Intellectual Property Rights: Civil Services Mentor Magazine November 2012

Intellectual Property Rights

Ideas can also belong to the people who conceived them like
physical property. These ideas result in popular names for products, books and
articles, films, music, processes for manufacturing products and products
themselves. There is a tension between the original conceiver of thee idea who
wants to earn the maximum incentives for his invention and the desire of the
public to have that invention at the lowest possible price at the earliest time.
Society feels it neces-sary to provide incentives to the inventors because
without such incentives there is not sufficient idealism around for inventions
to arise in all fields. A steady flow of inventions is essential for progress
and a better quality of life for human beings. At the same time, poor countries
have difficulty in paying incentives, which become such more expensive for more
recent inventions. There is, therefore, a country for inventions to be copied
and made available to the public at low prices. In fact, many of the most
important ideas – for example, the mathematics that underlies the modern
computer or the theories behind atomic energy or lasers – are not protected by
intellectual property. Academics spend considerable energy freely disseminating
their research findings. I am pleased when someone uses my ideas on asymmetric
information – though I do appreciate them giving me some credit. The growth of
the “open source” movement on the Internet shows that not just the most basic
ideas, but even products of enormous immediate commercial value can be produced
without intellectual property protection. Without intellectual property
protection, incentives to engage in certain types of creative endeavors would be
weakened. But there are high costs associated with intellectual property. Ideas
are the most important input into research, and if intellectual property slows
down the ability to use others’ ideas, then scientific and technological
progress will suffer. By contrast, an intellectual property regime rewards
innovators by creating a temporary monopoly power, allowing them to charge far
higher prices than they could if there were competition. In the process, ideas
are disseminated and used less than they would be otherwise. The economic
rationale for intellectual property is that faster innovation offsets the
enormous costs of such inefficiencies. But it has become increasingly clear that
excessively strong or badly formulated intellectual property rights may actually
impede innovation – and not just by increasing the price of research.
Monopolists may have much less incentive to innovate than they would if they had
to compete. Modern research has shown that the great economist Joseph Schumpeter
was wrong in thinking that competition in innovation leads to a succession of
firms. In fact, a monopolist, once established, may be hard to dislodge, as
Microsoft has so amply demonstrated.

Indeed, once established, a monopoly can use its market power
to squelch competitors, as Microsoft  so amply demonstrated in the case of
the Netscape Web browser. Such abuses of market power discourage innovation.
Moreover, so-called “patent thickets” – the fear that some advance will tread on
preexisting patents, of which the innovator may not even be aware – may also
discourage innovation. After the pioneering work of the Wright brothers and the
Curtis brothers, overlapping patent claims thwarted the development of the
airplane, until the United States government finally forced a patent pool as
World War I loomed. Today, many in the computer industry worry that such a
patent thicket may impede software development. The creation of any product
requires many ideas, and sorting out their relative contribution to the outcome
– let alone which ones are really new – can be nearly impossible.

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