The Economist is known for being a bastion of liberal free entreprise and is considered pro-business. But for the past few months, The Economist has taken a decidedly skeptical attitude towards the issue of intellectual property. Here are some excerpts:
Markets for ideas
http://www.economist.com/displaystor...tory_id=574263
Excerpt:
POPULAR discussion about intellectual-property rights is bedevilled by a recurring confusion. Few people any longer insist that “property is theft”, as Proudhon claimed. The centrality of property rights in a well-ordered market economy is so much taken for granted that the idea has seeped below the level of mainstream consciousness. So when owners of intellectual property say they are being robbed—as the record companies said they were, by Napster, or as big pharmaceutical companies say they are, by producers of cheap drugs in poor countries—one’s instinct is to see things their way. Property comes in many forms, one supposes, but whatever form it takes, stealing it must be wrong.
Not so fast. The urge to possess may be a basic human instinct, but the legal idea of property—and what, precisely, this complicated notion entails—is a human invention, developed down the years (and still being revised) to serve economic and social goals. The law on intellectual property, in particular, is everywhere both comparatively new and in flux. This is not a question of black and white, of right or wrong, as rich-country owners of intellectual property insist. It is a matter of striking a balance—and it is possible that owners are getting too much of a good deal.
Patently absurd?
http://www.economist.com/displaystor...tory_id=662374
Excerpt:
Innovation does not happen by accident. It takes long hours and a great deal of investment—often many millions of dollars. By conferring a monopoly to exploit a particular technology for a fixed period of time (increased recently in America from 17 to 20 years to bring it into line with Europe), patents create incentives for investors to put money into risky new ideas. But monopolies create problems of their own. Firms or individuals holding patents must register and defend them, risking potentially crippling lawsuits. Those without patents must license them, or engage in inefficient and anti-competitive alliances.
Economists have tussled for decades over ways to balance these costs and benefits. That debate is now taking a fresh turn. Growing numbers of economists are unearthing evidence that America’s patent regime is out of step with precisely those values it was designed to promote. Some believe that, in certain industries, strengthening intellectual-property protection accomplishes nothing positive. Others think that it may actually do some harm. If these economists are correct, patent-holders themselves may soon start clamouring for weaker, and not stronger, protection.
“Everything under the sun made by man is patentable,” asserted the American Supreme Court in a landmark decision in 1980 that left inventors scrambling to stake out their places in the sun. Between 1982 and 1992, the number of patents issued each year in America doubled from 55,000 to almost 110,000. “We are the patent office, not the rejection office,” said Bruce Lehman, the PTO’s commissioner at the time.Computers led the patent surge, with the number of related patents tripling between 1982 and 1992. Semiconductor patents increased fivefold over the same period (see chart).
As a result, Carl Shapiro, an economist at the Haas School of Business at the University of California, Berkeley, says that computing, semiconductor and information-technology firms now encounter a “thicket” of patents that constrain their inventiveness. This phenomenon has been dubbed the “Tragedy of the Anti-Commons”—in contrast to the classic “Tragedy of the Commons” that described how free resources such as fresh air and clean water could be over-used and destroyed by selfish agents. Here, the opposite occurs: when lots of property owners have to grant permission before a resource can be used, the result is that the resource tends to be chronically under-used. “In the case of patents,” says Mr Shapiro, “innovation is stifled.”
Do firms become more innovative when they increase their patenting activity? Studies of the most patent-conscious business of all—the semiconductor industry—suggest they do not. Rosemarie Ziedonis at Wharton Business School in Pennsylvania and Bronwyn Hall at Haas found that investment in R&D (a reasonable proxy for innovation) did not substantially increase during the industry’s most feverish period of patenting. Instead, semiconductor firms simply squeezed more patents out of each dollar they spent on R&D. From 1982 to 1992, the chip makers doubled their output of patents from 0.3 to 0.6 for every million dollars of R&D. That was at a time when the patent yield in other industries had barely budged.