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In a blog post, Mike Masnick critiques Solveig’s recent paper. I find Masnick interesting at times, but here, he seeks too much definitiveness on nuanced issues. A case-in-point is Masnick’s handling of cumulative and incremental innovation, which differ by degree across industries, rather than, as Masnick implies, apply or not apply to an innovation landscape.
Masnick seems to presume that cumulative and incremental innovation are new insights for the technology industries. They are not. Scholars from R. Nelson, Arora, Merges and Lemley have written on the relation between intellectual property and these innovation models for decades. And rather than explain how intellectual property should commensurate with cumulative and incremental innovation, as scholars have done, Masnick views them as rendering intellectual property of no value; a radical argument that should be drawn out in more detail than Masnick provides. The key point that we've made is that innovation is an ongoing process of improvement upon improvement upon improvement. Locking up any of those steps and giving the idea associated with it a price actually slows down innovation by delaying that ongoing process and adding needless friction to it. The cumulative nature of the technology industries may be prominent because of the speed at which innovation occurs; incremental innovation may be prominent because of the need to stabilize and integrate inventions with complementary hardware and software. Technological innovation is different, but not unrelated to other kinds of innovation that enjoy intellectual property rights protection. The degree of cumulative and incremental innovation in the technology industries suggest certain optimal patent scope and non-obvious threshold (Kahin and Duffy have done excellent research here), as well as application of copyright fair use and misuse doctrines (Lichtman has done good work in this area).
Masnick is right that intellectual property may not provide for the most efficient allocation of infinite resources after inventions exist, and he is right that creators should not be able to capture the full public value of their works, but Masnick does not address the transactional aspects of intellectual property, nor reconcile ex ante and ex post aspects of intellectual property.
Intellectual property rights stimulate transactions between strangers (non-direct contracts), enable creators to differentiate contracts between competitors and consumers, and can be strategically waived. The importance of these ex post transactional aspects of intellectual property is that they enable creators to maximize economic returns with regard to their competitive and market situation. Further, without copyrights and patents, creations may be allocated more efficiently, but may not be created sufficiently in the first place.
Masnick’s critique of Solveig’s article may reflect his ongoing work on “post-scarcity economics,” an area I find that he over-complicates, or at least has not prioritized his main and secondary points for. Masnick may simply be criticizing Kitch’s prospect theory and other ex post theories of intellectual property, but he seems to assume that dispelling them would also weaken ex ante theories for intellectual property- a creative approach, but one prone to conclusions where they really do not exist.
posted by Noel Le @ 9:38 PM | Markets: Business, Investment & Innovation
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