“We have two very different views of the patent system and innovation. One sees intellectual property ownership as a fundamental human right leading to national freedom, prosperity and better standards of living. The other sees innovation as an inherent threat, requiring increased government scrutiny of inventors to protect the public interest.”
The article in IPWatchdog describing how the United States democratized the patent system, extending the right to own intellectual property to commoners, came to mind after reading two very different papers on patents, innovation and their impact on society. Apparently the debate over the democratization of the patent system isn’t over. Some still see inventors as potential threats to the social order requiring close government supervision. The competing perspectives on patenting are reflected in the prominent figures from English history each study cites.
Edmund Burke’s observation: “A law against property is a law against industry” appears in “Property Rights: The Key to National Wealth and National Security” by Conservatives for Property Rights.
“Technological Un/Employment” by Camila Hrdy at the University of Akron School of Law takes another direction. She applauds what happened to William Lee in 1589 when he approached Queen Elizabeth I, seeking a patent on his knitting machine.
“Thou aimest high, Master Lee. Consider thou what the invention would do to my poor subjects. It would assuredly bring them ruin by depriving them of employment, thus making them beggars.” With that admonition, Lee along with his petition, was dismissed from the royal presence.
With just those hints, see if you can assign each of the quotes below to the correct paper:
- “Exclusivity over the patent is important in order to compensate for the inventor’s time, costs, and investments.”
- “As explained, denying an intellectual property right does not deny the right to use the technology. It just denies the exclusive right to do so.”
- “When intellectual property rights are protected, innovators are able to recover the costs incurred in research, product development, and market development. This cost recovery justifies the risks associated with development of new technologies and products today and is essential for stimulating the future R&D that is necessary to maintain America’s competitive edge.”
- “The upshot is that intellectual property magnifies the unequal distribution of returns between IP owners and IP-generators and everyone else.”
- “America’s industrial base rose rapidly from a largely agrarian society of farm workshops.. to factories and manufacturing plants that attracted workers and raised standards of living through higher wages and better products. Much of this growth was dependent on patents… The commercialization of secure patents created the world’s leading industrialized nations…”
- “Government would impose a tax– a required payment of cash into the public fisc (sic)– upon companies that decide to invent or adopt technologies that have an adverse impact on jobs. The tax would be imposed on two discrete groups: the businesses that adopt robots or other labor displacing innovations in the marketplace, or the owners of intellectual property rights in those labor displacing innovations.”
So we have two very different views of the patent system and innovation. One sees intellectual property ownership as a fundamental human right leading to national freedom, prosperity and better standards of living. The other sees innovation as an inherent threat, requiring increased government scrutiny of inventors to protect the public interest.
The inspiration for the Conservatives for Property Rights’ study is President Reagan and how he reversed America’s slide into industrial irrelevance by fostering innovation, getting government out of the way of entrepreneurs as much as possible. Professor Hrdy begins her paper quoting John Maynard Keynes: “We are being afflicted with a new disease of which some readers may not yet have heard the name, but of which they will hear a great deal in the years to come– namely, technological unemployment.”
Her remedy is for government to discourage inventions that could disrupt the labor market either by limiting their intellectual property protection or taxing them. She leans toward taxing as resulting revenues could be used to retrain and compensate displaced workers. Of course, the key question is who decides which technologies to target? The answer is bureaucrats.
Thus, American inventors would assume the posture of our friend William Lee, bending low before their bettors asking for indulgence to own their inventions. And like Mr. Lee, they could get the boot for their presumption. You don’t have a right to property that’s only bestowed according to the whims of government officials. And you can bet that in such a system those in political favor will fare best.
In order for this scheme to work, we have to believe that government is pretty good at predicting the impact of specific technologies. If there’s any basis for that faith, I haven’t seen it. Consciously or not, most of government’s efforts are to protect the status quo because those are the interests that are well represented in the system. If you were pondering the future of the computer industry in the 1970’s you would call in IBM executives, all dressed alike in blue suits with white shirts and red ties. Bill Gates and his band of geeky looking nerds wouldn’t get through security.
We can’t deny that there are real costs when disruptive technologies emerge. But history shows that rather than penalizing or discouraging them, nations which embrace and foster innovation wind up a lot better off than those which miss the wave and are left behind. No amount of government support can save an industry whose time has passed.
The debate over the role of innovation and the role of government is much more than an academic exercise. Each generation must weigh whether to value individual initiative or centralized control by elites. In the 1970’s the idea that centrally orchestrated economies like “Japan, Inc” were the wave of the future was much in vogue. Many of the “best and brightest” gleefully crowed that the days of “cowboy entrepreneurs” were over.
But the American electorate had a different idea. A massive wave of discontent swept Ronald Reagan into power. Defying conventional wisdom, he chose the path of decentralized innovation, with government getting out of the way. Congress had just passed the Bayh-Dole Act, which removed the management of federally funded inventions from Washington, placing it in the hands of universities and small businesses which were allowed to own their inventions. In 1982, the creation of the Court of Appeals for the Federal Circuit restored confidence in the U.S. patent system. These along with other policies putting their faith in individuals rather than bureaucracy made the economy take off like a rocket. Soon America’s lead in every field of technology was restored.
But with success we began to forget the lessons of the past. Once again we allowed our patent system to degrade. Many are again enamored with ever expanding government. Our greatest competitor, China, rejected political freedom for a centrally planned economy run by those in power for life. In our own country the debate over the size and nature of government and the rights of the individual has created a political chasm.
While I’m sure that Queen Elizabeth meant well, no one asked the people spending their lives knitting socks if they’d rather do something else. When given the chance, “commoners” flock to places where they can control their own destiny. That’s why many of our ancestors left behind everything they had known in the Old World to gamble on a new life in the United States. They fled societies where they were told by government what they could do, how far in life they could go, what they could own and last, but certainly not least, what they must believe.
While we should help those displaced by technology to develop new skills, penalizing inventors or having government tax innovations it doesn’t like couldn’t be more wrong-headed.
Queen Elizabeth didn’t preserve the manual sock knitting industry by denying Mr. Lee the right to own his invention. She merely delayed the inevitable. Luckily, she was wiser in turning her English “sea dogs” loose on the Spanish Armada. They showed what entrepreneurs can do to those hamstrung by bureaucracy. I don’t know about you, but I know which side I’m backing in that fight. Sign me up with the sea dogs.