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.


Reader Comments

Subscribe: RSS

View by: Time | Thread


  1. icon
    Mike (profile), 17 Aug 2005 @ 10:56am

    Re: Wrong. Try again.

    I like how you criticize us for being uninformed after admitting that you wouldn't even read the article.

    Yes, the patent is for a limited time, but it IS a monopoly, and monopolies DO slow down innovation. Indeed, there are benefits to having companies disclose information that can be used by others -- but it seems like that is *rarely* the benefit of the patent system any more.

    Your argument that IP is a big industry and changing the patent system would harm the economy is about as silly as saying the same thing about organized crime. It's big business, don't you know?

    As for your claim that taking away patent protection harms technology development -- especially in least developed nations, folks in Switzerland and the Netherlands might disagree. Both countries got rid of their patent systems for a while in the second half of the 19th century and innovation thrived, allowing both countries to raise their own economic status.

    There are tradeoffs to patents. Some of them good, some of them bad. Our argument is that there's increasing evidence that the bad is vastly outweighing the good.

Add Your Comment

Have a Techdirt Account? Sign in now. Want one? Register here



Subscribe to the Techdirt Daily newsletter




Comment Options:

  • Use markdown. Use plain text.
  • Remember name/email/url (set a cookie)

Follow Techdirt
Insider Shop - Show Your Support!

Essential Reading
Techdirt Insider Chat
Recent Stories

This site, like most other sites on the web, uses cookies. For more information, see our privacy policy. Got it
Close

Email This

This feature is only available to registered users. Register or sign in to use it.