The Technology Liberation Front - Latest Comments in Patents and Tacit Knowledge

Re: Patents and Tacit Knowledge

Kevin Carson — Wed, 06 Jun 2007 00:12:48 -0000

This is also relevant to org theory. Tacit knowledge is another reason to be dubious of Mises' ideas on the "entrepreneurial corporation" and the division of labor between entrepreneurs and tech types. Mises argued that rational calculation in the choice of alternative technical means was impossible without recourse to entrepreneurial knowledge of the relative costs of alternative inputs. Although Mises didn't acknowledge it, the obverse is also true: it is impossible to make rational entrepreneurial decisions about which black box to channel money into without a knowledge of the production process. And if much of either technical or entrepreneurial knowledge is tacit, it may not be feasible to delegate them to different people. The smaller the organization, the less stovepiping of functions, and the more ownership and control are combined with direct involvement in production, the more rationally the organization will be run.

Re: Patents and Tacit Knowledge

Tim Lee — Mon, 04 Jun 2007 23:54:53 -0000

I have not read that. Thanks for the pointer!

Re: Patents and Tacit Knowledge

eee_eff — Mon, 04 Jun 2007 22:52:34 -0000

Good post, Tim. Tacit knowledge also plays a very large part in design. Have you read, Donald Schon's Theory in Practice: Increasing Professional Effectiveness or Displacement of Concepts? They'd both be relevant.

I'd also suggest:

http://enigmafoundry.wordpress.com/2006/12/17/t...

Re: Patents and Tacit Knowledge

Noel — Mon, 04 Jun 2007 16:46:31 -0000

Tim, again you use this logic where you only compare extremes: "If my point about tacit knowledge is true, the patent is completely superfluous." No, no, no...

If a small company says: "we won't help you adopt our technology unless you give us a contract agreeing to give us X percent of the revenues for X years" the larger company would be constrained in how it commercializes technology, since it could adopt a better solution yet still owe the small company royalties. This is terrible for the innovation process in a sector where firms must adapt and be flexible. Such a scenario, as you suggest Tim, would also probably curb entry of new firms, who can't just license their patents but must essentially go rent-seeking with unproven technology.

You make some good points in this post Tim- suggesting that licensing agreements can also be seen as collaboration agreements, but then you over-generalize, and arrive at a very bizarre scenario.

Re: Patents and Tacit Knowledge

Tim Lee — Mon, 04 Jun 2007 15:31:00 -0000

Noel, did you read my post? The whole point was that, thanks to local knowledge, the large company will be able to "rework the technology" much more cheaply with the small company's help than without. So the small company says "we won't help you adopt our technology unless you give us a contract agreeing to give us 20 percent of the revenues for 10 years (or whatever). If my point about tacit knowledge is true, the patent is completely superfluous.

Re: Patents and Tacit Knowledge

Noel — Mon, 04 Jun 2007 15:19:26 -0000

Chris, excellent point, but without a patent, how exactly do you define the smaller firm's contribution? There is little to prevent the larger firm from reworking the technology to the point where it can say its no longer using the smaller firm's contribution.

Re: Patents and Tacit Knowledge

Chris Brand — Mon, 04 Jun 2007 15:03:38 -0000

Noel - for your #2 can't the smaller company sue the larger for breach of contract just as easily as for patent infringement ? (And it costs much lesser to get a good contract drafted, negotiated and signed than to get a patent awarded).

Re: Patents and Tacit Knowledge

Noel — Sun, 03 Jun 2007 14:32:26 -0000

Well, Tim, I gotta say this is a turn-around. One day, you write something I completely disagree with, and then you come back with something thats actually pretty good.

Check out these articles:

Lemley, Mark A. and Cohen, Julie E., "Patent Scope and Innovation in the Software Industry" . California Law Review, Vol. 89, p. 1, 2001.

Burk, Dan L. and Lemley, Mark A., "Designing Optimal Software Patents" . INTELLECTUAL PROPERTY RIGHTS IN FRONTIER INDUSTRIES: SOFTWARE AND BIOTECHNOLOGY, Robert Hahn, ed., 2005.

Lemley and others make several recommendations for patent policy, as it should govern software patents. Relevant items are a more stringent disclosure enforcement for software patent applications. Lemley did not call for lines of code being put into patent applications, but he makes strong arguments on how the USPTO shows little concern with the enablement doctrine due to lax enforcement of the disclosure doctrine. Another key argument by Lemley and others is that there should be a reverse engineering exception in patent doctrine, which is also tied to the USPTO's lax enforcement of the disclosure requirement.

I have to find this article by Robert Merges, in which he argues that the scope of enforcement for a patent should correlate with the extent of its disclosure. Can't recall the article offhand, since Merges has released a number of articles recently.

Having referred you to the argument above, I do take issue with this aspect of the post:

It’s pretty often... to see an argument that without patent protection, a small software company wouldn’t be able to negotiate on an equal footing with a large one, because the large one will simply listen to the smaller company’s pitch, take careful notes, and then steal the company’s idea without paying a penny.

You make two mistakes Tim: 1) confusing less leverage and no leverage, 2) not acknowing practices in the industry. For #1, lets try this: without patent protection, a small firm would have less leverage to negotiate with larger firms and would have to rely on trade secrets, which inherently do not invite collaboration and exchange between innovators. For #2, imagine that a small firm works with a larger one to commercialize an invention. The small firm provides a component part of an invention, the larger one wraps complementary technologies around it and manufactures. Without patent protection for the smaller firm, once the commercial invention is completed, the larger firm would not bother to pay licensing fees. They'd say, thanks sucka, but you don't have a patent on it. With patent protection, small firms hold leverage from the initial negotiation phase to the commercial phase.