William Kingston

Property Rights and Innovation

When Schumpeter asserted that innovation necessitated monopoly, he did so in the context of the modern corporate organization. The corporation, however, is only one expression of a much more fundamental economic reality, which is property rights. These are rights of ownership, broadly defined as covering use and transfer of, and exclusion of others from whatever is owned.1 The last of these three aspects of property rights is particularly interesting, because it is synonomous with market power, which, in all its manifestations, is the power to exclude, to erect barriers to entry, to escape from the constraints which the market seeks to impose by encouraging new entrants.

The Unexploited Potential of Patents

The concept of monopoly is far older than that of patents, and must indeed be equated in age with the earliest use of political power. By giving him (or her) sole control of some valuable resource, any sovereign could ensure that a favourite could prosper. In medieval times, monopoly came to be associated with arbitrary use of power in this way, and to be contrasted with a Franchise. The difference between the two was that a Franchise conferred rights (which could be sole rights, as in the case of a monopoly) and these carried corresponding duties, but no similar duties were imposed on the holder of a Monopoly.

Financing Information and Ideas

The resources with which individual creativity needs to be backed if it is to result in economic innovation, come from society’s capital. The provision of capital for innovation is therefore a dynamic interaction between creativity and resources, Historically, private property rights, including rights of intellectual property, have facilitated this interaction more successfully than any other arrangement.

Creativity in Innovation and Law

Once academic research into technological innovation had identified the importance of the contribution made by individuals, it was inevitable that attention would be turned to creativity in this area. However, the positive achievements in this direction so far have hardly gone beyond techniques which are more relevant to “intensive” rather than to “originative” innovation. This could be because research into creativity in business has been too self-denying in its terms of reference.

Innovation and Money

In a “Memorandum concerning Mr. Boulton,” which is in the Birmingham Assay Office, James Watt says of his partner that he nwas not only an ingenious mechanick well skilled in all the practices of the Birmingham manufactures, but possessed in a high degree the faculty of rendering any new invention of his own or others useful to the publick, by organizing and arranging the processes by which it could be carried on as well as by promoting the sale by his own correspondents. His conception of the nature of any invention was quick and he was not less quick in perceiving the uses to which it might be applied and the profits which might accrue from it.

Innovation as Learning

In a lecture which John Constable delievered to the Royal Institution in 1836, he asserted that nPainting is a science, and should be pursued as an inquiry into the laws of nature. Why, then, may not landscape painting be considered as a branch of natural philosophy, of which pictures are but the experiments?1 nConstable found that science enlarged his understanding of landscape; in particular he became fascinated by geology, which taught him the physical structure of what he painted with such feeling. “The sister arts”, he wrote elsewhere, “have less hold on my mind in its occasional ramblings from my one pursuit than the sciences”.2 Inall this he was untypical of post-Renaissance artists, and the idea that artistic activity is an alternative to science as a means of exploring reality, is quite strange to the modern mind.

Some Innovatory Initiatives

For the reasons discussed in Chapter IV, a valuable stimulus to innovation would be to make it possible for firms to accept ideas and information in confidence without thereby endangering their own activities and projects. This could be achieved by interposing some independent agent between both parties to the information transfer.

Intellectual Property and Information Theory

Discussion of the information economy has not generally been characterised by effort to define its terms precisely. This is all the more surprising because the emergence of the new discipline of Information Theory in recent decades has provided much of the necessary vocabulary. Since so much of the growth of information in products and services has been due to intellectual property laws, it might have been expected that some attempts would have been made to discover what contribution Information Theory could make to our understanding of how these laws actually work, and of how we might be able to make them more effective.

Between the Dreamer and the Mandarin

Artist, inventor, innovator, entrepreneur, trader — all words which describe people doing things. One senses something in common between them, the meanings of any adjacent pair of words in the group shade off into each other, and yet there is an evident contrast between the extremes. People doing what artists do are obviously not doing what traders do, yet it is perfectly possible to think of individuals to whom several of the descriptions in the list could have been applied during their lifetime. Serge Diagilhev, who made the Russian ballet famous throughout the world, was undoubtedly artist, innovator and entrepreneur all at once. Leonardo da Vinci was outstanding in the first three roles; Edison was everything but an artist at different times. The meanings of these words are worth dwelling on, since it is one of them — “innovator” — that is to be examined at length.

Advantages of Protecting Innovation Directly

The proposals outlined in the two previous chapters were developed completely independently of each other. One proposal comes from a legal and Patent Attorney background; the other from business and economics. The extent of their agreement is consequently quite remarkable, including, as it does: n n nSubject matter of protection to be innovation, not invention. n n nAny economic object can be protected, not just technology. n n nVariable term of monopoly grant. n n nMoney, not time, is explicitly recognized as the proper measure of the monopoly granted (as it is, of course, of any monopoly). n n nTime is only used as a convenient surrogate for the money measure in a Grant. n n nExamination relies heavily on Third Party involvement. n n nGrant is incontestable except through “fraud on the Office”. n n nNo renewal fees. n n nTerms of grant can differ between regions of a country, or can apply over more than one country. n n nSystem to be administered by an independent Authority.