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
    James, 24 Apr 2008 @ 9:24pm

    Re: Re: Wrong. Try again.

    Mike, you said "monopolies DO slow down innovation".

    That's totally wrong. What data do you have to back it up.

    If there is patent monopoly IN FORCE, then competitors are forced to innovate around the patent. This is called "thinking outside the box" for all you laypersons.

    How do you explain the exponential technological progress since patents were first allowed (1700s onwards) compared to the era before patents were allowed.

    You fail to explain why Switzerland and the Netherlands brought back a patent system after they got rid of it. Name some prominent inventions by Swiss and Dutch people in those 50 "glorious" years you mention. You can't because there aren't any, and you can't prove innovation thrived.

    You have absolutely presented no persuasive evidence that patents are more "bad" than they are "good". Can your logic in your argument be used to claim that taxes are more "bad" than they are "good"? Or for other things like copyright, industry standards (for example, safety, numbering systems, classification systems, accounting standards).

    You are seriously out of your depth Mike. You should listen to what Jeff is saying. I have come across many inventors who would've had their good idea stolen by "evil" companies too cheap to invest in their own R&D, and these individual inventors have made a ton of money. You will find that the data supports that patents protect the individual more so than the company. You never see a company sue an individual for patent infringement do you? Patents even up the unfairness between big companies with large resources and creative individuals with fairly limited resources.

    Take patents away and watch the progress of innovation dwindle to the rate experienced between the stone age to dark ages.

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