Research Shows: You Don't Need Patents To Disclose Information

from the people-figure-out-ways... dept

One of the things that we frequently hear in defense of patents (and to a lesser extent, copyrights) is that without that kind of protection, companies would never share information with one another about certain products, because it would be way too easy to simply copy the idea and run with it. The standard example is a case where an inventor or small company has an idea for a product, where they'd need a bigger company to manufacture it. We are told, without patents, how could the inventor possibly go to the manufacturer, without fear of completely losing the product. Similarly, in the drug business, where the key bit of information is the chemical formula, companies often insist that they absolutely need patents, or smaller companies won't bother to share the details of their research with others who can help manufacture the product.

Jerry Brito's Surprisingly Free podcast recently had a wonderful interview with Michael Burstein from Cardozo Law School, in which he talks about his recent research showing that a ton of information exchange occurs in the absence of intellectual property protection, and that inventors and companies figure out ways to protect themselves against someone just flat out copying their idea and running off with it. It's an area of research that is quite fascinating, because in the past, I'd thought that the argument about information sharing actually was one of the more compelling arguments for patents. Now... I'm beginning to question that assumption as well. The key thing that Burstein realized, was that information isn't quite as "clear cut" as people think it is, thus you can share some information without revealing all of the key points:
This article explains that, contrary to the conventional account of the disclosure paradox, information is not always nonexcludable and is not always a homogeneous asset. Instead, information is complex and multifaceted, subject to some inherent limitations but also manipulable by its holders. These characteristics give rise to a range of strategies for engaging in information exchange, of which intellectual property is only one. Information holders can use the characteristics of information itself as well as contractual and norms-based mechanisms and other legal or business strategies to achieve exchange. And examples drawn from fields as diverse and disparate as software and biotechnology show that entrepreneurs and inventors use these strategies alone or in combination to effectively link their ideas with capital and development skills, often without intellectual property playing a significant role in the transaction.
In other words, inventors and companies have already adapted to do this, even without relying on IP laws. Burstein argues that anyone relying on the claim that IP is needed to facilitate information exchange appears to be flat out wrong, based on his empirical research.
Intellectual property is therefore not necessary to promote robust markets for information and is, in fact, just as contingent and context-specific a solution to the paradox as the alternatives described here. At the very least, then, there is reason to doubt that commercialization theories founded upon information exchange provide a standalone justification for intellectual property. This article urges caution in policy interventions that seek to respond to the disclosure paradox and sets the stage for future empirical research to better understand the dynamics of information exchange strategies and the social welfare costs and benefits that may accompany them.
One example used in the report is how biotech firms share information without relying on intellectual property laws. They basically do a bit of a dance, in which they sign agreements and share bits of information with each other, which really seem to serve the purpose of testing whether each other is trustworthy. And, of course, because firms are involved in many, many transactions, there's a reputational issue at play here: a company that simply copies an idea presented to it by another will quickly find itself shut out of future opportunities to work with innovative companies. These are issues that patent system defenders and policymakers seem to rarely consider.

In some ways, this actually reminds me of the posts we've done on cargo cults and copying. Too many people seem to assume that it's easy to define and capture all of the information you need to copy someone else. If someone has a successful product, no problem, just make an exact replica of that product. But what we've seen over and over again is that there's superficial information, which can be easily copied, but most of the time there is also substantial tacit information which is not easy for a copycat to figure out without working closely with the original producer. This can be information into what kind of positioning worked with customers (and what failed). It can be as simple as experience with a unique way to calibrate a machine. There are all sorts of "little things" that those with experience have, that simply is not easy to easily capture from the outside. Thus, no matter how much superficial information is shared, it's not enough to make a really useful copy.


Reader Comments (rss)

(Flattened / Threaded)

  •  
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    M. Alan Thomas II (profile), Jun 28th, 2012 @ 12:10am

    Michael Burstein does seem to be saying that patents are a way of solving the problem, so it's not like they're useless. I imagine that, reformed, they will probably be the best solution for a certain class of cases, although I must admit to not being expert enough to identify specifically what that would be. (I think Burstein would like to see more research into that question.)

     

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      Spointman (profile), Jun 28th, 2012 @ 2:38pm

      Re:

      So here's a fun question. If the idea of patents is (in part) to ensure the proliferation of the protected knowledge, when was the last time someone needed to read the patent document to know how to replicate the invention? In almost every case I can imagine, the replication would be done by experimenting a bit after hearing the gist of the idea, or by developing the same solution independently, or by developing an alternate solution without ever seeing or even knowing about the patent.

       

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    identicon
    Gandalf, Jun 28th, 2012 @ 12:49am

    Patent in pharmaceutics

    Hi,

    few days ago, I would think that Patent are not a really good think these days. Its obsolete and in fact doesn't reflects current times.

    However few days ago I listen on TV to the lady, which is leader in pharmaceutics in Czech Republic. Not a manager, but a doctor who is working with pharmaceutics company. She also agree that patents are not a very good thing, however she wasn't very sure that patents are completely wrong in her field of work.

    Main reason for that is, that company which is developing new drug is spending big money on each research and counting, that not all research will bring some fruits. Some research will be dead end so there are many projects developing new drugs and company is hoping that some of them will work. Because of big money there, company would like to receive something, which ensure that when it find working drugs nobody will take it (after spending several milions of euro) and parasite on their work.

    That was original idea behind patents and I am not sure, if that idea was wrong.

    Now I think, that patent system are mostly wrong. And main reason is, that patents are used for work, which doesn't cover several milions euro/dollars investment, but few hours of thinking and big amount of hours of lawyers.

     

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      saulgoode (profile), Jun 28th, 2012 @ 2:11am

      Re: Patent in pharmaceutics

      In the case of pharmaceuticals, there is no need for patents even if you want to reward the discoverers with a temporary monopoly. All new drug manufacturing needs to be approved by the government (the Food & Drug Administration in the U.S.), and it would be entirely feasible to withhold this approval from competing products for a limited time.

       

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      identicon
      Anonymous Coward, Jun 28th, 2012 @ 9:23am

      Re: Patent in pharmaceutics

      The old, I wasted so much money on un-productive research, that I just HAVE to charge you more for the successful research approach.

      So if a contractor working on your house, said that they had to tear down and re-build your foundation and framework 3 times because their 'design' was a failure the first three times, would you be happy paying 4x the price of your house? Perhaps this is a poor analogy...

      You go to your hair dresser, and they have to 're-design' your hair 4 times to get it right, since the first 3 were failures... If the normal price is $50, do you pay $200 to cover the hairdressers 'failures'?

      R&D is a part of business, if your business doesn't want to do it (or isn't paying for it... aka using publicly funded research and claiming those as your 'failed R&D attempts') than you shouldn't be in that business....

       

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    Richard (profile), Jun 28th, 2012 @ 1:26am

    Whittle

    A great example of this is Frank Whittle.

    from his wikipedia entry:

    Whittle could ill afford the 5 renewal fee for his jet engine patent when it became due in January 1935, and because the Air Ministry refused to pay it the patent was allowed to lapse. Shortly afterwards, in May, he received mail from Rolf Dudley-Williams, who had been with him at Cranwell in the 1920s and Felixstowe in 1930. Williams arranged a meeting with Whittle, himself, and another now-retired RAF serviceman, James Collingwood Tinling. The two proposed a partnership that allowed them to act on Whittle's behalf to gather public financing so that development could go ahead.[3]

    The agreement soon bore fruit, and in September 1935 the pair introduced Whittle to two investment bankers at O.T. Falk & Partners, Sir Maurice Bonham-Carter and Lancelot Law Whyte.[3] The firm had an interest in developing speculative projects that conventional banks would not touch. Whyte was impressed by the 28-year-old Whittle and his design when they met on 11 September 1935:

    The impression he made was overwhelming, I have never been so quickly convinced, or so happy to find one's highest standards met... This was genius, not talent. Whittle expressed his idea with superb conciseness: 'Reciprocating engines are exhausted. They have hundreds of parts jerking to and fro, and they cannot be made more powerful without becoming too complicated. The engine of the future must produce 2,000 hp with one moving part: a spinning turbine and compressor.'


    Falk & Partners financed an independent engineering review that was favourable,[13] and with that the jet engine was finally on its way to becoming a reality.


    The financiers didn't buy the idea they bought the man.

    If you are an independent inventor with real talent then you don't need patents. The idea that you go into the meeting with can never be the only thing you have to sell. You need to convince them that you can solve all the little problems that will arise in the implementation.
    Sell yourself not a piece of paper!

     

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    Anonymous Coward, Jun 28th, 2012 @ 2:07am

    Every good idea needs to be donated to the collective.

    Just because you're smarter, more creative, more talented and contribute more to society and culture... does not mean you should be rewarded more than those that veg on the couch and contribute nothing.

    The Very Essence of Techdirt "logic".

     

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      Anonymous Coward, Jun 28th, 2012 @ 2:26am

      Re:

      You mean like Julie Newmar pantyhose patent?

      https://en.wikipedia.org/wiki/Julie_Newmar

      Just search for "funny patents", "absurd patents", "ridiculous patents", "crazy patents" or something like that and see how "creative" you morons are.

       

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      Anonymous Coward, Jun 28th, 2012 @ 3:02am

      Re:

      >Just because you're smarter, more creative, more talented and contribute more to society and culture... does not mean you should be rewarded more than those that veg on the couch and contribute nothing.

      Now, here's something I just don't get. Every time the argument against downloading is brought up it's because it's "stealing from artists". Yet, in order to support the argument that artists don't make much money, figures are brought out that artists make only 20%ish out of all CD sales. Why is the artist (assuming said artist plays the instruments, writes the songs) - who is being marketed - only getting peanuts for putting in the work? And why are people defending this system full of middlemen? It's as fallacious as the argument that without IP, there'd be no supermarkets and we'd all die of hunger.

       

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        Anonymous Coward, Jun 28th, 2012 @ 8:49am

        Re: Re:

        Because you're an idiot that knows nothing about the music business and doesn't have a clue what the "middlemen" do.

        It's literally rocket science to you. You're 100% ignorant when it comes to either subject.

        So how about shutting up about that which you know absolutely nothing about? Apparently your parents did a very poor job raising you.

         

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          TtfnJohn (profile), Jun 28th, 2012 @ 2:23pm

          Re: Re: Re:

          I suppose that when all else fails resort to insult.

          And yes, the middleman in the recording industry, as distinct from the broader music business, isn't always found at parties sniffing lines with hundred dollar bills and famously asking "by the way which one's Pink?".

          Nor are they, as far too often portrayed here by folks like you, guardians of the culture, keeping out the riff-raff and LOLcats. If a label can make a bundle off of singing LOLCats they'll sign and market them in a flash. After all, that's what A&R guys do. Labels aren't concerned about releasing ART they are a money making businesses that are concerned with making money. If art comes from that so much the better.

          The AC you're responding to may know diddly squat about the recording industry but from your response you know about as much as s/he does, perhaps less.

          Nor do you respond to his accurate point that most musicians and acts are the ones drawing the short end of the stick when it comes to collecting the cash at the end of the day. Or the simple fact that as the recording industry consolidated from the 1970s to now and the number of so-called majors fell to single digit numbers while regional labels almost disappeared as well the majors did what companies that face limited or no (real) competition do they loaded up with middle management (aka middlemen) whose major task has been shuffling paper.

          Face it, the majors are now owned by companies that aren't even distantly related to the arts much less recording in general and music in particular. The rich recording and musical environment of the 1950s to 1970s is long gone where the people in it were not only trying to make money but knew music, knew recording, knew how to do it and how to promote it. Not spreadsheet jockies insisting that the studio make a profit each and every week.

          As for whose parents did a better job raising their children I'd have to guess yours didn't manage to teach you any manners or even the fine art of persuasion. I'm sure they did their best so I'm not going to judge them on a single rude and ignorant post by their son. You, however I will judge.

          You're a rude, ignorant twerp.

           

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          identicon
          Anonymous Coward, Jun 28th, 2012 @ 9:02pm

          Re: Re: Re:

          So, go on. Tell us why other people, who have to rely on the artist to even have something to market, have the lion's share of the money? Even better, tell us why this system is a good thing for artists? No, you can't use "but that's the way it's always been/Lowery said so" as an answer.

          What I consider silly is how much resources and attention is being dedicated to defending the old system, supposedly for the sake of the artists - yet, for all the initiatives that were meant to make things better, the artist hasn't seen anything out of it. Taxes on blank media? Megaupload raid? Performance rights organisations demanding money for alleged performances by live bands? How much money are artists seeing from these things happening? Yet, while artists are being paid peanuts, they're being told by labels that somehow, it's all the fault of the consumers and they should be angry at said consumers and demand their heads.

          Go ahead, try to justify all the above and how middlemen are indispensable to artists. We'll be waiting.

           

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        Anonymous Coward, Jun 28th, 2012 @ 2:33pm

        Re: Re:

        I don't defend the existing "system". I'm in favor of artists determining how they make a living. If they need assistance and sign a contract with a label who provides that assistance, so be it. If the artist chooses to give away the fruits of their labors but providing free music downloads, I'm all for it.

        What most people who complain on this site have a problem with is that by ILLEGALLY downloading music, pirates are breaking the business model being used by the artist.

         

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          Richard (profile), Jun 28th, 2012 @ 3:49pm

          Re: Re: Re:

          most people who complain on this site have a problem with is that by ILLEGALLY downloading music, pirates are breaking the business model being used by the artist.

          Unfortunately it is just unrealistic to assume that this will not happen. The only way to prevent it would be draconian measures that would invade everyone's privacy, cost an enormous amount of money, disrupt many unrelated business activities on the internet and shut down the services that enable artists who chose to give their music away to do so economically.

           

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      Richard (profile), Jun 28th, 2012 @ 3:28am

      Re:

      Every good idea needs to be donated to the collective.

      Exactly the principle adopted during ww1 and ww2 by the British government. At the end of the war compensation was paid via the Royal Commission on Awards to Inventors so that (in contradiction to the second part of your comment) those whose work was used to win the war could get a fair reward. Frank Whittle - the subject of my earlier post- received 100 000 - then equivant to 200 years of an ordinary man's income.

       

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      Richard (profile), Jun 28th, 2012 @ 3:30am

      Re:

      Being smarter, more creative, more talented and able to contribute more to society and culture means you should be rewarded even if all you do is veg on the couch and contribute nothing except an initial idea.

      The essence of troll logic.

       

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    identicon
    Michael Kay, Jun 28th, 2012 @ 2:38am

    Can we have a "stupid" button

    All posts have three buttons allowing them to be flagged "insightful", "funny", or "report". Could we have another one labelled "stupid"? Nearly every post by the well-named "anonymous coward" would qualify.

     

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    PCCare247, Jun 28th, 2012 @ 3:40am

    Patents

    Gone are the days when people used to discover and innovate things just for the society. Patents is encouraging this feeling a lot more.

     

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    Ninja (profile), Jun 28th, 2012 @ 4:30am

    I do support copyrights, patents and trademark to some extent. While this article is interesting and relevant I believe that patents can play an important supportive role along with these other mechanisms. But not as the system is written today. You can virtually patent anything regardless if you can actually make it operational/practical or not.

    I'll agree that you don't need patents but I still agree that, if properly set up, they can support the whole process.

     

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      Anonymous Coward, Jun 28th, 2012 @ 5:17am

      Re:

      IP is like the ring once you felt it, it is hard to give it up and not be lured onto the dark corners of its lure.

      There will never be a granted monopoly that will not be abused, in time every single exclusionary right will be abused, will be used for things it was not designed to.

       

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    Danny (profile), Jun 28th, 2012 @ 5:14am

    I work for a small electronics company and we develop stuff for quite a few larger companies.

    Everything we design and produce is manufactured by external companies. Not once has anything we produce or design been cloned or stolen by a competitor and all without a single patent.

    Sometimes we sign NDA's with our clients as they believe they are being protected but never with our manufacturers.

     

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    Gene Cavanaugh (profile), Jun 28th, 2012 @ 9:02am

    Another example of "proving" something by selective arguments

    In SOME cases, IP is not needed, and I tell my clients that. However, to generalize that is like saying "Usain Bolt can run the 100 in less than 10 seconds, therefore EVERYONE can do the same unless they are lazy".
    Before I became an attorney (and partly this is why) I had TWO ideas stolen from me, patented, and used by others. One was fairly lucrative. The "inventor" never wanted to be around me after that, likely worried that I would expose his duplicity.
    Yes, at one time I was just as naive as this author.

     

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      Richard (profile), Jun 28th, 2012 @ 4:03pm

      Re: Another example of "proving" something by selective arguments

      I had TWO ideas stolen from me, patented, and used by others.

      Sounds to me like you would not have had the problem without the existence of patents.

      Not patenting in an environment where patents exist may be risky - but then the best ideas are simply kept secret if at all possible anyway.

       

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    Anonymous Coward, Jun 28th, 2012 @ 10:17am

    UNLV is pimping out their students.

    Last week there was news that a UNLV engineering group placed in a business competition. They teamed up with an inventor to develop a water saving device. From the description they gave, it seems like nothing more than a restrictor disc that has been re-purposed for a lawn sprinkler. I don't see how anyone can get a patent for something like this. Yes, I can see a market for the product. But a patent, I don't get it.

    Link

     

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    identicon
    6, Jun 28th, 2012 @ 10:49am

    "a ton of information exchange occurs in the absence of intellectual property protection,"

    That is obviously true. Don't need to do research to show that.

    "and that inventors and companies figure out ways to protect themselves against someone just flat out copying their idea and running off with it"

    Yes, those "ways" are by and large trade secrets and also keeping the "good parts" or "valuable parts" of the information secret (regardless of whether trade secret law is involved). Those "good parts" or "valuable parts" are what patents are there to get at.

    The other ways are dealing with honorable people that will keep their word etc. But the bottom line is that even though people do share information, sometimes even the good valuable information, they don't always want to share it all that way. Indeed, many inventors are very very secretive about that. Which again, is why we offer patent protection to ease their mind.

    And this also is a good reason to remember what patents are for, the useful arts. Not the software arts etc. And patents are very good at protecting (for 20- years) and securing the disclosure of the secrets of the useful arts for EVERYONE, not just one company or two companies. All companies and everyone who might want to form a company gets the disclosure.


    "Burstein argues that anyone relying on the claim that IP is needed to facilitate information exchange appears to be flat out wrong, based on his empirical research. "

    Obviously it wouldn't be needed at all if everyone where honorable. The laws are designed to account for the despicable as well as the honorable though.

    "They basically do a bit of a dance, in which they sign agreements and share bits of information with each other, which really seem to serve the purpose of testing whether each other is trustworthy. And, of course, because firms are involved in many, many transactions, there's a reputational issue at play here: a company that simply copies an idea presented to it by another will quickly find itself shut out of future opportunities to work with innovative companies"

    That is correct of course, and it is also the reason that in some industries the "dance" doesn't go down so well. There is a history of mistrust and deceit (remember these are evil, and psycho by the very laws that created them, companies we're talking about). Likewise note that many bio transactions involve patents being filed before they begin the dance and thus providing a safety net if the dance falls through.




    Bottom line, in this thread Mike begins to dip his toe into the realities underlying the patent system but shows off that he still hasn't jumped in past his knees.

     

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      Richard (profile), Jun 29th, 2012 @ 1:55am

      Re:

      Yes, those "ways" are by and large trade secrets and also keeping the "good parts" or "valuable parts" of the information secret (regardless of whether trade secret law is involved).

      Yes this is what happens

      Those "good parts" or "valuable parts" are what patents are there to get at.

      Except that they don't. The valuable parts are kept secret. The things that are patented are precisely the things that shouldn't be. In other words they are the things that somebody else would work out for themselves anyway. This is the fallacy of patent law. No one ever patents anything that they could avoid disclosing - unless they think that it is obvious enough for independent intvention to be inevitable.

      The laws are designed to account for the despicable as well as the honorable though.

      Unfortunately patent law simply creates more opportunities for the despicable to practice their craft.

       

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    Anonymous Coward, Jun 28th, 2012 @ 11:51am

    ofcourse you dont need it to DISCLOSE information,, you need it to protect information.. some 'researcher' had to work this out !!!..

    masnick,, when are you going to write about something new ??

    years and years, spend saying the same fucking shit over and over and over and over and over and over again !!!!..

    you can leave this site for a year, six months, or several years, come back, and it's freaking EXACTLY THE SAME..

    Masnick are you that unsure of yourself, that you have to repeat yourself endlessly ??? is this all we can expect from masnick ??

    masnick the repeater, the repeater, the repeates what he says,, and have you achieved in these years, ???? NOTHING LOL..

    it's fun to watch a loser at 'work'..

     

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    Anonymous Coward, Jun 28th, 2012 @ 12:07pm

    oh yea, nice to see you taking to advice of a lawyer, not a creator !!!!..

    so you found a patsy to find a loophole, and as usual you find some idiot obscure enough to say something you agree with,, so he'll do !!!!!..

    again, you yourself would never actually do 'research'.. LOL

    That would be because you are not capable of independent thought,, your one of the 'dullards'.. !!!

     

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      Richard (profile), Jun 29th, 2012 @ 1:57am

      Re:

      as usual you find some idiot obscure enough to say something you agree with,, so he'll do !!!!!..

      Unfortunately for you the idiot who is sufficiently obscure to agree with you doesn't exist!

       

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    Anonymous Coward, Jul 1st, 2012 @ 12:35am

    Good article. Companies don't have to be encouraged to disclose information to the public because they've figured out ways to share it with each other without disclosing to the public.

     

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