Building a New System: Basic Principles

      Enforceable property rights have to be defined and enforced for capitalism to work.

      Free use of knowledge ends up with societies that create too little new knowledge.

      Premise: The world now needs a socially managed enclosure movement for intellectual property rights or it will wittness a scramble among the powerful to grab valuable pieces of intellectual property.

  • The new system must strike the right balance between the production and distribution of new ideas

      • Objective One: "More Production"

        To develop new products and processes, individuals must have financial incentive to undertake the costs, risks, and efforts of developing new knowedge.

        Not surprisingly, bigger incentives lead to the production of more knowledge than smaller incentives.

      Objective Two: "Faster Distribution"

        The corollary of fading government efforts in R&D means the need for stronger private monopoly rights.

        At the same time, for any existing piece of knowledge, the social incentives are reversed 180 degrees. The wider the use and faster the distribution of that new knowledge, the greater the benefit to society.

        Free usage leads to the widest and fastest distribution.

      Any system of intellectual property rights must make the trade off between these competing objectives.

        It is a judgement call ....

        ... but it is not a call that should be made by a Judge!

        Judges don't think about what makes sense form the perspective of accelerating technological and economic progress.

        Judge are concerned about new areas of technology can be inserted into the existing legal framework with the LEASTdisruption to existing interpretations.

        These are LAZY law-writing practices and do not make for good economics or sensible technology polocies.

      In our modern economics, private monopoly power shoould be less worrisome than it was then our patent system was originally set up.

        There are fewer and fewer products with inelastic demand curves that would allow companies to raise their prices arbitrarily and earn monopoly returns.

        There are just too many choices and close substitutes.

        Small amounts of monpoly power which result in slightly higher prices, simply don't matter as much with todays higher incomes as they did in the past.

  • Laws on intellectual property rights must be enforcedable or they should not be laws

      • The same technology that has made intellectual property rights so important have made enforcement of those laws much more difficult, and in some cases impossible.

      Laws CAN be written, but they are meaningless - and should NTO be written unless a technological choke point exists which makes enforcement possible.

      Laws which cannot be enforced become widely violated leading to disrespect for teh law and more violations.

  • The System must be able to determine rights and resolve disputes quickly and efficiently.

      • Many of the problems with the patent system come from the lack of consistent, predictable, repid, lowcost determinations about intellectual property rights and a means of quick cheap dispute resolution.

      For inventors of technologies that have very short lives, making use of today's system of dispute resolution - with its delayed, lengthy and expensive court trials, it's equivalent to losing ones rights.

      Model: "US System for Water Rights"

      Federal water masters are given the authority to allocate water in dry years and to settle disputes qucikly BECAUSE crops die quickly!