Sunday, April 05, 2009

Alternatives to Patents

Intellectual property law involves extending monopolies to individuals to reward them for creative effort. Monopolies are notoriously inefficient, but they are considered a Hobson's Choice for the development of new pharamaceuticals: you can get results with monopolies or not at all. (Patent monopolies sometimes lead to startling ethical results, like when genetic researchers shut down cancer-screening nonprofits).

Finally, however, economists have tested an old model for incenting solutions to complex problems without patents.

Indeed, in the market setting more people solved the problem on average [than in a patent based system]. There are two possible explanations. First, the winner-take-all nature of the patent system may have deterred some of the weaker participants from exerting effort. Second, and more interesting, is that the prices in the market system did in fact incorporate information about the optimal solution - thus market prices may have given people hints about the optimal solution, much like seeing a partial solution to a jigsaw puzzle.
-Bossaerts et al. via Marginal Revolution Click through to see how it all worked.

My worry is how the WTO is exporting IP regimes by tying IP protections to development opportunities for poor nations. These nations have to develop complex IP protection infrastructures that often besiege their local foundling judicial systems, pushing ordinary justice to the side to protect the desires of multinational corporations. This global assumption that strong IP is the only way forward prevents different countries from even experimenting with other medical research systems. Even if the patent system proves to be the best system there is, it's unfortunate that we must completely trample any experimentation in this area.

For a "patents aren't so bad, at least not in pharma" counterpoint, consider this piece from Reason on The Tragedy of the Anticommons.