A Survey of the State of IP

An anonymous reader writes "This week's Economist has a number of stories in its survey of the state of IP (link to lead article), written from a balanced, business-oriented perspective. If you do not have a web subscription it is worth picking up a newsstand edition, if only to read a defense of open source from being seen as a 'flaky, radical, pinko strategy not related to the competitive marketplace'." From the article: "In recent years intellectual property has received a lot more attention because ideas and innovations have become the most important resource, replacing land, energy and raw materials. As much as three-quarters of the value of publicly traded companies in America comes from intangible assets, up from around 40% in the early 1980s."

Comments

Re:You lost me . . .

[Winckle]

Imagine how Linux zealots discuss Microsoft, and you're getting close.

Re:You lost me . . .

[ScentCone]

Look, if the don't-care-about-business-use-of-Linux(et al) people don't care, well... then they don't care! But the people that wish more users would adopt Linux have to care what businesses and business people think. You can't have it both ways.

This says it all

[Anonymous Coward]

"There is a broad recognition in the US that the patent system, if not reformed, will...begin to impede American competitiveness around the world," says Bruce Sewell, general counsel of Intel, the world's biggest chipmaker.

so while USA is busy in court the rest of the world will be busy innovating and actually moving forward
of course i think this has much to do with the "culture of greed" that permeates the US and will ultimately be its downfall, or to put in in biblical terms (as that seems to be a more popular line of reasoning in 14th i mean 21st century America)
the moneylenders will kick themselves out of the temple

Ring-fencing, the blindingly obvious, etcetera

[fuzzy12345]

I'm for IP legal protections, but there's some big problems I see with the current regime:

Ring-fencing: This is the creation of a ring of patents around the primary thing you're trying to protect, so that even when the original patent expires, competitors won't be able to reproduce the invention without violating your other patents. Often used to protect chemical processes used to manufacture drugs.

The blindingly obvious: RIM's Blackberry troubles stem from patents on the wireless transmission of email. If you're an EE or a CS guy, you'd think "information is information, a channel is a channel, and every combination of information x channel isn't a novel idea waiting to be thought of, it's the obvious thing" but alas, the patent office doesn't see it that way.

And the worst thing is, large companies with large stables of IP become very resistant to change (or, if they want change, it's for more protections for the patent-holders and less quid-pro-quo for everyone else) and, with cash-fueled American politics, things only get worse. Witness the effectively perpetual copyrights that the Mouse buys.

IP - the anti-christ of free markets

[argoff]

Patents and copyrights are really the anti-christ of free markets. They have nothing to do with freedom, and especially nothing to do with respect of property rights. From the outside, it simply amazes me to see time and time again how people treat them as if they were real property rights. It is almost as if I was living in an 1850's throwback, trying to prove that slavery was anti free market - "what's amater don't you believe in property rights? Don't you believe in the wealth and prosperity of American commerce? They have no incentive without it!" Those are the kind of arguments I get.

Re:IP - the anti-christ of free markets

[smose]

Patents and copyrights are really the anti-christ of free markets.

Not necessarily. Imagine that you and a competitor manufacture widgets. You create a process that radically improves the efficiency of manufacturing widgets. Free market: you can keep it for yourself and reap the rewards of your efficiency relative to your opponent. As long as they don't figure it out, you win. Alternatively, you can patent the improvement. It exposes the idea to your opponent, and if the cost savings for implementing your patented process is greater than the cost of paying you for it, your opponent implements it, and you still make more money. Perhaps your opponent improves it further, and reduces the cost of making widgets yet again. In the end, all the widgets get made more efficiently, and competition can bring the price down.

Perhaps you meant that modern patenting practices are anti-free-market. On that I could agree; the point isn't to profit from your idea into eternity; it's to set good ideas into permanent practice so that better ideas can come from it.

Re:IP - the anti-christ of free markets

[argoff]

Not necessarily. Imagine that you and a competitor manufacture widgets. You create a process that radically improves the efficiency of manufacturing widgets. Free market: you can keep it for yourself and reap the rewards of your efficiency relative to your opponent. As long as they don't figure it out, you win. Alternatively, you can patent the improvement. It exposes the idea to your opponent, and if the cost savings for implementing your patented process is greater than the cost of paying you for it, your opponent implements it, and you still make more money. Perhaps your opponent improves it further, and reduces the cost of making widgets yet again. In the end, all the widgets get made more efficiently, and competition can bring the price down.

That is a nice theory, but in reality there is plenty of incentive for each company to improve efficiency without a patent. So really why impose them? Also, 90% of inventions are incramental, built off of prior abilities and public knowledge - so now patents toss up another road block to the competitor who can't use the same discovery that they would have found out anyhow because the first company won't license it. Cuasing the competition in the space to die, and monopoly interests to begin.

Property rights are about allocating control over limited resources, not about creating artifical limits for the sake of controll. There are always nice sounding theories about why it's ok to impose restrictions on other people for the sake of this good or that good, but that is not good for free markets. Free markets are about freedom, not markets. When people have freedoms, then they tend to use them to create wealth and opportunity where none existed before. No matter how you slice it, things like patnets restrict freedom by imposing or allowing limits on how people can use inventions and discoveries that they already know about.

Re:IP - the anti-christ of free markets

[xoboots]

The US/Western/Modern system has severely confused the related notions of "free markets" with "competetive markets". First, there are no free markets: they are all heavily regulated. On top of regulation, there is usury (interest), rents and taxes at multiple levels. For the most part, exchanges are not made between equal players (eg: householders vs. corporations).

Unfortunately, the entire debate of "intellectual property" is framed within the lexicon "free markets" and "property". In fact, instruments such as patent and copyright are tools that restrict use and beget monopolies rather than competitive markets. This is especially true of the modern incantations of these systems which fly-in-the-face of their original intention. Originally, these tools were meant as temporary and necessary "evils" as a means to stimulate an increase in artistic and technical know-how, artifacts and techniques for the general public's USE -- both private and public (not merely via consumption). Of course, it turns out that modern society has MANY OTHER means of establishing these goods (eg: public research, universities, community based good will, etc) but we are stuck with a system that AROSE IN AN OLDER AND LESS FREE ERA.

So, in a competitive market without patent/copyright restrictions we face the threat of the "secret guild" monopoly regime; however, we also face that under current patent/copyright law since the length of the restrictions fairly much gaurantee monopolies for the lifetime of a product/technique. Worse, in an era of scientific progress conducted in large by universities, grants and other forms of public research, this is tantamount to stealing public resources. Even worse, in technologically reliant societies, inter-relation of technology is paramount. It is in everyone's interest to share ideas. In other words, the threat of "secret guilds" is not worth protecting against at this point in our evolution.

In game-theory we can see this as a form of the prisoners dillema: everyone is better off if all co-operate, but if only one player "cheats" by not co-operating (secrecy or patent/copyright), they will do much better than everyone else. If no one co-operates, then no-one does as well as if they would all co-operate (due to interconnection of ideas and implausibility of any single entity developing all ideas on their own).

So it comes down to this: as a society, how much longer do we wish to reward (reward!!) those who do not want to naturally co-operate?

Re:IP - the anti-christ of free markets

[nelsonal]

Of course they restrict freedom, but that restriction of freedom is a trade off for complete freedom after a set period of time. The idea is if you cannot restrict freedom of use of your invention, too little effort will be spent developing new things since both the inventor and everyone else gets the full benefits (so everyone free rides and nothing gets invented). Sure the Tesla's of the world might well continue to research, but there are many others who would do something else.

I think debate about the rewards (their size and duration) are highly valid, as even when they were established the period of a patent was set with no real thought behind it. I do not think most people would prefer the society that gives no reward to inventors, but I do think that there should be considerably more debate about what the proper reward structure could be (especially in a much more rapid business setting). 200 years ago, it could well have taken 10 years to build a factory and get the products to national markets, now obtaining factory capacity and national distribtion can be done in less than a year (more importantly obsolesence occurs much more rapidly than when patent law was established). I do not know enough to more than speculate on the proper duration of a patent, but I have learned that the more a subject is exposed to debate, the better off the final decision will be.

Re:IP - the anti-christ of free markets

[Anonymous Coward]

Have you considered that the value of first to market is inversely proportional to the value of IP?

Re:You lost me . . .

[Anonymous Coward]

You don't seem to have thought this through.

If the "don't-care-about-business-use-of-Linux(et al)" don't care, then they won't give a stuff about having it both ways, so there's no point in you wanking on about it like a slighted politician.

Evidence of Importance or evidence of lunacy

[denissmith]

As much as three-quarters of the value of publicly traded companies in America comes from intangible assets, up from around 40% in the early 1980s. Of course the argument that IP is important because intangible assets are so important to business valuations could be seen as a misunderstanding. Maybe the company valuations are 50% too high, and IP is a rationalization of an untenable market?

balanced, business-oriented perspective?

[twitter]

I liked them better in 1851, when they thought patents were a bad idea.

If you believe in "Intellectual property" and debate policies about IP, you are chasing something that does not exist. Patents, copyright and trademarks are radically different concepts and should never be lumped together. The term IP is designed to confuse the real issues and muddy the publics' concept of what should and should not have state protection. Blather about software cross-licensing is equally foolish and anchored in disproved development models of the early 1980s. Only the largest of incumbent businesses benefit from this kind of confusion. They use it to drive everyone else out of the market and pass the cost of complexity back to you and me.

A balanced business perspective would be closer to the informed opinion found in the vast majority of technical employers. Most people do not work for big dumb companies and have much to lose when patents cover business methods, copyright laws are used to prevent reverse engineering for compatibility, and trade mark laws are used to prevent advertising of compatibility or exchangeability. The median informed opinion is vastly different from the propaganda put out by giants like Microsoft. To present the two views together as equals is more an averaging of noise than it is a balance.

It scares me that so much of the US net worth is wrapped up in excluding others from doing things. I have little faith in the value of such things and see a rude awakening on the horizon when the rest of the world decides to give us the finger.

Anyone besides me think this is a bad thing?

[HangingChad]

As much as three-quarters of the value of publicly traded companies in America comes from intangible assets, up from around 40% in the early 1980s.

We've farmed our manufacturing capacity out to countries that do not necessarily share our best interests. Our business economy is no longer based on things we make, but on brain share products.

I'm not an economist but from a common sense perspective that just seems like a really shaky foundation for an economy. Why would the countries that make everything we buy give a rat's fanny about respecting our brain share assets? What are going to do if China starts pirating Disney movies? Or if they get tired of monkey boy and decide to field a chinese version of Windows? Threaten them with economic retaliation? Good luck with that, they own us. We take our money and buy things they produce, many time with machines we shipped over there so they could do it cheaper. Then they take our money and buy tangible things like property, oil, and natural resources.

The feeling I get is their economy is based on things with some intrinsic value while ours is fundamentally based on things with very little intrinsic value.