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Some fundamental, unchecked assumption here ? (4, Informative)

vikingpower (768921) | about a year ago | (#44098839)

Tabarrok seems to tacitly assume that innovation can be regulated via legislation. It seems to me that this non-proven, basic assumption has been proven wrong more than once, e.g. during the few years preceding the internet bubble of the '90s. The tip of the curve, then and there, lay completely to the left. ( Where IMHO it should be, but I am trying to separate facts from discussion from personal opinion here. )

Re:Some fundamental, unchecked assumption here ? (4, Informative)

stenvar (2789879) | about a year ago | (#44098875)

Tabarrok seems to tacitly assume that innovation can be regulated via legislation.

Where in the world do you get that idea from?

He just says that too much patent protection has a cost that, at some point, must outweigh any benefits, so the optimal level of patent protection is not the maximum one. What the optimum level is, he doesn't know

If you're of the school that believes that patent protection is always bad, then his argument isn't meant for you. He isn't arguing for more patent protection with people like you, he is arguing against more patent protection with people who say "since some patent protection is good, more must be better".

Re:Some fundamental, unchecked assumption here ? (2)

vikingpower (768921) | about a year ago | (#44098901)

Where in the world do you get that idea from?

From TFA, as in these lines:

So, we’ve constructed the patent system: people have a 17 year exclusive right to such public goods. That is, we’ve made them excludable by law

I am not necessarily of the "school that believes that patent protection is always bad". I am of the school that believes that patent protection is, sometimes, a necessary evil, and bad at all other times.

Re:Some fundamental, unchecked assumption here ? (2)

stenvar (2789879) | about a year ago | (#44098961)

And how does that translate into "regulation of innovation"???

Re:Some fundamental, unchecked assumption here ? (3)

narcc (412956) | about a year ago | (#44099097)

To be clear, he said "Tabarrok seems to tacitly assume that innovation can be regulated via legislation". Which, to answer your question, he supported by quoting the article: "So, we’ve constructed the patent system: people have a 17 year exclusive right to such public goods. That is, we’ve made them excludable by law".

I honestly don't see how you could possibly still be confused, having read both the article and the parent's posts.

Re:Some fundamental, unchecked assumption here ? (1)

jythie (914043) | about a year ago | (#44099123)

I think they are disagreeing on the specific phrasing of 'regulating innovation'. Both are agreeing that the piece talks about regulation that has an impact on innovation, but not on if that means innovation is being regulated.

Re:Some fundamental, unchecked assumption here ? (1)

khallow (566160) | about a year ago | (#44099259)

And how does that translate into "regulation of innovation"???

How is this not fairly obvious? Innovation is the process of turning ideas into viable economic products. Patents provide monopoly access to certain ideas for a period of time. Hence, they are regulation on access to ideas (a key issue in the innovation process) and thus, regulation of innovation.

Re:Some fundamental, unchecked assumption here ? (-1)

Anonymous Coward | about a year ago | (#44099613)

hey dipshit.

yes you.

the patent system is a government regulatory design.

you prevent other people who will likely have the same fucking idea in parallel, from acting on it. The government has regulated those people.

And thus you have regulated innovation, efficiency, competition, and a whole gamut of things.

the patent system is bullshit.

Re:Some fundamental, unchecked assumption here ? (4, Informative)

Savage-Rabbit (308260) | about a year ago | (#44099203)

Tabarrok seems to tacitly assume that innovation can be regulated via legislation. It seems to me that this non-proven, basic assumption has been proven wrong more than once, e.g. during the few years preceding the internet bubble of the '90s. The tip of the curve, then and there, lay completely to the left. ( Where IMHO it should be, but I am trying to separate facts from discussion from personal opinion here. )

Where in the world do you get that idea from?

From TFA, as in these lines:

So, we’ve constructed the patent system: people have a 17 year exclusive right to such public goods. That is, we’ve made them excludable by law

I am not necessarily of the "school that believes that patent protection is always bad". I am of the school that believes that patent protection is, sometimes, a necessary evil, and bad at all other times.

For the benefit of those who did not read TFA: What he is saying is that patent protection can boost innovation but if that protection is too great the patents get used as a weapon to bash competitors with the result that there is a net drop in innovation. Furthermore he is arguing that we have passed well beyond the point where patent protection is a demotivating influence on innovation so in that sense you actually agree with him. One only has to look at his curve to see this:

http://b-i.forbesimg.com/timworstall/files/2013/06/tabarrokcurve.png [forbesimg.com]

In that graph, if you move too far to the left and you have no patent protection at all which stifles innovation, move too far to the right and have excessive patent protection also stifles innovation, stay somewhere in the middle and patent protection will actually boost innovation above the two extremes. You seem to be mostly arguing for the greatest innovation being achieved at a point that is very close to the left hand extreme. I'm not saying he is right in every detail but the basic idea of applying the Laffer tax revenue curve [wikipedia.org] to innovation seems sound. Too much red tape around patents is just as detrimental to innovation as overtaxation is to state revenue. Likewise too little patent protection is just as likely to stifle innovation as excessive tax cuts are likely to screw up state finances.

As regards the legal system he eventually suggests that it may not be the patent system that is at fault so much as the legal system it self:

Knowledge is a public good and thus in a pure free market we think that too little of it will be produced. Too strong a protection and again too little will be produced.

These are the sorts of thorny questions that we instituted government to deal with for us. Hands up everyone who thinks that our current politicians are going to get this necessary balance right? Quite: it might be that it’s not so much the patent system which is not fit for purpose as the legislative.

Basically he is hypothesising here that we can move ourselves further to the left on his Tabarrok curve mostly (though presumably not exclusively) by legal reform rather than patent reform. I am no lawyer but it seems pretty obvious to me that fixing the legal system such that patent trolling by two bit law firms in East Texas and general patent warfare by major corporations were made significantly harder than it currently is, might be a good idea. In fact the whole issue of anti-competitive and SLAPP lawsuits and the power they give people with lots of money to spend to extort less wealthy people/organisations/companies is something that needs urgent fixing.

Re:Some fundamental, unchecked assumption here ? (1)

Bill_the_Engineer (772575) | about a year ago | (#44099699)

His hypothesis makes sense but it only looks at the time constraints. I assume he did this because it is the easiest thing to legislate and not have to deal with constitutional matters in the US, since the constitution directs the government "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 Discoveries;"

It would be nice if we could shorten the patent life to 15 years, limit the exclusive use of a patent to no more than 5 years, and mandate reasonable licensing during the remaining 10 years of the patent. Nontechnical patents like design patents should have a term no more than 5 years.

Re:Some fundamental, unchecked assumption here ? (4, Informative)

cpt kangarooski (3773) | about a year ago | (#44099789)

His hypothesis makes sense but it only looks at the time constraints. I assume he did this because it is the easiest thing to legislate and not have to deal with constitutional matters in the US, since the constitution directs the government "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 Discoveries;"

No, the Constitution only empowers the federal government to grant patents and copyrights. Article I, section 8 does not direct it to do so, however, any more than it directs the government to grant letters of marque and reprisal to privateers, which is another power it holds. Making the US a patent free zone mitt be a bad idea, but it would be perfectly constitutional.

Re:Some fundamental, unchecked assumption here ? (4, Interesting)

devent (1627873) | about a year ago | (#44099805)

It's just his opinion. And his curve is a straw man that he puts out of his ass.
Where is the evidence that some patent protection is good? Ah right there is none. Everybody just assumes that some patent protection is good for innovation. That is just like creationism or like any other theology.

There is evidence that more patent protection is bad. See software patents. But where is the evidence for the other side, i.e. no patent protection as bad?

Don't come to me with some mind experiments like "But without patent protection where is the incentive to innovate". People have innovate for freaking 50,000 years. Our patent system, or our capitalist system is just about 250 years old.

I repeat. There is no evidence that any patent protection increases innovation.

There is plenty of evidence that too strong patent protection hampers innovation. See software patents, patents on DNA, business patents, and so on.

There is also evidence that no patent protection actually increases innovation (I posted already here but I post again)
The only real empirical study that I know of is The patent game [slashdot.org] .
See http://www.youtube.com/watch?v=q1Pi4w8ddA8 [youtube.com]
And they come with quite surprising conclusions.

"pure common system" means no patent protection.

1. patents increase innovations?

Average unique innovations is lower in the "pure patent system", and is higher in the "pure common system"
Productivity, aka economic activity, the "pure common system" is almost double the "pure patent system"
Per capita wealth, the total amount of dollars generated in the system: "pure common system" is almost 4 times that of the "pure patent system".

Conclusion: "Despite received wisdom, commons spur innovation better then do patents"

Re:Some fundamental, unchecked assumption here ? (0)

Anonymous Coward | about a year ago | (#44100013)

It's just his opinion. And his curve is a straw man that he puts out of his ass.

Where is the evidence that some patent protection is good? Ah right there is none. Everybody just assumes that some patent protection is good for innovation. That is just like creationism or like any other theology.

Surely you mean pulled it out of his ass? And no he didn't pull it out of his ass, he has a PHD in Economics which, based on the rest of your post, is something that it is pretty safe to assume you do not have.

There is evidence that more patent protection is bad. See software patents. But where is the evidence for the other side, i.e. no patent protection as bad?

That's precisely what he is saying, too much protection hurts innovation.

Don't come to me with some mind experiments like "But without patent protection where is the incentive to innovate". People have innovate for freaking 50,000 years. Our patent system, or our capitalist system is just about 250 years old.

I repeat. There is no evidence that any patent protection increases innovation.

There is plenty of evidence that too strong patent protection hampers innovation. See software patents, patents on DNA, business patents, and so on.

There is also evidence that no patent protection actually increases innovation (I posted already here but I post again)
The only real empirical study that I know of is The patent game [slashdot.org] .
See http://www.youtube.com/watch?v=q1Pi4w8ddA8 [youtube.com]
And they come with quite surprising conclusions.

"pure common system" means no patent protection.

1. patents increase innovations?

Average unique innovations is lower in the "pure patent system", and is higher in the "pure common system"
Productivity, aka economic activity, the "pure common system" is almost double the "pure patent system"
Per capita wealth, the total amount of dollars generated in the system: "pure common system" is almost 4 times that of the "pure patent system".

Conclusion: "Despite received wisdom, commons spur innovation better then do patents"

You can make any claims you want but please support them with something better than a dead link and a youtube video, they do not count as empirical evidence, let alone scientifically rigorous studies. Try citing scientific papers or studies done by reputable scientists. Until you do that you are a damn sight closer to pulling things out of your ass than a PHD in Economics.

Re:Some fundamental, unchecked assumption here ? (1)

Cenan (1892902) | about a year ago | (#44099003)

If you're of the school that believes that patent protection is always bad, then his argument isn't meant for you.

Him having a different audience in mind does not exclude "us" from using his ill thought out arguments against him. Using the curve he presents, we could easily argue that zero strength patents yield the same amount of innovation as we see today (draw a horizontal line from the "we are here" point to the Y axis), but with the added benefit of having no patent trolls and litigation that produce nothing of value to society. If we factor in the side industry of patent litigation (and assume that patent litigation is bad), we are better off with no patents than with.

He is arguing for trying to find a theoretical global maximum somewhere along the curve "behind us". This, of course, assumes that we buy into his premise and accept that the matter can be simplified to the point of being a curve on a napkin. It also assumes that there is only one point on the curve with a global maximum value for innovation, yet is see no argument from him as to why that would be the case. In fact, there is nothing in the article that remotely constitutes a "proof" that this is how the curve should look.

Re:Some fundamental, unchecked assumption here ? (2)

jalopezp (2622345) | about a year ago | (#44099459)

Using the curve he presents, we could easily argue that zero strength patents yield the same amount of innovation as we see today (draw a horizontal line from the "we are here" point to the Y axis),

ooh, yeah... no. A drawing like that means he thinks the curve is concave with a local maximum above zero. And 'we are here' means he thinks we're to the right of the maximum. Talking about actual levels of innovation is way beyond his argument.

If we factor in the side industry of patent litigation...

This is precisely what he argues is the cost of patent law. It's already taken into account.

It also assumes that there is only one point on the curve with a global maximum value for innovation, yet is see no argument from him as to why that would be the case.

It is in fact there. Note a couple of things, both said in the article:

  1. (1) Knowledge (innovations, invention) is a public good [wikipedia.org] - it is non-exclusive and non-subtractable-, so in an unregulated market it will be under-supplied;
  2. (2) patents make knowledge exclusive, at least for a limited amount of time - whoever holds a patent may charge others for the use of his knowledge.

The idea, following the logic of the Laffer curve (people hate the Laffer curve because of its association with supply side economics, but the argument is very old and generally not contested), is that as we introduce a small amount of patenting, innovation will increase drastically as we take from where there is the most surplus: the great innovations with high cost and difficulty of discovery will be patented. There certainly will be some cost, and some litigation to prevent copying, but the existence of these new innovations greatly outweighs it. As we introduce more and more patents (or increase their length), lesser innovations will be patented, those whose research costs are not so high, and those which are a little bit more obvious. The costs of protecting these patents will be proportionally higher, and society will benefit less from the patent system being applied to them. Eventually, the cost will be so high that it is equal to the value of the new innovation. This is the maximum, the tip of the curve; this is the most innovation that we can get before it stops being worthwhile.

Now if we continue patenting more and more liberally, or extending the length of the state monopoly granted by the patent, we get to the point where trivialities are being patented, and parties are arguing over who deserves the credit (and the state monopoly) for a small incremental innovation that should have been obvious to everybody. The cost of litigation in this case will greatly exceed the value of the innovation introduced by the patent. This means that at this point, we would be better off reducing the amount of patents available; the cost of assigning the rights of the patent and .

This is his basic argument about the shape of the curve. He further argues that we're to the right of the maximum. Much like with the Laffer curve, this is not to suggest that the maximum amount of innovation is where we should be either.

Re:Some fundamental, unchecked assumption here ? (0)

Anonymous Coward | about a year ago | (#44099017)

He just says that too much patent protection has a cost that, at some point, must outweigh any benefits, so the optimal level of patent protection is not the maximum one. What the optimum level is, he doesn't know

Well this is true but tautology.As you do use Krebbs reaction please pay $100 per day or face consequences.

Re:Some fundamental, unchecked assumption here ? (1)

Anonymous Coward | about a year ago | (#44099105)

What the optimum level is, he doesn't know

Woohoo, there may be a curve, which we cannot measure and for which we have no data, may exist. And the guy who made it up and named it after himself knows nothing about it. This is going to be so useful.

Re:Some fundamental, unchecked assumption here ? (3, Interesting)

khallow (566160) | about a year ago | (#44099265)

Woohoo, there may be a curve

As long as you have two parameters, can vary one parameter with respect to the second, and the second parameter varies continuously with respect to small changes in the first parameter (all else being equal), you have a curve.

Re:Some fundamental, unchecked assumption here ? (-1)

Anonymous Coward | about a year ago | (#44099311)

As long as you have two parameters

What parameters? How do you measure 'innovation'?

Re:Some fundamental, unchecked assumption here ? (1)

ChrisMaple (607946) | about a year ago | (#44099341)

There's plenty of historical data. The problem is that it's too hard to interpret. Once something is invented, it can't be invented for the first time again, thus making comparisons of different systems difficult.

I've read that innovation in the telephone field fell when Bell got his patent and increased when the patents expired.

Re:Some fundamental, unchecked assumption here ? (0)

Anonymous Coward | about a year ago | (#44099405)

There's plenty of historical data. The problem is that it's too hard to interpret.

Ah, 20 TB of anecdotal data. The best kind of data.

Until you can put a number to 'innovation', you're just pissing in the wind.

Re:Some fundamental, unchecked assumption here ? (1)

PhilHibbs (4537) | about a year ago | (#44099971)

That's not necessarily a problem. If innovation was boosted because of the potential rewards for being the first to invent a telephone, then the patent system did its job.

Re:Some fundamental, unchecked assumption here ? (1)

ACE209 (1067276) | about a year ago | (#44099541)

Woohoo, there may be a curve, which we cannot measure and for which we have no data, may exist. And the guy who made it up and named it after himself knows nothing about it. This is going to be so useful.

Sounds good enough for economists.

Even more fundamental assumption (4, Insightful)

Camael (1048726) | about a year ago | (#44098973)

An even more fundamental assumption he makes is that intellectual property legislation is desirable because it encourages innovation. Why should that be a given?

Take for example, the very same example cited in TFA, Sir Issac Newton and his mathematical principles. Isaac Newton composed Principia Mathematica during 1685 and 1686, and it was published in a first edition on July 5, 1687 [wikipedia.org] . Copyright did not exist at that time; the very first copyright law, the Statute of Anne was enacted only 23 years later in 1710 [wikipedia.org] .

The point I am trying to make is that people will innovate and create, even without the protection of intellectual property laws.

On a separate point, if the whole rationale for intellectual property legislation is to promote innovation, shouldn't the focus be on protecting the rights of the actual person doing the creating, as opposed to whichever faceless entity who may own the contractual right to make use of the invention? Start by making intellectual property rights vest only in the creator, and make it non transferrable. This will force commercial entities to grant a fair share of the profits to the real innovators instead of the giving an unearned bonus to the patent troll who own a large number of the patents today. The way it is structured today, it is very clear that intellectual property legislation only benefits those with the capital to buy over the rights and not the creators themselves.

Re:Even more fundamental assumption (1)

mwvdlee (775178) | about a year ago | (#44099119)

The point I am trying to make is that people will innovate and create, even without the protection of intellectual property laws.

Which is why has graph, on the left edge where no intellectual property laws exists, still has a level of innovation.
The graph only states some amount of legislation facilitates the financial incentives and the assumption that financial incentives encourage innovation in general.
It also states that too much legislation actually has a negative net effect on innovation.
His graph seems to make no attempt at actually pinpointing any problems, it merely tries to explain that there is some undefined amount of legislation after which there are no further gains to be had.

Re:Even more fundamental assumption (1)

KiloByte (825081) | about a year ago | (#44099209)

Except that "protection", while it rewards the person in question, greatly harms dissemination of the idea. Thus, the first question to answer is whether that curve isn't strictly monotonic, which I think it is.

Re:Even more fundamental assumption (1)

ChrisMaple (607946) | about a year ago | (#44099395)

Your claim is refuted in TFA, citing Stradivarius. The idea is that low or lacking patent protection encourages "secret science", wherein the inventor estimates a better financial return if he never publicizes his advance. Patents, except the few that are secret for military purposes, are public record and easily available.

Re:Even more fundamental assumption (1)

ceoyoyo (59147) | about a year ago | (#44099425)

It doesn't. Protection encourages dissemination. With no intellectual property protection, many innovations and creations are kept as trade secrets. For every Newton you can cite, there were thousands of minstrels who didn't share their songs and blacksmiths, bakers, cobblers, stone masons, swordsmiths, etc. who didn't share their secrets. You used to have to be initiated into a guild to learn any of those things. Some of those guilds became extremely powerful because of it.

Overbearing protection discourages application, not dissemination. Since you can't use an idea you don't know about, there's a balance between the two.

Re:Even more fundamental assumption (1)

devent (1627873) | about a year ago | (#44099863)

His graph he gets out of his ass. There is no evidence that backs up the graph. I can draw a nice graph and then conclude anything.
Even the Laffer Curve is a non-model.

From Wikipedia:
"[...] the curve need not be single peaked nor symmetrical at 50%". And in fact the peak range from 32% to 70%.
So first, it can have multiple maxima, and second, studies shows that the peak range from 32% to 70%.

Re:Even more fundamental assumption (1)

khallow (566160) | about a year ago | (#44099325)

On a separate point, if the whole rationale for intellectual property legislation is to promote innovation, shouldn't the focus be on protecting the rights of the actual person doing the creating, as opposed to whichever faceless entity who may own the contractual right to make use of the invention?

No. because by contract the faceless entity is the one actually doing the creating. All this talk of "real innovators" ignores that they need various things such as support staff, infrastructure, and capital which are provided by the "faceless entity" in exchange for that contractual right. Without such a transferable right, then one also ends up with unresolvable issues of ownership in cases where there is no one person who is responsible for all of the creating.

Second, it should be painfully obvious to you that being able to sell one's IP rights to another strengthens the right in question. Let's consider a more general example, labor. The ability to sell our labor greatly strengthens our rights as workers and simultaneously makes us much more valuable to would-be employers. If some law was passed to make that not so (say, enforcing the Marxist opinion on labor, that it should have a non-transferable ownership to all products made by that labor), then that would greatly reduce the value of our labor (and perhaps even cause a collapse of society).

The way it is structured today, it is very clear that intellectual property legislation only benefits those with the capital to buy over the rights and not the creators themselves.

"Very clear"? Keep in mind that they have to buy over those rights. Who's selling? The creators themselves who benefit from the selling. In other words, this is a way for creators of IP to benefit by providing another means for doing so.

Re:Even more fundamental assumption (1)

greg1104 (461138) | about a year ago | (#44099385)

Start by making intellectual property rights vest only in the creator, and make it non transferrable. This will force commercial entities to grant a fair share of the profits to the real innovators instead of the giving an unearned bonus to the patent troll who own a large number of the patents today.

Dream on. What would actually happen is a combination of two things. One, employees doing research for large companies will get paid less, on the theory that now they get directly rewarded for the things they invent. It will work just like tipping does for food service people: their base income will drop because this expected (but not guaranteed) revenue would get lumped in as part of their compensation. Of course researchers will actually make nothing that way in the average case, due to the large cost of prosecuting a patent infringement, and the result will be they are paid less overall.

Second, really vital patents will end up assigned to the company management instead of the researchers, and then those people will license them out. Don't like it? You're fired, and we'll take your name off the patent application too the minute your ass is out the door. (This has happened to me) Instead of buying the patent, in this new arrangement you'll buy a share in the guy who owns it, and that won't be the real people at the bottom doing the work anymore. Currently patent rights when you work at a large company turns into a resume builder, while the company takes the profits from that work. Restructure the profits, and you'll find the credit moves away from the real inventor too. "That's just business" says the sort of executive who will happily execute the new style of employee agreements.

Don Lancaster wrote an interesting book twenty-ish years ago called "The Incredible Secret Money Machine", and there's a chapter in there about patent protection. He makes the point that if you really are the sort of genius who can invent something brand new as a researcher, the odds you are also a savvy business man who knows how to make a buck from that idea are almost zero. The only thing I would add to that is that you can't even just make the buck--you have to keep it away from assholes with money who'd prefer to litigate it out of you too.

Re:Even more fundamental assumption (1)

gtall (79522) | about a year ago | (#44099451)

Using Newton in this day and age is a bit disingenuous. His output was merely some well-thought out thoughts. Try coming up with the next drug to cure some current disease this way. You won't get past, gee, wouldn't it be neat if the disease worked like this, then I'd have a cure. It takes 100s of millions of dollars to come up with a single drug that hits the market. What's never shown are all the false starts and compounds that failed. And even then the FDA can send you back to the drawing board. And if your drug does make it to market, and you wind up killing or maiming a few people, expect to get your ass sued off.

Admittedly, the patent system is broken. In my own opinion, we need different rules for different sectors of the economy. That's going to be hard work and they cannot be fixed for 20 years because the economy evolves.

Re:Even more fundamental assumption (1)

ebno-10db (1459097) | about a year ago | (#44099767)

Using Newton in this day and age is a bit disingenuous. His output was merely some well-thought out thoughts.

Yeah, I don't know what the big deal was about Sir Isaac. All that fame over a few intelligent musings. Big deal, we probably get 100 of those per day on Slashdot.

Re:Some fundamental, unchecked assumption here ? (1)

bickerdyke (670000) | about a year ago | (#44098983)

No via legislation, but via money. That goes for the innovation that is a result from a controlled R&D process.

It does NOT effect the innovation that comes from pure serendipity, and that's why that curve neither starts nor ends at zero. But note that the right minimum is lower than the left one. Both ends describe a point where no money is invested anymnore, either because there is no money to make with inventions or inventing is to expensive because an invention would contain and base on an existing, patented invention. Too strict patent laws still may block serendipituous (is that even a real word?) improvements of existing inventions.

Re:Some fundamental, unchecked assumption here ? (0)

Anonymous Coward | about a year ago | (#44099139)

Which is handwavy bullsh*t, but still bullsh*t.

Let's say there were no patents. Innovation only comes from serendipity? Um, no. No it doesn't. It comes from pure raw desire for competitive advantage. I may not be able to PATENT my innovation, but I will innovate anyways - I will gain a temporary advantage when I have new tech and my competitors don't. Competitors may "me too!" copy my advantage, but they cannot do it instantly. Which means I need to keep innovating. Product cycles will be shorter. But that doesn't mean no innovation. Quite the opposite, actually. The ONLY way to build a brand that stands out is to be a leader.

Oh, and since we're handwaving at key concepts, I reject the lack of any concept of brand loyalty or first-mover advantage in TFA.

Frankly, I question the assumption the early parts of the graph are upward sloping - I expect they're largely flat. The difference between no patents and very weak patents is minimal-to-nonexistent. In both cases, the real barrier to competitors is the friction to observe the competition, evaluate which innovations customers want, and produce them, whether that's "no patents exist" or "patents are easy to work around."

I also question the assertion that the far right (very strong patents) is necessarily the lowest point. Let's say patents were strong and eternal. This could easily lead to land grabs - there's a rush to discover new areas that people aren't even thinking about right now and bring them to market so that they can be patented. The value of a patent portfolio is high, and so companies may innovate to create such portfolios. Cross-licensing would be the order of the day in that environment, but it would hardly mean innovation would be dead.

Obviously, the point chosen by the author (and the only relevant fact about it is the assertion we are at a point where we are PAST the maximum) is arbitrary. Proof by assertion. You can draw a graph all you want, but if you want to use it to prove a point, you need a better argument than the "none, really" provided to assert the things that lead to a policy recommendation.

The most important salient issue TFA misses, and the single most important issue with current patent regime (at least for technology) is the distinction between "strong patents" and "vague patents." Changing the patent period from 15 years to 10 years would have minimal effect on the current patent nuclear warefare. Most of the patents being asserted aren't OLD. They are BAD because they are VAGUE. Patents allow a patent holder to claim vague "methods of operation" (at least pre-Bilski, which is changing, but slowly). They allow incredibly broad interpretation of claims. Also, there's huge cost that can be foisted on an inventor with no recourse - you can be sued for anything, no matter how vague or unlikely for the notional patent holder to prevail. THAT'S the barrier, not patent length.

Oh, and by the way, the other major point the author misses is that there's no single actor whose actions matter here. We live in a global economy. If the US ABOLSIHED patents, global companies will go to war in other countries where patents laws are more favorable. They will close off markets, block production or shipping of parts or finished goods, etc. Look at Apple and Samsung doing battle in three countries at the same time.

This is C- material in an intermediate economics course.

Re:Some fundamental, unchecked assumption here ? (3, Interesting)

Miamicanes (730264) | about a year ago | (#44099795)

> Let's say patents were strong and eternal. This could easily lead to land grabs - there's a rush to discover new areas
> that people aren't even thinking about right now and bring them to market so that they can be patented. The value of a
> patent portfolio is high, and so companies may innovate to create such portfolios. Cross-licensing would be the order
> of the day in that environment, but it would hardly mean innovation would be dead.

No, it means we'd be in eternal stagnant IP feudalism, where only companies the size of Sony, Samsung, Apple, and Microsoft were allowed to innovate anything meaningful commercially. Everyone else would be -- at best -- IP sharecroppers forced to kneel before them and grant their patents for a pittance in return for the right to make commercial use of them at all, because just about any conceivable implementation would otherwise infringe upon two dozen other patents.

Think about it. When's the last time a huge corporation held by risk-averse institutional shareholders concerned with maximizing the next quarter's profits truly innovated *anything* that could be described as "disruptive"? The infant Microsoft would have been thrown into the well and drowned by IBM, DEC, Burroughs, Wang, and all the other companies that used to dominate the American computer industry back in the 1970s/80s. Woz would have gotten served a C&D 3 days after showing off his new prototype to the computer club. Commodore would have never existed, because its whole economic foundation was a semiconductor firm who built what was practically a 6800 clone. Fairchild *and* Shockley would have been eternal vassals of Bell Labs.

Big companies owned by institutional investors are almost genetically incapable of disruptive innovation, because it involves risk, and risk means the next quarter's profits might be disrupted. When alliances of similarly risk-averse companies have de-facto veto power over everyone else by virtue of strong patent protection, disruptive innovation stagnates.

In a way, the former Soviet Union is a perfect indirect example. In the Soviet Union, risk-averse bureaucrats had de-facto (if not de-jure) veto power over everything. The same way a company like Sony can unleash its lawyers to stop disruptive media technologies in their tracks in the holy name of IP law, the Soviet government could unleash its army of law enforcement officers and bureaucrats to prevent a Soviet citizen with a disruptive invention from ever doing anything with it. There was actually quite a bit of underground innovation in the Soviet Union... it's just that it was all basically masturbation, because their efforts were stymied at every level (by buraucratic indifference if they were lucky, by aggressive political backlash if they were perceived as presenting a risk to someone in a position of power, no matter how petty or meaningless).

Going back further to the dark ages, how much real innovation occurred when everyone was forced (by law, if not practical necessity) into being vassals under feudalism that subordinated everyone and everything to landed nobility and the Church? Yes, we had people like Kepler, Newton, and Galileo... and their contemporary influence was almost nonexistent. Their discoveries were talked about privately, behind closed doors, and most of their effort was spent trying to avoid getting crushed by those who cared mainly about preserving the status quo. They're revered today, centuries after their deaths, but in their day, they were basically viewed as godless heretics who deserved to burn for their sins, or at least spend a few decades repenting them in a dark prison cell somewhere.

People forget that the US itself was founded as a reaction to the old world order. Pre-Berne, American IP law was almost at a 90-degree angle to European IP law. European IP law viewed IP as a moral right, like being granted land by a sovereign king acting through the grace of God. American IP law, in stark contrast, was scandalously utilitarian. Up until the late 19th century, you couldn't even patent something in the US unless you could prove that whatever you were patenting actually *worked* (for the most part, at least). In some cases, you actually had to furnish the patent office with working miniature models. European industry viewed America as a global hotbed of intellectual piracy. Americans also invented lots of disruptive things and made them commercially viable, kind of like China does now. Twenty years ago, everything cool and groundbreaking came from Japan. Then, Sony laid down the law, and within a decade Japanese companies couldn't even make a goddamn straightforward digital music player without getting sued into oblivion or hit with injunctions. For a few years, largely thanks to the Internet briefly outstripping the legal system and Japan's Sony-inflicted handcuffs, the US moved back to the forefront... until Sony & Friends. got their act together, and unleashed the lawyers to start clamping down in the US, too.

The USPTO's web site shouldn't be an arsenal for lawyers... it should be an IP whorehouse of solved problems ready to license on fair terms and put to wide commercial use. It should be the FIRST place where people attempting to innovate go to look for solutions, operating under a legal framework where the general response of inventors would be, "crap, that patent will cost $x to license... but at least that problem is solved, so now I can either get on with commercializing this right away, or maybe find a better way to do it that would subordinate that patent and allow me to pay reduced royalties for its use [and collect additional royalties of my own from others who use it, too]".

Today, the USPTO perversely serves almost the opposite purpose it was constitutionally created to do -- inventors are cautioned to stay as far away from it as they can, lest they accidentally stumble across something that could get them sued for intentional infringement someday. Our current structure, with its emphasis on the first patent over subsequent refinements that made it actually *work* and be *useful*, is an upside-down jungle of rent-seeking lawyers who are like parasites on the entire system.

Re:Some fundamental, unchecked assumption here ? (1)

DragonTHC (208439) | about a year ago | (#44099299)

When Kennedy said he wanted a man on the moon, were there not laws passed to facilitate the budget required?

That single goal inspired a generation of scientists and the most innovative period in the history of the world.

Re:Some fundamental, unchecked assumption here ? (1)

hedwards (940851) | about a year ago | (#44099605)

Indeed, I'd be surprised if there were much validity to this. Especially seeing as the Laffer Curve is a complete joke. It's never been particularly well supported by evidence, and runs completely counter to actual historical data. At least in the US the times when the economy was doing best, were times when the Laffer curve would predict that the economy would be in the tank due to excessive taxation on the rich.

curves (2)

l3v1 (787564) | about a year ago | (#44098841)

Well, the first thing that came to mind when seeing it was this: http://xkcd.com/323/ [xkcd.com] :D

*Tumbleweed* (-1)

Anonymous Coward | about a year ago | (#44098853)

*crickets*

Assurance contracts (4, Informative)

IamTheRealMike (537420) | about a year ago | (#44098857)

Tabarrok is also known for his work on how to fund public goods via non-patent means, in particular his dominant assurance contract [wikipedia.org] form which is a variant of what Kickstarter does.

don't help and there's more than innovation (4, Interesting)

ciaran_o_riordan (662132) | about a year ago | (#44098863)

For software, they don't help innovation, and promoting innovation can't be the only goal. Lots of non-innovative software development is really useful.

* http://en.swpat.org/wiki/Studies_on_economics_and_innovation [swpat.org]
* http://en.swpat.org/wiki/More_than_innovation [swpat.org]

And it's really crucial that patents be analysed per-domain. The don't affect pharma and the auto industry the same, and they don't affect software the same either. The distribution models are different, as is the profile of who mass produces each thing, as is the complexity (number of ideas) that get added to a product within one lifecycle, and the length of product lifecycles...

* http://en.swpat.org/wiki/Why_software_is_different [swpat.org]

Re:don't help and there's more than innovation (4, Interesting)

ikaruga (2725453) | about a year ago | (#44098941)

Another nice feature would be protecting only patents actually used in products made by the inventor or its partners, in order to take out those so called patent trolls that don't produce anything. If in the future the inventor actually decides to use the patent in an actual product and there is someone already using it there could be some sort of predetermined fee. Obviously I'm oversimplifying the huge problem, but something must be done about those parasites.

Re:don't help and there's more than innovation (0)

Anonymous Coward | about a year ago | (#44099121)

When you find yourself saying "something must be done", like some 70-year-old woman in a 1950s comedy about whiskey, you need to look at your knee and see if it's moving of its own accord in a rapid irregular motion.

Re:don't help and there's more than innovation (1)

jythie (914043) | about a year ago | (#44099133)

The tricky part there is what counts as a 'partner' and how you cover the trolls but not, say, universities who do not produce products but do depend on patents to fund their research.

Re:don't help and there's more than innovation (0)

Anonymous Coward | about a year ago | (#44099301)

The patents need to go in the public domain. That's what National Institute of Health insists on, but they also grant funding based on patents. It's awkward. Patents are now so expensive to apply for with any chance of winning the patent that it's a serious tax on a productive lab's operational budget. I've been flat out told, my work was patentable, but to pursue the 3 patents was $5000 that would not be available for my salary. I wish I'd agreed to it, the patents would have helped my career a lot in later work.

And this was 15 years ago, it's much more expensive now.

Re:don't help and there's more than innovation (1)

KiloByte (825081) | about a year ago | (#44099225)

The reason their analysis excludes pharma is purely political: the big pharma lobby has such an immense power that anything they perceive as risk will be torpedoed. Having powerful enemies doesn't stop you from being right, though, merely might make holding your cards prudent.

Re:don't help and there's more than innovation (1)

itsdapead (734413) | about a year ago | (#44099389)

The reason their analysis excludes pharma is purely political: the big pharma lobby has such an immense power that anything they perceive as risk will be torpedoed.

Probably true.

The silly thing is, Pharma is the easiest one to fix. If a country doesn't require new drugs to be licensed/approved based on (expensively gathered) evidence of their efficacy and safety then, well, they should. A fixed term exclusive right to manufacture could easily be built into the licensing process.

Re:don't help and there's more than innovation (1)

ceoyoyo (59147) | about a year ago | (#44099471)

I disagree. It's crucial that patents NOT be analysed per domain. It's crucial that that basic requirements for a patent be applied consistently and as objectively as possible.

The problem in the software domain is that most "innovation" is trivially easy and stupid things get patented. If you applied the non-obvious requirement consistently you'd find that only a few software patents, the ones that are actually deserving, would be allowed. You don't have an idea for a new drug in the shower and run out and patent it. New drugs are the result of a considerable investment in time and research by skilled practitioners. One-click and "on the Internet" are in-the-shower inventions. Things like marching cubes, SIFT and the FFT are not, and probably deserve patents.

The problem is, how do you do it? The likely answer is, patent peer review.

The Laffer Curve? (0)

Anonymous Coward | about a year ago | (#44098885)

I don't think I want to have the Laffer Curve as an ally here.

Re:The Laffer Curve? (2)

fuzzyfuzzyfungus (1223518) | about a year ago | (#44098969)

I don't think I want to have the Laffer Curve as an ally here.

Oh, that's where your wrong; for a powerful ally it is. Just think for a moment: Do you have a problem that you can pretend to boil down to two variables that are inversely proportional in their hypothetical extreme cases? If so, just draw a curve of pretty much any shape between those points on the graph and *boom* Instant policy justification!

Re:The Laffer Curve? (1)

Cenan (1892902) | about a year ago | (#44099095)

This!
Spot on. And why is the Tabarrok curve not curving downwards? No justification for the shape in the article, other than "of course that is how it looks, d'uh".

Re:The Laffer Curve? (4, Interesting)

dkleinsc (563838) | about a year ago | (#44099085)

Oh, come on! These two curves are perfectly related: They're both attempting to vaguely connect 2 variables that intuitively seem like they ought to have something to do with each other without actually being a remotely accurate description of reality.

For reference, Arthur Laffer said the theoretical relationship between tax rates and government revenue per capita looks like this:
Laffer Curve [cynicalnation.com]
A suspicious Martin Gardner then plotted the actual relationship between tax rates and government revenue per capita, and got something that looks like this:
Neo-Laffer Curve [gapersblock.com]

My basic view on the subject:
1. There's absolutely no way to measure real innovation. Some of the problems:
- Discoveries that seem unimportant can turn out to be incredibly important 15 years later, and vice versa.
- Organizations sometimes protect their discoveries by keeping them secret.
- Academics often give away the knowledge they have without patenting it to build their career. However, they can also build their career by giving away nonsense and getting away with it.
- A lot of "innovations" are just tiny variations on things that we already have and don't make much real difference (e.g. the rounded rectangle).
2. There are lots of motivations for innovation, some of which can't be bottled, organized, or turned into policies. For example, the more idealistic scientists are motivated more by the joy of discovery than by the cash they'll get.
3. That means that trying to take a theoretical approach to creating more innovation is just plain unworkable. The one thing that seems to have worked, historically speaking, is (1) put really smart people in contact with each other, (2) make sure they have plenty of cash and whatever they need to do their work, and (3) tell them they can focus on pretty much whatever they feel like working on, just make something awesome happen. That worked in Alexandria 2300 years ago, it worked in Baghdad around 1000 years ago, it worked in London around 200 years ago, it worked in Bell Labs in the last century.

Re:The Laffer Curve? (1)

drinkypoo (153816) | about a year ago | (#44099153)

- Organizations sometimes protect their discoveries by keeping them secret.

Yes, this is the issue that patent protection was supposed to solve, and it's a reason why SOME legislation is beneficial.

That worked in Alexandria 2300 years ago, it worked in Baghdad around 1000 years ago, it worked in London around 200 years ago, it worked in Bell Labs in the last century.

Except that's really not how it went in any of those cases. In each case the thinkers were directed by patrons.

Re:The Laffer Curve? (1)

dkleinsc (563838) | about a year ago | (#44099197)

In each case the thinkers were directed by patrons.

Who told Erastothenes to measure the size of the earth? Who told Jabir ibn Hayyan to perform a ridiculous number of chemistry experiments? Who told Isaac Newton to write about physics and mathematics? Who told Charles Darwin to come up with evolution? Who told Ken Thompson to write an operating system?

I'm not saying you can't give smart people some kind of direction, like they did in the Manhatten Project, but you certainly get a lot when you do what something along the lines of "Welcome! Here's your lab and office. Here are your colleagues. Here's where you can find supplies, and here's how to request supplies if we don't have what you need on hand. Now, do something."

Re:The Laffer Curve? (1)

ceoyoyo (59147) | about a year ago | (#44099513)

You're talking about scientists or their pre-science equivalent - crazy people driven by the joy of discovery who can't wait to tell everyone when they figure something out. I'm one of those. Patents are essentially irrelevant to those people anyway.

Patents work when there are people who are driven by commercial motivations. Blacksmiths, iron mongers, stone masons, Microsoft.

Of course, most of the people you mention did have patrons anyway. You don't think Darwin sailed around the world looking at pretty birds on his own dime, do you? One of Isaac Newton's principle patrons was Charles Montagu, the founder of the Bank of England. Patrons didn't necessarily direct people's inquiries (although they certainly did sometimes), but they did pay for them.

Re:The Laffer Curve? (1)

khallow (566160) | about a year ago | (#44099377)

Oh, come on! These two curves are perfectly related: They're both attempting to vaguely connect 2 variables that intuitively seem like they ought to have something to do with each other without actually being a remotely accurate description of reality.

So you think there's a "vague connection" between tax rate and tax revenue? Or between innovation and regulation of that innovation? Do tell.

There's absolutely no way to measure real innovation.

You have a reason for this statement? Your supporting statements just mean that such measurement is a bit harder and less accurate than it could be. Not that innovation is somehow impossible to measure.

There are lots of motivations for innovation, some of which can't be bottled, organized, or turned into policies.

Irrelevant especially since there are substantial motivations (such as the profit motive) which can be so "bottled".

That means that trying to take a theoretical approach to creating more innovation is just plain unworkable.

Non sequitur. Nothing of your post aside from the unfounded claim that innovation can't be measured has any relevance to this statement.

Re:The Laffer Curve? (1)

ChrisMaple (607946) | about a year ago | (#44099467)

How do you expect to be taken seriously when you cite the notorious Martin Gardner, who provides a graph that is clearly a joke?

Re:The Laffer Curve? (1)

ObsessiveMathsFreak (773371) | about a year ago | (#44099251)

The Laffer curve is on record as having been dreamed up on the back of a napkin by Donald Rumsfeld during lunch hour. I am not making this up.

Re:The Laffer Curve? (1)

dkleinsc (563838) | about a year ago | (#44099321)

No, it was dreamed up on the back of a napkin by Arthur Laffer during lunch hour, which is why it's called the "Laffer Curve".

seriously? (1)

mapkinase (958129) | about a year ago | (#44098927)

Since when an arbitrary curve with extremum gets a name each time it applies to a phenomenon.

Re: seriously? (0)

Anonymous Coward | about a year ago | (#44098951)

Just wait for him to patent & trademark it. That will show you the "point" of his curve is really a sharp stick in the eye.

Re:seriously? (1)

SirGarlon (845873) | about a year ago | (#44099035)

Tarrabok has provided no evidence that the curve applies to this (or any) phenomenon. He might as well have done a parabola or freaking circle for that matter.

Re:seriously? (0)

Anonymous Coward | about a year ago | (#44099183)

This is how economics works, didn't you know?

Re:seriously? (1)

ceoyoyo (59147) | about a year ago | (#44099531)

Beware things that people name after themselves.

While we're on names: fallacy by moderation (0)

Anonymous Coward | about a year ago | (#44098943)

This is low quality rhetoric.

News (-1)

Anonymous Coward | about a year ago | (#44098945)

that's Great too Fast updated.
http://gossapi.blogspot.com/

Kicking in an open door (1)

golodh (893453) | about a year ago | (#44099009)

The idea of an optimum patent strength is like kicking in an open door. It's pretty obvious that somewhere between no patents at all and long-lasting patents there is an optimum in terms of societal benefits.

What's lacking unfortunately is the hard work of quantifying the societal benefits as a function on e.g. patent duration. Which incidentally is the 99% perspiration to accompany the 1% inspiration (which all of us probably has anyway).

So Tabarrok's curve is a typical no-brainer (in both senses) as far as it has been worked out.

What's needed is an analysis along the lines of the one by e.g. Rufus Pollock (see http://rufuspollock.org/papers/optimal_copyright_term.pdf [rufuspollock.org] ) or the one described here: http://www.ipdigit.eu/2010/09/what-is-the-optimal-copyright-length/ [ipdigit.eu] Of course this is where political viewpoints enter the debate, as evidenced by the views of the Von Mises institute (see http://archive.mises.org/17319/optimal-patent-and-copyright-term-length/ [mises.org] ) who cite people that argue that patents don't contribute at all to spurring innovation (something that anyone who has ever pitched his idea to a VC with the objective of funding a startup will reject out of hand).

It's hardly a new point of view. Perhaps mr. Tarrock ought to do a better literature search before coming up with an existing idea and grandly naming a curve after himself.

Re:Kicking in an open door (1)

jkflying (2190798) | about a year ago | (#44099051)

people that argue that patents don't contribute at all to spurring innovation (something that anyone who has ever pitched his idea to a VC with the objective of funding a startup will reject out of hand)

I think that's exactly the point those people miss. Sure, you can come up with as much innovation as you want without any patent protections. But, if you ever want anybody to pay for your innovation to become more than just figments of your imagination, they need to know that they will be getting their money back.

Re:Kicking in an open door (0)

Anonymous Coward | about a year ago | (#44099151)

There's a refinement of your argument, which goes as follows:

Yes, it may be that less patent protection leads to greater innovation, globally. But less patent protection means smaller VCs are less likely to invest. So the increase in innovation is mostly going to come from larger established players. We can argue degrees, but it seems clear that where we are on the curve not only affects innovation in "quantity", but also how much the innovation is consolidated to a few large players.

This may or may not be a bad thing. Large companies may then need to replace those VCs and fund external inventors as VCs do now, otherwise (to put it crudely) they'd have no small innovative companies to absorb. The terms of that funding may well change for the better (or for the worse) and it may be easier (or harder) to get than it is now, especially in smaller amounts ($100k vs $10m) and for projects that may have a higher chance of failure (but a higher return if they succeed).

Re:Kicking in an open door (1)

Qzukk (229616) | about a year ago | (#44099245)

So how did computing get as big as it did prior to the 1998 State Street Bank decision?

Re:Kicking in an open door (1)

ceoyoyo (59147) | about a year ago | (#44099555)

WWII.

Not that the success of early computing has much to do with the patentability of business ideas. Computers consist of nice, concrete, physical components, which were patented up the ying yang.

Re:Kicking in an open door (1)

ThosLives (686517) | about a year ago | (#44099327)

What about getting your potential customers to pay for the innovation itself, rather than some third-party VC group that generally only wants to pay for the right to earn profits off the innovation?

I think Kickstarter and the publicly-commissioned model could make the old funding models of VCs and banks and the like obsolete (for a large swath of products, at least). This reduces the middle-man effect, and ensures that the primary beneficiaries of innovation are the innovators and the consumers of the innovative products and services themselves, rather than the providers of liquidity.

Re:Kicking in an open door (1)

jkflying (2190798) | about a year ago | (#44099475)

Absolutely, this is an option that the Internet (and high-speed communication in general) has given us which wasn't available before. But even still, these kickstarted companies will have to charge much more to their initial customers if another company can swoop in and steal all their R&D the moment they have a successful product. The moment that happens the competitor will only have to pay incremental manufacturing costs, not the R&D which accumulated during the design process, and to be competitive the original company will have to lower their prices once competition starts up. So in order to break even the original customers will need to pay high enough costs that the original run will cover all R&D. This higher costs will stifle innovation.

Re:Kicking in an open door (0)

Anonymous Coward | about a year ago | (#44099137)

grandly naming a curve after himself

This wouldn't be possible if we had effective patent protection on curves.

Re:Kicking in an open door (1)

trout007 (975317) | about a year ago | (#44099243)

There is nothing to stop a private non-disclosure agreement between you and the VC's before you pitch your idea.

Re:Kicking in an open door (1)

ceoyoyo (59147) | about a year ago | (#44100043)

That's not the issue. The VCs don't want to put money into something that isn't patentable, because they're not as likely to get their money back out again. If you don't have a patent and can't get one, that's bad. If you don't have a patent and might not be able to get one, that's almost as bad. If you've got a patent, clearly it's patentable, and that's good.

Haven't you ever watched Dragon's Den / Shark Tank / Soul Sucking VC Rage II?

Re:Kicking in an open door (1)

Kookus (653170) | about a year ago | (#44099255)

I think he was poking fun at innovation through naming the curve after himself even though it's just an application of the Laffer curve. See the parallels?

No answer (2)

fastest fascist (1086001) | about a year ago | (#44099039)

But the curve doesn't provide any answers! There's no method for deciding where on the curve we are at the moment, although the author seems to have arbitrarily decided on a point.

Re:No answer (1)

M. Baranczak (726671) | about a year ago | (#44099297)

Worse than that: we're talking about things that can't be boiled down to two variables. At least the Laffer curve dealt with things that could easily be measured.

This Tabarrok guy is a puffed-up idiot who likes making charts, because he thinks that's what smart people do. He has a long and prosperous career ahead of him.

Re:No answer (1)

PhilHibbs (4537) | about a year ago | (#44099343)

And, where's the data? At least with laffer, there are some dots that you can kind of see could justify a curve if you close one eye and tilt your head. With this, it's just an arbitrary line and a cross. It is pure prejudice in the original definition of the term. I wish it were true, though, I really do, because it makes sense and would probably lead to better laws. But until I see some data, this is pure nonsense. And even with data, working out the direction of causality isn't easy.

Heh (0)

benjfowler (239527) | about a year ago | (#44099049)

The power of wishful thinking in action. The same thought of defective cargo-cult thinking behind the Laffer Curve, actually.

Libertarians will believe any old bunkum that'll reinforce their beliefs, and justify greed and selfishness. This Tabarrok Curve bollocks is just an extrapolation of that.

The Laffer Curve? (0)

Anonymous Coward | about a year ago | (#44099069)

So, what you're saying, is that Republicans will use this as theoretical justification for cutting patent protection as a response to ANY patent protection/innovation environment they encounter in the real world?

Actually, I could get behind that...

Natural monopolies for innovations (1)

trout007 (975317) | about a year ago | (#44099131)

There are natural patent monopolies that are rewarded to innovators in the market. If you are the first on the scene with a desirable product or service the consumers may reward you with monopoly prices. But as time goes on and other producers notice those outrageous profits it will lead others to enter that market and competition will reduce those profits to around the natural interest rate of the economy.

The nice part about natural monopolies is that they adjust well to how great an innovation is. The more the consumers like it the higher the profit and the more advanced it is over the state of the art the longer it will take competitors to catch up.

There is no reason why an artificial patent monopoly should increase innovation. It just breaks what would be small continuous innovations into step increases. With all of the bloat and overhead of the patent system it should be obvious it is a net negative on production.

Re:Natural monopolies for innovations (1)

Anonymous Coward | about a year ago | (#44099279)

Ever tried to manufacture really clever hardware? And had some jerk not only duplicate it after manufacture, but build it in sweat shops, use cheap parts, and get it *WRONG* and thus help poison the market? Been there, done that. The patents did help get cease and desist orders to prevent people manufacturing actually dangerous hardware, based on our work. And it helped keep the income in *our* pocket, who built the machine shops and the designs and spent solid research money and engineering time trying out new ideas. In this case, I felt it helped: the rewards of the patent helped fund our next round of R&D, and that is not cheap work.

I've also worked in medical research, and come up with perhaps half a dozen patentable electronic ideas as part of the work. The NIH funded laboratory refused to pursue patents, or allow me to pursue them, because they'd be public domain and it thus "wasn't worth pursuing". Lo and behold, one of them turned up in a commercial patent portfolio. The barrier to entry is too *high* for many genuine innovators, and that's an enormous problem with the system. At roughly $10,000/patent to get competent lawyers review it and walk it through the system, I agree that in general it's a mess now. And the software patents are a *complete* abuse of the process that stifles innovation because you they're like patenting sandpaper and hammers: 3/4" threaded holes: they're randomly patenting too many *components* of manufacture.

Missing the point (2)

Kirth (183) | about a year ago | (#44099165)

Well, patents might behave like that. Or they might not. Because there is actually NO data on why patents should foster innovation. People (and even scientists) just think they do, but any investigations so far turned up no positive correlation. So the verdict from 1851 still stands:

Besides the caveats,
by which one man attempts wrongly to appropriate to himself the bounty
which the State gives for invention and which properly belongs to another,
the granting patents “inflames cupidity,” excites fraud, stimulates men
to run after schemes that may enable them to levy a tax on the public,
begets disputes and quarrels betwixt inventors, provokes endless lawsuits,
bestows rewards on the wrong persons, makes men ruin themselves for the
sake of getting the privileges of a patent. Patents are like lotteries,
in which there are a few prizes and a great many blanks. Comprehensive
patents are taken out by some parties, for the purpose of stopping
inventions, or appropriating the fruits of the inventions of others,
&c. Such Consequences, more resembling the smuggling and fraud caused
by an ill-advised tax than anything else, cause a strong suspicion. that
the principle of the law from which such consequences flow cannot be just.
(The Economist, 1851)

Metric for 'strength'? (0)

Anonymous Coward | about a year ago | (#44099167)

The article plots the benefit from patents versus their strength.

What attribute of the patent system can we legislate to control it's strength.
      Perhaps the length of time a patent gives one exclusive use of the technology.
      Perhaps a limit on the license terms.
      Perhaps the scope of the patent to apply past a specific implementation.

It does seem that the optimal 'streangth' is different for different industries.
        Pharma has long and costly development cycles, maybe needs stronger patents.
            (Although the current economic incentives for pharma don't seen to result in the right drugs being developed.)
        S/W more the reverse. (Although I wonder what the cycle time was for the iphone?)

Economics is not a physical science (1)

devent (1627873) | about a year ago | (#44099195)

Please stop assuming that economics is a physical science like physics. About the Laffer curve from Wikipedia:

This is the curve as drawn by Arthur Laffer,[3] however, the curve need not be single peaked nor symmetrical at 50%.

and further:

The New Palgrave Dictionary of Economics reports that a comparison of academic studies yields a range of revenue maximizing rates that centers around 70%.[2] Economist Paul Pecorino presented a model in 1995 that predicted the peak of the Laffer curve occurred at tax rates around 65%.[12] A 1996 study by Y. Hsing of the United States economy between 1959 and 1991 placed the revenue-maximizing average federal tax rate between 32.67% and 35.21%.[13] A 1981 paper published in the Journal of Political Economy presented a model integrating empirical data that indicated that the point of maximum tax revenue in Sweden in the 1970s would have been 70%.[14] A recent paper by Trabandt and Uhlig of the NBER presented a model that predicted that the US and most European economies are on the left of the Laffer curve (in other words, that raising taxes would raise further revenue).[11]

So what curve is the Laffer curve? It can have multiple maxima, it can be asymmetric, the peak can range between 32% and 70%. If physical science were based on such curves the Moon landing would miss the Moon and fly to the Sun, and probably miss the Sun and fly to Jupiter.

Economics is a social science with a lot of psychology mixed in. The assumption that every individual in the economy works with maximum efficiency and have only his greed in mind is a nice hypothesis but is based on nothing. So is the Laffer curve based on nothing which explains the random properties of the curve.

The problem is then that the politicians are using this social and psychology based science and try to apply some magic formula and try to make public politics based on it. The results are mismanagement and at the worse case suffering of real people. Like the austerity politics introduced by the USA and which leads to economic meltdown of whole Europe.

Coming back to patents. There are no empirical studies at all in the field of patents, copyright and other "I.P." The politics just assume that more protection = more innovation, but that is not based on anything but lobby work from the parties that have personal gains in increasing monopoly rights. See Mickey Mouse Extension Act and all other copyright extension acts.

Why don't we have such lobbing for ever increasing extension of patents? Because patents are a two-way street whereas copyright is only a one-way street. Companies use patents that have expired as well as do new innovations, and the new innovations are often rooted in older patents. So there is as much interest in lower the patent protection as there is interests in increase protection. But with copyright there is only one big lobby, the copyright lobby. There are no lobby for the public good, for the common people. So you can see copyright and patent protection have nothing to do whether or not it increase innovation, but with the lobbing effort of the stakeholders.

The only real empirical study that I know of is "The patent game [patentgame.net] . See http://www.youtube.com/watch?v=q1Pi4w8ddA8 [youtube.com]

And they come with quite surprising conclusions.

"pure common system" means no patent protection.

1. patents increase innovations?

Average unique innovations is lower in the "pure patent system", and is higher in the "pure common system"
Productivity, aka economic activity, the "pure common system" is almost double the "pure patent system"
Per capita wealth, the total amount of dollars generated in the system: "pure common system" is almost 4 times that of the "pure patent system".

Conclusion: "Despite received wisdom, commons spur innovation better then do patents"

Re:Economics is not a physical science (1)

trout007 (975317) | about a year ago | (#44099261)

Economics should be classified similar to Logic and Math. They are constructs of the human mind that are great tools to model the way the world works. But like any model you have to know the limitations.

Re:Economics is not a physical science (1)

dargaud (518470) | about a year ago | (#44099557)

Economics should be classified similar to Logic and Math. They are constructs of the human mind that are great tools to model the way the world works. But like any model you have to know the limitations.

Not really, because the knowledge of the 'rules' of economics changes their effect ('beating the system'). It should be more akin to quantum mechanics, with wavefunctions observing other wavefunctions.

Re:Economics is not a physical science (1)

ebno-10db (1459097) | about a year ago | (#44099909)

Economics should be classified similar to Logic and Math.

No. Economics is supposed to be a science, and hence valid only to the extent that it jibes w/ empirical data. Math is a whole different animal, since everything flows from pure reason applied to a set of self-consistent axioms (logic is a branch of math, the watered down rhetorical version of logic notwithstanding). There are no axioms in science. What are called first principles are basic and well demonstrated theories, but always subject to empirical invalidation.

One of the biggest criticisms aimed at many economists is that they try to treat economics as though it were math, using their pet assumptions in lieu of axioms. It's garbage. Aside from not being how science works, many of their "axioms" have even been demonstrated to be false, yet they continue with them anyway. It's a circle jerk, with a set of "first principles" that can be chosen to come to any ideologically based conclusion you want.

Re:Economics is not a physical science (1)

the eric conspiracy (20178) | about a year ago | (#44099923)

> So what curve is the Laffer curve? It can have multiple maxima, it can be asymmetric, the peak can range between 32% and 70%

Just recognition there there is a curve is a good starting point. The shape depends on a lot of factors in yet unknown ways which makes policy debates interesting.

However the endpoints are known. One point is at zero taxes, which of course means no revenues. The other point is 100% taxes, which is what Genghis Khan experimented with when he razed conquered cities and exterminated their populations. Again no revenues.

Eventually Genghis Khan got an economic adviser who explained the concept of taxation to him, so stopping this practice.

That there should be a similar curve for patents seems reasonable. After all the Industrial Revolution didn't really take off until after the Brits adopted a patent system. And I think most people feel things have gone too far now.

So lets have the policy debates.

Simple fixes that would go a long way: (2)

Qzukk (229616) | about a year ago | (#44099211)

1. Eliminate the Doctrine of Equivalents
2. Especially with regards to "after-invented technology"

What 1 means is that if you come up with a way to do the same thing, even if you do it a completely different way, they can still sue you in court and you get to spend a million dollars proving that not only did you not infringe on their patent, you came nowhere near infringing on their patent.

What 2 means is that if someone invents something, and later someone else comes along and invents a better way to do something in the patent, it's still infringement because of fucked up court rulings that basically amount to "boo hoo the poor widdle inventors couldn't foresee this invention and shouldn't be penalized because they didn't think of it." Fuck that, if they wanted patent protection for it, they should have invented it themselves.

Inoovation ? (0)

Anonymous Coward | about a year ago | (#44099217)

Since when can we talk about innovation ? Real innovation ? [youtube.com]

Oh, erm, groundbreaking? (2)

Ihlosi (895663) | about a year ago | (#44099239)

Let's see:

No patent protection: Everyone tries to keep their innovations secret. Innovations get lost because they're kept secret and are forgotten at some point. Inventors are kept from inventing things because it's hard to profit from their inventions, either because they're immediately copied or because of all the effort to keep them secret.

Tons of patent protection: Great, invent something once and you and your descendants are set for life (just like copyright works today). Invention is stifled because inventors have no motivation to keep inventing after their first breakthrough - they're too busy throwing money out the window.

So the sensible level of patent protection needs to be between those two extremes. Allow inventors to profit from the publication of their inventions, but keep the protection short enough to motivate an ongoing process of new inventions.

what about an public defender system for patents t (3, Insightful)

Joe_Dragon (2206452) | about a year ago | (#44099283)

what about an public defender system for patents that can be used by innovations and company's who can't pay the costs of attorneys. that can help from people being bulled by BIG company's who can / have staff attorneys that can use the court system to shut people down.

Both Extremes Are Undesirable? (1)

Digital Vomit (891734) | about a year ago | (#44099289)

Slashdot likes to argue about intellectual property and patents, and it's clear that both extremes are undesirable

It is? I'm pretty sure the world would be a better place if people were not allowed to own ideas or expressions of ideas.

Re:Both Extremes Are Undesirable? (1)

the eric conspiracy (20178) | about a year ago | (#44099829)

If you have spent time working in industrial research and development you would realize that the lack of patent protection for real innovations would be detrimental to investment in technology.

Companies don't like investing large sums of money in anything and getting nothing out of it.

Forget patents (0)

Anonymous Coward | about a year ago | (#44099667)

How about the incredibly painful to the eye "Vs" in the title? "vs", or "vs.", please.

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