Another Nobel Laureate Points Out How The Patent System Holds Back Innovation

from the the-economics-are-clear... dept

It always amuses us when supporters of the patent system attack our views on patents as being somehow uninformed. Over the years, we've pointed to plenty of rather detailed research on how the patent system tends to hold back innovation -- and how there's no correlation between stronger patent systems and innovation. Usually, when we point this out, the response is to insult us, rather than respond to the research. Fortunately, though, those doing this kind of research keep getting plenty of validation for their work. We've already pointed out that at least one Nobel Laureate in Economics, Joe Stiglitz, has been speaking out on how patents harm innovation. Now comes the news that one of the latest economics Nobel winners has also done research in the space. Evan R.S. writes in to point out that the NY Times article on the winners notes that Nobel winner Eric S. Maskin recent research is on how patents can hold back innovation. The good folks over at Against Monopoly (who include some economists who have been leading the charge in studying this topic) point us to Maskin's paper on this topic. The paper argues that patents tend to harm innovation in high tech fields, mainly because so much innovation is sequential and complementary -- at which point handing out monopolies is guaranteed to slow down the innovation process, because the innovation gets more expensive (need to license any time you do anything), more limiting (because you have to get approval before innovating) and much more time consuming (especially if you have to keep going to court). This isn't a new idea or even new research -- but it's yet another reminder that the economic research continually shows how patents will often hold back innovation, rather than help it.


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  1.  
    identicon
    laissez-faire, Oct 18th, 2007 @ 7:14pm

    points of argument clear and acceptable. now you're vindicated. :)

     

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  2.  
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    T.J., Oct 18th, 2007 @ 7:31pm

    The Patent Idea

    I agree with the point that patents are bad for innovation, as well as extremely abused in this country. I think patents are a necessary evil, but I think that they should be extremely handicapped from their current form.

     

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  3.  
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    Anonymous Coward, Oct 18th, 2007 @ 7:39pm

    Re: The Patent Idea

    I think patents are a necessary evil, but I think that they should be extremely handicapped from their current form.
    Patents are one of those slippery slope type of things. As long as you have them, they will eventually be abused.

     

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  4.  
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    NE Economist, Oct 18th, 2007 @ 9:54pm

    Innovation's Greed

    There is a lot to be said about patent laws hindering innovation. Most of the articles, papers and research being done on this subject also hits on the topic of rewarding the innovator.

    In a society that has always been very possessive (cite America's founding documents) it is no surprise that we value the inherent title to our creations (even God wants his children to acknowledge he created them). To validate this concept and give it a system to follow for parity across the board we have given ourselves this wondrous dam we called patent law. Although, without these laws binding society to the terms of the innovator it is argued that man would be much less inclined to advance in any sector. By protecting the innovator to the point of profit after excessive time spent "at the drawing board" society encourages innovation with the profit incentive.

    This is not to say that I so much consider our system flawless, but it is not without merit. I believe this was the idea touched upon when mentioning your preference for patent laws to be "extremely handicapped." My only challenge: put yourself in the innovator's role, what motive do you have in this society to cause a breakthrough if someone can stand on your shoulders and make something better?

    NE Economist

     

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  5.  
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    Jeff, Oct 18th, 2007 @ 10:19pm

    It is not the innovators that are neccessarily the culprits, but the hoarders. The firms whose sole function is too ammass a treasure trove of patents then try to wring as much money out of the innovators as they can. Putting the innovators in a position they can't progress to that next breakthrough because they have so many blockades in place or they're just plain out of resources

     

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  6.  
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    Mike (profile), Oct 18th, 2007 @ 10:31pm

    Re: Innovation's Greed

    My only challenge: put yourself in the innovator's role, what motive do you have in this society to cause a breakthrough if someone can stand on your shoulders and make something better?

    Easy. The motive is to continue to innovate, to make something better and to beat the competition yourself. In doing so, that's how you build a big sustainable business.

    The only situation in which patents makes sense is where there's no ongoing innovation, but a single innovation marks the pinnacle of innovation.

    If we took your question and phrased it concerning some other business, you'd realize how silly it sounded: Put yourself in the restaurant owner's role, what motive do you have in this society if someone else has a restaurant across the street?

    It's easy, right? You compete by differentiating. And if the restaurant across the street copies your innovation, you keep innovating and you keep differentiating. It's that competition that drives innovation. The patents *slow* down that process by allowing someone to innovate once and be done. But in a world where innovation is a continuous process, you want competition to drive that process forward.

     

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  7.  
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    RandomThoughts, Oct 19th, 2007 @ 5:45am

    I agree that patents can slow down innovation IN CERTAIN FIELDS. In others? Maybe it slows it down, but without, I think innovation would grind to a halt or at least a trickle.

     

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  8.  
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    Danny, Oct 19th, 2007 @ 5:58am

    Re: Innovation's Greed

    The innovator deserved to be rewarded but that reward should not be the ablility to innovate once and then rest on your laurels. Its the same thing with copyrights on songs. Does it really make sense for Steve Tyler's family four generations in the future to simply live off the still incoming royalties of his music? That's the problem with the patent and copyright systems now. Patent/copyright holders are trying to turn there systems into welfare systems.

     

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  9.  
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    Tim, Oct 19th, 2007 @ 7:28am

    pinnacle

    "The only situation in which patents makes sense is where there's no ongoing innovation, but a single innovation marks the pinnacle of innovation." Thanks Mike for making this point.

    This allows 1st time innovators to capitalize on their invention. Without it, large companies who have resources to bring products and services to market quicker than the sole innovator would benefit unfairly and squelch innovation.

     

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  10.  
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    RandomThoughts, Oct 19th, 2007 @ 8:10am

    Pinnacle of innovation? Really? How do you define that? The pinnacle is something that can't be surpassed. How do you know something has reached the pinnacle?

     

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  11.  
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    Tim, Oct 19th, 2007 @ 8:41am

    Pinnacle

    Pinnacle may be a poor choice of word. However, the gist is that new inventions, something never done before, that is not incremental to something else, are worthy of patent protection.

     

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  12.  
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    bonelyfish, Oct 19th, 2007 @ 10:18am

    Re: Re: Innovation's Greed

    Worst of all someone who doesn't innovate at all goes and patented the business model and the name. Now what, no one can continue without paying.

     

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  13.  
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    yx, Oct 20th, 2007 @ 3:57am

    pinnacle

    Please point to an innovation that isn't a variation of one or a few things that have been done already.

     

    reply to this | link to this | view in thread ]


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