September 28, 2003

Petra Moser Wins the Gerschenkron Prize

And the New York Times has a story about her dissertation:

A Stroll Through Patent History: CAN a theoretical stroll through the Crystal Palace exhibition of 1851 in London -- at which thousands of inventions from -- tell us something about the nature of innovation today? Petra Moser, now an assistant professor at the Massachusetts Institute of Technology's Sloan School of Management, took exactly such a stroll -- in the form of a Ph.D. thesis -- and has come up with some surprising conclusions that are attracting the attention of fellow scholars. This month the Economic History Association awarded her a dissertation prize at its annual meeting....

One of Professor Moser's conclusions is that developing countries like India, which is scheduled to come into full compliance with an international patent treaty in 2005, may be better off without strong patent laws.... Professor Moser concludes what was good for America and Britain in the 19th century is not necessarily good for emerging, largely rural economies in countries like Denmark, the Netherlands and Switzerland....

Posted by DeLong at September 28, 2003 08:27 PM | TrackBack

Comments

And of course the full story is on a copyrighted page on the NYT website that you can't read without a subscription.

Posted by: James on September 29, 2003 12:42 AM

____

Right James, rats. But imagine if every screw or nail cost $5? Somebody invented them ...

Patents & copyrights have been reasonable for advancing innovation, but escalating enforcement costs to prevent easy copying/wealth increases are changing that balance. Time to replace patents & copyrights with a different way to reward innovation.

Suggest expansion of the Nobel prize -- with mutliple mini-prizes, by gov'ts and every organization that's interested. Could be tax-free (as gov't support), and could be every week, every month, every quarter, every year. Even with PayPal voting/ donations.

On digital entertainment -- big gov't servers with free highspeed download to anybody; records what is being downloaded, pays "popularity" fee in accordance to the download amount. Directly to the artist.

India & China should try such models.

Posted by: Tom Grey on September 29, 2003 02:20 AM

____

Right James, rats. But imagine if every screw or nail cost $5? Somebody invented them ...

Patents & copyrights have been reasonable for advancing innovation, but escalating enforcement costs to prevent easy copying/wealth increases are changing that balance. Time to replace patents & copyrights with a different way to reward innovation.

Suggest expansion of the Nobel prize -- with mutliple mini-prizes, by gov'ts and every organization that's interested. Could be tax-free (as gov't support), and could be every week, every month, every quarter, every year. Even with PayPal voting/ donations.

On digital entertainment -- big gov't servers with free highspeed download to anybody; records what is being downloaded, pays "popularity" fee in accordance to the download amount. Directly to the artist.

India & China should try such models.

Posted by: Tom Grey on September 29, 2003 02:22 AM

____

patents aren't for ever, is the system really broke? Pehaps an adjustment in the length of the protection time, longer for some categories, and shorter for others.

Posted by: big al on September 29, 2003 03:08 AM

____

patents aren't for ever, is the system really broke? Pehaps an adjustment in the length of the protection time, longer for some categories, and shorter for others.

Posted by: big al on September 29, 2003 03:11 AM

____

On the other hand. Patents only effectively protect two categories of holders: large corporations, and extremely small outfits without the resources to exploit their patents themselves.

I've done a bit of patent-worthy work for my company, but we have never filed the paperwork to get a patent. Our lawyers say that properly researching and filing a patent would cost us upwards of $30K, but the protection would be undependable and almost impossible to enforce. We are big enough to exploit my work ourselves, so we just treat it as a trade secret, rather than a public patent.

Patents work well to protect a small inventor while she shops around an idea to potential investors.

The also work well as a weapon for a big corporation to wield against competitors large and small.

Much of the innovation in this country takes place in companties of under 500 employees, (i.e. Federal SBIR-eligible,) and is left unpantented because the predictable ROI is too low compared to the hassle.

Posted by: Eric H on September 29, 2003 05:48 AM

____

I'm missing something about this story.

"... the purpose of patents is twofold: to protect the inventor and to speed technological progress. Thus, patent laws require that an inventor, in a quid pro quo exchange for the limited monopoly that a patent provides, **disclose his methods to others**". [My emphasis]

This is a key point that many who talk about patents miss. The patent process requires that innovation be disclosed *immediately* for use by others, even if they can't use it making the particular patented item for a limited number of years.

The alternate business strategy is keeping a "trade secret", with the intent of *never* disclosing the innovation for others to use. (The formula for Coca Cola is a trade secret.)

"Countries without patent laws have much larger shares of their innovations where patenting would have been a bad idea," Professor Moser said.

Hardly surprising. There are two kinds of innovations: those that are most profitably patented (you can't keep them secret forever) and those most profitable as trade secrets (you can keep them secret forever).

So if your country doesn't have patents laws, pretty obviously you are going to focus your innovation efforts on the latter. And you may produce a lot of innovation that way.

But it hardly indicates that you are going to have *more* innovation than a country that offers both patent *and* trade secret protection. It seems rather like you'd probably have less in total, by sacrificing the patentable opportunities when other nations can pursue both kinds of innovation.

"Meanwhile, inventors from countries not governed by patent laws were free to appropriate ideas patented by innovators in other countries."

Um, yes.

"The French inventor Hippolyte Mège-Mouriez, who invented margarine in 1870, blithely showed his invention to two Dutch entrepreneurs. Mr. Mège-Mouriez, having received a patent, felt confident that his idea was protected.

"The Dutch entrepreneurs took the Frenchman's ideas, improved on them (keeping their improvements secret) and established a thriving margarine business that in the 20th century merged into the multinational conglomerate Unilever. Mr. Mège-Mouriez died a pauper."

She's recommending this type of thing as beneficial policy? The innovator of the idea is left bankrupt? (Of course the Dutch adopted their own patent laws not so long later, with Unilever and its predecessors making extensive use of them.)

"We try to force patent laws on developing countries and say, This is best for you," she said. "Then we are surprised when they say they don't want patent laws. But they have a point. Such laws could actually hinder innovation in those countries."

Yes, that's true, but she doesn't say explicitly (at least in this story) *how* it could hinder innovation in those those countries.

The answer seems to be that even though the lack of patent laws hinders domestic innovation to some extent -- by sacrificing innovation of the "best protected by patent rather than trade secret" kind -- this handicap is more than made up for be maintaining a free hand to appropriate ideas patented in other countries, regardless of other countries' patent laws. So, on net, they obtain more patentable innovations.

Then as their own economies grow and they become able to develop larger numbers of "best protected by patent" innovations of their own, they, like the Dutch, adopt their own patent law, grandfather into it the innovations they took from others' patents without paying -- and start screaming at developing nations wihtout patents laws who violate their patents and steal their IP.

This may indeed be the best process to speed development in undeveloped countries. And Professor Moser may have done a wonderful job of documenting and quantifying it through the Exhibition. I don't doubt it, it sounds like she had a great idea.

But it is hardly a new analysis. Every holder of a patent for margarine or software or anything else that's ever been ripped off for mass use in developing countries knows that those countries ignore patents because they think it's good deal for them and their businesses to do so. Why would they be presumed to be wrong about that?

The analysis just seems to be: let developing nations ignore patent laws until they think its in their interest to adopt them. I don't see what's new or radical about that, though a lot of developed-nation patent owners don't like it. It seems rather an endorsement of the status quo.


Posted by: Jim Glass on September 29, 2003 10:46 AM

____

Register at nytimes.com
- FREE FREE FREE

Posted by: lise on September 29, 2003 11:11 AM

____

Since when did the Netherlands, Denmark, and Switzerland become emerging rural economies?

Posted by: Randall Parker on October 5, 2003 07:45 PM

____

Since when did the Netherlands, Denmark, and Switzerland become emerging rural economies?

Posted by: Randall Parker on October 5, 2003 07:47 PM

____

Since when did the Netherlands, Denmark, and Switzerland become emerging rural economies?

Posted by: Randall Parker on October 6, 2003 10:41 PM

____

The best solution against abortions is education, not snipers.

Posted by: Shimura Haru on December 20, 2003 04:18 PM

____

It is wise to apply the oil of refined politeness to the mechanisms of friendship.

Posted by: Weinberg Gregg on January 9, 2004 05:19 AM

____

Post a comment
















__