The Real Battle: Permission vs. Innovation; Lawyers vs. Innovators

from the which-one-works-better dept

Tim Lee points us to a really interesting blog post by Dave Alpert, which looks at the Uber dispute in Washington DC as the conflict of two modes of thinking: the permission model favored by lawyers and politicians vs. the innovation model favored by techies and entrepreneurs (and, yes, that’s a generalization which does not apply across the board). The post goes way beyond just the Uber dispute to talk about patents, and how they turn a permissionless innovation system into the opposite. The whole thing is great, but here’s a quick snippet:

But there is still a culture gap here. Specifically, there are two ways of thinking about how business meets law: the permission model and the innovation model. In one, there’s some gatekeeper that has set out a list of things you can do and things you can’t. If you want to do something different that nobody has done, you can get permission from that gatekeeper to allow it, if it has enough merit and/or you have enough influence. In the other, you can do what you want, unless it’s so harmful that someone takes action to stop you…

[…] Patents turn an innovation system into a permission system by carving up the space of possible things you could do but haven’t yet, and giving them to anyone who comes along and pays a fee to grab that piece of idea land. Patents don’t stop someone from building a product, but they do force them to check with everyone who has patents in the area first and get their permission.

That impedes someone from building a better website that effectively competes with an existing one. It even stops organizations like transit agencies from doing the mostly-obvious, like letting riders track trains and buses in real time, because a “patent troll” has the patent and wants to extract money from anyone stepping nearby.

A number of technology/policy/economics writers, like Tim Lee, have been talking about the destructive effects of patents for some time, but running into resistance from an interesting quarter: lawyers. It seems that most lawyers, accustomed to the world of law where everything is set up with a rule, find the permission system of patents more familiar and comfortable than the innovation model. The problem is, familiar doesn’t mean good; patents are slowing down Silicon Valley and favoring large, established companies.

We’ve seen (and made) similar arguments in the past about the difference between gatekeeping and innovation, but Alpert’s writeup lays it out quite nicely and is a worthwhile read. Check it out.

It certainly explains the general clash between entrepreneurs and innovators and any regulatory body they seem to come up against. It’s not just a disagreement about the best way to handle things, it’s a conflict of totally different paradigms. That can make for much louder clashes and much more confusion. But not much actual innovation.

Part of this really may just be a hammer/nail problem. Politicians have a single real tool: regulation. So that’s the tool they always use, in the belief that it will lead to innovation. But, innovation doesn’t work by following rules, but by ripping apart the rulebook, and showing that the rules don’t make sense. It goes beyond just a clash of cultures to a fundamentally different view of how innovation works.

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Companies: uber

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Comments on “The Real Battle: Permission vs. Innovation; Lawyers vs. Innovators”

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Franklin G Ryzzo (profile) says:

Re: The Idiots...


We need to draft a bill that will stop them from passing any new legislation until they have gone back and re-examined all of the old legislation for effectiveness and actual need. It’s truly a shame that they wouldn’t just do this on their own and would actually have to pass a regulation that would force them to do it. Even if we had something as simple as requiring new regulation to simply be backed by independent study to show the need it would be a step in the right direction and help to curb some of the ridiculous legislation that is getting passed.

Josh in CharlotteNC (profile) says:

Re: Re: The Idiots...

I see this suggestion a lot – “We need a law to stop Congress from doing ____.”

It is not that simple.

Who would need to pass that law? Congress. They won’t tie their own hands.

Even if they were willing to pass that law, it would be short lived. The current Congress cannot limit what a future Congress can do. So even if the next Congress passed such a law in January 2013, the next Congress could start ignoring it when they take office in 2015.

So let’s skip these laws and put in an amendment to the Constitution? Won’t work. Every amendment we have (after the first 10 of the Bill of Rights) has gone one of the two routes the Constitution provides – first it needs to to be proposed by Congress, requiring a 2/3rds majority in each house – so this is an even larger hurdle than passing a law – then needs to be ratified by 3/4ths of the states. (The other way the Consitution allows is for 2/3rds of states legislatures to demand an amendment, which Congress then calls a Constitutional Convention, which then makes a proposal that 3/4ths of states must ratify – there’s a few reasons why this has never happened yet.)

You know what the answer is?

Vote them out.

Keep voting them out until they are all so scared that they stop doing stupid things.

Or violently overthrow the government.

I wouldn’t bet on any of the above having a decent chance in the forseeable future.

Androgynous Cowherd says:

Why lawyers favor a permission model

the permission model favored by lawyers and politicians

Anyone want to know why?

a) Politicians, by and large, are (ex-)lawyers, and
b) Job security.

The permission model turns everything into a legal minefield. Then lawyers get to rack up billable hours as the #1 consultants on where the mines are in an area, and then rack up even more billable hours every time someone steps on a mine.

Naturally, this means they should do a relatively poor job in their consultancy role. But, far more significantly, it also means they profit more the larger and more pervasive the minefields, the more mines there are per square kilometer, the harder it is to find patterns in where the mines are (or aren’t), and the bigger the triggering and blast radii of the mines (in law, vagueness works well to achieve many of these effects).

And those are the people that become politicians, who are the mine layers.

As for politicians having three options of 1) add regulation, 2) remove regulation, or 3) do nothing, they compete with voters for who seems to be doing the most. 3) looks like doing nothing and 2) looks like going backwards, so 1) it is, especially in an election year.

Sunset after 50 years? Everything should require renewal every one or two years — and renewal would look like 3) doing nothing. The only danger is that they’d just pass all kinds of random stuff to look like they were doing something, and the laws would just shift and morph like Chicago weather year after year after year, to the benefit, again, of only lawyers, who’d get to add (bad) legal weather forecasting to their consultancy roles.

No, besides sunsetting what’s needed is some sort of reform of the political process in general. Or a miraculous change in how the whole population is educated on civics and government. Maybe the internet itself and the increasing tendency of these issues to reach the online public spotlight will eventually bring about that miracle where the schools and the broadcast media have (deliberately) failed.

Androgynous Cowherd says:

Microcosm reflects macrocosm

In [the permission model], there’s some gatekeeper that has set out a list of things you can do and things you can’t. If you want to do something different that nobody has done, you can get permission from that gatekeeper to allow it, if it has enough merit and/or you have enough influence.

This isn’t just an issue of the legal landscape. Even at smaller scales the pattern repeats: the above is a perfect description of the App Store.

Of course, Apple is only able to enforce its gatekeeper role there because it gets to use the government-scale permission model, in particular patents, copyrights, and the DMCA, to limit the ability of competitors to create either interoperable iFoos or interoperable App Stores.

Get rid of the problem at the top, then, and the market, and innovators making interoperable products without permission, should tend to recursively purge it from the smaller microcosms like the App Store.

From a very good source says:

IP Law

The US Intellectual Property Laws (IPR) laws are statutory laws enacted as a policy decision. They were at no time considered natural rights. By law they are legal rights, but not natural rights. Therefore, they are not inalienable.

There is nothing to support the claim that IPR fosters innovation. It may be true, but at no time in history, has anyone warranted that claim. With about 150 years of intensive practice we might have yielded proof, but no.

The claim that IPR places tremendous cost on society is warranted by enough studies to make it true.

Therefore we have a tremendous cost with not proof of benefit.

Further, of the nearly 7 million patens issued in USA since 1789, almost nothing patented has ever turned into a product If the extremely few items that are patented and are turned into products, almost nothing is ever profitable. If anything, a patent correlates with failure.

Nonetheless, we maintain a state agency with $3 billion budget for this regime.

It is not true that if you do not have monopoly rights you cannot make any money. As opposed to all that is traded in commerce, only a sliver is covered by patents or IPR. For example, 70 percent of new books sold are not covered b copyright, they are public domain content. It is true that almost everyone owns some Apple product, now the largest corporation in the world by stock value, but an Apple product is a minor purchases in a persons economic activity. The single largest purchase a person makes in a lifetime is a home for which intellectual property pays almost no part . Food, clothing, gas, utilities, the next biggest costs, are rarely associated with intellectual property. In any event, there is little monopoly if any, on those items.

Almost nothing traded in commerce is under IPR, yet people seem to make money without it.

You can invent, market, manufacture and sell an item and make money. Based on customer feedback, you are likely to change your designs to please an ever wider group of customers.

You can market, manufacture and sell an item and make money. Based on customer feedback, you are likely to change your designs to please an ever wider group of customers.

In both instances the marketing, manufacturing, selling, and distribution is by far the major effort in making money. The design is a minor part of the effort.

Therefore, small businesses really have no business with IPR anyway since they are constantly changing their offering.

Factories make money selling things they make. They want the best designs, so they can make more items. Designers may contract with factories to bring their designs to a given factory, in return for what we now call royalties. In this was designers can make money under contract law, which is a part of natural law, and not bother with IPR, which is not found in natural law.

Apple Computer sells a system of distributing music called iTunes. By paying well, Apple attracts the best artists to Apple?s means of production, iTunes. So it is with factories and artists. We need no IPR for artists to make money.

Someone else can ?steal? market, manufacture and sell an item and make money. Based on customer feedback, they are likely to change your designs to please an ever wider group of customers. This is good for the consumer. This is were true wealth, more options to choose form that more closely match your desires. Yes, the free market militates against individuals amassing personal wealth, so defined, but it was never intended to provide massive personal wealth. The purpose of the free market is to offer ever more options at more better cheaper faster. The free market is essentially about justice in distribution.

The research and development of products contributes almost nothing in the way of costs.

I understand in capitalism companies SPEND phenomenal amounts of money on research and development, but R&D does not cost that much.

Business expenses are taken off the bottom line, and the bottom line is what is subject to tax. In the pharmaceutical industry, imperial lifestyles are buried in the R&D budget. Vacations, sexytaries, Aspen and Davos confabs, personal effects, kids education’s, sinecures for friends and relatives, bribes to officials, are all buried in R&D. IPR invites personal corruption.

R&D that pays off is marginal, tiny tweaking at the margins. Apple continuously introduces excitement with its miniscule improvements.

Why should society prevent individuals from using their equipment and skills to market, manufacture and sell an item and make money?

But what if our competitor goes low price? Then you can go low price, if you want that market.

What if your competitor puts his name on your product? If he does well, apparently people prefer his name on your product. Therefore, if you want that business, put his name on your product. If you do not want that business, leave it to them.

The fatal flaw in IPR is the holder shifts from marketing to violence backed monopoly. Why should taxpayers be obliged to fund state agents to sort out a disagreement between and inventor and an adopter? It was not necessary under the law merchant, why is it necessary now? 4th and 5th parties pay to protect 1st parties in disputes with second parties. Why should I contribute to the millions in cost to protect bill gates from the free market? Why not let Bill gates pay to protect his so called ?wealth.?

What IPR does promise, aside form a sinecure for lawyers, is that you might win a lottery of sorts. You might gain exceptional personal wealth. Thus IPR appeals to the sort of people whose hopes are tied up in winning a lottery. A lottery has one winner and countless losers, with nothing of value otherwise provided. This is why all major religions condemn gambling.

The cost of IPR is less wealth for everyone else.

A lottery mentality is not a sustainable economic model.

In a free market, an individual may make less money, but never too little money, because one can always redesign to please more customers. A free market is the only means of facilitating people?s best efforts, and rewarding it. We see with deregulation how, as in telephones,we get more better cheaper faster. This would be true of food, medicine and education as well. There was no way to foresee the good we have now today back in 1980 when the telephones were deregulated. Unregulation would be even better.

It may mean you will make less money, but that is not proven. it may mean less money, less personal wealth, but not less access to a wider range of goods and services at ever lower costs.

Bastiat noted how economic calculation cannot include the unknown, what we would have if we were free. WE can know it is better, we just do not know how, what new wonders we would see.

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