Critic of Software Patents Wins Nobel Prize in Economics

doom writes "You've probably already heard that the Nobel Prize for Economics was given to three gents who were working on advances in mechanism design theory. What you may not have heard is what one of those recipients was using that theory to study: 'One recent subject of Professor Maskin's wide-ranging research has been on the value of software patents. He determined that software was a market where innovations tended to be sequential, in that they were built closely on the work of predecessors, and innovators could take many different paths to the same goal. In such markets, he said, patents might serve as a wall that inhibited innovation rather than stimulating progress.' Here's one of Maskin's papers on the subject: Sequential Innovation, Patents, limitation (pdf).

Not Nobel Prize in Economics

[CRCulver (715279)]

It's the Swedish Bank's Prize in Memory of Alfred Nobel. Nobel's estate doesn't recognize it, and there is much evidence that the old man would have been horrified to see the dismal science being rewarded.

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[MoonFog (586818)]

Easy mistake to make since they are listed on the Nobel Prize's official web page [nobelprize.org]. They are listed as receiving a price in economics though, not a Nobel price in economics, even though they are under the "Nobel Prizes" banner.

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[jkrise (535370)]

It's the Swedish Bank's Prize in Memory of Alfred Nobel. Nobel's estate doesn't recognize it..

Okay, I can see where you com from. We'll call it the SBP-Nobel Prize... just like GNU-Linux, does it make you happy now?

Re:Not Nobel Prize in Economics

[CRCulver (715279)]

Seconded. The Nobel Prize in Economics ... is awarded by the socialist Swedish central bank. Their awards are biased.

While Sweden is a Scandinavian socialist state, the economics prize is generally awarded to neo-liberal economists. The judges are based, but they are actually biased against the popular values of their own country.

Re:Not Nobel Prize in Economics

[timster (32400)]

That's partially because, despite what the people posting here would have you believe, the economics prize is awarded by the Royal Swedish Academy of Sciences -- the same organization that awards the prizes in physics and chemistry. It was established and funded by a grant from the Swedish central bank, but the bank does NOT determine the laureates.

Re:Not Nobel Prize in Economics

[SgtChaireBourne (457691)]

-1 disinformative for you there.

Sweden has never been socialist. It has, during nearly all of the previous century, followed a policy of the "Middle Path" choosing the elements from the free market where they are best applied and elements from socialism where they are best applied.

Nowadays it is following a Bush/ Bliar/Thatcher-style neoliberalism with heavy emphasis on buracracy, privatization and corporate welfare.

Go look at the statistics. During the years Sweden prospered economically, had low debt or a surplus, had good services such as health care, low unemployment, it was during the periods of closest adherence to the middle path. Look at the times where services are few and of poor quality, the budget is in shambles, lots of debt and high unemployment, it is during times when deviation from the middle path has been strongest -- such as the last 15 years.

The Swedish banks are the worst examples of failure of unrestrained capitalism. They have collapsed and been bailed out twice. However, normally when one buys out the debt from a failed company, the buyer then owns the company. Stupidly in the last case, the buyer (the Swedish government) simply handed the banks back to the same asshats that bankrupted them in the first places. These are the clowns that then pick the recipients for the Swedish Bank's Prize in Memory of Alfred Nobel. To try to lend credibility to their scam they, to their credit, have schmoozed into the Nobel celebration. However, the Swedish Bank's Prize in Memory of Alfred Nobel is to the Nobel Prize what films like Ernest in the Army [imdb.com] is to fine cinema.

Re:Not Nobel Prize in Economics

[djmurdoch (306849)]

Honestly any economist who doesn't recognize the value of creating and protecting intellectual property rights in an information economy is a POORLY trained economist.

As far as I can see, Maskin isn't against IP, only patents. His article says "copyright protection for software programs (which has gone through its own evolution over the last decade) may have achieved a better balance than patent protection." Copyright is IP too.

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[Otter (3800)]

As far as I can see, Maskin isn't against IP, only patents.

He's not against patents either, just against certain application of patents. To the degree that you believe that receiving this prize confers total authority, the anti-patent people certainly aren't coming out ahead on this one.

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[jimstapleton (999106)]

there's a value in creating and protecting it, yes, but there is also a penalty in hoarding it.

In these third world countries, the leadership can be fairly well off - the problem is that all of the wealth is congealed into a very small space.

A balance is needed, as with anything.

Re:Not Nobel Prize in Economics

[smilindog2000 (907665)]

As a country develops it's own intellectual property, it becomes important to protect it. For example, India seems to be moving towards proper copyright protection. However, this article is specifically about software patents, not copyrights. Of course software copyrights need to be protected. The authors need to have the rights to do whatever they want with their software, and it should not be stolen from them. Software patents are different. They don't protect your software, but restrict me from writing equivalent software. I can't recall a single example in history where a software innovator was rewarded by their patent - there are probably a few, but they are vastly outnumbered by the software patents that have restricted innovation. Instead of rewarding innovation, software patents make it possible for M$ to attack Linux, while doing nothing to help innovators break into the software market dominated by M$. Don't get me wrong... I'm a big supporter of M$ in general, but lets face it: software patents exist to protect M$ and other huge calcified players, rather than reward innovators.

Re:Not Nobel Prize in Economics

[mmcuh (1088773)]

Seconded. The Nobel Prize in Economics is NOT a real Nobel, and is awarded by the socialist Swedish central bank. Their awards are biased.

Honestly any economist who doesn't recognize the value of creating and protecting intellectual property rights in an information economy is a POORLY trained economist. Hernando de Soto has pegged a lack of real property rights as the primary issue that prevents wealth from being created in the third world (agricultural economies).

You do realise that property rights have absolutely nothing to do with "intellectual property"? One says that you are not allowed to steal other people's things, the other says that you are not allowed to create certain things if someone else created it first. Property rights is a rather obvious concept derived from the simple fact that if you take something from someone else, they lose it. "Intellectual property" is a government-sanctioned privately owned monopoly that prevents other people from creating something identical to what you have, or in some cases even just slightly similar.

As government-awarded private monopolies, "intellectual properties" are artificial barriers for the free market and thus you can certainly be opposed to them without being a "socialist".

That said, I doubt the Bank of Sweden knew about Maskin's patent critique, or if they did, that they cared about it. They gave him a prize for some neat theoretical work.

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[djmurdoch (306849)]

You do realise that property rights have absolutely nothing to do with "intellectual property"?

That's a popular thing to say, but it's just not true. IP is not the same as physical property, but the concept of owning an abstract thing (the monopoly granted by the patent) is pretty closely related to the concept of owning a physical thing.

One says that you are not allowed to steal other people's things, the other says that you are not allowed to create certain things if someone else created it first.

IP corr

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[pipatron (966506)]

Would you argue that changing the number on your bank statement to zero doesn't take something from you?

I completely agree with you. As long as I can still go to the bank and withdraw the money I have deposit, the number means nothing to me, and they can write it the way they want. That's the nice thing with information.

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[djmurdoch (306849)]

You must bank with Gringott's. With the banks I use, they don't actually keep my gold coins in a vault somewhere. The number on the statement is all there is.

Analogy is not identity

[Nicolas MONNET (4727)]

IP is not the same as physical property, but the concept of owning an abstract thing (the monopoly granted by the patent) is pretty closely related to the concept of owning a physical thing.

Analogy is not identity. Although I guess it depends on what the meaning of "is" is. Or something.

And the analogy breaks even more when you try to stretch it.

Re:Not Nobel Prize in Economics

[richie2000 (159732)]

The Nobel Prize in Economics is NOT a real Nobel, and is awarded by the socialist Swedish central bank.

I'll let the IP-hugging mumbo-jumbo in your post slide, but The Royal Swedish Academy of Sciences was given the task to select the Economics Prize Laureates starting in 1969. The central bank just comes up with the cash, they do not select the winners.

Re:Not Nobel Prize in Economics

[Dunbal (464142)]

Honestly any economist who doesn't recognize the value of creating and protecting intellectual property rights in an information economy is a POORLY trained economist.

      Yes and I am going to take YOUR word for it over a published, Nobel Prize winning economist...

Re:Not Nobel Prize in Economics

[A beautiful mind (821714)]

Seconded. The Nobel Prize in Economics is NOT a real Nobel, and is awarded by the socialist Swedish central bank. Their awards are biased.

Honestly any economist who doesn't recognize the value of creating and protecting intellectual property rights in an information economy is a POORLY trained economist. Hernando de Soto has pegged a lack of real property rights as the primary issue that prevents wealth from being created in the third world (agricultural economies). It follows that in economies (such as the US/Europe) which derive their wealth, more and more, from intellectual property, that the ability to protect those rights is ultimately to our benefit.

Not to rain on your parade but you seem pretty biased or to be more accurate parroting certain right-wing dogmas. Intellectual property doesn't exist. It is an umbrella term at best, but mostly it is a word designed to mislead and cause confusion. The value created by creating and protecting patents and to a lesser extent copyrights is seriously outweighed by the bad effects of giving a monopoly on specific information or methods to private companies or persons.

Copyright and patents do not create wealth, they make all of us poorer, because they tend to inhibit progress as the professor who got the Nobel has shown in the specific case of patents and the IT industry.

Also, quoting wikipedia:

The Bank of Sweden Prize in Economic Sciences in Memory of Alfred Nobel (Sveriges Riksbanks pris i ekonomisk vetenskap till Alfred Nobels minne), usually called the "Nobel Prize in Economics", is a prize awarded each year for outstanding intellectual contributions in the field of economics. The prize is generally considered the most prestigious honor in economics.

Re:Not Nobel Prize in Economics

[Tim C (15259)]

Of course you realise that every single one of those economies started out by vigorously ignoring IP, especially that of other nations, until such time as it had some of its own to protect and only then implemented its own IP-related laws, don't you?

You do also realise that there are many other factors in why the US and Europe, Japan, etc are more prosperous than third world countries, don't you, and that blaming it all on a lack of IP laws is simplistic almost beyond belief?

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[MECC (8478)]

Honestly any economist who doesn't recognize the value of creating and protecting intellectual property rights in an information economy is a POORLY trained economist.

Promote science and useful arts, indeed. Any system that lets - no make that encourages - someone buy someone else's idea then do exactly nothing at all with it except to sue others in order to leech off legitimate efforts at actually doing something useful is functionally broken, and doesn't make sense in terms of economics either. Wha

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[Sique (173459)]

Anyone who calls priviledges "property" is a poorly trained economist. They might be assets, though.

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[siddesu (698447)]

Key assumption for the existence of efficient economy is absence of information asymmetries. Intellectual property is an artificially created asymmetry -- information cannot be used to allocate resources efficiently, even if it is available.

Allegedly this 'compensates' the inventor and increases 'knowledge production', but I have yet to see a convincing theory as to why it would happen, and especially why "intellectual property" is the most efficient way to go about it. Conventional economic theory suggests

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[Mr. Slippery (47854)]

Honestly any economist who doesn't recognize the value of creating and protecting intellectual property rights in an information economy is a POORLY trained economist.

Honestly, anyone who doesn't recognize that using the term "intellectual property" to refer to several very different types of purely artificial monopolies created by government action is highly problematic, is ignorant on the subject. Copyrights are not patents and neither are trademarks; refering to them all as "intellectual property" is

Re:Not Nobel Prize in Economics

[russotto (537200)]

Hernando de Soto has pegged a lack of real property rights as the primary issue that prevents wealth from being created in the third world (agricultural economies). It follows that in economies (such as the US/Europe) which derive their wealth, more and more, from intellectual property, that the ability to protect those rights is ultimately to our benefit.

No, it does not follow. The differences between real property and IP have been hashed out over and over again; what holds for one does not necessarily hold for another.

Major relevant differences --
1) Lack of exclusivity. One user of intellectual property does not interfere with another.

2) Less limited resource -- with few exceptions, no one is making more land. New IP is created all the time

And a difference in the systems protecting them
3) With real property, a whole system of rights-of-way has been developed to prevent my use of my real property from interfering with your use of your real property, even if my real property stands between yours and some shared resource you need. With IP, it's the opposite -- your patent on your invention can easily prevent me from implementing mine.

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[pipatron (966506)]

damn commies want to ban all parents

Actually I think you're referring to China and their One Laptop Per Child... err.. no.. One Child Per Family policy. You cannot apply that to all communist regimes.

Has anyone else noticed...

[neokushan (932374)]

The similarities between software development and Evolution are striking. As this article states, software tends to progress slowly, building upon the previous generation, improving on it and occationally adding new features to give it the advantage over it's competition.
But when a software product progresses with little or no competition to speak of, it's innovation stops, it gets bigger, slower and more bloated.

Re:Has anyone else noticed...

[jimstapleton (999106)]

I'd argue that software in general tends to get bigger, slower and more bloated.

Typically, new releases of software tend to have more features - these added features are what cause the bigger-slower-bloatier effect, as the take space to store, time to execute, and not everyone wants them. I don't know of one piece of software that has managed to avoid this fate.

Re:Has anyone else noticed...

[foniksonik (573572)]

Have you looked at DNA lately? In the ancient bacteria, fossil fishes and fungi of the world the DNA is svelte and cleanly coded.... all streamlined to do a few tasks very efficiently, then move forward a few billion years and you get rats and primates.... all bloated with junk and things like consciousness that are completely unnecessary to survival, just bells and whistles really.

I'm not sure what it is you're arguing against.. sounds like you're agreeing with parent post 100% ;-p

p.s. so when is the bloat in our software going to self-actualize and become our computer's soul? I hope it's not based on Windows... what a freakin mess that would be, all freaked out about security, indecisive and completely self-conscious about being genuine... ugh it probably WILL be windows, that sounds like 99% of the people I know.

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[allcar (1111567)]

At risk of starting a religious flame war, software engineers like to think that they design software. Evolution, as we know, requires no designer, but simply proceeds by trial and error.

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[jimstapleton (999106)]

actually - software development is trial and error also.

The difference is not the trial and error part, but the fact that in evolutionary theory, the trials are random, in computer software design, the trials are not (and are usually kept unless the error is considered really bad)

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[asliarun (636603)]

The similarities between software development and Evolution are striking. As this article states, software tends to progress slowly, building upon the previous generation, improving on it and occationally adding new features to give it the advantage over it's competition.

Hey, that sounds like my relationship! Since it is not intelligent design, it is probably evolution.

Re:Has anyone else noticed...

[Comatose51 (687974)]

Yochai Benkler[sp?] called it the "Shoulder of Giants" effect in his book the "Wealth of Networks". He noted that innovations is one of those processes where the output serves as an input for the next cycle, meaning when you innovate your discovery can be used for more innovations. Needless to say, he argues against patents and this is coming from a law professor who gained an incredible insight into open source software development. Highly recommend his book.

In the "Myth of Innovations", the author, who I forgot, also talks about innovations are not inevitabilities but as a tree with different ideas branching off. A lot of them will be pruned and turn out to be failures in their environment but a few will survive. His insight was that innovations are more like trees, not lines, and their success depend on the environment they were developed in. The right solution for the wrong problem is still a failure. The two makes it sound awful lot like evolution like you mentioned.

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[knight24k (1115643)]

But when a software product progresses with little or no competition to speak of, it's innovation stops, it gets bigger, slower and more bloated.

I guess that explains Vista.

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[theantipop (803016)]

I would say software more closely resembles "intelligent" design. Unless you are talking about my software, in which case it could best be described as "I hope no one sees this" design.

Yes

[Per Abrahamsen (1397)]

My main contribution to "discussions" with creationist is that in my experience as a programmer, complex (software) systems are a result of evolution rather than intelligent design.

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[Dunbal (464142)]

Kill the competition. Bigger, slower and more bloated. Reminds me of America. *ducks and runs*

      Valid point. Only the competition is not "dead". In fact, it's only beginning.

Thats all nice, but

[should_be_linear (779431)]

since when geniuos minds play any significant role in politics? I imagine politician thinking "This guy would would give me half a million if I support software patents BUT there is this famous research study... Oh god, if I only could support both!".

Well Duh!

[Citizen of Earth (569446)]

In such markets, he said, patents might serve as a wall that inhibited innovation rather than stimulating progress.

Do I get a Nobel Prize for saying "No shit, Sherlock!"?

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[AusIV (950840)]

He didn't get a nobel prize for researching software patents. He got a prize for research into a new Economic theory, it just happens he's applying that theory to his research of software patents.

I guess I'll be devils advocate...

[distantbody (852269)]

(emphasis mine)

He determined that software was a market where innovations tended to be sequential, in that they were built closely on the work of predecessors, and innovators could take many different paths to the same goal. In such markets, he said, patents might serve as a wall that inhibited innovation rather than stimulating progress.

...That still leaves the opposition with plenty of wiggle room; they don't exactly sound like the words for an open-and-shut case...

This may not lead to patent reform very soon

[by Anonymous Coward]

The USofA makes a lot of money selling its IP to the rest of the world. Getting countries like China to play nice with our copyrights and patents is a 'big deal'. It is therefore unlikely that Uncle Sam will soften his position on either. Mickey Mouse will be copyrighted forever. Ridiculous patents will still be granted and enforced. Patent trolls will continue to get rich.

The trouble with the above is that innovation will move to other countries and America will be left behind. I can easily envisage

What is obvious to the dev community...

[zullnero (833754)]

Is mindblowing to the average person. This is the sort of paper that really needs to be distributed as much as possible (but rewritten to be understandable to the layman), because there really needs to be a great deal of political support for such an exemption from the patent process here. The biggest problem is that the software industry has already defined a piece of software as a patentable product, similar to a car or a monitor, and the general populace believes that to be true. However, you don't make a new car by tearing out the carburetor of a 1995 Ford, clean it up, add a couple parts from a 2002 Chevy to it, and stick it into your new car. However, that is precisely how software is generally made. There's your layman's explanation right there.

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[Darren Bane (21195)]

You say that "the software industry has already defined a piece of software as a patentable product". This is only the _American_ softare industry--if you want to destroy your own international competitiveness, nobody will stop you. Software patents are illegal in Europe (although we're fighting hard to keep it that way).

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[Husgaard (858362)]

Yes, this paper is mindblowing, and more people should know about it. But this paper is also theoretical, so it can be disputed by IP fundamentalists as having little to do with the real world.

But Research on Innovation [researchoninnovation.org] has a lot of other interesting papers.

In particular I like the paper AN EMPIRICAL LOOK AT SOFTWARE PATENTS [researchoninnovation.org]. This paper is an empirical investigation of the effect it had on innovation in the IT industry when software patents were legalized in the US.

From the abstract:

We find evidence

Hmmm.... let's see...

[idontgno (624372)]

On the side opposed to software patentability, an eminent Nobel-prize-winning economist.

On the side supporting software patentability, we have Steve Ballmer.

Which side seems more credible to you? I'm going with the Nobel-winner myself. Even if Dancing Monkeyboy meanaces me with chairs while screaming "DEVELOPERS!" at me.

Now a Major Motion Picture!

[Doc Ruby (173196)]

Even though TV is packed with "business news" shows, I don't expect to see this strong argument against SW patents even mentioned anywhere near people who determine the rules that govern inventors, who drive the entire economy.

All we'll ever hear about is "incumbent economics", which is how the rich always get richer, despite the actual economic values.

Re:Nobel Validity

[richie2000 (159732)]

So, if the Nobel committees can so blow this prize, going back to giving it to the dictator Yasser Arafat, do the other prizes have meaning? Are they better vetted than the Peace Prize? How and Why?

Because the peace prize is awarded by Norwegians, the others are all awarded by Swedes. http://nobelprize.org/prize_awarders/ [nobelprize.org]

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[by Anonymous Coward]

Here is a quote from the official statement put out by the committee on why Gore was selected:
"Extensive climate changes may alter and threaten the living conditions of much of mankind. They may induce large-scale migration and lead to greater competition for the earth's resources. Such changes will place particularly heavy burdens on the world's most vulnerable countries. There may be increased danger of violent conflicts and wars, within and between states."

One point a lot of people are missing is that of

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[Xiaran (836924)]

One I can think of would be CPU development...

Re:Great, but not an actual Nobel Prize

[gerf (532474)]

http://nobelprize.org/

Um, looks like Medicine, Chemistry, Peace, Physics, Literature, Economics. Further digging in their site shows that the Economics Prize was started in 1968. Well, perhaps Nobel didn't originate it, but it is selected by the same method as the others. Not that I'd consider that spectacular; They gave Al Gore and Jimmy Carter Peace Prizes after all.