One of the strongest arguments used by the Intellectual Property(IP) supporters is that patents promote innovation, and the strong counterargument by the IP opponents is, that patents stifle innovation, and that once patents are removed we will have more innovation, considering the fees which will not be spent on securing patents and hiring patent attorneys. The reason why I used the term ‘strong’ and ‘strongest’ because both the sides acknowledge that there is some weight on the argument of the other side. The question is, overall do patents promote innovation or will removal of patents promote innovation? To analyze the arguments, we need to perform small though experiments.
Society with very strict IP Rights
To exaggerate the observation, we need to consider a radically different society. Lets presume a society(say on the planet Mars) where every intellectual property is tangible like real property. For example, if you discovered a specific way to cover your body with a cloth(say you made a Shirt) then the only way I can also wrap myself with a cloth in that way is by taking your permission, otherwise it will be stealing, because then you will not be able to wear shirt the same way. If I discover a new term say ‘liberty’ then anyone who wants to use that term, must take my permission(usually granted for a specific fee) or else you will devoid me from using that term and it will be just like the theft of real property.
In this society every time a couple gets married, in addition to gifting them various physical products like a coffee maker or a toaster, people gift licenses to various recipes, as making a recipe without the prior permission of its creator will be theft. To write a book on the various topics, the publisher has to clear every possible term for its license. If you want to use the term ‘liberty’ and its definition is ‘the condition in which an individual has a right to act according to his or her own will’, then either need to get license from the creator of the term liberty(which would be the current descendents of John Stuart Mill), or you need to coin your own term which should be different from ‘liberty’ but convey the same meaning, like ‘liberty22’ which defines as ‘the condition in which an individual has a right to act according to his will without infringing on the rights of less than 5 million people’. Now presuming that your lawyers are able to defend this term as different from ‘liberty’, it basically conveys the same intention to the readers as the term ‘liberty’.
You will realize that in this society, there are a million different food recipes, a million different languages, billions of terms and words in languages, millions of different clothing items. As you can see this society would have much more ‘innovation’ than our current society, after all we only have a few 100 recipes in any cuisine, only a few hundred thousand words in any language, and if someone coins a term, it is used for so many things.
The truth is, that we can all see that although this society will have a very wide variety of innovation, it will suffer from two things, first the poor people will be devoid of so many things, the poor people will not be able to build efficient houses, because they cannot buy the licenses, they cannot eat variety of dishes, the poor kids will have to arrange for a lot more money because the education will be so costly. Secondly, although this society will have a lot more ‘variety’, we can see that it will lack the advanced technologies. For example, there will be 200 different types of semiconductor devices, but instead of having a million devices created out of one semiconductor device(like transistors) we will have only a few hundred different types of electronic devices. We will have hundreds of different words for describing ‘gravity’, but very little number of people who actually understand advanced concepts because they are using their brain cells to store 100 different terms for gravity, rather than 100 advanced usages of gravitational force.
Society with no IP Rights
Lets presume a society with no concepts of intellectual property, in fact there are no property rights at all as everything is intangible like information. If you have a loaf of bread then to give it to me all you need to do is show it to me, and I will close my eyes, wish it and I will get my own loaf of bread. If I like your lawn mower then all I have to do is close my eyes, wish it and I will be able to conjure it to me.
Its obvious that there will be a loss less starvation in this society, all we will have to do is conjure food for the poor people and they will be able to eat. If you need an computer or a television you just have to wish for it and you will get it. The only thing scarce in this society will be the time, that is you just have to do the work of choose what you wanna wish for and then you move on to enjoying that product.
What will happen to the innovation in this society? Its obvious that there is no incentive to do so many variety of things. There are no factories to mass produce a product, this means that the only job people do is either consuming the products, or invent new products out of their own need to do something different. The houses will all look the same, except for the rich people who would still wanna spend some money to have their houses look different(which will be immediately copied all over by poor people if they are given an access to their houses).Every product in the society will basically be the same except they will be personalized by each individual according to their own taste.
The development of technology in this society will be quite straightforward. There will be rarely two kinds of alternate technologies, for example if a cell phone is developed then all the other cell phones will be only personalized forms of this cell phone, until a stage is reached when personalization of personalization pass through hands of a geek who tweaks it to an iPhone, and so on. The biggest force behind the innovation in such a society will be a human need for variation. People want variations in their lives. Every technology in this society will be achieved through humans who voluntarily want to give their labor into developing something new, when they know they are not acquiring monopoly on the usage of that technology or property. An iPhone-like phone in this world may or may not be developed, we don’t know. But we do know that if it is developed no single company has to spend millions of dollars in developing it. The question ‘who will spend millions of dollars to develop a product without patents’ will never arise. There are no products in this world, there are no corporations producing these products, because they don’t really have to.
Vertical vs Lateral Innovation
There is clearly some reduction of innovation and some increase in innovation in both a society with patents and without patents, but none of sides(the pro– and anti– IP people) seem to realize this. There are no clear definition of what kinds of innovations are promoted by patents and what kinds of innovations are not. So lets define these two innovations, Vertical Innovation, and Lateral Innovation.
Vertical Innovation is when a new product is innovated based on merely a small amount of added new technology, for example adding the facility of watching videos on an MP3 player, or adding a new metal on an alloy best suited for making railway tracks which now reduces its ability to expand and contract in heat and in cold, or creating an AIDS vaccination by using the results, effects, and formulas of 10 different immunity vaccines.
Lateral Innovation is when a new product is developed which provides same functionality as a previously existing product but it tries to achieve that in a different manner. For example a new motorcycle is developed which uses fluids load-balancing(just making it up) for more stability because a motorcycle is already developed and it is patented, or a new type of Fan is developed which is embedded in a box because the regular fan is already developed and patented.
Patents only promote Lateral Innovation, and allow very slow vertical innovation, on the other hand a non-patent society promotes vertical innovation and allows very slow lateral innovation. Is either of them better than the other? Well the truth is, although you could make an equally strong case for the need of lateral innovation(or even a mixture of both by promoting a limited patent system), you cannot argue about the fact that a non-IP rights society allows its products to be reached by more and more people. If lateral vs vertical innovation was the only point of debate then there is literally no reason to choose one over the other, but the truth is, we live in the world of scarcity. We have property rights in tangible things only because if I create a loaf of bread, only one person can consume it, so its necessary to exclude others from consuming that loaf and give its ownership to its creator, but if that loaf of bread could be copied and distributed among millions of people and thereby satisfying the hunger of all those men, then forcing exclusion of other individuals from consuming it is just inhumane.
Its true that if you put your labor into an idea then you should be allowed to consume the fruits of it, but the only reason why you put that much labor into that idea(or innovation or discovery) is because you were excluded from using someone else’s labor. Intellectual Property is a classic solution created by the problem itself, just like everything else in the world done by the government.