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 . . .

[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.

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.

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?

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?

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.