IP != Capitalism

Fri, 22 Feb 2008 09:45:50 +0000

Here is a Techdirt article on IP law which I found interesting and is, I think, the first in a series. It's US centric, referring to the constitution, but the ideas at work are universal. After reviewing the writings of the founders the conclusion was that it was done...

However, it was clearly done with ambivalence, and the recognition that such "exclusive" rights could have more downsides than advantages. Note, also, that they were clear in their language, that the sole purpose of granting these exclusive rights was "To promote the Progress of Science and useful Arts." From that reading, it should be clear that any use of these types of monopolies in ways that do not promote the progress of science and useful arts is not covered by the Constitution at all.

The comments are interesting and, as you might expect, polarized. One comment that I thought particularly requires addressing was by Matt Fen:

Patents and IP are a good thing for the country and individuals. I have a patent. I am looking at starting a business around it. That business will take much capital. If I am going to pour my money or someone else's into the endeavor it clearly matters that I have exclusive control over the idea. If not, where is the incentive to risk treasure? This is fundamental to the success of Capitalism, and why other systems that may look good on paper fail.

It's really not clear to me at all why the commenters assertion that patents are "fundamental to the success of Capitalism" should be true. Patents may be good for the patenting company (although this is far from certain, just ask Charles Goodyear) and in some cases they may be "fundamental to one company cornering a market and making the maximum profit for itself" but this, to the best of my knowledge, is not actually a definition of capitalism.

In fact if we take a definition of capitalism from Wikipedia:

Capitalism refers to an economic and social system in which the means of production are predominantly private owned and operated, and in which investments, distribution, income, production and pricing of goods and services are determined through the operation of a market economy.

then the idea of the government interfering to grant monopolies to specific companies - and, in doing so, deforming the market economy - is, more or less, antithetical to capitalism.

In the commenters case he sees the path to success as being "owning the idea". Having a patent essentially means his company can be lazy, inefficient, do everything wrong, not serve customers but still, potentially, be very profitable because it will not have to put up with competition. I'm sure potential investors will love that.

As someone who is rarely short of an ideas I too hope, one day, to prosper through them. Given the reality of IP law today I guess that, despite my ideas springing from the wealth of knowledge freely given to me by those who have gone before, I guess that I don't rule out applying for patents. In our present system it may be in the individuals advantage in maximizing their potential returns.

But I would be in favor of a review of IP law that sought to redress the balance in favor of James Madisons view:

"But grants of this sort can be justified in very peculiar cases only, if at all; the danger being very great that the good resulting from the operation of the monopoly, will be overbalanced by the evil effect of the precedent; and it being not impossible that the monopoly itself, in its original operation, may produce more evil than good."

Curiouser and Curiouser! on ip-law

IP != Capitalism