Against Intellectual Monopoly

invention and cumulative discovery by a number of
more or less disconnected inventors. In all three cases, one of the inventors
participating in the cumulative effort - generally the one with the smallest
contribution but the best connections and the most cunning instinct for
the monopoly game - won the patent, the glory, and the monopoly profits.
Thanks to the patent system, the other innovators were left out in the cold,
without economic reward, without the right to make copies of their own
invention, without the right to compete in the market, andwithout any fame.
Of course, it may be that the 2002 declaration by the U.S. Congress that
Antonio Meucci invented the telephone was a suitable form of compensation
for his invention. Given that, at the time of the ruling, Meucci had been dead for many decades, we very much doubt that he would have felt that
this was the case.

The Moral
    The moral of these and dozens of other stories - calculus, clipper ship, bicycles, motion pictures, magnetic resonance imaging, automobiles, duct tape -
is simple. Most great inventions are cumulative and simultaneous; most
great inventions could have been introduced simultaneously, or almost so
by many different inventors and companies, competing among themselves
to improve the product and sell it to consumers at a price as low as possible;
most great inventions could have spread more rapidly and improved more
quickly if the social productive capacity that simultaneous inventions
generate had been usable. All of us, but for a dozen monopolists, would
have been better off. None of this has happened, and none of this is happening, because the system of intellectual monopoly blocks it. Intellectual
monopoly has historically given and still gives all the rewards to a lucky
and often-undeserving person who manages, in one way or other, to get
the patent and grab the monopoly power. As the stories we have told show,
intellectual monopoly is absolutely not necessary for great inventions to take
place. It is damaging for society, as valuable productive capacity is literally
destroyed and thrown away. Finally, if you allow us, it is also awfully unfair.
Notes
    1. The advantages and disadvantages of intellectual monopoly when innovations build
on previous innovations is discussed in Scotchmer (1991) and Boldrin and Levine
(1999), who construct examples in which competition achieves advantages best,
while intellectual monopoly fails to innovate at all. More elaborate modeling and
a more exhaustive analysis of the negative role intellectual monopoly plays when
the complexity of innovations increases can be found in Boldrin and Levine (2005a,
2006). A detailed analysis of the problem, with implications for merger and acquisition patterns in industries where intellectual monopoly is widespread, is in Llanes
and Trento (2006).
    2. A starting point for Douglass North's views of the role that well-defined property
rights, and patents in particular, played in the Industrial Revolution are his 1981 and
1991 works. It should be noted that North does not subscribe to a naive view of
the evolution of property rights according to which they become progressively more
efficient or just simply better as time goes on and the economy develops. Being aware
of the fact they are, more often than not, determined by rent-seeking agents within
a political game, North is careful at pointing out that the system of property rights
one often faces is substantially inefficient, or inefficiency inducing, along more than
one dimension.

    3. Writing about the use of patents to lure investments away from other countries
tempted us to engage in a, possibly not irrelevant, digression on the role that patents
played in Europe, roughly, between 1400 and 1800. We resisted the temptation, but
here are some hints for further reading. The original purpose of patents was to
attract specific groups of artisans and highly skilled professionals who were, for one
reason or another, lacking in the country or city promising the patent. Monopoly
was the carrot offered by most Italian and northern European cities to inventors
who agreed to immigrate and set up shop there. In England, during the seventeenth, eighteenth, and most of the nineteenth centuries, a royal patent privilege
was awarded to those citizens who would travel abroad and be the first to bring
back new goods and technologies. United States patent laws were less inclined to
provide