IP And Innovation: A Software Case Study

DECEMBER 24, 2012

When was the last time a strongly held belief of yours was challenged by persuasive argument? Was it during the presidential campaign of a few months ago? Did the President's arguments persuade you into a stance you had never previously taken? My guess is that this is not the case. Presidential debates have been shown to have an imperceptible (if any) impact on voters' minds, both as a whole and individually. This is largely because they are held late in the election season, after most had already made up their mind on the biggest issues.

I am no different than most. I don't watch presidential debates to be swayed. I watch them to see who is a better speaker, who slips up, and who is the most "presidential". Despite this, I recently participated in a debate that challenged my view on a largely uncontroversial topic: intellectual property protection. Now why did this debate change my mind as compared to the presidential debates? Because I was the one debating, of course!

My economics teacher, Mr. Kashdan, was assigning students to defend or argue against different political ideas. "Gabe, you get pro-government bailouts. Matt, you get against," my teacher read off his randomly generated list, "Varun, you get for intellectual property rights. Steve, you get against." Lucky me, I thought, to get the one indefensible position in the entire class: who could possibly argue against IP? Everyone knows that we need IP laws in place to encourage innovators to innovate, writers to write, and pharmaceutical companies to produce more drugs. After class, I whined my frustrations at Mr. Kashdan until he gave me a lead, a book called Against Intellectual Monopoly.

That night, I started researching the topic. Whatever, I thought, let's just buy the damn book and get this over with. I typed "Against Intellectual Monopoly" into Google and was about to click on the Amazon link, when I saw another promising linkā€¦ a link to the book online for free. Well that's a good sign, I thought, at least the authors aren't hypocrites. And so I began the book. And by god, it was persuasive.

One of the book's strongest arguments was of the use of IP protection in the software industry. They begin with the widely ridiculed attempt of Amazon to patent "one click" purchasing. But, they explain, "it was not always like this." Before a 1994 Supreme Court decision, the software industry had very little means to protect software through IP. But after the introduction of IP into the software industry, we IP-proponents would expect that there would be a wealth of ingenious ideas and innovation in computing- because, after all, now there is incentive to innovate. In fact, this Court decision allows us to form an amateur case study of the innovation before and after the decision. So let's examine the data. What innovations have we seen since 1994?

Well, for one, we've developed "one click" purchasing. Ok, that's just a joke. What about "the graphical user interfaces, the widgets such as buttons and icons, the compilers, assemblers, linked lists, object oriented programs, databases, search algorithms, font displays, word processing, computer languages - all the vast array of algorithms and methods that go into even the simplest modern program?" Actually, all of those things were invented before 1981 and without the benefit of any patent protection at all. Imagine where the software industry would be today if those things could have been patented. The man who has benefited most from IP protection in the history of the world, Bill Gates said himself that "If people had understood how patents would be granted when most of today's ideas were invented, and had taken out patents, the industry would be at a complete standstill today."

Just think for a moment: what happened to Microsoft's innovation after 1994/1995? Microsoft word, Internet Explorer and Windows 95 were all fairly major innovations done before this landmark decision, but what new innovations has it done since? Windows XP? Windows Vista? Most would agree that those weren't innovations at all.

This kind of non-innovating behavior is known as "rent-seeking", a term used to describe monopolies who don't produce new wealth, and just manipulate the system in order procure it, for example when lobbyists argue for farm subsidies. So was Microsoft just rent-seeking from 1994 onwards until Apple came on the scene and innovated them out of their stupor? Don't look at me; I don't know if that's the case, but it sure is an enticing explanation of the facts that portray IP protection as the villain, not the superhero.

So I ask you again, when was the last time a strongly held belief of yours was challenged by persuasive argument? If you're like I was, then you probably implicitly believed that protecting IP is a given, just like protecting people's right to regular property is a given. But I hope this belief that you never even considered questioning has been questioned. If you want to hear more and you have enough-self confidence to have your opinions disputed, I urge you pick up your free copy of Against Intellectual Monopoly here.