Abstract
The scientific story of Charles Babbage (1791–1871) highlights the pitfalls of an invention that was brilliant yet could never be commercialized. In 1837, this English mathematician and computer pioneer developed what he called the “analytical engine,” a mechanical general-purpose computer that could carry out a variety of different operations based on programming instructions given to it. This machine incorporated an arithmetic logic unit, control flow in the form of conditional branching and loops, and integrated memory, making it the first design for a general-purpose computer. Also, it could perform one task, then switch and perform another. This device could be described in modern terms as Turing-complete.
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Notes
- 1.
In laymen’s terms, a Turing-complete system is a system in which a program can be written that will find an answer to a problem (although with no guarantees regarding runtime or memory). In other words, it means that it could be used to solve any computation problem.
- 2.
Turing’s machine, which is considered to be the first modern computer, was invented in 1936 by Alan Turing. It was an abstract machine that manipulates symbols on a strip of tape according to a table of rules; to be more exact, it is a mathematical model of computation that defines such a device.
- 3.
In his words: “the invention of all those machines by which labour is so much facilitated and abridged, seems to have been originally owing to the division of labour. Men are much more likely to discover easier and readier methods of attaining any object, when the whole attention of their minds is directed towards that single object, than when it is dissipated among a great variety of things. But in consequence of the division of labour, the whole of every man’s attention comes naturally to be directed towards some one very simple object. It is naturally to be expected, therefore, that some one or other of those who are employed in each particular branch of labour should soon find out easier and readier methods of performing their own particular work, wherever the nature of it admits of such improvement” (Smith 1776, I.1.8).
- 4.
The statement in a press conference (1929), as quoted in Newton (1987: 24).
- 5.
Innovation results in the production of a novel product or service whose acceptance by the market analysts cannot ascertain with the help statistical data (Taleb 2007). In the language of Industrial Organization, the introduction in the market of an innovative product or services flattens the industry’s demand curve, but no one can anticipate by how much; it all depends on the public’s acceptance, whose endorsement will remain unknown even for the innovator until the launch of the innovation.
- 6.
Keynes (1936); Lekachman and Keynes (1964) demonstrated in his “Beauty Contest example” how mutual expectations lead to absolute uncertainty, this is the common trait that pervades markets and explains the emergence of institutions as connecting mechanisms that transform scattered ideas into meaningful, linked knowledge. Richardson (1960) explored in depth how entrepreneurs overcome the uncertainty of decentralized market systems by developing connections, or links, either as competitors or as suppliers or clients.
- 7.
In his 1952 book The Sensory Order, F.A. Hayek noted that human perception and human action is a purely subjective phenomenon. The mind does not represent physical or external events but is an interpretation of these events that we call reality.
- 8.
Cognitive biases are thinking errors that individuals make in processing information. Some of these have been verified empirically in the realm of psychology, while others are considered general categories of bias. These thinking errors prevent one from accurately understanding reality, even when confronted with all the needed data and evidence to form an accurate view. Cognitive biases are inherent to human thought, and therefore, any systematic method of acquiring knowledge must control bias; otherwise it is inherently invalid. They include a list of more than 35 identified forms of decision-making and behavioral biases; 25 forms of biases in probability and belief; 25 forms of social biases; and 10 forms of memory errors.
- 9.
This conclusion is now new. Loasby (2005) notes that Adam Smith found more relevant for his analysis to focus on how people come to accept some propositions as true, as opposed to attempting to establish the truth of any general empirical proposition by logic or evidence, which is impossible. The ‘discomfort’ produced by the failure of existing patterns of knowledge to account for newly-observed phenomena leads individuals to invent new ‘connecting principles’ that will impose a new understanding of things. But new ‘connecting principles’ lead to new expectations, new activities and new observations; thereby giving rise to its their anomalies and consequent stimuli to imagination. Thus, Smith transferred to economics his emphasis on knowledge about knowledge.
- 10.
Merton (1963) indicates “sometimes the discoveries are simultaneous or almost so; sometimes a scientist will make a new discovery which, unknown to him, somebody else has made years before.” Johnson (2010) explains this phenomenon as a result of the similar technological departing ground from which new discoveries are developed, which he calls “the adjacent possible.” In other words, both evolution and innovation tend to happen within the bounds of possibilities available at any given moment.
- 11.
With or without reason, sometimes these battles turned these towering figures into ungraceful advocates of their own causes. Take the case of Galileo’s “Defense against the Calumnies and Impostures of Baldassar Capar,” where he showed how his invention of the “geometric and military compass” had been taken from him; or his 1623 work The Assayer, which speaks of a villain who “attempted to rob me of that glory which is mine, pretending not to have seen my writings and trying to represent themselves as the original discoverer of these marvels.” Isaac Newton’s dispute with Robert Hooke over the discovery of optics and celestial mechanics seems to have become so sour that some accuse Newton, as President of the Royal Society, of doing much to obscure Hooke, including destroying (or failing to preserve) the only known portrait at the Society.
- 12.
The “Act for the Encouragement of Learning, by Vesting the Copies of Printed Books in the Authors or Purchasers of such Copies, during the Times therein mentioned,” (short named as Statute of Anne, after the name of the Queen of England) is considered the first modern copyright law. It would not see the light until 1710, and would be signed in England. The first copyright statute in Cervantes’ Spain was the Royal Order of 1764. So his options to protect his creation from plagiarism were fairly limited.
- 13.
So, in Chapter 59 Don Quixote becomes outraged when he learns of Avellaneda’s book and the way he is portrayed in it. Then, he avoids attending a jousting because it took place in the Avellaneda edition. In another chapter he uses Don Alfaro Tarfe, a character from Avellaneda’s work, to get him to sign an affidavit that he and Don Quixote have never met before. However, the funniest reference of all is found in Chapter 70, where Cervantes had the character Altisodora recount her journey to the gates of hell, and there she observed a group of devils playing tennis with books, instead of balls; one of these books being Avellaneda’s Quixote. The story is worth of recount in full. As Altisodora was viewing the game with books, she notices one of them, a brand-new, well-bound one. To this book, the devils “gave such a stroke that they knocked the guts out of it and scattered the leaves about.” “Look what book that is,” said one devil to another, and the other replied, “It is ‘Second Part of the History of Don Quixote of La Mancha,’ not by Cid Hamet [the metafictional historian of Don Quixote], the original author, but by an Aragonese who by his own account is of Tordesillas.” “Out of this with it,” said the first, “and into the depths of hell with it out of my sight.” “Is it so bad?” said the other. “So bad is it,” said the first, “that if I had set myself deliberately to make a worse, I could not have done it.”
- 14.
It was inevitable that the Industrial Revolution needed a legal foundation to sustain the increasing number of innovations. Patents were systematically granted in Venice as of 1450, where they issued a decree by which new and inventive devices had to be communicated to the Republic in order to obtain legal protection against potential infringers. This led to the diffusion of patent systems to other countries. However, the system was viewed as a royal monopoly granted to the privilege of subjects favored by the King. Consolidation arrived at the end of the eighteenth century, when the granting of patents began to be viewed as a form of intellectual property right. Following the new approach, several changes were introduced to patent law including requirements on those applying to a patent to supply a complete description of how the invention works, available for public access.
- 15.
According to Merton, the intent of a patent claim and priority of discovery are also fundamentally different. The primary goal of a patent is to stake territory as one’s own and exclude others (or make them pay for using your intellectual property), thus serving a goal of commercialization. The invention only enters the public domain for free use after many years. In contrast, the disclosure of work for “priority of discovery” is intended to encourage others to make use of the discovery and expand upon it for non-commercial use. Not only is this aligned with mission of science, but the scientist’s claim “priority” can only be firmly established when others validate (i.e. repeat) and affirm the importance (through further development) of the original discovery.
- 16.
Dependent claims provide patent claimants a backup during prosecution and enforcement actions. In our case, let us assume that a court invalidates claim 1 over the prior art during litigation. If the claimant only asserted claim 1 the case would be over, and the claimant would lose. Claims 2, 3, 4, 5 and 6, however, provide him or her a fallback. Claim 2 (“The two-sided aluminum hammer”) would be patentable if until then these peculiar hammers had been made of different materials but aluminum (say, plastic, or wood). Claim 3 (“two-sided aluminum hammers covered with a resistant polymer”) made possible for the claimant to obtain a patent even if two-sided aluminum hammers are prior art because it may be that the only hammers found in the market had no polymer covering. The same patent approval would occur if these hammers found in the market had no rubber grips (claim 4); or if they had one pointed-edged side, (claim 5) or if they had a wooden grip. In short, the dependent claims in a patent application provide useful fallback positions during patent filing, and then later on during litigation.
- 17.
MacNeil’s “relational contracts” theory postulates that contracts are “relational,” that is, their explicit terms merely outline the contractual boundaries of a relationship between the parties, the contours of which implicit terms and understandings arising out of their relationship fill in. Therefore, no contract can set forth all the contingencies that can emerge between two or more parties over the life of their contractual relationship. The theory emphasizes the open bounds of contractual relationships, because of the unexpected events that can arise throughout the life of the contract relation. More recently, Pistor and Xu (2003) note that the incomplete contract literature, drawn from the economics literature to explaining the boundaries of firms, also emphasize such boundless nature of contracts. Thus, a contract is complete if (and only if) all relevant contingencies and equal control rights – such as responsibilities of the parties for different aspects of the relation, rewards and punishments for certain actions, etc. – are specified unambiguously. Complete contracts resolve all possible disputes between the contractual parties ex-ante. A contract is incomplete when some appropriate contingencies are missing, or some items are specified ambiguously. As a result, the contract is unenforceable and on its own cannot resolve disputes. The critical issue, then, is who has the right to decide the issues that are not contractually fleshed out. These “residual rights” have to be allocated to achieve economic efficiency, by enabling one party full control of the outcome, thus narrowing the degree of “openness” in the relationship.
- 18.
The TRIPS Agreement contains certain provisions on well-known marks, which supplement the protection required by Article 6bis of the Paris Convention, as incorporated by reference into the TRIPS Agreement, which obliges Members to refuse or to cancel the registration, and to prohibit the use of a mark conflicting with a mark which is well known. Yet, even here one has to note there is no commonly agreed detailed definition of what constitutes a “well-known mark.” The WIPO Joint Recommendation Concerning Provisions on the Protection of Well-Known Marks provides certain guidelines, but again, the existence of these guidelines highlights the fact that the system is far from fully certain.
- 19.
Delays in the administration of justice and definition of rights can create opportunities for rent seeking (Bessen et al. 2012). Harper (2015) indicates that absence of appropriation over the intellectual resources resulting from the innovation process presents us with a case of the tragedy of the commons: dispute over the unowned areas. Uncertainty about the scope of IP increases the risk of abusive litigation through concurrent claims over disputed areas. This situation increases transaction costs in the ecosystem that can derail the emergence of technology markets.
- 20.
An example of these failures is asymmetric information or search costs that may retard efficient technology transfer (Gans et al. 2008). Ziedonis (2004) showed that in the semiconductor industry an aggressive patenting behavior not only depends on the level of the firm capital intensity but also on the fragmentation of patent ownerships in the industry. This phenomenon increases transaction costs in markets for technologies and the probability that firms infringe each other. Another example of failure is the murkiness that surrounds IP markets, which has made it incredibly difficult to facilitate to the public information about bilateral transactions, either sales or cross-licenses among firms. There is no efficient, transparent online platform for IP sales or license or exchange for patents; the attempts to do this by setting two-sided patent platforms have failed hopelessly (Hagiu and Yoffie 2013), as we will explore in detail later when we examine the case of IPXI. The result? When buyers and sellers do manage to find each other, they usually negotiate under enormous uncertainty: prices of similar IP differ a lot from transaction to transaction, and the terms of the transactions are often confidential (Hagiu and Yoffie 2013). Such inefficient trading mainly among big industry firms on IP markets is a welfare loss for the economy as a whole, as it delays the dissemination of useful knowledge in society.
- 21.
Paradoxically, awareness failures occur at a time where the world has the highest available number of databases of patents in history. These databases hold the entire text of all granted patents and applications published by all the most relevant patent offices. Also, they include information about the inventors, technology, backward and forward citations, prior art and ownership background. Under closer inspection, however, this phenomenon reveals that patent filing is only one of the many steps building up the ladder of certainties around the IP system, which is what nurtures the awareness of those involved in the innovation ecosystem.
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De Leon, I., Fernandez Donoso, J. (2017). Why Do We Need Intellectual Property Rules?. In: Innovation, Startups and Intellectual Property Management. Springer, Cham. https://doi.org/10.1007/978-3-319-54906-4_1
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