google blogger on Thursday, October 6, 2011
The claim that innovators would not develop new products if they knew others could simply copy their ideas is status quo bias. The argument seems very similar to claiming that a 100% income-tax rate would stop people from working, but is fundamentally different. Innovators can protect their ideas, methods, and processes from theft; but no one is able to legally avoid having their earnings stolen by the high tax rate.
Even if we assume that innovation would not occur without IP laws, what is to stop Edison, upon the discovery of a new light bulb design, to contract with a manufacturer (or build a factory himself), to create millions of bulbs before releasing them to the market at monopoly prices? As others scramble to copy his design and materials, he would become wealthy as a direct consequence of his invention. This is a primary reason that Apple was so financially successful -- keeping its designs and products a secret until millions of them flood the market, and competitors scramble to copy them. Notice that even with IP laws, Apple still behaves as if they do not exist in order to capture the full value of innovation.
Patents on various parts of Apple products only serve to throw a wrench into the efforts of competitors, just as patents on flywheel design slowed the improvement of the steam engine.
WD40 is another good example. Its inventor chose not to patent his "recipe" of chemicals, because it would only afford a short period of protection. Instead he chose to closely guard his methods and ingredients, and to this day it has not been successfully copied. The secrets that the WD40 company now protects are almost exactly the same as the secrets of any wildly successful food, like Coca Cola... or Sabra hummus, which are exquisitely balanced and nuanced flavors that are as impossible to reproduce as WD40. Why, then, is it possible to patent an industrial lubricant, but not a soda recipe?
I have developed several commercial recipes, and I can tell you that intellectual property is every bit as relevant to the process of converting plants and animals into a meal is it was to the process of turning rocks (metals) and trees into steam engines.
Additionally, protecting intellectual property is prohibitively expensive; so much so that even a relatively wealthy person cannot reasonably afford to patent and defend what they invent. Protection is effectively afforded only to very wealthy companies or individuals. It is not logical for me to pay taxes to support the courts and judges, socializing the costs of property lawsuits that do not involve me. Claiming that I benefit indirectly by encouraging innovation is like claiming that I benefit from (and must pay taxes for) roads even if I don't use them.
Posted by google blogger at 3:29 PM