Samizdata

About a year and a half ago, Terence Kealey gave a talk at a Hobart Lunch at the Institute of Economic Affairs arguing that a world without patents would be more innovative. Dr Kealey is a biochemist who is Vice-Chancellor of the University of Buckingham and the author of The Scientific Laws of Economic Research.

It was one of the most interesting events I have been to at the IEA, and the audience was very much split which made for an entertaining Q&A session. I disagreed with Dr Kealey at the lunch, but I recognized there was something to what he said. The lunch was something of a life-changing experience because I have subsequently moved towards his position, though I’m not there yet.

One of the most difficult aspects of thinking about a world with less or no patent protection is that it is so hard to imagine. When thinking about a Britain with a denationalized National Health Service, you can visit mainland Europe or America and see how systems work in other developed countries. Country comparisons aren’t so easily available when it comes to patents.

But one market I have written about here recently – that of software – clearly shows that fast innovation can occur without patents, at least in the area of software. If software patents had existed in the US from day one, and if there had been a culture of patenting everything, we might live in a very different world today. We might sit in front of our computers today and see this:

And people would pronounce in public: “Thank goodness that we have software patents. Just as property rights in physical property enables economic development, software patents enable software development.” And they would post articles to that effect on the internet, known in this alternative reality as The Microsoft Network, which might look like this:

And everyone would be thankful that we have a system that clearly and undeniably promotes innovation.

All of the major innovations in software have occurred without recourse to patents. From the creation of the graphical user interface to the word processor to the web browser, consumers and society have benefited from the same ideas being used by different competitors.

Some readers might point out that you can only patent an “implementation”, not an idea. But, as Chris Bidmead points out:

In practice patent lawyers have always attempted to file in a way that generalises the implementation to the point where any practical use of the idea is covered by the patent – tantamount to patenting the idea.

Fortunately, we weren’t locked into using WordStar, the first commercially successful word processor, for twenty years. Even though no one owned the idea of a word processor, companies still entered the market, and Microsoft has been able to keep investors very happy with the money it has gained through being better than the likes of WordStar and WordPerfect. The competitors in the word processor market kept copying each others’ ideas, and that was great because it led to a race to the top. High spending on R&D was a prerequisite of staying in the market. Had WordStar owned a patent on the idea of computer-based typewriting of documents, or on important aspects of the word processor, we would all be worse off today.

Innovation in software occurs because of copyright, not because of patents. Copyright enables people to protect their work. But we are all better off – we all benefit from greater innovation – when companies are able to compete free from the shackles of (software) patent monopolies. Established, vested interests – most notably Microsoft – want to prevent competition. The European Parliament fortunately voted against EU-wide software patents. In order to increase innovation, surely it is time for software patents to be fully repealed?