I have always associated innovation with patents.
It’s the classic vision of the lone, wild-haired inventor in a grimy white lab coat putting himself and his family (assuming they’re still hanging around – he spends all of his time in the basement tinkering and cursing) through abject poverty until he finally hits on something useful and a huge conglomerate buys his invention and he moves to a mansion.
Thanks to something called a patent.
Patents Make Things Valuable Through Scarcity
Patents were first invented by the Venetians back in the middle ages to stimulate the wild-haired inventors (in this case glass makers) to invest the kind of obsessive energy required to create new things by protecting them from copycats and by giving them a financial reward for their work.
Ever since then, patents have created what economists and lawyers call artificial scarcity. For a certain period (usually 10-20 years) one else is allowed to make or sell the product (or service) besides the inventor and the company he or she chooses to make the patented product so that they can recoup the investment made to invent, design, manufacture, and distribute the product and make a tidy sum besides – basically whatever price the market will bear.
Things Were Fine Until the Internet Came Along
But the patent system assumed that the promise of financial reward for their efforts was what motivated the wild hairs to keep at it. Turns out that’s not the case, at least not anymore. As the entertainment and publishing industries have discovered much to their chagrin, people just like to create things, solve problems, and get public recognition for it, even if that recognition doesn’t involve financial reward.
And patent holders can’t even use patents for their more dystopian purpose anymore: to discourage copycats from getting in on the action. Despite unleashing tens of thousands of copyright infringement lawsuits (copyright is a kind of more relaxed hippie cousin to patents) upon internet music and video pirates, the entertainment industry has failed to stop the practice.
Yet despite widespread piracy, musicians produce more music now than ever and quality has not suffered. Publishing has endured the same fate, yet more books are being churned out than ever. And let’s not even get started about YouTube.
The Suits Lose, Artists Keep Suffering
It’s really only the suits that are losing out. The artists are simply continuing to suffer just as they always have.
What has kept musicians and inventors in the basement for all those years wasn’t the promise of financial reward (though that certainly helped), it was that the costs of producing and distributing the thing they wanted to do were just too high for them to bear on their own.
But that’s all changed now. As I explained in a recent post, the costs of producing and distributing books and music have dropped to nearly zero. Just set up a free blog or download free audio recording software to your computer and you can stream your creations to a nearly limitless audience for free.
The Costs of Production Approach Zero for Everything
But publishing and entertainment aren’t anomalies. There are three other areas where the costs of production will soon reach zero, according to a fascinating academic article (in this rare case that’s not an oxymoron) by Mark A. Lemley, William H. Neukom Professor of Law at Stanford Law School:
- 3D printing. You’ve already heard how physical items can now remain in the nearly cost-free form of bits and bytes until they reach a really cheap printer in your bedroom or office.
- Synthetic Biology and Bioprinting. Scientists have made entirely new forms of bacteria different than anything found in nature. It’s not easy. But it will get easier. Synthetic biologists are developing collections of “biobricks” – individual modules that can be put together in organisms. Because these bricks are information, they can be shared and recombined in numerous ways, says Lemley. Just like music and publishing, development and distribution costs will approach zero.
- Robotics. Honda predicts that it will sell more robots than cars in 2020. Sounds like a market that it could try to sew up through patents. Yet even the realm of super-expensive and complex robotics is vulnerable to a loss of scarcity. Just like PCs, the value of robots will be not in the hardware but in the programming – what we can get the robot to do besides clean floors or weld cars – and we already know that there’s a robust open source community for programming on the internet.
Can the patent survive in a world without economic scarcity? Lemley, who is one of the world’s leading authorities on patent law, isn’t so sure. Intellectual property law’s original justification, that it stimulates innovation, seems to be a myth. Instead, patents encourage commercialization – the financial return that investors see in bringing a patented idea to market.
But patents don’t even do that well. Lemley argues that patents actually discourage commercialization; inventors and investors are too concerned about patent turf to invest in competing (as opposed to copycat) products. For example, a government report found that patents in the field of genetics actually limited patient access to genomic testing that would have helped them determine whether they had potentially life-threatening genetically-based diseases.
Lemley predicts that industries that see their profits threatened by the democratization of production will do just what the music and entertainment industries did: try to sue the threat out of existence, with the same costly failure for the suits and the same flowering of innovation for the wild hairs.
Patents will not disappear anytime soon, Lemley says. It’s still simply too expensive to bring a blockbuster movie or drug to market for patents and copyright to become completely irrelevant. But increasingly, high-cost products “will be islands of IP-driven content in a sea of content created without the need for IP.” (See, I told you this guy can write.)
As for me, I will never confuse patents with innovation ever again. How about you?