to the investor demands, I was forced to let it expire. They forced me to get a patent, which I did and then they forced me into exclusivity. Showed them where they could stick it. That was lesson one. Never again that way.

Since then I (and some colleagues) have developed systems ranging from small to large, with minimal impact to massive and each time, the funding is the problem. Every problem you could name in the world today could be solved in one year because the technology exists today but the funding doesn't. If you remove patents, you completely destroy and already crippled system. However, if you solve that problem, I'll concede on the patents.

Another recent development that promises to assist in getting things to market is the DIY movement of 3D printers, user friendly open source CAD/CAM, intelligent machining centers, online materials databases and DIY automation. When these finally reach maturity, many more possibilities will open up. That offer the opportunity for at least a smallish group to complete the process and earn a living. Until then, if you want to create anything more complex than an iPhone case, it will take massive amounts of money. There's just no way around it.

So, back on topic, you say these things will happen more often when IP is vanished? I empathize with your concern over corporate patent trolls, but they're just not stopping the really big stuff. Those big, grand ideas are simply staying underground for the time being (and obviously NOT making MSM news) until such time as a path to completion is found. If you see these breakthroughs taking place at a university, those people caved for small, short-term money but they will rarely get to market. Same with grants. Both are cons and both are being used in scams. Even the invention shops and innovation creation centers mandate that you sign over nearly full control prior to receiving any help.

But let's say that we do get to the point where I can raise the money or assistance or materials online for free. That in itself is a tremendous undertaking. Why in the world would I want to spend all the time fundraising, promoting, re-designing, collaborating and conceding on my design when the end game for it becomes an open source file that the average Joe can download and print at home? If that 'printing' process costs too much for Joe, he won't do it and neither will any company. My goals are not to do those tasks. My goals are to hire those tasks done, and focus on inventing and creating and seeing people benefit from that creation. To do that, I must ensure it reaches the market so I also need control over it's future. I'm not in it to get filthy rich but without a paycheck, my time and that of any support team will definitely go elsewhere.

Government monopoly handouts is not a justified business model

I'm sorry you see your business as dependent on having the government intrude on the free market, stomp on our freedom, and hand out monopolies.

Like we previously agreed, removing this government aggression against liberty will change the working business models drastically. Just like soldiers would have to find different lines of work if we stopped all our foreign military adventurism, people whose jobs depend on government handouts such as patent grants would have to find different lines of work.

Please do

inform us how to solve any of the tough questions I asked. I understand taking the libertarian viewpoint and railing against the government but I'm curious as to how you think any of the creative types I listed earlier could ever make a living.

And you don't get to say 'wait until we get a truly free market first' because that was my line first. I copyrighted it. LOL

I'm glad you clarified below

I'm glad you clarified in another part of this thread which tough questions you were talking about. I answered there. Let's finish this discussion there rather than trying to have it in both places.

I don't have one:

But I believe I will get one. My whole life has revolved around tools.
I have tools that I have made myself and people ask what is that thing?
I have tools that I have hardly ever used. Some say I'm obsessed.
I want one of these and I will not be getting it from sears simply because in my mind, they played this man and he wasn't savy enough to know at the time. I think I will try to get a few of them from his company to give as gifts.
Had he not given them an exclusive, they would be all over the market place and his company might have been better able to weather the storm if you will, and be in a better position to ward off the giant machine coming in to munch up his business and employees. I'm not saying beat them, but at least have a fair chance to compete. Which is what I have seen happening for decades. No fair playing field at all. Crush the little fellow so he has no chance and that is not what my America is about.

~~~~~~~~~~~~~~~~~~~~~~~~~~
I love my country
I am appalled by my government

Yep.. if you don't protect the little guys, there will be no

future for the average American nor for innovation through that avenue. A person has the right to benefit from their own naturally born creativity if they choose to.

Patriot Cell #345,168
I don't respond to emails or pm's.
http://www.youtube.com/watch?NR=1&feature=endscreen&v=qo8CmO...
Those who make peaceful revolution impossible will make violent revolution, inevitable.

edited to remove original

edited to remove original reply. replied in error with poor assumptions. not enough info for me to draw conclusion i originally drew, and i don't care enough to ask clarifying questions.

cheers,

Don't be fooled, IP harms the little guys most.

Big businesses have the biggest patent portfolios and the legions of lawyers to defend them. Megacorps love IP because it helps them become more entrenched and keep out the upstarts.

Patents started as a way for Kings to grant monopolies to their cronies. It's a fundamental feature of crony-capitalism. They have no place in a free market.

Welcome

To the world of Globalisation.
More to come..

"Hell is empty, and all the devils are here" (Shakespeare)
RP 2012~ Intellectual Revolution.

Sears didn't steal anything.

Ideas are not real property, because when I copy your idea, I don't deprive you of the idea; it's not like stealing your bike, where I deprive you of your bike. Because ideas are infinitely duplicatable at zero cost, there need not be any scarcity in ideas. And since there is no scarcity, there is no justification for claiming property rights in ideas.

When the government creates artificial property rights in ideas, they are intruding on the market and granting someone a monopoly that they didn't earn. They're also restricting your natural right to do what you will with the ideas that are in your head. Because once someone else's idea is disclosed to you, the copy of that idea in your head is now yours. So so-called "intellectual property" laws are government intrusions into the market, and they limit our natural rights.

Someone at this point may be thinking that by copying someone else's idea for a product, you are depriving them of something: by selling to their potential customers and thus satiating those customer's demand for the product, you're depriving them of potential customers. But I'd like to point out that we already have a term for depriving other businesses of potential customers through selling those customers what they want. That word is "competition".

Sears (or really, Sears' unnamed Chinese wrench supplier) is competing with Dan Brown's company. And apparently kicking Dan Brown's butt. Good for that Chinese supplier, and good for Sears. Sears is wealthier for it, and that's good for anyone with any kind of financial stake in Sears. Dan Brown better get off his butt and learn to compete, rather than whine to the MSM hoping for some kind of corporate welfare in the form of IP laws.