Wednesday, May 27, 2009

Will "Intellectual Property" Hurt or Help "Green" Technology?

Does patent law, trade marks, trade secrets, and such hinder technical innovation? More particularly, will "Intellectual Property" hurt or help "Green" technology?

The provocative article below was published by the Independent Institute. When I saw it posted on Dick and Sharon's LA Progressive web site, I remembered the interest of Wes, Cameron, and some of my other "Silicon Valley" Green Party friends in these questions. I am not familiar with the Independent Institute, but the arguments sound "libertarian." I would suggest that Greens throw away the naive libertarian's faith in the capitalist marketplace and keep what information and insight is useful.

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Posted on LA Progressive, Tuesday, May 26, 2009.
Intellectual Monopoly is an Unnecessary Evil
by Art Carden

In a rush to stimulate the economy, the Obama administration is touting various “visionary” plans to make the American economy more progressive, more innovative, and more forward-looking by subsidizing politically-motivated projects like “green” technology. These hands-on policies will be ineffective. Recent research suggests that a much more effective way to accomplish the same goals would be to eliminate intellectual monopoly and to reduce the regulatory burdens on innovators.

According to conventional wisdom in economics, temporary monopoly rights—patents—are necessary to give people incentives to come up with newer, better ideas. After all, if people who came up with new ideas could see those new ideas copied without cost by competitors, why bother spending the time and energy? Hence, we have patents.

But the conventional wisdom is wrong. In their 2008 book Against Intellectual Monopoly, economists Michele Boldrin and David Levine dropped a bombshell that will, I hope, overturn the consensus about rights to ideas. Using carefully developed theory and a host of real-world examples, they show how patents actually reduce, rather than encourage, innovation. Innovators like steam engine pioneer James Watt, devoted enormous amounts of time and energy to defending monopoly rights rather than to creating new value. Innovation and growth proceeded apace once the patents expired. In Boldrin and Levine’s opinion, this delayed the onset of modern economic growth.

As these authors argue, intellectual monopoly is an unnecessary evil. Further, it is a relic of medieval and early-modern mercantilist regulations whereby kings and nobles granted efficiency-reducing monopoly privileges to favored constituents. Eliminating intellectual monopoly would reduce the incomes of the intellectual monopolists, but it would unleash new creative energies throughout the economy.

In his recent book The Gridlock Economy, legal scholar Michael Heller argued that intellectual monopoly reduces the pace of innovation. He notes that innovative rap music, like Public Enemy’s initial work, was an early casualty of intellectual monopoly. Demands that artists pay royalties for borrowed music sharply restricted rap musicians’ ability to innovate.

While some people might not care about innovative rap music, many care about access to life-saving new medical technologies. Heller explains how this industry is particularly susceptible to the “tragedy of the anti-commons” created by intellectual monopoly. If an invention requires multiple patented innovations to be implemented, then every individual holder of one of the necessary patents can block further innovation. This slows the pace of economic progress.

Consider another example. Would Britney Spears’s artistic output fall if her intellectual monopoly rights were rescinded? I doubt it. Ms. Spears is much wealthier than she would be in the absence of intellectual monopoly, but her wealth is largely what economists refer to as economic rent: income in excess of her opportunity cost. Eliminating her intellectual monopoly very likely would not cause her to choose another occupation, but it would lead to an increase in net creative output.

Progress is also slowed by the regulation of food and drugs, which requires years of extensive and expensive testing before a drug can be approved for sale. This means that some lives are saved because people are restricted to hyper-safe drugs, but the lives saved come at the cost of lives that are lost because the appearance of these drugs on the market is delayed. Further, other drugs that would be useful but might carry greater risks never make it to the market to begin with.

White House Chief-of-Staff Rahm Emanuel suggested that the Administration should not waste the opportunities presented by the present economic and political crisis. Right now, the administration has the opportunity to make a bold move that will stimulate the economy for generations to come. By eliminating intellectual monopoly and by liberalizing markets, we can encourage further innovation and greater prosperity.

1 comment:

Cameron said...

Carden's on the right track, but he's made a big mistake lumping very different kinds of intellectual property together.

Patents could be a good thing, if they were used as Ben Franklin intended. They'd only protect an invention for the first quarter or third of its useful life, and ensure free public access over most of it. That's way better than the opposite of a patented invention: a trade secret invention. (Patents were intended as a more socially just alternative to trade secrets.) Royalties would go to the inventor, not her or his employer. And only genuine inventions would be patented. A genuine invention is original, valuable, and not obvious. That means you can't patent organisms, traditional medicines, business methods, algorithms, or computer software. If you found it in nature or culture, it's not original. Duh! I think the Green position is to return the patent system to its original design, not throw it away. A side effect of this reform is it would greatly reduce the huge volume of business-as-usual infringement lawsuits that give rich companies an unfair advantage over smaller ones, at huge public expense.

There isn't any "recent research" to "prove" that completely abolishing patents would have this or that effect on society. You can't "prove" anything when you start with a false assumption. That's what scientists call "hand waving," and Carden should be ashamed.

You need copyrights to make computer software possible. The most important software products we have succeeded in large degree because of one of the best copyrights ever invented, the GNU General Public License Version 2, also known as "the copyleft," or copyrights of similar intent. Software isn't like a folk song: its authors need enough control that they can fix bugs and distribute updates. Experience shows that's not possible with public domain software. When there are a thousand slightly different versions of a software product, patches don't work. (Disagree? Name one large public domain software work that gets adequately maintained.)

The problem there isn't copyrights, it's unfair copyrights, like the ones that come with non-free software. There are two appropriate reforms. 1. In the traditional common law, a contract that only benefits one party is not binding. The kind of "End User License Agreement" that governs something like Microsoft Office only benefits MSFT, and should be invalidated. That's happened in some jurisdictions, but it should be law, not just case law. 2. Public money should not be spent on software like that. Governments buy enough software that if they started boycotting unbalanced EULAs it would reform the industry. The way to do that is to require that they fairly consider freeware alternatives whenever they buy computer software. Freeware would usually win in a fair value contest. Microsoft bribes its way into government accounts, and they should be prosecuted and the executives responsible for that policy should go to prison. Governments should also routinely develop and own their own software when that's appropriate. The noncompetition doctrine has been a disaster.

"Britney Spears" is irrelevant. The entertainment industry is in crisis, because advancing technology has destroyed the inherent copy protection it enjoyed for most of a century. Its extreme misapplication of copyright is just a symptom of its denial of that fact. Suing rappers for sampling isn't going to fix it, nor is getting Microsoft to build copy protection into its operating system product. They're trying to hold back the tide. Maybe we need an explicit law to define fair use, but fair use will continue without one, and the industry will die anyway if it can't find a way to survive in the age of digital media.