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How We Got to Now? Not Just with IP.

· October 21, 2014

Tomorrow night airs the third episode of PBS’s miniseries based on Steven Johnson’s book, How We Got to Now: Six Innovations that Made the Modern World – one of two new books on innovation by best-selling authors that raise interesting questions about the role of intellectual property in promoting technological development. The other is by Walter Isaacson, author of Steve Jobs, who has expanded his scope in The Innovators: How a Group of Hackers, Geniuses, and Geeks Created the Digital Revolution.

Both books place great emphasis on collaborative innovation. And both books place significantly less weight on intellectual property protection than policymakers in Washington.

Isaacson states that “creativity is a collaborative process.” Throughout the book, he focuses on the collaborative teams that have created the digital age. He identifies three ways these teams were assembled. The first is government funding and coordination, which led to the original computers (Colossus, ENIAC) and networks (ARPANET).

The second is “peers freely sharing ideas and making contributions as part of a voluntary common endeavor.” Examples are the World Wide Web, Wikipedia and open source software such as Linux and Firefox. Isaacson observes that “this commons-based production by peer networks was driven not by financial incentives but by other forms of reward and satisfaction.”

The third way collaborative teams were formed was through private enterprise. Both large companies such as AT&T and Xerox, and startups such as Apple and Microsoft, formed research and development teams that innovated in search of profit. Isaacson recognizes that the profit motive “required a proprietary attitude to innovation that led to patents” and other intellectual property protections. Isaacson states that digital theorists and hackers disparaged this approach, “but a private enterprise system that financially rewarded invention was a component of a system that led to breathtaking innovation in transistors, chips, computers, phones, devices, and Web services.”

The key point is that IP is just a component of the private enterprise system, which itself is just a component of a larger innovation eco-system that also relied on voluntary networks and government-funded collaborations.

Isaacson notes that “the values of commons-based sharing and of private enterprise often conflict, most notably over the extent to which innovations should be patent-protected.” But in the course of a 540-page book, he devotes little space to exploring the conflict. He briefly speculates on which model of development leads to faster improvements: open source or marketplace competition with financial rewards for creating intellectual property. He concludes that “in the cases of the Internet, the Web, and some forms of software, the open model would turn to work better.” Conversely, the proprietary approach worked well for hardware, particularly in the 1950s. This is because “large industrial organizations, which needed to raise working capital, were best at handling the research, development, manufacturing, and marketing for such machines.” However, he identifies a downside to patent protection for hardware innovation: “the proprietary model produced companies that were so entrenched and defensive that they would miss out on the personal computer revolution in the early 1970s.”

Isaacson discusses the “audacity” of Bill Gates and Steve Jobs when it comes to their IP positions. In 1975, Bill Gates complained about members of the Homebrew Computer Club copying Microsoft BASIC without payment, but Gates himself “was a serial stealer of computer time,” much of it on “Harvard’s military-supplied computer, funded by American taxpayers.” Isaacson also states that the widespread copying of Microsoft BASIC helped the company in the long run by establishing Microsoft BASIC as a standard that other companies had to license.

And although Jobs (unsuccessfully) sued Microsoft for copying the desktop graphical user interface, Jobs copied that concept from Xerox, and he bragged that Apple had always been “shameless about stealing great ideas.” In assessing Jobs’s conduct, Isaacson says that “conception is just the first step. What really matters is execution.” He adds that “Jobs and his team took Xerox’s ideas, improved them, implemented them, and marketed them.”

Isaacson observes that by the 1990s there were numerous models for software development. In Apple’s approach, the hardware and operating system were tightly bundled, providing users with a seamless experience. In Microsoft’s approach, the operating system was unbundled from the hardware, which allowed the user more hardware choices. In the open source approach, software was completely unfettered and could be modified by any user. Isaacson concludes that

Each model had its own advantages, each had its own incentives for creativity….But the approach that worked best was having all three models coexisting, along with various combinations of open an closed, bundled and unbundled, proprietary and free….[A] variety of approaches competed over the decades, spurring each other on—and providing a check against any one model becoming so dominant that it stifled innovation.

Beyond these relatively brief discussions, the book contains only a handful of references to intellectual property protection. (The index only has three listings for “patents,” none for “intellectual property,” and none for “copyright.”) It discusses the early patent disputes between Sperry-Rand and Honeywell over the invention of the computer, as well as the litigation between Texas Instruments and Fairchild over the integrated circuit. In both cases the litigation dragged on for so long as to become irrelevant to leadership in the industry. With respect to the question of who invented the microchip, Isaacson states that “the near simultaneous advances made by Kilby [for Texas Instruments] and Noyce [for Fairchild] showed that the atmosphere of the time was primed for such an invention.”

The theme of simultaneous invention looms large in Steven Johnson’s How We Got to Now. Johnson explores six innovations that have shaped the modern world: light bulbs, sound recordings, air-conditioning, clean tap water, the wristwatch, and the glass lens. Like Isaacson, Johnson stresses the efforts of creative teams and what he terms “networked innovation.” He explains that inventions and discoveries come in clusters, where geographically dispersed investigators stumble independently onto the same discovery. “Most discoveries become imaginable at a very specific moment, after which point multiple people start to imagine them.”

Johnson goes to great lengths to demonstrate that Edison did not invent the light bulb as a lone genius but as part of a wider network. He then explains why debunking the myth of the lone inventor is important:

If we think that innovation comes from a lone genius inventing a new technology from scratch, that model naturally steers us towards certain policy decisions, like stronger patent protection. But if we think that innovation comes out of collaborative networks, then we want to support different policies and organizational forms: less rigid patent laws, open standards, employee participation in stock plans, cross-disciplinary connections.

As with The Innovators, How We Got to Now contains few references to intellectual property. (The index contains ten listings for “patents,” none for “intellectual property,” and none for “copyrights.”) Typically these references are passing mentions of who obtained a patent on a particular invention. One of the longer discussions occurs in the context of sound recordings. After lengthy antitrust litigation, the Justice Department and AT&T in 1956 entered into what Johnson termed an “intriguing compromise.” AT&T would maintain its monopoly over the telephone system, but any existing patent that had originated in Bell Labs would be freely licensed to any American company, and all new patents would have to be licensed at a reasonable fee. Johnson states that “the monopoly power gave the company a trust fund for research that was practically infinite, but every interesting idea that came out of that research could immediately be adopted by other firms.” Johnson adds that much of the American success in post-war electronics can ultimately be attributed to this consent decree.

Isaacson and Johnson certainly are not suggesting that intellectual property protection is antithetical to innovation. But they believe that the historical record demonstrates that intellectual property is part of a much more complex innovation dynamic involving government intervention and networks of collaboration, which can be adversely affected by over-protection. As Isaacson writes,

The protocols of the Internet were devised by peer collaboration, and the resulting system seemed to have embedded in its genetic code a propensity to facilitate such collaboration….The collaboration that created the digital age was not just among peers but also among generations. Ideas were handed off from one cohort of innovators to the next.

As Congress considers changes to our intellectual property laws, it would be well-advised to read these books and remember that intellectual property is not the be-all and end-all of innovation policy. Government involvement in the form of research funding and antitrust enforcement, as well as the encouragement of collaborative networks, are also critical.

The Administration is already taking some steps in the right direction. It supports increased research funding both for government labs and research universities. Its expansion of public access to the results of federally funded research will increase collaborative innovation. Similarly, President Obama expressed an understanding of the importance of trying to “get the balance right on patents and copyrights” when voicing support for patent reform at a town hall meeting in Los Angeles on October 9:

I think the basic concept is that you want to have sufficient IP, and–whether patents or copyrights–that you are continually encouraging and rewarding innovation and creativity. But you don’t want those structures so tight, in terms of protecting that intellectual property, that that ends up being actually an inhibitor to people getting good information, folks coming up with new uses for existing information….

Innovation

New technologies are constantly emerging that promise to change our lives for the better. These disruptive technologies give us an increase in choice, make technologies more accessible, make things more affordable, and give consumers a voice. And the pace of innovation has only quickened in recent years, as the Internet has enabled a wave of new, inter-connected devices that have benefited consumers around the world, seemingly in all aspects of their lives. Preserving an innovation-friendly market is, therefore, tantamount not only to businesses but society at large.

Intellectual Property

The Internet enables the free exchange of ideas and content that, in turn, promote creativity, commerce, and innovation. However, a balanced approach to copyright, trademarks, and patents is critical to this creative and entrepreneurial spirit the Internet has fostered. Consequently, it is our belief that the intellectual property system should encourage innovation, while not impeding new business models and open-source developments.