Do we need patents?
This is the continuation of my series on competition and monopolies. Now, we are going to talk about ownership and ideas.
As I alluded to in my previous article on competition, what distinguishes us humans from other animals is our higher-order mind. This has allowed us to escape the otherwise brutal conditions of nature in which everyone lives at the expense of another. What makes us special is our ability to see beyond the conflicts of nature. We can transform nature-given resources into tools in order to achieve higher goals. We trade the produces of our efforts with each other for mutual benefit, and we share ideas with one-another.
Ideas shape our existence as humans. Our ability to think and imagine new possibilities, how we can arrange stuff to affect reality has gotten us where we are now. If we have a look at history, it all is a mixing and rehashing of people's ideas. We constantly refine these ideas into something new, whether for cultural or commercial purposes, with the goal to benefit ourselves and our fellow beings.
We are all of us the result of the ideas that have influenced us in our lifetime as well as the ones before.
That should make us ask: Does anyone really own their ideas?
Ownership and Property Rights
Let us briefly talk about the basics of ownership.
A universal fact is that resources as scarce. In the primitive state of nature this is a cause of conflicts. Wild animals are fighting for a limited supply of food within a certain territory. The modern humans (Homo Sapiens) started as a nomadic hunter-gatherer people who later settled to farm land when they discovered the benefits of being stationary. Then they learned how to grow crops and to raise cattle. Their ties to their land became even more important - giving them a sense of belonging.
They were aided by their ability to negotiate and trade with each other for their mutual benefit and survival. Economic specialization lead them each to focus their resources, skills and efforts on what they were best at, and to then trade with each other. In this primitive barter system, they mostly avoided deadly conflicts for food.
The most crucial thing during this time was the invention of property rights. Since resources are scarce there is a risk of conflict. Due to humans now having become stationary, they had a sense of ownership of the land that they were cultivating. And, someone purely living out of another persons efforts without giving something in return would not have been appreciated. So they came up with rules to assign the rights to use property based on social norms of what was considered just. It was an important political event in human history. Later, with the invention of writing, these came to be codified as "laws".
The term "Property":
The term "property" did not originally apply to the thing you are owning but the relationship between owner and object. In the way that philosopher John Locke would have expressed it: "Carl is having a property in his pen". That is not the sense in which the word is being used today.
There is, of course, a lot more to this but we will not delve into it here.
Can you own ideas?
Let's put it simple. Physical or tangible resources are ultimately made up of billions of scarce atoms. It takes human skills and effort that have been built on for thousands of years to transform a resources into something new and useful. For instance, for making steel, and especially of the quality we have today. The production methods are quite complex from the primitive methods of making steel.
Each scarce resource can only serve one use and purpose at a time. Hence, ownership of physical resource is exclusionary.
The fact remains, matter is scarce and cannot be multiplied. You have an axe and you cannot instantly duplicate it. You have to make a new one out of other scarce resources. This requires human skills, effort and time.
Ideas, or information, are different from physical objects because they can be instantly duplicated with little effort and cost. Me having the same information as you does not exclude you from having it. Most of our information today comes in the form of digital data and it is simple to copy. The hardware might be scarce but you are not stealing any scarce resources - you are just copying patterns of electrons from one medium to another. The same logic goes for telling some information to someone. You are transmitting a representation of your thoughts through the medium of air. You still got your copy of the information.
And having the information does not mean that you know what it means or how to use it in a practical sense. That is where human skills and physical resources come into play. Ideas are useless if you cannot act according to them.
Ideas are cheap to replicate, but hard to realize in the physical world.
On the protection of data:
I just want to add that I do believe that someone who is having information that is not meant for others should be able to take protective measures, like the parts involved signing legal contracts, and obfuscation, and such. Making it harder for unintended people to access data is in another category. Humans are fairly innovative on this front. Whether some of the measures are feasible is for economics to decide. Using coercion is a pretty expensive problem to deal with it.
My general advice is: Do not tell your secrets among people you do not trust.
"Intellectual property"
In a legal sense, produces of the intellect are referred to as "intellectual property". In this category we find copyright and patent.
My argument is that products of the mind do not qualify as "property" since they do not need to be economized like physical and tangible resources are.
Patents
A patent is a monopoly on the use of an original idea, or invention, granted by the State. Its original purpose was to make inventors disclose their inventions. If questioned today, people see it as necessary incentive for innovation. Some even see it as an award for their ingenuity and original thinking.
When filing a patent you submit an original invention to the State's Patent Office for a lengthy review process. The bureaucrats check whether the invention is original enough to qualify for a patent. I will not go into the details of the criteria. Once the patent has been granted you as an originator will get an exclusive legal monopoly on that general idea. As a consequence of filing the patent it also becomes public. Everyone can view your invention and you have a limited exclusive right to the patent for at least 20 years with possibility to extend the protection for certain categories.
Patents have given rise to a separate market for corporations to sell and purchase the rights to patents. It has become essential for big corporations when negotiating with each other and to avoid legal conflicts. Some claim that it actually is good for innovation. But is it really?
The negative side of patents
A common reason for filing a patent is as a protective measure. If you do not patent an invention someone else might and potentially sue you. It also opens up for a darker side with patent trolls using patents as a way to extort other companies or individual patent holders.
Filing a patent implies paying a fee to the Patent Office for the company or person submitting their invention. You have to be able to bear the cost at the risk of your patent being rejected. Due to patenting being a lengthy process, corporations usually have a dedicated department consisting of people reviewing the proposals.
Smaller businesses such as startups cannot afford the patent advisors required in navigating the traps that are patents. That might stop them from pursuing certain ideas since they are afraid of the legal consequences of accidentally infringing a patent.
As we can se, patents create a barrier to entry - protecting those who have an economic advantage.
Patents stifle innovation by preventing ideas from being further developed to be made into something useful. The holders of the patent get the sole right to that produce anything from that is stated in that patent. It does not matter if someone finds a better use.
Because of this, enforcing a patent is implying a cost to society. There are so many patents that have been filed in the last 20 years (especially in the field of engineering) that remain un-used. What if someone could build upon them? I mean, to take ideas from various inventions and put them together into something new.
On patents in the medical industry:
There is an argument that patents are required as an incentive for innovation in the medical industry. What makes the medical industry different from other industries? Would not people have an incentive to do research, and to innovate and to come up with treatments regardless of patents?
If it is a matter of finance of research, there are plenty of non-profit organizations that would gladly help.
The right time for an idea
As British technology writer Matt Ridley pointed out, the fact that the incandescent lightbulb was invented by several people around the same time just proves that it was the right time for that idea. Thomas Edison, who go remembered for it, just happened to be a better businessman when he was granted the patent. The same can be said about the telephone. Alexander Graham Bell was not the only only one experimenting with the transferring audio through electric wires.
So by obtaining a patent, it does not mean that the idea was original, or that the person filing it deserved it more than any other person.
Who should be able to use an idea?
As we have seen, no one exclusively owns ideas as they are not scarce. Neither should they have the exclusive right.
Whoever is able to bring together scarce resources, skills and capital, in order to realize an idea should be able to do so without legal consequences.
That is the only way to maximize the social benefits.
Conclusion
We need competition even in the realm of ideas. We need the conditions to test and refine them into something that humanity as a whole ultimately can benefit from.
This systematic protection of ideas in the interest of a few is antithetical to being human.
In these times of crisis, we cannot help to think, what if ideas that have been patented could have helped us minimize the number of casualties, or even preventing this crisis all together.