Big data; security; the cloud; outsourcing. These are all hot topics in IT today, and they all focus on applications of technology to meet various needs. But another topic that is increasingly garnering headlines is intellectual property (IP)—particularly, in the case of IT, patents.
In a recent decision, a court ordered silicon company Marvell to pay Carnegie Mellon University about $1.17 billion in damages on the grounds that it infringed on two of the university’s patents. This judgment is one of the latest in a series of huge awards for patent infringement, exemplified by Apple’s $1.05 billion (since reduced) court victory over Samsung. In addition, so-called patent trolls use the legal system to wring money from companies—large and small—for using any number of common technologies. Although some of these IP companies deny they have any current interest in going after consumers for patent infringement (such as for using Wi-Fi), they stop short of disavowing the right to do so. Currently, companies are profitable targets, particularly smaller ones for whom the cost of settling when threatened with litigation is far less than the legal fees tied to fighting it out in court—even if the company is victorious.
The patent system is no longer the province of the little guy. One could easily envision the system as serving the inventor working his or her off hours in a garage or on a computer for years to develop some new technology—a patent (or other IP right) protects that work by preventing companies from using it without recompense to the inventor. The cost of obtaining a patent varies, but can easily exceed $10,000 in legal and administrative fees; strong patents can exceed $20,000—and, of course, the sky is the limit. But this is only the cost of applying for the patent. Should a patent be granted, the legal fees of taking a large company to court could be astronomical. So, even if the little guy can raise enough money to buy a patent, the financial risks (apart from an ironclad case) of legal action could make such a patent virtually worthless.
Calls for reform of the IP system are increasing, particularly in the face of what are apparently abuses of that system. But good, lasting reform first requires identification of the problem. Is intellectual property (of which patents are one form) even a defensible concept in the first place? What rights does IP confer, to whom and for how long? Answering these questions is not a simple matter, but the first step in doing so is to confront the issues with clear thinking. Thus, this article is the first in a series that aims to present some of the basic arguments regarding IP.
This series is not intended to promote one position over the other. Its goal is to present some of the areas in which adherents to and opponents of IP rights clash, with the hope that more-informed dialog will result. A clearer understanding of IP and its legal, logical and moral status will enable real reform of the patent system, rather than simply patches that will eventually cause more problems. Numerous resources are available to discuss the legal fine points of IP (such as the difference between patents, copyright and so on), as well as its history.
Intellectual Property Pro: Ownership of Ideas
Building on the idea that a person has a right to his or her physical property (by determining who can and cannot use or dispose of it, for instance), IP proponents often extend this idea to ideas. A person could therefore, by virtue of first discovery (or first claim to discovery), lay a legal if not moral right to certain intangibles or ideas. Just as physical property is granted legal protection (at least in some economic systems), so intellectual property would receive similar protection. No one else can use that idea or other intangible without permission—perhaps with certain compensation attached—from the owner.
This approach to the topic is essentially a moral/legal one that does not invoke the practicality of these rights. Just as (again, in some economic systems) physical property cannot be granted or confiscated simply on pragmatic grounds, IP rights are to be similarly respected.
Intellectual Property Con: Ideas Can’t Be Owned
Opponents of intellectual property might argue that ideas, precisely because they are intangible, cannot be owned. For instance, if a person takes a car belonging to someone else, the original owner has lost the use of that car. Only one person can “own” the car—such is the case with all “scarce” goods, which have a limited supply. Ideas and other intangibles, on the other hand, are not scarce. If a programmer creates a certain piece of code and then a user copies it, the programmer still has complete use of his or her product. In other words, unlike the case of a car, the code that a programmer creates is not a scarce good—an infinite number of copies potentially exist.
Furthermore, the argument for intellectual property builds on the foundation of physical property. Presumably, then, physical property is more fundamental than intellectual (from a logical standpoint). But the problem is that adding the concept of IP ultimately infringes on physical-property rights. For instance, say IP rights are granted, and the programmer owns his computer code. Legally, then, another individual is thereby limited in the use of his own computer: he or she is restricted in the peaceful, nonviolent use of that physical property. Thus, IP builds on the foundation of physical-property rights but then proceeds to attack that foundation.
IP Pro: Rebuttal
In response, the proponent of IP rights might say that in the case of the software programmer, copying the code may not take away the programmer’s use of that code, but it does decrease its market value. If the programmer has legal protections of his or her work, then the value of that work is much higher; rampant copying causes the market value of the code to plummet, eventually reaching zero (because of the infinite supply of copies). Thus, although the use of the code is not stolen from the programmer, monetary value is stolen. The associated use of physical property—involving copied software—is therefore not a peaceful use of IP.
IP Con: Rebuttal
The opponent of IP rights might respond by rejecting the use of market value in this way. In the physical realm, a similar scenario could be concocted in which the first gold miner claimed that because any further mining of gold reduced the value of his current stash, all future gold mining is theft of market value and should therefore be outlawed. The first person to sing might want royalties for anyone who decreased the value of his or her ability by singing. These situations are no longer applicable, since such activities have gone on for thousands of years, but they illustrate the problem of attempting to employ market value as a defense for IP rights.
This hypothetical back and forth looks at a small sampling of the types of arguments that surround the question of intellectual property. They look primarily at the fundamental legal/moral case for or against IP. The greatest difficulty for the pro side in this regard may be the limitation of (peaceful) physical-property rights, which are the exemplar of property rights generally. For the con side, the decrease in market value of certain work owing to a lack of legal protection raises some questions. A company might pay a huge sum for code that has yet to be created, yet it would pay nothing (in the absence of IP protection) for a copy of the work once it had been written.
So, which side has the upper hand? What other scenarios might each bring to bear in defense of the respective positions?
This part of The Data Center Journal’s series on IP covers only one facet of the debate. Future parts will look at issues such as the term of IP protection and what that means for the nature of such rights, the benefit (or lack thereof) that IP brings to innovation and the costs that IP brings to society, both businesses and consumers. Stay tuned for more!
Image courtesy of Michael Neubert