August 29, 2002
Living in Somebody Else's House

David Weinberger said something very reasonable about intellectual property:

All contending parties agree, I believe, that (1) the goal is to build a marketplace that encourages innovation and (2) that the way to do that is to let the market reward innovation. Unfortunately, to spread the value of innovation, two things have to happen that are contradictory from the market point of view: First, someone has to have a great idea for which she is rewarded. Second, you want that idea to spread and be built upon as rapidly as possible and requiring that the creator be rewarded slows down the spread. Much butting of heads ensues...

To which David Winer replied as if Weinberger had said something really stupid:

For crying out loud David, it's super simple. If I build a house I can live in it as long as I want. If I want to rent out rooms I can do that too, as long as I want.

The peculiar thing about this David Winer position--this "Mine! I thought of it! Mine! It's my intellectual property forever! All Mine!" position--is that Winer could not hold it had he looked up and around at the intellectual property house he happens to live in. If he did so, he would notice that he has--without getting their permission or approval--used a huge amount of intellectual property thought up by other people, and has neither compensated them nor acquired from them a license to do so.

To pick just one thing at random, there is the case of Ez-Eki-Baal and his cousin Ish-Baal, residents of Tyre in 1160 B.C. They first thought up the idea of using a stylized picture of an ox to represent the phoneme "A" (and the idea of using a bunch of other stylized pictures of other things to represent other phonemes). This invention of the "alpha-bet," as I have been told it is called, is in the estimation of some a very important piece of intellectual property. Some commentators have even claimed that most of us use it during most of our waking hours.

But have Ish-Baal, Ez-Eki-Baal, or their heirs received one red cent in the past century in return for other people's appropriation and use of their intellectual property? No. Does David Winer have a valid license authorizing him to use the alphabet--to move into the intellectual property house built by Ish-Baal and Ez-Eki-Baal and trash the place? No. Has David Winer made any effort at all to identify and compensate those to whom--on his own theories about the moral obligations imposed on those who make use of intellectual property--he owes a fortune? No.

So does he believe his own theories? It's hard to know at what level he does. It's genuinely hard to know what to do with people who argue that all the intellectual property they make is "Mine! All Mine! All Mine Forever!" and yet classify all the intellectual property they use as the common and free inheritance of all humanity. It's a "heads I win, tails you lose" kind of argument...

Posted by DeLong at August 29, 2002 11:11 AM | Trackback

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Nitpick time: It is the letter A that is the stylized picture of a cow (ox). (Turn it upside down and you'll better see the abstract triangle of the cow's head with horns.)

Other than that, I agree completely. Speaking as a descendent of Ish-Baal (can you prove otherwise?), I hereby relinquish any claim on the letter "A" from before the adoption of the Byrne Convention.

More seriously, we're back to the age-old argument of who is more important, the artist or the performer. Who gets the gold, the writer of the play or the actor in it? The writer of the book or the publisher? The inventor or the manufacturer? We've reached various compromises: All (or most) agreeing that the creator should get a cut and the interpreter/builder should get a cut. We're now, as the old joke goes, haggling over the price.

Aside: This is why patent offices/writer's unions/artist's guilds are important. With few exceptions, the skills required to be a creator are vastly different than those required to bring an idea to money-making fuition. To protect capitalism, we need to balance out the protection of intellectual property and the establishment of a market.

Naturally, those who don't create swing more toward marketplace forces. But that's a different subject.

Posted by: Dave Romm on August 29, 2002 12:34 PM

I also think this issue is simple but for an other reason. In this case we can exploit profitably the short-sightedness of human beings. You want to limit monopoly rights on intellectual property over time.

The idea itself is not quite new. But it seems to please everyone. The inventors, since very few patent holders even care to renew, for a nominal fee, their patents when the expire. And the larger public who inherits the IPRs when the patent expires.

There is a potentially more lasting effect to the patent though: the first-mover advantage. If you effectively protect an infant company from competition for even a limited number of years, you automatically give extra incentives to potential inovators to try to be acquire this protection through IPRs, with the hope that this will be enough to turn their business venture into a lasting profitable institution...

In truth, this protection and the confered first-mover advantage are never as defendable as would be suggested by the letter of the law. Indeed, inventions and ideas wear out at least as far as physical capital...

In any case, in the heat of the dot-com craze, I used to argue to my cat that business methods should actually be widely patentable, but only for short period of times, say 5 years. Some of the now infamously defunct e-business models, would perhaps have survived if we had made replication of their concept impossible for a few years until they too, like Amazon.com, turned profitable.

But why would you do that? Because I would like to know what kind of crazy concepts young business school graduates would actually come up with if they were offered a first-mover advantage.

Instead, now, you have a great idea over coffee or in your bath tub, and if with great luck you more or less survive for 2 years, a company like Microsoft buys your venture for 50 cents in exchange for the promise to put you on their payroll...

In most cases, we will simply never know, those original MBA ideas. These graduates are most likely working for WellsFargo or General Motors (which is okay I guess but not so conductive to paradigm shifts...)

Now, obviously my idea assumes out evil investment bankers trying to rob the public from its savings by underwriting and marking as "buy like hell!" the junkiest shares they can put their hands on...

Posted by: Jean-Philippe Stijns on August 29, 2002 12:40 PM

>>Nitpick time: It is the letter A that is the stylized picture of a cow (ox). (Turn it upside down and you'll better see the abstract triangle of the cow's head with horns.)<<

Ooooops!... I'd better fix that...

Posted by: Brad DeLong on August 29, 2002 01:13 PM

>It's genuinely hard to know what to do with people who argue that all the intellectual property they make is "Mine! All Mine! All Mine Forever!" and yet classify all the intellectual property they use as the common and free inheritance of all humanity. <

Sounds like a description of Disney.

Posted by: Arnold Kling on August 29, 2002 02:14 PM

Great comment, Brad. Wonderfully well put. Now, stay tuned for the wrath of Dave. You can't imagine ...

Posted by: Paul K on August 29, 2002 03:32 PM

Brad you've overlooked competition.

Also, you're arguing against patents.

No one's forcing you to use my software. I'm not saying other people can't implement my ideas. But if they want to compete they have to do as much work as I did. If I'm wrong I'll get a competitor that gives it all away (I doubt it).

BTW, thanks for the Letter A.

Good work.

Posted by: Dave Winer on August 29, 2002 04:13 PM


The difference between a house and a software program is rather clear: if you move into my house, then I lose the use of part of my house. If you pirate my software, I don't lose the use of my software in any way.

Posted by: Walt on August 29, 2002 04:48 PM

[IRONY]

Yeah, but why share something I can legally exclude you from using? (even if it doesn't make any other difference to me.)

Ownership is not a means towards an end it is the ultimate purpose of civilization :)

[/IRONY]

Posted by: Jean-Philippe Stijns on August 29, 2002 05:23 PM

Jean-Philippe,

Great posts on patent rights for business models.

Posted by: Paul on August 29, 2002 11:22 PM

Dave,

<>

No one is forcing you to use the alphabet, the decimal system, the periodic table, shirts, shoes etc either...


<>

When Microsoft 'competed' with Apple, did they 'do as much work as Apple did'? Or did they simply take Apple / Xerox's ideas and adopt them into Windows? When Pepsi 'competed' with Coke, did they 'do as much' including building the concept of the carbonated drink in a bottle or did they essentially reverse-engineer Coke's drink?

Intellectual Property is an oxymoron. Property is a material thing that is always owned (by somebody, even if it is the 'public'), the Intellect is the fount of knowledge which can NEVER be owned by anybody.

Patents on ideas (as opposed to products)perpetuate this oxymoronic concept.

Posted by: Suresh Krishnamoorthy on August 30, 2002 06:26 AM

>>Brad you've overlooked competition.<<

Dave, you've overlooked competition.

For example, Microsoft has been convicted of unfair business practices. People with good ideas have been squashed by people with money. They had something to protect, and that stifled innovation. Capitalism only works with a level playing field, and protecting property, intellectual and otherwise, is one aspect that levels the field.

In anarchy, bullies win.

Aside: You're welcome to the letter A, but mind your P's and Q's.

Posted by: Dave Romm on August 30, 2002 07:44 AM

Here is the definitive recent quote:

It is generally admitted that the present Patent Laws need much improvement; but in this case, as well as in the closely analogous one of Copyright, it would be a gross immorality in the law to set everybody free to use a person's work without his consent, and without giving him equivalent. I have seen with real alarm several recent attempts, in quarters carrying some authority, to impugn the principle of patents altogether; attempts which, if practically sucessful, would enthrone free stealing under the prostituted name of free trade, and make men of brains, still more than at present, the needy retainers and dependents of the men of money bags.

J.S. Mill
-------------------

Posted by: yodaiken on August 30, 2002 07:59 AM

>>When Pepsi 'competed' with Coke, did they 'do as much' including building the concept of the carbonated drink in a bottle or did they essentially reverse-engineer Coke's drink?<<

In actual fact, Pepsi and Coke grew up together and built the marketing concept together.

Posted by: Daniel Davies on August 30, 2002 08:20 AM

Dave Romm, I am totally in favor of reigning in Microsoft. But there's no need to sneak around to do it, do it directly.

Posted by: Dave Winer on August 30, 2002 08:51 AM

- In actual fact, Pepsi and Coke grew up together and built the marketing concept together.

Beg to differ. Coke (Coca Cola) was first created in 1886 and maketed in Atlanta until 1891 when Asa Candler bought it and took it nationwide by 1895.

Pepsi was first created in 1898 (a full four years later) by which time Candler had firmly established the 'cola drink' across the nation.

The later innovations (bottles, cans, worldwide appeal) came together, but bottom line - Pepsi was a knock-off of the Coca Cola concept.

Even in worldwide marketing Coca Cola led and Pepsi followed.

The point is, Coke could have patented numerous 'intellectual properties' along the way and stifled pepsi (and the other knock-offs), but would that have been a good thing?

PS: Coca Cola paptented its name and script in 1893, but we are talking about patenting 'marketing method' when Amazon patents the 'one click' and demands a toll from anybody else who one-clicks their way to a sale.

Posted by: Suresh Krishnamoorthy on August 30, 2002 08:57 AM

... and I never took the Mavis Beacon Teaches Typing software seriously enough!

Posted by: Suresh krishnamoorthy on August 30, 2002 08:59 AM

The real issue, Suresh, is not whether we should have protected Coca Cola. Obviously this is an example where protection was not needed since Coca-Cola is still around.

The real issue is not even the how many Cola-Cola type ventures went down because of of protection. The real issue is much harder to think about but is nonetheless very important:

How many Coca-cola ideas / concepts - and probably more important things than an artificial drink originally genuinely including Coke and Cola... - have never come to life because their innovators thought that their venture would be unprofitable because of premature exposition to competition?

The issue here is one of setting the incentives to undertake different type of activities right. Innovation, if we really think it matters most for long-run average welfare, should be highly rewarded, much more than it is now. Be it regarding technologies, new products or business methods.

But the utlimate goal, at least from my social democratic perspective, is to ultimately exploit the non-excludability of most general purpose ideas for the good of the greatest number of people.

Posted by: Jean-Philippe Stijns on August 30, 2002 10:45 AM

innovation should be highly rewarded - highly but not to the extent that further innovation is stifled or that vital products are withheld from masses of people

intellectual capital is being amassed as a fine and accelerating rate by the developed countries - what then of the needs of others

think of the astonishing hiv/aids epidemic ravaging southern africa and the cost of drugs - africa can not possibly pay what we can pay for drugs but the need is immediate and devastating

Posted by: on August 30, 2002 10:55 AM

IP rights can play different roles; this makes the arguments about them hard to follow. For
example in David Weinberger's piece he leaps to
the conclusion that we get more innovation with IPR than without. We don't know that. He also sets aside the widely held believe that inventors have some sort of moral right to their ideas.

There seem to be five reasonably distinct arguments that people braid portions up into their arguments about IPR.

1 IPR is the moral right of an inventor
2 IPR increases innovation revealing
3 IPR transduces public goods into private goods
4 IPR as zoning laws
5 IPR as transient

1. IP rights can be viewed as a moral right of the innovator. "I created it I should get to own it." As a person who generates ideas for a living and has rarely felt the rewards were proportionate to my efforts I can find this line of reasonaling attractive, but the implementation details are a mess. I have invented only a handful of really cool things in my life, none will ever make me any money. My favorite is putting a dime inside a balloon and spinning it around. Try it, it is very neat. If you think so too consider sending me the dime when the balloon breaks. Some people are all excited about how technology will enable that, i.e. you sending me the dime. Other people aren't convinced that innovators are all that clever - they suspect they just managed to get to the pattent office first.

2. IP rights can be viewed as an incentive to drag innovation out into the open. I have read that eye glasses where invented maybe a century before they became widely available - they were probably kept as a kind of trade secret during that period. Clearly a century of blurry vision is a huge social good civilization missed out on. This - the encourage innovation argument - is the argument in the constitution. Once we strip off the moral right argument this social good argument is somewhat pessimistic about the barriers ideas face in getting free and achieving wide distribution. Given what a gossip riddled species we are that seems a little too pessimistic for me. If this argument is the driving force then it would seem to me that the more communication we have the less we would need IP rights; i.e. the printing press, the phone, the internet, etc would all lower the barriers to communicating ideas an in turn lower the need to create financial incentives to drive the ideas out into the open. Open source is a good example of how idea consumers have begun to find ways to cover the costs of labor coordination, idea aggregation and distribution without property rights or firms.

3. Ideas, being information goods, and hence public goods (non-rival, non-excludable) they are a pesky-obnoxious exception to the wonderful world of the invisible hand. If one is deeply commited to the invisible hand as the one true way of solving society's coordination problems then IP rights provide a scheme for resolving this nit. This makes the assumption that for the set of all goods a private good is always better than a public good - better being a social or moral metric I guess. I don't have much sympathy for this argument. In particular it assumes that the well known problems of public goods - i.e. overcrowding, underprovisioning, etc. - aren't as sever with information goods. It's important to admit and have some sympathy for how many speakers in the debate are deeply uncomfortable about any public goods of any kind. The alphabet is a public good. Would we have a better more efficent alphabet if it - and other key communication protocols - were privitized? We are, of course, running these experiments with other key communication protocols. One example: the mess the US made of cellular phone service so far.

4. Once you have created IP rights you immediately get all the affordances of economics. Markets/middle-men/aggregators. This is cool if your fluent in those tools and methods of coordination. This is a major pain in the neck if your familiar with all so called 'market failures.' Concentration of power, inefficient distribution of wealth, monopolies, etc. etc. These concentrations of power - particularly in the form of IP aggregators - become extremely conservative. Property owners have a dependable tendency to turn to the govements and demand rules that keep their property rights and markets stable. I call this the zoning reflex. In a perverse twist these guys don't want innovation they what a highly conservative managed evolution of their gated communities. The key point to make here is that IPR is not just about structuring the market place between the innovators and the users - it also about structuring the market for the middlemen - the IPR aggregators.

5. The idea that IPR rights might be transient (see the constitution) is a curious beast. Clearly if our goal is to drag innovation (see the constitution) out into the open and we don't feel too strongly about the moral rights of the innovator and we lack much sympathy for the IPR aggregators then this looks like a great way to untie the knot. It splits the difference of the IPR's NPV. Leverages some of the power of private goods while pouring ideas into the pool of public goods so more innovation can be generated. I must admit I'm reminded a little of Pound's ideas about money that automaticly evaporates; and in turn the whole catalog of ideas about inflation being good for debtors.

It's all mess, at least the constitution seems pretty clear about the rules. The congress can grant IPR rights for limited periods in service of encouraging innovation. This reduces the problem to one of deciding how to maximize that social good while tacking down side of the zoning reflex or IPR middlemen.

Posted by: Ben Hyde on August 30, 2002 02:02 PM
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