Rearden Steel – Lawmakers Steal Royalties from Capitalists
America is often called the land of opportunity. Work hard and play by the rules, we hear, and you can lay claim to all that you have produced. It is the reason people risk death and imprisonment to set foot on American soil year after year. However, this magnificent legacy of freedom, justice, and achievement is under attack by Republican senator Jeff Sessions of Alabama. At the behest of a powerful lobbying group called the Financial Services Roundtable, Sessions is pushing an amendment through the Senate that would set a terrifying precedent for the protection of intellectual property rights.
The amendment centers around a company called DataTreasury, the creators of a patented system of digitally scanning, sending, and archiving checks. DataTreasury’s technology is used by most of the major financial institutions in the United States. However, many of those banks are infringing on DataTreasury’s patent by using their technology without paying royalties to do so. And although the United States Patent and Trademark Office upheld the patent when it was challenged last summer, Sessions’ amendment would prevent DataTreasury from collecting the royalties it is owed. According to the Washington Post:
“The provision, passed without dissent by the Senate Judiciary Committee in July and inserted into legislation scheduled for a vote by the full Senate this month, is a rare attempt by Congress to intervene in ongoing litigation, congressional experts say.
Although the amendment would not invalidate DataTreasury’s patents, it would spare the banks from paying for infringing them should courts decide that’s warranted. If DataTreasury collected a royalty of just a couple pennies per check, the cost would run into billions of dollars.”
Such an amendment would relegate DataTreasury’s patents to figureheads, stripping them of the rights our courts are sworn to protect. It all started when the Financial Services Roundtable mobilized their lobbying efforts, agitating for patent reform that would spare them from having to pay the royalties they owe. Of course, the lobbyists did not explicitly name this as their purpose. Instead, they cloaked their support for patent reform in the guise of “protecting banking institutions complying with post-9/11 security requirements from the abusive practices of patent trolling trial lawyers seeking personal enrichment, which ultimately will be paid for by checking account customers across America.” The amendment was approved by the committee within minutes and was given next to no attention by major media outlets.
The unvarnished truth, however, is that the financial industry is using its immense lobbying muscle and the entrenched culture of political corruption to avoid paying what it owes. Their concern is not bank customers, but the hit their own wallets would take. Tragically, it looks as though this amendment will pass and this horrifying degradation of property rights will become law. But how is this possible? How could such a travesty of justice take place in a nation founded on the rights to life, liberty, and property? The answer lies in the world of literature, in a work that has inspired millions of businessmen since its release.
In the watershed novel Atlas Shrugged, readers were introduced to Hank Rearden. A hardworking, self-made steel magnate who fought intransigently against tyrannical government invention in his affairs, Rearden symbolized a productive genius being exploited by lesser minds. Readers also meet Jim Taggart, the inept and corrupt railroad executive who operates by means of pull and government favors. At the behest of Taggart and his cronies, Rearden is brought to trial by the Bureau of Economic Planning and National Resources. His crime: selling his own product without government permission. The events leading up to Rearden’s trial are frighteningly parallel to DataTreasury’s predicament.
In bringing Rearden to trial, Taggart and his hoodlums appeal to “the public good” and “the national welfare” as reasons to limit Rearden’s profits. The justifications given for the limiting of DataTreasury’s patent royalties are similar. “This is a glaring example of the abuse of the system,” said former congressman Steve Bartlett (R-Tex.), president of the Financial Services Roundtable. But the goal of Sessions and Bartlett (the “Jim Taggarts” of this case) is not the sanctity of patent law – it is the attempt to subvert justice by means of intellectual dishonesty and political favoritism.
The Financial Services Roundtable has accused DataTreasury of being a patent troll who bought up patents with the intent to shakedown the financial industry. But the truth is that DataTreasury is a real-life Hank Rearden. From the same article:
[DataTreasury founder] Ballard asserts that he developed the basic architecture for the system in the mid-1990s, and applied for patents in 1997 and ’98. He said he realized at the time that paper would one day be obsolete for financial transactions but that paper and electronic images would have to coexist for a while. His system helped make that possible, he said.
Like Rearden, Ballard put his time and energy into the creation of a valuable product – and, like Rearden, a pack of corrupt competitors is conspiring to ensure that he never receives his just rewards.
Heroically, Rearden defeats his enemies. In a courtroom of his peers, he exposes the poverty of his attackers and their empty claim to be fighting for a noble purpose. Can DataTreasury do the same? Only time will tell, but its best hope for victory is to assert its rightful claims as Rearden did: openly, proudly, and without guilt. Nothing less will expose the moral bankruptcy of Sessions and these modern-day Jim Taggarts – and nothing less will secure the glorious tradition of property rights for future generations.
“I shall answer all the questions you are afraid to ask me openly. Do I wish to pay my workers more than their services are worth to me? I do not. Do I wish to sell my product for less than my customers are willing to pay me? I do not. Do I wish to sell it at a loss or give it away? I do not. If this is evil, do whatever you please about me, according to whatever standards you hold. These are mine. I am earning my own living, as every honest man must. I refuse to accept as guilt the fact of my own existence and the fact that I must work in order to support it. I refuse to accept as guilt the fact that I am able to do it better than most people – the fact that my work is of greater value than the work of my neighbors and that more men are willing to pay me. I refuse to apologize for my ability – I refuse to apologize for my success – I refuse to apologize for my money. If this is evil, make the most of it. If this is what the public finds harmful to its interests, let the public destroy me. This is my code – and I will accept no other.”