Against Intellectual Monopoly

places, such as http://www.law.cornell.edu/constitution.
    19. The $218 movie was Tarnation and the information, from BBC News, is at
http://news.bbc.co.uk/2/hi/entertainment/3720455.stm.
    20. Machlup (1958), p. 80. He nevertheless concluded that we should keep the patent
system. We discuss his position further in our conclusion.
    21. For the 2003 Lawrence R. Klein lecture, see Boldrin and Levine (2004b). See also
Selgin and Turner (2006).
    22. Scherer (1965).

     

TWO
Creation under Competition
    The basic conclusion of this book is that intellectual monopoly - patents,
copyrights, and restrictive licensing agreements - are unnecessary. Always
beware of theorists bearing radical ideas - most ideas are bad, and most
theories are wrong. This book may be yet another entry in that long list of
confused and confusing dreams.
    Therefore, we must first and foremost convince you that our ideas are
firmly grounded in facts and practice. Most innovations have taken place
without the benefit of intellectual monopoly. Indeed, the system of intellectual monopoly as it exists today is of recent vintage - some parts of the
current system are only a few years old, and their damaging effects are already
visible and dramatic.
    No gardens of utopia, then, but the fertile fields of practical experience,
as illustrated by thriving markets without intellectual monopoly - that is
what this and the next chapter are about.
Software
    In spite of being all around us, facts are often invisible because we look
at them with wrong-shaded glasses. Look closely at the computer on your
desk. You see a mouse, a keyboard, and, on your screen, a bunch of different
overlapping windows with word processors, spreadsheets, instant messengers, and a Web browser through which you can access a vast array of
information on a great diversity of subjects. At the end of the Second World
War - sixty years ago - digital computers did not exist, nor, of course, did
the software that makes them work. In few industries has there been such
extensive innovation as in the software industry - and few technologies have
changed our way of life as much. Will it surprise you to learn that virtually
none of the innovations in this industry took place with the protection of intellectual monopoly? Our tour of the hidden world where innovation
flourishes under competition starts here, in the software industry.

    We read about Amazon suing Barnes and Noble for patent infringement -
and being sued by IBM for the same - and we do not know whether to laugh
or to cry. We find Microsoft hinting that it will sue us for patent infringement
if we use GNU/Linux instead of Windows.' It seems as if no industry is as
hemmed in with intellectual monopoly as the software industry. But it was
not always like this. It turns out that over the past two decades, the software
industry has "benefited" from massive changes in the law, legislated by that
duly elected body, the U.S. Supreme Court. Indeed, prior to the 1981 U.S.
Supreme Court decision in Diamond v. Diehr, it was not possible to patent
software at all, and the current craze to patent every click of the mouse
originates in the subsequent extension of patents to software products in
the 1994 federal circuit court ruling In re Alappat.
    Did this judicial legislation bring forth an explosion in software innovation? We mentioned Amazon suing Barnes and Noble over purchasing
online with just "one click." Some might wonder how difficult and innovative this invention is, so it may seem a straw man. Whatever the merits are
of one click, there are certainly many software inventions that we all agree
are important and innovative. There are all the graphical user interfaces; the
widgets such as buttons and icons; the compilers, assemblers, linked lists,
object-oriented programs, databases, search algorithms, font displays, word
processing, and computer languages - all the vast array of algorithms and
methods that go into even the simplest modern program. These innovations
not only are all difficult and important, but also the fact is that every single
one of these innovations is used and is necessary to make the one click, or
for that matter two clicks, work.
    We do not mention any of these significant inventions as a consequence
of patents on software innovation for one simple reason. Each and every one
of these key innovations occurred prior to 1981 and so occurred without
the benefit of patent