Archive for patents

Patents Are Not Economical

TM158_Strong_Calico_Loom_with_Planed_Framing_and_Catlow's_Patent_DobbyWell, they’re often economical for the patent holder in the short-run. But over time, a legal regime that discourages information-sharing simply closes off advances in technology. Defenders of government-granted monopolies (i.e. patents) often rely make broad claims that allegedly show that inventions would not be made were it not for patents. True history, on the other hand, generally shows the exact opposite as in the case of William Gilmour and the power loom. James Bessen writes:

Although Gilmour and Lyman directly helped competing mechanics and textile mills, they weren’t fools. For two decades, machine shops and textile mills made high profits. Machine shops could charge high prices for textile equipment because few mechanics knew how to build them; textile mills could make high profits because it was much cheaper to use the new loom. Imitation didn’t substantially reduce profits because there was a shortage of mechanics who could build the machines, of entrepreneurs who could run the new type of enterprises, and of skilled workers who could make the new contraptions productive.

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Patents and Birdmen

300px-First_flight2In his new book “Birdmen: The Wright Brothers, Glenn Curtis, and the Battle to Control the Skies”, Lawrence Goldstone tells the story of the feud between America´s two early air pioneers.  The interesting part of the book is not the battle taking place in the air as the Wright Brothers battled with Glenn Curtis to see who could be the superior airman. The more important battle was fought in the courts over the early patents for heavier-than-air flight.

Orville Wright developed the idea of twisting a plane´s wings to enable lateral control of the craft. For this great idea, the Wright Brothers were the recipients of an early “pioneer patent” – a right not only to the specific invention, but to the general concept. Even though Curtis developed flaps and ailerons on the wings to bring control to the craft, the Wrights fought in the courts (and often won) to stop him and other rivals from trespassing on their turf of general aircraft control.

The effect on flight innovation was more than noticeable at the time. The patent war they unleashed took the steam out of the budding industry. In 1912, only 90 aviators were in the air each day in the United States. Across the pond in France, nearly 1,000 airmen were flying, testing and further developing their craft.

Goldstone wraps up by questioning whether the restrictive patent system was positive for American airplane development. It obviously hindered airmen like Curtis´ ventures, resulted in costly (both in time and money) legal fights, and the Wright Brothers were in no rush to build upon their early discoveries.

Today similar patent fights are embroiling the tech world. “Birdmen” is a good example of how these fights played out in another era. It´s unfortunate that we only see the damaging nature of these laws with the benefit of hindsight.

(Originally posted at Mises Canada.)

Scarcity, Monopoly, and Intellectual Property

6727David Gordon writes in today’s Mises Daily: 

Faced with a welter of arguments in conflict, what is the perplexed libertarian to do? Butler Shaffer’s superb monograph offers an easy way to unravel the IP puzzles. He starts from a fundamental principle basic to libertarianism and explains how the implications of this principle shed light on IP issues.

What is this principle? It is that rights stem from “the informal processes by which men and women accord to each other a respect for the inviolability of their lives — along with claims to external resources (e.g., land, food, water, etc.) necessary to sustain their lives.” (p.18) The “informal processes” that Shaffer mentions proceed without coercion. In particular, law and rights do not depend on the dictates of the state, an organization that claims a monopoly over the legitimate use of force in a territory.

How Intellectual Property Distorts Big Business, Science, and Creativity

6632Butler Shaffer writes in today’s Mises Daily:

There are many other costs associated with IP that rarely get attention in cost-benefit analyses of the topic. One has to do with the fact that the patenting process, as with government regulation generally, is an expensive and time-consuming undertaking that tends to increase industrial concentration. Large firms can more readily incur the costs of both acquiring and defending a patent than can an individual or a small firm, nor is there any assurance that, once either course of action is undertaken, a successful outcome will be assured. Thus, individuals with inventive products may be more inclined to sell their creations to larger firms. With regard to many potential products, various governmental agencies (e.g., the EPA, FDA, OSHA) may have their own expensive testing and approval requirements before new products can be marketed, a practice that, once again, favors the larger and more established firms.

Increased concentration also contributes to the debilitating and destructive influences associated with organizational size. In addressing what he calls “the size theory of social misery,” Leopold Kohr observes that “[w]herever something is wrong, something is too big,” a dynamic as applicable to social systems as in the rest of nature. The transformation of individuals into “overconcentrated social units” contributes to the problems associated with mass size. One sees this tendency within business organizations, with increased bureaucratization, ossification, and reduced resiliency to competition often accompanying increased size. Nor do the expected benefits of economies of scale for larger firms overcome the tendencies for the decline of earnings and rates of return on investments, as well as the maintenance of market shares following mergers. The current political mantra, “too big to fail,” is a product of the dysfunctional nature of size when an organization faces energized competition to which it must adapt if it is to survive.

Advancing Pharmaceutical and Medical Technology Does Not Depend on Patents

6625Writes Nathan Nicolaisen in today’s Mises Daily:

The notion that unpatented medical technologies are not feasible is historically false. Surveys of important medical breakthroughs provide insight into whether patents are absolutely necessary and conducive to innovation in medicine. In 2006, the British Medical Journal challenged its readership to submit a list of the most noteworthy medical and pharmaceutical inventions throughout history. The original list contained over 70 different discoveries before being narrowed down to 15. The list goes as follows in no particular order: penicillin, x-rays, tissue culture, ether anesthetic, chlorpromazine, public sanitation, germ theory, evidence-based medicine, vaccines, the pill, computers, oral rehydration therapy, DNA structure, monoclonal antibody technology, and smoking health risk. Of these discoveries, only two of them have remotely anything to do with patents, chlorpromazine and the pill. In another survey conducted by the United States Centers for Disease Control the results are strikingly similar. Of the ten most important medical discoveries of the twentieth century, none of them had anything to do with patents.