“The only original idea was Adam’s” goes the old saying, referring to how rare a truly “original’ idea is. Like Newton, innovators and creative types “stand[] on the shoulders of giants” by borrowing from and improving upon previous works. Innovation usually isn’t a process of great leaps coming from Eureka moments–it’s slow, incremental, and (directly or indirectly) collaborative.
Writing for The Interpreter, the blog of the Lowy Institute, Stephen Grenville argues for this view of innovation in the context of President Trump’s animosity towards intellectual property “theft”:
The short answer [to the question of whether and how much innovators should be rewarded] is: “it depends”. Society benefits from innovation, so invention should be encouraged, which means that innovators should be rewarded. But our present system of intellectual (IP) rights gives the reward (and the incentive for further innovation) in an inefficient way – by giving the IP owner a monopoly. Monopolies are inefficient – they restrict production, make excess profits, and may not foster further innovation.
Grenville uses a number of examples of IP “theft” to show the benefits of such stealing to progress. James Watt and Matthew Boulton invented and patented the steam engine, but it was only after the patent expired that the design was improved upon–Watt and Boulton had no incentive to do so while they still held monopoly rights to the idea.
The early American textile industry was also built on the shoulders of technology “freely taken,” in Grenville’s words, from British firms.
It’s a short post worth reading in full, but Grenville offers three excellent recommendations for the design of an IP system more compatible with how innovation propagates.
Any successful protection of IP must recognise three things. First, “ideas want to be free”, in both senses of the word “free”. Second, governments always play a key role, so criticism based on the role of the Chinese government may be misplaced. Tech companies might keep this in mind as they minimise their company tax. Third, society’s principal aim should be to encourage innovation. With patents, monopolies are created but the aim should be to minimise inefficiency, which means parsimonious protection of IP. And the rules need to be tailored to enhance competition and further innovation, not inhibit it.
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