Winners Always Win

XOR CursorOur intellectual property system has been broken for so long that most people can’t even see the problem. I remember back in the early 1990s, my friends and I often talked about software patents and how they were killing innovation. Things like the GIF image format and the XOR cursor could make me apoplectic. Over the last year or two, I’ve been hearing a lot more people talk about this—only three decades late! (I don’t mean to suggest that I was on the cutting edge.)

Now let me be clear. I’m with Dean Baker: we should rethink our entire patent and copyright systems. There are two arguments in favor of patents. First, patents encourage innovation. I think this a highly questionable statement. But even if one accepts it, there are other ways to encourage innovation. As a society, we are blinded by our approach to intellectual property. In fact, most people think these anti-free market laws are somehow God given.

The second argument in favor of patents is that it protects the “little guy” against the big corporations. I like this image of the individual battling against the system. But it is rarely, if ever, the case. Take the story of Edwin Howard, the inventor of FM radio, driven to kill himself when corporate interests blocked his new (And far better!) system.

Yesterday, Charles Duhigg and Steve Lohr wrote an excellent article about the software patent system, The Patent, Used as a Sword. It starts with the story of Vlingo, a company that created voice recognition software included in Siri in the iPhone, which was destroyed by a patent lawsuit that Vlingo won. It is a very familiar story.

They also note in the article that Apple and Google now spend more on patent lawsuits and purchases (which are often coerced in cases like Vlingo) than they do on Research & Development. That makes sense. Why should a company create intellectual property when they can just steal it?

This story points to an important aspect of our entire economic system: large companies use the legal system as a sword against small companies and individuals. Conservatives claim that the government should not “pick winners and losers.” But the truth is that through a broken intellectual property system that allows the powerful to always get their way, the government is picking winners and losers. It is simply doing it in the most unjust way imaginable. Conservatives don’t even see the problem given that they like this kind of “winners always win” market manipulation. And liberals don’t see it either because they are too involved using Siri on their iPhones.

Update (8 October 2012 12:41 pm)

Dean Baker chimes in on the Times article:

The one major error is that the piece implies at one point that the story with prescription drugs is better, if anything it is almost certainly much worse. The enormous patent rents that drug companies are able to earn (drugs that can be profitably sold for $5 are instead sold for 100 or even 1000 times this much with patent protection) give them a huge incentive to misrepresent their effectiveness and safety and to market them for inappropriate uses. As the NYT has frequently documented in news stories, the drug companies respond to these incentives as economic theory predicts.
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About Frank Moraes

Frank Moraes is a freelance writer and editor online and in print. He is educated as a scientist with a PhD in Atmospheric Physics. He has worked in climate science, remote sensing, throughout the computer industry, and as a college physics instructor. Find out more at About Frank Moraes.

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