Monday, 16 June 2014

Fun Online Polls: Intellectual Property rights & Complete Chaos

The results to last week's Fun Online Poll were as follows:

When a patent or copyright expires, does society as a whole...

become slightly wealthier - 71%

stay exactly the same - 26%
becomes slightly poorer - 3%

Which must be the correct answer.

Shakespeare's plays are long out of copyright, but they are still there for everybody to enjoy (or not as the case may be). Everybody can manufacture ring-pull cans without having to pay a fraction of a penny licence fee to the original inventor/designer for each one, and so on and so forth. Overall, the wealth is still there, it is just shared out slightly differently (and probably more efficiently).

Of course there is a loss to the original owner when his IP rights lapse but that is more than outweighed by the gain to 'everybody else'. Worst case, it's a break even.

Think about it, there are four variables in deciding what protection to grant:
- whether it gets protection in the first place,
- how expensive the registration procedure is,
- how long the protection should last, and
- to the extent a government taxes earned income, there is an argument for taxing such protected income before it taxes anything else.

Have we got the balance right? In some respects, no, but broadly speaking, we're not far off. Governments have to incentivise innovation without stifling competition, and this is a good way of doing it.

If the 3% who voted "slightly poorer" are correct, then that must mean that patents and copyrights should be protected for infinity, which is clearly wrong, or else we'd have it (doesn't apply to trademarks, they are protected in perpetuity).

Now, if we agree that government protection of what is ultimately earned income should only be time limited, why do we think that governments have the right to sell off the freehold of land for one initial payment, often centuries ago, and protect that source of unearned income in perpetuity?

Is there not a mismatch here?
This week's Fun Online Poll.

Complete and utter chaos (multiple selections allowed).

Vote here or use the widget in the sidebar.


The Stigler said...

You're right to say it's a balance. I think the term for patents aren't too far wrong, especially medical patents, but copyright is way out of line.

My own opinion is that 20 years for copyright from when the work was published is sufficient. Most works make the bulk of their money within that period i.e. if you make it 20 years you won't stop JK Rowling writing her books or Coldplay making records.

It's worth noting that some of Shakespeare's works are adapted from other works. Romeo and Juliet was a folk tale that became a poem, that became a piece of prose. Shakespeare then improved on that prose. Today, he'd be getting a cease and desist notice for doing so.

Anonymous said...

I think the whole concept of patents are on the contrary most notably at fault regards medical patents.
They have become quite damaging in terms of limiting the types of research undertaken and hence progress being made as well as being highly extractive in terms of rents granted. It's to this end that people like Joe Stiglitz and Dean Baker amongst others have been active in presenting the case for some alternative.

Mark Wadsworth said...

TS, PC, it is a balance; with patents, the protection period is possibly too short (and with copyrights, far, far too long), but on the other hand, patents are handed out far too liberally to large corporations (yes Apple, Samsung et al, this means you) and quite probably Big Pharma as well. Monsanto just takes the piss.

But that wasn't the point of the post, it was, as per usual, about land ownership :-)

Dinero said...

I read that patents were invented in Florence to encourage trade guilds to not keep secrets and in so doing promote wealth all round. And so in that sense the original granting of a patent makes society wealthier in the first place.

Bayard said...

Din, AFAIK, the idea of a patent was to allow an inventor to publish their ideas (make them patent, as in "patently obvious") whilst receiving some sort of state protection against copying. This was to prevent ideas being kept secret and then dying with their inventor. One of the most well known of these was the material "Coade stone", which was never patented, probably because Mrs Coade didn't trust the patent system, and so the formula for it was eventually lost.