Nobel Winning Economist Rips Apart Innovation Harming Patent Process

from the he's-got-a-bit-of-credibility dept

For a while now, we've been pointing out how the misuse of a badly implemented patent system is doing more to harm innovation than to help it. The problems are pretty clear to many people. Patents grant a monopoly -- which is usually quite dangerous to innovation. When the patent system in the US was first laid out by Thomas Jefferson, he noted this problem and believed that patents should only be granted in the rarest of circumstances. Second, patents reward invention, not innovation -- and it's innovation we should be rewarding. It seems that those of us who support fairly massive patent reform may have some pretty strong support from someone who clearly understands these issues. Boing Boing points to a terrific column by Nobel prize winning economist Joseph Stiglitz, who anyone who ever learned about adverse selection and moral hazard should thank for the concepts. Stiglitz's column clearly points out why the patent system is problematic and how it's being abused not just to harm innovation, but to leave many people around the world without medication that would save their lives.

He explains how the idea that innovation wouldn't occur without patents is completely false: "In fact, many of the most important ideas - for example, the mathematics that underlies the modern computer or the theories behind atomic energy or lasers - are not protected by intellectual property." He explains how patents create monopolies which throw up barriers to innovation: "an intellectual property regime rewards innovators by creating a temporary monopoly power, allowing them to charge far higher prices than they could if there were competition. In the process, ideas are disseminated and used less than they would be otherwise." He also discusses even the fear of patents being stockpiled can harm innovation: "the fear that some advance will tread on pre-existing patents, of which the innovator may not even be aware - may also discourage innovation. After the pioneering work of the Wright brothers and the Curtis brothers, overlapping patent claims thwarted the development of the airplane, until the United States government finally forced a patent pool as World War I loomed." He then goes on to discuss the problem of determining obviousness for a patent: "The creation of any product requires many ideas, and sorting out their relative contribution to the outcome - let alone which ones are really new - can be nearly impossible." He also agrees that many of our patent laws are more influenced by powerful lobbyists, rather than what's best for the people: "I served on the Clinton administration's Council of Economic Advisors at the time, and it was clear that there was more interest in pleasing the pharmaceutical and entertainment industries than in ensuring an intellectual-property regime that was good for science, let alone for developing countries." In many ways, he's simply saying what many of us have been saying for years -- but he does so with obvious credibility and puts it all down in a very easy to understand manner.


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  1. identicon
    ezra abrams, 16 Dec 2007 @ 10:40am

    r any of you real inventors

    Patents are good and bad; to paraphrase Churchill, the worst system ever invented, except for all the others.
    Innovation is such a complex thing - how can it be reduced to soemthing simple enough to get a yes no on patents ? ya gotta think about the real world - complex, messy humans.
    as someone who works at small companies driven by patnetns and venture capitial, i would say patents are a big thing for driving innovation; innovation in your brain is fine, but untill it turns into something, it aint curing your cancer. I'm sure all you people can point to all sorts of theory and quotation; why don't you get a job in the real world, and you will understand why patents aint all that bad (that the system works about as well as fema in katrina merely means we got something to fix, not that is is wrong. )
    as for that moron Jack G - What plane are you living on ? Europeans have, by many measure, a higher std of livingg. NOt only that, in many high tech areas they are AHEAD of us, eg anyone who has been to Europe knows cell phones are way ahead of us....but why let facts spoil your right wing theorys ?

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