Brian Tabox’s four-hour drive in Los Angeles traffic to meet with Dr. Howard Sartin, a psychologist best known for devising an approach for handicapping horse races, demonstrated his flexibility and commitment. The trip was part of his efforts to help retirement investors and provided Brian with valuable insight. Dr. Sartin told Brian that the surveys retirement investors completed to assess risk, then in vogue, were worthless. Dr. Sartin stated that the retirement investors would provide what they thought were the “correct” answers, which had no utility in evaluating their aversion to risk. Brian stated that Dr. Richard Thaler (who later received the Nobel Prize) agreed with Dr. Sartin, and thereafter, Brian determined to seek other ways to help retirement investors.
After this and other research, Brian determined to explore how automatic procedures could help retirement investors. He reasoned that then-current procedures required action, such as shifting out of money-market type funds, to succeed. He wanted to establish the viability of reversing this by providing that retirement investors had to take action to fail.
Brian was able to convince the owner of a small manufacturing company in the Midwest to permit him to operate a pilot based on the premise that it would benefit the workers. Brian invested considerable time to test his premise of opt out to fail. The pilot was so successful that Drs. Thaler and Bernartzi wrote about it in a series of papers titled “Save More Tomorrow.” The success of the pilot was instrumental in Congress passing laws based on Brian’s premise. Consequently, retirement investors have hundreds of billions more in retirement savings.
Brian’s Motivation
Brian was motivated by the promise of patent protection in the Constitution and in the laws passed by Congress, which were not in question at that time. However, money managers (“Wall Street”) refused to share even a tiny portion of the billions of dollars they made for using his work. Instead, they and others lobbied to change the law retroactively. Wall Street and others were successful in convincing the Supreme Court. Lacking money for health insurance, Brian delayed medical appointments and subsequently passed away from melanoma.
Justice for Brian
Brian’s and others’ reasonable reliance (based on a consensus view of the law at that time) on the representations made by the United States should be honored. As James Madison opined regarding the United States honoring its promises:
Mr. Madison observed that it was needless to go into proofs of the necessity of paying the public debts; that the idea of erecting our national independence on the ruins of public faith and national honor must be horrid to every mind which retained either honesty or pride
Therefore, Congress should provide Brian’s estate and others with the ability to obtain just compensation. Such action would benefit all but the dominant industries by encouraging future innovations.
An Outline of One Approach
Even the Supreme Court cannot give Brian his life back and Congress, unlike the Supreme Court, is very limited in changing the law retroactively. However, Congress can change the law prospectively to justly compensate Brian and others who relied on the law.
It can provide for patent extensions for a period measured from the time that the Supreme Court started to change the law until enactment of the new law. For example, this could begin with when the Court agreed to take the Bilski case. Any delay in the reissuance of the patent should be added to the patent term,
The legislation should provide for reinstatement of expired patents at no cost. Further, the new extensions should not be subject to any restrictions or limitations based on agreements which devalued innovation based on the Supreme Court’s changing the law. This would be any agreement after the Court agreed to hear the Bilski case.
The affected innovations would be those which received objections based on what constituted “patentable subject matter” or section 101. The objections could be from the United Stated Patent Office or from parties unrelated to the inventor in the course of attempts to license the patent.
Why is this Good Policy
It is fundamentally good policy for the United Stated to honor its promises. Failure to do so results in persons not acting based on representations of the United States to the detriment of all. In the case of innovators, many small inventors no longer believe what is stated on their patents. This means that many no longer innovate because they rightfully believe that only others will benefit from their work.
The restoration of rights will result in a transfer from the “takers” to the “makers.” Fundamental to capitalism is the accrual of resources to those who produce value based on the premise of incentives and the fact that the producers of value are more likely to employ capital productively than the “takers.”
It is not unfair to the “takers” as they receive notice of the pendency and issuance of patents. In Brian’s case, he personally let many know of the pendency of patent protection.
Providing patent protection to patents affecting financial service firms has been broadly criticized. Congress even passed special laws enabling challenges to “business methods patents” which name underscores the capacity to mislead as the legislation was specific to patents affecting the financial services industry.
The evidence emphatically supports the necessity of incentives for innovation in this area. Brian’s innovations are a case in point. As noted above, his innovations resulted in hundreds of billions in retirement savings.
If there is no need for incentives in this area then financial service firms, with their vast resources, should be able to demonstrate either that Brian’s work was not critical to this outcome or that their own innovations dwarfed the significance of Brian’s work. If instead, as appears to be the case, the evidence shows that Brian’s innovations were of greater value to retirement investors than all of those of the financial services industry combined, this should embarrass any person who would continue to make this argument.
Publius is the collective pseudonym used by Alexander Hamilton, James Madison, and John Jay, three influential Founding Fathers of the United States. Together, they authored the Federalist Papers, advocating for the ratification of the U.S. Constitution. Hamilton, Madison, and Jay each brought their unique expertise in economics, political theory, and law to the essays, which continue to be revered for their impact on American political thought.
This Author bio is reserved for authors who wish to remain anonymous.
