Ok, so lets start off with some facts: Copyrights can last anywhere from 70 to 95 years depending on when the work was created. Patents are 14-20 years. The case made for the existence of these is that it encourages innovation by allowing the creator to reap the extraordinary profits that come along with having monopoly privileges. My problem is the length of the protection should only last long enough to recoup the costs of the initial invention. So for instance pharmaceuticals cost billions to produce the first pill, but each iteration there after is pennies. So yea, in this case I can see it taking ~20 years to make the initial product worthwhile to produce. This however is a very unique situation, very few products have such a massive discrepancy between the first and the second good produced. It's turned the entire patent and copyright system into a ridiculous rent seeking game where companies speculate and seek IP protection for ideas that aren't even useful. This works exactly against the stated goal, virtually no product exists that isn't built on the back of some other technology and prohibiting the reuse of idea creates knowledge bottlenecks. What we've created is a tragedy of the anticommons (credit to Heller/Eisenberg), ownership is preventing desirable outcomes from coming to fruition. As we've seen with Wikipedia, OpenOffice and Firefox, protection from competition and the ability to extract rents are not required components for innovation, the system I'd prefer to see is one where protection length is variable based on the costs to produce and each years worth of protection would incur additional scrutiny and to also raise the cost of the protection to at least slow down the speculators. Heller Eisenberg paper From the conclusion:
Dodgy territory! Consider, for example, the abstract from Graham et al (2009, High Technology Entrepreneurs and the Paten System: Results of the 2008 Berkeley Patent Survey, Berkeley Technology Law Journal, Vol. 24, pp 1255-1327): We offer description and analysis of the 2008 Berkeley Patent Survey- the first comprehensive survey of patenting and entrepreneurship in the United States-summarizing the responses of 1,332 early-stage technology companies founded since 1998. Our results show that entrepreneurs have varied and subtle reasons for using the patent system, many of which diverge from the traditional theory that patents provide an "incentive to invent." Somewhat surprisingly, startup executives report that patents generally provide relatively weak incentives to conduct innovative activities. But while a substantial share of early-stage companies hold no patents, we also find that holding patents is more widespread than previously reported, with patenting patterns and motives being highly industry, technology, and context specific. When early-stage companies patent, they are often seeking competitive advantage, and the associated goals of preventing technology copying, securing financing, and enhancing reputation. We find substantial differences between the health-related sectors (biotechnology and medical devices), in which patents are more commonly used and considered important, and the software and Internet fields, in which patents are reported to be less useful. Startups with venture funding hold more patents regardless of industry, although unlike software companies, venture-backed IT hardware firms show a patenting pattern more similar to that of health-related firms. When choosing not to patent major innovations, early-stage companies often cite to cost considerations, and report substantially higher patenting costs than the prior literature has estimated. Our unique findings help inform the ongoing debate about the role and usefulness of the patent system Starts jolly, with the reference to how patents provide relatively weak innovation incentives. But then there are start-ups with venture funding. Changes to the system could well skew funding of new firm
The problem with the current patent system is a lack of understanding of the actual law. It is not allowed to patent anything found in nature, which makes many patents useless right there. It is also not allowed to patent "prior art" which mean anything published anywhere by anyone, which should automatically exclude patents on most things in the software world. It is also not allowable to gain a patent on something "that is obvious to any practitioner of the art". It is also not allowed to claim the same thing as another patent. The patent situation with high tech is especially vulnerable to all this. In a Patent the only thing that matters is the claims and they must be entirely unique and original. In other words there must be no one on the planet who has expressed the same thing. The problem is, are thousands of patents that make the exact same claims, not a few, not a few hundred, but thousands. There are also thousands of patents that should be invalidated by prior art, multitouch was first described over a decade before the first of many patents on it was issued. The matter of obviousness has reached absurd levels Many software methods have been recently patented that were implemented a decade or more ago in other programming languages but were never patented because they were so obvious. Judge Posner was right to toss the patent case before him out of his court. The patent system is so broken that no reasonable person can make sense of it. Patents are supposed to be about tangible things that can be touched and felt and made by hand or machine. They are supposed to advance the technological arts by providing the inventor of a truly unique and entirely new thing the chance to gain reward from it in the markets. The current situation is the opposite from that. There is little new and un-obvious about these patent fights since many of the patents would be invalidated under real scrutiny.
The problem with the current patent system is a lack of understanding of the actual law. It is not allowed to patent anything found in nature, which makes many patents useless right there. It is also not allowed to patent "prior art" which mean anything published anywhere by anyone, which should automatically exclude patents on most things in the software world. It is also not allowable to gain a patent on something "that is obvious to any practitioner of the art". It is also not allowed to claim the same thing as another patent. The patent situation with high tech is especially vulnerable to all this. In a Patent the only thing that matters is the claims and they must be entirely unique and original. In other words there must be no one on the planet who has expressed the same thing. The problem is, are thousands of patents that make the exact same claims, not a few, not a few hundred, but thousands. There are also thousands of patents that should be invalidated by prior art, multitouch was first described over a decade before the first of many patents on it was issued. The matter of obviousness has reached absurd levels Many software methods have been recently patented that were implemented a decade or more ago in other programming languages but were never patented because they were so obvious. Judge Posner was right to toss the patent case before him out of his court. The patent system is so broken that no reasonable person can make sense of it. Patents are supposed to be about tangible things that can be touched and felt and made by hand or machine. They are supposed to advance the technological arts by providing the inventor of a truly unique and entirely new thing the chance to gain reward from it in the markets. The current situation is the opposite from that. There is little new and un-obvious about these patent fights since many of the patents would be invalidated under real scrutiny.
I don't want to take the extreme position and say that it's all rent seeking... but a great deal of it seems to be. Venture funding in the high tech fields is very much akin to speculating in futures markets, same with the gene patenting that occurs in bio-medicine. Whatever negative impact occurs by removing the rent seeking activity would likely be recouped by removing or lowering the artificial barriers created by patents. A fine current example is smartphones, which without a doubt is built on the backs of existing technology, but is inundated with various patent claimants, significantly stunting the rate at which they should be evolving. Admittedly the variable length patents wasn't an idea original to me, I first heard of it from Alex Tabarrok. His analysis is focused around the ration between development costs vs. the cost to imitate. Like genes? http://en.wikipedia.org/wiki/Gene_patent It doesn't, if it did One-Click would never have been granted a patent, it's ludicrous because the technology is so completely reliant on previous works. Same deal with Priceline.com's "name-your-price"... really? PL was the first to come up with that? Give me a break. And useful! In either case, as I have and could continue to do, many of the things granted patent protection now do not meet those criteria. My contention is that very few things should be granted protection from competition and that innovation doesn't derive from copying what someone else has already done, but via the recombination of many works, and that limiting the pool of works from which others can draw has a powerful negative impact. Agreed.
The issue is the extent that it can be linked to firm creation. It's a relatively straight forward ask to attack the current system and how it slow innovation adaptation. However, given financial market imperfections and the reduced uncertainty offerted by patents, it cpould arguably be a significant feature in creating future competition
Creating? Or preventing? Sure, the current system provides an avenue for start ups to secure financial capital, but accomplishes this task in an anti-competitive manor. If the goal is to increase innovation and competition, creating monopolies sounds like a pretty silly way to accomplish that goal, especially knowing that this is an explicit goal for companies with large enough revenues to support the constant legal battles these create, further compounding the wastefulness.
Creating monopolies? Careful now, your viewpoint is a little incompatable with creative destruction. Here, the point is that the view of competiton is essentially static. A dynamic approach, where the firm creation process is hampered through uncertainty, allows us to see patents as actually increasing competition
Of course, state granted protection from competition, that's precisely what a patent is. The gales that blow come from innovators not from imitators, as was remarked in the Graham paper patenting does little to encourage innovation and we also know that patents laws are used to prevent new entry into a market, so with that knowledge it seems very odd to present it as a mechanism for encouraging competition even given it's impact on uncertainty. I get the dynamic argument that it enables new entry, and I suppose it's an empriical question whether that's offset by removing the problems with the anti-commons.
As you know, we can use the idea of creative destruction to note the advantages of monopoly. I will always find the 'it doesn't help innovation' argument difficult as it ignores how the innovation process is inherently linked to firm creation. I'm sick of seeing too many 'firms' being just the redundant forced to give service sector self-employment of little value except for family survival
We could categorize our patents. Instead of issuing a one size fits all patent we could divide patents into different categories. The different patent categories would have different durations of patent protection. We could determine the different durations by issuing time blocks to each of the different patent categories. We could have categories such as industrial mechanical, industrial electronic, industrial chemical, personal mechanical, personal electronic, personal chemical, business electronic, business chemical, medical chemical, textiles, etc. Each of these categories would be issued a number of two year time blocks to determine the duration of patent protection for a product in the category. Industrial mechanical could have one time block. Medical chemical could have ten time blocks. Textiles could have two time blocks. Business electronic could have five time blocks. If we categorized our patents we could develop a flexible system to fit the needs of the modern business world. We could develop a system that allows us to have large corporations while also providing legitimate production opportunities for the independent or small businessman. If we put our heads together we could come up with the combination of categories and durations needed to protect our corporations while restoring business opportunities for small or independent business.
That's basically what I'm suggesting, where the length of the patent relates to the ration between the costs to develop vs. the costs to imitate. I prefer this to industry or product specific since it more accurately address the concerns raised by those in favor of them. Shouldn't be too tough given that we know patenting is used to stifle competitive firm creation. Amazon's patent over One-Click provides a fine example of this, gigantic firms with armies of lawyers ready to defend them doesn't sound like a story consistent with one about patenting encouraging firm creation. I fail to see how the Apple, Google, Microsoft patent wars help anyone... at all.
I like the idea of using the cost to develop/cost to imitate ratio as part of the basis to determine patent duration. Like you said in the origianl post, the cost ratio would be different for different types of products. Determining the differences in the ratios would be very useful in helping to determine the different patent durations. The main reason I would want categorized patents would be to place more industries in the public domain. There is no point in creating an environment that encourages the development of small business if there is nothing for the new businesses to do. I think we need more modern products placed in the public domain so people can have a legitimate chance to operate a successful business. I want to give people a way to manufacture modern products without creating a business environment that destroys our corporations. I don't think we need to have manufacturing done in either a corporate or small business environment. I think manufacturing should be done in both the corporate and small business environment. I think categorized patent is a necessary step in accomplishing this goal. It's time for a fundamental change in our production methods. It's time for a change in our business world. We don't have to choose between living with trickle down or living with social programs. We can find new ways to produce our own wealth in this country.
I have a radical notion. Get rid of all intellectual property rights. I know, I know, say what?? But consider that the rent seeking mentioned was first seen in aircraft manufacturers started with the Wright Brothers, when they tried to block competitors rather than develop airplanes. This caused the nascent aircraft industry to collapse into bickering and law suit. The US government then forced the companies to create a patent pool, sharing all the results. It didn't seem to hurt the aircraft companies, they certainly innovated.. Then consider things such as open source software. I'm using Firefox as my browser, e.g. Then consider what RIAA and the media companies are doing with copyrights. I used to support all this until I saw what the record companies were doing and started digging. It's silly to think that the Beatles wouldn't have written their songs if they didn't have protection. And with the net, there are way to market direct, bypassing the middle man For instance, I can tell my fans (as if) that I will write my next novel when I've received $100,000 from 10,000 fans (insert your own numbers) So I could make a good argument for getting rid of the intellectual property protection and the many monopolies they create
You're guilty of tabloidism here. Can we refer to specific case studies that support either view? That would be easy. Its much more difficult to use such case studies to present a coherent argument. At best we have a pretty much useless account of competition within a static context. The truth is that the effects on competition are ambiguous. Those arguing otherwise, often fake libertarians, make invalid claim in order to feed a political ideology inherently reliant on an utopian view over the market and the innovation process
I think this likely holds true for a great many things, I certainly see no just cause for patents over things like slide-to-unlock, one-click, or name-your-price. I feel even more strongly about the damage done by the MPAA and the RIAA who have stood in the way of up and coming artists, though we can be thankful for the consumer revolt (pirating) that's forcing many of them to capitulate to new vendors such as iTunes and Amazon, or even those who choose to release their music digitally and independently. I do however very much see the value in protecting products that not only have massive development/imitation ratios, but also those products that have massive positive externalities, which is why I will always have an exemption for pharmaceutical. I'm open minded to other good falling into this category, just not many come to mind right away. I don't agree, which is why I've not taken an extreme position of suggesting that all patent and copyright protection ought to be eliminated. My argument (whether you think it coherent or not) is that a single fixed length patent is the wrong way to do it and that the length of the patent ought to reflect the ration I've mentioned in other posts. I don't think it's ambiguous at all, like everything else there are trade-offs. In this case I see the current system as both harmful to competition and to innovation, why go with the alternative that we know impacts negatively (or at least ambiguously) both of those? I'd hardly consider Alex Tabarrok a "fake libertarian", so come off it... you don't get to define libertarianism and the claim is valid even if there is evidence to the contrary. At worst, I'm siding with this argument as a result of my priors.
If you allow exceptions for one patent but not another, then we have a non egalitarian solution (different rules for different items of the same class) then you've run into an unresolvable moral quandary. Why protect one invention but not another. Anyway, getting rid of patent protection would open innovation in ways it's hard to imagine.
The nascent aircraft industry is one example. The Wright Brothers were patent trolls. As I said above, they used their patent to start a patent war with Curtiss which allowed the Europeans to steal a march on the Americans. The Europeans didn't have the same patent protection, so they were forced to innovate. What a concept. Competition forcing people to innovate in order to satisfy their customers. There might be something in that. Someone should do a study, we may be on to something here.
Because of high variance in the cost to develop vs. imitate. Pharma giants would be very reluctant to spend hundreds of billions on clinical trials and FDA approval if they new someone the very next day could simply copy the drug and resell it at a discount. So it's this rationale combined with the positive externalities of pharmaceuticals that causes me to make an exception for them.
But you can't justify it morally. YOu can't say "You get protection but he doesn't." Either we have patents or we don't . There can't be separate classes.
But you can't justify it morally. YOu can't say "You get protection but he doesn't." Either we have patents or we don't . There can't be separate classes.
I wouldn't try to, morality is inherently subjective so I'd rather avoid it. I'd justify it based on the public good. We'd agree that medicine is good and saves/prolongs lives and if we can through policy encourage that activity then more great.
Then look at it pragmatically. If you say "This patent is protected but this patent isn't" then you will have lobbyist filling DC pressing for "Just a small change in the law" to allow their product. IOW, you open the system to moral hazards (economics, not ethics) which will always destroy it in the end
Which is precisely why the decision wouldn't be made arbitrarily, but rather based on a mathematical function.
