Some people love to complain about intellectual property (IP) laws, with copyrights and patents at the top of the list (luckily, trademarks haven’t become a source of frustration yet, but the day is probably coming). The truly audacious believe IP laws should be usurped. There’s always radical cred in making these proposals — you sound dangerous and sophisticated all at once.
Because IP is invisible and amorphous, it’s easy to dismiss. Because IP laws are generally uniformly applied and accepted in advanced societies, their benefits are easily taken for granted. And because IP is valuable, people who don’t have it want it unprotected so they can take advantage of it at no cost to themselves.
But sometimes, academics argue against IP for the academic exercise — an understandable if sometimes pointless exercise. A recent paper by two economists from Washington University in St. Louis argues the case against patents. Unfortunately, the economists arrived at the topic with a surprisingly trite understanding of patents, ideas, inventions, and innovation itself. To me, reading their paper was disappointing, and at times insulting.
I’ve had a little bit of experience with patents, having filed a few in the past while also testing the waters for others here and there. I’ve assembled the drawings, schematics, and descriptions necessary for an application, and worked with high-powered patent attorneys. I’ve seen organizations wake up to the potential benefits of patenting ideas. And I know how important patents can be to a fledgling entrepreneur or business.
The authors try to attack the patent system from every possible angle — “strengthening the patent system” doesn’t lead to more innovation (likely true — more salt doesn’t make better food, but some salt makes food better); patents should only be necessary as new industries emerge because then innovation ceases (you mean, just like it did in automobiles, computers, agriculture, chemistry, electronics, aviation, and biology); and patents don’t provide first-mover advantages in and of themselves (right, there are plenty of ways to establish these, including secrecy and acquisitions — are those better?). In short, their arguments struck me as easily refuted attempts to undermine patents.
Within the paper, there are plenty of questionable statements:
- “The recent explosion of patents . . . has not brought about any additional surge in useful innovations and aggregate productivity.” There are two problems with this thought. First, innovations take time to have an effect on productivity. The Internet was 30+ years in its roll out; cellular phones were around long before they because ubiquitous and turned into smartphones; and GPS satellites were being built long before we had GPS displays in our cars. Innovation is actually pretty tedious work after the initial insight, and it takes time to pervade society and affect the economy. Second, this statement is wrong. There has been a surge in useful innovations (DVRs, smartphones, wireless connectivity, new medical devices, radio-controlled clocks, flatscreens, new fabrics, e-books, and the list goes on). There has been a steady increase in aggregate productivity across economies with strong IP laws. But productivity is a fraught measure — higher productivity can occur when hours worked decline, so a sputtering labor market can lead to higher productivity. Nevertheless, numerous studies have shown that technological innovations brought to market have increased productivity, as workers can get more done faster and at more points during the day.
- “. . . the empirical evidence is consistent with the proposition that greater competition, not patents, is the main factor leading to innovation and greater productivity.” This statement is made after observing that competitive industries generate more patents, many of which may be defensive in nature. As noted above, innovation is a slog — it takes capital, long-term thinking, and employees to turn an idea into a marketable product based on one or more innovations. Defensive patents are a tool feeding innovation, in the sense that without them, the investments might not be made — the risk:reward equation wouldn’t add up. The authors point to this without realizing it, noting in an earlier section that there is good “evidence that, in countries with initially weak IP [intellectual property] regimes, strengthening IP increases the flow of foreign investment in sectors where patents are frequently used.” That is, patents give investors more confidence to take more risks. Risk is inherent to bringing ideas to the market. Bringing ideas to the market is innovation. Patents are therefore key to innovation.
- “. . . the extent of practical ‘dislosure’ in modern patents is as negligible as the skills of patent attorneys can make it.” This slam aimed at patent attorneys begs the question, “Can patent attorneys file an effective patent application that does not clearly describe the claimed invention?” I’ve filed patents. They’re really difficult to write and illustrate sufficiently well to get your idea across without extraneous or distracting detail. Even then, patent officers can request additional drawings, diagrams, or clarifications. Patent attorneys help you avoid throwing in the kitchen sink, but that’s not nefarious — that’s editing. They help you file a precise patent, as that increases your odds of success. Being imprecise means there’s a greater chance for rejection, because then you’ll match up against more possible existing patents, generating false-positives. “Negligible disclosure” usually leads to rejection, either because your application isn’t deemed sufficient, or because your claimed invention inadvertently matches too many other existing patents.
- “What lead the US Patent Office to interpret, essentially, the words ‘non-obvious’ as meaning ‘obvious’?” This is written in relation to Amazon’s infamous one-click patent, which was granted in 1999, reviewed in 2006, struck down briefly, and then reinstated in 2007 with a slightly diminished scope. This patent irks the layman, because the idea of “one-click” purchasing seems just so, well, obvious once someone points out to you that it is, actually, an idea. This is the crucial moment. It’s easy for ideas to seem obvious once they are clearly executed — of course a half-dozen satellites in geosynchronous orbit will help me find the nearest Applebee’s, isn’t that obvious? Of course, a system of user identification, customer databases, e-commerce, and online interface design all neatly tied together so you can order an item with one click is obvious. Well, neither of these was obvious to most people. Now, they seem second-nature. That’s how ideas work — they are hard to have, but if they’re useful and clear, they seem like they should have always existed. Volume can be measured by the displacement of water? Obvious, observed all the time by bathers and sailors, but never turned into an idea until one “Eureka!” moment. I’ve seen people too often dismiss new ideas as ideas at all — they are new, but seem so natural and unobtrusive that surely they are “obvious.” They are not. The authors are right — the “one-click” idea was right in front of everyone’s noses, but only Amazon saw it for what it was, executed it, and patented it. In fact, there are three attributes that courts in the US have found to show objective evidence of non-obviousness — commercial success, long-felt but unsolved needs, and failure of others to solve the same problem. The “one-click” meets all these criteria. Personally, I really don’t like it when people dismiss the ability to see farther than others as unimportant. This is often what innovation is — seeing one foot farther ahead than the other person amidst the fog of life.
There are many junctures in the paper where, if you read the data slightly differently, as either pro-patent or at least neutral, you can make the data support patenting. For instance, they decry the increase in patents between 1983 and 2010 in the United States, where patents issued grew by almost 5x. Is this a failure of the patent system? Or a success? Did the patents of the prior decades come to fruition by creating a telecommunications-computer-Internet world ready for an explosion of innovation?
I was just at a dinner discussing the BigBelly Solar trash compactor garbage cans appearing all over cities in the US. These trash cans cut costs for cities by using solar energy to power a compactor feature, letting the cans go for weeks without emptying; the cans also email city workers when they’re near capacity. BigBelly Solar has built wonderfully on prior technological breakthroughs, but will they increase productivity? Fewer trash cans will need to be emptied. You see how not every invention increases productivity in a measurable sense.
Someone at the table had a connection with the inventor of the BigBelly Solar trash compactor cans. Now, let’s contemplate what might have happened to this inventor in a world without patents. His idea for a solar-powered public trash compactor becomes known to more than handful of people, or he sells a few to a small city in a small state. A large corporation capable of scaling up manufacturing in a short time steals the idea, makes it their own, and earns millions selling urban trash compactors powered by the sun. The inventor would get nada, zip, zilch. The business community would consolidate further. Solar power would become more dependent on a multinational conglomerate. In this scenario, wealth accumulates at the top, innovators are discouraged, and might makes right. “Disruptive innovation” can’t occur on many fronts. Incumbents hold all the cards. There is no rule of law for ideas. It’s all about stealing ideas as fast as you can, ripping off inventors without apology. That’s not sensible social policy.
Patents help to reassure investors that an invention isn’t going to be plucked away during the nurturing phase; patents inspire investment in new initiatives that require a lot of new workflows due to constraints created by the innovation itself; and patents are time-limited, meaning they do expire and revert to benefit society after a reasonable time for investments to be recouped. (For instance, modern chess pieces and the chess board design was once a patented invention, as was the supermarket.)
In short, this argument — down to its requisite slams against so-called “patent trolls,” who do exist, but whose presence doesn’t invalidate patents, just as predatory OA publishers don’t invalidate OA — fails to convince. Cherry-picked references, a superficial understanding of investments, ideas, and innovation — well, there’s just not much IP in this paper to protect.