Prove that would have been invented without patents!
In an email someone mentioned to me a particular key invention from a few decades ago, which was responsible for a number of other high-tech innovations that we now enjoy, and asked me to "show us how any of that could have happened if there were no patents." My response is below.
Why is the burden on me to show how it could have happened without patents? The question is itself question-begging, as it assumes the patents played a causal role, which must be either explained away or for which a substitute incentive effect must be found.
I'd say that almost any invention that comes will come eventually--maybe even sooner, absent the patent system, absent the state (see Yet Another Study Finds Patents Do Not Encourage Innovation). In my experience, this view is almost universal among inventors and engineers. We would have had transistors by now without Shockley, Planck, and Schrödinger; we would have had light bulbs without Edison; and one-click purchasing on web sites without Jeff Bezos. Maybe a bit later, but eventually. And maybe even earlier--patents slow things down too, after all.
And we cannot forget that a huge factor in innovation is wealth. Wealth is needed to provide spare time and resources to engage in research and development. And wealth is no doubt hampered severely in a society that has a state, which any patent society must. Without a state there would be no patents, but a far richer world, and more innovation because of that factor alone.
Finally--so what if we wouldn't have had invention X, Y, Z, as early, or even ever, without a patent system? After all, a patent system undeniably has costs in terms of both rights and money. How can it be shown that having invention X is worth the violation of rights incurred as a result of the patent system necessary to generate X? Utilitarianism is a bankrupt doctrine, after all. And even if you approach it from a utilitarian, wealth-maximization angle: how can it be shown--who has shown?--that the cost of the patent system that generates X is less than the value of X?
Comments (29)
Gil
"Why is the burden on me to show how it could have happened without patents?"
Duh! Because a system without patents is the one that doesn't exist. It's doubtful a system without some sort of I.P. would allow for innovations faster if there's no way for an inventor to hope to gain anything from the invention other than it being a 'gift' to society. It's akin to saying a farmer would grow more food even though he's not allowed to stop thieves from pilfering his crops because no one recognises R.P.
Published: July 10, 2009 11:15 PM
Silas Barta
@Gil: Right on.
@Stephan_Kinsella: You can't prove that everything you like required physical property rights in order to exist. Ergo, any argument about the good consequences of physical property rights is speculative and question-begging.
Yeah, who cares if it's a bit later? It's not like time has any value or anything.
Published: July 10, 2009 11:29 PM
Nate Y
Gil,
I think your farmer analogy doesn't make any sense. To my mind, the I.P. system as it is now is more akin to farmers being granted exclusive rights to growing specific crops. Such action would certainly limit supply (decrease wealth) and stifle innovation would it not?
Published: July 10, 2009 11:35 PM
Evan
Gil: It's akin to saying a farmer would grow more food even though he's not allowed to stop thieves from pilfering his crops because no one recognises R.P.
If you were really to apply the patent analogy to farming it would be more like: there is one farmer who can grow food and everybody else cannot, because the farmer thought up the idea of growing food.
The Idea that a new invention is a 'gift' to society without patents is ludicrous. Private contracts can still be made for trade secrets, and inventors still get first-mover advantage and public recognition. Patents have turned software design and perhaps other fields into a minefield because (unlike copyrights) patents forbid INDEPENDENT invention. For a quick example of this check out the Eolas patent which caused microsoft so much trouble (that guy patented the idea of putting a specific type of object on a web page). Or check out the history of the steam engine, where development was set back 40 years because of Watt patenting the separate condenser.
The way I see it, ideas are not property like chicken or grain. If I take a chicken from you, I have really deprived you of something. But, if you voluntarily tell me your idea about something, I haven't deprived you of anything.
The crux of your argument Gil is that patents act as incentives for new technology. But I think if you really look at the literature, patents have generally held back progress, because people can't take your idea and improve on it without shelling out some insane licensing fee.
Published: July 10, 2009 11:49 PM
Rob
Gil,
"It's doubtful a system without some sort of I.P. would allow for innovations faster if there's no way for an inventor to hope to gain anything from the invention other than it being a 'gift' to society."
That "gain" you're speaking of is only possible because I.P. rights create artificial scarcity. The real thing to look at in inventions is not gaining from inventing something, but rather gaining from producing something. Ideas are really not that scarce. How many times have you seen a fancy new product on the shelves that you thought of ten years earlier? Are you entitled to some of the proceeds from the sales because you also had the idea? Of course not. What if you actually had taken the time ten years ago and thought through the way such a thing would have to be made? Would that get you in line for money from the sales? Again, obviously not. But this is a situation that is repeated over and over, because ideas aren't that scarce.
Instead of a reward for having the idea, the person profiting from a fancy new product on the shelves gets a reward for investing capital and actually producing the product. Wealth is scarce, and someone who risks wealth to make something previously untested is rewarded with profits if the new venture works or losses if the idea turns out to be a dud.
And yes, such a system with no I.P. still allows for the idea men to get by on thinking--let's face it, we all have ideas all the time, but very few have ideas that are worth a nickel on the open market--without having themselves to get into the production of something. If you figure it out, you sell your method. All this can be done through the principles of contract law without I.P. being necessary.
Published: July 10, 2009 11:50 PM
P.M.Lawrence
Silas Barta wrote of Stephan_Kinsella's "...we would have had light bulbs without Edison...", "Yeah, who cares if it's a bit later? It's not like time has any value or anything."
Actually, there would have been light bulbs in the USA earlier without Edison - because he used the US patent system to prevent Swan's prior invention of the light bulb in the UK from finding a market in the USA. Luckily for the UK, it didn't stick there and Edison was forced to settle by going into a joint venture.
Published: July 11, 2009 2:31 AM
Greg
Some "ideas" may need decades of testing before viable results are attained. Decades of research requires significant investment. Patents protect that investment. TANSTAAFL.
Published: July 11, 2009 2:37 AM
newson
greg worries about not having enough time to make investments "viable" and silas about having too little. perhaps we should let the entrepreneurs to gauge time-preferences, and not agonize over the issue. (besides, how would one-size-fits-all time stipulation satisfy both greg and silas?)
Published: July 11, 2009 3:02 AM
S.M. Oliva
"Without a state there would be no patents, but a far richer world, and more innovation because of that factor alone."
Of course, if you eliminate patents but not the remainder of the state, innovation would largely ground to a halt because other state institutions would "fill the void," so to speak.
Published: July 11, 2009 7:40 AM
kmeisthax
@Greg: So, what you are saying is that some company that's working on an idea for 20 years, should be able to coercively prevent others from inventing the same thing of their own means? What's wrong with some other company bringing the same idea to market faster?
...Or are you saying that companies should be able to protect themselves from their own employees using the idea in competition with the company they got it from? Well, you don't need patents for that. It's called a non-compete / non-disclosure agreement. Fairly common industry practice, actually, and it has nothing to do with intellectual monopoly.
Published: July 11, 2009 10:21 AM
Dale B. Halling
The empirical evidence supports a strong patent system. The richest countries in the world have the strongest intellectual property laws. The poorest countries have weak or non-existent intellectual property laws. Unless this study can explain this, it is inherently flawed.
Should Patents be Abolished? – Scarcity
There have been a number of suggestions that patent should be scaled back or outright abolished. For instance, Stephen Kinsella has written a book, Against Intellectual Property, and Tom Palmer has written and article, “Are Patents and Copyright Morally Justified? The Philosophy of Property Rights and Ideal Objects.” Many of these critiques suggest that property rights are based on scarcity and intellectual property rights are not subject to scarcity.
The article “Scarcity – Does it Prove Intellectual Property is Unjustified?” (http://hallingblog.com/2009/06/22/scarcity-%e2%80%93-does-it-prove-intellectual-property-is-unjustified/) suggests that property rights are not based on scarcity but on the “labor theory of property” first proposed by John Locke. The labor theory of property explains criminal law, how property is to be allocated and intellectual property law. The “scarcity” theory of private property does not explain criminal law and does not explain how property should be allocated. According to its proponents it does explain why there should not be intellectual property law. Trading scarcity for the labor theory of property is like trading the theory that “what goes up must come down” for Newton’s Law of gravity. The fact of the matter is that the proponents of scarcity have confused cause with effect. A system of private property results in efficient allocation of resource, but it is not the reason for private property – it is the effect of private property.
Is the conception of ideas and inventions subject to scarcity? See http://hallingblog.com/2009/06/25/scarcity-and-intellectual-property-empirical-evidence-for-inventions/
Is the distribution of ideas and invention (technology diffusion) subject to scarcity? See http://hallingblog.com/2009/06/25/scarcity-and-intellectual-property-empirical-evidence-of-adoptiondistribution-of-technology/
Published: July 11, 2009 10:37 AM
RWW
Dale B. Halling: Two enormous fallacies (correlation implies causation, and the labor theory of value) in one post is downright impressive.
Published: July 11, 2009 10:46 AM
Mrhuh
Human beings didn't need a patent system to create the wheel or agriculture. Case closed.
Published: July 11, 2009 10:51 AM
Joe
"Human beings didn't need a patent system to create the wheel or agriculture. Case closed."
Add free, open-source software.
Published: July 11, 2009 11:11 AM
Gil
Actually, RWW, prolong correlation can imply causation. Or, 'correlation doesn't imply causation' is a fallacy when someone keep denying the facts show a strong correlation. If I.P. is bunk then countries with little to no I.P. protection should be flocked with inventors and have the greatest innovations and techonological change. To tell me when you can find such a place.
Then again, humans didn't alway need the wheel and agriculure yet survived Mrhuh. Big whoop. Socialist nations somehow keep turning and don't belly up just because their definition of real property rights is fuzzy.
Published: July 11, 2009 11:26 AM
Matthew
Gil: "If I.P. is bunk then countries with little to no I.P. protection should be flocked with inventors and have the greatest innovations and techonological change. To tell me when you can find such a place."
Does China count?
Published: July 11, 2009 11:32 AM
Renegade Division
Dale B Halling
The empirical evidence supports a strong patent system. The richest countries in the world have the strongest intellectual property laws. The poorest countries have weak or non-existent intellectual property laws. Unless this study can explain this, it is inherently flawed.
Empirical evidence also supports skin with fairer tone. The richest countries in the world have the whitest people, and the poorest countries have the darkest people.
This clearly means that we need a society which is predominantly white. Ban brown and black immigrants, and put heavy taxes on Tanning saloons and tanning machines.
Also join French Candlemakers in petitioning to ban the Sun, because they are turning our people into dark and thereby making us poor.
Anyways on a serious tone, richest countries have good roads, but poorest countries don't have good roads, does that mean roads give us this prosperity or it is the fact that there is no point spending more money on good roads than they are worth used for.
I am from India, and there they have practically no Intellectual property rights in Software. I have grown up using pirated Windows, pirated Autocad and pirated everything. The end result, you get a huge IT service sector, and IT investors DO flock into that country to have more and more of their jobs outsourced.
One more thing, the main idea of not having IP rights is not that no company will find it feasible to invest in technologies the way they do now, but that no company will HAVE to invest in technologies all the way like they do now.
Take a look at wikipedia and tell me if there would have been more growth had wikipedia chosen the non-creative commons model?
Yes we would have had 18 different encyclopedias(Apple Encyclopedia, Microsoft Encyclopedia etc etc), but none of them as vast as Wikipedia.
Why? Because in order to use the fruits of wikipedia you don't have built it from scratch.
If we have had strong patent rights since the starting of the property rights, then by now, we wouldn't all be eating Bread and Steak. But there will be thousands and thousands different kinds of recipes, when a couple gets a new home, they will have to apply for licenses for the recipes.
Its true that in that world there would have been a lot more innovation, but growth? No way!
If on another planet Mars, the aliens cannot copy each other's actions, and they must think of their own, then true, there will be million different ways discovered to tie their laces, million different ways to eat, and million different ways to brush your teeth.
But the question is, will that society be more developed than ours?
Published: July 11, 2009 12:07 PM
jc butte
Suppose the USPTO were abolished tomorrow and all existing patents rescinded. How long would it take for a private IP firm to emerge that would have the backing of every industry and manufacturing association?
About 24 hrs, I think...
Published: July 11, 2009 3:22 PM
AJ Witoslawski
Frederic Bastiat's distinction between that "which is seen" and that "which is not seen" fits perfectly to the IP debate. IP proponents see the obvious - that temporary monopoly rights increase incentive to invent. IP opponents, on the other hand, see that which is unseen as well: that temporary monopoly rights legally prevent any innovation from improving the invention.
Published: July 11, 2009 4:08 PM
Walt D.
A limp argument?
As good Austrians, I think we are underestimating the effect of the market. Lets take Stephan's pet peeve, viagra, a trivial chemical compound that is patented and sells for, say $8 (?) per pill and costs only 50 cents to manufacture. What stops Stephan from forming a consortium and hiring a Ph.D. chemist to set up a process to produce these pills for 50 cents?
Lets look at the economics of the situation. $8 x 5 days x 50 weeks = $2000 a year (per person in the consortium). The question then arises as to how much they will have to pay the Ph.D. chemist. Clearly, there is a break even price of the pill. Why is is set at $8 as opposed to $50 or $100 or $1000? (I'm sure if Elliott Spitzer became impotent, he would have no trouble paying an extra $1000 on top of his $5000 call girl fee!) Now, the fact that this medication is, in some cases paid for by insurance also serves to keep the price high. However, it is my contention that even with patent protection, the price of the pill is still set in part by market forces.
BTW since viagra is trivial, compared say to interferon, why was it not discovered or rediscovered in the USSR or China?
Published: July 11, 2009 5:38 PM
iawai
@Greg:
But in that "10 year protection zone", isn't the idea worthless? If there still needs to be R&D to make the product profitable, why are we rewarding an incomplete product and allowing the half-assed inventors to rest on their laurels because they can milk the current iteration of the product for a small purse while holding all development rights to actually make something worthwhile?
Your hypothetical seems to argue against the IP system, if logically concluded.
Published: July 11, 2009 7:53 PM
iawai
@Greg:
But in that "10 year protection zone", isn't the idea worthless? If there still needs to be R&D to make the product profitable, why are we rewarding an incomplete product and allowing the half-assed inventors to rest on their laurels because they can milk the current iteration of the product for a small purse while holding all development rights to actually make something worthwhile?
Your hypothetical seems to argue against the IP system, if logically concluded.
Published: July 11, 2009 7:53 PM
newson
those who think patents alone can offer protection for innovators seeking economic rent should read george selgin's excellent paper "strong steam, weak patents, or the myth of watt's innovation-blocking monopoly, exploded".
http://www.terry.uga.edu/%7Ejlturner/StrongSteamApril2009.pdf
Published: July 11, 2009 9:52 PM
BioTube
While not near as dramatic as the idea of Watt delaying steam engine development, when the World's Fair(I forget exactly which one) decided to go with AC for power, Edison refused to let his lightbulb design be used, requiring Tesla to invent a noninfringing one(which looked every bit like it had been thought up last minute).
Published: July 12, 2009 8:21 AM
Mark
High tech companies didn't used to to invent things just for the sake of inventing them. They invented things to solve problems and sell products. They would continue to do that absent a patent system.
Of course now days we have companies that do invent things just for the sake of filing patents and selling them. Some companies make no products. They just file for and license patents. Rambus comes to mind, though I don't know if that's still their business model.
Published: July 12, 2009 9:08 AM
RWW
How long would it take for a private IP firm to emerge that would have the backing of every industry and manufacturing association?
Would a "private IP firm" be allowed to violate actual property rights in the ways that the current regime does? Or would it simply be enforcing contracts between sellers and buyers?
Published: July 12, 2009 10:07 AM
Fred Mann
Good point A.J. -- you write:
"Frederic Bastiat's distinction between that "which is seen" and that "which is not seen" fits perfectly to the IP debate. IP proponents see the obvious - that temporary monopoly rights increase incentive to invent. IP opponents, on the other hand, see that which is unseen as well: that temporary monopoly rights legally prevent any innovation from improving the invention."
The unseen also includes the goods and services that do not exist because money was funneled away from production of goods and services and into R&D. And of course, R&D is expensive BECAUSE the factors of production used in R&D (labor, materials, etc) are not in great supply. But of course, you need to produce these things in the first place in order to lower the costs of these factors. And this is what the market does (it also makes ALL labor cheaper, by lower EVERYONES living costs). Kind of a catch 22 for the pro-IP side.
And, as always, IP inhibits the introduction of small innovations/modifications of existing products (i.e. those ideas which are "too small" and are therefore labeled "infringements"). What is the cumulative effect of inhibiting these millions/billions of small innovations?
Published: July 12, 2009 5:12 PM
Peter Surda
I noticed this post late, but it looks like other people eloquently argued against IP even in my absence. Not that I'm a spokesman or anything :-).
I am starting to think that the debate is kind of pointless though. Not because I wouldn't see a way to persuade IP proponents. The reason is far more basic than pro/against arguments. The reason is that IP proponents were so far unable to come up with a coherent definition of IP, its position within the legal system or a proposed model for its implementation, whether by fixing the existing one or creating a new one from scratch. Without that, what is it even that they propose and we oppose? I must admit, I don't know what they propose. I tried to come up with some suggestions, but none of them seem to have been successful. In my arguments, I have tried to generalise the current IP law, meaning that IP is a right to prevent a third party from using the property in question.
Still, some remarks to the points brought up:
I strongly suspect that the correlation between (classical) property rights and a country being rich is also present. Therefore, when evaluating the correlation between IP and country being rich, one would need to reprocess the data to compensate for the influence of (classical) property rights.
I am fairly sure that if IP is abolished, private companies would spring up to compensate. But there is no way of telling what they will be like and it is possible that they would be all about contracts and might not have anything to do with IP as per my definition above. I posted an example some time ago, let me rephrase it. The "IP company" would provide exclusive rights to concert visitors (let's call it "club membership"), but also require them to sign a waiver to adhere to the company's "IP policy", e.g. only obtaining music of its members by authorised resellers. This is advantageous for all parties involved:
Resellers: can charge over the market prices because there are people who agreed to pay them.
Music group: gets money both from media sales and concerts.
"IP company": can only sue their actual customers and not third parties ("fictional" customers).
Fans: have a choice of either getting the music for free or being able to go to concerts.
People who don't care about the group: don't need to pay anything to support a system just so that someone else's business model is profitable.
This is just an example. As you can see though, this is a matter of entrepreneurship and not economics. And strictly from legal point of view, none of it is actually IP.
Published: July 13, 2009 5:08 AM
George Selgin
Just to be clear, my and John Turner's working paper, linked by Newson, is a defense of Watt's patent against the charge that it held-back technical innovation in steam power. In fact, we areue that it may have hastened the turn to high-powered steam.
Published: July 16, 2009 1:44 AM