Against Intellectual Monopoly by Michele Boldrin;David K. Levine Page B

copyright
first and patents later grew. Nowadays copyright and patents stand at the
core of the software industry, which has become both monopolized and
substantially less innovative than in the past.' Innovation and creativity
come from the competitive fringe, which has great difficulty hiding behind
"intellectual property" protection. Neither Google nor YouTube nor Skype
is the golden egg of the patents' chicken, and in fact they do not use patents
to retain their competitive advantage. By contrast, Microsoft would have
had a hard time imitating and then catching up with Netscape had the
latter managed to patent the idea of a browser, something it could do today. These are the facts: the great role of patents in giving us modern software is
unadulterated fantasy.

    We shall see now that the story of software is far from unique. Most
successful industries have followed the same pattern: "intellectual property"
plays little role at the pioneering stage when new innovations and better
and cheaper goods are pouring in. Then, when the creative reservoir runs
dry, there is the desperate scramble for the pork that "intellectual property"
provides. Because this is true for every well-established sector, from cars to
electricity, from chemicals and pharmaceuticals to textiles and computers,
and because this is widely documented in every decent history of such
industries, we will not bore readers by going through these most traditional,
if economically crucial, sectors. Instead, in keeping with our odd tradition
of looking where our arguments have fewer chances of holding water, we
will try to make our point by looking at some less obvious industries - for
example, where imitation is cheap and there is lots of fierce competition.
World without Patent
    Historically, very few ideas and innovations have been rewarded with government protected monopolies. Although the Venetians introduced limited
patent protection to "accutissimi Ingegni, apti ad excogitar et trouar varij
Ingegnosi artificij"2 in 1474, this was an exceptional provision aimed at
attracting particularly skillful artisans and merchants from other states.
Such it remained for about a century and a half, with kings, princes, and
doges giving or taking away exclusive privileges as they saw fit either to
promote the economic vigor of the state or, more often, to promote the
financial well-being of their purse.
    It was English Parliament that, in 1623, pioneered patent law in its modern version with the aptly named Statute of Monopolies. At the time,
the euphemism "intellectual property" had not yet been adopted - that
a monopoly right and not a property right was being granted to innovators
no one questioned. Moreover, the act of Parliament introducing the statute
did not create a new monopoly. It took the power of granting monopoly
away from the monarchy (represented at the time by King James I) and
lodged it instead with Parliament. This basic fact is often missed in discussions over the role of patents in the economic development of the United
Kingdom. Before the statute was enacted, the royal power to sell monopolies (on either new or old products, it did not matter: think of the salt
monopoly) went completely unchecked and its use aimed at maximizing royal revenues. The economic incentives of innovators or, more generally,
of entrepreneurs were nobody's concern in issuing letters of patent.

    The statute, therefore, replaced the super-monopolistic power of expropriation and arbitrary grants of monopoly the Crown had enjoyed until
then, with the milder temporary monopoly actual inventors would receive
from Parliament. This, no doubt, represented progress in terms of private
property rights and incentives to private economic initiative. Further, the
range of products to which patent protection could and would be given
was greatly reduced, as it was restricted to actual inventions (that is, forget
the monopoly of salt) that satisfied