Archive for May, 2008

Innovation, Gladwell, and Those Nasty Things Called Patents

Gladwell’s article is a good read, and his prose is as tightly threaded as ever, even if it sometimes colors itself purple come paragraph end. Gladwell is the prince of grand one-liner metaphors that bring down the curtain on his sections’ endings, and I don’t mind that one bit.

Stop reading this, and go read that. A duplicative summary is a waste.

I read Mike Masnick regularly and consistently enjoy his writing on the nature of innovation and how it happens. But I’m not sure about one of his main criticisms of Gladwell’s piece—that, “if these ideas are the natural progression, almost guaranteed to be discovered by someone sooner or later, why do we give a monopoly on these ideas to a single discoverer?

So let me make a surprise leap to the defense of Gladwell. Let’s suppose, probably correctly, that the purpose of intellectual property is to stimulate innovation.

Sometimes this premise gets misunderstood. Lessig explains how this misunderstanding works in Free Culture:

Creative work has value; whenever I use, or take, or build upon the creative work of others, I am taking from them something of value. Whenever I take something of value from someone else, I should have their permission. The taking of something of value from someone else without permission is wrong. It is a form of piracy. … This view runs deep within the current debates. It is what NYU law professor Rochelle Dreyfuss criticizes as the “if value, then right” theory of creative property—if there is value, then someone must have a right to that value.

This concept of “if value, then right” gets causation exactly backwards. In these terms, the statement formulated correctly would look more like “iff right, then value.”

What does that mean? It means that there should be this set of intellectual property rights if and only if there would not be the value without them. Of course, this works on the margin and actually looks something like this: The actual world should be the possible world with some set of intellectual property rights if and only if that set of rights means greater value than what’s in some other possible world that’s identical but for lacking that set of rights.

In other words, we ask, Is the value of the stimulated innovation greater than the deadweight loss from monopolistic price-setting of the innovation that would have happened anyhow?

“Multiplicity,” however, seems to make for stark evidence against the need to stimulate. It seems to say that the value would be around even in the absence of the right: “The sheer number of multiples could mean only one thing,” Gladwell writes. “Scientific discoveries must, in some sense, be inevitable. They must be in the air, products of the intellectual climate of a specific time and place.”

Multiplicity says that possible worlds that are like ours but that don’t have something like our set of intellectual property rights probably have about as much value—if not more.

But why is this so? The mere fact that people in our actual world tend to have the same ideas at the same time surely doesn’t imply as much. So what if nine people invented the steam engine and two invented the telephone at once?

They were all presumably looking to create value for the world and keep a part of it for themselves—probably enough, on average, that they could consider themselves rich. Alexander Graham Bell and Elisha Gray worked within the same legal incentive structure. As Gladwell writes, “the two filed notice with the Patent Office in Washington, D.C., on the same day.”

Even if the ideas themselves are inevitable, it’s not at all clear that the pace at which we as humans arrive at them is also inevitable.

Do patents speed up that pace? How much? Enough, on average, to compensate for the deadweight loss they create at any given time-slice T compared to T-1?

And what about pure scientific discoveries? Gladwell quotes William Ogburn and Dorothy Thomas, who compiled one of the first lists of “multiples”: “The law of the conversation of energy, so significant in science and philsophy, was formulated four times in 1847…. They had all be anticipated by Robert Mayer in 1842.”

That’s all fine and good, but none of them was chasing a Nobel. Had the prize been around in the middle of of the nineteenth century, is it possible that one of them, or someone else, would have endured a few more sleepless nights, hustled a bit more, and put together the law earlier?

Of course it’s possible. But the way to know about whether intellectual property regimes, or fancy academic prizes, stimulate creative and innovative thinking must be comparative. It must be measured across possible worlds.

In the end, Masnick helps me make my point: “Yet, if Gladwell’s premise is correct (and there’s plenty of evidence included in the article),” then inventors’ “efforts shouldn’t be seen as a big deal. After all,” he continues, if it weren’t for some inventors, “others would very likely come up with the same thing sooner or later.”

I take no position on whether our set of intellectual property rights is ultimately helpful (though I doubt it is). The point is that there probably is some set of rights that is helpful—precisely because other inventors really would come up ideas later without it.

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