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Fair Rewards

Innovation, Patents, Copyrights and Fair Rewards vs. Time, Population, Communications and Fair Use
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While the fundamental rationale for the existence of Patents and Copyrights has not changed since their inception, there is today a widespread perception that "the System is broken". Innovators are claiming to be harmed as much as helped by that System, for example. In this Essay an attempt is made to show that the major causes of that problem are population growth and communications speed, and a remedy is proposed.

(Part I) A Tale of Two Eras
A look at a history of Patent Law (linked) reveals that the idea may have existed since the days of ancient Greece. And Copyright Law is basically a derivation of Patent Law, a direct result of the innovation of the printing press, which made it easy to copy documents. One thing to note is that the Term of a Patent or Copyright has varied considerably in different times and places. Regardless of the details, it is well known that the overall Goal of a Patent or Copyright Term is to provide the innovator with the opportunity to earn a Fair Reward for the effort of creating the innovation (regardless of whether it was a gadget or a story).

Let us now examine some details regarding how that Fair Reward typically was obtained. Then as now, an innovator needed to produce copies of the innovation for sale, and also find a way to let people know it existed, so that they might decide to buy one (or more). Now take a look at the (linked) graph, regarding the overall population growth of the human species. It is obvious that for a long long time population grew quite slowly. Next, take a look at the history of communications (linked) --it is just as true that for most of that same long long time, ideas could not spread much faster than a horse could run.

The Logical Conclusion is that it was worth granting a Patent or Copyright for a number of years, simply because it could easily take that long for an innovator to receive a Fair Reward, the result of slow communications and low population.

The next aspect of the overall "System is broken" problem relates in a different way to population and communications. It is well known that the majority of innovations build upon something (or some things) that had previously been invented. One of the most famous ways of expressing that fact was penned by Isaac Newton (linked). So, the first relevant point is that even a genius of Newton's caliber needed access to previous discoveries/innovations. The second relevant point is the fact that several decades passed after those discoveries were made, and before Newton began to build upon them (linked). What if some other genius had come along before Newton, and had encountered the same discoveries from which Newton had derived his innovations?

That Question brings up the relevant factor of population - -not everyone is a genius, and especially not everyone is a genius of Isaac Newton's caliber. We may now switch from the specific case just mentioned, to the more general case of a more ordinary innovation, because even ordinary innovators do not make up a large fraction of the population. Logically, therefore, when the population is small (and the total number of innovators is low) and communications are slow, it can take considerable time before Innovation A --or some portion of it-- becomes incorporated as a part of Innovation B. Thus we might see little conflict in the notion of granting Patent or Copyright protection for several years, simply because of the low probability that someone would immediately derive Innovation B from Innovation A.

On the other hand, due to various random factors, it might only take a few days for Innovation B to be imagined. This is where the doctrine of Fair Use becomes relevant (more- so for Copyrights than for Patents). The most important fact is that Ideas are not protected so much as Implementations of those Ideas. Therefore, because it might be impossible to copy an Idea without also copying some of its Protected Implementation, the Law allows a minimal amount of copying (the exact amount of which, of course, frequently becomes the subject of a legal dispute).

Fast-forward to today's Era.

One of the most important and gaining-ground technologies is called "3D Printing" or "additive manufacturing". This technology is going to force a merging of Patent Law with Copyright Law, because the plans that get fed into such a Printer might be covered by Copyright Law, but the thing that gets Printed could well be covered by Patent Law --and the two Laws have very different Protection Durations, which can only lead to confusion and more legal problems, in the absence of merging the Laws.

Next, today's population and communication situation is such that it is possible for hundreds of millions of people to learn about an innovation within hours or days of its announcement. Since such a population quite naturally includes a great many more innovators than in the earlier Era, Innovations B, C, D, and others can quite quickly be derived from Innovation A. While this is the simplest and most obvious explanation for the rate of today's technological progress, it also explains why many of today's innovators think "the System is broken" --they want to be able to sell their Innovations B, C, D, ..., almost before the ink or paint has dried on Innovation A, and they can't do it easily because the Patent and Copyright Laws, protecting Innovation A, were designed for a low- population-and-slow-communications Era.

(Part II) Toward A Modest Proposal
It may now make sense to think again about that earlier Era, and ask a Question: "How should the Fair Reward be measured?" If an Innovation Protection Term length was, for example, 20 years, that did not actually equate to money earned --it was merely an opportunity to earn money without competition for that length of time. Well, how much could actually have been earned in that Era, for 20 years???

A number of factors must be included in any attempt to Answer that Question, of which "production cost" and "sales price" are probably the most important. Those things not only directly relate to profits/earnings, the sales-price alone directly affects the Popular Demand for the innovation. If you invent an earth-moving machine and must sell it for twenty times an average person's annual wage, you will have fewer customers than if you sold a child's-toy version of the device, for an equivalently small price.

Another factor is Economic Inflation, because prices might not stay fixed for the duration of an Innovation Protection Term. Inflation basically makes it worthless to talk about fixed monetary amounts of earnings. On the other hand, the modern Era has given us plenty of experience with Inflation, and there are known/accepted ways of dealing with it, such as automatic price adjustments, indexed to the Inflation rate. And there are other ways of describing an income that don't reference monetary amounts at all. The description "life-style" can imply anything from "impoverished" to "super-rich" --and the phrase "maintaining a life-style" manages to convey the concept of "earning enough money to do that" without being specific as to quantity.

So, suppose we re-considered the Fair Reward for an Innovation in terms of "maintaining a life-style". In that earlier Era, and assuming a particular Innovation sold to moderate degree, with zero Inflation, how many years might the Innovator be able to support a modest life- style from the total Protected-Term proceeds of the Innovation? (In other words, gather up all the sales data for the Protection Term, figure the profits, and then see how many years of life-style could those profits support.)

For the purposes of this Essay a numerical value is now needed, but we can use the Rules of Algebra to call it "X years", and a great deal of historical data should be processed in order to arrive at the actual appropriate value of "X". Keep in mind that there could be considerable Debate regarding the known fact that something like 90% of all Innovations fail to earn a dime --should they be included in the historical calculations of a maintaining-a- modest-life-style Fair Reward?

The result of the preceding gives us an easy way to re- phrase a Patent or Copyright Protection Term. An example of such a re-phrasing might be this: "The Protection Term ends when you have earned enough to maintain a modest life-style for X years." Economic Inflation is automatically taken into account. And if the word "you" is taken to reference either Singular or Plural, then if an Innovation Team created the Innovation, the Fair Reward would apply to all the members of the Team, not just one person. "You" might even refer to everyone in an entire corporation, but care must be taken to ensure that nothing like "Hollywood accounting" (linked) is employed to cheat.

The best part of this Proposal is that it applies equally well to both the low-population-and-slow-communications Era and the high-population-and-fast-communications Era. In today's Era a newly-released Innovation might only have a Protection Term of 3 days, if so many items were sold in that time such that the profits could meet the "maintain- a- modest-life-style-for-X-years" condition. Please keep in mind that the Original Goal was to provide a Fair Reward for **Innovation**, not for Greed.... In what way does this Proposal fail to offer a Fair Reward for Actual Innovation?

In closing, we can now re-consider Innovations B, C, D, ..., derived from Innovation A. If the Protection Term for Innovation A really-in-practice often is able to shrink from years to weeks or even days, because of today's large population and fast communications, then it becomes quite easy for the later Innovators to wait for their own Fair Rewards, instead of feeling that "the System is broken".

Vernon, Nov 19 2013

History of patent law http://en.wikipedia...story_of_patent_law
As mentioned in the main text. [Vernon, Nov 19 2013]

Population Graph http://en.wikipedia...tion#Overpopulation
As mentioned in the main text. [Vernon, Nov 19 2013]

History of communications http://library.thinkquest.org/5729/
As mentioned in the main text. [Vernon, Nov 19 2013]

Newton Quoted http://www.phrases....eanings/268025.html
As mentioned in the main text. [Vernon, Nov 19 2013]

Newton Discovery Timeline http://www.uwgb.edu...sttech/suncentr.htm
As mentioned in the main text. [Vernon, Nov 19 2013]

Hollywood Accounting http://en.wikipedia...ollywood_accounting
As mentioned in the main text. [Vernon, Nov 19 2013]

The case against patents http://www.tinaja.com/glib/casagpat.pdf
Don Lancaster on patents - pdf file, and more useful than a vernon essay. [neelandan, Nov 19 2013]

Trans-Pacific Partnership Leaked Draft http://wikileaks.org/tpp/
As mentioned by xaviergisz [arvin, Nov 20 2013]

[link]






       Good problem statement, bad solution. The process of determining the apropriate period for each innovation is going to keep the lawyers well-fed, and only corporations will be able to afford to use the system.   

       Many inovations take a lot of capitol to bring to market. A large corporation has the resources to do that quickly. // The Protection Term ends when you have earned enough to maintain a modest life-style for X years // So that means that a corporation that brings the innovation to market quickly ends the time period quickly once they have made their buck (assuming you have some way to measure that), but a weekend inventor could drag it out for years because they don't get their invention to market. While some time difference may be reasonable, there should also be some incentive to get a product to market sooner than later and allow others to build on teh innovation as well.
scad mientist, Nov 19 2013
  

       Happy lawyers - now that's something you don't want to see ...
8th of 7, Nov 19 2013
  

       I think there is one major, major problem with this idea.
MaxwellBuchanan, Nov 19 2013
  

       [MaxwellBuchanan], yeah? "In what way does this Proposal fail to offer a Fair Reward for Actual Innovation?"   

       [scad mientist], you may be neglecting to think of Sturgeon's Law, regarding "90% of everything is crud." Most innovations don't earn a dime because nobody wants them --and, when that is actually true, it is probable that almost nobody will be incorporating them into other Innovations.
Vernon, Nov 19 2013
  

       I don't know - it was too long to read. That was the problem. Is the idea good enough to put into three sentences?
MaxwellBuchanan, Nov 19 2013
  

       [MaxwellBuchanan], my proposed solution depends on the background context. If the context was badly presented or simply flawed (but not so, according to [scad mientist]), then there is little chance the solution could make sense.   

       Nevertheless, the Idea is pretty simple, that the Protection Term should be associated with the income an Innovation generates. In the Old Days it could easily take a whole 20-year Term to generate a decent income, but that is not true today, for any truly worthwhile Innovation.
Vernon, Nov 19 2013
  

       There, you see? With a little effort you can do it. You've saved me (and countable others) minutes of time by summarizing.   

       So, now, I can point out the flaws in this idea. Who decides how much revenue an idea should generate?
MaxwellBuchanan, Nov 19 2013
  

       [MaxwellBuchanan] and [lurch], now you know why you should read the main text. A major reason for writing that text was to pre-emptively resolve such issues. The relevant paragraphs, answering the point you made, begin with "So, suppose we re- considered" and "For the purposes of this Essay".
Vernon, Nov 19 2013
  

       Don Lancaster had a write up about patents. He said that a patent only conferred the right to go to court, and that for the average inventor working alone it was more bother than it was worth.   

       They are used as status symbols and bargaining chips by large entities who already have lawyers on their payroll, who engage in harassing the smaller fry just to justify their existence.   

       More laws and scope for litigation is not going to improve life. Except for lawyers.
neelandan, Nov 19 2013
  

       If I understand this correctly, patent protection lasts until the inventor has secured $X in income (either through selling a product incorporating the patent or by licensing it).   

       If so, you are assuming that the "fair reward" for every inventor is exactly the same amount, irrespective of the nature of the invention. I understand that the word fair can have varying definitions but I don't know how this can be considered fair.   

       Compare, for example, a medical device that took a decade of work to perfect, vs a fancy glow on icons when you hover over them that somebody put together in an afternoon. I don't see how it can possibly be fair that both receive the same monetary value of protection. [The current system, where they both receive the same number of years of protection, is also unfair; yours might be an improvement but in my opinion doesn't go far enough]
arvin, Nov 20 2013
  

       [arvin], this Idea qualifies as Half-Baked because certain things were not stated precisely. The X number of years still needs to be computed.   

       The definition of "modest life-style" needs to be nailed down (not easy when a modest life-style in the USA can equate with living-like-a-king in various other places).   

       The possibility that Economic Inflation might happen at an increased (or decreased!) rate AFTER the Protection Term ends, and before the X number of years has passed, wasn't even mentioned.   

       I made no claim that this Idea was perfect; I only claimed it was better than the current system, and offered a rationale as to why. If an additional factor should be incorporated into the Protection Term calculations (your own recent post about originality is quite worthy), I'm fine with that.
Vernon, Nov 20 2013
  

       I agree whole-heartedly agree that patent and copyright terms are in need of review. A uniform 20 years regardless of the type of invention is lazy and inefficient.   

       I also agree that identifying the purpose of patents is essential in determining the optimal term of patents.   

       My opinion diverges from yours in regard to the calculation of a "Fair Reward".   

       The purpose of a patent is to encourage disclosure (i.e. publication) of technical information. Without this encouragement for disclosure, people and companies tend to keep their inventions secret. Although in theory most inventions could be 'reverse-engineered' to discover how they work, this is very inefficient. (Note that more than 80% of technical knowledge resides exclusively in patents.)   

       So a patent is a trade of a limited monopoly for a disclosure (of that invention). The optimal term for a patent is the *minimum* number of years of monopoly that a person/company would be willing to reveal how the invention works.   

       At this point we would need to do research into what this optimal term would be. this would need to take into account that there is an 'eventual inevitability' of almost all inventions - what is cutting edge and novel now becomes rudimentary and obvious as time and technology rolls on.   

       Ultimately patents should be an incentive to consolidate the 'first mover advantage' in commercialising technology. Patents should not be a tool for speculation, where profit (through royalties or infringement payments) only requires to wait for someone else to become the 'first mover'.   

       I'm guessing that the result of the analysis would reveal much shorter patent terms are optimal, but different technology would require different terms. So, for example, patent terms in pharmaceuticals would be significantly longer than in software.   

       The big elephant-in-the-room of all this discussion is that the net exporters of intellectual property want the longest terms of protection possible, regardless of how sub- optimal and inefficient that may be (i'll leave the reader to figure out which countries are net exporters). For the latest chapter in the extending reach of patents see the recently leaked draft of the Trans-Pacific Partnership Agreement.
xaviergisz, Nov 20 2013
  

       "net exporters of intellectual property want the longest terms of protection possible"   

       That's just greed. See the second-to-last sentence of the second-to-last paragraph of the main text (treat the ellipsis as a sentence-break).   

       [xaviergisz], you may have a good point regarding the disclosure of a patented innovation's details, but you are certainly missing some things.   

       First, the earliest things in History given a Protection Term would typically have been far less complex than today's inventions --just about anyone could fully understand how one of those gadgets worked as soon as it was seen (almost no reverse engineering needed).   

       Second, Copyrights exist without any notion of "full disclosure" attached to the things Copyrighted. They are basically all about the "Fair Reward" thing.   

       Third, here are a couple quotes from the US. Constitution:
"The Congress shall have Power To lay and collect Taxes [...]"
"To promote the Progress of Science and useful Arts, by securing for limited Times to Authors and Inventors the exclusive Right to their respective Writings and Discoveries;"
There is nothing in THAT about "full disclosure".
  

       So, it is clearly reasonable to think that the idea of a "Fair Reward" for the Innovation has, historically, been far more important than "full disclosure".   

       I think you will find that the *actual* purpose of "full disclosure" is to enable the distinguishing of similar Innovations from each other in the Legal System. That is, if an Innovator want to sue someone for violating the Protection Term, the Innovator needs to be able to show how the violator is copying the Protected Innovation --the Patent precisely describes the Thing Protected, see?   

       (Copyrighted things are of course inherently "fully disclosed", so it is often quite easy to detect plagiarism. Only the degree of copying gets scrutinized by the Legal System, and that is entirely because of the existence of the "Fair Use" notion.)
Vernon, Nov 20 2013
  

       [lurch], thank you for your remarks. I do think you might have misinterpreted something, though. That value of "X" mentioned in the main text was supposed to be computed only once, a generic answer to the question of how much of a Fair Reward might be worthy --not computed for every single patent application.
Vernon, Nov 20 2013
  
      
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