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Paul Solman frequently answers questions from the NewsHour audience on business and economic news on his Making Sen$e page. Here is Wednesday’s query:
Name: Michael Shinder
Question: Science and technology don’t seem to be producing the jobs or economic improvement many would hope. What often gets forgotten is that many science and technology ideas are developed in academia where they are owned by the institutions. The schools are not businesses to turn them into products and businesses have a harder time making money on ideas they don’t own. So these intellectual property portfolios become idea graveyards. What if the rules changed so that the individuals who came up with the ideas could own a majority stake in their own ideas? Could they not then follow it out of academia and out to product? Seems like that would start more businesses, give universities more money (some of something as opposed to all of nothing), and even take some of the weight off of long term government support for science. Am I being naive to think that we could fix science and improve the economy?
Paul Solman:Yes, I think you are being naive. I know quite a few people at universities- professors and students both – and more and more of them talk about commercializing their research, or are actively engaged in doing so. Ideas do not seem to be trapped in the groves of academe. Just the opposite. If you think I’m wrong, readers, I trust you to let me know in the Comments section below.
A much more important hurdle to innovation may be the U.S. patent system, strengthened last week by the jury judgment against Samsung from infringing Apple patents. A number of economists have written about the anti-competitive constraints imposed by the patent system in the past decade, including Adam Jaffe of Brandeis and Josh Lerner of Harvard Business School (“Innovation and its Discontents”) and two economists at Washington University, St. Louis: Michele Boldrin and David K. Levine.
As columnist Sebastian Mallaby wrote in the Financial Times very recently:
“A supposed pillar of the nation’s capitalist vigour has been revealed in all its decadence. That pillar is the US patent system, which has allowed Apple to extract $1bn from Samsung in compensation for alleged theft of intellectual property….
> “Americans reasonably worship property rights and unreasonably extend this attitude to intellectual property rights, conflating “rival” goods like homes and hamburgers, which cannot be shared costlessly, with “non-rival” intellectual products that can be enjoyed simultaneously by all. Likewise, Americans worship innovation and presume that intellectual property rights always promote it. But this presumption is wrong.
The poster child for patents is the pharmaceuticals industry. But, as Richard Posner, a federal appeals court judge, has argued, what works in this sector is not necessarily appropriate in communications, software or elsewhere…
“No clinical trials are needed, so costs of development are lower and the case for monopoly weaker. Certainly, 20-year exclusivity cannot be justified. But as Michele Boldrin and David Levine observe in a new paper, the right policy for Silicon Valley might be to grant no patents whatsoever. Technology innovators are amply rewarded by the first-mover advantage…
“If the need for monopoly incentives in the tech industry is doubtful, the cost of granting them is clear. Whereas a drug patent covers one independent product, a technology patent typically covers a building block of a product, such as the look of the icons on a touch screen, to cite one of Apple’s complaints against Samsung. By patenting such building blocks, tech groups prevent rivals from using yesterday’s inventions to create tomorrow’s improved ones.”
The most convincing book I’ve read about the problems with “intellectual property” rights, and the most engagingly wide-ranging, is “Common as Air” by the remarkable Lewis Hyde of Kenyon College, Harvard and USC. Hyde’s 1983 book, “The Gift,” republished in 2007, remains a classic in anthropology, letters, and economics.
This entry is cross-posted on the Making Sen$e page, where correspondent Paul Solman regularly answers your economic and business questions.