Does the Piracy Paradox apply for Patents?

A 2006 paper by Kal Raustiala (UCLA) and Chris Sprigman (UVA) titled the Piracy Paradox discusses intellectual property and the fashion industry. The authors conclude that the legal ability of manufacturers to create knock-off versions of fashion designs actually promotes innovation and investment in that industry. Similar phenomena have been explained in other industries. In music, for instance, some studies have shown that peer-to-peer file sharing of copyrighted work actually increases sales because of the increased popularity of the artist. Since the dawn of radio, record companies have paid stations to broadcast their music – even though the broadcast would be considered infringement.

My question is whether there are patent specific examples of this process going on? Are there times when 'piracy' of a technology actually encourages further R&D?

Comments

[David Cain]

The original RSA patent didn't have any non-super-computer embodiments until Phil Zimmerman infringed on his PC.

Interestingly, Zimmerman refused to seek patent protection for his inventions, essentially handing all the rents over to RSA.

I'm sure there are other takes, but that's been mine. Once upon a time, I examined crypto at the PTO.

DCC

[AnonEcon]

"Are there times when 'piracy' of a technology actually encourages further R&D? "

Pretty much *all* of software works this way *all* the time. Business methods too.

The key feature here is that patent protection does not act as an incentive to creation of inventions, or publication of them, at all, in either field. So it's not even like the fashion industry, where uniqueness is inherently valuable.

In fact, patents usually suppress innovation. Some rather careful economic studies showed, for quite a lot of fields, no examples where they could be shown to have helped, and for several fields, strong evidence that they hurt.

The theoretical best fields for patents are ones where R&D is *very expensive* but reproducing an already-discovered thing is *very cheap*. Software and business methods fail because R&D is very cheap, verging on the cost-free. Trains and airplanes fail (though less so) because reproducing an already-discovered thing is quite expensive. Pharmaceuticals are the only area where patents were shown to have an actual benefit: R&D is fiendishly expensive, but reproducing existing drugs is extremely cheap.