Michael Heller is an academic at Columbia University in New York
and told technology law podcast OUT-LAW
Radio that intellectual property laws are being used to stop
new products and services being made.
"I discovered a paradox in the free market and it is this:
usually private ownership creates wealth, but too much ownership
has the opposite effect, it creates gridlock," he said. "When too
many owners control a single resource – it can be a patent, a
copyright, land – when too many people control a single resource,
co-operation breaks down and wealth disappears, everybody ends up
losing."
Heller has expanded on his theory in a just-published book, The
Gridlock Economy – how too much ownership wrecks markets, stops
innovation and costs lives.
He uses the example of someone who has come up with a new
medicine and is trying to get it to market. To do that they must
use systems, processes and tests which are owned by other
people.
"Imagine a drug developer walking into an auditorium and seeing
50 or 100 or several hundred patent owners, each with their
essential patent on their lap, and the drug developer knows that
unless he's able to negotiate successfully with every single one of
those patent owners, his drug can't come to market," said
Heller.
The same can happen with technologies, said Heller. Even the
standards process which allowed DVD players, CD players and file
formats such as JPEG for images and MP3 for sound to be universally
usable is not infallible, he said.
"A standard, when it works, can solve the problem of gridlock.
But to create the standard you need to get, in the context of a
DVD, seven or eight hundred separate patents pooled together into a
single patent pool; but there are many areas that we don't have
because entrepreneurs can't get the pools together or can't get the
standard negotiated," he said.
One way of minimising the problems associated with gridlock
would be to change the patent system in the US, said Heller.
"There are tweaks to patent law – so for example in the US the
area of damages available for infringement of a patent needs to be
fixed," he said. "When a patent is infringed the damages that are
available now under American law are super-compensatory. They give
much more to the patent owner than the contribution of that patent
would have been to the product, which means that a couple of
lawsuits can sap the entire profits available from a new
product."
Heller also said that the US courts system should clamp down on
forum shopping. The Eastern District of Texas is a very popular
court for those looking for patent infringement damages because it
is perceived as being friendly to those claims. This does not make
for a fair system, said Heller.
He did say, though, that the problems are fixable, as long as
there is the political and industrial will to fix them.
"Gridlock is a choice, so in area after area in the modern
economy we see resources being wasted through to under-use because
you have the problem of too many uncoordinated owners, but that's a
choice that we make," he said. "We can always fix gridlock if we
come up with a smart legal solution."
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