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June 21, 2007 10:09 PM

A games and economic theory argument against intellectual property. Watt's on first in academic paper.
posted by klangklangston (42 comments total)

Link not itself a PDF; does go to PDFs.
posted by klangklangston at 10:12 PM on June 21, 2007

Hang on a sec, I've only got 281 pages to go. I have a feeling I'm gonna have a sweet comment. :-)
posted by facetious at 10:21 PM on June 21, 2007

I haven't read this yet (though I will), but the economic explanation for why IP protection (like anything) can be overdone is pretty simple. In fact, the spreading recognition of that everywhere but in Congress is one reason that Lawrence Lessig recently announced that he's moving on to other issues (which I probably should have made a mefi post about).
posted by gsteff at 10:31 PM on June 21, 2007

I love this quote from their review of Landes and Posner's book:

'They [Landes and Posner] quote from a book on Disney marketing: "To avoid overkill, Disney manages its character portfolio with care. It has hundreds of characters on its books, many of them just waiting to be called out of retirement...Disney practices good husbandry of its characters and extends the life of its brands by not overexposing them...They avoid debasing the currency." This is of course exactly how we would expect a monopolist to behave. If Disney were to be given a monopoly on food, we can be sure they would practice "good husbandry" of food, most likely leaving us all on the edge of starvation.'

Perfect.

I wonder for how long Disney, and their accomplices, had been working on getting the extension of copyright. The cost of pursuing that legislation must have been outrageous.
posted by BigSky at 10:38 PM on June 21, 2007 [1 favorite]

Reading through the first chapter, they evidently argue that IP protection doesn't even increase innovation; this is a some different position than that taken by Lessig and the CC enthusiasts, who simply claim that costs to consumers outweigh the benefits. Judging from the Watt story, they're claiming that patents, at least, interfere so much with new innovation so much as to cancel out the incentive effects (increasing the cost of creation, as Posner refers to the analagous effect in his foundational paper The Economic Analysis of Copyright Law). I have a hard time buying that in the case of drug patents, but I guess they've studied the numbers.
posted by gsteff at 10:41 PM on June 21, 2007

"I have a hard time buying that in the case of drug patents, but I guess they've studied the numbers."

We'll see. I'm a fair chunk in (yeah, I'm that guy, the one who posts to MeFi without finishing his links), but I haven't seen real numbers yet on pharmecuticals.
posted by klangklangston at 10:50 PM on June 21, 2007

The Hall of Shame list is mindblowing; patents being issued to major companies for things where the prior art could be located in literally 30 seconds if anyone had been of a mind to try, and worse. Toast? The peanut butter and jelly sandwich? Time to close down the patent office.

And if you haven't seen The Future of Food, I recommend you do; biotech companies have simply walked in to government seed banks and patented the genes of existing and heritage food crops. It's madness.
posted by George_Spiggott at 10:55 PM on June 21, 2007 [1 favorite]

Basically, rather than fund research through profit we will raise your taxes to fund it through government grants and it will all work really smoothly just like all the other government projects. If you are a bright person with a really good idea, all you have to do is fill out this form and have the agency approve it.
posted by caddis at 11:06 PM on June 21, 2007

gsteff, pharmecutical patents don't in fact protect research & development costs, that is almost 100% paid for by the government. However, pharmecutical companies do invest huge sums in the approval process and marketing.

A more reasonable system might be:

All nations pay for the approval process of drugs they feel are needed. Nations may not al agree on the testing, but these diffrences are small. Those nations paying the bills on a particular drug should be granted a "national patent", meaning the drug can only be produced within their boarders, but by any company.

Of course your pharmecutical companies could still produce & patent drugs, but their prices would norally be undercut by publicly funded drugs. And obviously paying the earlier research & development costs should allow nations to block patents if they choose to aprove the drug publicly.
posted by jeffburdges at 11:20 PM on June 21, 2007

Anyway the approval process is necessarily quite expensive, but the marketing process is unnecessarily expensive and distorts medical care. So some public system is far cheaper. Infact the research already is publically funded. However, politicians may move the money into project that profit them more. So you need some sort of incentive for the politicians to pay for both the real research and the approval process. A national patent system solves this problem because the politicians are now directly creating jobs & still profiting local companies.. but its now more jobs and less profit.
posted by jeffburdges at 11:26 PM on June 21, 2007

A more reasonable system might be:

All nations pay for the approval process

Ha, ha, that would be interesting. Right now all the nations that are not the USA basically suck off the the teat of the USA on this. They have drug price controls, the USA does not; the high prices in the USA fund the research and approval and the rest of the world gets a free ride. Since the USA is really pretty rich this is kind of OK but the imbalance is getting way out of hand.
posted by caddis at 11:27 PM on June 21, 2007 [1 favorite]

I'm sorry, what academic journal did this appear in? Oh, I see.
posted by geoff. at 12:03 AM on June 22, 2007

I'm sorry, what academic journal did this appear in? Oh, I see.

It's being published by Cambridge University Press. Thanks for asking.
posted by gsteff at 12:09 AM on June 22, 2007

No intellectual property means big money controls creative output faster. Another company obtains a recording of your music and sells it without giving you any money.

Intellectual property does not prevent big money from controlling creative output.
posted by Ironmouth at 12:23 AM on June 22, 2007

gsteff, pharmecutical patents don't in fact protect research & development costs, that is almost 100% paid for by the government. However, pharmecutical companies do invest huge sums in the approval process and marketing.

Flat untrue.
posted by Ironmouth at 12:24 AM on June 22, 2007

Posner thinks he knows everything. In reality, he knows one thing, but mistakes it for everything.
posted by Ironmouth at 12:25 AM on June 22, 2007 [1 favorite]

I'm curious on this topic. I believe in open source for the development of means and methods that benefit lives - stuff like AIDS medicines, solar powered lanterns and lighting for poor villages, potable water systems etc etc

However, what happens when one person's ideas and concepts, which they choose to share in an open manner, get used by others for profit. the original ideator loses out? how then can this work? it would require that all participants be of equal integrity?
posted by infini at 12:31 AM on June 22, 2007

infini,

What happens is the other guys make some money off of the creator's idea. It wouldn't be the first time.

The creator doesn't always lose out. He may not have had the contacts or the sales and marketing skills to make the money that others did with his idea. The money wasn't there for him. Publishing his idea may well create a greater financial opportunity for others than it does for himself. So it goes.
posted by BigSky at 12:43 AM on June 22, 2007

However, what happens when one person's ideas and concepts, which they choose to share in an open manner, get used by others for profit. the original ideator loses out? how then can this work?

The GPL is one solution. It allows people to share their work without worrying that someone else will profit from it, and even encourages others to do the same. Creative Commons and other such licenses similarly. Chapter 3 of the book linked in this post claims that historically, innovation has thrived in conditions like this, without (much) IP protection. After discussing the rise of the mail order industry:

Since 1955, sticking to the same sector, we can add to this list such modern innovations as Ray Kroc’s fast-food franchise (better known as McDonalds), the 24-hour convenience store, home delivery of pre-cooked food, the suburban shopping mall, franchise-everything (from coffee to hairdressing), the various steps that make up the delivery business of UPS, Federal Express, and DHL, and, obviously, online commerce. That is to say: pretty much each and every innovation that, during the last half century, has had any lasting impact in the retail and distribution sector is not due to the presence of patents.

posted by gsteff at 1:05 AM on June 22, 2007

I have a hard time buying that in the case of drug patents

You can hardly do anything in biotech without infringing on the patents of others. This method of extracting that is patented, and it's the only way to this step of the process, and that's just step 5 of many in your research effort, most of the rest patented too.

Not classed as a pharmaceutical, but close enough to make a point - the university that developed GE "golden" rice could only do so through a labyrinthine web of negotiations with myriad companies (who were not developing or manufacturing or interested in golden rice) to waive their patent rights and grant the charity to allow the university to do its thing.

I'm speculating out my ass, but I suspect the amount of resources in a typical phrama company that are spent on negotiating, fighting for, and fighting against, patents, legal specialists, etc (not to mention lawsuits) would be colossal.
posted by -harlequin- at 1:18 AM on June 22, 2007

However, what happens when one person's ideas and concepts, which they choose to share in an open manner, get used by others for profit.

The bottom line is that everyone brings something to the table, and in a fair world, the guy that brings the most to the table, should take away the most.

The guy that brings the idea to the table is not the guy bringing the most to the table. Far from it. He's probably the one bringing the least to the table. Good ideas are a dime a dozen - they are so common they far outstrip the resources available to bring and idea to fruition. Those resources are the valuable bit - the thousands of man-hours in R&D, the gear, the millions spent on marketing, etc. The idea is nothing. (For this reason, patents are specifically prohibited from applying to ideas - they must apply to something that has been developed. But the USPTO these days ignores its own mandate and rubber-stamps almost anything)

The ugly scenario (that maybe you were thinking of) is when the small guy puts down the resources to do the valuable stuff (ie, not the idea, but the turning it into a product, testing it, solving all the devils in the details, manufacturing it, marketing it, etc), and then a much bigger company comes along, copies it, and uses a much vaster factories and marketing budget to sell their version to the world.

That would be the fear of loosening IP, but... the current patent system doesn't seem to be preventing this scenario happening right now (I'll only half-jokingly mention the ipod here :), so the IP laws don't seem very useful in doing what they're meant to, and obviously there is their huge cost - it seems like most significant product innovation these days can only happen after millions of dollars have been wasted in court battles.

No IP is an alien concept to me, but sometimes I wonder... could it really possibly be worse than what we have?

Unless you're of the lawyer type that is a kind of welfare class that the corporations have to pay their massive amounts of protection money to, in which case the current IP system is AWESOME! :-)
posted by -harlequin- at 1:37 AM on June 22, 2007

The guy that brings the idea to the table is not the guy bringing the most to the table. Far from it. He's probably the one bringing the least to the table. Good ideas are a dime a dozen - they are so common they far outstrip the resources available to bring and idea to fruition.

Here's a dime -harlequin- I'd like a dozen ideas THAT WORK for preventing baldness. It's an obvious problem. Lots of people must have thought about to solve this. There must be lots of ideas out there.

You give me the good leads - the Glengarry leads - and I'll do the heavy work of finding the financing and getting a factory in China to produce it. We'll split the profits: 99% for my perspiration and 1% for your inspiration.
posted by three blind mice at 3:01 AM on June 22, 2007 [1 favorite]

gsteff, bigsky, and others - All very valid, "ideas" are a dime a dozen etc, and the little guy loses out to the big guys who have the wherewithal to turn these into big public relations exercises and marketing promos, accepted.

However, what if -

a) its not just an "idea" but has been worked out into a workable, business model that provides a win win scenario that generates revenue not only for the service provider but also for the end user - say in the case of a product or service or business model for those at the bottom of the pyramid.

and

b) the little guy writes this stuff out into proposals for the purpose of raising funding to make it all happen and gets screwed anyway.

So does this mean the little guy NEVER makes any money? Must just sit there churning out these ideas for others to put their "99% perspiration" into as three blind mice says? I don't think so, because the 1% inspiration - the idea - was then turned into a strategy that works, a concept that was fully fleshed out into a workable business model. The little guy put in the 99% perspiration as well.

Then what?

Is the little guy forever doomed to be screwed out because they're producing on the basis of a value system that says if you put the good stuff out there, good stuff will eventually come back to you [call it karma, abundance theory or open source, whatever]. That they don't have the gazillions in lawyers, funds and wherewithal? That the big guys are going to screw you anyway cos you're too little to squeak and too easy to step on?

Or do you turn cynical, revise your own philosophy, your own value system, your faith in the fairness of humanity and turn into a whore that won't say a word unless the money is shown first?

Well?
posted by infini at 4:26 AM on June 22, 2007

This is great! I'm going to cut and paste the entire thing and go get it published under my name. I'm sure David K. Levine won't mind.
posted by applemeat at 4:41 AM on June 22, 2007 [1 favorite]

Gee, I think people should get paid for their work. Is that wrong?
posted by MarshallPoe at 5:06 AM on June 22, 2007

Applemeat - go ahead. Try it. You'll look really good and be widely praised, while Levine will starve in the gutter.

MarshallPoe - That's very wrong. Levine is saying that creative people should all starve in the gutter, as every campaigner against IP laws agrees. Only the kindly, selfless acts of IP monopolists stop this from happening.

Disclaimer: My job is generating content. every last bit of which is given away. (That's not strictly true, thinking about it: some of it appears on paid-for services: oddly enough I get no direct renumeration for that). I am not starving in the gutter.
posted by Devonian at 5:36 AM on June 22, 2007

eh.. devonian, I am.
posted by infini at 6:40 AM on June 22, 2007

>>I'm sorry, what academic journal did this appear in? Oh, I see.

It's being published by Cambridge University Press. Thanks for asking.

Yeah, but despite its name Cambridge University Press is simply a commercial publisher, not an "approver of content" -- this paper has not appeared in any peer-reviewed journal, and it shows.
posted by modernnomad at 7:04 AM on June 22, 2007

this paper has not appeared in any peer-reviewed journal

Actually it appears that this document aggregates the results of a number of papers by the authors which have been published and cited by others.
posted by George_Spiggott at 7:12 AM on June 22, 2007

infini & MarshallPoe,

I think it's a good thing when people get paid for their work too. But I'm not so attached to making sure inventors get their end that I will look past all other considerations. But that said, I don't think the inventor has to lose either.

My major concern is that as technology increases, protecting intellectual property becomes more difficult and requires more invasive means. How will it be enforced? I'm not willing to have the government monitor my communication for the sake of protecting intellectual property. We might hate the idea that someone's idea gets spread around but the cost of enforcement can still be a worse alternative. About a month ago the Bush administration, with Gonzales leading the charge, pushed for draconian legislation to protect intellectual property. Notice that this includes obtaining wiretaps on those who are suspected of attempting to commit copyright infringement.

I certainly admit that inventors and creators need to have incentives. Does the current system provide for that? There was an FPP here a couple of months back on Don Lancaster. He's an inventor and he counsels others to avoid seeking a patent for their work. You can read his opinions here. Basically, he thinks patents are a corporate game and the individual inventor really can't win. They will only lose time and money. And seeking a patent isn't cheap.

And briefly focusing on copyright, this is an interesting examination of some of the cultural effects that accompany long term protection of imaginary works.
posted by BigSky at 7:38 AM on June 22, 2007

Bigsky: thank you for the informative post, and I'll look through the links. Fundamentally I do agree with much of what you're saying re: corporate IP and draconian laws et al. I think, imho, in my post above, I let my personal feelings stemming from a recent experience get in the way of this conversation on IP issues. grazie.
posted by infini at 7:59 AM on June 22, 2007

Good ideas are a dime a dozen.

True enough. Fortunately, the people who think this way almost universally lack the intelligence to know which the good ones are, and so must at least pay some smart person to do the picking for them.
posted by jamjam at 10:52 AM on June 22, 2007

I haven't read this yet (though I will), but the economic explanation for why IP protection (like anything) can be overdone is pretty simple.

Indeed, it's so simple that almost everyone instinctively knows it's right, but we continue the current system because of corruption. I appreciate the research, but I won't read it cuz I don't need to.

Gee, I think people should get paid for their work. Is that wrong?

Absolutely.
posted by mrgrimm at 12:40 PM on June 22, 2007

Damn I don't have time to read this interesting paper, but just let me point out a chain of assertions:

If I must defend my patent by using the lawyer+court system and

If this system costs a fixed+variable amounts of money , to be paid at certain fixed times and

If my cash flow is such that I can't meet the payment schedules

therefore

My patent protection can't be enforced and is therefore useless

----

To some this is rediscovering hot water, but it is often not represented or considered as an implicit given, that you can't partecipate to competition without adequate resources and that, therefore, cost-of-law is a barrier to entry in the market. Not surprisingly the point of barriers-to-entry is used by apologist of complete deregulation of markets, except that one doesn't, in my experience, hear them cry for the abolition of patent and/or copyrights.
posted by elpapacito at 4:12 PM on June 22, 2007

I'm of two minds here.

One ... We stand at the end of 100+ years of enormous, mind-blowing economic progress, all of it driven by the notion of patents and intellectual property, then stand up and say, "Yeah, ya' know, these ideas of ours are actually holding us back."

Okaaayyyy...

Two ... I've seen anti-piracy ads where they say, "You wouldn't steal a car, so don't steal music." And I think, they're right. I wouldn't steal a car. But let's say my buddy buys a car, and I say, "Hey, Ted, nice car you've got there." And he says, "Papa, why don't I just burn you a copy..."

Then you have to wonder, there's something wrong here...
posted by Cool Papa Bell at 5:19 PM on June 22, 2007

100+ years of enormous, mind-blowing economic progress, all of it driven by the notion of patents and intellectual property

Begging the question. All of it driven by the ideas themselves and the exploitation of those ideas, which does not rely on them being patentable or property. If you have a way of making something more useful and productive than it's ever been before which will result in you being more productive and wealthier, do you say "oh wait, I'm not going to develop and use this idea because I can't patent it!" Do people stop building and using things productively and for economic gain when the patent on them expires? Of course not.
posted by George_Spiggott at 5:47 PM on June 22, 2007

Of course, what George is forgetting is that what patents do is provide some level of assurance to entrepreneurs that they will have a reasonable timeframe in which to develop and market their new ideas without another more established and wealthy company walking along and just copying them wholesale before the new folks even get out of the gate. It doesn't mean without patents, *no-one* will invent anything... it's merely an encouragement to the process. Most countries have bankruptcy laws for the exact same reason -- those places that have the easiest bankruptcy processes also have the highest rates of innovation. They allow people to take gambles.

George, when you say "would you do something that would make you wealthier even if you couldn't patent it?" you completely ignore the fact that a substantial part of the wealth creation comes from the exclusivity granted by the patent.

Like anything, a patent system can be abused, and I wouldn't argue with you if you said in many places it *is* being abused. I don't know where you live, but in my country, it is in desperate need of reform. But that doesn't mean the entire concept is without value.

This paper sounds more like a rather desperate attempt to post-hoc justify music "sharing" any pseudo-economic language. I have a hard time believing that anyone with any training in economics or law buys the arguments.
posted by modernnomad at 6:24 PM on June 22, 2007

modernnomad, I'm hardly "forgetting" that: that objection is a major focus of the paper, the principal justification for patents and intellectual property in general, and the inevitable starting point for any discussion of this topic.
posted by George_Spiggott at 6:35 PM on June 22, 2007

klangklangston: Excellent post...

infini, gsteff, etc: On the point of how the little guy who innovates can earn a return in the absence of IP rights: Different markets/industries naturally favor players of different sizes due to product and customer characteristics. This is true with or without IP rights. To take extreme examples, a one-person company can't succeed in the automotive industry but in the market for "management gurus", it is at little apparent disadvantage.

caddis: Agree on your point about the lunacy of Boldrin & Levine's pharma industry proposal to have a government agency decide which Phase 2-3 clinical studies to carry out. Why would government be better at doing this than some alternative private mechanism?

-harlequin-, BigSky and elpapacito: Re cost of enforcement of IP and other IP-related transaction costs: Agree that this is a big issue. I think Boldrin & Levine (and other opponents of IP) perhaps don't focus on it enough.

George_Spiggott & modernnomad: On the point of what gets invented (and what doesn't get invented) depending on whether IP rights exist. This is a difficult topic to address empirically. In principle:
- When IP rights exist: Potential innovators may initially make greater effort, knowing that if they invent something they will have a monopoly on it. However, it becomes difficult for 3rd parties to subsequently make improvements to these inventions. Also, the original innovator has diminished incentive to keep improving the invention during the exclusivity period, since it is shielded from competition.
- When IP rights don't exist: The incentive to make an effort is diminished for those potential innovators who know that if they invent something they won't be able to turn it into a successful product. However, the incentive to make an effort is much increased for potential innovators who have capability to productise and who see an opportunity to make incremental improvements to or to build upon already existing inventions.
posted by gbognar at 7:00 AM on June 23, 2007

caddis, A national patent system might solve that problem, i.e. if the USA pays for the development & approval then you may only produce those drugs inside the USA for 17 years. Currently US federal money pays for the development and US high prices pay for approval and marketing but the patent holder may produce the drug abroad. Why not simply: nations claim patent on the drugs the develop and approve, anyone may produce those drugs, but only inside the nations who paid.
posted by jeffburdges at 4:19 AM on June 24, 2007

Oh, the people in other countries will love that. No medicine for you.
posted by caddis at 7:53 AM on June 24, 2007

No, you can still export it. And you'll still get reasnable prices since anyone can make it inside the paying countries. What non-paying countries don't get is the jobs related to production.
posted by jeffburdges at 7:32 AM on June 25, 2007