Dump the patent protection regime

Patents = Intellectual Public Resources and not Intellectual Property Rights


Let me concentrate on the patents here (though similar considerations apply to trademarks and copyrights as well).  They say it is Intellectual Property Right over an idea that a human being figures out.  And they also say that people with ethics respect others intellectual property.  And they also say that without intellectual property rights innovation would die out.  I beg to disagree with all of this.

First lets look into the moral of thing. What if I referred to that innovation as an Intellectual Public Resource?  What if I said that as per God’s word whatever the mind dreams up is a blessing of the almighty and therefore is a public resource and not a private one.  For the atheists as well I could come up with an argument – new ideas come out of old ones and therefore a new idea/innovation cannot be assigned solely to the individual to whom it was revealed.

Second consider the efficiency argument – if the innovator does not get the returns from his innovation why would he innovate?  Sounds fine right? But not always.  Even copying takes some time, and the innovator has a monopoly in the intervening period.  Moreover, if the innovator knows that his innovation will be copied soon, he has to keep on innovating to get the monopoly profits in the intervening period – in fact there are a range of situations where innovation would be faster without IPR protection than with.

Third, reflect upon the practical problem.  It is very costly to get IPR protection and moreover that protection is imperfect.   Consequently only a few large companies (or those funded by VCs) are be able to get good quality IPR protection.  Most will not.  Let me illustrate how.  I run a R&D firm that is built on innovations, has R&D that comprises of about half of our total expenditure, and personnel time. We have no patents, havent applied for any, nor do we want to.  The problem is this:

1. Good patents require good lawyers otherwise the patent has little protective value, good lawyers are very expensive, and most small firms are unable to afford them.

2. It is difficult to know who is a good lawyer and who is not. Most well known lawyers do not have the time to go into the nitty-gritty of the problem.  Reputation therefore is not a good way to figure out who is good.

3. Writing a patent application requires a lot of our time.  In large organizations there are special departments that churn out patent applications, but in small ones no one really has the time to do this, and so large organizations that include government and large firms get a lot of patents, where people spend an inordinate amount of time applying for patents rather than useful innovations. (check with such people and they will tell you what actually happens)

4. In India you cannot technically get a software or algorithm patented, but good lawyers have found ways around them.  Indians can get a patent abroad but they first need some sort of a permission from the Indian patent office.  All of this is time, effort and money consuming.  Also if I get a patent in India, it does not mean I am protected in the US or UK or Pakistan, I have to apply there too.  Only large companies can afford to make multiple applications.

5. Many patents have been granted that are a complete travesty of what is innovation.  It seems every small routine in our algorithms deserves to get a patent if we go by what’s out there.  But that will be impossible for anyone to protect.

And therefore not surprisingly most patents are quite useless, and most of the rest are not used.  The patenting process is quite costly, and the small guy will rarely be able to get adequate protection without access to some heavy-weight assistance.  But, there are examples some may say, when a small inventor gained.  There are many many more examples, I will argue, where the person who innovated got little.  Someone else, generally a large conglomerate gained.

Net result.  Large companies and organizations will hire expensive lawyers, they will spend large amounts lobbying with politicians and bureaucrats, they will hire well known academicians to convince everyone that IPRs are essential for humanity’s progress.

But none of that is necessarily true.  Morally (if you believe in that) it is not clear whether ideas can be dealt with in the same manner as tangible or physical property. These same lobbies labelled patents as Intellectual Property; I would label any new innovation as Intellectual Public Resource – a resource that is for everyone to benefit one.  Yes one can write a model that will show that with Patent type IPR, innovation  is greater.  But any half decent economics graduate student would be able to write another model that would show without IPR, innovations would be greater.  The point is, not just ethically, even theoretically, it is not clear what is better.   And practically the implementation of the IPR regime is so costly and so unequally biased against the small guy, that we might as well dump it.

But then who will deal with the large industry and politicians and lobbies funded by them in the US and Europe?  India cannot, this is one fight that has to be fought by Americans with American firms, but for the world.

And interestingly – I have not even begun to mention how the poor countries catch up more rapidly with the rich ones when they don’t follow the IPR norms the western world would like them to follow!


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