The Hamiltonian Origins of the U.S. Patent System, and Why They Matter Today
56 Pages Posted: 31 Mar 2019
Date Written: March 30, 2019
I revisit one of the earliest administrative functions of the United States government, the granting of patents, to show why the U.S. Patent Office fits so poorly with the contemporary model of an Executive Branch agency in the modern Administrative State. In parallel with other early “proto-agencies” the Patent Office participated in the most important job of the new national government: economic development. Because of the importance of this policy, and the limited power of the then-new federal government, Congress, courts, and the executive branch emphasized concerted action rather than separation of powers.
The Patent Office had been performing its basic function for nearly one hundred years when the modern “administrative revolution” began its sweep though the federal government. The modern administrative state was created to counterbalance the emergent power of large, concentrated industries; it had little relationship to the original Patent Office mandate from Hamiltonian times. As a consequence, contemporary administrative law is a poor fit for the Patent Office. Administrative law, especially the Administrative Procedure Act (“APA”), governs power relations between federal agencies and the industries they regulate, with courts often acting as referee. But the Patent Office grants government-sanctioned property rights to dispersed inventors in an extremely wide variety of industries, then lets private investment, transactions, and enforcement take over. Since its founding, the Patent Office has been charged not with regulating concentrated industries, but with handing out a small dollop of state power to dispersed parties in the form of individual property rights.
Although some features of the modern administrative apparatus surely apply to the Patent Office, it is best overall to respect and maintain the (pre-APA) regulatory principles that emerged from the early Hamiltonian economic development state. These embody a more submissive relationship to courts (no Chevron deference, for example); and they largely leave it to Congress to make substantive patent law. (Courts occasionally create new patent requirements also, through the common law process of applying certain old, broad statutory provisions of the Patent Act -- some of which have changed little since the first Patent Act in 1790.) None of this means that the Patent Office is a weak agency. It is just a very different agency. Although, like most modern agencies, it surely affects the competitive conditions of private actors (primarily by examining patent applications, and determining which will issue as patents), it does not quite regulate in the classic APA-era sense. It has instead a more active, participatory role in economic activity -- just as Hamilton envisaged.
Suggested Citation: Suggested Citation