Capital Commentary is the weekly current-affairs publication of CPJ, written to encourage the pursuit of public justice.


Innovation, Intellectual Property, and the Constitution


Jason E. Summers

09-30-2011


September 30, 2011
by Jason E. Summers

Scientia Donum Dei Est,
Unde Vendi Non Potest.

Just as free markets rely on the institutional definition and enforecement of property rights, innovation within markets relies on institutionally defined and enforced patent rights, which enable innovators to recoup development costs through the exercise of temporary monopoly.  The Constitution grants Congress this power “to promote the progress of science and useful arts, by securing for limited times to...inventors the exclusive right to their...discoveries.”  Current debate over these protections centers around the question of whether the products of intellectual labor should be regarded as real property, subject to those rights developed in American jurisprudence, or whether such products more properly belong to a cultural commons, one in which innovators contribute to the public sphere through disclosure of their invention and, in return, are granted monopoly privilege.

The latter view has been articulated recently as part of a sweeping cultural and historical exploration of the commons by Lewis Hyde.  In Common as Air, Hyde argues that ideas, the fruits of invention, are what economists term public goods, being both nonrivalrous (use by one individual does not reduce availability for others) and nonexcludable (access to them cannot be limited).  Hyde then culturally and historically frames constitutional patent protections as the 18th century civic-republican virtue of public service in response to private gain—what he terms the “Republican Two-Step.”  

Hyde grounded the founders' intent for patent protections in those new positive liberties that emerge through formation of civil society by the social contract.  But, as Michael J. DeMoor describes, this is exactly civic republicanism of the type espoused by Abraham Kuyper: individuals exercise positive liberty through and by the establishment of a political community that protects negative liberty.  Thus, these privileges are neither absolute rights nor “special benefits doled out by...governments.”  Rather, as the medieval Christian dictum suggests, ideas, like land, are the gift of God.  And, just as Kuyper found for property “no right of rule except in the context of the organic association of mankind,” ideas, even if regarded as property, exist for the community and cannot be disposed of  “without considering the needs of others.”  In this is revealed the full purpose of the commons of ideas Hyde describes.

Economist Ronald Coase showed that private exchanges between parties lead to efficient allocation of external costs and benefits to society if transaction costs are low and property rights are assigned.  This suggests that intellectual public goods might be allocated best by treating them as property in which inventors have perpetual rights.  But, as Steven Cheung found in studying fruit farmers and their pollination practices, efficient allocation of positive externalities (bees pollinating neighboring orchards) is realized through social rules and customs without explicitly assigning property rights to the externalities (a difficult task when it entails following the movements of bees).  Social rules encourage members of the community to become good neighbors through adopting pollination customs that amount to efficient exchanges.  In short, externalities are allocated as in historical agricultural commons.

Like the community described by Hyde in which Benjamin Franklin's inventions emerged, modern scientific communities exemplify such markets in which all benefit through a sharing of ideas (in journals, at conferences) bounded by institutional norms.  This efficient exchange drives innovation as, in Thomas Jefferson's words, “one new idea leads to another, that to a third, and so on through a course of time until someone, with whom no one of these ideas was original, combines all together, and produces what is justly called a new invention.”  In contrast, indefinite monopoly privileges apply government constraints to the institutional definition of exchange norms and impose additional costs through litigating and enforcing ownership of essentially nonexcludable goods. 

Though the founders may have wished for such free exchanges to be sustained by republican virtues, such sentiments are largely extinct, as Timothy Sherratt recently noted.  Instead, it is better for policy to pragmatically acknowledge that the goals espoused by both Kuyper and the framers are more fully realized when institutions are empowered to establish cultural norms for exchange, and transaction costs—often driven by enforcement and litigation—are kept low. 

The recently enacted patent reform bill, the Leahy-Smith America Invents Act, takes a few tentative steps in this direction by linking rights to invention with public disclosure and introducing measures that should reduce litigation costs.  However, it introduces new complications, potentially harming innovation by favoring large firms while failing to address the drive toward increasingly longer periods of monopoly privilege.

Jason E. Summers is Chief Scientist of Applied Research in Acoustics LLC. The views expressed here are those of the author alone.

 

 

 

 



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Capital Commentary is a weekly current-affairs publication of the Center for Public Justice. Published since 1996, it is written to encourage the pursuit of justice. Commentaries do not necessarily represent an official position of the Center for Public Justice but are intended to help advance discussion. Articles, with attribution, may be republished according to our publishing guidelines.”