New Book by Debunked Author Claims Software Ownership is “Killing” Innovation and Competition

The author of a new book who was previously accused of employing junk economic science says that software ownership is damaging innovation and impeding U.S. competition.

Proprietary rights like patents and copyrights, says James Bessen, Executive Director of the Technology & Policy Research Initiative, have failed to promote innovation and encourage competition.

The New Goliaths: How Corporations Use Software to Dominate Industries, Kill Innovation, and Undermine Regulation (Yale University Press) is a perplexing book with a questionable agenda and dubious author.

Bessen, IP CloseUp readers will recall, is author with Michael Meurer of Patent Failure: How Judges, Bureaucrats, and Lawyers Put Innovators at Risk, a 2008 book that resorts to junk science and false claims to demonize patent licensors who do not practice inventions. Trolls, assert the authors, are destroying innovation and the economy.

Junk Science

In Patent Failure they attribute $29 billion in 2011 losses alone to patent trolls, a term which has no real

meaning but has become a meme symbolizing all patent licensors as a result of promotion by vested interests.

In the book the authors state:

“We find that NPE lawsuits are associated with half a trillion dollars [my italics] of lost wealth to defendants from 1990 through 2010. During the last four years, the lost wealth has averaged over $80 billion per year [2008-2012].”

If anything, it is the efficient patent and copyright infringers who are threatening the quality of innovation and fairness of competition, not owners of short-lived proprietary software that is likely unpatentable under current laws.

If anything, it is the efficient patent and copyright infringers who are threatening the quality of innovation and fairness of competition, not owners of short-lived proprietary software that is likely unpatentable under current laws.

The authors’ much-debunked data was unfortunate fuel for passage of the American Invents Act and the onerous Patent Trial and Appeal Board.

For the full 2,500 word article in the latest Intangible Investor, visit IPWatchdog.

Creative Destruction Destroyed

“There is an advantage to software that economists haven’t really reckoned with yet,” Bessen told The New York Times in a recent Sunday Business feature. “Software isn’t accelerating creative destruction today. Software is suppressing it.”

The unfair advantage is not software. It is an IP system damaged by misdirected legislation and courts that are unable to provide certainty.

There is an advantage to certainty and fairness when it comes to application of IP rights that is poorly understood by economists and investors. Bessen in “The New Goliaths” does his best to further confuse them and policymakers about the real issues.

Image source: kpcw.npr; yalebooks.yale.edu