Sunday, October 01, 2006

Do Patents And Copyrights Spur Innovation?

An expert on United States law on intellectual property tells me a National Academy of Sciences study found empirical evidence suggesting the answer is "Yes" to the question in the post title. Presumably, he was referring more to the former than the latter of:I've downloaded the executive summaries, but I doubt I will purchase these reports.

Apparently if I go longer between posts, commentators will have more to say on each one.


Anonymous said...

A belated comment...

Some years ago I did an informal survey of literature on cost/benefit analysis of IP protection, so it is a topic that interests me.

Note however that your title contains the wrong question:

"Do Patents And Copyrights Spur Innovation?"

for several reasons:

* The goal of neither is to spur innovation. For patents the goal is to spur publication of inventions (a very different thing!), for copyrights to spur the production of works of authorship, innovative or not.

* Whether they spur innovation or not is anyhow rather beside the point; the question is rather whether they spur useful innovation, if innovation is a secondary goal.

* Anyhow asking a question about the benefits of patents and copyrights ignores the issue of their costs, both obvious (patent and copyright systems have large and manifest costs) and indirect (as a consequence of restraint of trade).

* Also, what matter to some is not all benefits, but the benefits to the public, because patents and copyright are supposed to be in the public interest.

Now the costs of patents and copyrights are at least in part obvious and manifest and large, while its benefits (whether because of publication or innovation) are both entirely hypothetical and undemonstrated.

If the benefits were large and certain it should be extremely easy to prove them, but curiously several decades of research have failed to do so.

The results that I have seen are very tentative and I would summarize them in this way:

* For most countries except the USA there is probably no net public benefit to patents or copyrights. Sometimes there is not gross benefit either.

* In the USA there is some evidence that there is a public benefit in some areas, apparently pharma patents is just about the only one.

For foreign countries I have read reports by government commissions in Canada and Australia, so pretty serious, advanced places, stating specifically that their countries did not have a net benefit from patents.

In general copyrights are worth of less skepticism than patents, because they tend to be less obvious negative effects, unless they are too long.

And as to length or scope of patents or copyrights I have never seen or heard of any evidence that ''the more the better'', just rather a lot of handwaving to the effect that it is always in the public interest to extending duration and strength of such monopolies.

Just as in the Ancient Regime it was a good and inexpensive way for Kings to favour their supporters with letters patent granting the right to exact tolls or to enjoy monopolies of trade, so legislatures todays find extending legal IP monopolies a good way to reward campaign contributors without raising taxes overtly.

Anonymous said...

Another interesting detail about in particular patents in the USA is that the enormous extension in their scope in recent decades and also their duration has been due to Japanese competition, because a WTO-recognized right of patent holders if to prevent the import of competing products.

The idea was that USA companies would be allowed to patent just about everything and thus keep out Japanese imports, entirely legally.

However Japanese companies were not stupid, and at the same time started applying for a large number of USA patents to prevent that. With the effect that nowadays a lot of case before the FTC are brought by Japanese companies against Korean/Taiwanese/Chinese imports, thus protecting the profits and jobs of the Japanese by keeping USA prices higher.

But even if they are few there are enough determined, influential beneficiaries in the USA that they collude with the Japanese in upholding the system...

Robert Vienneau said...

Thanks for the comment.

I agree that patents go back to royal grants. In Britain, an act of parliament, the 1623-1624 Statute of Monopolies is important in laying the foundation for modern patent law. A theory is written into the U.S. constitution: "To promote the progress of science and useful arts, by securing for limited times to authors and inventors the exclusive right to their respective writings and discovery." I don't have a decided opinion on this theory.

Some of your expansions I thought were implicit in my short post. I agree, for example, that one has to consider costs.

If one accepts the theory in principle, room still is open for debate about the scope and length of patents of copyrights. I thought that the questionable areas in the U.S. lie more with the undue length of copyrights (resulting from Disney lobbying) and the scope of patents. One can distinguish between arguments about whether certain areas (e.g., business methods) should be protected by patents and arguments over the quality of particular patents or in particular areas.

I do not see why different countries should not make different decisions on these matters. I guess this view is in opposition to U.S. policy, where the government seeks global uniformity. I would not expect the cost and benefits of variations of systems of intellectual property to be obvious. In history, we rarely have controlled experiments.