Tech Businesses Recognize the Power of a Knowledge Commons

Intellectual property rights are supposed to give people incentives to innovate. That’s the cherished grand narrative. But what’s actually happening on the ground? A dispatch by Steve Lohr in today’s NYT suggests that the edifice of IP law may be killing basic research in the cradle:

The legal wrangling over intellectual property rights in research projects involving universities and companies, specialists say, can take months, sometimes more than a year. This legal maneuvering, they say, is not only slowing the pace of innovation, but is also prompting some companies to seek universities research partners in other countries, where negotiations over intellectual property are less time-consuming.

It turns out that the legal apparatus to negotiate and enforce intellectual property rights is a fairly unwieldy and costly enterprise unto itself. Big transaction costs. Expensive lawyers. The intense legal jockeying to determine who will own new scientific knowledge, paradoxically, is preventing scientists from having the freedom to collaborate and generate that knowledge in the first place! The absence of a knowledge commons means that a commercial market can’t emerge.

The good news is that four major tech companies (IBM, H-P, Intel and Cisco) have collaborated with seven major research universities and the Kauffman Foundation to forge a new set of guidelines for making open source software research freely available. The guidelines are intended to promote “collaborative innovation” in software development by bypassing the customary constraints of patent and copyright law.

For those people who equate the commons with communism, it’s worth pondering this statement by John E. Kelly III, Senior Vice President, Technology & Intellectual Property at IBM: “Open source software and standards developed among universities, government and the IT industry form the basis for genuine collaborative innovation. This collaboration will lead to greater commercialization throughout the IT industry. Because of that, it is imperative that these principles guide our efforts to collectively improve current intellectual property practices.” (emphasis added)

The new guidelines are an implicit retreat from the ethic promoted by the Bayh-Dole Act, the 1980 law that presumes that university research will be commercialized more rapidly if universities can patent their research. Tech businesses and scientists alike are discovering that the marketization of academic research has some serious downsides, especially for basic research. IP restrictions are preventing researchers from trading information, collaborating and innovating. The lack of a knowledge commons has serious functional implications.

The new guidelines have not yet been posted on IBM’s or the Kauffman Foundation’s website, so it’s hard to tell how broad and effective a solution they are; the market ethic fostered by Bayh-Dole has penetrated deeply into academia, altering its institutional priorities and identity in many instances. Still, it’s encouraging that major tech companies are taking practical steps to reinvigorate the knowledge commons as an indispensable foundation of their commercial fortunes.

Crossposted at OntheCommons.org.

9 thoughts on “Tech Businesses Recognize the Power of a Knowledge Commons

  1. I think it’s a big leap to go from “there are some administrative costs in our IP system” to “thus the system impedes innovation.” The existence of a cost without identification of a potentially-offsetting benefit is simply not convincing. Of course there are kinks, and surely they could be smoothed out in a “better” world. But a few kinks in a massive and complex system surely don’t necessarily topple the entire edifice. In fact, the existence of VOLUNTARY commons (it’s the involuntary kind that look a lot more like communism (hyperbole yours, not mine) — there’s a huge difference) suggests that the system is resilient enough to work around the kinks. But even this takes place against the backdrop of Bayh-Dole: It may well be that the background ethic of strongly-enforced property rights was a necessary backstop to enable even this minimal experiment. In other words — perhaps a strong market ethic plus a little softening around the edges is much better than forced softening everywhere. I know you’re not necessarily saying (at least in this post) that we scrap our IP protection in its entirety. But the clear implication is that legal enforcement of IP rights in the real world impedes rather than promotes innovation. I suppose it might be true, but I just don’t think this is any evidence of it.

  2. I’m a bit mystified that Geoff Manne quarrels with the explicit rationale given by the university/high tech developers for their open source research guidelines. They expressly point to high IP transaction costs and delays as impediments to scientific collaboration and innovation. And they are deliberately seeking to create a knowledge commons to bypass those IP impediments.

    Now, one can call this a “kink” if one wants, but that seems an evasion of an elemental reality, that the commons is a powerful vehicle of value-creation in its own right. Yes, IP helps promote innovation (or more accurately, certain types of marketable innovation). But the commons has a legitimate and valuable role too. We don’t need to reduce this disagreement into an either/or choice.

    It is apparent to me that the commons often functions as a vital *pre-market* incubator of innovation. Think how communities of musicians, artists, and street fashion serve to incubate creativity — and how academia can develop promising lines of inquiry precisely because it is insulated from a market ethic. Once a marketable potential is discerned, entrepreneurs and companies are only too happy to appropriate or develop it.

    If patenting under Bayh-Dole had been the norm during the 1950s and 1960s, it is far more likely that innovation in computer science and genetics would have been stymied by an anti-commons problem (fragmented and dispersed IP rights impeding collaborative creativity). Without this basic research, the subsequent revolutions in these fields may never have occurred. Basic research needed a de facto commons in which to incubate and flourish; fortunately, the market ethic had not yet colonized academic science as extensively as it has today.

    There are many who question whether Bayh-Dole is truly necessary to stimulate commercial tech transfer. It may help in some cases, it may help certain research universities — but overall? If we’re going to talk about potentially offsetting factors, let’s talk about how market norms have imposed new costs & ethical problems on free and open scientific inquiry (see, e.g., Jennifer Washburn’s book, “Universities Inc.”) A case can be made that non-exclusive access to federally funded research would not only be more equitable to taxpayers who fund the research, but also stimulative to commercial innovation (precisely because the research is treated as a public good).

    Is it really that hard to acknowledge that a commons can be innovative, robust and wealth-producing without the direct ministrations of IP law? (And that IP law can still have a respectable, but more limited, role?) The value-generation of the commons is precisely why open source, open science, open access scholarly publishing and kindred regimes are being embraced, even by (especially by) entrepreneurial companies.

    As for which is more conducive to “freedom” and prone to coercion — market or commons — that is an entirely empirical question, to my mind. A lot of factors determine whether a market is coercive or freedom-enhancing, and in any case, there are qualitative differences between the freedom of a market order and a commons.

    Let’s not be alarmist: I’m not itching to “scrap IP protection in its entirety,” nor calling for “a forced softening everywhere” (though I’m not sure exactly what that means). But I don’t believe we can’t just dismiss the wealth-generating capacities of the commons as a mere “kink.” Excuse me for persisting, but the hostility to the commons is hardly exaggerated. It wasn’t me, but Steve Ballmer of Microsoft, who in July 2000 likened Linux to “communism” — and he is hardly the only one to fling that charge. Some people just can’t stand the idea that the market doesn’t have a monopoly on “freedom” and “innovation.”

  3. It’s just that your evidence proves nothing. I’m sure “communities of musicians, artists” and the like incubate creativity. But you have no idea (and you have not demonstrated) the extent to which such endeavors are made possible only by otherwise strong property right protections. Sure, as long as the bulk of my income is protected, I’ll tinker on the margins in some collective environment in the hope that I’ll get out more than I put in. But if that were the only way I could make music or art, I probably wouldn’t bother. So commons exist in this setting, and seem to have been useful. What does that demonstrate?

    As for academia, the argument applies in spades. Yes there is a lot of free exchange in academia. But the academy’s insulation from market forces has certainly served to weaken it, as well. There is more crap published, less accountability, too much focus on publications . . . I could go on . . . than is likely socially optimal. All of these are attributable in some part to the absence of strong competitive forces in universities. So your pointing out that university research has thrived in this environment is pretty unconvincing to me; I’d say university research has been hamstrung. Pointing to “success” alone without reference to a baseline is pretty useless. And I’d wager its existing success is almost solely attributable to the massive amounts of federal funds thrown at it, but that a more market-driven environment could have produced more and faster. (NB: I recognize the Bayh-Dole ethic is now prevalent. It is, indeed, one small competitive influence in the non-profit university world. But it is seriously tempered by the absence of market-driven accountability and oversight).

    As for your “commons vs. markets” straw man — well, I’ll let Steve Ballmer speak for himself. As for me, I’d say the real disconnect is in people who equate a voluntary commons with the absence of market forces. Of course, as I noted, there will be great value to some actors in some industries some of the time in voluntarily relinquishing some property rights. This is the definition of the absence of a market? Hardly. Where such cooperation occurs voluntarily within a market setting it must, itself, be considered a competitive device. It’s competition disguised as cooperation, but it’s still competition. And, moreover, it is certainly not the case that exchanges of knowledge will occur only in commons. In fact, there are myriad market incentives for rights owners to license and exchange their knowledge. As you say, it’s not an either/or.

    My real beef is with the implicit (and at times explicit) notion that, because one can point to the occasional voluntary collective endeavor against a backdrop of strong property rights enforcement, that it demonstrates that property rights should be weakened, that commons are a “better” way of going about innovation and creation. But that’s just hype and hyperbole. You’ve demonstrated nothing of the sort.

    Personally, I have nothing against privately-managed commons. I don’t know of anything in our IP laws that prohibits the voluntary creation of a commons once one owns a more expansive right (for copyrighted works, at least, Creative Commons wouldn’t exist if this weren’t true), and I think well-considered business decisions to do so are perfectly fine (and, I hasten to add, often not successful, I’m sure — just because a business makes a decision does not ensure that it will be “correct”). At the same time, I applaud your and others’ efforts to thwart government efforts to stifle competition in the alleged name of IP rights — that’s not competition, that’s abuse of power.

    In the end, if I thought the pro-commons folks were content to just point out these nice collective endeavors and single them out for praise, I really wouldn’t care. But the agenda is far more intrusive than that, I believe, and as I said, unsupported, as far as I can tell, by the “evidence.” One more time: Voluntary commons = (likely) good; forced commons by government fiat = (likely) bad. If you shun the latter and embrace the former I’m with you.

  4. I have written about this debate extensively in a few articles, e.g., An Economic Theory of Infrastructure and Commons Management, Evaluating the Demsetzian Trend in Copyright Law, and Commercializing University Research Systems in Economic Perspective: A View from the Demand Side–all of which are available on ssrn.com (http://papers.ssrn.com/sol3/cf_dev/AbsByAuth.cfm?per_id=232991). So I am not going to respond fully here. A few quick thoughts…

    Bottom line: I disagree with Geoff on a few points. Markets fail, sometimes in ways that strong property rights do not fix but instead make worse. “Forced” commons don’t make sense for all resources to be sure; neither do strong property rights. But “forced” commons do make economic sense for some resources. Abstract ideas and historical facts are two simple examples from IP. There are many others (e.g., many infrastructure resources).

    Strong property rights and competition do not always go hand in hand, and “forced” commons do not always preclude competition, especially where we’re talking about cumulative systems/markets. “Forced commons” sometimes breed competition in downstream markets; they allow for competitive (rather than coordinated) utilization and development of a resource (say an idea). As I believe David suggested, commons and markets can be complementary.

    I am just wondering what evidence Geoff has that strong property rights are needed to efficiently stimulate creative endeavors. Ok, some argue that intellectual property rights should be weakened, and some argue that they should be strengthened, and what we have seen is persistent strengthening without “evidentiary support” that such strengthening is warranted.

    Finally, it seems odd to label the commons agenda intrusive. into what exactly? the property rights agenda? which is itself pretty darn intrusive. into what exactly? Well, the commons, of course.

  5. This exchange of comments seems to be about whether “voluntary commons” are necessarily inscribed within a market system (and therefore dependent upon property rights), or whether a commons can exist on its own, prior to and independent of property rights. I’m not sure this is a productive debate because in the real world, the market and commons interpenetrate; it may be pointless to argue which is prior and “more important.”

    Still, I can’t avoid the suspicion that this is more of a philosophical or even ideological disagreement than a strictly empirical one. I see human history as replete with creative traditions that have flourished without property rights and market structures as we know them today. So how does one account for the existence of such creativity in the absence of strong property rights enforcement?

    But my real point is this: I think it’s inaccurate to patronize the commons as simply a place for “tinkering on the margins.” It’s not just an avocation for “nice” collective endeavors that can be safely indulged on the side, outside of the market, where the “real action” and value-creation occur — or as displaced versions of market competition.

    I guess I’m just a die-hard humanist who believes there’s a broader spectrum of human motivation than economic utility functions. The creative sectors that I cited – jazz, hip-hop, fashion, open source software, academia (among many others) – are vital and innovative only because they exist first – and in an ongoing way — as social and creative commons. The market system surely amplifies, expands and develops the output, and this is important. But social community and exchange are as vital to a creative sector as the property rights and market exchange. I’m not sure why you are so adamant about challenging this.

    You complain that the existence of “occasional” commons does not justify the weakening of property rights enforcement. But you fail to engage the specific examples that I cite, which are neither occasional nor trivial, and which have demonstrable value to the marketplace. The fashion industry, for example, is globally competitive and robust precisely because most of its creative design cannot be owned. (See more on this at the website for the USC conference, “Ready to Share,” at http://www.learcenter.org/html/projects/?cm=ccc/fashion) Open source software is arguably one of the most robust creative sectors precisely because it leverages social energies in a way that a property rights regime cannot.

    Are these creative commons implicated in a system of property rights law and markets? Of course. Does that mean they work only because of that system of incentives? Only in part and indirectly. They work because a commons elicits different human motivations and social energies than a property rights system can. Yes, people do significant creative things for the love and passion of it. And online commons can actually be more efficient than the market; the apparatus of contracts and rights enforcement can be far more costly and cumbersome than a community of trust based on shared social and creative commitments.

    One can try to marginalize the commons and annex it into a system of property rights law, if only to assert the ideological supremacy of the latter. (Perhaps that is the real issue here.) But the irreducible truth of the matter is that most people who are committed to a given field of creative endeavor generally have important motivations that transcend the market rewards. They’re competing for peer approval; they seen prestige or reputation; they’re discharging a sense of social obligation; they are honoring a mentor; they may be altruistic. Etc. Property rights incentives are not the only system of motivation, or even necessarily the most powerful.

    If the government can take all sorts of steps to support our system of property rights, I see no philosophical reason why it cannot also take steps to support collectively based modalities of “freedom” and “innovation” – i.e., the commons. Of course, property rights advocates find this objectionable by definition (or by fiat, one might say). This explains why President Bush, in his crusade for an “ownership society,” denigrates collectively provisioned freedoms such as Social Security and national parks, and seeks to convert them into a system of private property rights. Where’s the real coercion? I’m wondering if Manne would consider a public library a “forced commons by government fiat.” Should we consider the Internet a coercive commons that ought to be replaced by the “freedom” of “walled gardens” provided by Comcast and telcos?

    Our core disagreement seems to be whether the commons is a significant vehicle of value-creation, and whether that can be legitimately supported by government. I say yes to both.

  6. It doesn’t seem like the argument is about the commons (e.g. Open Source Software)versus IP law since neither one is going away anytime soon, nor would it be a good thing to willy-nilly dismantle something that has worked for a long time. But IBM, Oracle, Sun and the Anybody But Microsoft (ABM)crowd see open source as a way to compete with the 900 pound gorilla and change the rules of the game so that the market advantage of a quasi-monopoly is lessened…seems like good old capitalism to me, we have a more competitive market and in the end consumers benefit.

    However if the argument is about who will own the wires and whether they should be publicly funded then that seems like a totally different argument then IP law versus the commons and should be treated as such…

  7. A few thoughts on this interesting debate:

    I am left without a good idea of what David Bollier means when he refers to markets and particularly, market forces. It appears that the he adopts something the following definition of market conduct: “those activities involving the exchange of goods and services for money.” This strikes me as an oddly narrow definition for this discussion. Plenty of economic activity occurs prior to the actual “marketing” of the product. Commons-type activities included. It is unclear why such activity is thought to be independent of economic forces. As Geoff and David both seem to recognize, this debate is not likely to be productive on these terms.

    Of course it is true that common endeavors surely can create value — but I’m not sure anybody (even Ballmer) has denied that proposition. Like Geoff, however, I am left unsatisfied with the assertions that these endeavors “work because a commons elicits different human motivations and social energies than a property rights system can,” and when market forces are involved, they operate “only in part and indirectly.” This articulation sounds like you have a theory in mind for precisely how commons incentives operate, and the conditions under which they might be more efficient than the market. Do you?

    In any event, I am skeptical of these propositions in large part because they appear to be based upon this same narrow definition of “market-based conduct.” If I understand Geoff’s point properly, evidence of some successful common endeavors are surely insufficient to prove these assertions because it fails to identify the impact of commons independent of the backdrop of a robust IP regime. One might think it a reasonable idea that commons will develop more robustly in an environment with strong property rights. That is a fair point, and I wonder how you might respond?

    The central question seems to be whether the fact that some commons have created value says something broader about markets failing. Brett Frischmann seems to think so. I disagree. Why and when is it that property rights make market failures worse? Those seeking commons are always free to voluntary relinquish these rights, and the evidence suggests that they occasionally do. In other words, when commons create efficient environments for creative activity, and generate value, there is nothing to stop this form of organization. In this environment, it is hard to see how a forced commons could improve social welfare. It does not take much imagination, however, to see how forced commons could make things worse.

  8. “Like Geoff, however, I am left unsatisfied with the assertions that these endeavors “work because a commons elicits different human motivations and social energies than a property rights system can,””

    I’m satisfied, and I don’t regard it as an “assertion” but a direct observation of what goes on now in scholarship and other contemporary subcultures, plus a more or less irresistable conclusion about what drove creativity in the past. We’ve had ideas and creativity since before we became the species we are today. Most of that history predates the law and custom of IP. A lot of it also predates money, so I see no reason to define a market in terms of money. How about considering a market any culture of production and exchange?

    It stands to reason that we get more innovation in a society that pays for and incentivizes innovation not only with prestige and influence and reputation but also, thanks to patenting, with money. No matter how big and diverse a collection of subcultures we potential creators have in which to establish our reputations, there’s bound to very useful things that promise little glory to the would be inventor. Patenting incentivizes those inventions anyway with the promise of money. Being rich largely substitutes for a reputation.

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