August 12, 2007
Some Problems with Patents
Via Organizations and Markets, Stephan Kinsella over at the Ludwig von Mises blog favorably surveys the case against intellectual property:
The most recent study I'm aware of is reported in my post Do Patents Discourage Innovation? Yeah. But So What.: Boston University Law School Professors (and economists) Michael Meurer and Jim Bessen conclude (as summarized by Patently-O):
"the pair has compiled a tremendous amount of economic data regarding patents and companies who patent. ... Meurer & Bessen's bottom line: On average, the patent system is bad for innovation. They agree innovator firms often profit from their own patents. However, the pair's data shows that the innovator firms are also the ones most likely to be targeted by other patent holders. (litigation, licensing, etc.) In today's system, they find, the disincentives created by other people's patents outweighs the incentives to build your own portfolio. I.e., on average, the patent system discourages innovation."
And here's another recent study about how patents harm innovation: Patents Chilling Effect on Science, reporting that:
"The American Association for the Advancement of Science recently conducted a survey on the effect of patenting on the sciences. The results are frightening: 1/5th or more of all research projects in the United States are being chilled by patent holders. The sheer amount of research being canceled because of licensing issues is astounding, but at the same time many of these researchers hold their own patents and therefore contribute to the problem."
Posted by Robin Varghese at 01:48 PM | Permalink
Comments
Since I make my living in large part by translating patents, I should be championing the cause of patents and patent litigation. But I agree that it's probably a very questionable institution.
But then the whole concept of property rights needs a lot more questioning than it gets nowadays. There was a certain "19th-century German philosopher," as Gramsci called him, who started to do that, but nobody pays attention to him these days, do they? At least, no one who's "serious."
Posted by: JonJ | Aug 12, 2007 5:59:53 PM
The very usage of the term "property" in the context of copyrights and patents is a misnomer that shifts the discussion away from the critical question of incentives (the foundation of both copyright and patent law) and thus serves the interests of those who want more extensive patent and copyright protections.
In any society, the aggregate aesthetic and scientific innovation of its citizens constitutes a significant public good, which (like many public goods) is underproduced without government interference in the market. The value of these published creative outputs lies in the ability of everyone to make use of them, and build on them, without depriving anyone else of that simultaneous ability. However, much potential creative output would not be produced if individuals could not realize some material gain upon publication of their work, and so the government grants these artists, writers, and inventors a limited monopoly to induce them to publish these things that will eventually become public goods. (Publication is essential to the process - a symphony sitting in Beethoven's desk drawer is of no good to society, and so there is no monopoly granted.)
Implicit in this policy is a cost-benefit analysis: every infringement on the free market - in this case, the granting of a government-sanctioned monopoly - carries a cost to society. Here we weigh that cost against the value that accrues to society, and try to strike the right balance. We accept temporary limitations on what we can do with other people's intellectual output, in the interest of knowing that it will eventually enter the public domain, and that we will have an optimum quantity of creative work being produced.
This principle is violated when "intellectual property" monopolies are granted too broadly, as we are seeing now. For example, patents are routinely granted for "inventions" that are not truly novel and non-obvious developments over prior art. Also, copyrights for previously-produced creative works are regularly extended beyond their original terms. This can never be justified in the context of the incentive theory. (E.g. a law passed today that extends the copyright term on the Harry Potter books has no impact on J.K. Rowling's incentives to write those books. She already wrote them, and the then-existing incentives were clearly enough to prompt her to do so.)
These unfortunate developments, besides being the result of lobbying by special interests, stem from confusion over the underlying purpose of copyrights and patents - which is not to benefit the creators and inventors, but primarily to benefit society by ensuring the optimum production of creative and inventive works.
Posted by: Nizam Arain | Aug 12, 2007 7:49:53 PM
I have three software patents to my credit, and not one is worth the paper it's printed on (I was forced to file them by my employer). In each case, the patented work is just a trivial application of previous research.
The burden of complying with software patents is such that if any major software firm decided to enforce its stock of patents (whether or not those attempts would hold up in court), the whole industry would probably grind to a halt. As far as I can tell, the only thing preventing such a scenario is the threat of retaliation by the victim ("mutual assured destruction"). Much like the arms race during the cold war, each major software firm spends great amounts of its resources accumulating an ever-larger patent portfolio in the hopes of deterring its competitors from attempting to enforce their patents. The losers are small companies and independent software developers (especially open source projects) who don't have a legal department to vet every line of code or intimidate competitors into leaving patents unenforced.
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