Do Patents Encourage or Hinder Innovation? The Case of the Steam Engine
Patent Law Is Highly Controversial
Many economists are in love with the idea of a natural experiment. A natural experiment is a turn of events that enables a clean comparison between two different economic-policy alternatives. For many economic policies we do not have the good fortune of a natural experiment. In these cases economists must fall back on other less-reliable modes of econometric analysis. Fortunately for other economic policies nature has been kind enough to provide us with the laboratory we need.
The Patent Controversy
Today one of the most controversial issues in economic policy is that of patent law. Is a patent just an extension of property rights to the realm of ideas? Or is it an unwarranted interference by the government into the rights of individuals who have purchased goods and services to use them as they see fit? Should the Western system of patents be extended worldwide? Or should we get rid of patents entirely? Is the patent system responsible for modern miracle drugs? Or is it to blame for the millions dying of HIV in Africa? Do patents lead to greater innovation and economic growth? Or do they kill the goose that lays the golden egg?
The issue of whether patents are genuine property rights or unwarranted government interference cannot of course easily be answered by a natural experiment. We will leave that discussion to philosophers. The impact of patents on innovation does have an objective answer. In this case history instead of nature has been kind enough to provide us with a wonderful natural experiment. This experiment took place in the county of Cornwall, England, between 1772 and 1852. It was there, in the extreme southwest of England, in the wet depths of the Cornish copper and tin mines, far removed from the supply of coal in Wales, that the steam engine was pioneered.
To examine innovation in steam technology, we need a measure of how good a steam engine is. One important measure is the amount of work delivered by a given amount of fuel. This can be measured by the duty of a steam engine: the number of pounds of water that can be lifted one foot for each 94 pounds of coal consumed.
In 1772 steam engines were of the so-called Newcomen design of which the best had a duty of 10 million foot-pounds (10M). In 1777 Matthew Boulton and James Watt began selling the first steam engines with a separate condenser. These initially had a duty of 18M, rising by 1792 to a peak of 26M. There things rested until 1814 when the use of the high-pressure design of Richard Trevithick led to engines with a duty of 55M. The duty then rose relatively continuously until it reached a peak of 110M in 1852.
To summarize: During the 42 years from 1772 to 1813 duty rose 3.8 percent per year; during the 38 years from 1814 to 1852 duty rose more than twice as fast—8.5 percent per year. The evolution of the duty is charted in the figure. The state of innovation is best represented by the best engine currently being produced, but for completeness the average and minimum duty of constructed engines is reported. The decline in duty growth after 1852 reflects both the general decline of the Cornish mining industry and the more difficult conditions in which steam engines were forced to operate due to the deepening of the mines.
As it happens there is one critical difference between the earlier period and the later period. By patenting the separate condenser Boulton and Watt, from 1769 to 1800, had almost absolute control on the development of the steam engine. They were able to use the power of their patent and the legal system to frustrate the efforts of engineers such as Jonathan Hornblower to further improve the fuel efficiency of the steam engine. By way of contrast, and fortunately, Trevithick did not patent his equally innovative high-pressure design.
Ironically, not only did Watt use the patent system as a legal cudgel with which to smash competition, but his own efforts at developing a superior steam engine were hindered by the very same patent system he used to keep competitors at bay. An important limitation of the original Newcomen engine was its inability to deliver a steady rotary motion. The most convenient solution, involving the combined use of the crank and a flywheel, relied on a method patented by James Pickard, which prevented Watt from using it. Watt also made various attempts at efficiently transforming reciprocating into rotary motion, reaching, apparently, the same solution as Pickard. But the existence of a patent forced him to contrive an alternative less-efficient mechanical device, the sun and planet gear. It was only in 1794, after the expiration of Pickard’s patent, that Boulton and Watt adopted the economically and technically superior crank. The impact of the expiration of Watt’s patents on his empire may come as a surprise as well. Far from being driven out of business, Boulton and Watt for many years were able to charge a premium over the price of other steam engine manufacturers.
Here we see clearly the upside and the downside of the patent system in action. The upside is that it may be the case that the prospect of a 31-year monopoly induced Watt to spend three and a half years of his life—between late 1764, when he first was asked to repair a steam engine, and mid-1768, when he applied for patents on his improved design—working to improve steam technology.
The downsides are two. The first is that the reward to success bears no relation to the cost of invention. In what respect is it necessary, reasonable, or fair to grant a 31-year monopoly and make a man fabulously wealthy because he spent a few years working on a project that benefited his fellow man? Certainly this kind of inducement was not needed for Trevithick, whose contribution to steam technology raised the duty 110 percent as against Watt’s contribution, which raised the duty only 80 percent.
The second downside of the patent system is the devastating effect it has on incremental innovation. From 1786 to 1800 there was no increase in the duty of steam engines at all, as Boulton and Watt successfully sought to prevent competition by suppressing innovation. This should be a cautionary note for people who think that the current wave of patent litigation triggered by a system of software patents created by the courts is likely to have a beneficial impact on software innovation.
Collaborative Innovation
For the 11 years following the end of the Boulton and Watt monopoly, Cornish mining activities underwent a period of slackness, as the mine adventurers were content with the financial relief coming from the cessation of the premiums they had paid to Bolton and Watt. As a consequence they neglected the maintenance and the improvement of their engines. This situation lasted until 1811, when a group of mine captains decided to begin the publication of a monthly journal reporting the relevant technical characteristics, the operating procedures, and the performance of each engine. Their explicit intention was twofold. First, the publication of the reports permitted the rapid individuation and diffusion of best-practice techniques. Second, it introduced a climate of competition among the engineers entrusted with the different pumping engines, with favorable effects on the rate of technical progress. Joel Lean, a highly respected mine captain, was appointed as the first engine reporter. The journal would later be called Lean’s Engine Reporter. During the 31 years after 1811 this collaborative competitive effort at innovation raised duty by more than the great “breakthrough” of Watt ever did.
It is worth remarking another important feature of the process of technical change in Cornish engines during the collaborative period. Most engines were single-cylinder, high-pressure, single-acting engines, with a plunger pump of the type originally erected by Trevithick in 1812. Interestingly enough, however, alternative designs were never completely ruled out. For example, in different periods, engineers such as Arthur Woolf and James Sims continued to experiment with compound engines. Throughout this period, the development of the Cornish engine remained a fluid state and this facilitated a more thorough exploration of alternative designs.
The astute reader will no doubt notice that the collaborative innovation occurring after the expiration of the Watt patents resembles nothing so much as modern open-source software development. Like with open-source software, altruism and socialism played no role—just good old-fashioned capitalist incentives. Engineers were recruited by captains of the mine on a one-off basis to build and design an engine. Engineers were in charge of the design and they supervised the erection of the engine that was commissioned to them. They also provided directions for day-to-day working and maintenance of the engines they were entrusted with. Thus the publication of technical information concerning the design and performance of different steam engines permitted the best engineers to consolidate their reputation and improve their career prospects. Over time, this practice gave rise to a professional ethos favoring sharing and publication of previous experiences.
Much of the free/open-source-software industry operates this way today, with software engineers competing for future business through the quality of their current innovations. Sharing of information is a key part of this competition. If Linus Torvalds, creator of the Linux kernel, is not nearly so rich as Bill Gates, he is nevertheless richer than most of us. (See Michele Boldrin and David K. Levine, “Open-Source Software: Who Needs Intellectual Property?” The Freeman, January 2007.)
Even the modern controversy over the current effort of the Free Software Foundation to limit software patents through the General Public License Version 3 finds reflection in the earlier Cornwall experience. Familiar with the negative impact of the Watt patents on innovation, Cornwall mine engineers were reluctant to patent their inventions. From 1781 to 1852 Cornish residents took out a grand total of 15 patents on steam technology—against 994 patents on steam technology in all of England during that period. Will it surprise you to learn that the area with the fewest patents also was the area that contributed the most to the innovation and development of steam technology?
One may wonder why development in an obscure corner of England should draw our attention. As it happens, the design of fuel-efficient high-pressure steam engines did not only serve to improve the efficiency of pumping water out of mines in one small region. It is the fact that efficient high-pressure engines can be made light and compact and do not require much weight of fuel that made possible such modest advances as . . . the steam train, the steam boat, the steam jenny, and the steam just-about-everything-else. In short—the steam engine that we imagine as the centerpiece of the Industrial Revolution, the key link that took us from riding horses to being frequent fliers—was not the product of the inventive genius of James Watt. When the Boulton and Watt monopoly expired in 1800 steam engines were used only to pump water out of mines. The earth-shattering innovation of widely usable steam engines was the product of the efforts of Joel Lean and dozens of other equally anonymous Cornwall mining captains and engineers. It is equally a tribute to their steady innovation without making use of patents.
Comment by Levon on 3 January 2009:
Excellent article.
It seems patents might be called legalized monopoly. I look forward to a discussion on the economic impacts of monopolies. How do monopolies impact innovation, income, equality, prosperity etc.?
Comment by Chris on 11 January 2009:
I am about finished with Thomas Friedman’s “Hot, Flat, and Crowded,” in which he advocates a new Clean Energy System as opposed to the Dirty Fuels System we’ve been using since the Industrial Revolution.
The authors here should consider an article on the role of public utilities in the United States, and how their government-granted monopoly affects the rate of innovation in clean energy technology as well as energy conservation.
Comment by vince beazel on 19 January 2009:
We are seeing the end of the energy monopolies; may the same open-source spirit serve the clean energy field in the decentralization of power in my mission with our radio shows.
http://BlogTalkRadio.com/AlternativeEnergyCom
Comment by davidc on 19 January 2009:
Sex, science and profits: Kealey has an entire chapter looking at the development of the steam engine. And another great one on the use of patents in todays world. Worth a look for those interested in the role of patents in technological progress
Comment by MarkH on 19 January 2009:
Patent rights do create legalized monopolies and, as a consequence, impede development of their markets while they are in force. However, a complete evaluation of their impact should include the incentive patent right provide. How much additional dollars are allocated to innovation because discovery can be protected for a period of time?
Yet, even if the benefits of patents do not entirely offset the early adoption costs they impose, it would be wrong to entirely exclude ideas from private property protections. Would we extend an elimination of patent rights to copyright laws?
Though private property provides the most efficient macro allocation of resources, it cannot be said to do so in every situation. Property owners may choose uses that are suboptimal from a macro stand-point based on their personal preferences. That is within their discretion and is why we call it \"private\" property, we protect their right to make those decisions.
An evaluation of patents rights must be made in same context. We can identify and measure the efficiencies or impediments they create, but in the end we must acknowledge a right is a right.
What becomes arbitrary is the period over which these rights should extend. What becomes problematic is the definition of patentable ideas. Do we limit patents to a more narrower set of innovations, or do extensions of previous ideas to new applications qualify? Who draws the line and on what basis?
Comment by Robert O'Callahan on 23 May 2010:
The problem with treating patents as a fundamental right is that they forbid independent reinvention, thus extinguishing other more fundamental rights.
For example, I labour away in my workshop inventing a wonderful new kind of machine, and start selling them to my neighbours. Then a man, whose person and work I’ve never heard of, shows up and tells me that the government has granted him a monopoly on my invention and I must stop using and selling my invention, or pay him whatever he demands. My fundamental right to the fruits of my own labour has been extinguished.
Such an outcome is an affront to liberty and justice. *At best* you can only justify the patent system by appealing to practical benefits in the advancement of science or industry, benefits sufficient to justify this trampling on the rights of others. If those benefits don’t exist, the system must go.
Comment by Russell Barton on 26 May 2010:
If “When the Boulton and Watt monopoly expired in 1800 steam engines were used only to pump water out of mines” why would there have been any concerns about rotary motion?
The answer is that the quoted statement is false. Boulton saw the mining market as limited and pushed Watt to develop rotary engines so that the Mill market could be pursued. By 1800 there were more Watt engines in mills powering manufacturing than there were being used as pumps.
Watt’s opposition to the use of high pressure steam may have held things back and his patent may have aided him in doing so, but to down play his huge role in the industrial revolution is silly.
Trevithick’s high pressure steam engine which lead to steam trains etc was invented in 1799 (before Watt’s patent expired) and was influenced by work on high pressure steam by Watt and Boulton’s right hand man William Murdoch. His most important work was in 1799-1808 culminating in the “catch me who can” train before Lean’s Engine Reporter was published. Trevithick also died penniless and miserable so perhaps isn’t the best economic role model as brilliant as he was as an engineer.
Comment by James Madison Fan on 26 May 2010:
You can find another natural experiment that contradicts Buldrin, Levine, and Nuvolari’s (BLN) 1812 example here in 2010. Does it seem odd to anyone besides me they have to go back 200 years to find an example if the situation is as broken as they seem to think it is?
Regardless, the example I’m thinking was ruled on earlier this year. A man invented a device that would protect workers at Home Depot from injury while using a rotary saw. Home Depot was spending millions every year due to Worker’s Comp claims. They installed half-a-dozen of these devices in different stores and they worked greatl. Home Depot was in the process of buying the rights to the device but backed out at the last minute. Months later Home Depot reverse engineered the device and installed it in every store cutting their cost from millions per annum to thousands. The inventor sued for patent violation and got multiples of what Home Depot would have had to pay him if they had acted in good faith.
For every example BLN come up with that demonstrates how patents and copyrights inhibit innovation history provides dozens of examples of people being exploited by companies seeking to grow rich on the work and creativity of other people such as Robert Kearns who invented the intermittent windshield wiper which was stolen by Ford in much the same way Home Depot did above. The number of blatant patent and copyright infringements that take place on a yearly basis by large corporations is obscene and more often than not they get away with it.
I would ask BLN or their supporters to revisit one of their questions with a slight adjustment:
‘In what respect is it necessary, reasonable, or fair for a mega corporation to use (steal) someone else’s idea when the inventor invested years of his life as well as his own money working on a project that benefited his fellow man especially when these corporations are already fabulously wealthy?’
Seems to me that anything someone does that ends up making himself money and benefits his fellow man at the same time is the core goal of Capitalism but maybe BLN have some economic insight I lack and they will see fit to educate me?
In addition to this BLN’s assertion is flawed. Innovation on a product can continue even under the aegis of a patent. Items that enhance the original product can be patented. So if I invent a Steam Engine and someone else comes up with a better design the improvements can be patented so innovation is not stifled only reproduction and use without credit.
I’d also point out BLN’s example does not demonstrate their point. Watt could have paid Pickard to use the flywheel design in the same way he expected to be paid for his own intellectual property. The failure resides in Watt’s desire to invent a process that would exclude Pickard not the concept of intellectual property.
In addition to the above there is the issue of intellectual and financial investment on a macro level such as the Research and Development of new technologies that range from medicine to software. If Dupot invests a couple billion on a cure for cancer there may be an altruistic mandate for them to share this discovery but they have a fiduciary responsibility to their shareholders not only to recoup the money invested in the R&D but to make a profit. How would BLN suggest they recoup this investment, especially when there was no guarantee they would succeed? Shouldn’t great risk yield an equally great reward?
I don’t see how BLN’s assessment holds up when exposed to Capitalist and Libertarian ideals? If I don’t own what goes on in my head, what my money buys, and what my hands make then it seems to me any other claim of ownership, including my home, is entirely hollow.
Comment by Peter Giancana on 29 June 2010:
1. The authors seem to assume a lot about why steam engine innovation took the path that it did. For example.
“By patenting the separate condenser Boulton and Watt, from 1769 to 1800, had almost absolute control on the development of the steam engine.”
No. They had control of their approach to the problem of steam energy. Anyone inclined to do so cuold have taken a different approach.
“The second downside of the patent system is the devastating effect it has on incremental innovation. From 1786 to 1800 there was no increase in the duty of steam engines at all, as Boulton and Watt successfully sought to prevent competition by suppressing innovation.”
How do the authors know this? Maybe there was smiply no one interested in the problem who was also smart enough to get to a useful innovation between 1786 and 1800. Maybe there were ten thousand socio-economic factors that kept people from thinking about steam engines while more pressing problems daily survivial remained.
“For the 11 years following the end of the Boulton and Watt monopoly, Cornish mining activities underwent a period of slackness, as the mine adventurers were content with the financial relief coming from the cessation of the premiums they had paid to Bolton and Watt.”
The authors seem to know what makes a Cornish miner content.
2. Some of the authors’ comments are jsut wrong. For example,
“They were able to use the power of their patent and the legal system to frustrate the efforts of engineers such as Jonathan Hornblower to further improve the fuel efficiency of the steam engine.”
No. They disclosed to Mr. Hornblower what they did, and Mr. Hornblower was free to improve that design or take a wholly different approach.
3. Some of the authors’ comments seem contradictory. For example,
“By way of contrast, and fortunately, Trevithick did not patent his equally innovative high-pressure design.”
So, how was it that Trevithick was able to innovate? Wht was he not frustrated, as the authors assume Hornblower was?
4. The authors give little credit to limited monopolies as a cause of innovation, and yet, I read
“The most convenient solution, involving the combined use of the crank and a flywheel, relied on a method patented by James Pickard, which prevented Watt from using it. Watt also made various attempts at efficiently transforming reciprocating into rotary motion, reaching, apparently, the same solution as Pickard. But the existence of a patent forced him to contrive an alternative less-efficient mechanical device, the sun and planet gear.”
So, the blocking patent forced Watt to “make various attmepts” and “contrive an alternative less-efficient mecahnical device”. The device Watt contrived may have been less efficient for his immediate purposes, but if the flywheel had been available to Watt, then Watt does not go on this side journey of attmepting and contriving.
5. The authors write:
“During the 31 years after 1811 this collaborative competitive effort at innovation raised duty by more than the great “breakthrough” of Watt ever did.”
Sure. Standing on the shoulders of Watt, who, according to the authors, may have been incentivized by the promise of a monopoly.
6. The authors position “collaborative innovation” as a wholly better framework then limited monopolies. But, as others have already pointed out, you can find countless situations on both sides where one or te other approach would lead to innovative solutions faster or slower, based on a myriad number of factors that have been glossed over in this piece.
Comment by Jim Spencer on 29 June 2010:
I tend to agree with posters Fan and Giancana. Another thing that is not mentioned is that all of these patents are for sale at the right price or any number of business arrangemeants could have been made short of a sale. Maybe Pickard’s crank and flywheel were what was needed, but how much use were they to him without a propulsion system? I’m sure a business arrangement could have been reached. There are any number of patented mechnisms that are found in numerous applications, all with patent holder permission.
Comment by montestruc on 18 August 2010:
This seems a classic example of cherry picking your data, as in you pick a few data points and claim they prove something.
You do not cite enough cases of patented innovation vs. unpatented innovation to even show a true standard deviation. I think you should have not less than three innovations of each class before you can claim anything remotely approaching statistical significance.
Then as others point you Watt is forced to innovate further and develop a sun and planet gear system.
This sort of thinking is not at all scientific, other than in the same way “communist science” proved the economic progress and dominance of the USSR.
This sort of thinking is, I think, based on the childish idea that if theft is easy, then it must be morally acceptable.
Taking the product of another man’s labor without his agreement is immoral, and robs all men.
You have two fundamental innovations, that of Watt, that of Hornblower, and
Comment by Sepp Hasslberger on 5 September 2010:
Some commenters criticize the authors of this article for assumptions they say are incorrect. I would like to support them for having the courage to examine and criticize a system that has been established to protect economic interests, but that has never been proven to actually do much more than make a few people fabulously rich at the expense of everyone else and – at times – at the expense of technological progress.
Why is it that the disc break, invented by Italian engineer Giovanni Dotto, although vastly superior to the drum break design in use in all early cars, was not adopted by the major car and truck manufacturers, until Dotto’s patent had expired and the innovative design was no longer protected? Did patenting the disc break protect Dotto’s interests? No, it didn’t. Did patenting the disc break promote early adoption and use of an innovative design that vastly improved driving safety? No, it didn’t.
Another, more current example: A man named Theodore Litovitz discovered that by adding low-frequency electronic “white noise” over the top of a cell phone signal, most of the biological effects of the radiation that were known at the time could be reversed.
http://tinyurl.com/325fxtx
Litovitz wrote several convincing papers on this subject and patented his work, but it does not seem to have been taken up by the cell phone industry. Instead, that same industry does everything it can to deny and bury any evidence that there ARE biological effects of pulsed microwave radiation and that their products are a ticking time-bomb for the health of users. Tumor incidence has a nasty habit of appearing with a long delay, years or even decades after continuos exposure.
Has patenting the solution to the problem of biological effects of pulsed microwave radiation by Litoviz served his economic interest? No, it hasn’t. Has the patent led to the adoption of a life-saving technological hack that would make cell phones and other wireless apparatus safer for users and non users? No, it hasn’t. On the contrary, one might argue it has induced the industry to try and avoid the additional cost of licensing, and to bend science in the process, to the detriment of many people’s health.
I have brought up the question of patents in 1989 in an article titled “The Inventor and Society”
http://www.hasslberger.com/pat/pate_1.htm
and have argued that, on balance, patents have done more harm to technological progress than they have helped. Innovation does not depend on the inventor being compensated with huge sums and a long term monopoly. It depends on human creativity and a spirit of competition.
There is no question in my mind that patents (and copyright) should be abolished or at least severely limited.
One change that would make sense could be a “fair compensation” provision that allows the originator of an idea the right to a reward, without hindering others from adopting or in their turn monopolizing the idea. An agreed percentage of the income from sales to the inventor/creator, collected without a huge bureaucracy intervening (as is the case today with copyright) would be sufficient incentive, without stifling adoption.
Comment by Sepp Hasslberger on 5 September 2010:
Hmmm – can’t edit a comment, so here is a correction.
“One change that would make sense could be a “fair compensation” provision that allows the originator of an idea the right to a reward, without hindering others from adopting or in their turn monopolizing the idea.”
Should really be: One change that would make sense could be a “fair compensation” provision that allows the originator of an idea the right to a reward, without hindering others from adopting the idea or allowing them to monopolize it in their turn.
Pingback by How patents prevent rather than promote adoption of new technologies | FEEDER on 6 September 2010:
[...] Do Patents Encourage or Hinder Innovation? The Case of the Steam Engine [...]
Comment by Robert A. Patterson on 6 September 2010:
The problems with not patenting something like a generator or for that matter any mechanical device is that no manufacturer will mass-produce the product because there is no license-ability to the product. So what happens is a manufacturer spends millions to tool up for a mass production run and then along comes Joe-manufacturer producing the same product for 5-bucks putting the other manufacturer out of business to the tune of millions of dollars.
So much for fair competition, you just put a whole company out of business, they can’t pay their employ’s their employs can’t pay their bills they can’t feed their children an so on add-nazism and the whole idea of open source technology comes crumbling down!
Pingback by P2P Foundation » Blog Archive » The constraining role of IP and patents (1): case study of steam engine innovation on 18 September 2010:
[...] Article: Do Patents Encourage or Hinder Innovation? The Case of the Steam Engine. by Michele Boldrin, David K. Levine, and Alessandro Nuvolari. The Freeman, December 2008 • [...]
Comment by Sneak on 22 September 2010:
Patents are debatebly necessary to enhcance the propensity to spend time researching an innovative idea instead of spending that time working.
This creates the opportunity for ideas to be created and brought to life that would not have been without patents.
Comment by Joe Schmoe on 1 November 2010:
Let’s do a thought experiment on a more recent idea: Drug patents.
Thanks to the FDA’s mandates, the average pharmaceutical company spends, what, something like 14.5 years on average testing their product to demonstrate that it is safe? And patents only last 20 years, of course. So the company has 5.5 years to recoup their investment before the drug is available in the open market.
I’ve seen many free market supporters allege that the FDAs role inflates drug prices and causes companies to abandon testing on more specialized drugs for unique and unusual conditions and correspondingly lower profit potential.
Without patents, the drug would immediately be available for sale by generic manufacturers, which would most likely end all drug research by the pharmaceuticals. Now, I can imagine entrepreneurs and community college chemists coming together to continue research, but I don’t see how this improves conditions when it comes to innovation (in particular, because even when you’ve developed the drug you still have to spend millions of dollars and 14.5 years testing it). The only thing I can imagine is the companies banding together in some kind of cartel to split the cost amongst the industry.
I’m not seeing how removing patents helps this scenario.
Pingback by This Is Free Trade? | The Freeman | Ideas On Liberty on 7 December 2010:
[...] “Do Patents Encourage or Hinder Innovation? The Case of the Steam Engine” by Michele Boldrin, David K. Levine, and Alessandro Nuvolari, and [...]
Comment by Deefburger on 21 February 2011:
A patent is a positive right, and it is only useful if it can be enforced. The cost to enforce positive rights is a direct drain on the income one might gain from holding the right.
However, the positive right and the enforcement of it has a negative impact on the market, and that impact results in a reduction in potential sales long term.
In short, the creation of a positive right is the creation of a loss at the start, with a long slow death to the right, resulting in a release of the actual gain of the innovation by the removal of the positive right to restrict it’s spread into the greater good of the market.
What is more conducive to personal gain? Breathing freely or protecting your breath by holding it? What is a patent except a decree that nobody else can breath YOUR air so YOU won’t die trying to hold your own breath?
Comment by Deefburger on 21 February 2011:
If a patent represents a move forward in innovation, how does the assumption of a right to restrict it’s use equate to a gain to the greater good? The potential to create gain in the market is already reduced by the automatic assumption of the restriction of use in the positive right. The greater potential gain is in the spreading of the innovation and it’s use, and re-use, as both a gain in usefulness from the innovation now and the inspiration of new innovation through the free improvement of the current one.
The rights holder may see a much larger gain locally, to himself, but the gain to the system overall is reduced from what could be expected if the gain were not concentrated in one place, the patent holder.
Same is true of any positive right created. The gain one sees is limited to those who hold the right, not the general populous. To the general populous, the positive right is a loss in rights overall.
Examples of positive rights are things like:
Power to use force.
Power to emit bills of credit.
Power to tax.
Power to restrict movement.
Power to control trade.
Power to trade that excludes all others.
Power to _________________(Fill in the blank, someone probably has had it as a positive right at some time or other.)
No positive right to anything can be created that is effective on it’s own merits. All of them require the right to the first use of force as a support of the positive right itself. That’s two wrongs being used to make a right. Nature will not suffer it in the long term.
Comment by Rodger on 15 April 2011:
RE: cancer, pharmaceutical corporations, and patents
There have already been simple and effective cures for cancer for over 70 years. Look up “Ten Cancer Cures That Worked” by Daniel Haley.
However, the cures have been suppressed by the FDA, the AMA, and the medical establishment.
One issue for the pharmaceutical corporations is that they can’t patent such simple cures. Ie. the electro magnetic frequencies that killed cancer, discovered by Royal Raymond Rife. And so, there are no studies done on these cures by corporations. Or universities, which are partially funded by the corporations. Or government, which is filled with officials who came from from the pharmaceutical corporations.
The medical establishment actually makes more money “treating” cancer with very expensive chemotherapies and drugs. According to one website, $300K to $1 million per treatment per year. Good revenue.
If the corporations were to cheaply and effectively cure their patients, they would have far less cash flow and profits. The documentary, The Beautiful Truth, (about the Gerson Diet), points out that there are actually more people working in the cancer business in the USA, than there are cancer patients.
In addition, the “treatments” are very ineffective. One study (Search for: “How Effective is Chemotherapy”, and cancershield.net) noted that the average five year survival rate of cancer patients who took chemotherapy was around 2%! Yes, there is variability in the cancers. About 40% of Hodgkins lymphoma patients survived. But 100% of the prostate cancer patients died. In spite of the expensive treatments and drugs. So, 98% of chemotherapy patients died within 5 years!!!
So, as far as patents and innovation, I would have to say that it’s not just patents that affect innovation or not. It’s just one part of the whole business model of the existing establishment that makes more money doing less effective things while retaining their cash cows. And the public policy that supports it.
The innovative cures for cancer have already been developed and proven.
Comment by P. Huston on 3 May 2011:
I found this article quite entertaining. To conclude that the patent system slowed down the innovation of the steam engine during the time when innovation doubled every 100-150 years seems a little far reaching. This simple notion of open innovation without control would work great in a society where everything is free. But that doesn’t exist.
To say that “If Linus Torvalds, creator of the Linux kernel, is not nearly so rich as Bill Gates, he is nevertheless richer than most of us.” was highly humorous. What this would be called is he preferred to “share the wealth”. This caters to a socialist society…a society not known for it’s innovation advancements.
Let’s use a more modern example…data security. I have been involved in the business side of data security where companies store millions of financial records in their databases. The last time I checked, when you want to keep a secret, you don’t tell anyone. Yet in the data security industry, all of the techs were convinced that publicizing security standards would generate feedback from the industry to help improve. PCI is the worst. Those standards are published for anyone. Wow! The hackers are having a heyday…it’s like giving the answers to a math test…all you have to do is back into the equation. Ask Heartland Processing, RBSLynk Processing, etc. how that worked for them? They were compliant but it still cost them several hundred million dollars each. And the cost for compliance is skyrocketing and data is still being compromised…this points to me that sharing isn’t working.
You can bitch and moan all you want about Bill Gates, but he delivers a product that is consistent in quality and performance. Not a million different variations of a similar program that is available with open source. Whatever they (open source) uses for quality control is quite lacking in an industry (software) where there are standardized QA controls. You have no idea what you are getting. Oh I forgot, you don’t want no stinkin’ control, you just want to do whatever you want. Hmm…maybe that is the problem. I would rather be one of few with similar products in the marketplace than in a marketplace where anyone working in their underwear in the basement of their parent’s home can push out questionable product into the marketplace
Remember the dot bombs, there was a lot of sharing going on and everyone touted proprietary technology and everyone had a patent and that was their only asset. Now your hypothesis says this hindered innovation afterward, yet true innovation was never impacted, it barely slowed down
Patents provide a means by which an inventor can protect his inventions and be able to control it’s destiny without copycats taking and destroying the marketplace with inferior products. I don’t know of many inventors (not corporately controlled) who wouldn’t be willing to license their patents. However, you don’t like the fact that you would have to pay for the license. Hmmm…you want it for free without any strings…all for the advancement of innovation.
Sounds lame to me…of course if you actually did have an innovation that was purely your own and not copying someone else’s invention, I am sure you would see the importance of the patent. However, history has shown that being an inventor does not make you a smart businessperson. Are there inventors that made bad business decisions and lost control of their invention or patents. Yes…that happens in a free society. There are no guarantees in life and there are no free rides.
I look at patents just about every day and all the time I come across several where they have improved an invention someone else patented. They actually name the patent and inventor, they just have to prove that they have actually improved the patent through their own innovation, not just a copy of the invention.
I notice that only one inventor has commented on this topic and he seems to have sour grapes. If he had actually been able to make the money on the invention himself, would he have commented at all or with the same viewpoint? I think not. He seemed to have forgotten…”There are no guarantees in life and there are no free rides.” Because you invent something and get a patent is only the beginning of the process, making something of it is completely a whole different ballgame. Some make it, some don’t. That has nothing to do with the patent system.
The patent system is there for a reason and like it or not, it is not going away. You can work within the system or you can throw your ideas out to everyone and feel good about it when someone else patents your idea and makes all the money. I am a believer that the first one to market controls the market, but I am not naive enough not to have the patent process going on in the background.
Sorry for the long comment, but this side of the topic needed some attention. I personally do not know of anything in recent history where true innovation was hindered by patents. If something was to be held up by a patent, then I would question whether it really was innovation.
Comment by Arturo on 2 July 2011:
First of all Linus Torvald do not create de gnu/linux operating system, he only create the kernel and was the develoment of over the years with many people collaborating not only linus torvald.
Open source is collaborative effort of many people and that include big companies, is a form of make things.
Bill Gates is Billonary because he is good in business, linus torvald is only a programmer, Bill gates made his money before software patents impact the software industry like today, so microsoft take many peoples idea and implemented in own products, like the spreadsheet, the browser, the OS kernel, graphic user interface, ect, they bougth other people products and sell it as their own creation.
Comment by Joe on 12 July 2011:
I found a patent pump on the handle it reads pat jan 10 1812.
Comment by Cry Aboutit on 25 July 2011:
http://www.npr.org/blogs/money/2011/07/22/138576167/when-patents-attack?sc=nl&cc=pmb-20110723
Pingback by SALEM FARM SUPPLY, INC. ; Do Patents Encourage or Hinder Innovation? The Case of the Steam Engine | The Freeman | Ideas On Liberty « salemfarmsupply on 27 July 2011:
[...] Do Patents Encourage or Hinder Innovation? The Case of the Steam Engine | The Freeman | Ideas On Lib…. [...]
Comment by Juan on 28 July 2011:
Like someone writed before the problem is what is patentable and what is not. Every year thousands of pattetns are granted but how many of them are true innovations?. If you search patents in internet you will find many stupid pattents that anyone with common sense could have invented. Where is the innovation there? the problem are not the patents, the problem is the use of them by some companies to avoid competence, and without competence there is not free market.
Someone told before about cancer cure(I have family and friends that died). I can’t believe this is true because if it is the big phamaceutic companies and the people working in then are killers no mather their right to earn money, that is a genocide. I want to say that some inventions even real innovations shoudnt be patentable because the major humanity benefice. And if a company doesn’t invest at least let others to do it.
Pingback by tragedy of the patents « thoughts of a slowpoke on 4 September 2011:
[...] First of all, when discussing patents, one has to look at history a bit. Proponents of the patent system often like to argue that patents are what enabled the industrial revolution, since they gave incentive to Watt to invent the steam engine. This argument, however, completely ignores the fact that the subsequent monopoly on that invention essentially brought innovation on the steam engine to a halt for the next 31 years. Even worse, Watt himself was hindered by other patents from improving the steam engine, as competitors patented solutions to some problems, for example the crank and flywheel to deliver a steady rotary motion, which was patented by James Pickard. A great summary of this whole mess can be found here. [...]
Pingback by Do Patents Encourage or Hinder Innovation? The Case of the Steam Engine | The Freeman | Upstarta.biz on 6 September 2011:
[...] http://www.thefreemanonline.org/featured/do-patents-encourage-or-hinder-innovation-the-case-of-the-s... [...]
Comment by Daniel Knight on 10 September 2011:
http://eternian.wordpress.com/2011/09/09/what-if-patent-law-had-never-been-invented/
You should have used a search engine first to see if what you said was valid.
Comment by Daniel Knight on 10 September 2011:
@Robert A. Patterson
http://eternian.wordpress.com/2011/09/09/what-if-patent-law-had-never-been-invented/
You should have used a search engine first to see if what you said was valid.
(that first comment was meant for Robert)
Comment by Martin Treadgold on 8 October 2011:
The idea of a patent is sound, it protects the inventor’s IP, but recently we are seeing a rise in patent trading where a company can buy an entire patent solely on the basis that they can sue a rival company for profit, or put a rival company out of business.
Any form of Patent Trading should be made illegal, especially the ‘current owners’ of the patent are not the original inventors. This kind of patent use really hinders progress, especially in the consumer electronics industry where the whole business of suing, counter suing, is just nasty and childish, and lawmakers should be able to revoke the ownership of a patent if it is used in this way.
References to Google vs Apple debacle where google buys up patents from IBM to counter Apple suing Google.
It has to stop, its unethical.
Pingback by The Electric Leaf’s True Believers Won’t Leave Well Enough Alone | The Freeman | Ideas On Liberty on 20 October 2011:
[...] “Do Patents Encourage or Hinder Innovation? The Case of the Steam Engine” by Michele Boldrin, David K. Levine, and Alessandro Nuvolari [...]
Pingback by Cientifica’s white paper on nanotechnology in drug delivery (NDD) « FrogHeart on 8 December 2011:
[...] are a problematic area as there are arguments that current patent regimes are stifling innovation (Do Patents Encourage or Hinder Innovation? The Case of the Steam Engine; Patent Law Is Highly Contro…) while others suggest longer patent periods are needed (Drug Patents Stifling Innovation by [...]
Pingback by Against Patents - The Generalist on 13 January 2012:
[...] work of one man alone – they proceed in stages. For those in need of an empirical example, the case of the steam engine makes evident the hindrances to innovation caused by patents.[4] It’s important to note, [...]
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