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On the viability of the use of State Force as an incentive to innovation

Irrespective of the origin and nature of such innovation, however, it still seems a fair proposition to state that there should be some form of motivation to create such innovation. All human activity is conducted out of some fundamental human motivation, whether for simple sustenance and survival or towards the satisfaction of a relatively abstract (but nonetheless, equally fundamental) impetus, be it power, approval or the creative impulse. However, it has never, until the post-industrial era, been a fundamental supposition that all these motivations may be satisfied by the provision of economic benefits. Given, that monetary valuation has been rapidly accepted as the default for all goods and services, it may seem logical that this valuation be extended to innovation as well. Hence, the monopoly over patented inventions, granting the inventor the opportunity to realise economic value from his creation. However, this assumption misunderstands the impetus for human innovation and distorts the process of innovation itself. The inventor invents or creates in response to a perceived need to do so. Upon completion or during the process of such creation, he searches for means to monetize it. Amongst these means of monetization, he is presented with the option of the patent system, to which the alternatives are trade secret protection, lead time in production and the provision of complementary service. In most situations, the inventor prefers not to use the patent system at all, and to utilise these alternatives instead, some of which may exclude the patent system (for more information on this, see p.3 of the linked .pdf). The patent system does not motivate the inventor to create. What it does motivate the inventor to do is to exclude others from access to this creation. The inherent assumption is that this right to exclude others from the opportunity to utilise the patented invention provides the inventor with the opportunity to utilise the opportunities that would otherwise have been provided to others. It is essentially the provision of a license to a person from the State, granting the person the power to utilise the force and authority of the State in order to prevent others from utilising his invention in an unauthorised manner. There is no dearth of examples of situations where entities, granted the authority of the State, utilise this authority towards their own ends, whether they be in conformity with the intentions of the State or not. In the case of the patent regime, as well, this authority is exploited, not by those seeking to protect their creations, but by those seeking to strategically exclude the possibility of legitimate improvements or modifications upon these creations. This results in the creation of the 'patent paradox', a situation where the effectiveness of patenting as a means of protecting real research has declined, though the number of patents secured has increased. For this reason, it may be argued that a system dependent on economic exclusion combined with political and legal enforcement, such as the patent system, does not promote innovation at all, and serves, rather, to retard true innovation.

The Integration of the Patent System into Current Technological Development

Given the fundamental flaws within the patent system, its fair to wonder why the patent system exists at all today, and whether there exists a viable alternative to patenting as a means for incentivising innovation. As I have already noted earlier, innovation is (usually) not the result of individual effort. It results from the efforts of a collective, whether the collective is represented by the State or a corporation. The reason for this is that collectives are able to organise and invest the financial, human and time-related resources required in order to create the innovation required in a rapidly technologically advancing world. This is no less true today than it was in the Industrial era. However, the problem inherent in the collective lies in its insular character, and its motivation for the furtherance of its own interests. If this collective is a State, then these interests may be beneficial to the citizens of that State, but not so much for others. If it is a corporation, these interests are beneficial to its shareholders, and probably not to others. The patent system was created and perpetuated in order to foster these interests, and the rules of exclusion and enforcement created therein support and feed this model of innovation. If we did not have a patent system, it would be irresponsible... to recommend instituting one. But since we have had a patent system for a long time, it would be irresponsible, on the basis of our present knowledge, to recommend abolishing it. The way I see it, this statement speaks not to the inherent benefits of the patent system, but to its integration into our current system of industrial and technological organisation. To arbitrarily remove this system would be to bring the existing machineries of technological and industrial development crashing down. Assuming that this is a bad result, what remains that can be done? The only way to remove reliance on such an edifice is to provide an alternative form of collective dependent on an alternative system of innovation incentivisation. How does one create such a collective out of thin air? The answer to this question is that such alternatives exist today, and are being implemented. In some industry areas, the 'alternative' is an established means of creating and fostering innovation. In others, it remains in its nascent stages, but with much potential for the future. This alternative consists of the system of networked innovation.

Networked Innovation: Creating the new collective

Networked innovation is a system of innovation by which the financial, human and time-related resources required for innovation are provided, not by a single organised entity, but by an aggregation of entities, the identities of which may constantly change. The creation, development and improvement of knowledge is conducted in increments, with each increment provided and improved by different entities over time. Incentive for creation may lie in approval and/or monetary benefit in the form of grants or payment for value-added services. The end-result is the creation of knowledge through a non-insular collective, resulting in products that have behind them resource-allocation equal to or greater than a large corporation. However, no one entity within the collective has invested the quantity of resources that demands massive profit-maximisation as a result of such investment. These results are achievable today, to varying degrees in different industries. They are evident today in software-related fields, from browser development to knowledge database creation to operating systems. They are yet to significantly impact other industry areas but networked innovation exists in areas such as biotechnology and automobile design. Completed products of this system of organisation and incentivisation of innovation have been capable of competing effectively with equivalent products created by the corporate innovation system. Some of these systems are more proprietary than others but none of them so far utilise the exclusionary powers encouraged by the patent regime. Given the proven effectiveness of this system and its rapid rate of growth, it is a matter of time before the networked innovation collective emerges as a viable alternative to, and eventually, a replacement for corporate innovation. Assuming that the products of this system will largely operate outside of the patent system, the system itself will become increasingly redundant, the rate of its redundancy directly proportionate to the rate of decline of corporate innovation.

So why do I study patent law?

On the viability of the use of State Force as an incentive to innovation

Once the foundation for the patent system loses plausibility, the remainder begins to look extremely wobbly? What is the point of a system of novelty, utility and nonobviousness but to create arbitrary rulesets determining potential excludability of other creations? Why understand reexamination procedure when you are aware that it serves as nothing more than a mechanism to

Why do I study patent law?

This thought occurred to me the afternoon before my Patent law exam, a common time for the occurrence of such thoughts. Its appearance was not a surprise, given the progress I was making through a thousand pages of casebook material, and the usual feeling of desperation that sets in at about five pm the evening before a ten am exam. However, in addition to the more conventional feelings of guilt and regret that accompany such pre-exam cramming, I noticed an additional factor of futility, not at the thought of writing the following day's paper with any measure of respectability, but with the concept of studying patent law itself. I realised that I did not believe in the patent system. Upon this realisation, all the different legal structures and principles that I was attempting to cram into my head took on an unreal, mirage-like shimmer.

The Foundations of the Patent Regime

I decided that in order to understand the reasons for my current disillusionment with the patent regime, it was important to trace my thought process back to my fascination for it. On reflection, it would appear to stem from my fascination with the idea of human creativity in the origination of useful technical information. I was fascinated with patents because it seemed to me that the patent system was the accepted legal and economic standard for the encouragement of such creativity, and that an analysis of this system would lead me to an understanding of the way in which this creativity could be nurtured and encouraged. On further analysis, it would appear that this is in fact the foundation upon which the patent system, (and for that matter, the intellectual property system itself) claims its right to existence today. (For further information on the subject, see page 10 of the linked .pdf). When broken down, the arguments for the existence of the patent system seem classifiable into these points:

1. Human innovation is part of an a. individual-centric process of creation b. of discrete, novel and useful inventions 2. This process of creation would not occur spontaneously, or at least, would not occur at an accelerated rate, if incentive were not provided to the individuals who so create 3. The incentive required to be provided should be in the form of a monopoly granted by the state to the individuals over such creation (the underlying assumption being that such a monopoly would allow the inventor to do with the invention as he saw fit)

In the course of my study of patent law, I came to realise that these assumptions are flawed. Whether they are only flawed today, as a result of the directions US and international patent law has taken, or whether they were flawed at the outset is a question that will be answered in the course of this paper. However, at this point in time, these assumptions are flawed.

The Mythical Inventor and the Magic Flame

The primary assumption that innovation is a process of creation undertaken by an individual inventor would be the first to go. It is clear from USPTO statistics on the percentage of all patents granted in the recorded history of the USPTO, that grants to collectives, whether they be in the form of government undertakings or corporations, is 87%, as opposed to the remaining 13% secured by individual inventors. It is to be noted that these numbers could not reflect the number of patents subsequently assigned by these individual inventors to collectives. These numbers reflect the patent grant statistics of a country where all modes of production, distribution, sale and (increasingly) social organisation are increasingly dominated by collectives. To that extent, they are fairly reflective of American reality. However, these numbers are also fairly reflective of worldwide practice in patent application. So the assumption, reflected in most patent statutes, that innovation is the result of an individual inventor is inherently flawed. It would be an unfair generalisation to say that human innovation has always occured through collectives, but that is the overarching reality, irrespective of how this reality is represented statistically. Innovation is an inherently collaborative process. At one point, the collective of choice was the State. With the birth and evolution of the corporation, the locus of collective power has changed.

However, this shouldn't make a difference if this innovation results in the creation of discrete, novel and useful inventions, right? Unfortunately, it became clear from my reading and limited assistance with the drafting of patent specifications that this assumptions was also false. The vast majority of patents granted consist of minor improvements in existing patented devices(for more information on this, see Chapter 13 of the linked Googlebook). A further analysis of these existing patented devices themselves yields a similar conclusion. This is not to say that some of these incremental additions do not advance the field of innovation to a great degree. The assumption made by patent law, that innovation exists like a magic flame created out of the ether of individual brilliance is flawed. Sparks of genius may exist in the form of individuals, but the innovative blaze that results rests on the kindling of centuries of effort of thousands of people.

Incentives to Innovate

Irrespective of the origin and nature of such innovation, however, it still seems a fair proposition to state that there should be some form of motivation to create such innovation.

In order to justify the existence of the patent regime, it is important to accommodate the assumption that the creation and distribution of practical knowledge is not a spontaneous process, and requires a system of protected incentivisation additional to that created by market forces

On of this ground, I found reason to disagree. Studies have shown that the creation and distribution of practical knowledge is not dependent on such protected incentivisation as is created by the patent regime. In fact, it has been demonstrated that, on the contrary, the creation and distribution of practical knowledge has been shown to suffer from such a system.

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