Innovation, Technology and the Law: The Case of (Software) Patents. Rufus Pollock FFII-UK
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1 Innovation, Technology and the Law: The Case of (Software) Patents Rufus Pollock FFII-UK
2 Who Am I? Coordinator, FFII-UK Director, Open Knowledge Foundation Creative Commons...
3 [1] What is FFII?
4 Foundation for a Free Information Infrastructure
5 + More than 400 members, 1000 companies and supporters + Act as public interest group on policy regarding exclusion rights (IP) in information goods especially software patents
6 [2] What is a Patent?
7 (Temporary) Monopoly Rights over an Invention Patent right. (a) The exclusive right to an invention, and the control of its manufacture. [Webster's 1913]
8 [3] Software Patents:
9 Software Patents Patents over software algorithms. Examples: Amazon One Click Electronic shopping cart (Sun) Progress Bar (IBM) Multimap patent Many more... Estimated that there are 30,000 software patents granted by EPO (but are they valid...)
10 [Politics]
11 Political Scene Changing patentability in the US with extension to software (early 1980s) and business methdos (1998) Europe: desire from patent establishment to harmonize with US EU Directive started 1997/1998 on 'Computer Implemented Inventions'
12 Directive Would have legitimized software patents in EU But: July 6th 2005: directive rejected by a landslide at second reading
13 Political Economy Very unusual result IP normally just extended and extended without any evidence Why?...
14 Political Economy 2 IP is a one way street Those who gain the benefits of IP are concentrated those who bear the costs (e.g. future innovators and public) are diffuse. This leads to very different lobbying power Rights fundamentalism
15 [Consequences]
16 We Get Too Much IP Software Patents are the Classic Example
17 Innovation is Crucial to Growth Current levels of innovation are unprecedented. Difference between 1.5% and 3% rate is the difference between doubling economy in 48 years and 24 years Consider the web, internet etc
18 So costs are very high So putting much sand in the wheels of innovation, especially software, can cost us a lot Think about a world without the internet, the web etc... We need competition and open standards...
19 [End]
20 Innovation: software the site of VERY rapid innovation. Has also allowed new forms of production (F/OSS) Technology: technology is changing rapidly making software ubiqutous. Cost of communications and hardware continue to halve... Law: software patents have emerged over last 20 years. Now an EU directive.
21 Five Reasons Software Patents are Harmful: 1. Reward disproportionate to investment (software is about implementation not inspiration) 2. Ecology of software (componentization) 3. Copyright protects what matters (implementation) 4. Loss of competition very significant as low cost of entry 5. Large legal costs
22 In short: - Benefits are negative (harms innovation) - Costs are significant (impedes diffusion and reduces competition)
23 What fundamentally do we care about? Ans: Welfare Of Society (crudely: how well off we are in the widest sense)! Keep this in mind it's easy to forget!
24 [3] The Theory of Innovation or: What are Patents For and Why Should We Care About Them?
25 We care about technological progress (Innovation) WHEN it improves welfare of society (through econ. growth) - when costs > benefits
26 1. A juggling routine 2. A recipe for a cake 3. A new financial product 4. A faster algorithm for computing the square root of 2 on a computer 5. An encryption algorithm for communications 6. A pharmaceutical drug for combating AIDS such as AZT 7. A more efficient type of plough
27 Two steps in innovation: 1. Creation: actual invention (producing the first unit/copy) 2. Diffusion: people using the innovation
28 But: - Reduces diffusion by raising prices - Hurts other inventors who build on original invention - Transaction cost issues (gives power to large companies) - Bad patents
29 Inventions as Public Goods + Non-Rivalry + Appropriability and the Free Rider Problem + Up front fixed costs + But are they really...
30 So inventor might need temporary excludability to make money. Idea: Patents (temporary monopoly) encourage innovation
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