Reason on IP Protection and Creativity

rnturn writes "A long but interesting article over at Reasononline discusses a paper written by a pair of economists and published by the Federal Reserve Bank of Minneapolis (!) and the reactions to it of several other economists. A snippet from the article: 'Moreover, U.S. court decisions in the 1980s that strengthened patent protection for software led to less innovation. "Far from unleashing a flurry of new innovative activity," Maskin and Bessen write, "these stronger property rights ushered in a period of stagnant, if not declining, R&D among those industries and firms that patented most."' Not exactly news to most readers but it appears that their paper is making waves in economic circles."

Comments

General Patents Information

[syr]

If you're looking for a broad range of information concerning patents--what they cost, trade secrets, legal matters, USPTO information, etc.-- a good place to start is Patents.com. Or you can always go to CrazyPatents to see some of the more ridiculous patents out there.

GameTab - Game Reviews Database

Length = boring?

[Faust7]

"A long but interesting article"

Ah, the true readership culture of Slashdot shows itself. ;)

Eye Opener

[Camulus]

Reactions to the paper have been mixed. Robert Solow, the MIT economist who won a Nobel Prize in 1987 for his work on growth theory, wrote Boldrin and Levine a letter calling the paper "an eye-opener" and making suggestions for further refinements.

It is amazing, /. has been saying this for years, but some one with a Nobel Prize calls it an eye opener?

Re:Eye Opener

[Qzukk]

some one with a Nobel Prize calls it an eye opener?

See, I told you they would listen to Reason.

Re:Eye Opener

[praksys]

Hmmm... well people on /. have been saying all sorts of stuff for years. The difference between wild speculation (i.e. what happens on /. most of the time) and rigorous accademic inquiry (like the papers produced by Boldrin and Levine) is that the later produces theories which can be tested against the facts, refined, put into use, etc.

Anyone can say "intellectual property is BS". Few can give a rigorous proof of why intellectual property is BS.

Re:Eye Opener

[praksys]

However, it seemed to have an air of, "well, gee I didn't think of that".

I think the surprising part for economists was the extent to which the predictions of earlier models depended on certain simplifying assumptions. Economic models always contain assumptions that are unrealistic, and usually this is fine as long as the predictions obtained from a model remain approximately accurate even when its assumptions are relaxed a bit. In this case economists had assumed that intellectual goods are entirely non-rival and that copying costs nothing at all. At first glance these look like pretty reasonable assumptions because they are actually pretty close to the truth - economists often use assumptions that are far more unrealistic. What is surprising here is that even very slight changes to these assumptions - a small degree of rivalry and a small copying cost - make a big difference to the predicted results. Some economists were surprised to see just how big that difference can be.

Re:Eye Opener

[Kanagawa]

/. has not been saying this for years. I rarely see cogent slashdot posts on economics, much less posts that include a mathematical model. Slashdotters usually limit themselves to the type of comments you just provided, "See!! We're right! Woo!!" But, we mustn't confuse instinct with academic analysis. Moreover, we ought not confuse the article, originally posted here, with the actual paper. The staff research report by Boldrin and Levine here is 40 pages of economic theory. The summary is mostly fluff and sound bytes. Yeah, its appealing to think it may be correct, but the arguments on both sides are very strong. more

FWIW, you can find more of Levin's work at various places. Prof. Danny Quah also has some thoughts on the subject.

Re:Eye Opener

[ninjadroid]

The difference between wild speculation (i.e. what happens on /. most of the time) and rigorous accademic inquiry (like the papers produced by Boldrin and Levine) is that the later produces theories which can be tested against the facts, refined, put into use, etc.

Not all slashdot posts are pointless speculative drivel, and many "rigorous academic inquiries" are pompous, pedantic, and obfuscated. The medium through which a thing is said does not inherently render it good or bad. Granted, you didn't say that, but I feel the need to point it out regardless.

Anyone can say "intellectual property is BS". Few can give a rigorous proof of why intellectual property is BS.

AFAICS, formally educated economists have done nothing but support conventional wisdom for the past few decades. If they have done anything great, I haven't heard of it, probably because I'm not an economist and "those in the know" do not feel obligated to explain to the public (in words we can understand) why their theories should govern us.

Anyone can support intellectual property by reiterating conventional wisdom. Frankly, I'm not comfortable with a system that isn't constantly being challenged. If the academics aren't gonna do it, I'm more than happy to have the slashdot trolls fill the void.

I believe the real reason why Boldrin and Levine are getting an audience is because economists don't care to listen to people who aren't of their ilk. Although I suppose I'll have to make a "rigorous academic inquiry" into that hypothesis before anybody listens.

Re:Eye Opener

[AJWM]

What is surprising here is that even very slight changes to these assumptions [...] make a big difference to the predicted results.

And that's what is significant and eye-opening. When a system or relationship previously assumed to be linear is shown to be non-linear, that throws off everything -- all analyses and assumptions based on that have to be re-evaluated. It also raises the question: what other relationships have we assumed to be linear but aren't? (IOW, how much of what we thought we knew is wrong?)

Orignal Paper

[Jeremy Erwin]

Boldrin and Levine's original paper is available here (pdf).

Now you may hate them.

[Bender Unit 22]

Now you may hate the entire country of France, but they have a saying, "Der er biler paa striben i aften" which could be transferred to the Simpson quote "Take an existing product and put a clock in it".
Of course innovation requires that you won't get ripped of when you come up with a great idea, but at the same time what good is it if no one can use it. Would the WWW have accelerated so fast if you were to pay license fees for every application using HTML codes? I think not. It's a fine balance that you have to maintain. To little and too much protection is evil.

Spot on

[arvindn]

The consequences of the simple fact that copies of information can be made at no cost or loss to the original are profound. Unfortunately, current mainstream thinking is totally misguided by applying conventional ideas of property to thoughts and ideas.

The recent trends in DRM etc are actually consequences of this. If you haven't yet, go read Stallman's A right to read. He anticipated DRM 9 years ago. The point is that there are certain things as unenforceable digital restrictions, such as sending a copy of a file on a machine you own to another machine you own through a channel you own. The media companies are seeking to prevent exactly this. To succeed, they will have to own all computing. From this point, I think we are on a path of no return. Either we will end up in a big-brother like situation, or there will be a major social revolution and rebellion, an overthrow of the existing order, and major reevaluation of the thinking on intellectual property issues.

From the article:

Central to Romer's theory is the idea of nonrivalry, a property he considers inherent to invention, designs, and other forms of intellectual creation. "A purely nonrival good," he wrote, "has the property that its use by one firm or person in no way limits its use by another." A formula, for example, can be used simultaneously and equally by 100 people, whereas a wrench cannot.

This guy "gets it". What needs to be done is to raise awareness on a large scale so that we can meet the threats head on.

Re:Spot on

[Minna Kirai]

(I don't think the parent post was really proposing elimiation of IP laws, but let's proceed from there anyhow)

Well, "If there were no IP laws", then there would be IP laws. This natural pattern occurs accross human societies. (Even without technology to build DRM machines)

If a law or regulating principle is useful (or seems useful to enough people), then it will be created, with or without the government's help. The government might be able to implement the law in more efficient or fair manner than the private sector could, but someone will create it.

For a fantasy example, take murder. If murder were governmentally legalized, soon enough murder would be illegal again- but the enforcers would be private contractors. Since murder is legal, revenge-killing of a murderer is also legal. When you sign up for life-insurance, you'd allocate a portion of the award to go towards hiring avengers (if you were murdered). Of course, the insurance company wouldn't pay if you had yourself been killed for venegance, so they'd create arbitration panels to determine culpability to see if a particular killing violated "policy" or not. Eventually, a near duplication of the existing criminal investigation/enforcement arms of a normal government would be created.

Likewise, if copyright law was abolished, then trade organizations of publishers, authors, and distributors would implement their own form of copyright law. Before Barnes&Noble allowed you to buy a book, you'd need to show your "Authorship Protection Association Membership Card". To get this card, you'd have to read and sign a big contract, wherein you promise to never duplicate (or maybe even re-sell) any APA works you might acquire. Violate this, and you've agreed to pay a big fine. (Don't pay, and they take the card and continue billing you).

So then, if the private sector can create necessary laws without government help, why should the government bother to have any laws? 2 reasons:

• Government enforcement may be inherently more efficient and less-wasteful than private enforcement would be. (Some may laugh at the "government efficiency" oxymoron, but it can happen in some cases)
  
• Because the government version of the laws will be more fair or permissive then what private companies would create.
  

The second point is the big one for copyright. As US copyright was established in 1777, a short period of enforcement was created (14-28 years). This was long enough to give publishers some peace of mind, but short enough to make ideas free within a single human lifetime. A much shorter period (so short that it truely reduced the profitability of publishers) would've been an incentive to create a "private sector copyright law" out of an interlocking set of contracts imposed on every customer (EULAs, you might call them).

And chances are, those contracts would last far longer than any governmental copyright would.

To prevent a private group from drafting a "virtual law", we need to offer some kind of copy-protection from the government. But this is a compromise- they should get only enough coverage so that building an alternative enforcement mechanism is more expensive than it's worth- and no more than that.

As you may know, lobbyists have already pushed us far past that point.

My opinion on the subject.

[Randolpho]

I like IP rights. I think they're good; people should have the right to make a few bucks with something they invented, without the worry of competition for a little while. This is a good thing, because it gives motivation to innovate -- why create something if your competitors are free to copy it immediately and glut the market?

However, I agree that IP rights are out of control. Copyrights are being extended indefinitely, patents are granted with broad wording that allows for devious undermining of previous IP.

The cause is very obvious: corporations. They have the money and power to lobby for extentions and special rights on their legal monopolies. The solution is simple: eliminate corporate right of ownership of IP, and return it to the hands of the inventors and authors.

Obviously even with such a change, there would be openings for abuse, but they would be greatly limited by also eliminating the right to sell or transfer IP rights. Anyway, that's my opinion on the subject. Feel free to pick it apart.

READ your employment agreements!

[bninja_penguin]

I just had to leave my place of employment, as the new management wanted us to sign new contracts. Part of the contract stated that any idea, document, illustration, patent, trademark, (and the list goes on and on) that I may come up with, on or off the clock, or on or off the job site, at any time during my employment, was then the property soley and exclusively of the company.

Most "innovation" and invention has traditionally been done by a person in their garage or basement, working on the proverbial better mouse trap. Corporations are trying to cash in on this, saying stuff like, well, you wouldn't have gotten that idea if you didn't work for me, so it is now mine. No wonder there's been a lessening of "innovation", invention, progress, etc. What I do on my time is mine.
I may work for a corporation, but I refuse to be owned by one.

Time to put an end to the "monopoly" myth

[Anonymous Coward]

The basic idea of civil society, as articulated by the great enlightenment social contract philosophers, is this: You give up your "natural rights", that is, the right to take by force whatever you have the power to take, to the state, and in return, you are granted "civil rights", such as the right to your own property, the right to freely enter into contracts, freedom of speech, and so on.

Now, most copyright and patent infringement advocates don't have a problem with private ownership of material property, even though this is also an artificial construct which takes away their "right" to steal whatever they like and gives whoever acquires ownership of property through lawful market transactions a "monopoly" over its use. So why do they claim that intellectual property is any different? Usually the answer is a hodgepodge of weak analogies, claiming it is similar to such things as oxygen and water, unsubstantiated slogans like "information wants to be free", and of course the favorite retort of totalitarian zealots, "its inevitable".

But the most insidious of them all is the recent pronouncement that copyright, and intellectual property laws in general, create "monopolies", and so in fact are in opposition to the principles of free market economics. This is a gross perversion of the term monopoly, as it usually applies to monolithic, stifling state-supported enterprises. You might consider the case of the Coca-Cola corporation: They sell a popular soft drink which you may be familiar with. The secret to its popularity is great taste, and this is because of a time-tested, proprietary formula. In order to produce this beverage, naturally, operators of bottling plants have to enter into agreements with the Coca-Cola corporation, and pay royalties. If one is to follow the analogy favored by piracy advocates, Coca-Cola has "monopoly" on this drink, and it is unfair that only they are allowed to sell it, and it impedes the operation of free markets. But just ask their competitors: This idea is ridiculous. Just because they can't sell beverages made according to the exact Coca-Cola formula doesn't mean that they are prevented from selling soft drinks. It just means that in order to compete, you are forced to innovate yourself, and this results in the diversity that a market economy should provide: Pepsi, RC Cola, Jolt, and many other unique varieties of cola are available, and they are all able to profit because of their distinctive taste and branding. Why should they not be rewarded for their investment in research and development? And why should someone who rights software, books, or music not also be rewarded?

Of course an individual or corporation ought to have rights to the unique result of their own creative work, and they should also have the right to transfer these rights to anyone they please if it is in their own interest. Exclusive rights over something like the text of a particular, source code to a particular program, or a particular performance of a popular song, do not translate into a "monopoly" in the general case: It only forces competitors to produce their own original products, which produces diversity that we as consumers should value anyway. It isn't like Oxygen or water: Every O2 or H2O molecule is the same, but Microsoft Windows XP is the result of billions of dollars of research and development money invested over 20 years. And maybe it wants to be free, but perhaps so does your car: That doesn't mean that someone who tries to steal if from shouldn't be thrown in jail. We accept these abrogations of "natural law" because the result is more prosperity and more fairness for everybody.

Re:Time to put an end to the "monopoly" myth

[cpt kangarooski]

So why do they claim that intellectual property is any different?

As a prelude I'd like to point out that writings or inventions simply aren't property. IP -- which is a very misleading term -- actually refers to the copyrights, patents, etc., and not the subject matter they exist in reference to. It's a subtle, but important distinction.

At any rate, two differences present themselves. Firstly, there is frequently a greater public necessity to use writings and inventions that other people have developed as opposed to a need to use other people's real or personal property. Secondly, that that writings and inventions are nonrivalrous. That is, if you have an invention, and I use that invention, I do not preclude your use of it. Whereas if you had a car, and I took the car, you could not use that car at all while I had it.

This is a gross perversion of the term monopoly, as it usually applies to monolithic, stifling state-supported enterprises.

Copyrights and patents are granted by the state, exclusively to particular parties. One needn't be ATT to have a monopoly, and at any rate, the assertion that patents, copyrights, etc. are monopolistic dates back at least over two hundred years (Jefferson was suspicious of permitting them, because they'd create monopolies), and likely even farther back.

Why should they not be rewarded for their investment in research and development? And why should someone who rights software, books, or music not also be rewarded?

Who shall reward them? If you want to reward them, that's fine. But why should I be forced to do so? To compel me to reward them amounts to a gross imposition on my own liberties. Remember the civil society you mentioned? It is fundementally a quid pro quo. People enter into the social contract because they feel they're going to personally benefit more from doing so than they would if they did not.

Thus, while I don't mind necessarily, rewarding authors or inventors, I see no reason to do so unless I benefit more from doing so than I would if I abstained. Certainly the mere assertion that creation 'earns' the ability to curtail my rights is nonsense. Someone could spend millions upon millions of dollars inventing the best buggy-whip in the world, but I won't feel beholden to use it, and a patent with no economic value hurts the inventor just as much, as they still receive no reward or compensation.

Patents, copyrights, marks, and trade secrets all have their place. And I have no problem in respecting them within reason, because it is in my best interests to do so. However, when they become oppressive; that is, more of a burden than a benefit, then they need to be reduced to a more managable level, or abolished outright.

Exclusive rights over something like the text of a particular, source code to a particular program, or a particular performance of a popular song, do not translate into a "monopoly" in the general case: It only forces competitors to produce their own original products, which produces diversity that we as consumers should value anyway.

This is not always true. For example, someone might discover the demonstrably best possible method of doing something. Perhaps the ONLY method of doing something. There will be no substitute of like value. Permitting rights in such a case would harm the public measurably.

At any rate, you're looking at this one-sidedly. Remember, what's going on is fundementally a bargain between creators and the rest of the world (including all the other creators). Prosperity and fairness are fine if both sides get them, but a system that prefers creators is unacceptable to the people being asked to submit to the demands of the creators. Thus, it won't stand. It just isn't worth it.

Damn right it's big news that Reason gets it.

[ShatteredDream]

First of all, Reason is the one major publication other than a Linux rag or The Nation, that would get it right off the bat. The Reason Foundation does what its conservative counterparts screech about doing, but never get around to: rolling back government involvement in ours lives. They can claim credit to saving Indianapolis taxpayers around $600M because they put together a plan to privatize all non-essential government services.

This is very bad news for the content cartels. While many people may not know about Reason, most Libertarians do and a lot of Libertarians who actually sided with the cartels will probably be swayed over against them. My father is frequently amazed (he's a staunch conservative) at how many times he's been forced to agree with a position taken by Reason Online because it just "makes sense" more than anything from the National Review. I've long said that Libertarians and Classical Liberals better represent the conservative platform than Conservatives themselves.

I read this in their print magazine. This is not a turning point against the cartels, but it is certainly a major blow. There are two types of the Right: those that believe individual rights are an essential ingredient to morality and those that believe that individual rights are expendable in order to maintain public "morality." Reason in my experience wins over the former quite easily on most issues because its arguments are realistic and it proposes how we can balance morality and individual rights in its articles related to vice and stuff like that.

One of the things that IIRC I've seen argued in Reason articles on drug prohibition is that stripping drug users of free medical care even if they are veterans would do 10x more to stop drug usage than jail terms. They frame such issues in terms that the Right can appreciate and make it very clear that such programs are nothing more than government subsidizing licensious behavior.

Invariably Reason ends up kicking its conservative competitors' asses on a regular basis. It indirectly exposes them for the statist hypocrites that they are such as ol' Goldberg over at NRO who thinks that those who are complaining of slippery slopes in regard to the PATRIOT Act and DeptHS are whiny paranoid nuts. This is an article that every /.'er in the US should keep bookmarked in case they need it against a cartel shill.