From IP to NP, Day Two: Part 4

The closing session of 'From IP to NP', entitled "Striking the Right Balance, an Analysis of the Present, a Look to the Future", was moderated by Stephan Freischem (Secretary General of AIPPI). Stephan opened by looking for subtitles: "IP and the Ivory Tower", "IP and the Cloud", but something to do with "Extracting the Value" would be more apt; it's also important to see the value in the functions of IP: the US and EU show stagnating growth, and a declining degree of appreciation for IP, in contrast with those countries, such as Korea, which have advanced rapidly through their increased commitment to it.

Stephan then introduced Professor Yochai Benkler (Harvard Law School, author of The Wealth of Networks), to say a few words on "Property, commons, and cooperation: diverse innovation and learning strategies for an uncertain environment". He opened with a review of the disruptive impact of Encarta on Encyclopaedia Britannica -- the decline of which was not caused by Encarta but rather by Wikipedia; he also cited the growth of free/open source software. Are we talking about the non-market fighting the market?  What's going on here, he asked.

Over the past 120 years we've seen four transactional frameworks: the "market-based versus non-market-based" combined with the "centralised versus decentralised". The past decade has shown the threat of non-centralised and non-market-based solutions -- not just for commercial purposes but for activities such as crowd-sourcing the examination of aerial photos to locate drought victims in accessible areas.  Yelp for restaurant criticisms is another example.

What has happens reflects a shift in how we learn and how we control the learning process in order to appropriate it.  When agents and resources are connected to a project, boundaries exist: one is property, another is contract -- both of which allow cooperation and also restrict it.  As boundaries are removed, the ability to combine agents and resources increase extralinearly [at least, that's the word this Kat thought he heard].

I understood all of that,
of course!

What accounted for the phenomenon of Silicon Valley? Was it the unenforceability of non-compete clauses in California, the manner in which human social interaction was effected and information exchanged, or what? Can one generalise from the phenomenon to a generalised theory of innovation? Now, with the internet, problem-solvers can be accessed from anywhere in the world, but the further apart they are, the less able it is to control them or predict their outcomes.  Yochai then considered human knowledge in relation to uncertainty: the less certain an outcome, the less easy it is to motivate innovation by incentivising it. The network industry resists patents in that freedom to operate in an environment of extreme uncertainty, the greater is the push against appropriability (and hence against patents). With more interconnectivity and uncertainty in a changing world, we will continue to see more emphasis on freedom to operate, to explore and adapt, against more powerful exclusionary incentives.  The big challenge of the patent system today is to allow the largest amount of freedom to operate without killing it through the imposition of the sort of rewards offered by traditional IP.

Hagit Messer Yaron (Tel-Aviv University, Israel, former Chief Scientist of the Ministry of Science) then spoke on "Universities and patents - facts, analysis and trends".  "My challenge", she said, "is to make my CV shorter in order to allow more time for my talk". She described the gap between academia and industry as 'The Death Valley': it should not be filled in, but should at least be bridged so that the two sides can transfer knowledge to one another, or jump from one to the other like Super Mario.  Research is like a parachute, she added: if it isn't open, it doesn't work.

Hagit described a successful tech transfer policy, as designed by the law firm S. Horowitz, as "The Giving Tree". Each piece of fruit has to be captured as it matures, and given to its beneficiary -- but if you take every piece of fruit there's nothing left with which to plant a new tree.  In advance, we can't predict which fruit is edible, which makes for problems in formulating patent policy.  The fruit might consist of a technology that needs improving, in which case it presumably needs to be transferred back to the tree.

How does IP interfere with research? It may governed research done in other institutions and which is non-portable, as well as preventing disclosure and collaboration between academics ("this is the end of science"); it can make equipment and research tools more expensive, added Hagit, noting that public access to information may be delayed or, where that information is destroyed, prevented.  Even the direction of faculty research may be changed, and personal and institutional conflicts of interest are often created. Also on the downside, patents don't encourage invention -- but they do encourage innovation; they're not much use in helping to define the fruit, and there's always a tension between the interests of the public and private sectors. Patents may be of some use,  but not to the research activities of universities. In any event, patent law needs to be updated because it's not fit for purpose in the university context.

Shuki Gleitman (General Partner, Platinum Ventures; former Chief Scientist and Director General of Israel’s Ministry of Industry and Trade) came next, speaking on a national policy for innovation.  Patents are necessary, he said, since it is only them and their ecosystem that allow innovation to survive. Patents are an efficient way of creating employment, offer a higher return on investment, help to build a modern flexible economy, create a "national advantage" and their benefit spills over into other areas, by creating a remedy for market failure.  Look how Israel changed itself from an agricultural socialist state in the 1970s, whose main export was oranges, to a serious innovation-based economy, he observed.

Israel's venture capital environment (per capita it's three times the size of that of the US) depends on the creation of appropriate venture capital tools, to encourage investment, innovation, start-ups, profitable business exits, often selling small businesses that are still losing money, to large companies, for apparently inflated profits.  Government input has supported this, and Israel's expenditure on R&D is 4.5% of its gross domestic product, against just 3% in the USA.  Innovations have both linear, like the old Japanese model, and disruptive -- throwing up entirely new products and showing that the world is moving on.  Corporate structures of large companies are not adept at supporting disruptive technologies, though an example to the contrary (so far) is Apple ("though I don't know if it will survive", Shuki added.

Moving on to some IP issues, a big problem is that IP is run by lawyers, who don't understand anything.  IP is a piece of property: anyone who uses it without permission should be made to pay.  The cost of doing business in the IP field is terrible; litigation is hugely costly too. Both these factors favour big business against the small.  Further, its outcome is unpredictable.  Shuki then offered a few examples to support his contention.

The last word was left to Tal Band (President AIPPI-Israel, Senior Partner at S. Horowitz & Co.), who offered his thanks to the many people whose hard work and efforts have turned this event into a reality. Thanks were given to, inter alia, Stephan Freischem, Asa Kling (head, Israel Patent Office), WIPO, Michael Birnhack, the Steering Committee, various organisers and assistants, the sponsors, the IPKat (blush, blush) and, last but not least, Ilan Cohn and Dorit Korine.