Uses and abuses of intellectual property rights

A recent article on paleoanthropology gives me an opportunity to share some reflection on the uses and abuses of intellectual property rights (IPR).

200’000 years ago, our gene kit was essentially the same as the one we have today – says fossil and DNA research. So why weren’t we so smart then? The difference is technology[1]. Humans still had to develop the tools allowing us to adapt to and (for a while at least) master the most diverse environments. About 80’000 years ago small groups of humans started using advanced technology for the production of spearheads. It was a complicated crafting process that required much trial and error to develop as well as social (group) life structured in a way to formulate and transmit the working memory to the next generation – cultural transmission. Such technological developments are not strung erratically along humanity’s time-line, but tend to bunch – one speaks of the development of “tool-kits” that define discrete stages of human development. Thus we speak of the Upper Neolithic tool kit, consisting of fibers and bone needles, nets, bows and arrows, as well as new lithic technologies.

“Tool kits” are associated with characteristic social structures and population densities. The larger the group – the greater the complexity of the tool kit. Again, this was most likely a discontinuous process: people had to learn both to live together as a larger group and to put closeness to good use in developing technologies. New social structures and tool kits co-evolved, with strong reciprocal feed-back effects. Conversely, isolation and population loss might lead to “de-culturation” – the loss of acquired technologies. When the Laach volcano south of Bonn erupted shortly after 11’000 BC, indigenous groups moved away – some went north, and some went south. Those isolated in Scandinavia soon lost good part of their technological kit, while those bunched together in the south developed standardized technologies, personal ornaments, and symbolic carvings as well as figurines[2].

This excursion into paleo-anthropology is needed to drive home the fact that innovation is first and foremost a social phenomenon. The Western obsession with individual creativity is myth. We implicitly know that: there is always a nebula of people around the inventor who either enabled or assisted him. Newton spoke of giants on whose shoulders he stood. Not that Mozart was not Mozart: but had we placed Mozart in a solitary cell and asked him to compose – his genius would have soon dried up.

So as not further to complicate matters, I’ll forego here “serendipity”. Primary serendipity occurs when the discovery is fortuitous or unintended. A second form of serendipity takes place when the innovation is successfully put to an unintended use – this often happens with tools. I’ll also ignore the fact that inventions may simply be the result of circumstance – instances where ascribing innovation to a willful creator is just a cognitive illusion[3]. Nor would I dwell on the issue that some innovations simply capture emergent natural monopolies[4]. A thorough analysis of the role of IPR would have to quantify these effects, however, so as truly to reward merit.

What does the insight that innovation is a social phenomenon tell us in the context of IPR? If inventions and innovation are far more a social (or fortuitous) phenomenon that we care to admit, we should be cautious about the extent of our rewarding the effort by a rent-yielding monopoly. One may then consider a “cap” on such a reward – examples are time limitations on patents as set out in the US Constitution. One may go even
further, and cap the reward quantitatively, if generously.

IPR used to be personal – until corporations, claiming to be “moral persons”, also laid claim to IPR. This has significantly complicated matters. As long as IPRs were personal, the losers in the innovation game just individually took their losses, while the innovator walked away with the prize – whatever it was. This is not the way of corporations. IPRs should, according to their lights, be sized in such a way as to allow compensation for their unsuccessful efforts as well. This would be akin to arguing that if I buy up all the lottery tickets the winning ticket should be a multiple of my total investment[5]. This is the way the tax law is written, and it inflates the IPR take significantly. It also makes for wasteful R&D.

Corporations, furthermore, have a fundamental flaw: they employ patent lawyers. Their “strategic” design of patents is such as to discourage the competition by surrounding a successful patent with a thicket of accessory defensive patents. Their function is not to record invention, but to slow down the competition through a well-designed maze of legal hurdles. Confronted with such patents, other firms in the field will have to scrutinize such spurious and/or loosely worded patents lest they become the object of lawsuits[6]. At this point, the IPR legal system no longer strengthens innovation. On the contrary, it poisons the social climate, which is precondition for innovation. There are numerous indications in the biological field that this is happening.

Somewhere between the stance that ideas should be free[7] and unlimited IPRs lies a socially acceptable compromise. Prerequisite for such a solution is dispensing with ideological absolutes, myths and brazen greed.

On a personal note, I’ve yet to meet (in person or print) an innovator who did it “for the money”. Sure, money is a more than welcome collateral benefit. But innovation is basically a matter of curiosity – neophilia, I’ve discovered, is the technical term – and creative urge. Creativity is a gift, and as such its own reward. I’m therefore wary of arguments that stress “profits” as pre-condition for creativity. They might be most loudly advanced by those who want both trotters in the troth, despite their lack of merit.

[1] Lest one believe that tools or consciousness are inherently humans: magpies have self-consciousness, and both kea parrots and crows use tools, and are even able to develop new ones.

[2] See Clive OPPENHEIMER (2011): Eruptions that shook the world. Cambridge University Press, Cambridge; Chapter 9.

[3] For a compelling analysis of the role of circumstance in “innovation” see Malcolm GLADWELL (2008): Outliers. The story of success. Allan Lane, London. One may recall that bankers testified before the US Congress that the latest financial crisis was “an act of God”. One wonders whether they would have been prepared to classify the profits also in the same way.

[4] The pre-eminence of MICROSOFT is not the result of any superior quality of its products. It follows naturally from the fact that it has established the standard for interconnectivity.

[5] Or put it another way: Michelangelo should have been paid enough for him to subsidize all of the failed painters of the day.

[6] Patents may not evaluated by the patent office as to their merits prior to the award. It is left to the courts to sort out the situation – if and when litigation ensues. Such a post-dated evaluation significantly slows down the competitor, who is to evaluate his chances in court, or go through the process. Some firms specialize in a form of “greenmail”: on the basis of an early generically worded patent they blackmail
the successful competitor with a suit for damages. Blackberry was one of the victims of such a viral attack by a 3-person company, which was backed by the US State Department in the framework of NAFTA. The firm settled for several hundred million $, rather than go through the wrangle.

[7] For a carefully argued stance see Michael PERELMAN (2002): Steal this idea. Intellectual property rights and the corporate confiscation of creativity. Palgrave, Basingstoke.

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