The IPcentral Weblog

Wednesday, April 19, 2006

Richard Epstein on Anticommons, Open Source


On the anticommons:

Heller and Rebecca Eisenberg [postulated], chiefly with pharmaceuticals, that large numbers of patents, each covering a small fraction of the intellectual terrain, could lead to an IP anticommons. Each patent holder, they speculated, would demand a king's ransom for the use of its drugs or research tools--chemicals, genes, probles and the like--until we replicated the unhappy situation found in the former Soviet Union...

The one detailed study of the pharmaceutical industry found that business ingenuity overcame any supposed patent blockade. To avoid paralysis, researchers in industry and universities adopted strategies of "licensing, inventing around patents, going offshore, the development and use of public databases and research tools, court challenges, and simply using the technology without a license (i.e. infringement)." That result is more consistent with economic theory than the Heller-Eisenberg supposition, once we recall that Soviet bureaucrats and American entrepreneurs face radically different incentives. The bureacrat gains power and receives bribes or favors by holding up valuable private activities. But a patent is a wasting asset. Any patentee who hunkers down will watch its wealth melt away day by day. Businesses, in contrast, only make money by cutting deals that put the patent to work.

on open source licensing as a solution to the anticommons:

One ongoing question is how well open source stacks up against traditional proprietary software. Much depends on the scale of the enterprise. The decentralized methods for open source work well with small systems, but are difficult to maintain as the network expands--a problem that any proprietary system also faces in integrating backwards to existing products while introducing new products. In addition, loose cooperatives must organize to fend off outsiders claiming that the entire system incorporates their trade secrets or IP. The present SCO litigation, for example, puts the entire Linux system at risk on these grounds, prompting the formation of a litigation committee to coordinate the common defense. Right now at the heart of the movement lies a commercial joint venture spearheaded by well-established firms like IBM, Intel, and Hewlett-Packard, which develop service and proprietary programs that operate on top of an open source infrastructure. The new development gives ample testimony that no loose assemblage of voluntary contributors will be able to carry the day any longer.

Ultimately, however, the central issue is not whether this prediction proves right or wrong. Rather, it is to let the process run its course without state interference... Government should remain neutral between competing forms of ownership and competing software licensing models, by not setting up impediments or preferences either way. The first of these should be designed to allow different systems to both compete and cooperate within a common framework, and thus requires the implementation of interoperability among rival systems under some umbrella standards. [SS note: I confess I do not understand this last bit.]. The second of these should govern the procurement policies of government agencies . . . [which] need to take into account the total cost in both acquiring and maintaining a system, in light of its reliability, vendor support, ease of use, security, warranties for use, and indemnities against intellectual property claims.

posted by Solveig Singleton @ 12:32 PM | Academia , Big Tent , Liberty and IP , Software

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