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 Accelerando

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In IP geek circles, Manfred is legendary; he's the guy who patented the business practice of moving your e-business somewhere with a slack intellectual property regime in order to evade licensing encumbrances. He's the guy who patented using genetic algorithms to patent everything they can permutate from an initial description of a problem domain - not just a better mousetrap, but the set of all possible better mousetraps. Roughly a third of his inventions are legal, a third are illegal, and the remainder are legal but will become illegal as soon as the legislatosaurus wakes up, smells the coffee, and panics. There are patent attorneys in Reno who swear that Manfred Macx is a pseudo, a net alias fronting for a bunch of crazed anonymous hackers armed with the Genetic Algorithm That Ate Calcutta: a kind of Serdar Argic of intellectual property, or maybe another Bourbaki math borg. There are lawyers in San Diego and Redmond who swear blind that Macx is an economic saboteur bent on wrecking the underpinning of capitalism, and there are communists in Prague who think he's the bastard spawn of Bill Gates by way of the Pope.

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Amber interrupts the cat's grumbling by clapping her hands gleefully; "So what is it?" she demands: "A new invention? Some kind of weird sex toy from Amsterdam? A gun, so I can shoot Pastor Wallace?"

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Brains in bottles - empowered ones, with total, dictatorial, control over the reality they are exposed to - sometimes stop engaging in activities that brains in bodies can't avoid. Menstruation isn't mandatory. Vomiting, angina, exhaustion, and cramp are all optional. So is meatdeath, the decomposition of the corpus. But some activities don't cease, because people (even people who have been converted into a software description, squirted through a high-bandwidth laser link, and ported into a virtualization stack) don't want them to stop. Breathing is wholly unnecessary, but suppression of the breathing reflex is disturbing unless you hack your hypothalamic map, and most homomorphic uploads don't want to do that. Then there's eating - not to avoid starvation, but for pleasure: Feasts on sautéed dodo seasoned with silphium are readily available here, and indeed, why not? It seems the human addiction to sensory input won't go away. And that's without considering sex, and the technical innovations that become possible when the universe - and the bodies within it - are mutable.

 CONTENT - Selected Essays on Technology, Creativity, Copyright and the Future of the Future

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We've never had this principle: in fact, we've always had just the reverse. Think about all the things that can be plugged into a parallel or serial interface, which were never envisioned by their inventors. Our strong economy and rapid innovation are byproducts of the ability of anyone to make anything that plugs into anything else: from the Flo-bee electric razor that snaps onto the end of your vacuum-hose to the octopus spilling out of your car's dashboard lighter socket, standard interfaces that anyone can build for are what makes billionaires out of nerds.

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It's a bad business. DVD is a format where the guy who makes the records gets to design the record players. Ask yourself: how much innovation has there been over the past decade of DVD players? They've gotten cheaper and smaller, but where are the weird and amazing new markets for DVD that were opened up by the VCR? There's a company that's manufacturing the world's first HDD-based DVD jukebox, a thing that holds 100 movies, and they're charging $27,000 for this thing. We're talking about a few thousand dollars' worth of components -- all that other cost is the cost of anticompetition.

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Which means that today's copyright -- the thing that DRM nominally props up -- didn't come down off the mountain on two stone tablets. It was created in living memory to accommodate the technical reality created by the inventors of the previous generation. To abandon invention now robs tomorrow's artists of the new businesses and new reach and new audiences that the Internet and the PC can give them.

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If all this stuff seems a little sneaky, underhanded and even illegal to you, you're not alone. When representatives of nearly all the world's entertainment, technology, broadcast, satellite and cable companies gather in a room to collude to cripple their offerings, limit their innovation, and restrict the market, regulators take notice.

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Of course they would! Why, when America was a-borning, she was a pirate nation, cheerfully copying the inventions of European authors and inventors. Why not? The fledgling revolutionary republic could copy without paying, keep the money on her shores, and enrich herself with the products and ideas of imperial Europe. Of course, once the US became a global hitter in the creative industries, out came the international copyright agreements: the US signed agreements to protect British authors in exchange for reciprocal agreements from the Brits to protect American authors.

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The novel is an invention, one that was engendered by technological changes in information display, reproduction, and distribution. The cognitive style of the novel is different from the cognitive style of the legend. The cognitive style of the computer is different from the cognitive style of the novel.

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Likewise, DRM has exacted a punishing toll wherever it has come into play, costing us innovation, free speech, research and the public's rights in copyright. And likewise, DRM has not stopped infringement: today, infringement is more widespread than ever. All those costs borne by society in the name of protecting artists and stopping infringement, and not a penny put into an artist's pocket, not a single DRM-restricted file that can't be downloaded for free and without encumbrance from a P2P network.

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However, the EULA that got Bragg upset wasn't a Murdoch innovation -- it dates back to the earliest days of the service. It seems to have been posted at a time when the garage entrepreneurs who built MySpace were in no position to hire pricey counsel -- something borne out by the fact that the old MySpace EULA appears nearly verbatim on many other services around the Internet. It's not going out very far on a limb to speculate that MySpace's founders merely copied a EULA they found somewhere else, without even reading it, and that when Murdoch's due diligence attorneys were preparing to give these lucky fellows $600,000,000, that they couldn't be bothered to read the terms of service anyway.

 Democratizing Innovation

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I have also greatly benefited from close contacts with colleagues in industry. As Director of the MIT Innovation Lab, I work together with senior innovation managers in just a few companies to develop and try out innovation tools in actual company settings. Close intellectual colleagues and friends of many years standing in this sphere include Jim Euchner from Pitney-Bowes, Mary Sonnack and Roger Lacey from 3M, John Wright from IFF, Dave Richards from Nortel Networks, John Martin from Verizon, Ben Hyde from the Apache Foundation, Brian Behlendorf from the Apache Foundation and CollabNet, and Joan Churchill and Susan Hiestand from Lead User Concepts. Thank you so much for the huge (and often humbling) insights that your and our field experimentation has provided!

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Early in my research on the democratization of innovation I was very fortunate to gain five major academic mentors and friends. Nathan Rosenberg, Richard Nelson, Zvi Griliches, Edwin Mansfield, and Ann Carter all provided crucial support as I adopted economics as the organizing framework and toolset for my work. Later, I collaborated with a number of wonderful co-authors, all of whom are friends as well: Stan Finkelstein, Nikolaus Franke, Dietmar Harhoff, Joachim Henkel, Cornelius Herstatt, Ralph Katz, Georg von Krogh, Karim Lakhani, Gary Lilien, Christian Luthje, Pamela Morrison, William Riggs, John Roberts, Stephan Schrader, Mary Sonnack, Stefan Thomke, Marcie Tyre, and Glen Urban. Other excellent research collaborators and friends of long standing include Carliss Baldwin, Sonali Shah, Sarah Slaughter, and Lars Jeppesen.

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At some point as interest in a topic grows, there is a transition from dyadic academic relationships to a real research community. In my case, the essential person in enabling that transition was my close friend and colleague Dietmar Harhoff. He began to send wonderful Assistant Professors (Habilitanden) over from his university, Ludwig Maximilians Universität in Munich, to do collaborative research with me as MIT Visiting Scholars. They worked on issues related to the democratization of innovation while at MIT and then carried on when they returned to Europe. Now they are training others in their turn.

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Democratizing Innovation,
Eric von Hippel

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Democratizing Innovation

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When I say that innovation is being democratized, I mean that users of products and services---both firms and individual consumers---are increasingly able to innovate for themselves. User-centered innovation processes offer great advantages over the manufacturer-centric innovation development systems that have been the mainstay of commerce for hundreds of years. Users that innovate can develop exactly what they want, rather than relying on manufacturers to act as their (often very imperfect) agents. Moreover, individual users do not have to develop everything they need on their own: they can benefit from innovations developed and freely shared by others.

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The trend toward democratization of innovation applies to information products such as software and also to physical products. As a quick illustration of the latter, consider the development of high-performance windsurfing techniques and equipment in Hawaii by an informal user group. High-performance windsurfing involves acrobatics such as jumps and flips and turns in mid-air. Larry Stanley, a pioneer in high-performance windsurfing, described the development of a major innovation in technique and equipment to Sonali Shah:

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By 1998, more than a million people were engaged in windsurfing, and a large fraction of the boards sold incorporated the user-developed innovations for the high-performance sport.

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The user-centered innovation process just illustrated is in sharp contrast to the traditional model, in which products and services are developed by manufacturers in a closed way, the manufacturers using patents, copyrights, and other protections to prevent imitators from free riding on their innovation investments. In this traditional model, a user's only role is to have needs, which manufacturers then identify and fill by designing and producing new products. The manufacturer-centric model does fit some fields and conditions. However, a growing body of empirical work shows that users are the first to develop many and perhaps most new industrial and consumer products. Further, the contribution of users is growing steadily larger as a result of continuing advances in computer and communications capabilities.

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In this book I explain in detail how the emerging process of user-centric, democratized innovation works. I also explain how innovation by users provides a very necessary complement to and feedstock for manufacturer innovation.

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The ongoing shift of innovation to users has some very attractive qualities. It is becoming progressively easier for many users to get precisely what they want by designing it for themselves. And innovation by users appears to increase social welfare. At the same time, the ongoing shift of product-development activities from manufacturers to users is painful and difficult for many manufacturers. Open, distributed innovation is "attacking" a major structure of the social division of labor. Many firms and industries must make fundamental changes to long-held business models in order to adapt. Further, governmental policy and legislation sometimes preferentially supports innovation by manufacturers. Considerations of social welfare suggest that this must change. The workings of the intellectual property system are of special concern. But despite the difficulties, a democratized and user-centric system of innovation appears well worth striving for.

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Users, as the term will be used in this book, are firms or individual consumers that expect to benefit from using a product or a service. In contrast, manufacturers expect to benefit from selling a product or a service. A firm or an individual can have different relationships to different products or innovations. For example, Boeing is a manufacturer of airplanes, but it is also a user of machine tools. If we were examining innovations developed by Boeing for the airplanes it sells, we would consider Boeing a manufacturer-innovator in those cases. But if we were considering innovations in metal-forming machinery developed by Boeing for in-house use in building airplanes, we would categorize those as user-developed innovations and would categorize Boeing as a user-innovator in those cases.

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Innovation user and innovation manufacturer are the two general "functional" relationships between innovator and innovation. Users are unique in that they alone benefit directly from innovations. All others (here lumped under the term "manufacturers") must sell innovation-related products or services to users, indirectly or directly, in order to profit from innovations. Thus, in order to profit, inventors must sell or license knowledge related to innovations, and manufacturers must sell products or services incorporating innovations. Similarly, suppliers of innovation-related materials or services---unless they have direct use for the innovations---must sell the materials or services in order to profit from the innovations.

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The user and manufacturer categorization of relationships between innovator and innovation can be extended to specific functions, attributes, or features of products and services. When this is done, it may turn out that different parties are associated with different attributes of a particular product or service. For example, householders are the users of the switching attribute of a household electric light switch---they use it to turn lights on and off. However, switches also have other attributes, such as "easy wiring" qualities, that may be used only by the electricians who install them. Therefore, if an electrician were to develop an improvement to the installation attributes of a switch, it would be considered a user-developed innovation.

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Empirical studies show that many users---from 10 percent to nearly 40 percent---engage in developing or modifying products. About half of these studies do not determine representative innovation frequencies; they were designed for other purposes. Nonetheless, when taken together, the findings make it very clear that users are doing a lot of product modification and product development in many fields.

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Studies of innovating users (both individuals and firms) show them to have the characteristics of "lead users." That is, they are ahead of the majority of users in their populations with respect to an important market trend, and they expect to gain relatively high benefits from a solution to the needs they have encountered there. The correlations found between innovation by users and lead user status are highly significant, and the effects are very large.

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Since lead users are at the leading edge of the market with respect to important market trends, one can guess that many of the novel products they develop for their own use will appeal to other users too and so might provide the basis for products manufacturers would wish to commercialize. This turns out to be the case. A number of studies have shown that many of the innovations reported by lead users are judged to be commercially attractive and/or have actually been commercialized by manufacturers.

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Research provides a firm grounding for these empirical findings. The two defining characteristics of lead users and the likelihood that they will develop new or modified products have been found to be highly correlated (Morrison et al. 2004). In addition, it has been found that the higher the intensity of lead user characteristics displayed by an innovator, the greater the commercial attractiveness of the innovation that the lead user develops (Franke and von Hippel 2003a). In figure 1.1, the increased concentration of innovations toward the right indicates that the likelihood of innovating is higher for users having higher lead user index values. The rise in average innovation attractiveness as one moves from left to right indicates that innovations developed by lead users tend to be more commercially attractive. (Innovation attractiveness is the sum of the novelty of the innovation and the expected future generality of market demand.)

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Figure 1.1 User-innovators with stronger "lead user" characteristics develop innovations having higher appeal in the general marketplace. Estimated OLS function: Y = 2.06 + 0.57x, where Y represents attractiveness of innovation and x represents lead-user-ness of respondent. Adjusted R2 = 0.281; p = 0.002; n = 30. Source of data: Franke and von Hippel 2003.

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Even if many users want "exactly right products" and are willing and able to pay for their development, why do users often do this for themselves rather than hire a custom manufacturer to develop a special just-right product for them? After all, custom manufacturers specialize in developing products for one or a few users. Since these firms are specialists, it is possible that they could design and build custom products for individual users or user firms faster, better, or cheaper than users could do this for themselves. Despite this possibility, several factors can drive users to innovate rather than buy. Both in the case of user firms and in the case of individual user-innovators, agency costs play a major role. In the case of individual user-innovators, enjoyment of the innovation process can also be important.

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A small model of the innovate-or-buy decision follows. This model shows in a quantitative way that user firms with unique needs will always be better off developing new products for themselves. It also shows that development by manufacturers can be the most economical option when n or more user firms want the same thing. However, when the number of user firms wanting the same thing falls between 1 and n, manufacturers may not find it profitable to develop a new product for just a few users. In that case, more than one user may invest in developing the same thing independently, owing to market failure. This results in a waste of resources from the point of view of social welfare. The problem can be addressed by new institutional forms, such as the user innovation communities that will be studied later in this book.

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Chapter 4 concludes by pointing out that an additional incentive can drive individual user-innovators to innovate rather than buy: they may value the process of innovating because of the enjoyment or learning that it brings them. It might seem strange that user-innovators can enjoy product development enough to want to do it themselves---after all, manufacturers pay their product developers to do such work! On the other hand, it is also clear that enjoyment of problem solving is a motivator for many individual problem solvers in at least some fields. Consider for example the millions of crossword-puzzle aficionados. Clearly, for these individuals enjoyment of the problem-solving process rather than the solution is the goal. One can easily test this by attempting to offer a puzzle solver a completed puzzle---the very output he or she is working so hard to create. One will very likely be rejected with the rebuke that one should not spoil the fun! Pleasure as a motivator can apply to the development of commercially useful innovations as well. Studies of the motivations of volunteer contributors of code to widely used software products have shown that these individuals too are often strongly motivated to innovate by the joy and learning they find in this work (Hertel et al. 2003; Lakhani and Wolf 2005).

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Users' Low-Cost Innovation Niches (Chapter 5)

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An exploration of the basic processes of product and service development show that users and manufacturers tend to develop different types of innovations. This is due in part to information asymmetries: users and manufacturers tend to know different things. Product developers need two types of information in order to succeed at their work: need and context-of-use information (generated by users) and generic solution information (often initially generated by manufacturers specializing in a particular type of solution). Bringing these two types of information together is not easy. Both need information and solution information are often very "sticky"---that is, costly to move from the site where the information was generated to other sites. As a result, users generally have a more accurate and more detailed model of their needs than manufacturers have, while manufacturers have a better model of the solution approach in which they specialize than the user has.

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When information is sticky, innovators tend to rely largely on information they already have in stock. One consequence of the information asymmetry between users and manufacturers is that users tend to develop innovations that are functionally novel, requiring a great deal of user-need information and use-context information for their development. In contrast, manufacturers tend to develop innovations that are improvements on well-known needs and that require a rich understanding of solution information for their development. For example, firms that use inventory-management systems, such as retailers, tend to be the developers of new approaches to inventory management. In contrast, manufacturers of inventory-management systems and equipment tend to develop improvements to the equipment used to implement these user-devised approaches (Ogawa 1998).

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If we extend the information-asymmetry argument one step further, we see that information stickiness implies that information on hand will also differ among individual users and manufacturers. The information assets of some particular user (or some particular manufacturer) will be closest to what is required to develop a particular innovation, and so the cost of developing that innovation will be relatively low for that user or manufacturer. The net result is that user innovation activities will be distributed across many users according to their information endowments. With respect to innovation, one user is by no means a perfect substitute for another.

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Why Users Often Freely Reveal Their Innovations (Chapter 6)

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The social efficiency of a system in which individual innovations are developed by individual users is increased if users somehow diffuse what they have developed to others. Manufacturer-innovators partially achieve this when they sell a product or a service on the open market (partially because they diffuse the product incorporating the innovation, but often not all the information that others would need to fully understand and replicate it). If user-innovators do not somehow also diffuse what they have done, multiple users with very similar needs will have to independently develop very similar innovations---a poor use of resources from the viewpoint of social welfare. Empirical research shows that users often do achieve widespread diffusion by an unexpected means: they often "freely reveal" what they have developed. When we say that an innovator freely reveals information about a product or service it has developed, we mean that all intellectual property rights to that information are voluntarily given up by the innovator, and all interested parties are given access to it---the information becomes a public good.

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The empirical finding that users often freely reveal their innovations has been a major surprise to innovation researchers. On the face of it, if a user-innovator's proprietary information has value to others, one would think that the user would strive to prevent free diffusion rather than help others to free ride on what it has developed at private cost. Nonetheless, it is now very clear that individual users and user firms---and sometimes manufacturers---often freely reveal detailed information about their innovations.

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The practices visible in "open source" software development were important in bringing this phenomenon to general awareness. In these projects it was clear policy that project contributors would routinely and systematically freely reveal code they had developed at private expense (Raymond 1999). However, free revealing of product innovations has a history that began long before the advent of open source software. Allen, in his 1983 study of the eighteenth-century iron industry, was probably the first to consider the phenomon systematically. Later, Nuvolari (2004) discussed free revealing in the early history of mine pumping engines. Contemporary free revealing by users has been documented by von Hippel and Finkelstein (1979) for medical equipment, by Lim (2000) for semiconductor process equipment, by Morrison, Roberts, and von Hippel (2000) for library information systems, and by Franke and Shah (2003) for sporting equipment. Henkel (2003) has documented free revealing among manufacturers in the case of embedded Linux software.

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Innovators often freely reveal because it is often the best or the only practical option available to them. Hiding an innovation as a trade secret is unlikely to be successful for long: too many generally know similar things, and some holders of the "secret" information stand to lose little or nothing by freely revealing what they know. Studies find that innovators in many fields view patents as having only limited value. Copyright protection and copyright licensing are applicable only to "writings," such as books, graphic images, and computer software.

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Active efforts by innovators to freely reveal---as opposed to sullen acceptance---are explicable because free revealing can provide innovators with significant private benefits as well as losses or risks of loss. Users who freely reveal what they have done often find that others then improve or suggest improvements to the innovation, to mutual benefit (Raymond 1999). Freely revealing users also may benefit from enhancement of reputation, from positive network effects due to increased diffusion of their innovation, and from other factors. Being the first to freely reveal a particular innovation can also enhance the benefits received, and so there can actually be a rush to reveal, much as scientists rush to publish in order to gain the benefits associated with being the first to have made a particular advancement.

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Innovation Communities (Chapter 7)

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Innovation by users tends to be widely distributed rather than concentrated among just a very few very innovative users. As a result, it is important for user-innovators to find ways to combine and leverage their efforts. Users achieve this by engaging in many forms of cooperation. Direct, informal user-to-user cooperation (assisting others to innovate, answering questions, and so on) is common. Organized cooperation is also common, with users joining together in networks and communities that provide useful structures and tools for their interactions and for the distribution of innovations. Innovation communities can increase the speed and effectiveness with which users and also manufacturers can develop and test and diffuse their innovations. They also can greatly increase the ease with which innovators can build larger systems from interlinkable modules created by community participants.

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Free and open source software projects are a relatively well-developed and very successful form of Internet-based innovation community. However, innovation communities are by no means restricted to software or even to information products, and they can play a major role in the development of physical products. Franke and Shah (2003) have documented the value that user innovation communities can provide to user-innovators developing physical products in the field of sporting equipment. The analogy to open source innovation communities is clear.

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The collective or community effort to provide a public good---which is what freely revealed innovations are---has traditionally been explored in the literature on "collective action." However, behaviors seen in extant innovation communities fail to correspond to that literature at major points. In essence, innovation communities appear to be more robust with respect to recruiting and rewarding members than the literature would predict. Georg von Krogh and I attribute this to innovation contributors' obtaining some private rewards that are not shared equally by free riders (those who take without contributing). For example, a product that a user-innovator develops and freely reveals might be perfectly suited to that user-innovator's requirements but less well suited to the requirements of free riders. Innovation communities thus illustrate a "private-collective" model of innovation incentive (von Hippel and von Krogh 2003).

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Adapting Policy to User Innovation (Chapter 8)

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Is innovation by users a "good thing?" Welfare economists answer such a question by studying how a phenomenon or a change affects social welfare. Henkel and von Hippel (2005) explored the social welfare implications of user innovation. They found that, relative to a world in which only manufacturers innovate, social welfare is very probably increased by the presence of innovations freely revealed by users. This finding implies that policy making should support user innovation, or at least should ensure that legislation and regulations do not favor manufacturers at the expense of user-innovators.

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The transitions required of policy making to achieve neutrality with respect to user innovation vs. manufacturer innovation are significant. Consider the impact on open and distributed innovation of past and current policy decisions. Research done in the past 30 years has convinced many academics that intellectual property law is sometimes or often not having its intended effect. Intellectual property law was intended to increase the amount of innovation investment. Instead, it now appears that there are economies of scope in both patenting and copyright that allow firms to use these forms of intellectual property law in ways that are directly opposed to the intent of policy makers and to the public welfare. Major firms can invest to develop large portfolios of patents. They can then use these to create "patent thickets"---dense networks of patent claims that give them plausible grounds for threatening to sue across a wide range of intellectual property. They may do this to prevent others from introducing a superior innovation and/or to demand licenses from weaker competitors on favorable terms (Shapiro 2001). Movie, publishing, and software firms can use large collections of copyrighted work to a similar purpose (Benkler 2002). In view of the distributed nature of innovation by users, with each tending to create a relatively small amount of intellectual property, users are likely to be disadvantaged by such strategies.

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It is also important to note that users (and manufacturers) tend to build prototypes of their innovations economically by modifying products already available on the market to serve a new purpose. Laws such as the (US) Digital Millennium Copyright Act, intended to prevent consumers from illegally copying protected works, also can have the unintended side effect of preventing users from modifying products that they purchase (Varian 2002). Both fairness and social welfare considerations suggest that innovation-related policies should be made neutral with respect to the sources of innovation.

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It may be that current impediments to user innovation will be solved by legislation or by policy making. However, beneficiaries of existing law and policy will predictably resist change. Fortunately, a way to get around some of these problems is in the hands of innovators themselves. Suppose many innovators in a particular field decide to freely reveal what they have developed, as they often have reason to do. In that case, users can collectively create an information commons (a collection of information freely available to all) containing substitutes for some or a great deal of information now held as private intellectual property. Then user-innovators can work around the strictures of intellectual property law by simply using these freely revealed substitutes (Lessig 2001). This is essentially what is happening in the field of software. For many problems, user-innovators in that field now have a choice between proprietary, closed software provided by Microsoft and other firms and open source software that they can legally download from the Internet and legally modify to serve their own specific needs.

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Policy making that levels the playing field between users and manufacturers will force more rapid change onto manufacturers but will by no means destroy them. Experience in fields where open and distributed innovation processes are far advanced show how manufacturers can and do adapt. Some, for example, learn to supply proprietary platform products that offer user-innovators a framework upon which to develop and use their improvements.

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Democratizing Innovation (Chapter 9)

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Users' ability to innovate is improving radically and rapidly as a result of the steadily improving quality of computer software and hardware, improved access to easy-to-use tools and components for innovation, and access to a steadily richer innovation commons. Today, user firms and even individual hobbyists have access to sophisticated programming tools for software and sophisticated CAD design tools for hardware and electronics. These information-based tools can be run on a personal computer, and they are rapidly coming down in price. As a consequence, innovation by users will continue to grow even if the degree of heterogeneity of need and willingness to invest in obtaining a precisely right product remains constant.

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Equivalents of the innovation resources described above have long been available within corporations to a few. Senior designers at firms have long been supplied with engineers and designers under their direct control, and with the resources needed to quickly construct and test prototype designs. The same is true in other fields, including automotive design and clothing design: just think of the staffs of engineers and modelmakers supplied so that top auto designers can quickly realize and test their designs.

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But if, as we have seen, the information needed to innovate in important ways is widely distributed, the traditional pattern of concentrating innovation-support resources on a few individuals is hugely inefficient. High-cost resources for innovation support cannot efficiently be allocated to "the right people with the right information:" it is very difficult to know who these people may be before they develop an innovation that turns out to have general value. When the cost of high-quality resources for design and prototyping becomes very low (the trend we have described), these resources can be diffused very widely, and the allocation problem diminishes in significance. The net result is and will be to democratize the opportunity to create.

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On a level playing field, users will be an increasingly important source of innovation and will increasingly substitute for or complement manufacturers' innovation-related activities. In the case of information products, users have the possibility of largely or completely doing without the services of manufacturers. Open source software projects are object lessons that teach us that users can create, produce, diffuse, provide user field support for, update, and use complex products by and for themselves in the context of user innovation communities. In physical product fields, product development by users can evolve to the point of largely or totally supplanting product development---but not product manufacturing---by manufacturers. (The economies of scale associated with manufacturing and distributing physical products give manufacturers an advantage over "do-it-yourself" users in those activities.)

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The evolving pattern of the locus of product development in kitesurfing illustrates how users can displace manufacturers from the role of product developer. In that industry, the collective product-design and testing work of a user innovation community has clearly become superior in both quality and quantity relative to the levels of in-house development effort that manufacturers of kitesurfing equipment can justify. Accordingly, manufacturers of such equipment are increasingly shifting away from product design and focusing on producing product designs first developed and tested by user innovation communities.

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How can or should manufacturers adapt to users' encroachment on elements of their traditional business activities? There are three general possibilities: (1) Produce user-developed innovations for general commercial sale and/or offer custom manufacturing to specific users. (2) Sell kits of product-design tools and/or "product platforms" to ease users' innovation-related tasks. (3) Sell products or services that are complementary to user-developed innovations. Firms in fields where users are already very active in product design are experimenting with all these possibilities.

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Application: Searching for Lead User Innovations (Chapter 10)

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Manufacturers design their innovation processes around the way they think the process works. The vast majority of manufacturers still think that product development and service development are always done by manufacturers, and that their job is always to find a need and fill it rather than to sometimes find and commercialize an innovation that lead users have already developed. Accordingly, manufacturers have set up market-research departments to explore the needs of users in the target market, product-development groups to think up suitable products to address those needs, and so forth. The needs and prototype solutions of lead users---if encountered at all---are typically rejected as outliers of no interest. Indeed, when lead users' innovations do enter a firm's product line---and they have been shown to be the actual source of many major innovations for many firms--- they typically arrive with a lag and by an unconventional and unsystematic route. For example, a manufacturer may "discover" a lead user innovation only when the innovating user firm contacts the manufacturer with a proposal to produce its design in volume to supply its own in-house needs. Or sales or service people employed by a manufacturer may spot a promising prototype during a visit to a customer's site.

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Modification of firms' innovation processes to systematically search for and further develop innovations created by lead users can provide manufacturers with a better interface to the innovation process as it actually works, and so provide better performance. A natural experiment conducted at 3M illustrates this possibility. Annual sales of lead user product ideas generated by the average lead user project at 3M were conservatively forecast by management to be more than 8 times the sales forecast for new products developed in the traditional manner---$146 million versus $18 million per year. In addition, lead user projects were found to generate ideas for new product lines, while traditional market-research methods were found to produce ideas for incremental improvements to existing product lines. As a consequence, 3M divisions funding lead user project ideas experienced their highest rate of major product line generation in the past 50 years (Lilien et al. 2002).

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Application: Toolkits for User Innovation and Custom Design (Chapter 11)

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Firms that understand the distributed innovation process and users' roles in it can change factors affecting lead user innovation and so affect its rate and direction in ways they value. Toolkits for user innovation custom design offer one way of doing this. This approach involves partitioning product-development and service-development projects into solution-information-intensive subtasks and need-information-intensive subtasks. Need-intensive subtasks are then assigned to users along with a kit of tools that enable them to effectively execute the tasks assigned to them. The resulting co-location of sticky information and problem-solving activity makes innovation within the solution space offered by a particular toolkit cheaper for users. It accordingly attracts them to the toolkit and so influences what they develop and how they develop it. The custom semiconductor industry was an early adopter of toolkits. In 2003, more than $15 billion worth of semiconductors were produced that had been designed using this approach.

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Manufacturers that adopt the toolkit approach to supporting and channeling user innovation typically face major changes in their business models, and important changes in industry structure may also follow. For example, as a result of the introduction of toolkits to the field of semiconductor manufacture, custom semiconductor manufacturers---formerly providers of both design and manufacturing services to customers---lost much of the work of custom product design to customers. Many of these manufacturers then became specialist silicon foundries, supplying production services primarily. Manufacturers may or may not wish to make such changes. However, experience in fields where toolkits have been deployed shows that customers tend to prefer designing their own custom products with the aid of a toolkit over traditional manufacturer-centric development practices. As a consequence, the only real choice for manufacturers in a field appropriate to the deployment of toolkits may be whether to lead or to follow in the transition to toolkits.

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Linking User Innovation to Other Phenomena and Fields (Chapter 12)

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In chapter 12 I discuss links between user innovation and some related phenomena and literatures. With respect to phenomena, I point out the relationship of user innovation to information communities, of which user innovation communities are a subset. One open information community is the online encyclopedia Wikipedia (www.wikipedia.org). Other such communities include the many specialized Internet sites where individuals with both common and rare medical conditions can find one another and can find specialists in those conditions. Many of the advantages associated with user innovation communities also apply to open information networks and communities. Analyses appropriate to information communities follow the same overall pattern as the analyses provided in this book for innovation communities. However, they are also simpler, because in open information communities there may be little or no proprietary information being transacted and thus little or no risk of related losses for participants.

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Next I discuss links between user-centric innovation phenomena and the literature on the economics of knowledge that have been forged by Foray (2004) and Weber (2004). I also discuss how Porter's 1991 work on the competitive advantage of nations can be extended to incorporate findings on nations' lead users as product developers. Finally, I point out how findings explained in this book link to and complement research on the Social Construction of Technology (Pinch and Bijker 1987).

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I conclude this introductory chapter by reemphasizing that user innovation, free revealing, and user innovation communities will flourish under many but not all conditions. What we know about manufacturer-centered innovation is still valid; however, lead-user-centered innovation patterns are increasingly important, and they present major new opportunities and challenges for us all.

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I begin this chapter by reviewing the evidence that many users indeed do develop and modify products for their own use in many fields. I then show that innovation is concentrated among lead users, and that lead users' innovations often become commercial products.

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The evidence on user innovation frequency and pervasiveness is summarized in table 2.1. We see here that the frequency with which user firms and individual consumers develop or modify products for their own use range from 10 percent to nearly 40 percent in fields studied to date. The matter has been studied across a wide range of industrial product types where innovating users are user firms, and also in various types of sporting equipment, where innovating users are individual consumers.

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The studies cited in table 2.1 clearly show that a lot of product development and modification by users is going on. However, these findings should not be taken to reflect innovation rates in overall populations of users. All of the studies probably were affected by a response bias. (That is, if someone sends a questionnaire about whether you innovated or not, you might be more inclined to respond if your answer is "Yes."). Also, each of the studies looked at innovation rates affecting a particular product type among users who care a great deal about that product type. Thus, university surgeons (study 4 in table 2.1) care a great deal about having just-right surgical equipment, just as serious mountain bikers (study 8) care a great deal about having just-right equipment for their sport. As the intensity of interest goes down, it is likely that rates of user innovation drop too. This is probably what is going on in the case of the study of purchasers of outdoor consumer products (study 6). All we are told about that sample of users of outdoor consumer products is that they are recipients of one or more mail order catalogs from suppliers of relatively general outdoor items---winter jackets, sleeping bags, and so on. Despite the fact that these users were asked if they have developed or modified any item in this broad category of goods (rather than a very specific one such as a mountain bike), just 10 percent answered in the affirmative. Of course, 10 percent or even 5 percent of a user population numbering in the tens of millions worldwide is still a very large number---so we again realize that many users are developing and modifying products.

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The cited studies also do not set an upper or a lower bound on the commercial or technical importance of user-developed products and product modifications that they report, and it is likely that most are of minor significance. However, most innovations from any source are minor, so user-innovators are no exception in this regard. Further, to say an innovation is minor is not the same as saying it is trivial: minor innovations are cumulatively responsible for much or most technical progress. Hollander (1965) found that about 80 percent of unit cost reductions in Rayon manufacture were the cumulative result of minor technical changes. Knight (1963, VII, pp. 2--3) measured performance advances in general-purpose digital computers and found, similarly, that "these advances occur as the result of equipment designers using their knowledge of electronics technology to produce a multitude of small improvements that together produce significant performance advances."

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Although most products and product modifications that users or others develop will be minor, users are by no means restricted to developing minor or incremental innovations. Qualitative observations have long indicated that important process improvements are developed by users. Smith (1776, pp. 11--13) pointed out the importance of "the invention of a great number of machines which facilitate and abridge labor, and enable one man to do the work of many." He also noted that "a great part of the machines made use of in those manufactures in which labor is most subdivided, were originally the invention of common workmen, who, being each of them employed in some very simple operation, naturally turned their thoughts towards finding out easier and readier methods of performing it." Rosenberg (1976) studied the history of the US machine tool industry and found that important and basic machine types like lathes and milling machines were first developed and built by user firms having a strong need for them. Textile manufacturing firms, gun manufacturers and sewing machine manufacturers were important early user-developers of machine tools. Other studies show quantitatively that some of the most important and novel products and processes have been developed by user firms and by individual users. Enos (1962) reported that nearly all the most important innovations in oil refining were developed by user firms. Freeman (1968) found that the most widely licensed chemical production processes were developed by user firms. Von Hippel (1988) found that users were the developers of about 80 percent of the most important scientific instrument innovations, and also the developers of most of the major innovations in semiconductor processing. Pavitt (1984) found that a considerable fraction of invention by British firms was for in-house use. Shah (2000) found that the most commercially important equipment innovations in four sporting fields tended to be developed by individual users.

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A second major finding of empirical research into innovation by users is that most user-developed products and product modifications (and the most commercially attractive ones) are developed by users with "lead user" characteristics. Recall from chapter 1 that lead users are defined as members of a user population having two distinguishing characteristics: (1) They are at the leading edge of an important market trend(s), and so are currently experiencing needs that will later be experienced by many users in that market. (2) They anticipate relatively high benefits from obtaining a solution to their needs, and so may innovate.

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The theory that led to defining "lead users" in terms of these two characteristics was derived as follows (von Hippel 1986). First, the "ahead on an important market trend" variable was included because of its assumed effect on the commercial attractiveness of innovations developed by users residing at a leading-edge position in a market. Market needs are not static---they evolve, and often they are driven by important underlying trends. If people are distributed with respect to such trends as diffusion theory indicates, then people at the leading edges of important trends will be experiencing needs today (or this year) that the bulk of the market will experience tomorrow (or next year). And, if users develop and modify products to satisfy their own needs, then the innovations that lead users develop should later be attractive to many. The expected benefits variable and its link to innovation likelihood was derived from studies of industrial product and process innovations. These showed that the greater the benefit an entity expects to obtain from a needed innovation, the greater will be that entity's investment in obtaining a solution, where a solution is an innovation either developed or purchased (Schmookler 1966; Mansfield 1968).

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Empirical studies to date have confirmed lead user theory. Morrison, Roberts, and Midgely (2004) studied the characteristics of innovating and non-innovating users of computerized library information systems in a sample of Australian libraries. They found that the two lead user characteristics were distributed in a continuous, unimodal manner in that sample. They also found that the two characteristics of lead users and the actual development of innovations by users were highly correlated. Franke and von Hippel (2003b) confirmed these findings in a study of innovating and non-innovating users of Apache web server software. They also found that the commercial attractiveness of innovations developed by users increased along with the strength of those users' lead user characteristics.

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Evidence of Innovation by Lead Users

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Several studies have found that user innovation is largely the province of users that have lead user characteristics, and that products lead users develop often form the basis for commercial products. These general findings appear robust: the studies have used a variety of techniques and have addressed a variety of markets and innovator types. Brief reviews of four studies will convey the essence of what has been found.

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Innovation in Industrial Product User Firms

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In the first empirical study of lead users' role in innovation, Urban and von Hippel (1988) studied user innovation activity related to a type of software used to design printed circuit boards. A major market trend to which printed circuit computer-aided design software (PC-CAD) must respond is the steady movement toward packing electronic circuitry more densely onto circuit boards. Higher density means one that can shrink boards in overall size and that enables the circuits they contain to operate faster---both strongly desired attributes. Designing a board at the leading edge of what is technically attainable in density at any particular time is a very demanding task. It involves some combination of learning to make the printed circuit wires narrower, learning how to add more layers of circuitry to a board, and using smaller electronic components.

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To explore the link between user innovation and needs at the leading edge of the density trend, Urban and von Hippel collected a sample of 138 user-firm employees who had attended a trade show on the topic of PC-CAD. To learn the position of each firm on the density trend, they asked questions about the density of the boards that each PC-CAD user firm was currently producing. To learn about each user's likely expected benefits from improvements to PC-CAD, they asked questions about how satisfied each respondent was with their firm's present PC-CAD capabilities. To learn about users' innovation activities, they asked questions about whether each firm had modified or built its own PC-CAD software for its own in-house use.

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Users' responses were cluster analyzed, and clear lead user (n = 38) and non-lead-user (n = 98) clusters were found. Users in the lead user cluster were those that made the densest boards on average and that also were dissatisfied with their PC-CAD capabilities. In other words, they were at the leading edge of an important market trend, and they had a high incentive to innovate to improve their capabilities. Strikingly, 87 percent of users in the lead user cluster reported either developing or modifying the PC-CAD software that they used. In contrast, only 1 percent of non-lead users reported this type of innovation. Clearly, in this case user innovation was very strongly concentrated in the lead user segment of the user population. A discriminant analysis on indicated that "build own system" was the most important indicator of membership in the lead user cluster. The discriminant analysis had 95.6 percent correct classification of cluster membership.

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Innovation in Libraries

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Morrison, Roberts, and I obtained responses from 102 Australian libraries that were users of OPACs. We found that 26 percent of these had in fact modified their OPAC hardware or software far beyond the user-adjustment capabilities provided by the system manufacturers. The types of innovations that the libraries developed varied widely according to local needs. For example, the library that modified its OPAC to "add book retrieval instructions for staff and patrons" (table 2.2) did so because its collection of books was distributed in a complex way across a number of buildings--- making it difficult for staff and patrons to find books without precise directions. There was little duplication of innovations except in the case of adding Internet search capabilities to OPACs. In that unusual case, nine libraries went ahead and did the programming needed to add this important feature in advance of its being offered by the manufacturers of their systems.

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Source of data: Morrison et al. 2000, table 1. Number of users (if more than one) developing functionally similar innovations is shown in parentheses after description of innovation.

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The libraries in the sample were asked to rank themselves on a number of characteristics, including "leading edge status" (LES). (Leading edge status, a construct developed by Morrison, is related to and highly correlated with the lead user construct (in this sample, ρ (LES, CLU) = 0.904, p = 0.000). 【1 LES contains four types of measures. Three ("benefits recognized early," "high benefits expected," and "direct elicitation of the construct") contain the core components of the lead user construct. The fourth ("applications generation") is a measure of a number of innovation-related activities in which users might engage: they "suggest new applications," they "pioneer those applications," and (because they have needs or problems earlier than their peers) they may be "used as a test site" (Morrison, Midgely, and Roberts 2004). 】 Self-evaluation bias was checked for by asking respondents to name other libraries they regarded as having the characteristics of lead users. Self-evaluations and evaluations by others did not differ significantly.

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The commercial value of user-developed innovations in the library OPAC sample was assessed in a relatively informal way. Two development mangers employed by the Australian branches of two large OPAC manufacturers were asked to evaluate the commercial value of each user innovation in the sample. They were asked two questions about each: (1) "How important commercially to your firm is the functionality added to OPACs by this user-developed modification?" (2) "How novel was the information contained in the user innovation to your firm at the time that innovation was developed?" Responses from both managers indicated that about 70 percent (25 out of 39) of the user modifications provided functionality improvements of at least "medium" commercial importance to OPACs---and in fact many of the functions were eventually incorporated in the OPACs the manufacturers sold. However, the managers also felt that their firms generally already knew about the lead users' needs when the users developed their solutions, and that the innovations the users developed provided novel information to their company only in 10--20 percent of the cases. (Even when manufacturers learn about lead users' needs early, they may not think it profitable to develop their own solution for an "emerging" need until years later. I will develop this point in chapter 4.)

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"Consumer" Innovation in Sports Communities

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Franke and Shah (2003) studied user innovation in four communities of sports enthusiasts. The communities, all located in Germany, were focused on four very different sports.

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A total of 197 respondents (a response rate of 37.8 percent) answered a questionnaire about innovation activities in their communities. Thirty-two percent reported that they had developed or modified equipment they used for their sport. The rate of innovation varied among the sports, the high being 41 percent of the sailplane enthusiasts reporting innovating and the low being 18 percent of the boardercross snowboarders reporting. (The complexity of the equipment used in the various sports probably had something to do with this variation: a sailplane has many more components than a snowboard.)

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The innovations developed varied a great deal. In the sailplane community, users developed innovations ranging from a rocket-assisted emergency ejection system to improvements in cockpit ventilation. Snowboarders invented such things as improved boots and bindings. Canyoners' inventions included very specialized solutions, such as a way to cut loose a trapped rope by using a chemical etchant. With respect to commercial potential,

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Franke and Shah found that 23 percent of the user-developed innovations reported were or soon would be produced for sale by a manufacturer. Franke and Shah found that users who innovated were significantly higher on measures of the two lead user characteristics than users who did not innovate (table 2.4). They also found that the innovators spent more time in sporting and community-related activities and felt they had a more central role in the community.

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Table 2.4 Factors associated with innovation in sports communities.

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Innovation among Hospital Surgeons

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Lüthje (2003) explored innovations developed by surgeons working at university clinics in Germany. Ten such clinics were chosen randomly, and 262 surgeons responded to Lüthje's questionnaire---a response rate of 32.6 percent. Of the university surgeons responding, 22 percent reported developing or improving some item(s) of medical equipment for use in their own practices. Using a logit model to determine the influence of user characteristics on innovation activity, Lüthje found that innovating surgeons tended to be lead users (p < 0.01). He also found that solutions to problems encountered in their own surgical practices were the primary benefit that the innovating surgeons expected to obtain from the solutions they developed (p < 0.01). In addition, he found that the level of technical knowledge the surgeon held was significantly correlated with innovation (p < 0.05). Also, perhaps as one might expect in the field of medicine, the "contextual barrier" of concerns about legal problems and liability risks was found to have a strongly significant negative correlation with the likelihood of user invention by surgeons (p < 0.01).

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With respect to the commercial value of the innovations the lead user surgeons had developed, Lüthje reported that 48 percent of the innovations developed by his lead user respondents were or soon would be marketed by manufacturers of medical equipment.

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The studies reviewed in this chapter all found that user innovations in general and commercially attractive ones in particular tended to be developed by lead users. These studies were set in a range of fields, but all were focused on hardware innovations or on information innovations such as new software. It is therefore important to point out that, in many fields, innovation in techniques is at least as important as equipment innovation. For example, many novel surgical operations are performed with standard equipment (such as scalpels), and many novel innovations in snowboarding are based on existing, unmodified equipment. Technique-only innovations are also likely to be the work of lead users, and indeed many of the equipment innovations documented in the studies reviewed here involved innovations in technique as well as innovations in equipment.

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Despite the strength of the findings, many interesting puzzles remain that can be addressed by the further development of lead user theory. For example, empirical studies of innovation by lead users are unlikely to have sampled the world's foremost lead users. Thus, in effect, the studies reviewed here determined lead users to be those highest on lead user characteristics that were within their samples. Perhaps other samples could have been obtained in each of the fields studied containing users that were even more "leading edge" with respect to relevant market trends. If so, why were the samples of moderately leading-edge users showing user innovation if user innovation is concentrated among "extreme" lead users? There are at least three possible explanations. First, most of the studies of user innovation probably included users reasonably close to the global leading edge in their samples. Had the "top" users been included, perhaps the result would have been that still more attractive user innovations would have been found. Second, it may be that the needs of local user communities differ, and so local lead users really may be the world's lead users with respect to their particular needs. Third, even if a sample contains lead users that are not near the global top with respect to lead users' characteristics, local lead users might still have reasons to (re)develop innovations locally. For example, it might be cheaper, faster, more interesting, or more enjoyable to innovate than to search for a similar innovation that a "global top" lead user might already have developed.

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The high rates of user innovation documented in chapter 2 suggest that many users may want custom products. Why should this be so? I will argue that it is because many users have needs that differ in detail, and many also have both sufficient willingness to pay and sufficient resources to obtain a custom product that is just right for their individual needs. In this chapter, I first present the case for heterogeneity of user needs. I then review a study that explores users' heterogeneity of need and willingness to pay for product customization.

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Evidence from Studies of User Innovation

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Two studies of innovation by users provide indirect information on the heterogeneity of user need. They provide descriptions of the functions of the innovations developed by users in their samples. Inspection of these descriptions shows a great deal of variation and few near-duplicates. Different functionality, of course, implies that the developers of the products had different needs. In the 2000 study of user modifications of library IT systems by Morrison, Roberts, and von Hippel, discussed earlier, only 14 of 39 innovations are functionally similar to any other innovations in the sample. If one type of functionality that was repeatedly developed ("web interface") is excluded, the overlap is even lower (see table 2.2). Other responses by study participants add to this impression of high heterogeneity of need among users. Thirty percent of the respondents reported that their library IT system had been highly customized by the manufacturer during installation to meet their specific needs. In addition, 54 percent of study respondents agreed with the statement "We would like to make additional improvements to our IT system functionality that can't be made by simply adjusting the standard, customer-accessible parameters provided by the supplier."

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Similar moderate overlap in the characteristics of user innovations can be seen in innovation descriptions provided in the study of mountain biking by Lüthje, Herstatt, and von Hippel (2002). In that study sample, I estimate that at most 10 of 43 innovations had functionality similar to that of another sample member. This diversity makes sense: mountain biking, which outsiders might assume is a single type of athletic activity, in fact has many subspecialties.

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As can be seen in table 3.1, the specializations of mountain bikers in the our study sample involved very different mountain biking terrains, and important variations in riding conditions and riding specializations. The innovations users developed were appropriate to their own heterogeneous riding activities and so were quite heterogeneous in function. Consider three examples drawn from our study:

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Those interested can easily enhance their intuitions about heterogenity of user need and related innovation by users. User innovation appears to be common enough so that one can find examples for oneself in a reasonably small, casual sample. Readers therefore may find it possible (and enjoyable) to do their own informal tests of the matter. My own version of such a test is to ask the students in one of my MIT classes (typically about 50 students) to think about a particular product that many use, such as a backpack. I first ask them how satisfied they are with their backpack. Initially, most will say "It's OK." But after some discussion and thinking, a few complaints will slowly begin to surface (slowly, I think, because we all take some dissatisfaction with our products as the unremarkable norm). "It doesn't fit comfortably" in this or that particular way. "When my lunch bag or thermos leaks the books and papers I am carrying get wet---there should be a water proof partition." "I carry large drawings to school rolled up in my backpack with the ends sticking out. They are ruined if it rains and I have not taken the precaution of wrapping them in plastic." Next, I ask whether any students have modified their backpacks to better meet their needs. Interestingly enough, one or two typically have. Since backpacks are not products of very high professional or hobby interest to most users, the presence of even some user innovation to adapt to individual users' unmet needs in such small, casual samples is an interesting intuition builder with respect to the findings discussed in this chapter.

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Users' vs. Manufacturers' Views of Innovation Opportunities

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Three specific contributors to transaction costs---in addition to the "usual suspects," such as opportunism---often have important effects on users' decisions whether to buy a custom product or to develop it for themselves. These are (1) differences between users' and manufacturers' views regarding what constitutes a desirable solution, (2) differences in innovation quality signaling requirements between user and manufacturer innovators, and (3) differences in legal requirements placed on user and manufacturer innovators. The first two of these factors involve considerations of agency costs. When a user hires a manufacturer to develop a custom product, the user is a principal that has hired the custom manufacturer as to act as its agent. When the interests of the principal and the agent are not the same, agency costs will result. Recall from chapter 1 that agency costs are (1) costs incurred to monitor the agent to ensure that it follows the interests of the principal, (2) the cost incurred by the agent to commit itself not to act against the principal's interest (the "bonding cost"), and (3) costs associated with an outcome that does not fully serve the interests of the principal (Jensen and Meckling 1976). In the specific instance of product and service development, agency considerations enter because a user's and a manufacturer's interests with respect to the development of a custom product often differ significantly.

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Manufacturers also must invest in indirect quality signals that may not have an effect on actual quality, but instead are designed to assure both the specific user being served and the market in general that the product being supplied is of high quality. These represent another element of agency costs that user-innovators do not incur. When users develop an innovation for themselves, they end up intimately knowing the actual quality of the solution they have developed, and knowing why and how it is appropriate to their task. As an example, an engineer building a million-dollar process machine for in-house use might feel it perfectly acceptable to install a precisely right and very cheap computer controller made and prominently labeled by Lego, a manufacturer of children's toys. (Lego provides computer controllers for some of its children's building kit products.) But if that same engineer saw a Lego controller in a million-dollar process machine his firm was purchasing from a specialist high-end manufacturer, he might not know enough about the design details to know that the Lego controller was precisely right for the application. In that case, the engineer and his managers might well regard the seemingly inappropriate brand name as an indirect signal of bad quality.

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A case study by Sarah Slaughter (1993) illustrates the impact of some of the transaction costs discussed above related to users' innovate-or-buy decisions. Slaughter studied patterns of innovation in stressed-skin panels, which are used in some housing construction. The aspects of the panels studied were related to installation, and so the users of these features were home builders rather than home owners. When Slaughter contrasted users' costs of innovating versus buying, she found that it was always much cheaper for the builder to develop a solution for itself at a construction site than to ask a panel manufacturer to do so.

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In housing construction, stressed-skin panels are generally attached to strong timber frames to form the outer shell of a house and to resist shear loads (such as the force of the wind). To use the panels in this way, a number of subsidiary inventions are required. For example, one must find a practical, long-lasting way to attach panels to each other and to the floors, the roof, and the frame. Also, one has to find a new way to run pipes and wires from place to place because there are no empty spaces in the walls to put them---panel interiors are filled with foam.

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Stressed-skin panels were introduced into housing construction after World War II. From then till 1989, the time of Slaughter's study, 34 innovations were made in 12 functionally important areas to create a complete building system for this type of construction. Slaughter studied the history of each of these innovations and found that 82 percent had been developed by users of the stressed-skin panels---residential builders---and only 18 percent by manufacturers of stressed-skin panels. Sometimes more than one user developed and implemented different approaches to the same functional problem (table 4.1). Builders freely revealed their innovations rather than protecting them for proprietary advantage. They were passed from builder to builder by word of mouth, published in trade magazines, and diffused widely. All were replicated at building sites for years before any commercial panel manufacturer developed and sold a solution to accomplish the same function.

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Histories of the user-developed improvements to stressed-skin panel construction showed that the user-innovator construction firms did not engage in planned R&D projects. Instead, each innovation was an immediate response to a problem encountered in the course of a construction project. Once a problem was encountered, the innovating builder typically developed and fabricated a solution at great speed, using skills, materials, and equipment on hand at the construction site. Builders reported that the average time from discovery of the problem to installation of the completed solution on the site was only half a day. The total cost of each innovation, including time, equipment, and materials, averaged $153.

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Table 4.1 Users would have found it much more costly to get custom solutions from manufacturers. The costs of user-developed innovations in stressed-skin panels were very low.

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N represents number of innovations developed by users to carry out each listed function. Source: Slaughter 1993, tables 4 and 5. Costs and times shown are averaged for all user-developed innovations in each functional category. (The six manufacturer-developed innovations in Slaughter's sample are not included in this table.)

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The builder-innovator reported that the total time to develop the innovation was only an hour, and that the total cost for time and materials equaled $40. How could it cost so little and take so little time? The builder explained that using hot wires to slice sheets of plastic foam insulation into pieces of a required length is a technique known to builders. His idea as to how to modify the slicing technique to melt channels instead came to him quickly. To test the idea, he immediately sent a worker to an electrical supply house to get some nichrome wire (a type of high-resistance wire often used as an electrical heating element), attached the wire to a tip of a pole, and tried the solution on a panel at the building site---and it worked!

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To determine whether users' decisions to innovate rather than buy made economic sense for them, Slaughter calculated, in a very conservative way, what it would have cost users to buy a manufacturer-developed solution embodied in a manufactured panel rather than build a solution for themselves. Her estimates included only the cost of the delay a user-builder would incur while waiting for delivery of a panel incorporating a manufacturer's solution. Delay in obtaining a solution to a problem encountered at a construction site is costly for a builder, because the schedule of deliveries, subcontractors, and other activities must then be altered. For example, if installation of a panel is delayed, one must also reschedule the arrival of the subcontractor hired to run wires through it, the contractor hired to paint it, and so on. Slaughter estimated the cost of delay to a builder at $280 per crew per day of delay (Means 1989). To compute delay times, she assumed that a manufacturer would always be willing to supply the special item a user requested. She also assumed that no time elapsed while the manufacturer learned about the need, contracted to do the job, designed a solution, and obtained needed regulatory approvals. She then asked panel manufacturers to estimate how long it would take them to simply construct a panel with the solution needed and deliver it to the construction site. Delay times computed in this manner ranged from 5 days for some innovations to 250 days for the longest-term one and averaged 44 days.

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Next we consider payoffs to a manufacturer for solving problem j. In this case, transaction costs such as those discussed in earlier sections will be encountered. With respect to transaction costs assume first that t = 0 but T > 0. Then, the manufacturer's payoff for solving problem j will be Vij - Whj, which needs to be positive in order for the manufacturer to find innovation attractive:

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The condition for the user to buy the innovation rather than innovate itself becomes Nj ≥ 15. For a number of users less than 15 but greater than 1, there will be a wasteful multiplication of user effort: several users will invest in developing the same innovation independently.

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In a world that consists entirely of manufacturers and of users that do not share the innovations they develop, the type of wasteful duplicative innovation investment by users just described probably will occur often. As was discussed earlier in this chapter, and as was illustrated by Slaughter's study, substantial transaction costs might well be the norm. In addition, low numbers of users having the same need---situations where Nj is low---might also be the norm in the case of functionally novel innovations. Functionally novel innovations, as I will show later, tend to be developed by lead users, and lead users are by definition at the leading (low-Nj) edge of markets.

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When the type of market failure discussed above does occur, users will have an incentive to search for institutional forms with a lower T and/or a lower t than is associated with assignment of the problem to an upstream manufacturer. One such institutional form involves interdependent innovation development among multiple users (for example, the institutional form used successfully in open source software projects that I will discuss in chapter 7). Baldwin and Clark (2003) show how this form can work to solve the problem of wasteful user innovation investments that were identified in our model. They show that, given modularity in the software's architecture, it will pay for users participating in open source software projects to generate and freely reveal some components of the needed innovation, benefiting from the fact that other users are likely to develop and reveal other components of that innovation. At the limit, the wasteful duplication of users' innovative efforts noted above will be eliminated; each innovation component will have been developed by only one user, but will be shared by many.

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Benefiting from the Innovation Process

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Some individual users (not user firms) may decide to innovate for themselves rather than buy even if a traditional accounting evaluation would show that they had made a major investment in time and materials for an apparently minor reward in product functionality. The reason is that individual users may gain major rewards from the process of innovating, in addition to rewards from the product being developed. Make-or-buy evaluations typically include factors such as the time and materials that must be invested to develop a solution. These costs are then compared with the likely benefits produced by the project's "output"---the new product or service created---to determine whether the project is worth doing. This was the type of comparison made by Slaughter, for example, in assessing whether it would be better for the users to make or to buy the stressed-skin panel innovations in her sample. However, in the case of individual user-innovators, this type of assessment can provide too narrow a perspective on what actually constitutes valuable project output. Specifically, there is evidence that individuals sometimes greatly prize benefits derived from their participation in the process of innovation. The process, they say, can produce learning and enjoyment that is of high value to them.

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5 Users' Low-Cost Innovation Niches

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How Information Asymmetries Affect User Innovation vs. Manufacturer Innovation

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An important consequence of information stickiness is that it results in information asymmetries that cannot be erased easily or cheaply. Different users and manufacturers will have different stocks of information, and may find it costly to acquire information they need but do not have. As a result, each innovator will tend to develop innovations that draw on the sticky information it already has, because that is the cheapest course of action (Arora and Gambardella 1994; von Hippel 1994). In the specific case of product development, this means that users as a class will tend to develop innovations that draw heavily on their own information about need and context of use. Similarly, manufacturers as a class will tend to develop innovations that draw heavily on the types of solution information in which they specialize.

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This effect is visible in studies of innovation. Riggs and von Hippel (1994) studied the types of innovations made by users and manufacturers that improved the functioning of two major types of scientific instruments.

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They found that users tended to develop innovations that enabled the instruments to do qualitatively new types of things for the first time. In contrast, manufacturers tended to develop innovations that enabled users to do the same things they had been doing, but to do them more conveniently or reliably (table 5.1). For example, users were the first to modify the instruments to enable them to image and analyze magnetic domains at sub-microscopic dimensions. In contrast, manufacturers were the first to computerize instrument adjustments to improve ease of operation. Sensitivity, resolution, and accuracy improvements fall somewhere in the middle, as the data show. These types of improvements can be driven by users seeking to do specific new things, or by manufacturers applying their technical expertise to improve the products along known dimensions of merit, such as accuracy.

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Table 5.1 Users tend to develop innovations that deliver novel functions.

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The variation in locus of innovation for different types of innovations, seen in table 5.1 does fit our expectations from the point of view of sticky information considerations. But these findings are not controlled for profitability, and so it might be that profits for new functional capabilities are systematically smaller than profits obtainable from improvements made to existing functionality. If so, this could also explain the patterns seen.

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Ogawa (1998) took the next necessary step and conducted an empirical study that did control for profitability of innovation opportunities. He too found the sticky-information effect---this time visible in the division of labor within product-development projects. He studied patterns in the development of a sample of 24 inventory-management innovations. All were jointly developed by a Japanese equipment manufacturer, NEC, and by a user firm, Seven-Eleven Japan (SEJ). SEJ, the leading convenience-store company in Japan, is known for its inventory management. Using innovative methods and equipment, it is able to turn over its inventory as many as 30 times a year, versus 12 times a year for competitors (Kotabe 1995). An example of such an innovation jointly developed by SEJ and NEC is just-in-time reordering, for which SEJ created the procedures and NEC the hand-held equipment to aid store clerks in carrying out their newly designed tasks. Equipment sales to SEJ are important to NEC: SEJ has thousands of stores in Japan.

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The 24 innovations studied by Ogawa varied in the amount of sticky need information each required from users (having to do with store inventory- management practices) and the amount of sticky solution information required from manufacturers (having to do with new equipment technologies). Each also varied in terms of the profit expectations of both user and manufacturer. Ogawa determined how much of the design for each was done by the user firm and how much by the manufacturer firm. Controlling for profit expectations, he found that increases in the stickiness of user information were associated with a significant increase in the amount of need-related design undertaken by the user (Kendall correlation coefficient = 0.5784, P < 0.01). Conversely he found that increased stickiness of technology-related information was associated in a significant reduction in the amount of technology design done by the user (Kendall correlation coefficients = 0.4789, P < 0.05). In other words, need-intensive tasks within product-development projects will tend to be done by users, while solution-intensive ones will tend to be done by manufacturers.

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Low-Cost Innovation Niches

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Just as there are information asymmetries between users and manufacturers as classes, there are also information asymmetries among individual user firms and individuals, and among individual manufacturers as well. A study of mountain biking by Lüthje, Herstatt, and von Hippel (2002) shows that information held locally by individual user-innovators strongly affects the type of innovations they develop. Mountain biking involves bicycling on rough terrain such as mountain trails. It may also involve various other extreme conditions, such as bicycling on snow and ice and in the dark (van der Plas and Kelly 1998).

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Mountain biking enthusiasts did not stop their innovation activities after the introduction of commercially manufactured mountain bikes. They kept pushing mountain biking into more extreme environmental conditions, and they continued to develop new sports techniques involving mountain bikes (Mountain Bike 1996). Thus, some began jumping their bikes from house roofs and water towers and developing other forms of acrobatics. As they did so, they steadily discovered needs for improvements to their equipment. Many responded by developing and building the improvements they needed for themselves.

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Our sample of mountain bikers came from the area that bikers call the North Shore of the Americas, ranging from British Columbia to Washington State. Expert mountain bikers told us that this was a current "hot spot" where new riding styles were being developed and where the sport was being pushed toward new limits. We used a questionnaire to collect data from members of North Shore mountain biking clubs and from contributors to the mailing lists of two North Shore online mountain biking forums. Information was obtained from 291 mountain bikers. Nineteen percent of bikers responding to the questionnaire reported developing and building a new or modified item of mountain biking equipment for their own use. The innovations users developed were appropriate to the needs associated with their own riding specialties and were heterogeneous in function.

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We asked mountain bikers who had innovated about the sources of the need and solution information they had used in their problem solving. In 84.5 percent of the cases respondents strongly agreed with the statement that their need information came from personal needs they had frequently experienced rather than from information about the needs of others. With respect to solution information, most strongly agreed with the statement that they used solution information they already had, rather than learning new solution information in order to develop their biking equipment innovation (table 5.2).

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To the extent that users have heterogeneous and sticky need and solution information, they will have heterogeneous low-cost innovation niches. Users can be sophisticated developers within those niches, despite their reliance on their own need information and solution information that they already have in stock. On the need side, recall that user-innovators generally are lead users and generally are expert in the field or activity giving rise to their needs. With respect to solution information, user firms have specialties that may be at a world-class level. Individual users can also have high levels of solution expertise. After all, they are students or employees during the day, with training and jobs ranging from aerospace engineering to orthopedic surgery. Thus, mountain bikers might not want to learn orthopedic surgery to improve their biking equipment, but if they already are expert in that field they could easily draw on what they know for relevant solution information. Consider the following example drawn from the study of mountain biking discussed earlier:

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Users' low-cost innovation niches can be narrow because their development "labs" for such experimentation often consist largely of their individual use environment and customary activities. Consider, for example, the low-cost innovation niches of individual mountain bikers. Serious mountain bikers generally specialize in a particular type of mountain biking activity. Repeated specialized play and practice leads to improvement in related specialized skills. This, in turn, may lead to a discovery of a problem in existing mountain biking equipment and a responsive innovation. Thus, an innovating user in our mountain biking study reported the following: "When doing tricks that require me to take my feet off the bike pedals in mid-air, the pedals often spin, making it hard to put my feet back onto them accurately before landing." Such a problem is encountered only when a user has gained a high level of skill in the very specific specialty of jumping and performing tricks in mid-air. Once the problem has been encountered and recognized, however, the skilled specialist user can re-evoke the same problematic conditions at will during ordinary practice. The result is the creation of a low-cost laboratory for testing and comparing different solutions to that problem. The user is benefiting from enjoyment of his chosen activity and is developing something new via learning by doing at the same time.

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In sharp contrast, if that same user decides to stray outside his chosen activity in order to develop innovations of interest to others with needs that are different from his own, the cost properly assignable to innovation will rise. To gain an equivalent-quality context for innovation, such a user must invest in developing personal skill related to the new innovation topic. Only in this way will he gain an equivalently deep understanding of the problems relevant to practitioners of that skill, and acquire a "field laboratory" appropriate to developing and testing possible solutions to those new problems.

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Of course, these same considerations apply to user firms as well as to individual users. A firm that is in the business of polishing marble floors is a user of marble polishing equipment and techniques. It will have a low-cost learning laboratory with respect to improvements in these because it can conduct trial-and-error learning in that "lab" during the course of its customary business activities. Innovation costs can be very low because innovation activities are paid for in part by rewards unrelated to the novel equipment or technique being developed. The firm is polishing while innovating---and is getting paid for that work (Foray 2004). The low cost innovation niche of the marble polishing firm may be narrow. For example, it is unlikely to have any special advantage with respect to innovations in the polishing of wood floors, which requires different equipment and techniques.

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6 Why Users Often Freely Reveal Their Innovations

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Products, services, and processes developed by users become more valuable to society if they are somehow diffused to others that can also benefit from them. If user innovations are not diffused, multiple users with very similar needs will have to invest to (re)develop very similar innovations, which would be a poor use of resources from the social welfare point of view. Empirical research shows that new and modified products developed by users often do diffuse widely---and they do this by an unexpected means: user-innovators themselves often voluntarily publicly reveal what they have developed for all to examine, imitate, or modify without any payment to the innovator.

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In this chapter, I first review evidence that free revealing is frequent. Next, I discuss the case for free revealing from an innovators' perspective, and argue that it often can be the best practical route for users to increase profit from their innovations. Finally, I discuss the implications of free revealing for innovation theory.

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When my colleagues and I say that an innovator "freely reveals" proprietary information, we mean that all intellectual property rights to that information are voluntarily given up by that innovator and all parties are given equal access to it---the information becomes a public good (Harhoff, Henkel, and von Hippel 2003). For example, placement of non-patented information in a publicly accessible site such as a journal or public website would be free revealing as we define it. Free revealing as so defined does not mean that recipients necessarily acquire and utilize the revealed information at no cost to themselves. Recipients may, for example, have to pay for a subscription to a journal or for a field trip to an innovation site to acquire the information being freely revealed. Also, some may have to obtain complementary information or other assets in order to fully understand that information or put it to use. However, if the possessor of the information does not profit from any such expenditures made by its adopters, the information itself is still freely revealed, according to our definition. This definition of free revealing is rather extreme in that revealing with some small constraints, as is sometimes done, would achieve largely the same economic effect. Still, it is useful to discover that innovations are often freely revealed even in terms of this stringent definition.

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Routine and intentional free revealing among profit-seeking firms was first described by Allen (1983). He noticed the phenomenon, which he called collective invention, in historical records from the nineteenth-century English iron industry. In that industry, ore was processed into iron by means of large furnaces heated to very high temperatures. Two attributes of the furnaces used had been steadily improved during the period 1850--1875: chimney height had been increased and the temperature of the combustion air pumped into the furnace during operation had been raised. These two technical changes significantly and progressively improved the energy efficiency of iron production---a very important matter for producers. Allen noted the surprising fact that employees of competing firms publicly revealed information on their furnace design improvements and related performance data in meetings of professional societies and in published material.

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After Allen's initial observation, a number of other authors searched for free revealing among profit-seeking firms and frequently found it. Nuvolari (2004) studied a topic and time similar to that studied by Allen and found a similar pattern of free revealing in the case of improvements made to steam engines used to pump out mines in the 1800s. At that time, mining activities were severely hampered by water that tended to flood into mines of any depth, and so an early and important application of steam engines was for the removal of water from mines. Nuvolari explored the technical history of steam engines used to drain copper and tin mines in England's Cornwall District. Here, patented steam engines developed by James Watt were widely deployed in the 1700s. After the expiration of the Watt patent, an engineer named Richard Trevithick developed a new type of high-pressure engine in 1812. Instead of patenting his invention, he made his design available to all for use without charge. The engine soon became the basic design used in Cornwall. Many mine engineers improved Trevithick's design further and published what they had done in a monthly journal, Leans Engine Reporter. This journal had been founded by a group of mine managers with the explicit intention of aiding the rapid diffusion of best practices among these competing firms.

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Free revealing has also been documented in the case of more recent industrial equipment innovations developed by users. Lim (2000) reports that IBM was first to develop a process to manufacture semiconductors that incorporated copper interconnections among circuit elements instead of the traditionally used aluminum ones. After some delay, IBM revealed increasing amounts of proprietary process information to rival users and to equipment suppliers. Widespread free revealing was also found in the case of automated clinical chemistry analyzers developed by the Technicon Corporation for use in medical diagnosis. After commercial introduction of the basic analyzer, many users developed major improvements to both the analyzer and to the clinical tests processed on that equipment. These users, generally medical personnel, freely revealed their improvements via publication, and at company-sponsored seminars (von Hippel and Finkelstein 1979). Mishina (1989) found free, or at least selective no-cost revealing in the lithographic equipment industry. He reported that innovating equipment users would sometimes reveal what they had done to machine manufacturers. Morrison, Roberts, and I, in our study of library IT search software (discussed in chapter 2 above), found that innovating users freely revealed 56 percent of the software modifications they had developed. Reasons given for not revealing the remainder had nothing to do with considerations of intellectual property protection. Rather, users who did not share said they had no convenient users' group forum for doing so, and/or they thought their innovation was too specialized to be of interest to others.

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Innovating users of sports equipment also have been found to freely reveal their new products and product modifications. Franke and Shah (2003), in their study of four communities of serious sports enthusiasts described in chapter 2, found that innovating users uniformly agreed with the statement that they shared their innovation with their entire community free of charge---and strongly disagreed with the statement that they sold their innovations (p < 0.001, t-test for dependent samples). Interestingly, two of the four communities they studied engaged in activities involving significant competition among community members. Innovators in these two communities reported high but significantly less willingness to share, as one might expect in view of the potentially higher level of competitive loss free revealing would entail.

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The "private investment model" of innovation assumes that innovation will be supported by private investment if and as innovators can make attractive profits from doing so. In this model, any free revealing or uncompensated "spillover" of proprietary knowledge developed by private investment will reduce the innovator's profits. It is therefore assumed that innovators will strive to avoid spillovers of innovation-related information. From the perspective of this model, then, free revealing is a major surprise: it seems to make no sense that innovators would intentionally give away information for free that they had invested money to develop.

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In this subsection I offer an explanation for the puzzle by pointing out that free revealing is often the best practical option available to user innovators. Harhoff, Henkel, and von Hippel (2003) found that it is in practice very difficult for most innovators to protect their innovations from direct or approximate imitation. This means that the practical choice is typically not the one posited by the private investment model: should innovators voluntarily freely reveal their innovations, or should they protect them? Instead, the real choice facing user innovators often is whether to voluntarily freely reveal or to arrive at the same end state, perhaps with a bit of a lag, via involuntary spillovers. The practical case for voluntary free revealing is further strengthened because it can be accomplished at low cost, and often yields private benefits to the innovators. When benefits from free revealing exceed the benefits that are practically obtainable from holding an innovation secret or licensing it, free revealing should be the preferred course of action for a profit-seeking firm or individual.

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Innovators seeking to protect innovations they have developed as their intellectual property must establish some kind of monopoly control over the innovation-related information. In practice, this can be done either by effectively hiding the information as a trade secret, or by getting effective legal protection by patents or copyrights. (Trademarks also fall under the heading of intellectual property, but we do not consider those here.) In addition, however, it must be the case that others do not know substitute information that skirts these protections and that they are willing to reveal. If multiple individuals or firms have substitutable information, they are likely to vary with respect to the competitive circumstances they face. A specific innovator's ability to protect "its" innovation as proprietary property will then be determined for all holders of such information by the decision of the one having the least to lose by free revealing. If one or more information holders expect no loss or even a gain from a decision to freely reveal, then the secret will probably be revealed despite other innovators' best efforts to avoid this fate.

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Commonly, firms and individuals have information that would be valuable to those seeking to imitate a particular innovation. This is because innovators and imitators seldom need access to a specific version of an innovation. Indeed, engineers seldom even want to see a solution exactly as their competitors have designed it: specific circumstances differ even among close competitors, and solutions must in any case be adapted to each adopter's precise circumstances. What an engineer does want to extract from the work of others is the principles and the general outline of a possible improvement, rather than the easily redevelopable details. This information is likely to be available from many sources.

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For example, suppose you are a system developer at a bank and you are tasked with improving in-house software for checking customers' credit online. On the face of it, it might seem that you would gain most by studying the details of the systems that competing banks have developed to handle that same task. It is certainly true that competing banks may face market conditions very similar to your bank, and they may well not want to reveal the valuable innovations they have developed to a competitor. However, the situation is still by no means bleak for an imitator. There are also many non-bank users of online credit checking systems in the world---probably millions. Some will have innovated and be willing to reveal what they have done, and some of these will have the information you need. The likelihood that the information you seek will be freely revealed by some individual or firm is further enhanced by the fact that your search for novel basic improvements may profitably extend far beyond the specific application of online credit checking. Other fields will also have information on components of the solution you need. For example, many applications in addition to online credit checking use software components designed to determine whether persons seeking information are authorized to receive it. Any can potentially be a provider of information for this element of your improved system.

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Even in the unlikely event that a secret is held by one individual, that information holder will not find it easy to keep a secret for long. Mansfield (1985) studied 100 American firms and found that "information concerning development decisions is generally in the hands of rivals within about 12 to 18 months, on the average, and information concerning the detailed nature and operation of a new product or process generally leaks out within about a year." This observation is supported by Allen's previously mentioned study of free revealing in the nineteenth-century English iron industry. Allen (1983, p. 17) notes that developers of improved blast furnace designs were unlikely to be able to keep their valuable innovations secret because "in the case of blast furnaces and steelworks, the construction would have been done by contractors who would know the design." Also, "the designs themselves were often created by consulting engineers who shifted from firm to firm."

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Next, suppose that a single user-innovator is the only holder of a particular unit of innovation-related information, and that for some reason there are no easy substitutes. That user actually does have a real choice with respect to disposing of its intellectual property: it can keep the innovation secret and profit from in-house use only, it can license it, or it can choose to freely reveal the innovation. We have just seen that the practical likelihood of keeping a secret is low, especially when there are multiple potential providers of very similar secrets. But if one legally protects an innovation by means of a patent or a copyright, one need not keep an innovation secret in order to control it. Thus, a firm or an individual that freely reveals is forgoing any chance to get a profit via licensing of intellectual property for a fee. What, in practical terms, is the likelihood of succeeding at this and so of forgoing profit by choosing to freely reveal?

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In most subject matters, the relevant form of legal protection for intellectual property is the patent, generally the "utility" patent. (The notable exception is the software industry, where material to be licensed is often protected by copyright.) In the United States, utility patents may be granted for inventions related to composition of matter and/or a method and/or a use. They may not be granted for ideas per se, mathematical formulas, laws of nature, and anything repugnant to morals and public policy. Within subject matters potentially protectable by patent, protection will be granted only when the intellectual property claimed meets additional criteria of usefulness, novelty, and non-obviousness to those skilled in the relevant art. (The tests for whether these criteria have been met are based on judgement. When a low threshold is used, patents are easier to get, and vice-versa (Hall and Harhoff 2004).)

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Despite recent governmental efforts to strengthen patent enforcement, a comparison of survey results indicates only a modest increase between 1983 and 1994 in large firms' evaluations of patents' effectiveness in protecting innovations or promoting innovation investments. Of course, there are notable exceptions: some firms, including IBM and TI, report significant income from the licensing of their patented technologies.

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Obtaining a patent typically costs thousands of dollars, and it can take years (Harhoff, Henkel, and von Hippel 2003). This makes patents especially impractical for many individual user-innovators, and also for small and medium-size firms of limited means. As a stark example, it is hard to imagine that an individual user who has developed an innovation in sports equipment would find it appealing to invest in a patent and in follow-on efforts to find a licensee and enforce payment. The few that do attempt this, as Shah (2000) has shown, seldom gain any return from licensees as payment for their time and expenditures.

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Copyright is a low-cost and immediate form of legal protection that applies to original writings and images ranging from software code to movies. Authors do not have to apply for copyright protection; it "follows the author's pen across the page." Licensing of copyrighted works is common, and it is widely practiced by commercial software firms. When one buys a copy of a non-custom software product, one is typically buying only a license to use the software, not buying the intellectual property itself. However, copyright protection is also limited in an important way. Only the specific original writing itself is protected, not the underlying invention or ideas. As a consequence, copyright protections can be circumvented. For example, those who wish to imitate the function of a copyrighted software program can do so by writing new software code to implement that function.

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Given the above, we may conclude that in practice little profit is being sacrificed by many user-innovator firms or individuals that choose to forgo the possibility of legally protecting their innovations in favor of free revealing.

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As was noted earlier, when we say that an innovator "freely reveals" proprietary information we mean that all existing and potential intellectual property rights to that information are voluntarily given up by that innovator and that all interested parties are given access to it---the information becomes a public good. These conditions can often be met at a very low cost. For example, an innovator can simply post information about the innovation on a website without publicity, so those potentially interested must discover it. Or a firm that has developed a novel process machine can agree to give a factory tour to any firm or individual that thinks to ask for one, without attempting to publicize the invention or the availability of such tours in any way. However, it is clear that many innovators go beyond basic, low-cost forms of free revealing. They spend significant money and time to ensure that their innovations are seen in a favorable light, and that information about them is effectively and widely diffused. Writers of computer code may work hard to eliminate all bugs and to document their code in a way that is very easy for potential adopters to understand before freely revealing it. Plant owners may repaint their plant, announce the availability of tours at a general industry meeting, and then provide a free lunch for their visitors.

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Innovators' active efforts to diffuse information about their innovations suggest that there are positive, private rewards to be obtained from free revealing. A number of authors have considered what these might be. Allen (1983) proposed that reputation gained for a firm or for its managers might offset a reduction in profits for the firm caused by free revealing. Raymond (1999) and Lerner and Tirole (2002) elaborated on this idea when explaining free revealing by contributors to open source software development projects. Free revealing of high-quality code, they noted, can increase a programmer's reputation with his peers. This benefit can lead to other benefits, such as an increase in the programmer's value on the job market. Allen has argued that free revealing might have effects that actually increase a firm's profits if the revealed innovation is to some degree specific to assets owned by the innovator (see also Hirschleifer 1971).

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Free revealing may also increase an innovator's profit in other ways. When an innovating user freely reveals an innovation, the direct result is to increase the diffusion of that innovation relative to what it would be if the innovation were either licensed at a fee or held secret. The innovating user may then benefit from the increase in diffusion via a number of effects. Among these are network effects. (The classic illustration of a network effect is that the value of each telephone goes up as more are sold, because the value of a phone is strongly affected by the number of others who can be contacted in the network.) In addition, and very importantly, an innovation that is freely revealed and adopted by others can become an informal standard that may preempt the development and/or commercialization of other versions of the innovation. If, as Allen suggested, the innovation that is revealed is designed in a way that is especially appropriate to conditions unique to the innovator, this can result in creating a permanent source of advantage for that innovator.

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Being first to reveal a certain type of innovation increases a user firm's chances of having its innovation widely adopted, other things being equal. This may induce innovators to race to reveal first. Firms engaged in a patent race may disclose information voluntarily if the profits from success do not go only to the winner of the race. If being second quickly is preferable to being first relatively late, there will be an incentive for voluntary revealing in order to accelerate the race (de Fraja 1993).

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By freely revealing information about an innovative product or process, a user makes it possible for manufacturers to learn about that innovation. Manufacturers may then improve upon it and/or offer it at a price lower than users' in-house production costs (Harhoff et al. 2003). When the improved version is offered for sale to the general market, the original user-innovator (and other users) can buy it and gain from in-house use of the improvements. For example, consider that manufacturers often convert user-developed innovations ("home-builts") into a much more robust and reliable form when preparing them for sale on the commercial market. Also, manufacturers offer related services, such as field maintenance and repair programs, that innovating users must otherwise provide for themselves.

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We have seen that in practice free revealing may often be the best practical course of action for innovators. How can we tie these observations back to theory, and perhaps improve theory as a result? At present there are two major models that characterize how innovation gets rewarded. The private investment model is based on the assumption that innovation will be supported by private investors expecting to make a profit. To encourage private investment in innovation, society grants innovators some limited rights to the innovations they generate via patents, copyrights, and trade secrecy laws. These rights are intended to assist innovators in getting private returns from their innovation-related investments. At the same time, the monopoly control that society grants to innovators and the private profits they reap create a loss to society relative to the free and unfettered use by all of the knowledge that the innovators have created. Society elects to suffer this social loss in order to increase innovators' incentives to invest in the creation of new knowledge (Arrow 1962; Dam 1995).

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The second major model for inducing innovation is termed the collective action model. It applies to the provision of public goods, where a public good is defined by its non-excludability and non-rivalry: if any user consumes it, it cannot be feasibly withheld from other users, and all consume it on the same terms (Olson 1967). The collective action model assumes that innovators are required to relinquish control of knowledge or other assets they have developed to a project and so make them a public good. This requirement enables collective action projects to avoid the social loss associated with the restricted access to knowledge of the private investment model. At the same time, it creates problems with respect to recruiting and motivating potential contributors. Since contributions to a collective action project are a public good, users of that good have the option of waiting for others to contribute and then free riding on what they have done (Olson 1967).

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What can explain these deviations from expected practice? What, in other words, can explain free revealing of privately funded innovations and enthusiastic participation in projects to produce a public good? From the theoretical perspective, Georg von Krogh and I think the answer involves revisiting and easing some of the basic assumptions and constraints conventionally applied to the private investment and collective action models of innovation. Both, in an effort to offer "clean" and simple models for research, have excluded from consideration a very rich and fertile middle ground where incentives for private investment and collective action can coexist, and where a "private-collective" innovation model can flourish. More specifically, a private-collective model of innovation occupies the middle ground between the private investment model and the collective action model by:

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Eliminating the assumption in private investment models that free revealing of innovations developed with private funds will represent a loss of private profit for the innovator and so will not be engaged in voluntarily. Instead the private-collective model proposes that under common conditions free revealing of proprietary innovations may increase rather than decrease innovators' private profit.

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In summation: Innovations developed at private cost are often revealed freely, and this behavior makes economic sense for participants under commonly encountered conditions. A private-collective model of innovation incentives can explain why and when knowledge created by private funding may be offered freely to all. When the conditions are met, society appears to have the best of both worlds---new knowledge is created by private funding and then freely revealed to all.

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7 Innovation Communities

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It is now clear that users often innovate, and that they often freely reveal their innovations. But what about informal cooperation among users? What about organized cooperation in development of innovations and other matters? The answer is that both flourish among user-innovators. Informal user-to-user cooperation, such as assisting others to innovate, is common. Organized cooperation in which users interact within communities, is also common. Innovation communities are often stocked with useful tools and infrastructure that increase the speed and effectiveness with which users can develop and test and diffuse their innovations.

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In this chapter, I first show that user innovation is a widely distributed process and so can be usefully drawn together by innovation communities. I next explore the valuable functions such communities can provide. I illustrate with a discussion of free and open source software projects, a very successful form of innovation community in the field of software development. Finally, I point out that innovation communities are by no means restricted to the development of information products such as software, and illustrate with the case of a user innovation community specializing in the development of techniques and equipment used in the sport of kitesurfing.

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User Innovation Is Widely Distributed

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When users' needs are heterogeneous and when the information drawn on by innovators is sticky, it is likely that product-development activities will be widely distributed among users, rather than produced by just a few prolific user-innovators. It should also be the case that different users will tend to develop different innovations. As was shown in chapter 5, individual users and user firms tend to develop innovations that serve their particular needs, and that fall within their individual "low-cost innovation niches." For example, a mountain biker who specializes in jumping from high platforms and who is also an orthopedic surgeon will tend to develop innovations that draw on both of these types of information: he might create a seat suspension that reduces shock to bikers' spines upon landing from a jump. Another mountain biker specializing in the same activity but with a different background---say aeronautical engineering---is likely to draw on this different information to come up with a different innovation. From the perspective of Fleming (2001), who has studied innovations as consisting of novel combinations of pre-existing elements, such innovators are using their membership in two distinct communities to combine previously disparate elements. Baldwin and Clark (2003) and Henkel (2004a) explore this type of situation in theoretical terms.

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The analogy to distributed user innovation is, of course, that each user has a different set of innovation-related needs and other assets in place which makes a particular type of innovation low-cost ("shallow") to that user. The assets of some user will then generally be found to be a just-right fit to many innovation development problems. (Note that this argument does not mean that all innovations will be cheaply done by users, or even done by users at all. In essence, users will find it cheaper to innovate when manufacturers' economies of scale with respect to product development are more than offset by the greater scope of innovation assets held by the collectivity of individual users.)

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Available data support these expectations. In chapter 2 we saw evidence that users tended to develop very different innovations. To test whether commercially important innovations are developed by just a few users or by many, I turn to studies documenting the functional sources of important innovations later commercialized. As is evident in table 7.1, most of the important innovations attributed to users in these studies were done by different users. In other words, user innovation does tend to be widely distributed in a world characterized by users with heterogeneous needs and heterogeneous stocks of sticky information.

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Table 7.1 User innovation is widely distributed, with few users developing more than one major innovation. NA: data not available.

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Number of users developing this number of major innovations

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a. Source: von Hippel 1988, appendix: GC, TEM, NMR Innovations.
b. Source: Riggs and von Hippel, Esca and AES.
c. Source: von Hippel 1988, appendix: Semiconductor and pultrusion process equipment innovations.
d. Source: Shah 2000, appendix A: skateboarding, snowboarding, and windsurfing innovations.

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Innovation Communities

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User-innovators may be generally willing to freely reveal their information. However, as we have seen, they may be widely distributed and each may have only one or a few innovations to offer. The practical value of the "freely revealed innovation commons" these users collectively offer will be increased if their information is somehow made conveniently accessible. This is one of the important functions of "innovation communities."

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I define "innovation communities" as meaning nodes consisting of individuals or firms interconnected by information transfer links which may involve face-to-face, electronic, or other communication. These can, but need not, exist within the boundaries of a membership group. They often do, but need not, incorporate the qualities of communities for participants, where "communities" is defined as meaning"networks of interpersonal ties that provide sociability, support, information, a sense of belonging, and social identity" (Wellman et al. 2002, p. 4).【9 When they do not incorporate these qualities, they would be more properly referred to as networks---but communities is the term commonly used, and I follow that practice here. 】

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Innovation communities can have users and/or manufacturers as members and contributors. They can flourish when at least some innovate and voluntarily reveal their innovations, and when others find the information revealed to be of interest. In previous chapters, we saw that these conditions do commonly exist with respect to user-developed innovations: users innovate in many fields, users often freely reveal, and the information revealed is often used by manufacturers to create commercial products---a clear indication many users, too, find this information of interest.

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Innovation communities are often specialized, serving as collection points and repositories for information related to narrow categories of innovations. They may consist only of information repositories or directories in the form of physical or virtual publications. For example, userinnovation.mit.edu is a specialized website where researchers can post articles on their findings and ideas related to innovation by users. Contributors and non-contributors can freely access and browse the site as a convenient way to find such information.

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Innovation communities also can offer additional important functions to participants. Chat rooms and email lists with public postings can be provided so that contributors can exchange ideas and provide mutual assistance. Tools to help users develop, evaluate, and integrate their work can also be provided to community members---and such tools are often developed by community members themselves.

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All the community functionality just mentioned and more is visible in communities that develop free and open source software programs. The emergence of this particular type of innovation community has also done a great deal to bring the general phenomenon to academic and public notice, and so I will describe them in some detail. I first discuss the history and nature of free and open source software itself (the product). Next I outline key characteristics of the free and open source software development projects typically used to create and maintain such software (the community-based development process).

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Development of Physical Products by Innovation Communities

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User innovation communities are by no means restricted to the development of information products like software. They also are active in the development of physical products, and in very similar ways. Just as in the case of communities devoted to information product, communities devoted to physical products can range from simple information exchange sites to sites well furnished with tools and infrastructure. Within sports, Franke and Shah's study illustrates relatively simple community infrastructure. Thus, the boardercross community they studied consisted of semi-professional athletes from all over the world who meet in up to 10 competitions a year in Europe, North America, and Japan. Franke and Shah report that community members knew one another well, and spent a considerable amount of time together. They also assisted one another in developing and modifying equipment for their sport. However, the community had no specialized sets of tools to support joint innovation development.

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Designing kites for kitesurfing is a sophisticated undertaking, involving low-speed aerodynamical considerations that are not yet well understood. Early kites for kitesurfing were developed and built by user-enthusiasts who were inventing both kitesurfing techniques and kitesurfing equipment interdependently. In about 2001, Saul Griffith, an MIT PhD student with a long-time interest in kitesurfing and kite development, decided that kite-surfing would benefit from better online community interaction. Accordingly, he created a site for the worldwide community of user-innovators in kitesurfing (www.zeroprestige.com). Griffith began by posting patterns for kites he had designed on the site and added helpful hints and tools for kite construction and use. Others were invited to download this information for free and to contribute their own if they wished. Soon other innovators started to post their own kite designs, improved construction advice for novices, and sophisticated design tools such as aerodynamics modeling software and rapid prototyping software. Some kitesurfers contributing innovations to the site had top-level technical skills; at least one was a skilled aerodynamicist employed by an aerospace firm.

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The example of the kitesurfing group's methods of sharing design information illustrates the close relationship between information and physical products. Initially, users in the group exchanged design ideas by means of simple sketches transferred over the Internet. Then group members learned that computerized cutters used by sail lofts to cut sails from large pieces of cloth are suited to cutting cloth for surfing kites. They also learned that sail lofts were interested in their business. Accordingly, innovation group members began to exchange designs in the form of CAD files compatible with sail lofts' cutting equipment. When a user was satisfied with a design, he would transmit the CAD file to a local sail loft for cutting. The pieces were then sewn together by the user or sent to a sewing facility for assembly. The total time required to convert an information product into a physical one was less than a week, and the total cost of a finished kite made in this way was a few hundred dollars---much less than the price of a commercial kite.

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Clearly, user innovation communities can offer sophisticated support to individual innovators in the form of tools. Users in these innovation communities also tend to behave in a collaborative manner. That is, users not only distribute and evaluate completed innovations; they also volunteer other important services, such as assisting one another in developing and applying innovations.

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Franke and Shah (2003) studied the frequency with which users in four sporting communities assisted one another with innovations, and found that such assistance was very common (table 7.2). They also found that those who assisted were significantly more likely to be innovators themselves (table 7.3). The level of satisfaction reported by those assisted was very high. Seventy-nine percent agreed strongly with the statement "If I had a similar problem I would ask the same people again." Jeppesen (2005) similarly found extensive user-to-user help being volunteered in the field of computer gaming.

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Table 7.3 Innovators tended to be the ones assisting others with their innovations (p < 0.0001).

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Such helping activity is clearly important to the value contributed by innovation communities to community participants. Why people might voluntarily offer assistance is a subject of analysis. The answers are not fully in, but the mysteries lessen as the research progresses. An answer that appears to be emerging is that there are private benefits to assistance providers, just as there are for those who freely reveal innovations (Lakhani and von Hippel 2003). In other words, provision of free assistance may be explicable in terms of the private-collective model of innovation-related incentives discussed earlier.

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8 Adapting Policy to User Innovation

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Government policy makers generally wish to encourage activities that increase social welfare, and to discourage activities that reduce it. Therefore, it is important to ask about the social welfare effects of innovation by users. Henkel and von Hippel (2005) explored this matter and concluded that social welfare is likely to be higher in a world in which both users and manufacturers innovate than in a world in which only manufacturers innovate.

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In this chapter, I first explain that innovation by users complements manufacturer innovation and can also be a source of success-enhancing new product ideas for manufacturers. Next, I note that innovation by users does not exhibit several welfare-reducing effects associated with innovation by manufacturers. Finally, I evaluate the effects of public policies on user innovation, and suggest modifications to those that---typically unintentionally---discriminate against innovation by users.

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Social Welfare Effects of User Innovation

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Social welfare functions are used in welfare economics to provide a measure of the material welfare of society, using economic variables as inputs. A social welfare function can be designed to express many social goals, ranging from population life expectancies to income distributions. Much of the literature on product diversity, innovation, and social welfare evaluates the impact of economic phenomena and policy on social welfare from the perspective of total income of a society without regard to how that income is distributed. We will take that viewpoint here.

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User Innovation Improves Manufacturers' Success Rates

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Innovations developed by users can improve manufacturers' information on users' needs and so improve their new product introduction success rates. Recall from previous chapters that innovation by users is concentrated among lead users. These lead users tend, as we have seen, to develop functionally novel products and product modifications addressing their own needs at the leading edge of markets where potential sales are both small and uncertain. Manufacturers, in contrast, have poorer information on users' needs and use contexts, and will prefer to manufacture innovations for larger, more certain markets. In the short term, therefore, user innovations will tend to complement rather than substitute for products developed by manufacturers. In the longer term, the market as a whole catches up to the needs that motivated the lead user developments, and manufacturers will begin to find production of similar innovations to be commercially attractive. At that point, innovations by lead users can provide very useful information to manufacturers that they would not otherwise have.

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As lead users develop and test their solutions in their own use environments, they learn more about the real nature of their needs. They then often freely reveal information about their innovations. Other users then may adopt the innovations, comment on them, modify and improve them, and freely reveal what they have done in turn. All of this freely revealed activity by lead users offers manufacturers a great deal of useful information about both needs embodied in solutions and about markets. Given access to a user-developed prototype, manufacturers no longer need to understand users' needs very accurately and richly. Instead they have the much easier task of replicating the function of user prototypes that users have already demonstrated are responsive to their needs. For example, a manufacturer seeking to commercialize a new type of surgical equipment and coming upon prototype equipment developed by surgeons need not understand precisely why the innovators want this product or even precisely how it is used; the manufacturer need only understand that many surgeons appear willing to pay for it and then reproduce the important features of the user-developed prototypes in a commercial product.

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Observation of innovation by lead users and adoption by follow-on users also can give manufacturers a better understanding of the size of the potential market. Projections of product sales have been shown to be much more accurate when they are based on actual customer behavior than when they are based on potential buyers' pre-use expectations. Monitoring of field use of user-built prototypes and of their adoption by other users can give manufacturers rich data on precisely these matters and so should improve manufacturer's commercial success. In net, user innovation helps to reduce information asymmetries between users and manufacturers and so increases the efficiency of the innovation process.

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User Innovation and Provisioning Biases

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The economic literature on the impact of innovation on social welfare generally seeks to understand effects that might induce society to create too many product variations (overprovisioning) or too few (underprovisioning) from the viewpoint of net social economic income (Chamberlin 1950). Greater variety of products available for purchase is assumed to be desirable, in that it enables consumers to get more precisely what they want and/or to own a more diverse array of products. However, increased product diversity comes at a cost: smaller quantities of each product will be produced on average. This in turn means that development-related and production-related economies of scale are likely to be less. The basic tradeoff between variety and cost is what creates the possibility of overprovisioning or underprovisioning product variety. Innovations such as flexible manufacturing may reduce fixed costs associated with increased diversity and so shift the optimal degree of diversity upward. Nonetheless, the conflict still persists.

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Henkel and I studied the welfare impact of adding users as a source of innovation to existing analyses of product diversity, innovation, and social welfare. Existing models uniformly contained the assumption that new products and services were supplied to the economy by manufacturers only. We found that the addition of innovation by users to these analyses largely avoids the welfare-reducing biases that had been identified. For example, consider "business stealing" (Spence 1976). This term refers to the fact that commercial manufacturers benefit by diverting business from their competitors. Since they do not take this negative externality into account, their private gain from introducing new products exceeds society's total gain, tilting the balance toward overprovision of variety. In contrast, a freely revealed user innovation may also reduce incumbents' business, but not to the innovator's benefit. Hence, innovation incentives are not socially excessive.

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Freely revealed innovations by users are also likely to reduce deadweight loss caused by pricing of products above their marginal costs. (Deadweight loss is a reduction in social welfare that occurs when goods are sold at a price above their marginal cost of production.) When users make information about their innovations available for free, and if the marginal cost of revealing that information is zero, an imitator only has to bear the cost of adoption. This is statically efficient. The availability of free user innovations can also induce sellers of competing commercial offerings to reduce their prices, thus indirectly leading to another reduction in dead-weight loss.

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Henkel and I also explored a few special situations where social welfare might be reduced by the availability of freely revealed user innovations. One of these was the effect of reduced pricing power on manufacturers that create "platform" products. Often, a manufacturer of such a product will want to sell the platform---a razor, an ink-jet printer, a video-game player---at a low margin or a loss, and then price necessary add-ons (razor blades, ink cartridges, video games) at a much higher margin. If the possibility of freely revealed add-ons developed by users makes development of a platform unprofitable for a manufacturer, social welfare can thereby be reduced. However, it is only the razor-vs.-blade pricing scheme that may become unprofitable. Indeed, if the manufacturer makes positive margins on the platform, then the availability of user-developed add-ons can have a positive effect: it can increase the value of the platform to users, and so allow manufacturers to charge higher margins on it and/or sell more units. Jeppesen (2004) finds that this is in fact the outcome when users introduce free game modifications (called mods) operating on proprietary game software platform products (called engines) sold by game manufacturers. Even though the game manufacturers also sell mods commercially that compete with free user mods, many provide active support for the development and diffusion of user mods built on their proprietary game engines, because they find that the net result is increased sales and profits.

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If innovation by users is welfare enhancing and is also significant in amount and value, then it makes sense to consider the effects of public policy on user innovation. An important first step would be to collect better data. Currently, much innovation by users---which may in aggregate turn out to be a very large fraction of total economic investment in innovation--- goes uncounted or undercounted. Thus, innovation effort that is volunteered by users, as is the case with many contributions to open source software, is currently not recorded by governmental statistical offices. This is also the case for user innovation that is integrated with product and service production. For example, much process innovation by manufacturers occurs on the factory floor as they produce goods and simultaneously learn how to improve their production processes. Similarly, many important innovations developed by surgeons are woven into learning by doing as they deliver services to patients.

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Next, it will be important to review innovation-related public policies to identify and correct biases with respect to sources of innovation. On a level playing field, users will become a steadily more important source of innovation, and will increasingly substitute for or complement manufacturers' innovation-related activities. Transitions required of policy making to support this ongoing evolution are important but far from painless. To illustrate, we next review issues related to the protection intellectual property, related to policies restricting product modifications, related to source-biased subsidies for R&D, and related to control over innovation diffusion channels.

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Earlier, when we explored why users might freely reveal their innovations, we concluded that it was often their best practical choice in view of how intellectual property law actually functions (or, often, does not function) to protect innovations today. For example, recall from chapter 6 that most innovators do not judge patents to be very effective, and that the availability of patent grant protection does not appear to increase innovation investments in most fields. Recall also that patent protection is costly to obtain, and thus of little value to developers of minor innovations---with most innovations being minor. We also saw that in practice it was often difficult for innovators to protect their innovations via trade secrecy: it is hard to keep a secret when many others know similar things, and when some of these information holders will lose little or nothing from freely revealing what they know.

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These findings show that the characteristics of present-day intellectual property regimes as actually experienced by innovators are far from the expectations of theorists and policy makers. The fundamental reason that societies elect to grant intellectual property rights to innovators is to increase private investment in innovation. At the same time, economists have long known that there will be social welfare losses associated with these grants: owners of intellectual property will generally restrict the use of their legally protected information in order to increase private profits. In other words, intellectual property rights are thought to be good for innovation and bad for competition. The consensus view has long been that the good outweighs the bad, but Foray (2004) explains that this consensus is now breaking down. Some---not all---are beginning to think that intellectual property rights are bad for innovation too in many cases.

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The need to grant private intellectual property rights to achieve socially desirable levels of innovation is being questioned in the light of apparent counterexamples. Thus, as we saw earlier, open source software communities do not allow contributing innovators to use their intellectual property rights to control the use of their code. Instead, contributors use their authors' copyright to assign their code to a common pool to which all--- contributors and non-contributors alike---are granted equal access. Despite this regime, innovation seems to be flourishing. Why? As we saw in our earlier discussions of why innovators might freely reveal their innovations, researchers now understand that significant private rewards to innovation can exist independent of intellectual property rights grants. As a general principle, intellectual property rights grants should not be offered if and when developers would seek protection but would innovate without it.

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The debate rages. Gallini and Scotchmer (2002) assert that "intellectual property is the foundation of the modern information economy" and that "it fuels the software, lifesciences and computer industries, and pervades most other products we consume." They also conclude that the positive or negative effect of intellectual property rights on innovation depends centrally on "the ease with which innovators can enter into agreements for rearranging and exercising those rights." This is precisely the rub from the point of view of those who urge that present intellectual property regimes be reconsidered: it is becoming increasingly clear that in practice rearranging and exercising intellectual property rights is often difficult rather than easy. It is also becoming clear that the protections afforded by existing intellectual property law can be strategically deployed to achieve private advantage at the expense of general innovative progress (Foray 2004).

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Consider an effect first pointed out by Merges and Nelson (1990) and further explored as the "tragedy of the anticommons" by Heller (1998) and Heller and Eisenberg (1998). A resource such as innovation-related information is prone to underuse---a tragedy of the anticommons---when multiple owners each have a right to exclude others and no one has an effective privilege of use. The nature of the patent grant can lead to precisely this type of situation. Patent law is so arranged that an owner of a patent is not granted the right to practice its invention---it is only granted the right to exclude others from practicing it. For example, suppose you invent and patent the chair. I then follow by inventing and patenting the rocking chair---implemented by building rockers onto a chair covered by your patent. In this situation I cannot manufacture a rocking chair without getting a license from you for the use of your chair patent, and you cannot build rocking chairs either without a license to my rocker patent. If we cannot agree on licensing terms, no one will have the right to build rocking chairs.

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In theory and in a world of costless transactions, people could avoid tragedies of the anticommons by licensing or trading their intellectual property rights. In practice the situation can be very different. Heller and Eisenberg point specifically to the field of biomedical research, and argue that conditions for anticommons effects do exist there. In that field, patents are routinely allowed on small but important elements of larger research problems, and upstream research is increasingly likely to be private. "Each upstream patent," Heller and Eisenberg note, "allows its owner to set up another tollbooth on the road to product development, adding to the cost and slowing the pace of downstream biomedical innovation."

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A second type of strategic behavior based on patent rights involves investing in large portfolios of patents to create "patent thickets"---dense networks of patent claims across a wide field (Merges and Nelson 1990; Hall and Ham Ziedonis 2001; Shapiro 2001; Bessen 2003). Patent thickets create plausible grounds for patent infringement suits across a wide field. Owners of patent thickets can use the threat of such suits to discourage others from investing research dollars in areas of technical advance relevant to their products. Note that this use of patents is precisely opposite to policy mak' intentions to stimulate innovation by providing ways for innovators to assert intellectual property rights. Indeed, Bessen and Hunt (2004) have found in the field of software that, on average, as firm's investments in patent protection go up, their investments in research and development actually go down. If this relationship proves causal, there is a reasonable explanation from the viewpoint of private profit: corporations that can use a patent thicket to deter others' research in a field might well decide that there is less need to do research of their own.

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Similar innovation-retarding strategies can be applied by owners of large collections of copyrighted work in the movie, publishing, and software fields. Copyright owners can prevent others from building new works on characters (e.g. Mickey Mouse) that are already familiar to customers. The result is that owners of large portfolios of copyrighted work can gain an advantage over those with no or small portfolios in the creation of derivative works. Indeed, Benkler (2002) argues that institutional changes strengthening intellectual property protection tend to foster concentration of information production in general. Lessig (2001) and Boldrin and Levine (2002) arrive at a similarly negative valuation of overly strong and lengthy copyright protection.

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These types of innovation-discouraging effects can affect innovation by users especially strongly. The distributed innovation system we have documented consists of users each of whom might have only a few innovations and a small amount of intellectual property. Such innovators are clearly hurt differentially by a system that gives advantage to the owners of large shares of the intellectual property in a field.

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We will learn over time whether and how widely the practice of creating and defending intellectual commons diffuses across fields. There obviously can be cases where it will continue to make sense for innovators, and for society as well, to protect innovations as private intellectual property. However, it is likely that many user innovations are kept private not so much out of rational motives as because of a general, not-thought-through attitude that "we do not give away our intellectual property," or because the administrative cost of revealing is assumed to be higher than the benefits. Firms and society can benefit by rethinking the benefits of free revealing and (re)developing policies regarding what is best kept private and what is best freely revealed.

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Users often develop prototypes of new products by buying existing commercial products and modifying them. Current efforts by manufacturers to build technologies into the products they sell that restrict the way these products are used can undercut users' traditional freedom to modify what they purchase. This in turn can raise the costs of innovation development by users and so lessen the amount of user innovation that is done. For example, makers of ink-jet printers often follow a razor-and-blade strategy, selling printers at low margins and the ink cartridges used in them at high margins. To preserve this strategy, printer manufacturers want to prevent users from refilling ink cartridges with low-cost ink and using them again. Accordingly, they may add technical modifications to their cartridges to prevent them from functioning if users have refilled them. This manufacturer strategy can potentially cut off both refilling by the economically minded and modifications by user-innovators that might involve refilling (Varian 2002). Some users, for example, have refilled cartridges with special inks not sold by printer manufacturers in order to adapt ink-jet printing to the printing of very high-quality photographs. Others have refilled cartridges with food colorings instead of inks in order to develop techniques for printing images on cakes. Each of these applications might have been retarded or prevented by technical measures against cartridge refilling.

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The Digital Millennium Copyright Act, a legislative initiative intended to prevent product copying, may negatively affect users' abilities to change and improve the products they own. Specifically, the DMCA makes it a crime to circumvent anti-piracy measures built into most commercial software. It also outlaws the manufacture, sale, or distribution of code-cracking devices used to illegally copy software. Unfortunately, code cracking is also a needed step for modification of commercial software products by user-innovators. Policy makers should be aware of "collateral damage" that may be inflicted on user innovation by legislation aimed at other targets, as is likely in this case.

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Users that innovate and wish to freely diffuse innovation-related information are able to do so cheaply in large part because of steady advances in Internet distribution capabilities. Controls placed on such infrastructural factors can threaten and maybe even totally disable distributed innovation systems such as the user innovation systems documented in this book. For example, information products developed by users are commonly distributed over the Internet by peer-to-peer sharing networks. A firm that owns both a channel and content (e.g., a cable network) may have a strong incentive to shut out or discriminate against content developed by users or others in favor of its own content. The transition from the chaotic, fertile early days of radio in the United States when many voices were heard, to an era in which the spectrum was dominated by a few major networks---a transition pushed by major firms and enforced by governmental policy making--- provides a sobering example of what could happen (Lessig 2001). It will be important for policy makers to be aware of this kind of incentive problem and address it---in this case perhaps by mandating that ownership of content and ownership of channel be separated, as has long been the case for other types of common carriers.

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In many countries, manufacturing firms are rewarded for their innovative activity by R&D subsidies and tax credits. Such measures can make economic sense if average social returns to innovation are significantly higher than average private returns, as has been found by Mansfield et al. (1977) and others. However, important innovative activities carried out by users are often not similarly rewarded, because they tend to not be documentable as formal R&D activities. As we have seen, users tend to develop innovations in the course of "doing" in their normal use environments. Bresnahan and Greenstein (1996a) make a similar point. They investigate the role of "co-invention" in the move by users from mainframe to client-server architecture.【15 See also Bresnahan and Greenstein 1996b; Bresnahan and Saloner 1997; Saloner and Steinmueller 1996. 】 By "co-invention" Bresnahan and Greenstein mean organizational changes and innovations developed and implemented by users that are required to take full advantage of a new invention. They point out the high importance that co-invention has for realizing social returns from innovation. They consider the federal government's support for creating "national information infrastructures" insufficient or misallocated, since they view co-invention is the bottleneck for social returns and likely the highest value locus for invention.

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Efforts to level the playing field for user innovation and manufacturer innovation could, of course, also go in the direction of lessening R&D subsidies or tax credits for all rather than attempting to increase user-innovators' access to subsidies. However, if directing subsidies to user-innovators seems desirable, social welfare will be best served if policy makers link them to free revealing by user-innovators as well as or instead of tying them to users' private investments in the development of products for exclusive in-house use. Otherwise, duplication of effort by users interested in the same innovation will reduce potential welfare gains.

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In sum, the welfare-enhancing effects found for freely revealed user innovations suggest that policy makers should consider conditions required for user innovation when creating policy and legislation. Leveling the playing field for user-innovators and manufacturer-innovators will doubtless force more rapid change onto manufacturers. However, as will be seen in the next chapter, manufacturers can adapt to a world in which user innovation is at center stage.

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9 Democratizing Innovation

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We have learned that lead users sometimes develop and modify products for themselves and often freely reveal what they have done. We have also seen that many users can be interested in adopting the solutions that lead users have developed. Taken together, these findings offer the basis for user-centered innovation systems that can entirely supplant manufacturer-based innovation systems under some conditions and complement them under most. User-centered innovation is steadily increasing in importance as computing and communication technologies improve.

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I begin this chapter with a discussion of the ongoing democratization of innovation. I then describe some of the patterns in user-centered innovation that are emerging. Finally, I discuss how manufacturers can find ways to profitably participate in emerging, user-centered innovation processes.

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Users' abilities to develop high-quality new products and services for themselves are improving radically and rapidly. Steady improvements in computer software and hardware are making it possible to develop increasingly capable and steadily cheaper tools for innovation that require less and less skill and training to use. In addition, improving tools for communication are making it easier for user innovators to gain access to the rich libraries of modifiable innovations and innovation components that have been placed into the public domain. The net result is that rates of user innovation will increase even if users' heterogeneity of need and willingness to pay for "exactly right" products remain constant.

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The radical nature of the change that is occurring in design capabilities available to even individual users is perhaps difficult for those without personal innovation experience to appreciate. An anecdote from my own experience may help as illustration. When I was a child and designed new products that I wanted to build and use, the ratio of not-too-pleasurable (for me) effort required to actually build a prototype relative to the very pleasurable effort of inventing it and use-testing it was huge. (That is, in terms of the design, build, test, evaluate cycle illustrated in figure 5.1, the effort devoted to the "build" element of the cycle was very large and the rate of iteration and learning via trial and error was very low.)

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Functional equivalents of the resources for innovation just described have long been available within corporations to a lucky few. Senior designers at firms have long been supported by engineers and designers under their direct control, and also with other resources needed to quickly construct and test prototype designs. When I took a job as R&D manager at a start-up firm after college, I was astounded at the difference professional-quality resources made to both the speed and the joy of innovation. Product development under these conditions meant that the proportion of one's effort that could be focused on the design and test portions of the innovation cycle rather than on prototype building was much higher, and the rate of progress was much faster.

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But, as we learned in chapter 7, the capability and the information needed to innovate in important ways are in fact widely distributed. Given this finding, we can see that the traditional pattern of concentrating innovation-support resources on just a few pre-selected potential innovators is hugely inefficient. High-cost resources for innovation support cannot be allocated to "the right people," because one does not know who they are until they develop an important innovation. When the cost of high-quality resources for design and prototyping becomes very low---which is the trend we have described---these resources can be diffused widely, and the allocation problem then diminishes in significance. The net result is and will be to democratize the opportunity to create.

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Democratization of the opportunity to create is important beyond giving more users the ability to make exactly right products for themselves. As we saw in a previous chapter, the joy and the learning associated with creativity and membership in creative communities are also important, and these experiences too are made more widely available as innovation is democratized. The aforementioned Chris Hanson, a Principal Research Scientist at MIT and a maintainer in the Debian Linux community, speaks eloquently of this in his description of the joy and value he finds from his participation in an open source software community:

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Adapting to User-Centered Innovation---Like It or Not

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User-centered innovation systems involving free revealing can sometimes supplant product development carried out by manufacturers. This outcome seems reasonable when manufacturers can obtain field-tested user designs at no cost. As an illustration, consider kitesurfing (previously discussed in chapter 7). The recent evolution of this field nicely shows how manufacturer-based product design may not be able to survive when challenged by a user innovation community that freely reveals leading-edge designs developed by users. In such a case, manufacturers may be obliged to retreat to manufacturing only, specializing in modifying user-developed designs for producibility and manufacturing these in volume.

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It is not clear that manufacturers of kitesurfing equipment adhering to the traditional developer-manufacturer model can---or should---survive this new and powerful combination of freely revealed collaborative design and prototyping effort by a user innovation community combined with volume production by a specialist manufacturer. In effect, free revealing of product designs by users offsets manufacturers' economies of scale in design with user communities' economies of scope. These economies arise from the heterogeneity in information and resources found in a user community.

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Manufacturers' Roles in User-Centered Innovation

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Users are not required to incorporate manufacturers in their product-development and product-diffusion activities. Indeed, as open source software projects clearly show, horizontal innovation communities consisting entirely of users can develop, diffuse, maintain, and consume software and other information products by and for themselves---no manufacturer is required. Freedom from manufacturer involvement is possible because information products can be "produced" and distributed by users essentially for free on the web (Kollock 1999). In contrast, production and diffusion of physical products involves activities with significant economies of scale. For this reason, while product development and early diffusion of copies of physical products developed by users can be carried out by users themselves and within user innovation communities, mass production and general diffusion of physical products incorporating user innovations are usually carried out by manufacturing firms.

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In light of this situation, how can, should, or will manufacturers of products, services, and processes play profitable roles in user-centered innovation systems? Behlendorf (1999), Hecker (1999) and Raymond (1999) explore what might be possible in the specific context of open source software. More generally, many are experimenting with three possibilities: (1) Manufacturers may produce user-developed innovations for general commercial sale and/or offer a custom manufacturing service to specific users. (2) Manufacturers may sell kits of product-design tools and/or "product platforms" to ease users' innovation-related tasks. (3) Manufacturers may sell products or services that are complementary to user-developed innovations.

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Firms can make a profitable business from identifying and mass producing user-developed innovations or developing and building new products based on ideas drawn from such innovations. They can gain advantages over competitors by learning to do this better than other manufacturers. They may, for example, learn to identify commercially promising user innovations more effectively that other firms. Firms using lead user search techniques such as those we will describe in chapter 10 are beginning to do this systematically rather than accidentally---surely an improvement. Effectively transferring user-developed innovations to mass manufacture is seldom as simple as producing a product based on a design by a single lead user. Often, a manufacturer combines features developed by several independent lead users to create an attractive commercial offering. This is a skill that a company can learn better than others in order to gain a competitive advantage.

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The decision as to whether or when to take the plunge and commercialize a lead user innovation(s) is also not typically straightforward, and companies can improve their skills at inviting in the relevant information and making such assessments. As was discussed previously, manufacturers often do not understand emerging user needs and markets nearly as well as lead users do. Lead users therefore may engage in entrepreneurial activities, such as "selling" the potential of an idea to potential manufacturers and even lining up financing for a manufacturer when they think it very important to rapidly get widespread diffusion of a user-developed product. Lettl, Herstatt, and Gemünden (2004), who studied the commercialization of major advances in surgical equipment, found innovating users commonly engaging in these activities. It is also possible, of course, for innovating lead users to become manufacturers and produce the products they developed for general commercial sale. This has been shown to occur fairly frequently in the field of sporting goods (Shah 2000; Shah and Tripsas 2004; Hienerth 2004).

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Some firms that sell platform products or design tools to users have learned to systematically incorporate valuable innovations that users may develop back into their commercial products. In effect, this second strategy can often be pursued jointly with the manufacturing strategy described above. Consider, for example, StataCorp of College Station, Texas. StataCorp produces and sells Stata, a proprietary software program designed for statistics. It sells the basic system bundled with a number of families of statistical tests and with design tools that enable users to develop new tests for operation on the Stata platform. Advanced customers, many of them statisticians and social science researchers, find this capability very important to their work and do develop their own tests. Many then freely reveal tests they have developed on Internet websites set up by the users themselves. Other users then visit these sites to download and use, and perhaps to test, comment on, and improve these tests, much as users do in open source software communities.

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As a final example of a strategy in which manufacturers offer a platform to support user innovation of value to them, consider General Electric's innovation pattern with respect to the magnetic-resonance imaging machines it sells for medical use. Michael Harsh (GE's Director of R&D in the division that produces MRI machines) and his colleagues realized that nearly all the major, commercially important improvements to these machines are developed by leading-edge users rather than by GE or by competing machine producers. They also knew that commercialization of user-developed improvements would be easier and faster for GE if the users had developed their innovations using a GE MRI machine as a platform rather than a competitor's machine. Since MRI machines are expensive, GE developed a policy of selectively supplying machines at a very low price to scientists GE managers judged most likely to develop important improvements. These machines are supplied with restrictive interlocks removed so that the users can easily modify them. In exchange for this research support, the medical researchers give GE preferred access to innovations they develop. Over the years, supported researchers have provided a steady flow of significant improvements that have been first commercialized by GE. Managers consider the policy a major source of GE's commercial success in the MRI field.

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Many user innovations require or benefit from complementary products or services, and manufacturers can often supply these at a profit. For example, IBM profits from user innovation in open source software by selling the complement of computer hardware. Specifically, it sells computer servers with open source software pre-installed, and as the popularity of that software goes up, so do server sales and profits. A firm named Red Hat distributes a version of the open source software computer operating system Linux, and also sells the complementary service of Linux technical support to users. Opportunities to provide profitable complements are not necessarily obvious at first glance, and providers often reap benefits without being aware of the user innovation for which they are providing a complement. Hospital emergency rooms, for example, certainly gain considerable business from providing medical care to the users and user-developers of physically demanding sports, but may not be aware of this.

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All the examples above explore how manufacturers can integrate themselves into a user-centered innovation system. However, manufacturers will not always find user innovations based on or related to their products to be in their interest. For example, manufacturers may be concerned about legal liabilities and costs sometimes associated with "unauthorized user tinkering." For example, an automaker might legitimately worry about the user-programmed engine controller chips that racing aficionados and others often install to change their cars' performance. The result can be findings of eventual commercial value as users explore new performance regimes that manufacturers' engineers might not have considered. However, if users choose to override manufacturers' programming to increase engine performance, there is also a clear risk of increased warrantee costs for manufacturers if engines fail as a consequence (Mollick 2004).

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We have seen that manufacturers can often find ways to profit from user innovation. It is also the case, however, that user innovators and user innovation communities can provide many of these same functions for themselves. For example, StataCorp is successfully selling a proprietary statistical software package. User-developed alternatives exist on the web that are developed and maintained by user-innovators and can be downloaded at no charge. Which ownership model will prove more robust under what circumstances remains to be seen. Ultimately, since users are the customers, they get to choose.

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10 Application: Searching for Lead User Innovations

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Users and manufacturers can apply the insights developed in this book to improve their innovation processes. In this chapter, I illustrate by showing how firms can profit by systematically searching for innovations developed by lead users. I first explain how this can be done. I then present findings of a study conducted at 3M to assess the effectiveness of lead user idea-generation techniques. Finally, I briefly review other studies reporting systematic searches for lead users by manufacturers, and the results obtained.

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These traditional processes cannot easily be adapted to systematic searching for lead user innovations. The focus on target-market customers means that lead users are regarded as outliers of no interest. Also, traditional market-research analyses focus on collecting and analyzing need information and not on possible solutions that users may have developed. For example, if a user says "I have developed this new product to make task X more convenient," market-research analyses typically will note that more convenience is wanted but not record the user-developed solution. After all, product development is the province of in-house engineers!

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We are therefore left with a question: How can manufacturers build a product-development process that systematically searches for and evaluates lead user-generated innovations? (See figure 10.1.) It turns out that the answer differs depending on whether the lead users sought are at the leading edge of "advanced analog" fields or at the leading edge of target markets. Searching for the former is more difficult, but experience shows that the user-developed innovations that are most radical (and profitable) relative to conventional thinking often come from lead users in "advanced analog" fields.

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Figure 10.1 Innovations by lead users precede equivalent commercial products.

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The result of the more extreme demands and additional constraints placed on solutions to aircraft braking was the development of antilock braking systems (ABS) for aircraft. Auto firms conducting searches for valuable lead user innovations regarding auto braking were able to learn about this out-of-field innovation and adapt if for use in autos---where it is common today. Before the development of ABS for autos, an automobile firm could have learned about the underlying concept by studying the practices of users with a strong need for controlling skidding while braking such as stock car auto racing teams. These lead users had learned to manually "pump" their brakes to help control this problem. However, auto company engineers were able to learn much more by studying the automated solutions developed in the "advanced analog" field of aerospace.【16 ABS braking is intended to keep a vehicle's wheels turning during braking. ABS works by automatically and rapidly "pumping" the brakes. The result is that the wheels continue to revolve rather than "locking up," and the operator continues to have control over steering. 】

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In general it is easier to identify users at the leading edge of target markets than it is to identify users in advanced analog fields. Screening for users with lead user characteristics can be used. When the desired type of lead user is so rare as to make screening impractical---often the case---pyramiding can be applied. In addition, manufacturers can take advantage of the fact that users at the leading edge of a target market often congregate at specialized sites or events that manufacturers can readily identify. At such sites, users may freely reveal what they have done and may learn from others about how to improve their own practices still further. Manufacturers interested in learning from these lead users can easily visit the sites and listen in. For example, sports equipment companies can go to sporting meets where lead users are known to compete, observe user innovations in action, and compare notes.

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Essentially the same thing can be done at virtual sites. For example, recall the practices of StataCorp, a supplier of statistical software. Stata sells a set of standard statistical tests and also a language and tools that statisticians can use to design new tests to serve their own evolving needs. Some Stata users (statisticians) took the initiative to set up a few specialized websites, unaffiliated with StataCorp, where they post their innovations for others to download, use, comment on, and improve. StataCorp personnel visit these sites, learn about the user innovations, and observe which tests seem to be of interest to many users. They then develop proprietary versions of the more generally useful tests as commercial products.

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When specialized rendezvous sites for lead users don't exist in a particular field, manufacturers may be able to create them. Technicon Corporation, for example, set up a series of seminars at which innovating users of their medical equipment got together and exchanged information on their innovations. Technicon engineers were free to listen in, and the innovations developed by these users were the sources of most of Technicon's important new product improvements (von Hippel and Finkelstein 1979).

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We also found no major differences in the innovation opportunities teams faced. They also looked for Hawthorne or placebo effects that might affect the project teams differentially, and found none. (The Hawthorne effect can be described as "I do better because extra attention is being paid to me or to my performance." The placebo effect can be described as "I expect this process will work and will strive to get the results I have been told are likely.") We concluded that the 3M samples of funded LU and non-LU idea-generation projects, though not satisfying the random assignment criterion for experimental design, appeared to satisfy rough equivalence criteria in test and control conditions associated with natural or quasi-experimentation. Data were collected by interviews and by survey instruments.

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To illustrate what the major product line innovations that the LU process teams generated at 3M were like, I briefly describe four (one is not described for 3M proprietary reasons):

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A new approach to the prevention of infections associated with surgical operations. The new approach replaced the traditional "one size fits all" approach to infection prevention with a portfolio of patient-specific measures based on each patient's individual biological susceptibilities. This innovation involved new product lines plus related business and strategy innovations made by the team to bring this new approach to market successfully and profitably. _* Electronic test and communication equipment for telephone field repair workers that pioneered the inclusion of audio, video, and remote data access capabilities. These capabilities enabled physically isolated workers to carry out their problem-solving work as a virtual team with co-workers for the first time.

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A new approach, implemented via novel equipment, to the application of commercial graphics films that cut the time of application from 48 hours to less than 1 hour. (Commercial graphics films are used, for example, to cover entire truck trailers, buses, and other vehicles with advertising or decorative graphics.) The LU team's solutions involved technical innovations plus related channel and business model changes to help diffuse the innovation rapidly.

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Lilien, Morrison, Searls, Sonnack, and I also explored to see whether the major product lines generated by the lead user projects had characteristics similar to those of the major product lines that had been developed at 3M in the past, including Scotch Tape. To determine this we collected data on all major new product lines introduced to the market between 1950 and 2000 by the five 3M divisions that had executed one or more lead user studies. (The year 1950 was as far back as we could go and still find company employees who could provide some data about the innovation histories of these major products lines.) Examples from our 1950--2000 sample include the following:

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Table 10.3 provides profiles of the five LU major product lines and the 16 non-LU major product lines for which we were able to collect data. As can be seen, innovations generated with inputs from lead users are similar in many ways to the major innovations developed by 3M in the past.

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Active search for lead users that have innovated enables manufacturers to more rapidly commercialize lead user innovations. One might think that an alternative approach would be to identify lead users before they have innovated. Alert manufacturers could then make some prior arrangements to get preferred access to promising user-developed innovations by, for example, purchasing promising lead user organizations. I myself think that such vertical integration approaches are not practical. As was shown earlier, the character and attractiveness of innovations lead users may develop is based in part on the particular situations faced by and information stocks held by individual lead users. User innovation is therefore likely to be a widely distributed phenomenon, and it would be difficult to predict in advance which users are most likely to develop very valuable innovations.

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How do we square these findings with the arguments, put forth by Christensen (1997), by Slater and Narver (1998), and by others, that firms are likely to miss radical or disruptive innovations if they pay close attention to requests from their customers? Christensen (1997, p. 59, n. 21) writes: "The research of Eric von Hippel, frequently cited as evidence of the value of listening to customers, indicates that customers originate a large majority of new product ideas. . . . The [Christensen] value network framework would predict that the innovations toward which the customers in von Hippel's study led their suppliers would have been sustaining innovations. We would expect disruptive innovations to have come from other sources."

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Unfortunately, the above contains a basic misunderstanding of my research findings. My findings, and related findings by others as well, deal with innovations by lead users, not customers, and lead users are a much broader category than customers of a specific firm. Lead users that generate innovations of interest to manufacturers can reside, as we have seen, at the leading edges of target markets, and also in advanced analog markets. The innovations that some lead users develop are certainly disruptive from the viewpoint of some manufacturers---but the lead users are unlikely to care about this. After all, they are developing products to serve their own needs. Tim Berners-Lee, for example, developed the World Wide Web as a lead user working at CERN---a user of that software. The World Wide Web was certainly disruptive to the business models of many firms, but this was not Berners-Lee's concern. Lead users typically have no reason to lead, mislead, or even contact manufacturers that might eventually benefit from or be disrupted by their innovations. Indeed, the likely absence of a preexisting customer relationship is the reason that manufacturing firms must search for lead user innovations outside their customer lists---as 3M did in its lead user idea generation studies. "Listening to the voice of the customer" is not the same thing as seeking out and learning from lead users (Danneels 2004).

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That basic misunderstanding aside, I do agree with Christensen and others that a manufacturer may well receive mainly requests for sustaining innovations from its customers. As was discussed in chapter 4, manufacturers have an incentive to develop innovations that utilize their existing capabilities---that are "sustaining" for them. Customers know this and, when considering switching to a new technology, are unlikely to request it from a manufacturer that would consider it to be disruptive: they know that such a manufacturer is unlikely to respond positively. The net result is that manufacturers' inputs from their existing customers may indeed be biased towards requests for sustaining innovations.

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I conclude this chapter by reminding the reader that studies of the sources of innovation show clearly that users will tend to develop some types of innovations but not all. It therefore makes sense for manufacturers to partition their product-development strategies and portfolios accordingly. They may wish, for example, to move away from actual new product development and search for lead users' innovations in the case of functionally novel products. At the same time manufacturers may decide to continue to develop products that do not require high-fidelity models of need information and use environments to get right. One notable category of innovations with this characteristic is dimension-of-merit improvements to existing products. Sometimes users state their needs for improved products in terms of dimensions on which improvements are desired---dimensions of merit. As an example, consider that users may say "I want a computer that is as fast and cheap as possible." Similarly, users of medical imaging equipment may say "I want an image that is of as high a resolution as is technically possible." If manufacturers (or users) cannot get to the end point desired by these users right away, they will instead progressively introduce new product generations that move along the dimension of merit as rapidly and well as they can. Their rate of progress is determined by the rate at which solution technologies improve over time. This means that sticky solution information rather than sticky need information is central to development of dimension-of-merit improvements. Manufacturers will tend to have the information they need to develop dimension of merit innovations internally.

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11 Application: Toolkits for User Innovation and Custom Design

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An improved understanding of the relative innovation capabilities of users and manufacturers can enable designs for more effective joint innovation processes. Toolkits for user innovation and custom design illustrate this possibility. In this new innovation process design, manufacturers actually abandon their efforts to understand users' needs accurately and in detail. Instead, they outsource only need-related innovation tasks to their users, who are equipped with appropriate toolkits. This process change differs from the lead user search processes discussed earlier in an interesting way. Lead user searchs identify existing innovations, but do nothing to change the conditions affecting user-innovators at the time a new product or service is being developed. Toolkits for users, in contrast, do change the conditions potential innovators face. By making innovation cheaper and quicker for users, they can increase the volume of user innovation. They also can channel innovative effort into directions supported by toolkits.

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Toolkits for user innovation and design are integrated sets of product-design, prototyping, and design-testing tools intended for use by end users. The goal of a toolkit is to enable non-specialist users to design high-quality, producible custom products that exactly meet their needs. Toolkits often contain "user-friendly" features that guide users as they work. They are specific to a type of product or service and a specific production system. For example, a toolkit provided to customers interested in designing their own, custom digital semiconductor chips is tailored precisely for that purpose--- it cannot be used to design other types of products. Users apply a toolkit in conjunction with their rich understanding of their own needs to create a preliminary design, simulate or prototype it, evaluate its functioning in their own use environment, and then iteratively improve it until they are satisfied.

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A variety of manufacturers have found it profitable to shift the tasks of custom product design to their customers along with appropriate toolkits for innovation. Results to date in the custom semiconductor field show development time cut by 2/3 or more for products of equivalent complexity and development costs cut significantly as well via the use of toolkits. In 2000, more than $15 billion worth of custom integrated circuits were sold that had been designed with the aid of toolkits---often by circuit users---and produced in the "silicon foundries" of custom semiconductor manufacturers such as LSI (Thomke and von Hippel 2002). International Flavors and Fragrances (IFF), a global supplier of specialty flavors to the food industry, has built a toolkit that enables its customers to modify flavors for themselves, which IFF then manufactures. In the materials field, GE provides customers with Web-based tools for designing better plastic products. In software, a number of consumer product companies provide toolkits that allow people to add custom-designed modules to their standard products. For example, Westwood Studios provides its customers with toolkits that enable them to design important elements of their own video games (Jeppesen 2005).

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If a manufacturer outsources need-intensive design tasks to users, it must also make sure that users have the information they need to carry out those tasks effectively. This can be done via a toolkit for user innovation. Toolkits are not new as a general concept---every manufacturer equips its own engineers with a set of tools suitable for developing the type of products or services it wishes to produce. Toolkits for users also are not new---many users have personal collections of tools that they have assembled to help them create new items or modify standard ones. For example, some users have woodworking tools ranging from saws to glue which can be used to create or modify furniture---in very novel or very standard ways. Others may have a kit of software tools needed to create or modify software. What is new, however, is integrated toolkits enabling users to create and test designs for custom products or services that can then be produced "as is" by manufacturers.

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Present practice dictates that a high-quality toolkit for user innovation will have five important attributes. (1) It will enable users to carry out complete cycles of trial-and-error learning. (2) It will offer users a solution space that encompasses the designs they want to create. (3) It will be user friendly in the sense of being operable with little specialized training. (4) It will contain libraries of commonly used modules that users can incorporate into custom designs. (5) It will ensure that custom products and services designed by users will be producible on a manufacturer's' production equipment without modification by the manufacturer.

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It is crucial that user toolkits for innovation enable users to go through complete trial-and-error cycles as they create their designs. Recall that trial-and-error problem solving is essential to product development. For example, suppose that a user is designing a new custom telephone answering system for her firm, using a software-based computer-telephony integration (CTI) design toolkit provided by a vendor. Suppose also that the user decides to include a new rule to "route all calls of X nature to Joe" in her design. A properly designed toolkit would allow her to temporarily place the new rule into the telephone system software, so that she could actually try it out (via a real test or a simulation) and see what happened. She might discover that the solution worked perfectly. Or she might find that the new rule caused some unexpected form of trouble---for example, Joe might be flooded with too many calls---in which case it would be "back to the drawing board" for another design and another trial.

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In the same way, toolkits for innovation in the semiconductor design field allow users to design a circuit that they think will meet their needs and then test the design by "running" it in the form of a computer simulation. This quickly reveals errors that the user can then quickly and cheaply fix using toolkit-supplied diagnostic and design tools. For example, a user might discover by testing a simulated circuit design that a switch needed to adjust the circuit had been forgotten and make that discovery simply by trying to make a needed adjustment. The user could then quickly and cheaply design in the needed switch without major cost or delay.

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In contrast, a sophisticated toolkit for user innovation would allow the user to conduct trial-and-error tests to evaluate the effects of initial choices made and to improve on them. For example, a computer design site could add this capability by enabling users to actually test and evaluate the hardware configuration they specify on their own programs and computing tasks before buying. To do this, the site might, for example, provide access to a remote computer able to simulate the operation of the computer that the user has specified, and provide performance diagnostics and related choices in terms meaningful to the user (e.g., "If you add option x at cost y, the time it takes to complete your task will decrease by z seconds"). The user could then modify or confirm initial design choices according to trade-off preferences only he or she knows.

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Economical production of custom products and services is achievable only when a custom design falls within the pre-existing capability and degrees of freedom built into a particular manufacturer's production system. My colleagues and I call this the solution space offered by that system. A solution space may vary from very large to small, and if the output of a toolkit is tied to a particular production system, then the design freedom that a toolkit can offer a user will be accordingly large or small. For example, the solution space offered by the production process of a manufacturer of custom integrated circuits offers a huge solution space to users---it will produce any combination of logic elements interconnected in any way that a user-designer might desire, with the result that the user can invent anything from a novel type of computer processor to a novel silicon organism within that space. However, note that the semiconductor production process also has stringent limits. It will only implement product designs expressed in terms of semiconductor logic---it will not implement designs for bicycles or houses. Also, even within the arena of semiconductors, it will only be able to produce semiconductors that fit within a certain range with respect to size and other properties. Another example of a production system offering a very large solution space to designers---and, potentially to user-designers via toolkits---is the automated machining center. Such a device can basically fashion any shape out of any machinable material that can be created by any combination of basic machining operations such as drilling and milling. As a consequence, toolkits for innovation intended to create designs that can be produced by automated machining centers can offer users access to that very large solution space.

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User toolkits for innovation are most effective and successful when they are made "user friendly" by enabling users to use the skills they already have and to work in their own customary and well-practiced design language. This means that users don't have to learn the---typically different---design skills and language customarily used by manufacturer-based designers, and so they will require much less training to use the toolkit effectively.

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A user-friendly toolkit for hairstyling innovation can be built upon these familiar skills and tools. For example, a user can be invited to sit in front of a computer monitor, and study an image of her face and hairstyle as captured by a video camera. Then, she can select from a palette of colors and color patterns offered on the screen, can superimpose the effect on her existing hairstyle, can examine it, and can repeatedly modify it in a process of trial-and-error learning. Similarly, the user can select and manipulate images of familiar tools, such as combs and scissors, to alter the image of the length and shape of her own hairstyle as projected on the computer screen, can study and further modify the result achieved, and so forth. Note that the user's new design can be as radically new as is desired, because the toolkit gives the user access to the most basic hairstyling variables and tools such as hair color and scissors. When the user is satisfied, the completed design can be translated into technical hairstyling instructions in the language of a hairstyling specialist---the intended production system in this instance.

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Custom designs seldom are novel in all their parts. Therefore, a library of standard modules will be a valuable part of a toolkit for user innovation. Provision of such standard modules enables users to focus their creative work on those aspects of their product or service designs that cannot be implemented via pre-designed options. For example, architects will find it very useful to have access to a library of standard components, such as a range of standard structural support columns with pre-analyzed structural characteristics, that they can incorporate into their novel building designs. Similarly, users who want to design custom hairstyles will often find it helpful to begin by selecting a hairstyle from a toolkit library. The goal is to select a style that has some elements of the desired look. Users can then proceed to develop their own desired style by adding to and subtracting from that starting point.

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The "language" of a toolkit for user innovation must be convertible without error into the language of the intended production system at the conclusion of the user's design work. If it is not, the entire purpose of the toolkit will be lost---because a manufacturer receiving a user design will essentially have to do the design work over again. Error-free translation need not emerge as a major problem---for example, it was never a major problem during the development of toolkits for integrated circuit design, because both chip designers and chip producers already used a language based on digital logic. In contrast, in some fields, translating from the design language preferred by users to the language required by intended production systems can be the central problem in toolkit design. As an illustration, consider a recent toolkit test project managed by Ernie Gum, the Director of Food Product Development for the USA FoodServices Division of Nestlé.

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With respect to industry and market conditions, the toolkit-for-user innovation approach to product design is likely to be most appealing to toolkit suppliers when the heterogeneous needs of many users can be addressed by a standard solution approach encoded in a toolkit. This is because it can be costly to encode all the solution and production information relevant to users' design decisions. For example, a toolkit for custom semiconductor design must contain information about the semi-conductor production process needed to ensure that product designs created by users are in fact producible. Encoding such information is a one-time cost, so it makes the best economic sense for solution approaches that many will want to use.

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Toolkits for user innovation are not an appropriate solution for all product needs, even when heterogeneous needs can be addressed by a common solution approach. Specifically, toolkits will not be the preferred approach when the product being designed requires the highest achievable performance. Toolkits incorporate automated design rules that cannot, at least at present, translate designs into products or software as skillfully as a human designer can. For example, a design for a gate array generated with a toolkit will typically take up more physical space on a silicon chip than would a fully custom-developed design of similar complexity. Even when toolkits are on offer, therefore, manufacturers may continue to design certain products (those with difficult technical demands) while customers take over the design of others (those involving complex or rapidly evolving user needs).

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The design freedom provided by toolkits for user innovation may not be of interest to all or even to most users in a market characterized by heterogeneous needs. A user must have a great enough need for something different to offset the costs of putting a toolkit to use for that approach to be of interest. Toolkits may therefore be offered only to a subset of users. In the case of software, toolkits may be provided to all users along with a standard, default version of the product or service, because the cost of delivering the extra software is essentially zero. In such a case, the toolkit's capability will simply lie unused in the background unless and until a user has sufficient incentive to evoke and employ it.

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Provision of toolkits to customers can be a complement to lead user idea-generation methods for manufacturers. Some users choosing to employ a toolkit to design a product precisely right for their own needs will be lead users, whose present strong need foreshadows a general need in the market. Manufacturers can find it valuable to identify and acquire the generally useful improvements made by lead users of toolkits, and then supply these to the general market. For this reason, manufacturers may find it valuable implement toolkits for innovation even if the portion of the target market that can directly use them is relatively small.

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Manufacturers that think long-term disadvantages may accrue from a switch to toolkits for user innovation and design will not necessarily have the luxury of declining to introduce toolkits. If any manufacturer introduces a high-quality toolkit into a field favoring its use, customers will tend to migrate to it, forcing competitors to follow. Therefore, a firm's only real choice in a field where conditions are favorable to the introduction of toolkits may be whether to lead or to follow.

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12 Linking User Innovation to Other Phenomena and Fields

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This final chapter is devoted to describing links between user-centered innovation and other phenomena and literatures. Of course, innovation writ large is related to anything and everything, so the phenomena and the literatures I will discuss here are only those hanging closest on the intellectual tree. My goal is to enable interested readers to migrate to further branches as they wish, assisted by the provision of a few important references. With respect to phenomena, I will first point out the relationship of user innovation to information communities---of which user innovation communities are a subset. With respect to related fields, I begin by linking user-centric innovation phenomena explored in this book to the literature on the economics of knowledge, and to the competitive advantage of nations. Next I link it to research on the sociology of technology. Finally, I point out how findings regarding user innovation could---but do not yet---link to and complement the way that product development is taught to managers.

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Many of the considerations I have discussed with respect to user innovation communities apply to information communities as well---a much more general category of which user innovation communities are a subset. I define information communities as communities or networks of individuals and/or organizations that rendezvous around an information commons, a collection of information that is open to all on equal terms.

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In close analogy to our discussions of innovation communities, I propose that commons-based information communities or networks will form when the following conditions hold: (1) Some have information that is not generally known. (2) Some are willing to freely reveal what they know. (3) Some beyond the information source have uses for what is revealed. On an intuitive basis, one can immediately see that these conditions are often met. Of course, people and firms know different things. Of course there are many things that one would not be averse to freely revealing; and of course others would often be interested in what is freely revealed. After all, as individuals we all regularly freely reveal information not generally known to people who ask, and presumably these people value at least some of the information we provide.

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The economics of information communities can be much simpler than that of the user innovation communities discussed earlier, because valuable proprietary information is often not at center stage. When the service provided by information communities is to offer non-proprietary "content" in a more convenient and accessible form, one need consider only the costs and benefits associated with information diffusion. One need not also consider potential losses associated with the free revealing of proprietary innovation-related information.

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It is likely that information communities are getting steadily more pervasive for the same reasons that user innovation communities are: the costs of diffusing information are getting steadily lower as computing and communication technologies improve. As a result, information communities may have a rapidly increasing impact on the economy and on the landscape of industry. They are and will be especially empowering to fragmented groups, whose members may for the first time gain low-cost access to a great deal of rich and fresh information of mutual interest. As is the case for user innovation networks, information networks can actually store content that participants freely reveal and make it available for free downloading. (Wikipedia is an example of this.) And/or, information networks can function to link information seekers and information holders rather than actually storing information. In the latter case, participants post to the network, hoping that someone with the requested information will spot their request and provide an answer (Lakhani and von Hippel 2003). Prominent examples can be found in the medical field in the form of specialized websites where patients with relatively rare conditions can for the first time find each other and also find specialists in those conditions. Patients and specialists who participate in these groups can both provide and get access to information that previously was scattered and for most practical purposes inaccessible.

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Just as is the case in user innovation groups, open information communities are developing rapidly, and the behaviors and infrastructure needed for success are being increasingly learned and codified. These communities are by no means restricted to user-participants. Thus, both patients and doctors frequently participate in medical information communities. Also, information communities can be run by profit-making firms and/or on a non-profit basis for and by information providers and users themselves--- just as we earlier saw was the case with innovation communities. Firms and users are developing many versions of open information communities and testing them in the market. As an example of a commercially supported information commons, consider e-Bay, where information is freely revealed by many under a structure provided by a commercial firm. The commercial firm then extracts a profit from commissions on transactions consummated between information providers and information seekers. As an example of an information community supported by users themselves, again consider Internet sites specializing in specific diseases---for example, childrenfacingillness.com.

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What Paul David and colleagues call "open science" is a type of information community that is closely related to the innovation communities discussed earlier (David 1992; Dasgupta and David 1994; David 1998). Free revealing of findings is, of course, a characteristic of modern science. Academic scientists publish regularly and so freely reveal information that may have high proprietary value. This raises the same question explored in the case of innovation communities: Why, in view of the potential of free ridership, do scientists freely reveal the information they have developed at private cost? The answer overlaps with but also differs from the answers provided in the case of free revealing of proprietary innovations by innovation users. With respect to similarities, sociologists of science have found that reputation among peers is important to scientists, and that priority in the discovery of new knowledge is a major component of reputation. Because of the importance of priority, scientists generally rush their research projects to completion and then rush to freely reveal their new findings. This dynamic creates a great advantage from the point of view of social welfare (Merton 1973).

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With respect to major differences, it is public policy in many countries to subsidize research with public funds. These policies are based on the assumption that only inadequate amounts of scientific research can be drawn forth by reputational inducements alone. Recall that, in contrast, innovations developed and freely revealed by innovation users are not subsidized from any source. Users, unlike "scientists," by definition have a personal or corporate use for the innovation-related knowledge they generate. This additional source of private reward may explain why user innovation communities can flourish without subsidy.

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In this field, Foray (2004) provides a rich road map regarding the economics of knowledge and the central role played by users. Foray argues that the radical changes in information and communication technologies (ICT) are creating major changes in the economics of knowledge production and distribution. Economists have traditionally reduced knowledge production to the function of research and development, defined as the activity specifically devoted to invention and innovation. Starting with Machlup (1962), economists also have identified the knowledge-based economy as consisting of specialized sectors focused on activities related to communication, education, the media, and computing and information-related services. Foray argues that these simplifications, although providing a rationale for a way to measure knowledge-generation activities, were never appropriate and now are totally misleading.

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One solution is the familiar economy that depends upon a blend of exclusive property rights, divisions of labor, reduction of transaction costs, and the management of principal-agent problems. The success of open source demonstrates the importance of a fundamentally different solution, built on top of an unconventional understanding of property rights configured around distribution. . . . And it relies on a set of organizational structures to coordinate behavior around the problem of managing distributed innovation, which is different from the division of labor. (ibid., p. 224)

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Weber details the property-rights regime used by open source projects, and also the nature of open source innovation communities and incentives acting on participants. He then argues that this new mode of production can extend beyond the development of open source software, to an extent and a degree that are not yet understood:

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One important direction in which the open source experiment points is toward moving beyond the discussion of transaction as a key determinant of institutional design. . . . The elegant analytics of transaction cost economics do very interesting work in explaining how divisions of labor evolve through outsourcing of particular functions (the decision to buy rather than make something). But the open source process adds another element. The notion of open-sourcing as a strategic organizational decision can be seen as an efficiency choice around distributed innovation, just as outsourcing was an efficiency choice around transactions costs. . . . As information about what users want and need to do becomes more fine-grained, more individually differentiated, and harder to communicate, the incentives grow to shift the locus of innovation closer to them by empowering them with freely modifiable tools. (ibid., pp. 265--267)

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Understanding national innovation systems and the competitive advantage of a nation's firms is an important matter for national policy makers (Nelson 1993). Can what we have learned in this book shed any light on their concerns? Porter (1991), assessing national competitive advantage through the intellectual lens of competitive strategy, concludes that one of four major factors determining the competitive advantage of nations is demand conditions. "A nation's firms," he argues, "gain competitive advantage if domestic buyers are, or are among, the world's most sophisticated and demanding buyers for the product or service. Such buyers provide a window into the most advanced buyer needs. . . . Buyers are demanding where home product needs are especially stringent or challenging because of local circumstances." For example: "The continental United States has been intensely drilled, and wells are being drilled in increasingly difficult and marginal fields. The pressure has been unusually great for American oil field equipment suppliers to perfect techniques that minimize the cost of difficult drilling and ensure full recovery from each field. This has pushed them to advance the state of the art and sustain strong international positions." (ibid., pp. 89--90)

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From my perspective, Porter is making the case for the value of a nation's domestic lead users to national competitive advantage. However, he is also assuming that it is manufacturers that innovate in response to advanced or stringent user demand. On the basis of the findings reported on in this book, I would modify this assumption by noting that, often, domestic manufacturers' links to innovating lead users have the impacts on national competitive advantage that he describes---but that the lead users' input to favored domestic firms would include innovations as well as needs.

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What new insights and research questions can the work of this book contribute to this analysis of national competitive advantage? On the one hand, I certainly see the pattern Porter describes in some studies of lead user innovation. For example, early in the history of the US semiconductor industry, AT&T, the inventor of the transistor and an early innovator, developed a number of novel types of production equipment as a user organization. AT&T engineers went to local machine shops to have these machines produced in volume to meet AT&T's in-house production needs. A side effect of this procurement strategy was to put many of these previously undistinguished firms into the business of producing advanced semi-conductor equipment to the world (von Hippel 1977, 1988).

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On the other hand, the findings of this book suggest that the "natural advantages" Porter proposes that domestic manufacturers will have with respect to filling the needs of local lead users may be eroding in the Internet age. As has been seen in the case of open source software, and by extension in the cases of other information-based products, users are capable of developing complex products in a coordinated way without geographic proximity. Participants in a particular open source project, for example, may come from a number of countries and may never meet face to face. In the case of physical products, the emergence of a pattern of user-based design followed by "foundry-style" production may also reduce the importance of propinquity between innovating lead users and manufacturers. As in the cases of integrated circuits and kitesurfing discussed earlier in this book, users can transmit CAD product-design information files from anywhere to any suitably equipped manufacturer for production. Probably only in the case of physical products where the interaction between product and production methods are not clear will geography continue to matter deeply in the age of the Internet. Nations may be able to create comparative advantages for domestic manufacturers with respect to profiting from innovation by lead users; however, they cannot assume that such advantages will continue to exist simply because of propinquity.

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Of course, user innovations and modifications are involved in these cases along with users' reinterpretation of product uses. Kline and Pinch report that manufacturers adopted some of the rural users' innovations, generally after a lag. For example, a car that could also serve as a small truck was eventually offered as a commercial product.

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Research on communities of practice offers another link between studies of user innovation and sociology (Brown and Duguid 1991; Wenger 1998). The focus of this research is on the functioning of specialist communities. Researchers find that experts in a field spontaneously form interest groups that communicate to exchange their views and learnings on how to carry out and improve the practices of their profession. Members of communities of practice exchange help in informal ways that seem similar to the practices described above as characteristic of open source software projects and communities of sports innovators.

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Research on brand communities is still another related research thread (Muniz and O'Guinn 2001). Brand communities form around commercial brands and products (e.g., Lego construction toys) and even around products discontinued by their manufacturers e.g., Apple's Newton personal digital assistant). Brand communities can be intensely meaningful to participants and can involve user innovation. In Newton groups, for example, users develop new applications and exchange information about how to repair aging equipment (Muniz and Schau 2004). In Lego communities, lead users develop new products, new building techniques, and new offline and online multiplayer building projects that later prove to be of interest to the manufacturer (Antorini 2005).

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Finally, I turn to links between user-centered innovation and teaching on the management of product development. Information on lead users as a source of new product ideas now appears in most marketing textbooks. There also should be a link to other elements of user-centered innovation processes in the literature on product-development management---but there really isn't much of one yet. Although much of the research on user innovation cited in this book is going on in schools of management and business economics, little of this information has moved into teaching related to the product-development process as of yet.

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Clearly, it would be useful to provide managers of both user firms and manufacturing firms with a better understanding of the management of user-centered innovation. It is a curious fact that even managers of firms that have built major product lines upon user-developed innovations may hold the manufacturer-centric view that "we developed that." For example, an early study of innovation in scientific instruments documented that nearly 80 percent of the major improvements commercialized by instrument manufacturers had been developed by users (von Hippel 1976). When I later discussed this finding with managers in instrument firms, most of them were astonished. They insisted that all the innovations in the study sample had been developed within manufacturing firms. They could be convinced otherwise only when supplied with actual publications by user-scientists describing user-built prototypes of those instrument improvements---prototypes developed from 5 to 7 years before any instrument firm had sold a functionally equivalent commercial product.

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My inquiries into why managers in this field and others held---and largely still hold---such contrary-to-fact beliefs identified several contributing factors. First, manufacturers seldom track where the major new products and product improvements they sell actually came from. Managers see no need to set up a tracking system, because the conventional wisdom is clear: "Everyone knows new products are developed by manufacturers such as ourselves based on user needs identified by market research." Further, the manufacturing firms have market-research and product-development departments in place, and innovations are somehow being produced. Thus, it is easy to conclude that the manufacturers' innovation processes must be working as expected.

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In fact, however, important, functionally novel innovations are often brought into manufacturers by informal channels. Product-development engineers may attend conferences and learn about important user innovations, salesmen and technical service personnel discover user-modified equipment on field visits, and so on. Once the basic innovation-related information is in house, the operating principles of a user's prototype will often be adopted, but the detailed design of the device will be changed and improved for production. After a while, the user's prototype, if remembered at all, will begin to look quite primitive to the firm's engineers relative to the much better product they have designed. Finally, when sales begin, the firm's advertising will urge customers to buy "our wonderful new product." Other Phenomena and Fields 175

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The net result is understandable: the user roots of many new commercial products, never widely known in manufacturing firms, are forgotten. And when it is time to develop the next innovation, management again turns to the conventional methods that "worked so well for us last time." Eventually, information about new user innovations will again arrive by pathways unnoticed and unmanaged---and with an unnecessary lag.

ocn 653:

To improve matters, managers must learn when it is appropriate to follow user-centered and manufacturer-centered innovation process paradigms and how user-centered innovation can best be managed when it is the method of choice. Managers in user firms and in manufacturing firms need tools with which to understand the innovate-or-buy decisions they face---to understand which product needs or which service needs users (rather than manufacturers) should invest in developing. Managers in user firms also need to learn how their firms can best carry out development work in their low-cost innovation niches: how they can best deploy their information-related advantages of being actual users and residing in the context of use to cheaply learn by doing. Managers in manufacturing firms will want to learn how they can best play a profitable role in user-centered innovation patterns when these play a role in the markets they serve.

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Innovating users may also want to learn whether and how to diffuse their innovations by becoming manufacturers. This may be a fairly common practice in some fields. Shah (2000) found that users of sports equipment sometimes became manufacturers by a very natural process. The users would demonstrate the performance and value of their innovations as they used them in public sporting events. Some of the participants in the meets would then ask "Can you make one of those for me too?" Informal hobby-level production would then sometimes become the basis of a major company. Lettl, Herstatt, and Gemünden (2004) report on case histories in which user-innovators became heavily involved in promoting the commercialization of important innovations in surgical equipment. These innovations tended to be developed by surgeons, who then often made major efforts to induce manufacturers to commercialize them. Hienerth (2004) documents how user-innovators in "rodeo kayaking" build their own boats, discover that kayak manufacturers (even those established by a previous generation of user-innovators) are unwilling to manufacture what they want, and so are driven to become manufacturers themselves.

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Managers must learn that no single locus of innovation is the "right" one for either user firms or manufacturer firms. The locus of innovation varies between user firms and manufacturing firms according to market-related and information-related conditions. These conditions may well vary predictably over product life cycles. Utterback and Abernathy (1975) proposed that innovation by users is likely to be more important in the early stages of such cycles. Early in the life of a new product, there is a "fluid" stage in which the nature and the use of a product are unclear. Here, Utterback and Abernathy say, users play a big part in sorting the matter out, in part through innovation. Later, a dominant product design will emerge---a shared sense of exactly what a particular product is, what features and components it should include, and how it should function. (We all know, for example, that a car has four wheels and moves along the ground in directions determined by a steering wheel.) After that time, if the market for the product grows, innovation will shift from product to process as firms shift from the problem of what to produce to the problem of how to produce a well-understood product in ever greater volumes. From a lead user innovation perspective, of course, both functionally novel products and functionally novel processes are likely to be developed by users---in the first case users of the product, and in the second by manufacturing firms that use the process.

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In this book I have explored how and why users, individually and in firms and in communities, develop and freely reveal innovations. I have also argued that there is a general trend toward a open and distributed innovation process driven by steadily better and cheaper computing and communications. The net result is an ongoing shift toward the democratization of innovation. This welfare-enhancing shift is forcing major changes in user and manufacturer innovation practices, and is creating the need for change in government policies. It also, as I noted at the start of the book, presents major new opportunities for us all. Other Phenomena and Fields 177

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1. LES contains four types of measures. Three ("benefits recognized early," "high benefits expected," and "direct elicitation of the construct") contain the core components of the lead user construct. The fourth ("applications generation") is a measure of a number of innovation-related activities in which users might engage: they "suggest new applications," they "pioneer those applications," and (because they have needs or problems earlier than their peers) they may be "used as a test site" (Morrison, Midgely, and Roberts 2004).

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Lüthje, C., C. Herstatt, and E. von Hippel. 2002. The Dominant Role of Local Information in User Innovation: The Case of Mountain Biking. Working Paper, MIT Sloan School of Management.

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Meyer, M. H., and L. Lopez. 1995. "Technology Strategy in a Software Products Company." Journal of Product Innovation Management 12, no. 4: 194--306.

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Mollick, E. 2004. Innovations from the Underground: Towards a Theory of Parasitic Innovation. Master's thesis, Massachusetts Institute of Technology.

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Morrison, P. D., J. H. Roberts, and E. von Hippel. 2000. "Determinants of User Innovation and Innovation Sharing in a Local Market." Management Science 46, no. 12: 1513--1527.

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 Down and Out in the Magic Kingdom

ocn 1400:

Yeah, there are legal problems. Yeah, it's hard to figure out how people are gonna make money doing it. Yeah, there is a lot of social upheaval and a serious threat to innovation, freedom, business, and whatnot. It's your basic end-of-the-world-as-we-know-it scenario, and as a science fiction writer, end-of-the-world-as-we-know-it scenaria are my stock-in-trade.

 For the Win

ocn 1593:

You can't eliminate Coase costs, but you can lower it. There's two ways of doing this: get better organizational techniques (say, "double-entry book-keeping," an Earth-shattering 13th-century invention that is at the heart of every money-making organization in the world, from churches to corporations to governments), or get better technology.

 Free Culture - How Big Media Uses Technology and the Law to Lock Down Culture and Control Creativity

ocn 28:

On the day after Christmas, 1933, four patents were issued to Armstrong for his most significant invention - FM radio. Until then, consumer radio had been amplitude-modulated (AM) radio. The theorists of the day had said that frequency-modulated (FM) radio could never work. They were right about FM radio in a narrow band of spectrum. But Armstrong discovered that frequency-modulated radio in a wide band of spectrum would deliver an astonishing fidelity of sound, with much less transmitter power and static.

ocn 32:

As our own common sense tells us, Armstrong had discovered a vastly superior radio technology. But at the time of his invention, Armstrong was working for RCA. RCA was the dominant player in the then dominant AM radio market. By 1935, there were a thousand radio stations across the United States, but the stations in large cities were all owned by a handful of networks.

ocn 33:

RCA's president, David Sarnoff, a friend of Armstrong's, was eager that Armstrong discover a way to remove static from AM radio. So Sarnoff was quite excited when Armstrong told him he had a device that removed static from "radio." But when Armstrong demonstrated his invention, Sarnoff was not pleased.

ocn 35:

Armstrong's invention threatened RCA's AM empire, so the company launched a campaign to smother FM radio. While FM may have been a superior technology, Sarnoff was a superior tactician. As one author described,

ocn 95:

Disney had created something very new, based upon something relatively new. Synchronized sound brought life to a form of creativity that had rarely - except in Disney's hands - been anything more than filler for other films. Throughout animation's early history, it was Disney's invention that set the standard that others struggled to match. And quite often, Disney's great genius, his spark of creativity, was built upon the work of others.

ocn 98:

Steamboat Bill, Jr. appeared before Disney's cartoon Steamboat Willie. The coincidence of titles is not coincidental. Steamboat Willie is a direct cartoon parody of Steamboat Bill,【20 I am grateful to David Gerstein and his careful history, described at link #4. According to Dave Smith of the Disney Archives, Disney paid royalties to use the music for five songs in Steamboat Willie: "Steamboat Bill," "The Simpleton" (Delille), "Mischief Makers" (Carbonara), "Joyful Hurry No. 1" (Baron), and "Gawky Rube" (Lakay). A sixth song, "The Turkey in the Straw," was already in the public domain. Letter from David Smith to Harry Surden, 10 July 2003, on file with author. 】 and both are built upon a common song as a source. It is not just from the invention of synchronized sound in The Jazz Singer that we get Steamboat Willie. It is also from Buster Keaton's invention of Steamboat Bill, Jr., itself inspired by the song "Steamboat Bill," that we get Steamboat Willie, and then from Steamboat Willie, Mickey Mouse.

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The real significance of Eastman's invention, however, was not economic. It was social. Professional photography gave individuals a glimpse of places they would never otherwise see. Amateur photography gave them the ability to record their own lives in a way they had never been able to do before. As author Brian Coe notes, "For the first time the snapshot album provided the man on the street with a permanent record of his family and its activities. ... For the first time in history there exists an authentic visual record of the appearance and activities of the common man made without [literary] interpretation or bias."【30 Coe, 58. 】

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What was required for this technology to flourish? Obviously, Eastman's genius was an important part. But also important was the legal environment within which Eastman's invention grew. For early in the history of photography, there was a series of judicial decisions that could well have changed the course of photography substantially. Courts were asked whether the photographer, amateur or professional, required permission before he could capture and print whatever image he wanted. Their answer was no.【31 For illustrative cases, see, for example, Pavesich v. N.E. Life Ins. Co., 50 S.E. 68 (Ga. 1905); Foster-Milburn Co. v. Chinn, 123090 S.W. 364, 366 (Ky. 1909); Corliss v. Walker, 64 F. 280 (Mass. Dist. Ct. 1894). 】

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John Seely Brown is the chief scientist of the Xerox Corporation. His work, as his Web site describes it, is "human learning and ... the creation of knowledge ecologies for creating ... innovation."

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The Napsters of those days, the "independents," were companies like Fox. And no less than today, these independents were vigorously resisted. "Shooting was disrupted by machinery stolen, and 'accidents' resulting in loss of negatives, equipment, buildings and sometimes life and limb frequently occurred."【53 Marc Wanamaker, "The First Studios," The Silents Majority, archived at link #12. 】 That led the independents to flee the East Coast. California was remote enough from Edison's reach that film- makers there could pirate his inventions without fear of the law. And the leaders of Hollywood filmmaking, Fox most prominently, did just that.

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Peer-to-peer sharing was made famous by Napster. But the inventors of the Napster technology had not made any major technological innovations. Like every great advance in innovation on the Internet (and, arguably, off the Internet as well【74 See Clayton M. Christensen, The Innovator's Dilemma: The Revolutionary National Bestseller That Changed the Way We Do Business (New York: HarperBusiness, 2000). Professor Christensen examines why companies that give rise to and dominate a product area are frequently unable to come up with the most creative, paradigm-shifting uses for their own products. This job usually falls to outside innovators, who reassemble existing technology in inventive ways. For a discussion of Christensen's ideas, see Lawrence Lessig, Future, 89-92, 139. 】), Shawn Fanning and crew had simply put together components that had been developed independently.

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Yet soon thereafter, and before Congress was given an opportunity to enact regulation, MTV was launched, and the industry had a record turnaround. "In the end," Cap Gemini concludes, "the 'crisis' ... was not the fault of the tapers" who did not [stop after MTV came into being] - but had to a large extent resulted from stagnation in musical innovation at the major labels."【80 U.S. Congress, Copyright and Home Copying, 4. 】

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Zero tolerance has not been our history. It has not produced the content industry that we know today. The history of American law has been a process of balance. As new technologies changed the way content was distributed, the law adjusted, after some time, to the new technology. In this adjustment, the law sought to ensure the legitimate rights of creators while protecting innovation. Sometimes this has meant more rights for creators. Sometimes less.

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Sound policy, as well as history, supports our consistent deference to Congress when major technological innovations alter the market for copyrighted materials. Congress has the constitutional authority and the institutional ability to accommodate fully the varied permutations of competing interests that are inevitably implicated by such new technology."【92 Sony Corp. of America v. Universal City Studios, Inc., 464 U.S. 417, 431 (1984). 】

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We should be doing the same thing today. The technology of the Internet is changing quickly. The way people connect to the Internet (wires vs. wireless) is changing very quickly. No doubt the network should not become a tool for "stealing" from artists. But neither should the law become a tool to entrench one particular way in which artists (or more accurately, distributors) get paid. As I describe in some detail in the last chapter of this book, we should be securing income to artists while we allow the market to secure the most efficient way to promote and distribute content. This will require changes in the law, at least in the interim. These changes should be designed to balance the protection of the law against the strong public interest that innovation continue.

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Even that limited right was viewed with skepticism by the British. They had had a long and ugly experience with "exclusive rights," especially "exclusive rights" granted by the Crown. The English had fought a civil war in part about the Crown's practice of handing out monopolies - especially monopolies for works that already existed. King Henry VIII granted a patent to print the Bible and a monopoly to Darcy to print playing cards. The English Parliament began to fight back against this power of the Crown. In 1656, it passed the Statute of Monopolies, limiting monopolies to patents for new inventions. And by 1710, Parliament was eager to deal with the growing monopoly in publishing.

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It looks like there's about two to three million recordings of music. Ever. There are about a hundred thousand theatrical releases of movies, ... and about one to two million movies [distributed] during the twentieth century. There are about twenty-six million different titles of books. All of these would fit on computers that would fit in this room and be able to be afforded by a small company. So we're at a turning point in our history. Universal access is the goal. And the opportunity of leading a different life, based on this, is ... thrilling. It could be one of the things humankind would be most proud of. Up there with the Library of Alexandria, putting a man on the moon, and the invention of the printing press."

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Thus, there's nothing wrong or surprising in the content industry's campaign to protect itself from the harmful consequences of a technological innovation. And I would be the last person to argue that the changing technology of the Internet has not had a profound effect on the content industry's way of doing business, or as John Seely Brown describes it, its "architecture of revenue."

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Thus, while it is understandable for industries threatened with new technologies that change the way they do business to look to the government for protection, it is the special duty of policy makers to guarantee that that protection not become a deterrent to progress. It is the duty of policy makers, in other words, to assure that the changes they create, in response to the request of those hurt by changing technology, are changes that preserve the incentives and opportunities for innovation and change.

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So copyright's duration has increased dramatically - tripled in the past thirty years. And copyright's scope has increased as well - from regulating only publishers to now regulating just about everyone. And copyright's reach has changed, as every action becomes a copy and hence presumptively regulated. And as technologists find better ways to control the use of content, and as copyright is increasingly enforced through technology, copyright's force changes, too. Misuse is easier to find and easier to control. This regulation of the creative process, which began as a tiny regulation governing a tiny part of the market for creative work, has become the single most important regulator of creativity there is. It is a massive expansion in the scope of the government's control over innovation and creativity; it would be totally unrecognizable to those who gave birth to copyright's control.

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We achieved that free culture because our law respected important limits on the scope of the interests protected by "property." The very birth of "copyright" as a statutory right recognized those limits, by granting copyright owners protection for a limited time only (the story of chapter 6). The tradition of "fair use" is animated by a similar concern that is increasingly under strain as the costs of exercising any fair use right become unavoidably high (the story of chapter 7). Adding statutory rights where markets might stifle innovation is another familiar limit on the property right that copyright is (chapter 8). And granting archives and libraries a broad freedom to collect, claims of property notwithstanding, is a crucial part of guaranteeing the soul of a culture (chapter 9). Free cultures, like free markets, are built with property. But the nature of the property that builds a free culture is very different from the extremist vision that dominates the debate today.

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Yet zero tolerance is increasingly our government's policy. In the middle of the chaos that the Internet has created, an extraordinary land grab is occurring. The law and technology are being shifted to give content holders a kind of control over our culture that they have never had before. And in this extremism, many an opportunity for new innovation and new creativity will be lost.

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I'm not talking about the opportunities for kids to "steal" music. My focus instead is the commercial and cultural innovation that this war will also kill. We have never seen the power to innovate spread so broadly among our citizens, and we have just begun to see the innovation that this power will unleash. Yet the Internet has already seen the passing of one cycle of innovation around technologies to distribute content. The law is responsible for this passing. As the vice president for global public policy at one of these new innovators, eMusic.com, put it when criticizing the DMCA's added protection for copyrighted material,

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This strategy is not just limited to the lawyers. In April 2003, Universal and EMI brought a lawsuit against Hummer Winblad, the venture capital firm (VC) that had funded Napster at a certain stage of its development, its cofounder (John Hummer), and general partner (Hank Barry).【160 See Joseph Menn, "Universal, EMI Sue Napster Investor," Los Angeles Times, 23 April 2003. For a parallel argument about the effects on innovation in the distribution of music, see Janelle Brown, "The Music Revolution Will Not Be Digitized," Salon.com, 1 June 2001, available at link #42. See also Jon Healey, "Online Music Services Besieged," Los Angeles Times, 28 May 2001. 】 The claim here, as well, was that the VC should have recognized the right of the content industry to control how the industry should develop. They should be held personally liable for funding a company whose business turned out to be beyond the law. Here again, the aim of the lawsuit is transparent: Any VC now recognizes that if you fund a company whose business is not approved of by the dinosaurs, you are at risk not just in the marketplace, but in the courtroom as well. Your investment buys you not only a company, it also buys you a lawsuit. So extreme has the environment become that even car manufacturers are afraid of technologies that touch content. In an article in Business 2.0, Rafe Needleman describes a discussion with BMW:

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This is the world of the mafia - filled with "your money or your life" offers, governed in the end not by courts but by the threats that the law empowers copyright holders to exercise. It is a system that will obviously and necessarily stifle new innovation. It is hard enough to start a company. It is impossibly hard if that company is constantly threatened by litigation.

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The point is not that businesses should have a right to start illegal enterprises. The point is the definition of "illegal." The law is a mess of uncertainty. We have no good way to know how it should apply to new technologies. Yet by reversing our tradition of judicial deference, and by embracing the astonishingly high penalties that copyright law imposes, that uncertainty now yields a reality which is far more conservative than is right. If the law imposed the death penalty for parking tickets, we'd not only have fewer parking tickets, we'd also have much less driving. The same principle applies to innovation. If innovation is constantly checked by this uncertain and unlimited liability, we will have much less vibrant innovation and much less creativity.

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The point is directly parallel to the crunchy-lefty point about fair use. Whatever the "real" law is, realism about the effect of law in both contexts is the same. This wildly punitive system of regulation will systematically stifle creativity and innovation. It will protect some industries and some creators, but it will harm industry and creativity generally. Free market and free culture depend upon vibrant competition. Yet the effect of the law today is to stifle just this kind of competition. The effect is to produce an overregulated culture, just as the effect of too much control in the market is to produce an overregulated-regulated market.

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The building of a permission culture, rather than a free culture, is the first important way in which the changes I have described will burden innovation. A permission culture means a lawyer's culture - a culture in which the ability to create requires a call to your lawyer. Again, I am not antilawyer, at least when they're kept in their proper place. I am certainly not antilaw. But our profession has lost the sense of its limits. And leaders in our profession have lost an appreciation of the high costs that our profession imposes upon others. The inefficiency of the law is an embarrassment to our tradition. And while I believe our profession should therefore do everything it can to make the law more efficient, it should at least do everything it can to limit the reach of the law where the law is not doing any good. The transaction costs buried within a permission culture are enough to bury a wide range of creativity. Someone needs to do a lot of justifying to justify that result.

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The uncertainty of the law is one burden on innovation. There is a second burden that operates more directly. This is the effort by many in the content industry to use the law to directly regulate the technology of the Internet so that it better protects their content.

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There is one more obvious way in which this war has harmed innovation - again, a story that will be quite familiar to the free market crowd.

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An almost unlimited number of FM stations was possible in the shortwaves, thus ending the unnatural restrictions imposed on radio in the crowded longwaves. If FM were freely developed, the number of stations would be limited only by economics and competition rather than by technical restrictions. ... Armstrong likened the situation that had grown up in radio to that following the invention of the printing press, when governments and ruling interests attempted to control this new instrument of mass communications by imposing restrictive licenses on it. This tyranny was broken only when it became possible for men freely to acquire printing presses and freely to run them. FM in this sense was as great an invention as the printing presses, for it gave radio the opportunity to strike off its shackles.【168 Lessing, 239. 】

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Overregulation stifles creativity. It smothers innovation. It gives dinosaurs a veto over the future. It wastes the extraordinary opportunity for a democratic creativity that digital technology enables.

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This analysis of "the Rest" showed most clearly where our focus had to be: on the Conservatives. To win this case, we had to crack open these five and get at least a majority to go our way.Thus, the single overriding argument that animated our claim rested on the Conservatives' most important jurisprudential innovation - the argument that Judge Sentelle had relied upon in the Court of Appeals, that Congress's power must be interpreted so that its enumerated powers have limits.

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The reaction to this idea was amazingly strong. Steve Forbes endorsed it in an editorial. I received an avalanche of e-mail and letters expressing support. When you focus the issue on lost creativity, people can see the copyright system makes no sense. As a good Republican might say, here government regulation is simply getting in the way of innovation and creativity. And as a good Democrat might say, here the government is blocking access and the spread of knowledge for no good reason. Indeed, there is no real difference between Democrats and Republicans on this issue. Anyone can recognize the stupid harm of the present system.

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These prices are not high because the ingredients of the drugs are expensive. These prices are high because the drugs are protected by patents. The drug companies that produced these life-saving mixes enjoy at least a twenty-year monopoly for their inventions. They use that monopoly power to extract the most they can from the market. That power is in turn used to keep the prices high.

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These are first steps to rebuilding a public domain. They are not mere arguments; they are action. Building a public domain is the first step to showing people how important that domain is to creativity and innovation. Creative Commons relies upon voluntary steps to achieve this rebuilding. They will lead to a world in which more than voluntary steps are possible.

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Yet it is always astonishing to me that we, who come from a tradition of extraordinary innovation in governmental design, can no longer think innovatively about how governmental functions can be designed. Just because there is a public purpose to a government role, it doesn't follow that the government must actually administer the role. Instead, we should be creating incentives for private parties to serve the public, subject to standards that the government sets.

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For example, if a recording industry association devises a method for marking CDs, it would propose that to the Copyright Office. The Copyright Office would hold a hearing, at which other proposals could be made. The Copyright Office would then select the proposal that it judged preferable, and it would base that choice solely upon the consideration of which method could best be integrated into the registration and renewal system. We would not count on the government to innovate; but we would count on the government to keep the product of innovation in line with its other important functions.

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Goldstein's analysis would make perfect sense if the cost of the legal system were small. But as we are currently seeing in the context of the Internet, the uncertainty about the scope of protection, and the incentives to protect existing architectures of revenue, combined with a strong copyright, weaken the process of innovation.

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The appeal of file-sharing music was the crack cocaine of the Inter-net's growth. It drove demand for access to the Internet more powerfully than any other single application. It was the Internet's killer app-possibly in two senses of that word. It no doubt was the application that drove demand for bandwidth. It may well be the application that drives demand for regulations that in the end kill innovation on the network.

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No doubt it would be difficult to calculate the proper measure of "harm" to an industry. But the difficulty of making that calculation would be outweighed by the benefit of facilitating innovation. This background system to compensate would also not need to interfere with innovative proposals such as Apple's MusicStore. As experts predicted when Apple launched the MusicStore, it could beat "free" by being easier than free is. This has proven correct: Apple has sold millions of songs at even the very high price of 99 cents a song. (At 99 cents, the cost is the equivalent of a per-song CD price, though the labels have none of the costs of a CD to pay.) Apple's move was countered by Real Networks, offering music at just 79 cents a song. And no doubt there will be a great deal of competition to offer and sell music on-line.

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This regime of competition, with a backstop to assure that artists don't lose, would facilitate a great deal of innovation in the delivery of content. That competition would continue to shrink type A sharing. It would inspire an extraordinary range of new innovators - ones who would have a right to the content, and would no longer fear the uncertain and barbarically severe punishments of the law.

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We can minimize that harm while maximizing the benefit to innovation by

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But we're a long way away from whittling the problem down to this subset of type A sharers. And our focus until we're there should not be on finding ways to break the Internet. Our focus until we're there should be on how to make sure the artists are paid, while protecting the space for innovation and creativity that the Internet is.

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"America needs a national conversation about the way in which so-called 'intellectual property rights' have come to dominate the rights of scholars, researchers, and everyday citizens. A copyright cartel, bidding for absolute control over digital worlds, music, and movies, now has a veto over technological innovation and has halted most contributions to the public domain from which so many have benefited. The patent system has spun out of control, giving enormous power to entrenched interests, and even trademarks are being misused. Lawrence Lessig's latest book is essential reading for anyone who want to join this conversation. He explains how technology and the law are robbing us of the public domain; but for all his educated pessimism, Professor Lessig offers some solutions, too, because he recognizes that technology can be the catalyst for freedom. If you care about the future of innovation, read this book."

 Free For All - How Linux and the Free Software Movement Undercut the High Tech Titans

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Software is different from cars or hamburgers. Once someone writes the source code, copying the source costs next to nothing. That makes it much easier for tinkerers like Cox to have a global effect. If Cox, Stallman, Torvalds, and his chums just happen to luck upon something that's better than Microsoft, then the rest of the world can share their invention for next to nothing. That's what makes Cox, Torvalds, and their buddies a credible threat no matter how often they sleep late.

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Over the years, the same sad ending has befallen many communes, utopian visions, and hypnotic vibes. Freedom is great. It allows brilliant inventors to work independently of the wheels of power. But capital is another powerful beast that drives innovation. The great communes often failed because they never converted their hard work into money, making it difficult for them to save and invest. Giving things away may be, like, really groovy, but it doesn't build a nest egg.

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The problem was that not everyone could get UNIX. AT&T, which had sponsored much of the research at Berkeley, kept an iron hand on its invention. If you wanted to run UNIX, then you needed to license some essential software from AT&T that sat at the core of the system. They were the supreme ruler of the UNIX domain, and they expected a healthy tithe for the pleasure of living within it.

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Some grouse that comparing features like this isn't fair to the Mac or Windows world. The GNOME toolkit, they point out, didn't come out of years of research and development. The start button and the toolbar look the same because the GNOME developers were merely copying. The GNU/Linux world didn't create their own OS, they merely cloned all of the hard commercial research that produced UNIX. It's always easier to catch up, but pulling ahead is hard. The folks who want to stay on the cutting edge need to be in the commercial world. It's easy to come up with a list of commercial products and tools that haven't been cloned by an open source dude at the time of this writing: streaming video, vector animation, the full Java API, speech recognition, three dimensional CAD programs, speech synthesis, and so forth. The list goes on and on. The hottest innovations will always come from well capitalized start-ups driven by the carrot of wealth.

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Others point out that the free software world has generated more than its share of innovation. Most of the Internet was built upon non-proprietary standards developed by companies with Department of Defense contracts. Stallman's Emacs continues to be one of the great programs in the world. Many of the projects like Apache are the first place where new ideas are demonstrated. People who want to mock up a project find it easier to extend free source software. These ideas are often reborn as commercial products. While free source users may not have access to the latest commercial innovations, they have plenty of their own emerging from the open software world. GNOME isn't just a Windows clone--it comes with thousands of neat extensions and improvements that can't be found in Redmond.

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Of course, Microsoft is not without its own arms. Microsoft still has patent law on its side, and this may prove to be a very serious weapon. The law allows the patent holder the exclusive right to determine who uses an idea or invention over the course of the patent, which is now 20 years from the first filing date. That means the patent holder can sue anyone who makes a product that uses the invention. It also means that the patent holder can sue someone who simply cobbles up the invention in his basement and uses the idea without paying anything to anyone. This means that even someone who distributes the software for free or uses the software can be liable for damages.

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The third and greatest defense for the free source ideology is a loophole in the patent law that may also help many people in the free software world. It is not illegal to use a patented idea if you're in the process of doing some research on how to improve the state of the art in that area. The loophole is very narrow, but many users of free software might fall within it. All of the distributions come with source code, and many of the current users are programmers experimenting with the code. Most of these programmers give their work back to the project and this makes most of their work pretty noncommercial. The loophole probably wouldn't protect the corporations that are using free software simply because it is cheap, but it would still be large enough to allow innovation to continue. A non-commercial community built up around research could still thrive even if Microsoft manages to come up with some patents that are very powerful.

 Free as in Freedom (2.0) - Richard Stallman and the Free Software Revolution

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Among those who value progress above freedom, the fact that the high-technology marketplace has come so far in such little time is cited both for and against the GNU GPL. Some argue in favor of the GPL, pointing to the short lifespan of most computer hardware platforms. Facing the risk of buying an obsolete product, consumers tend to flock to companies with the best long-term survival. As a result, the software marketplace has become a winner-take-all arena.【4 See Shubha Ghosh, "Revealing the Microsoft Windows Source Code," Gi-galaw.com (January, 2000),
http://www.gigalaw.com/. 】 The proprietary software environment, they say, leads to monopoly abuse and stagnation. Strong companies suck all the oxygen out of the marketplace for rival competitors and innovative startups. Others argue just the opposite. Selling software is just as risky, if not more risky, than buying software, they say. Without the legal guarantees provided by proprietary software licenses, not to mention the economic prospects of a privately owned "killer app" (i.e., a break-through technology that launches an entirely new market),【5 Killer apps don't have to be proprietary. Still, I think the reader gets the point: the software marketplace is like the lottery. The bigger the potential pay-off, the more people want to participate. For a good summary of the killer-app phenomenon, see Philip Ben-David, "Whatever Happened to the 'Killer App'?", e-Commerce News (December 7, 2000),
http://www.ecommercetimes.com/story/5893.html. 】 companies lose the incentive to participate. Once again, the market stagnates and innovation declines. As Mundie himself noted in his May 3rd address on the same campus, the GPL's "viral" nature "poses a threat" to any company that relies on the uniqueness of its software as a competitive asset. Added Mundie:

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Richard Matthew Stallman's rise from frustrated academic to political leader over the last 20 years speaks to many things. It speaks to Stallman's stubborn nature and prodigious will. It speaks to the clearly articulated vision and values of the free software movement Stallman helped build. It speaks to the high-quality software programs Stallman has built, programs that have cemented Stallman's reputation as a programming legend. It speaks to the growing momentum of the GPL, a legal innovation that many Stallman observers see as his most momentous accomplishment.

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Such innovations would take another two decades to make their way into the commercial marketplace. Still, by the 1970s, video screens had started to replace teletypes as display terminals, creating the potential for full-screen - as opposed to line-by-line - editing capabilities.

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By Stallman's own recollection, the macro hack touched off an explosion of further innovation. "Everybody and his brother was writing his own collection of redefined screen-editor commands, a command for everything he typically liked to do," Stallman would later recall. "People would pass them around and improve them, making them more powerful and more general. The collections of redefinitions gradually became system programs in their own right."【49 Ibid. 】

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So many people found the macro innovations useful and had incorporated it into their own TECO programs that the TECO editor had become secondary to the macro mania it inspired. "We started to categorize it mentally as a programming language rather than as an editor," Stallman says. Users were experiencing their own pleasure tweaking the software and trading new ideas.【50 Ibid. 】

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Two years after the explosion, the rate of innovation began to exhibit inconvenient side effects. The explosive growth had provided an exciting validation of the collaborative hacker approach, but it had also led to incompatibility. "We had a Tower of Babel effect," says Guy Steele.

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Stallman now faced another conundrum: if users made changes but didn't communicate those changes back to the rest of the community, the Tower of Babel effect would simply emerge in other places. Falling back on the hacker doctrine of sharing innovation, Stallman embedded a statement within the source code that set the terms of use. Users were free to modify and redistribute the code on the condition that they gave back all the extensions they made. Stallman called this "joining the Emacs Commune." Just as TECO had become more than a simple editor, Emacs had become more than a simple software program. To Stallman, it was a social contract. In a 1981 memo documenting the project, Stallman spelled out the contract terms. "EMACS," he wrote, "was distributed on a basis of communal sharing, which means that all improvements must be given back to me to be incorporated and distributed."【52 See Stallman (1979): #SEC34. 】

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The original Emacs ran only on the PDP-10 computer, but soon users of other computers wanted an Emacs to edit with. The explosive innovation continued throughout the decade, resulting in a host of Emacs-like programs with varying degrees of cross-compatibility. The Emacs Commune's rules did not apply to them, since their code was separate. A few cited their relation to Stallman's original Emacs with humorously recursive names: Sine (Sine is not Emacs), Eine (Eine isnot Emacs), and Zwei (Zwei was Eine initially). A true Emacs had to provide user-programmability like the original; editors with similar keyword commands but without the user-programmability were called "ersatz Emacs." One example was Mince (Mince is Not Complete Emacs).

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That the decision had been made with zero appeal or deference to Stallman and the Free Software Foundation speaks to the GPL's growing portability. Although it would take a couple of years to be recognized by Stallman, the explosiveness of Linux development conjured flashbacks of Emacs. This time around, however, the innovation triggering the explosion wasn't a software hack like Control-R but the novelty of running a Unix-like system on the PC architecture. The motives may have been different, but the end result certainly fit the ethical specifications: a fully functional operating system composed entirely of free software.

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Summarized Raymond, "I think Linus's cleverest and most consequential hack was not the construction of the Linux kernel itself, but rather his invention of the Linux development model."【124 See Eric Raymond, "The Cathedral and the Bazaar" (1997). 】

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[Stallman] changed the debate from "is" to "ought." He made people see how much was at stake, and he built a device to carry these ideals forward... That said, I don't quite know how to place him in the context of Cerf or Licklider. The innovation is different. It is not just about a certain kind of code, or enabling the Internet. [It's] much more about getting people to see the value in a certain kind of Internet. I don't think there is anyone else in that class, before or after.

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A classic example of this expanded hacking definition is the game Spacewar, the first computer-based video game. Developed by MIT hackers in the early 1960s, Spacewar had all the traditional hacking definitions: it was goofy and random, serving little useful purpose other than providing a nightly distraction for the dozen or so hackers who delighted in playing it. From a software perspective, however,it was a monumental testament to innovation of programming skill.It was also completely free. Because hackers had built it for fun,they saw no reason to guard their creation, sharing it extensively with other programmers. By the end of the 1960s, Spacewar had become a diversion for programmers around the world, if they had the (then rather rare) graphical displays.

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This notion of collective innovation and communal software ownership distanced the act of computer hacking in the 1960s from the tunnel hacking and phone hacking of the 1950s. The latter pursuits tended to be solo or small-group activities. Tunnel and phone hackers relied heavily on campus lore, but the off-limits nature of their activity discouraged the open circulation of new discoveries. Computer hackers, on the other hand, did their work amid a scientific field biased toward collaboration and the rewarding of innovation. Hackers and "official" computer scientists weren't always the best of allies, but in the rapid evolution of the field, the two species of computer programmer evolved a cooperative - some might say symbiotic - relationship.

 Gulliver's Travels

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To confirm what I have now said, and further to show the miserable effects of a confined education, I shall here insert a passage, which will hardly obtain belief. In hopes to ingratiate myself further into his majesty's favour, I told him of "an invention, discovered between three and four hundred years ago, to make a certain powder, into a heap of which, the smallest spark of fire falling, would kindle the whole in a moment, although it were as big as a mountain, and make it all fly up in the air together, with a noise and agitation greater than thunder. That a proper quantity of this powder rammed into a hollow tube of brass or iron, according to its bigness, would drive a ball of iron or lead, with such violence and speed, as nothing was able to sustain its force. That the largest balls thus discharged, would not only destroy whole ranks of an army at once, but batter the strongest walls to the ground, sink down ships, with a thousand men in each, to the bottom of the sea, and when linked together by a chain, would cut through masts and rigging, divide hundreds of bodies in the middle, and lay all waste before them. That we often put this powder into large hollow balls of iron, and discharged them by an engine into some city we were besieging, which would rip up the pavements, tear the houses to pieces, burst and throw splinters on every side, dashing out the brains of all who came near. That I knew the ingredients very well, which were cheap and common; I understood the manner of compounding them, and could direct his workmen how to make those tubes, of a size proportionable to all other things in his majesty's kingdom, and the largest need not be above a hundred feet long; twenty or thirty of which tubes, charged with the proper quantity of powder and balls, would batter down the walls of the strongest town in his dominions in a few hours, or destroy the whole metropolis, if ever it should pretend to dispute his absolute commands." This I humbly offered to his majesty, as a small tribute of acknowledgment, in turn for so many marks that I had received, of his royal favour and protection.

ocn 316:

Their houses are very ill built, the walls bevil, without one right angle in any apartment; and this defect arises from the contempt they bear to practical geometry, which they despise as vulgar and mechanic; those instructions they give being too refined for the intellects of their workmen, which occasions perpetual mistakes. And although they are dexterous enough upon a piece of paper, in the management of the rule, the pencil, and the divider, yet in the common actions and behaviour of life, I have not seen a more clumsy, awkward, and unhandy people, nor so slow and perplexed in their conceptions upon all other subjects, except those of mathematics and music. They are very bad reasoners, and vehemently given to opposition, unless when they happen to be of the right opinion, which is seldom their case. Imagination, fancy, and invention, they are wholly strangers to, nor have any words in their language, by which those ideas can be expressed; the whole compass of their thoughts and mind being shut up within the two forementioned sciences.

ocn 354:

The sum of his discourse was to this effect: "That about forty years ago, certain persons went up to Laputa, either upon business or diversion, and, after five months continuance, came back with a very little smattering in mathematics, but full of volatile spirits acquired in that airy region: that these persons, upon their return, began to dislike the management of every thing below, and fell into schemes of putting all arts, sciences, languages, and mechanics, upon a new foot. To this end, they procured a royal patent for erecting an academy of projectors in Lagado; and the humour prevailed so strongly among the people, that there is not a town of any consequence in the kingdom without such an academy. In these colleges the professors contrive new rules and methods of agriculture and building, and new instruments, and tools for all trades and manufactures; whereby, as they undertake, one man shall do the work of ten; a palace may be built in a week, of materials so durable as to last for ever without repairing. All the fruits of the earth shall come to maturity at whatever season we think fit to choose, and increase a hundred fold more than they do at present; with innumerable other happy proposals. The only inconvenience is, that none of these projects are yet brought to perfection; and in the mean time, the whole country lies miserably waste, the houses in ruins, and the people without food or clothes. By all which, instead of being discouraged, they are fifty times more violently bent upon prosecuting their schemes, driven equally on by hope and despair: that as for himself, being not of an enterprising spirit, he was content to go on in the old forms, to live in the houses his ancestors had built, and act as they did, in every part of life, without innovation: that some few other persons of quality and gentry had done the same, but were looked on with an eye of contempt and ill-will, as enemies to art, ignorant, and ill common-wealth's men, preferring their own ease and sloth before the general improvement of their country."

ocn 366:

In another apartment I was highly pleased with a projector who had found a device of ploughing the ground with hogs, to save the charges of ploughs, cattle, and labour. The method is this: in an acre of ground you bury, at six inches distance and eight deep, a quantity of acorns, dates, chestnuts, and other mast or vegetables, whereof these animals are fondest; then you drive six hundred or more of them into the field, where, in a few days, they will root up the whole ground in search of their food, and make it fit for sowing, at the same time manuring it with their dung: it is true, upon experiment, they found the charge and trouble very great, and they had little or no crop. However it is not doubted, that this invention may be capable of great improvement.

ocn 375:

He assured me "that this invention had employed all his thoughts from his youth; that he had emptied the whole vocabulary into his frame, and made the strictest computation of the general proportion there is in books between the numbers of particles, nouns, and verbs, and other parts of speech."

ocn 376:

I made my humblest acknowledgment to this illustrious person, for his great communicativeness; and promised, "if ever I had the good fortune to return to my native country, that I would do him justice, as the sole inventor of this wonderful machine;" the form and contrivance of which I desired leave to delineate on paper, as in the figure here annexed. I told him, "although it were the custom of our learned in Europe to steal inventions from each other, who had thereby at least this advantage, that it became a controversy which was the right owner; yet I would take such caution, that he should have the honour entire, without a rival."

ocn 379:

The other project was, a scheme for entirely abolishing all words whatsoever; and this was urged as a great advantage in point of health, as well as brevity. For it is plain, that every word we speak is, in some degree, a diminution of our lunge by corrosion, and, consequently, contributes to the shortening of our lives. An expedient was therefore offered, "that since words are only names for things, it would be more convenient for all men to carry about them such things as were necessary to express a particular business they are to discourse on." And this invention would certainly have taken place, to the great ease as well as health of the subject, if the women, in conjunction with the vulgar and illiterate, had not threatened to raise a rebellion unless they might be allowed the liberty to speak with their tongues, after the manner of their forefathers; such constant irreconcilable enemies to science are the common people. However, many of the most learned and wise adhere to the new scheme of expressing themselves by things; which has only this inconvenience attending it, that if a man's business be very great, and of various kinds, he must be obliged, in proportion, to carry a greater bundle of things upon his back, unless he can afford one or two strong servants to attend him. I have often beheld two of those sages almost sinking under the weight of their packs, like pedlars among us, who, when they met in the street, would lay down their loads, open their sacks, and hold conversation for an hour together; then put up their implements, help each other to resume their burdens, and take their leave.

ocn 381:

Another great advantage proposed by this invention was, that it would serve as a universal language, to be understood in all civilised nations, whose goods and utensils are generally of the same kind, or nearly resembling, so that their uses might easily be comprehended. And thus ambassadors would be qualified to treat with foreign princes, or ministers of state, to whose tongues they were utter strangers.

ocn 446:

"Add to this, the pleasure of seeing the various revolutions of states and empires; the changes in the lower and upper world; ancient cities in ruins, and obscure villages become the seats of kings; famous rivers lessening into shallow brooks; the ocean leaving one coast dry, and overwhelming another; the discovery of many countries yet unknown; barbarity overrunning the politest nations, and the most barbarous become civilized. I should then see the discovery of the longitude, the perpetual motion, the universal medicine, and many other great inventions, brought to the utmost perfection.

ocn 563:

When I had answered all his questions, and his curiosity seemed to be fully satisfied, he sent for me one morning early, and commanded me to sit down at some distance (an honour which he had never before conferred upon me). He said, "he had been very seriously considering my whole story, as far as it related both to myself and my country; that he looked upon us as a sort of animals, to whose share, by what accident he could not conjecture, some small pittance of reason had fallen, whereof we made no other use, than by its assistance, to aggravate our natural corruptions, and to acquire new ones, which nature had not given us; that we disarmed ourselves of the few abilities she had bestowed; had been very successful in multiplying our original wants, and seemed to spend our whole lives in vain endeavours to supply them by our own inventions; that, as to myself, it was manifest I had neither the strength nor agility of a common Yahoo; that I walked infirmly on my hinder feet; had found out a contrivance to make my claws of no use or defence, and to remove the hair from my chin, which was intended as a shelter from the sun and the weather: lastly, that I could neither run with speed, nor climb trees like my brethren," as he called them, "the Yahoos in his country.

ocn 565:

"He was the more confirmed in this opinion, because, he observed, that as I agreed in every feature of my body with other Yahoos, except where it was to my real disadvantage in point of strength, speed, and activity, the shortness of my claws, and some other particulars where nature had no part; so from the representation I had given him of our lives, our manners, and our actions, he found as near a resemblance in the disposition of our minds." He said, "the Yahoos were known to hate one another, more than they did any different species of animals; and the reason usually assigned was, the odiousness of their own shapes, which all could see in the rest, but not in themselves. He had therefore begun to think it not unwise in us to cover our bodies, and by that invention conceal many of our deformities from each other, which would else be hardly supportable. But he now found he had been mistaken, and that the dissensions of those brutes in his country were owing to the same cause with ours, as I had described them. For if," said he, "you throw among five Yahoos as much food as would be sufficient for fifty, they will, instead of eating peaceably, fall together by the ears, each single one impatient to have all to itself; and therefore a servant was usually employed to stand by while they were feeding abroad, and those kept at home were tied at a distance from each other: that if a cow died of age or accident, before a Houyhnhnm could secure it for his own Yahoos, those in the neighbourhood would come in herds to seize it, and then would ensue such a battle as I had described, with terrible wounds made by their claws on both sides, although they seldom were able to kill one another, for want of such convenient instruments of death as we had invented. At other times, the like battles have been fought between the Yahoos of several neighbourhoods, without any visible cause; those of one district watching all opportunities to surprise the next, before they are prepared. But if they find their project has miscarried, they return home, and, for want of enemies, engage in what I call a civil war among themselves.

ocn 604:

Several others declared their sentiments to the same purpose, when my master proposed an expedient to the assembly, whereof he had indeed borrowed the hint from me. "He approved of the tradition mentioned by the honourable member who spoke before, and affirmed, that the two Yahoos said to be seen first among them, had been driven thither over the sea; that coming to land, and being forsaken by their companions, they retired to the mountains, and degenerating by degrees, became in process of time much more savage than those of their own species in the country whence these two originals came. The reason of this assertion was, that he had now in his possession a certain wonderful Yahoo (meaning myself) which most of them had heard of, and many of them had seen. He then related to them how he first found me; that my body was all covered with an artificial composure of the skins and hairs of other animals; that I spoke in a language of my own, and had thoroughly learned theirs; that I had related to him the accidents which brought me thither; that when he saw me without my covering, I was an exact Yahoo in every part, only of a whiter colour, less hairy, and with shorter claws. He added, how I had endeavoured to persuade him, that in my own and other countries, the Yahoos acted as the governing, rational animal, and held the Houyhnhnms in servitude; that he observed in me all the qualities of a Yahoo, only a little more civilized by some tincture of reason, which, however, was in a degree as far inferior to the Houyhnhnm race, as the Yahoos of their country were to me; that, among other things, I mentioned a custom we had of castrating Houyhnhnms when they were young, in order to render them tame; that the operation was easy and safe; that it was no shame to learn wisdom from brutes, as industry is taught by the ant, and building by the swallow (for so I translate the word lyhannh, although it be a much larger fowl); that this invention might be practised upon the younger Yahoos here, which besides rendering them tractable and fitter for use, would in an age put an end to the whole species, without destroying life; that in the mean time the Houyhnhnms should be exhorted to cultivate the breed of asses, which, as they are in all respects more valuable brutes, so they have this advantage, to be fit for service at five years old, which the others are not till twelve."

ocn 616:

I had settled my little economy to my own heart's content. My master had ordered a room to be made for me, after their manner, about six yards from the house: the sides and floors of which I plastered with clay, and covered with rush-mats of my own contriving. I had beaten hemp, which there grows wild, and made of it a sort of ticking; this I filled with the feathers of several birds I had taken with springes made of Yahoos' hairs, and were excellent food. I had worked two chairs with my knife, the sorrel nag helping me in the grosser and more laborious part. When my clothes were worn to rags, I made myself others with the skins of rabbits, and of a certain beautiful animal, about the same size, called nnuhnoh, the skin of which is covered with a fine down. Of these I also made very tolerable stockings. I soled my shoes with wood, which I cut from a tree, and fitted to the upper-leather; and when this was worn out, I supplied it with the skins of Yahoos dried in the sun. I often got honey out of hollow trees, which I mingled with water, or ate with my bread. No man could more verify the truth of these two maxims, "That nature is very easily satisfied;" and, "That necessity is the mother of invention." I enjoyed perfect health of body, and tranquillity of mind; I did not feel the treachery or inconstancy of a friend, nor the injuries of a secret or open enemy. I had no occasion of bribing, flattering, or pimping, to procure the favour of any great man, or of his minion; I wanted no fence against fraud or oppression: here was neither physician to destroy my body, nor lawyer to ruin my fortune; no informer to watch my words and actions, or forge accusations against me for hire: here were no gibers, censurers, backbiters, pickpockets, highwaymen, housebreakers, attorneys, bawds, buffoons, gamesters, politicians, wits, splenetics, tedious talkers, controvertists, ravishers, murderers, robbers, virtuosos; no leaders, or followers, of party and faction; no encouragers to vice, by seducement or examples; no dungeon, axes, gibbets, whipping-posts, or pillories; no cheating shopkeepers or mechanics; no pride, vanity, or affectation; no fops, bullies, drunkards, strolling whores, or poxes; no ranting, lewd, expensive wives; no stupid, proud pedants; no importunate, overbearing, quarrelsome, noisy, roaring, empty, conceited, swearing companions; no scoundrels raised from the dust upon the merit of their vices, or nobility thrown into it on account of their virtues; no lords, fiddlers, judges, or dancing-masters.

 Little Brother

ocn 1729:

The next day, I set out to work on my papers. San Francisco is a good place to write about. History? Sure, it's there, from the Gold Rush to the WWII shipyards, the Japanese internment camps, the invention of the PC. Physics? The Exploratorium has the coolest exhibits of any museum I've ever been to. I took a perverse satisfaction in the exhibits on soil liquefaction during big quakes. English? Jack London, Beat Poets, science fiction writers like Pat Murphy and Rudy Rucker. Social studies? The Free Speech Movement, Cesar Chavez, gay rights, feminism, anti-war movement...

 The Cathedral and the Bazaar

ocn 18:

Perhaps this should have been obvious (it's long been proverbial that "Necessity is the mother of invention") but too often software developers spend their days grinding away for pay at programs they neither need nor love. But not in the Linux world—which may explain why the average quality of software originated in the Linux community is so high.

ocn 45:

In fact, I think Linus's cleverest and most consequential hack was not the construction of the Linux kernel itself, but rather his invention of the Linux development model. When I expressed this opinion in his presence once, he smiled and quietly repeated something he has often said: "I'm basically a very lazy person who likes to get credit for things other people actually do." Lazy like a fox. Or, as Robert Heinlein famously wrote of one of his characters, too lazy to fail.

ocn 48:

The Emacs story is not unique. There have been other software products with a two-level architecture and a two-tier user community that combined a cathedral-mode core and a bazaar-mode toolbox. One such is MATLAB, a commercial data-analysis and visualization tool. Users of MATLAB and other products with a similar structure invariably report that the action, the ferment, the innovation mostly takes place in the open part of the tool where a large and varied community can tinker with it.

ocn 56:

Linus's innovation wasn't so much in doing quick-turnaround releases incorporating lots of user feedback (something like this had been Unix-world tradition for a long time), but in scaling it up to a level of intensity that matched the complexity of what he was developing. In those early times (around 1991) it wasn't unknown for him to release a new kernel more than once a day! Because he cultivated his base of co-developers and leveraged the Internet for collaboration harder than anyone else, this worked.

ocn 118:

Interestingly enough, you will quickly find that if you are completely and self-deprecatingly truthful about how much you owe other people, the world at large will treat you as though you did every bit of the invention yourself and are just being becomingly modest about your innate genius. We can all see how well this worked for Linus!

ocn 176:

So I believe the fetchmail project succeeded partly because I restrained my tendency to be clever; this argues (at least) against design originality being essential for successful bazaar projects. And consider Linux. Suppose Linus Torvalds had been trying to pull off fundamental innovations in operating system design during the development; does it seem at all likely that the resulting kernel would be as stable and successful as what we have?

ocn 191:

Before cheap Internet, there were some geographically compact communities where the culture encouraged Weinberg's "egoless" programming, and a developer could easily attract a lot of skilled kibitzers and co-developers. Bell Labs, the MIT AI and LCS labs, UC Berkeley—these became the home of innovations that are legendary and still potent.

 The Public Domain - Enclosing the Commons of the Mind

ocn 16:

A sealed crustless sandwich for providing a convenient sandwich without an outer crust which can be stored for long periods of time without a central filling from leaking outwardly. The sandwich includes a lower bread portion, an upper bread portion, an upper filling and a lower filling between the lower and upper bread portions, a center filling sealed between the upper and lower fillings, and a crimped edge along an outer perimeter of the bread portions for sealing the fillings there between. The upper and lower fillings are preferably comprised of peanut butter and the center filling is comprised of at least jelly. The center filling is prevented from radiating outwardly into and through the bread portions from the surrounding peanut butter.【5 U.S. Patent No. 6,004,596 (filed Dec. 21, 1999), available at ‹http://patft.uspto.gov/netahtml/PTO/srchnum.htm› (search “6,004,596”). As is required, the patent refers extensively to the “prior art”—in this case prior art in sealing sandwiches. It also refers to the classic scientific reference work “50 Great Sandwiches by Carole Handslip 81–84, 86, 95, 1994.” Is this patent ridiculous? Yes, clearly so. But not so ridiculous that its eventual owner, Smucker's, refrained from sending out cease and desist letters to competing sandwich manufacturers, and, when one of those competitors successfully requested the Patent and Trademark Office to reexamine the patent, from appealing the resulting rejection all the way through the Board of Patent Appeals and Interferences to the Court of Appeals for the Federal Circuit. The judges there were less than sympathetic at oral argument. “Judge Arthur Gajarsa noted that his wife often squeezes together the sides of their child's peanut butter and jelly sandwiches to keep the filling from oozing out. ‘I'm afraid she might be infringing on your patent!' he said.” The court found that the PTO got it right the second time around and agreed with the Board of Patent Appeals in rejecting the patent. Portfolio Media, “Peanut Butter and Jelly Case Reaches Federal Circuit,” IPLaw360 (April 7, 2005), available at ‹http://www.iplawbulletin.com›. For the Board of Patent Appeals's learned discussion of whether the patent was anticipated by such devices as the “Tartmaster,” complete with disputes over expert testimony on the subjects of cutting, crimping, and “leaking outwardly” and painstaking inquiries about what would seem obvious to a “person having ordinary skill in the art of sandwich making,” see ‹http://des.uspto.gov/Foia/ReterivePdf?system=BPAI&flNm=fd031754› and ‹http://des.uspto.gov/Foia/ReterivePdf?system=BPAI&flNm=fd031775›. One could conclude from this case that the system works (eventually). Or one could ask who cares about silly patents like this—even if they are used in an attempt to undermine competition? The larger point, however, is that an initial process of examination that finds a crimped peanut butter and jelly sandwich is “novel and nonobvious” is hardly going to do better when more complex technologies are at stake. I take that point up in Chapter 2 with reference to Thomas Jefferson's discussion of patents and in Chapter 7 on synthetic biology. For a more general discussion of the flaws of the patent system see Adam B. Jaffe and Josh Lerner, Innovation and Its Discontents: How Our Broken Patent System Is Endangering Innovation, and Progress and What To Do About It (Princeton, N.J.: Princeton University Press, 2004). 】

ocn 18:

This book is an attempt to tell the story of the battles over intellectual property, the range wars of the information age. I want to convince you that intellectual property is important, that it is something that any informed citizen needs to know a little about, in the same way that any informed citizen needs to know at least something about the environment, or civil rights, or the way the economy works. I will try my best to be fair, to explain the issues and give both sides of the argument. Still, you should know that this is more than mere description. In the pages that follow, I try to show that current intellectual property policy is overwhelmingly and tragically bad in ways that everyone, and not just lawyers or economists, should care about. We are making bad decisions that will have a negative effect on our culture, our kids' schools, and our communications networks; on free speech, medicine, and scientific research. We are wasting some of the promise of the Internet, running the risk of ruining an amazing system of scientific innovation, carving out an intellectual property exemption to the First Amendment. I do not write this as an enemy of intellectual property, a dot-communist ready to end all property rights; in fact, I am a fan. It is precisely because I am a fan that I am so alarmed about the direction we are taking.

ocn 28:

When the subject is intellectual property, this gap in our knowledge turns out to be important because our intellectual property system depends on a balance between what is property and what is not. For a set of reasons that I will explain later, “the opposite of property” is a concept that is much more important when we come to the world of ideas, information, expression, and invention. We want a lot of material to be in the public domain, material that can be spread without property rights. “The general rule of law is, that the noblest of human productions—knowledge, truths ascertained, conceptions, and ideas—become, after voluntary communication to others, free as the air to common use.”【16 International News Service v. Associated Press, 248 U.S. 215, 250 (1918) (Brandeis, J., dissenting); Yochai Benkler, “Free as the Air to Common Use: First Amendment Constraints on Enclosure of the Public Domain,” New York University Law Review 74 (1999): 354–446. 】 Our art, our culture, our science depend on this public domain every bit as much as they depend on intellectual property. The third goal of this book is to explore property's outside, property's various antonyms, and to show how we are undervaluing the public domain and the information commons at the very moment in history when we need them most. Academic articles and clever legal briefs cannot solve this problem alone.

ocn 35:

At the same time as you are developing your culture, you want a flourishing economy—and not just in literature or film. You want innovation and invention. You want drugs that cure terrible diseases, and designs for more fuel-efficient stoves, and useful little doodads, like mousetraps, or Post-it notes, or solar-powered backscratchers. To be exact, you want lots of innovation but you do not know exactly what innovation or even what types of innovation you want.

ocn 39:

Why not use this mechanism to meet your cultural and innovation needs? If people need Madame Bovary or The New York Times or a new kind of antibiotic, surely the market will provide it? Apparently not. You have brought economists with you into your brave new world—perhaps out of nostalgia, or because a lot of packing got done at the last minute. The economists shake their heads.【17 As the suggested further reading indicates, this light-hearted account of the economic basis of intellectual property conceals considerable complexity. On the other hand, the core argument is presented here—and a compelling argument it is. 】 The petunia farmer is selling something that is “a rivalrous good.” If I have the petunia, you can't have it. What's more, petunias are “excludable.” The farmer only gives you petunias when you pay for them. It is these factors that make the petunia market work. What about Madame Bovary, or the antibiotic, or The New York Times? Well, it depends. If books have to be copied out by hand, then Madame Bovary is just like the petunia. But if thousands of copies of Madame Bovary can be printed on a printing press, or photocopied, or downloaded from www.flaubertsparrot.com, then the book becomes something that is nonrival; once Madame Bovary is written, it can satisfy many readers with little additional effort or cost. Indeed, depending on the technologies of reproduction, it may be very hard to exclude people from Madame Bovary.

ocn 41:

It is important to pause at this point and inquire how closely reality hews to the economic story of “nonexcludable” and “nonrival” public goods. It turns out that the reality is much more complex. First, there may be motivations for creation that do not depend on the market mechanism. People sometimes create because they seek fame, or out of altruism, or because an inherent creative force will not let them do otherwise. Where those motivations operate, we may not need a financial incentive to create. Thus the “problem” of cheap copying in fact becomes a virtue. Second, the same technologies that make copying cheaper may also lower the costs of advertising and distribution, cutting down on the need to finance expensive distribution chains. Third, even in situations that do require incentives for creativity and for distribution, it may be that being “first to market” with an innovation provides the innovator with enough of a head start on the competition to support the innovation.【18 See Jack Hirshleifer, “The Private and Social Value of Information and the Reward to Inventive Activity,” American Economic Review 61 (1971): 561–574. 】 Fourth, while some aspects of the innovation may truly be nonrival, other aspects may not. Software is nonrival and hard to exclude people from, but it is easy to exclude your customers from the help line or technical support. The CD may be copied cheaply; the concert is easy to police. The innovator may even be advantaged by being able to trade on the likely effects of her innovation. If I know I have developed the digital camera, I may sell the conventional film company's shares short. Guarantees of authenticity, quality, and ease of use may attract purchasers even if unauthorized copying is theoretically cheaper.

ocn 42:

In other words, the economic model of pure public goods will track our reality well in some areas and poorly in others—and the argument for state intervention to fix the problems of public goods will therefore wax and wane correspondingly. In the case of drug patents, for example, it is very strong. For lots of low-level business innovation, however, we believe that adequate incentives are provided by being first to market, and so we see no need to give monopoly power to the first business to come up with a new business plan—at least we did not until some disastrous patent law decisions discussed later in this book. Nor does a lowering of copying costs hurt every industry equally. Digital copies of music were a threat to the traditional music business, but digital copies of books? I am skeptical. This book will be freely and legally available online to all who wish to copy it. Both the publisher and I believe that this will increase rather than decrease sales.

ocn 43:

Ignore these inconvenient complicating factors for a moment. Assume that wherever things are cheap to copy and hard to exclude others from, we have a potential collapse of the market. That book, that drug, that film will simply not be produced in the first place—unless the state steps in somehow to change the equation. This is the standard argument for intellectual property rights. And a very good argument it is. In order to solve the potentially “market-breaking” problem of goods that are expensive to make and cheap to copy, we will use what my colleague Jerry Reichman calls the “market-making” device of intellectual property. The state will create a right to exclude others from the invention or the expression and confer it on the inventor or the author. The most familiar rights of this kind are copyrights and patents. (Trademarks present some special issues, which I will address a little later.) Having been given the ability to forbid people to copy your invention or your novel, you can make them pay for the privilege of getting access. You have been put back in the position of the petunia farmer.

ocn 44:

Pause for a moment and think of what a brilliant social innovation this is—at least potentially. Focus not on the incentives alone, but on the decentralization of information processing and decision making that a market offers. Instead of having ministries of art that define the appropriate culture to be produced this year, or turning the entire path of national innovation policy over to the government, intellectual property decentralizes the choices about what creative and innovative paths to pursue while retaining the possibility that people will actually get paid for their innovation and creative expression.

ocn 47:

The promise of patent is this: we have a multitude of human needs and a multitude of individuals and firms who might be able to satisfy those needs through innovation. Patent law offers us a decentralized system that, in principle, will allow individuals and firms to pick the problem that they wish to solve. Inventors and entrepreneurs can risk their time and their capital and, if they produce a solution that finds favor in the marketplace, will be able to reap the return provided by the legal right to exclude—by the legal monopoly over the resulting invention. The market hints at some unmet need—for drugs that might reduce obesity or cure multiple sclerosis, or for Post-it notes or windshield wipers that come on intermittently in light rain—and the innovator and her investors make a bet that they can meet that need. (Not all of these technologies will be patentable—only those that are novel and “nonobvious,” something that goes beyond what any skilled person in the relevant field would have done.)

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In return for the legal monopoly, patent holders must describe the technology well enough to allow anyone to replicate it once the patent term ends. Thus patent law allows us to avert two dangers: the danger that the innovation will languish because the inventor has no way to recover her investment of time and capital, and the danger that the inventor will turn to secrecy instead, hiding the details of her innovation behind black box technologies and restrictive contracts, so that society never gets the knowledge embedded in it. (This is a real danger. The medieval guilds often relied on secrecy to maintain the commercial advantage conveyed by their special skills, thus slowing progress down and sometimes simply stopping it. We still don't know how they made Stradivarius violins sound so good. Patents, by contrast, keep the knowledge public, at least in theory;【19 Unfortunately, the reality turns out to be less rosy. James Bessen, “Patents and the Diffusion of Technical Information,” Economics Letters 86 (2005): 122: “[S]urvey evidence suggests that firms do not place much value on the disclosed information. Moreover, those firms that do read patents do not use them primarily as a source of information on technology. Instead, they use them for other purposes, such as keeping track of competitors or checking for infringement. There are, in fact, sound theoretical reasons why the disclosed information may not be very valuable. [Fritz] Machlup and [Edith] Penrose report that the argument about diffusion is an old one, popular since the mid-19th century. They also point out that, at least through the 1950s, economists have been skeptical about this argument. The problem, also recognized in the mid-19th century, is that ‘only unconcealable inventions are patented,' so patents reveal little that could not be otherwise learned. On the other hand, ‘concealable inventions remain concealed.' ” [Citations omitted.] 】 you must describe it to own it.) And again, decisions about the direction of innovation have been largely, though not entirely, decentralized to the people who actually might use the products and services that result. This is our innovation policy and it is increasingly driven by patent.

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What about the legal protection of trademarks, the little words or symbols or product shapes that identify products for us? Why do we have trademark law, this “homestead law for the English language”?【20 Felix S. Cohen, “Transcendental Nonsense and the Functional Approach,” Columbia Law Review 35 (1935): 817. 】 Why not simply allow anyone to use any name or attractive symbol that they want on their products, even if someone else used it first? A trademark gives me a limited right to exclude other people from using my mark, or brand name, or product shape, just as copyright and patent law give me a limited right to exclude other people from my original expression or my novel invention. Why create such a right and back it with the force of law?

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So there we have the idealized vision of intellectual property. It is not merely supposed to produce incentives for innovation by rewarding creators, though that is vital. Intellectual property is also supposed to create a feedback mechanism that dictates the contours of information and innovation production. It is not an overstatement to say that intellectual property rights are designed to shape our information marketplace. Copyright law is supposed to give us a self-regulating cultural policy in which the right to exclude others from one's original expression fuels a vibrant public sphere indirectly driven by popular demand. At its best, it is supposed to allow a decentralized and iconoclastic cultural ferment in which independent artists, musicians, and writers can take their unique visions, histories, poems, or songs to the world—and make a living doing so if their work finds favor. Patent law is supposed to give us a self-regulating innovation policy in which the right to exclude others from novel and useful inventions creates a cybernetic and responsive innovation marketplace. The allocation of social resources to particular types of innovation is driven by guesses about what the market wants. Trademark law is supposed to give us a self-regulating commercial information policy in which the right to exclude others from one's trade name, symbol, or slogan produces a market for consumer information in which firms have incentives to establish quality brand names and consumers can rely on the meaning and the stability of the logos that surround them. Ivory soap will always mean Ivory soap and Coke will mean Coke, at least until the owners of those marks decide to change the nature of their products.

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Like most social institutions, intellectual property has an altogether messier and more interesting history than this sanitized version of its functioning would suggest. The precursors of copyright law served to force the identification of the author, so that he could be punished if he proved to be a heretic or a revolutionary. The Statute of Anne—the first true copyright statute—was produced partly because of publishers' fights with booksellers; the authorial right grew as an afterthought.【21 For contrasting views of the sequence of events, see John Feather, “Publishers and Politicians: The Remaking of the Law of Copyright in Britain 1775–1842,” pt. 2, “The Rights of Authors,” Publishing History 25 (1989): 45–72; Mark Rose, Authors and Owners: The Invention of Copyright (Cambridge, Mass.: Harvard University Press, 1993). 】 The history of patents includes a wealth of attempts to reward friends of the government and restrict or control dangerous technologies. Trademark law has shuttled uneasily between being a free-floating way to police competition so as to prohibit actions that courts thought were “unfair” and an absolute property right over an individual word or symbol.

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But does intellectual property work this way now, promoting the ideal of progress, a transparent marketplace, easy and cheap access to information, decentralized and iconoclastic cultural production, self-correcting innovation policy? Often it does, but distressingly often it does the reverse. The rights that were supposed to be limited in time and scope to the minimum monopoly necessary to ensure production become instead a kind of perpetual corporate welfare—restraining the next generation of creators instead of encouraging them. The system that was supposed to harness the genius of both the market and democracy sometimes subverts both. Worse, it does so inefficiently, locking up vast swaths of culture in order to confer a benefit on a tiny minority of works. But this is too abstract. A single instance from copyright law will serve as a concrete example of what is at stake here. Later in the book I will give other examples.

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Apart from doing away with the need to indicate that you want your works to be copyrighted, we have lengthened the copyright term. We did this without any credible evidence that it was necessary to encourage innovation. We have extended the terms of living and even of dead authors over works that have already been created. (It is hard to argue that this was a necessary incentive, what with the works already existing and the authors often being dead.) We have done away with the need to renew the right. Everyone gets the term of life plus seventy years, or ninety-five years for corporate “works for hire.” All protected by a “strict liability” system with scary penalties. And, as I said before, we have made all those choices just when the Internet makes their costs particularly tragic.

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The single best starting point for someone who wishes to understand an economic perspective on intellectual property is William M. Landes and Richard A. Posner, The Economic Structure of Intellectual Property Law (Cambridge, Mass.: Belknap Press, 2003). The story laid out in this chapter is one largely (but not entirely) focused on the idea of intellectual property rights offered as incentives—the carrot that induces the author to write, the inventor to research, the investor to fund that research, and the corporation to develop attractive and stable brand names that convey reliable information to consumers. This is conventionally known as the ex ante perspective. But as the chapter also hints, intellectual property rights, like property rights in general, have a role after the innovation has occurred—facilitating its efficient exploitation, allowing inventors to disclose their inventions to prospective licensees without thereby losing control of them, and providing a state-constructed, neatly tied bundle of entitlements that can be efficiently traded in the market. Readers interested in these perspectives will benefit from looking at these articles: Edmund Kitch, “The Nature and Function of the Patent System,” Journal of Law and Economics 20 (1977): 265–290; Paul J. Heald, “A Transaction Costs Theory of Patent Law,” Ohio State Law Journal 66 (2005): 473–509; and Robert Merges, “A Transactional View of Property Rights,” Berkeley Technology Law Journal 20 (2005): 1477–1520. Of course, just as the incentives account of intellectual property has its skeptics, so these ex post theories attract skepticism from those who believe that, in practice, the rights will not be clear and well-delineated but vague and potentially overlapping, that the licensing markets will find themselves entangled in “patent thickets” from which the participants can escape only at great cost or by ignoring the law altogether. It is worth comparing Michael A. Heller and Rebecca S. Eisenberg, “Can Patents Deter Innovation? The Anticommons in Biomedical Research,” Science 280 (1998): 698–701, with John Walsh, Ashish Arora, and Wesley Cohen, “Effects of Research Tool Patents and Licensing on Biomedical Innovation,” in Patents in the Knowledge-Based Economy (Washington D.C.: National Academies Press, 2003), 285–340. There is a nice irony to imagining that the necessary mechanism of the efficient market is “ignore the property rights when they are inconvenient.”

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The skeptics argue that the alternative to a deeply commodified world of invention and innovation, with hundreds of thousands of licensing markets, is a rich information and innovation commons, from which all can draw freely, supporting a thin and well-defined layer of intellectual property rights close to the ultimate commercially viable innovation. The rhetorical structure of the debate—replete with paradox and inversion—is laid out in James Boyle, “Cruel, Mean, or Lavish? Economic Analysis, Price Discrimination and Digital Intellectual Property,” Vanderbilt Law Review 53 (2000): 2007–2039. For some of the difficulties in the attempt to arrive at a coherent economic theory of intellectual property, see James Boyle, Shamans, Software, and Spleens: Law and the Construction of the Information Society (Cambridge, Mass.: Harvard University Press, 1996), 35–46. Finally, while I urge that at the outset we must care about the actual effects and economic incentives provided by intellectual property rights, I am by no means asserting that we should stop there. Indeed to do so would dramatically impoverish our view of the world. James Boyle, “Enclosing the Genome: What Squabbles over Genetic Patents Could Teach Us,” in Perspectives on Properties of the Human Genome Project, ed. F. Scott Kieff (San Diego, Calif.: Elsevier Academic Press, 2003), 97, 107–109.

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Patents then, as now, were only supposed to be given for inventions that were novel, nonobvious, and useful. Jefferson had considerable doubt whether Evans's device, essentially a revolving string of buckets used to move grain, actually counted as “an invention.” “The question then whether such a string of buckets was invented first by Oliver Evans, is a mere question of fact in mathematical history. Now, turning to such books only as I happen to possess, I find abundant proof that this simple machinery has been in use from time immemorial.” Jefferson cites from his library example after example of references to the “Persian wheel”—a string of buckets to move water. The display of scholarship is effortless and without artifice. If the device existed to move water, he declares, Mr. Evans can hardly patent it to move grain. “If one person invents a knife convenient for pointing our pens, another cannot have a patent right for the same knife to point our pencils. A compass was invented for navigating the sea; another could not have a patent right for using it to survey land.”【32 Letter to McPherson, 328. 】

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He starts by dismissing the idea “that inventors have a natural and exclusive right to their inventions, and not merely for their own lives, but inheritable to their heirs.” In lines that will sound strange to those who assume that the framers of the Constitution were property absolutists, Jefferson argues that “stable ownership” of even tangible property is “a gift of social law.” Intellectual property, then, has still less of a claim to some permanent, absolute, and natural status.

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If nature has made any one thing less susceptible than all others of exclusive property, it is the action of the thinking power called an idea, which an individual may exclusively possess as he keeps it to himself; but the moment it is divulged, it forces itself into the possession of every one, and the receiver cannot dispossess himself of it. Its peculiar character, too, is that no one possess the less, because every other possess the whole of it. He who receives an idea from me, receives instruction himself without lessening mine; as he who lights his taper at mine, receives light without darkening me. That ideas should freely spread from one to another over the globe, for the moral and mutual instruction of man, and improvement of his condition, seems to have been peculiarly and benevolently designed by nature, when she made them, like fire, expansible over all space, without lessening their density in any point, and like the air in which we breathe, move, and have our physical being, incapable of confinement or exclusive appropriation. Inventions then cannot, in nature, be a subject of property.【35 Ibid., 333–334. 】

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Those who quote the passage sometimes stop here, which is a shame, because it leaves the impression that Jefferson was unequivocally against intellectual property rights. But that would be a considerable overstatement. When he says that inventions can never be the subject of property, he means a permanent and exclusive property right which, as a matter of natural right, no just government could abridge. However, inventions could be covered by temporary state-created monopolies instituted for the common good. In the lines immediately following the popularly quoted excerpt, Jefferson goes on:

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Society may give an exclusive right to the profits arising from [inventions], as an encouragement to men to pursue ideas which may produce utility, but this may or may not be done, according to the will and convenience of the society, without claim or complaint from any body. Accordingly, it is a fact, as far as I am informed, that England was, until we copied her, the only country on earth which ever, by a general law, gave a legal right to the exclusive use of an idea. In some other countries it is sometimes done, in a great case, and by a special and personal act, but, generally speaking, other nations have thought that these monopolies produce more embarrassment than advantage to society; and it may be observed that the nations which refuse monopolies of invention, are as fruitful as England in new and useful devices.【36 Ibid. 】

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Considering the exclusive right to invention as given not of natural right, but for the benefit of society, I know well the difficulty of drawing a line between the things which are worth to the public the embarrassment of an exclusive patent, and those which are not.【37 Ibid., 335. 】

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First, the stuff we cover with intellectual property rights has certain vital differences from the stuff we cover with tangible property rights. Partly because of those differences, Jefferson, like most of his successors in the United States, does not see intellectual property as a claim of natural right based on expended labor. Instead it is a temporary state-created monopoly given to encourage further innovation.

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Third, intellectual property rights are not and should not be permanent; in fact they should be tightly limited in time and should not last a day longer than necessary to encourage the innovation in the first place.

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Fourth, a linked point, they have considerable monopolistic dangers—they may well produce more “embarrassment than advantage.” In fact, since intellectual property rights potentially restrain the benevolent tendency of “ideas . . . [to] freely spread from one to another over the globe, for the moral and mutual instruction of man,” they may in some cases actually hinder rather than encourage innovation.

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Fifth, deciding whether to have an intellectual property system is only the first choice in a long series.【38 See ibid., 333–335. 】 Even if one believes that intellectual property is a good idea, which I firmly do, one will still have the hard job of saying which types of innovation or information are “worth to the public the embarrassment” of an exclusive right, and of drawing the limits of that right. This line-drawing task turns out to be very difficult. Without the cautions that Jefferson gave us it is impossible to do it well.

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These words from Jefferson and Macaulay encapsulate an eighteenth- and nineteenth-century free-trade skepticism about intellectual property, a skepticism that is widely, but not universally, believed to have played an important role in shaping the history of intellectual property in both the United States and the United Kingdom. Certainly the U.S. Supreme Court has offered support for that position,【43 Graham v. John Deere, 383 U.S. 1, 7–11 (1966). 】 and, with one significant recent exception,【44 Adam Mossoff, “Who Cares What Thomas Jefferson Thought about Patents? Reevaluating the Patent ‘Privilege' in Historical Context,” Cornell Law Review 92 (2007): 953–1012. In a thoughtful, carefully reasoned, and provocative article, Professor Mossoff argues that Jefferson's views have been misused by the courts and legal historians, and that if we understand the use of the word “privilege” in historical context, we see that the “patent privilege” was influenced by a philosophy of natural rights as well as the antimonopolist utilitarianism described here. I both agree and disagree.
Professor Mossoff's central point—that the word “privilege” was not understood by eighteenth-century audiences as the antonym of “right”—is surely correct. To lay great stress on the linguistic point that the patent right is “merely” a “privilege” is to rest one's argument on a weak reed. But this is not the only argument. One could also believe that intellectual property rights have vital conceptual and practical differences with property rights over tangible objects or land, that the framers of the Constitution who were most involved in the intellectual property clause were deeply opposed to the confusion involved in conflating the two, and that they looked upon this confusion particularly harshly because of an intense concern about state monopolies. One can still disagree with this assessment, of course; one can interpret Madison's words this way or that, or interpret subsequent patent decisions as deep statements of principle or commonplace rhetorical flourishes. Still it seems to me a much stronger argument than the one based on the privilege–right distinction. I am not sure Professor Mossoff would disagree.
Professor Mossoff is also correct to point out that a “legal privilege” did sometimes mean to an eighteenth-century reader something that the state was duty-bound to grant. There was, in fact, a wide range of sources from which an eighteenth-century lawyer could derive a state obligation to grant a privilege. Eighteenth-century legal talk was a normative bouillabaisse—a rich stew of natural right, common law, utility, and progress—often thrown together without regard to their differences. Some lawyers and judges thought the common law embodied natural rights, others that it represented the dictates of “progress” and “utility,” and others, more confusingly still, seemed to adopt all of those views at once.
Nevertheless, I would agree that some eighteenth-century writers saw claims of common-law right beneath the assertion of some “privileges” and that a smaller number of those assumed common-law right and natural right to be equivalent, and thus saw a strong state obligation to grant a particular privilege based on natural right, wherever that privilege had been recognized by English or U.S. common law. But here is where I part company with Professor Mossoff.
First, I do not believe that the most important architects of the intellectual property clause shared that view when it came to patents and copyrights. Jefferson, of course, was not one of those who believed the state was so bound. “Society may give an exclusive right to the profits arising from [inventions], as an encouragement to men to pursue ideas which may produce utility, but this may or may not be done, according to the will and convenience of the society, without claim or complaint from any body” (Letter to McPherson, 334, emphasis added). More importantly, Jefferson's thinking about patents was infused by a deeply utilitarian, antimonopolist tinge. So, I would argue, was Madison's.
The quotations from Madison which I give later show clearly, to me at least, that Madison shared Jefferson's deeply utilitarian attitude toward patent and copyright law. I think there is very good reason to believe that this attitude was dominant among the Scottish Enlightenment thinkers whose writings were so influential to the framers. I do not think it is an exaggeration to say that the American Revolution was violently against the world of monopoly and corruption that was the supposed target of the English Statute of Monopolies (itself hardly a natural rights document). Yes, those thinkers might fall back into talking about how hard an inventor had worked or construing a patent expansively. Yes, they might think that within the boundaries of settled law, it would be unjust to deny one inventor a patent when the general scheme of patent law had already been laid down. But that did not and does not negate the antimonopolist and, for that matter, utilitarian roots of the Constitution's intellectual property clause.
Second, while I agree that there were strands of natural right thinking and a labor theory of value in the U.S. intellectual property system, and that they continue to this day—indeed, these were the very views that the Feist decision discussed in Chapter 9 repudiated, as late as 1991—I think it is easy to make too much of that fact. Is this signal or noise? There are conceptual reasons to think it is the latter. Later in this chapter I discuss the evolution of the droits d'auteur tradition in France. Here, at the supposed heart of the natural rights tradition, we find thinkers driven inexorably to consider the question of limits. How far does the supposed natural right extend—in time, in space, in subject matter? It is at that moment that the utilitarian focus and the fear of monopoly represented by Jefferson and Madison—and, for that matter, Locke and Condorcet—become so important.
Professor Mossoff is correct to criticize the focus on the word “privilege,” and also correct that the ideas of natural right and the labor theory of value always color attitudes toward intellectual property claims. But it would be an equal and opposite mistake to ignore two points. First, intellectual property rights are profoundly different from physical property rights over land in ways that should definitively shape policy choices. Second, partly because of those differences, and because of the influence of free-trade Scottish Enlightenment thought on the American Revolution in particular, there was a powerful antimonopolist and free-trade sentiment behind the copyright and patent clause. Simply read the clause. Congress is given the power “to promote the Progress of Science and useful Arts, by securing for limited Times to Authors and Inventors the exclusive Right to their respective Writings and Discoveries.” Does this really read like the work of a group of believers in natural right? On the contrary, it reads like a limited grant of power to achieve a particular utilitarian goal. That sentiment—nicely encapsulated in but by no means limited to the words of Jefferson—is still a good starting place for an understanding of intellectual property. 】 historians of intellectual property have agreed.【45 See, e.g., Ochoa and Rose, “Anti-Monopoly Origins,” and Edward C. Walterscheid, The Nature of the Intellectual Property Clause: A Study in Historical Perspective (Buffalo, N.Y.: W. S. Hein, 2002). Ochoa, Rose, and Walterscheid stress the antimonopolist concerns that animated some of those who were most active in the debates about intellectual property. They also point out the influence of the English Statute of Monopolies of 1623, which attacked monopolies in general, while making an exception for periods of legal exclusivity for a limited time granted over “sole Working or Making of any Manner of new Manufacture within this Realm, to the first true Inventor or Inventors of such Manufactures which others at the time of the Making of such Letters Patents Grants did not use, so they be not contrary to the Law, nor mischievous to the State, by Raising of the Prices of Commodities at home, or Hurt by Trade, or generally inconvenient.” 】 Jefferson himself had believed that the Constitution should have definite limits on both the term and the scope of intellectual property rights.【46 For example, in a letter to Madison commenting on the draft of the Constitution: “I like it, as far as it goes; but I should have been for going further. For instance, the following alterations and additions would have pleased me: . . . Article 9. Monopolies may be allowed to persons for their own productions in literature, and their own inventions in the arts, for a term not exceeding . . . years, but for no longer term, and no other purpose.” Letter from Thomas Jefferson to James Madison (August 28, 1789), in Writings of Thomas Jefferson, vol. 7, 450–451. 】 James Madison stressed the costs of any intellectual property right and the need to limit its term and to allow the government to end the monopoly by compulsory purchase if necessary.【47 “Monopolies tho' in certain cases useful ought to be granted with caution, and guarded with strictness against abuse. The Constitution of the U.S. has limited them to two cases—the authors of Books, and of useful inventions, in both which they are considered as a compensation for a benefit actually gained to the community as a purchase of property which the owner might otherwise withhold from public use. There can be no just objection to a temporary monopoly in these cases: but it ought to be temporary because under that limitation a sufficient recompence and encouragement may be given. The limitation is particularly proper in the case of inventions, because they grow so much out of preceding ones that there is the less merit in the authors; and because, for the same reason, the discovery might be expected in a short time from other hands. . . . Monopolies have been granted in other Countries, and by some of the States in this, on another principle, that of supporting some useful undertaking, until experience and success should render the monopoly unnecessary, and lead to a salutary competition . . . But grants of this sort can be justified in very peculiar cases only, if at all; the danger being very great that the good resulting from the operation of the monopoly, will be overbalanced by the evil effect of the precedent; and it being not impossible that the monopoly itself in its original operation, may produce more evil than good. In all cases of monopoly, not excepting those in favor of authors and inventors, it would be well to reserve to the State, a right to extinguish the monopoly by paying a specified and reasonable sum. . . . Perpetual monopolies of every sort are forbidden not only by the Genius of free Governments, but by the imperfection of human foresight.” James Madison, “Monopolies, Perpetuities, Corporations, Ecclesiastical Endowments” (1819), in “Aspects of Monopoly One Hundred Years Ago,” Harper's Magazine, ed. Galliard Hunt, 128 (1914), 489–490; also in “Madison's ‘Detatched Memoranda,' ” ed. Elizabeth Fleet, William & Mary Quarterly, 3rd series, 3 no. 4 (1946): 551–552, available at ‹http://www.constitution.org/jm/18191213_monopolies.htm›. 】 Adam Smith expressed similar views. Monopolies that carry on long after they were needed to encourage some socially beneficial activity, he said, tax every other citizen “very absurdly in two different ways: first, by the high price of goods, which, in the case of a free trade, they could buy much cheaper; and, secondly, by their total exclusion from a branch of business which it might be both convenient and profitable for many of them to carry on.”【48 Adam Smith, The Wealth of Nations, pt. 3, Of the Expenses of Public Works and Public Institutions, 2nd ed. (Oxford: Oxford University Press, 1880), 2:339: “When a company of merchants undertake, at their own risk and expense, to establish a new trade with some remote and barbarous nation, it may not be unreasonable to incorporate them into a joint-stock company, and to grant them, in case of their success, a monopoly of the trade for a certain number of years. It is the easiest and most natural way in which the state can recompense them for hazarding a dangerous and expensive experiment, of which the public is afterwards to reap the benefit. A temporary monopoly of this kind may be vindicated, upon the same principles upon which a like monopoly of a new machine is granted to its inventor, and that of a new book to its author. But upon the expiration of the term, the monopoly ought certainly to determine; the forts and garrisons, if it was found necessary to establish any, to be taken into the hands of government, their value to be paid to the company, and the trade to be laid open to all the subjects of the state. By a perpetual monopoly, all the other subjects of the state are taxed very absurdly in two different ways: first, by the high price of goods, which, in the case of a free trade, they could buy much cheaper; and, secondly, by their total exclusion from a branch of business which it might be both convenient and profitable for many of them to carry on.” 】

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To some people, my argument so far—and Jefferson's and Macaulay's—will seem to miss the point. They see intellectual property rights not as an incentive, a method of encouraging the production and distribution of innovation, but as a natural or moral right. My book is mine because I wrote it, not because society or the law gives me some period of exclusivity over allowing the copying of its contents. My invention is mine because it came from my brain, not because the law declares a twenty-year monopoly over its production or distribution. My logo is mine because I worked hard on it, not because the state grants me a trademark in order to lower search costs and prevent consumer confusion. One answer is simply to say “In the United States, the framers of the Constitution, the legislature, and the courts have chosen to arrange things otherwise. In copyright, patent, and trademark law—despite occasional deviations—they have embraced the utilitarian view instead.”

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Then there is the question of length. How long is a natural right in expression or invention supposed to last? It seems absurd to imagine that Shakespeare's or Mozart's heirs, or those who had bought their copyrights, would still be controlling the performance, reproduction, and interpretation of their works hundreds of years after their death. If the rights are truly formed for a nonutilitarian purpose, after all, why should they expire? The person who first acquires property rights in land by work or conquest passes those rights down to heirs and buyers with the chain of transmission reaching to the present day. Should copyright follow suit? Even in France, the home of the strongest form of the droits d'auteur and of the “moral rights” tradition, the answer to this question was in the negative.

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Hesse argues that this instability would continue through the revolutionary period. I agree; indeed I would argue that it does so to the present day. Why? The answer is simple. The moral rights view simply proved too much. Without a limiting principle—of time, or scope, or effect—it seemed to presage a perpetual and expansive control of expressive creations, and perhaps of inventions. Our intuition that this is a bad idea comes from our intuitive understanding that “Poetry can only be made out of other poems; novels out of other novels. All of this was much clearer before the assimilation of literature to private enterprise.”【74 Northrop Frye, Anatomy of Criticism: Four Essays (Princeton, N.J.: Princeton University Press, 1957), 96–97. 】

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Of course, we could build a culture around a notion of natural, absolute, and permanent rights to invention and expression. It is not a world many of us would want to live in. There are exceptions of course. In a recent New York Times op-ed, Mark Helprin—author of Winter's Tale—argued that intellectual property should become perpetual.【75 Mark Helprin, “A Great Idea Lives Forever. Shouldn't Its Copyright?” New York Times editorial (May 20, 2007), A12. 】 After all, rights in real estate or personal property do not expire—though their owners might. Why is it that copyrights should “only” last for a lifetime plus seventy additional years, or patents for a mere twenty? Mr. Helprin expresses respect for the genius of the framers, but is unmoved by their firm command that rights be granted only for “limited times.” He concludes that it was a misunderstanding. Jefferson did not realize that while ideas cannot be owned, their expression can. What's more, the framers were misled by their rustic times. “No one except perhaps Hamilton or Franklin might have imagined that services and intellectual property would become primary fields of endeavor and the chief engines of the economy. Now they are, and it is no more rational to deny them equal status than it would have been to confiscate farms, ropewalks and other forms of property in the 18th century.” Poor Jefferson. How lucky we are to have Mr. Helprin to remedy the consequences of his lack of vision.

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Or perhaps not. Think of the way that Jefferson traced the origins of the mechanical arts used in the elevators and hopper-boys all the way back to ancient Persia. (In Mr. Helprin's utopia, presumably, a royalty stream would run to Cyrus the Great's engineers.) Jefferson's point was that for the process of invention to work, we need to confine narrowly the time and scope of the state-provided monopoly, otherwise further inventions would become impossible. Each process or part of a new invention would risk infringing a myriad of prior patents on its subcomponents. Innovation would strangle in a thicket of conflicting monopolies with their roots vanishing back in time. Presumably the title of Mr. Helprin's excellent novel would require clearance from Shakespeare's heirs.

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Of course, one could construct a more modest Lockean idea of intellectual property~{The two most influential and brilliant examples are Justin Hughes, “The Philosophy of Intellectual Property,” Georgetown Law Journal 77 (1988): 287–366, and Wendy J. Gordon, “A Property Right in Self-Expression: Equality and Individualism in the Natural Law of Intellectual Property,” Yale Law Journal 102 (1993): 1533–1610. Both of these articles attempt not to use Locke as the basis for a world of absolute right, but instead to focus on the Locke whose world of private property coexisted with a commons—albeit one much diminished after the invention of money. If one goes far enough into the Lockean conception—fine-tuning “enough and as good” so as to allow for a vigorous commons, and the claims of labor so as to take account of the importance of the embedded contributions of culture and science—then the differences between the Jeffersonian view and the Lockean view start to recede in significance. Academics have found the Lockean view attractive, noting, correctly, that Locke is commonly brandished as a rhetorical emblem for property schemes that he himself would have scorned. Yet when one looks at the actual world of intellectual property policy discourse, and the difficulty of enunciating even the simple Jeffersonian antimonopolist ideas I lay out here, it is hard to imagine the nuanced Lockean view flourishing. Consider this comment of Jeremy Waldron's and ask yourself—is this result more likely from within the Jeffersonian or the Lockean view?
Our tendency of course is to focus on authors when we think about intellectual property. Many of us are authors ourselves: reading a case about copyright we can empathize readily with a plaintiff's feeling for the effort he has put in, his need to control his work, and his natural desire to reap the fruits of his own labor. In this Essay, however, I shall look at the way we think about actual, potential and putative infringers of copyright, those whose freedom is or might be constrained by others' ownership of songs, plays, words, images and stories. Clearly our concept of the author and this concept of the copier are two sides of the same coin. If we think of an author as having a natural right to profit from his work, then we will think of the copier as some sort of thief; whereas if we think of the author as beneficiary of a statutory monopoly, it may be easier to see the copier as an embodiment of free enterprise values. These are the connections I want to discuss, and my argument will be that we cannot begin to unravel the conundrums of moral justification in this area unless we are willing to approach the matter even-handedly from both sides of the question.
After a magisterial study of justifications for the existing world of intellectual property, Waldron concludes, “[t]he fact is, however, that whether or not we speak of a burden of proof, an institution like intellectual property is not self-justifying; we owe a justification to anyone who finds that he can move less freely than he would in the absence of the institution. So although the people whose perspective I have taken—the copiers—may be denigrated as unoriginal plagiarists or thieves of others' work, still they are the ones who feel the immediate impact of our intellectual property laws. It affects what they may do, how they may speak, and how they may earn a living. Of course nothing is settled by saying that it is their interests that are particularly at stake; if the tables were turned, we should want to highlight the perspective of the authors. But as things stand, the would-be copiers are the ones to whom a justification of intellectual property is owed.” See Jeremy Waldron, “From Authors to Copiers: Individual Rights and Social Values in Intellectual Property,” Chicago-Kent Law Review 68 (1993): 841, 842, 887. That justification seems more plausibly and practically to come from the perspective I sketch out here. See also William Fisher, “Theories of Intellectual Property,” in New Essays in the Legal and Political Theory of Property, ed. Stephen R. Munzer (Cambridge: Cambridge University Press, 2001), 168–200.} —building on the notion of “enough and as good” left over for others and drawing the limits tightly enough to avoid the worst of Mr. Helprin's excesses. But as one attempts to do this systematically, the power of the Jeffersonian vision becomes all the more apparent—at least as a starting place.

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At the annual meeting of the Kongress deutscher Volkswirthe held in Dresden, September 1863, the following resolution was adopted “by an overwhelming majority”: “Considering that patents hinder rather than further the progress of invention; that they hamper the prompt general utilization of useful inventions; that on balance they cause more harm than benefit to the inventors themselves and, thus, are a highly deceptive form of compensation; the Congress of German Economists resolves: that patents of invention are injurious to common welfare.”【79 Quoted in Fritz Machlup and Edith Penrose, “The Patent Controversy in the Nineteenth Century,” Journal of Economic History 10, no. 1 (1950): 4, n8. 】

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In the Netherlands, the patent system was actually abolished in 1869 as a result of such criticisms. Observers in a number of other countries, including Britain, concluded that their national patent systems were doomed. Various proposals were made to replace patents, with state-provided prizes or bounties to particularly useful inventions being the most popular.【80 Ironically, contemporary economists are rediscovering the attractions of patent alternatives. A paper by Steven Shavell and Tanguy Van Ypersele is particularly interesting in this regard: “Rewards versus Intellectual Property Rights,” NBER Working Paper series, no. 6956, available at ‹http://www.nber.org/papers/w6956›. 】

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What were the concerns of these early critics? They worried about intellectual property producing artificial scarcity, high prices, and low quality. They insisted that the benefits of each incremental expansion of intellectual property be weighed against its costs. Think of Macaulay discussing Johnson's preference for a shin of beef rather than another slice of postmortem copyright protection. They worried about its justice; given that we all learn from and build on the past, do we have a right to carve out our own incremental innovations and protect them by intellectual property rights?【81 “Governor Thomas was so pleased with the construction of this stove . . . that he offered to give me a patent for the sole vending of them for a term of years; but I declined it from a principle which has ever weighed with me on such occasions, viz.: That, as we enjoy great advantages from the inventions of others, we should be glad of an opportunity to serve others by any invention of ours; and this we should do freely and generously.” Benjamin Franklin, Autobiography, in The Works of Benjamin Franklin, ed. John Bigelow, vol. 1 (New York: G. P. Putnam's Sons, 1904), 237–238. 】 Price aside, they also worried that intellectual property (especially with a lengthy term) might give too much control to a single individual or corporation over some vital aspect of science and culture. In more muted fashion, they discussed the possible effects that intellectual property might have on future innovation. The most radical among them worried about intellectual property's effects on political debate, education, and even control of the communications infrastructure, though they did not use that particular phrase. But the overwhelming theme was the promotion of free trade and a corresponding opposition to monopolies. Now if we were to stop here and simply require that today's policy makers, legislators, and judges recite the Jefferson Warning before they rush off to make new intellectual property rules for the Internet and the genome, we would have accomplished a great deal. National and international policy makers are keen to set the “rules of the road for the digital age.” If they would momentarily pause their excited millenarian burbling and read the points scratched out with a quill pen in 1813, or delivered (without PowerPoint support) on the floor of the House of Commons in the 1840s, we would be better off. Everyone is beginning to understand that in the world of the twenty-first century the rules of intellectual property are both vital and contentious. How good it would be then if our debate on intellectual property policy were as vigorous and as informed as the debates of the nineteenth century. (Though we might hope it would also be more democratic.)

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And yet . . . there is much that is missing from the skepticism of the eighteenth and nineteenth centuries and much that remains unclear. Look at the structure of these comments; they are framed as criticisms of intellectual property rather than defenses of the public domain or the commons, terms that simply do not appear in the debates. There is no real discussion of the world of intellectual property's outside, its opposite. Most of these critics take as their goal the prevention or limitation of an “artificial” monopoly; without this monopoly our goal is to have a world of—what? The assumption is that we will return to a norm of freedom, but of what kind? Free trade in expression and innovation, as opposed to monopoly? Free access to expression and innovation, as opposed to access for pay? Or free access to innovation and expression in the sense of not being subject to the right of another person to pick and choose who is given access, even if all have to pay some flat fee? Or is it common ownership and control that we seek, including the communal right to forbid certain kinds of uses of the shared resource? The eighteenth- and nineteenth-century critics brushed over these points; but to be fair, we continue to do so today. The opposite of property, or perhaps we should say the opposites of property, are much more obscure to us than property itself.

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So these are working definitions of public domain and commons. But why should we care? Because the public domain is the basis for our art, our science, and our self-understanding. It is the raw material from which we make new inventions and create new cultural works. Why is it so important? Let us start with the dry reasons.

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Information and innovation are largely nonrival and nonexcludable goods. This is Jefferson's point, though expressed in less graceful language. It has some interesting corollaries. Information is hard to value until you have it, but once you have it, how can you dispossess yourself of it? The apple can be taken back by the merchant if you decide not to buy. The facts or the formulae cannot. The moment when you might have decided to pay or not to pay is already over. The great economist Kenneth Arrow formalized this insight about information economics,【82 Kenneth Arrow, “Economic Welfare and the Allocation of Resources for Invention,” in National Bureau of Economic Research, The Rate and Direction of Inventive Activity: Economic and Social Factors (Princeton, N.J.: Princeton University Press, 1962), 609–626. 】 and it profoundly shapes intellectual property policy. (To a large extent, for example, the requirement of “patent disclosure” attempts to solve this problem. I can read all about your mousetrap but I am still forbidden from using it. I can decide whether or not to license your design at that point.) But for all the material in the public domain, where no intellectual property right is necessary, this point is solved elegantly by having the information be “free as the air to common use.” All of us can use the same store of information, innovation, and free culture. It will be available at its cost of reproduction—close to zero—and we can all build upon it without interfering with each other. Think of the English language, basic business methods, tables of logarithms, the Pythagorean theorem, Shakespeare's insights about human nature, the periodic table, Ohm's law, the sonnet form, the musical scale.

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I deliberately gave easy examples. It is obvious how unnecessary but also how harmful it would be to extend property rights to language, to facts, to business methods and scientific algorithms, to the basic structures of music, to art whose creators are long dead. It is obvious that this would not produce more innovation, more debate, more art, more democracy. But what about the places where the value of the public domain is not obvious?

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What if we were actually moving to extend patents to business methods, or intellectual property rights to unoriginal compilations of facts? What if we had locked up most of twentieth-century culture without getting a net benefit in return? What if the basic building blocks of new scientific fields were being patented long before anything concrete or useful could be built from them? What if we were littering our electronic communication space with digital barbed wire and regulating the tiniest fragments of music as if they were stock certificates? What if we were doing all this in the blithe belief that more property rights mean more innovation? The story of this book is that we are.

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My own understanding of the history of “intellectual property”—itself a relatively recently invented and contentious category—has been profoundly influenced by more scholars than I can list here. Edward C. Walterscheid, The Nature of the Intellectual Property Clause: A Study in Historical Perspective (Buffalo, N.Y.: W. S. Hein, 2002), gives a magisterial account of the origins of the U.S. Constitution's intellectual property clause. Tyler T. Ochoa and Mark Rose, “The Anti-Monopoly Origins of the Patent and Copyright Clause,” Journal of the Patent & Trademark Office Society 84 (2002): 909–940, offer a vision of the history that is closest to the one I put forward here. In addition, Tyler T. Ochoa, “Origins and Meanings of the Public Domain,” University of Dayton Law Review 28 (2002): 215–267, provides the same service for the concept of the public domain. Malla Pollack provides a useful historical study of the contemporary understanding of the word “progress” at the time of the American Constitution in Malla Pollack, “The Democratic Public Domain: Reconnecting the Modern First Amendment and the Original Progress Clause (a.k.a. Copyright and Patent Clause),” Jurimetrics 45 (2004): 23–40. A rich and thought-provoking account of the way that ideas of intellectual property worked themselves out in the context of the corporate workplace can be found in Catherine Fisk, Working Knowledge: Employee Innovation and the Rise of Corporate Intellectual Property, 1800–1930 (Chapel Hill: University of North Carolina Press, forthcoming 2009).

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Of course, the history of copyright or of intellectual property cannot be confined to the two figures I focus on principally here—Jefferson and Macaulay—nor cannot it be confined to the Anglo-American tradition or to the debates in which Jefferson and Macaulay were participating. Carla Hesse, Publishing and Cultural Politics in Revolutionary Paris, 1789–1810 (Berkeley: University of California Press, 1991), is vital reading to understand the parallels between the Anglo-American and droits d'auteur tradition. It is also fascinating reading. For studies of the broader intellectual climate, I recommend Martha Woodmansee, The Author, Art, and the Market: Rereading the History of Aesthetics (New York: Columbia University Press, 1994); Peter Jaszi, “Toward a Theory of Copyright: The Metamorphoses of ‘Authorship,' ” Duke Law Journal 1991, no. 2: 455–502; Mark Rose, Authors and Owners: The Invention of Copyright (Cambridge, Mass.: Harvard University Press, 1993); Lyman Ray Patterson, Copyright in Historical Perspective (Nashville, Tenn.: Vanderbilt University Press, 1968). The British debates at the time of Macaulay are beautifully captured in Catherine Seville, Literary Copyright Reform in Early Victorian England: The Framing of the 1842 Copyright Act (Cambridge, U.K.: Cambridge University Press, 1999). (It should be noted that, while sympathetic, she is less moved than I by Macaulay's arguments.)

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So much for the bad side of the enclosure movement. For many economic historians, everything I have said up to now is the worst kind of sentimental bunk, romanticizing a form of life that was neither comfortable nor noble, and certainly not very egalitarian. The big point about the enclosure movement is that it worked; this innovation in property systems allowed an unparalleled expansion of productive possibilities.【88 See generally Lord Ernle, English Farming Past and Present, 6th ed. (Chicago: Quadrangle Books, 1961). 】 By transferring inefficiently managed common land into the hands of a single owner, enclosure escaped the aptly named “tragedy of the commons.” It gave incentives for large-scale investment, allowed control over exploitation, and in general ensured that resources could be put to their most efficient use. Before the enclosure movement, the feudal lord would not invest in drainage systems, sheep purchases, or crop rotation that might increase yields from the common—he knew all too well that the fruits of his labor could be appropriated by others. The strong private property rights and single-entity control that were introduced in the enclosure movement avoid the tragedies of overuse and underinvestment: more grain will be grown, more sheep raised, consumers will benefit, and fewer people will starve in the long run.【89 For an excellent summary of the views of Hobbes, Locke, and Blackstone on these points, see Hannibal Travis, “Pirates of the Information Infrastructure: Blackstonian Copyright and the First Amendment,” Berkeley Technology Law Journal 15 (2000): 789–803. 】

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Now it is worth noting that while this view was once unchallenged,【90 More recent accounts which argue that enclosure led to productivity gains tend to be more qualified in their praise. Compare the more positive account given in Ernle, English Farming, with Michael Turner, “English Open Fields and Enclosures: Retardation or Productivity Improvements,” Journal of Economic History 46 (1986): 688: “Enclosure cannot be seen as the automatic open door to this cycle of agricultural improvement, but the foregoing estimates do suggest that perhaps it was a door which opened frequently, and with profit.” 】 recent scholarship has thrown some doubts on the effects of enclosure on agricultural production.【91 Most notably work by Robert C. Allen: “The Efficiency and Distributional Consequences of Eighteenth Century Enclosures,” The Economic Journal 92 (1982): 937–953; Enclosure and The Yeoman (New York: Oxford University Press, 1992). Allen argues that the enclosure movement produced major distributional consequences, but little observable efficiency gain. The pie was carved up differently, to the advantage of the landlords, but made no larger. In contrast, Turner sees enclosure as one possible, though not a necessary, route to productivity gains (“English Open Fields,” 688). Donald McCloskey's work also argues for efficiency gains from enclosure, largely from the evidence provided by rent increases. Donald N. McCloskey, “The Enclosure of Open Fields: Preface to a Study of Its Impact on the Efficiency of English Agriculture in the Eighteenth Century,” Journal of Economic History 32 (1972): 15–35; “The Prudent Peasant: New Findings on Open Fields,” Journal of Economic History 51 (1991): 343–355. In Allen's view, however, the increase in rents was largely a measure of the way that changes in legal rights altered the bargaining power of the parties and the cultural context of rent negotiations; enclosure allowed landlords to capture more of the existing surplus produced by the land, rather than dramatically expanding it. “[T]he enclosure movement itself might be regarded as the first state sponsored land reform. Like so many since, it was justified with efficiency arguments, while its main effect (according to the data analysed here) was to redistribute income to already rich landowners.” Allen, “Eighteenth Century Enclosures,” 950–951. 】 Some scholars argue that the commons was actually better run than the defenders of enclosure admit.【92 The possibility of producing “order without law” and thus sometimes governing the commons without tragedy has also fascinated scholars of contemporary land use. Robert C. Ellickson, Order without Law: How Neighbors Settle Disputes (Cambridge, Mass.: Harvard University Press, 1991); Elinor Ostrom, Governing the Commons: The Evolution of Institutions for Collective Action (Cambridge: Cambridge University Press, 1990). 】 Thus, while enclosure did produce the changes in the distribution of wealth that so incensed an earlier generation of critical historians, they argue that there are significant questions about whether it led to greater efficiency or innovation. The pie was carved up differently, but did it get bigger? The debate about these issues is little known, however, outside the world of economic historians. “Everyone” knows that a commons is by definition tragic and that the logic of enclosure is as true today as it was in the fifteenth century. I will not get involved in this debate. Assume for the sake of argument that enclosure did indeed produce a surge in agriculture. Assume, in other words, that converting the commons into private property saved lives. This is the logic of enclosure. It is a powerful argument, but it is not always right.

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Take the human genome as an example. Again, the supporters of enclosure have argued that the state was right to step in and extend the reach of property rights; that only thus could we guarantee the kind of investment of time, ingenuity, and capital necessary to produce new drugs and gene therapies.【94 See, e.g., William A. Haseltine, “The Case for Gene Patents,” Technology Review (September 2000): 59, available at ‹http://www.technologyreview.com/articles/haseltine0900.asp›; cf. Alexander K. Haas, “The Wellcome Trust's Disclosures of Gene Sequence Data into the Public Domain & the Potential for Proprietary Rights in the Human Genome,” Berkeley Technology Law Journal 16 (2001): 145–164. 】 To the question, “Should there be patents over human genes?” the supporters of enclosure would answer that private property saves lives.【95 See, e.g., Haseltine, “The Case for Gene Patents”; Biotechnology Industry Association, “Genentech, Incyte Genomics Tell House Subcommittee Gene Patents Essential for Medical Progress,” available at ‹http://www.bio.org/news/newsitem.asp?id=2000_0713_01›. 】 The opponents of enclosure have claimed that the human genome belongs to everyone, that it is literally the common heritage of humankind, that it should not and perhaps in some sense cannot be owned, and that the consequences of turning over the human genome to private property rights will be dreadful, as market logic invades areas which should be the farthest from the market. In stories about stem cell and gene sequence patents, critics have mused darkly about the way in which the state is handing over monopoly power to a few individuals and corporations, potentially introducing bottlenecks and coordination costs that slow down innovation.【96 See, e.g., Howard Markel, “Patents Could Block the Way to a Cure,” New York Times (August 24, 2001), A19. For the general background to these arguments, see Rebecca S. Eisenberg, “Patenting the Human Genome,” Emory Law Journal 39 (1990): 740–744. 】

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So far I have argued that there are profound similarities between the first enclosure movement and our contemporary expansion of intellectual property, which I call the second enclosure movement. Once again, the critics and proponents of enclosure are locked in battle, hurling at each other incommensurable claims about innovation, efficiency, traditional values, the boundaries of the market, the saving of lives, the loss of familiar liberties. Once again, opposition to enclosure is portrayed as economically illiterate: the beneficiaries of enclosure telling us that an expansion of property rights is needed in order to fuel progress. Indeed, the post-Cold War “Washington consensus” is invoked to claim that the lesson of history itself is that the only way to get growth and efficiency is through markets; property rights, surely, are the sine qua non of markets.【102 The phrase “Washington consensus” originated in John Williamson, “What Washington Means by Policy Reform,” in Latin American Adjustment: How Much Has Happened? ed. John Williamson (Washington, D.C.: Institute for International Economics, 1990). Over time it has come to be used as shorthand for a neoliberal view of economic policy that puts its faith in deregulation, privatization, and the creation and defense of secure property rights as the cure for all ills. (See Joseph Stiglitz, “The World Bank at the Millennium,” Economic Journal 109 [1999]: 577–597.) It has thus become linked to the triumphalist neoliberal account of the end of history and the victory of unregulated markets: see Francis Fukuyama, The End of History and the Last Man (New York: Free Press, 1992). Neither of these two results are, to be fair, what its creator intended. See John Williamson, “What Should the Bank Think about the Washington Consensus?” Institute for International Economics (July 1999), available at ‹http://www.iie.com/publications/papers/paper.cfm?ResearchID=351›. 】

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Unlike the earthy commons, the commons of the mind is generally “nonrival.” Many uses of land are mutually exclusive: if I am using the field for grazing, it may interfere with your plans to use it for growing crops. By contrast, a gene sequence, an MP3 file, or an image may be used by multiple parties; my The Second Enclosure Movement use does not interfere with yours. To simplify a complicated analysis, this means that the threat of overuse of fields and fisheries is generally not a problem with the informational or innovational commons.【105 The exceptions to this statement turn out to be fascinating. In the interest of brevity, however, I will ignore them entirely. 】 Thus, one type of tragedy of the commons is avoided.

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Here we come to another big difference between the commons of the mind and the earthy commons. As has frequently been pointed out, information products are often made up of fragments of other information products; your information output is someone else's information input.【107 James Boyle, Shamans, Software, and Spleens: Law and the Construction of the Information Society (Cambridge, Mass.: Harvard University Press, 1996), 29; William M. Landes and Richard A. Posner, “Economic Analysis of Copyright Law,” Journal of Legal Studies 18 (1989): 325; Pamela Samuelson and Suzanne Scotchmer, “The Law & Economics of Reverse Engineering,” Yale Law Journal 111 (2002): 1575–1664; Jessica Litman, “The Public Domain,” Emory Law Journal 39 (1990): 1010–1011. 】 These inputs may be snippets of code, discoveries, prior research, images, genres of work, cultural references, or databases of single nucleotide polymorphisms—each is raw material for future innovation. Every increase in protection raises the cost of, or reduces access to, the raw material from which you might have built those future products. The balance is a delicate one; one Nobel Prize-winning economist has claimed that it is actually impossible to strike that balance so as to produce an informationally efficient market.【108 Sanford J. Grossman and Joseph E. Stiglitz, “On the Impossibility of Informationally Efficient Markets,” American Economic Review 70 (1980): 404. 】

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Whether or not it is impossible in theory, it is surely a difficult problem in practice. In other words, even if enclosure of the arable commons always produced gains (itself a subject of debate), enclosure of the information commons clearly has the potential to harm innovation as well as to support it.【109 For a more technical account, see James Boyle, “Cruel, Mean, or Lavish? Economic Analysis, Price Discrimination and Digital Intellectual Property,” Vanderbilt Law Review 53 (2000): 2007–2039. 】 More property rights, even though they supposedly offer greater incentives, do not necessarily make for more and better production and innovation—sometimes just the opposite is true. It may be that intellectual property rights slow down innovation, by putting multiple roadblocks in the way of subsequent innovation.【110 The most recent example of this phenomenon is multiple legal roadblocks in bringing GoldenRice™ to market. For a fascinating study of the various issues involved and the strategies for working around them, see R. David Kryder, Stanley P. Kowalski, and Anatole F. Krattiger, “The Intellectual and Technical Property Components of Pro-Vitamin A Rice (GoldenRice™): A Preliminary Freedom-to-Operate Review,” ISAAA Briefs No. 20 (2000), available at ‹http://www.isaaa.org/Briefs/20/briefs.htm›. In assessing the economic effects of patents, one has to balance the delays and increased costs caused by the web of property rights against the benefits to society of the incentives to innovation, the requirement of disclosure, and the eventual access to the patented subject matter. When the qualification levels for patents are set too low, the benefits are minuscule and the costs very high—the web of property rights is particularly tangled, complicating follow-on innovation, the monopoly goes to “buy” a very low level of inventiveness, and the disclosure is of little value. 】 Using a nice inversion of the idea of the tragedy of the commons, Heller and Eisenberg referred to these effects—the transaction costs caused by myriad property rights over the necessary components of some subsequent innovation—as “the tragedy of the anticommons.”【111 Michael A. Heller and Rebecca S. Eisenberg, “Can Patents Deter Innovation? The Anticommons in Biomedical Research,” Science 280 (1998): 698–701. 】

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Both overtly and covertly, the commons of facts and ideas is being enclosed. Patents are increasingly stretched to cover “ideas” that twenty years ago all scholars would have agreed were unpatentable.【114 The so-called “business method” patents, which cover such “inventions” as auctions or accounting methods, are an obvious example. See, e.g., State St. Bank & Trust Co. v. Signature Fin. Group, Inc. , 149 F.3d 1368, 1373 (Fed. Cir. 1998). 】 Most troubling of all are the attempts to introduce intellectual property rights over mere compilations of facts.【115 Database Investment and Intellectual Property Antipiracy Act of 1996, HR 3531, 104th Cong. (1996); Collections of Information Antipiracy Act, S 2291, 105th Cong. (1998). 】 If U.S. intellectual property law had an article of faith, it was that unoriginal compilations of facts would remain in the public domain, that this availability of the raw material of science and speech was as important to the next generation of innovation as the intellectual property rights themselves.【116 See, e.g., Feist Publications v. Rural Tel. Serv. Co. , 499 U.S. 340, 350 (1991): “Copyright treats facts and factual compilations in a wholly consistent manner. Facts, whether alone or as part of a compilation, are not original and therefore may not be copyrighted.” To hold otherwise “distorts basic copyright principles in that it creates a monopoly in public domain materials without the necessary justification of protecting and encouraging the creation of ‘writings' by ‘authors.' ” Ibid., at 354. 】 The system would hand out monopolies in inventions and in original expression, while the facts below (and ideas above) would remain free for all to build upon. But this premise is being undermined. Some of the challenges are subtle: in patent law, stretched interpretations of novelty and nonobviousness allow intellectual property rights to move closer and closer to the underlying data layer; gene sequence patents come very close to being rights over a particular discovered arrangement of data—C's, G's, A's, and T's.【117 See Eisenberg, “Patenting the Human Genome”; Haas, “Wellcome Trust's Disclosures.” 】 Other challenges are overt: the European Database Protection Directive did (and various proposed bills in the United States would) create proprietary rights over compilations of facts, often without even the carefully framed exceptions of the copyright scheme, such as the usefully protean category of fair use.

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Beyond the theoretical and historical arguments about the effects of enclosure on real property lie the question of how well those arguments translate to the world of the intangible and intellectual. It is that question which this chapter raises. Christopher May, A Global Political Economy of Intellectual Property Rights: The New Enclosures? (London: Routledge, 2000) offers a similar analogy—as do several other articles cited in the text. The key differences obviously lie in the features of intellectual property identified in the earlier chapters—its nonrivalrousness and nonexcludability—and on the ways in which a commons of cultural, scientific, and technical information has been central to the operation of both liberal democracy and capitalist economy. I owe the latter point particularly to Richard Nelson, whose work on the economics of innovation amply repays further study: Richard Nelson, Technology, Institutions, and Economic Growth (Cambridge, Mass.: Harvard University Press, 2005).

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In this environment, convincing the legislature or the press that fundamental public choices were implicated in the design of intellectual property rights for the digital world was about as easy as convincing them that fundamental public choices were implicated in the rules of tiddlywinks. My own experience is probably representative. I remember trying to pitch an article on the subject to a charming but uncomprehending opinion page editor at the Washington Post. I tried to explain that decisions about property rules would shape the way we thought about the technology. Would the relatively anonymous and decentralized characteristics of the Internet that made it such a powerful tool for global speech and debate come to be seen as a bug rather than a feature, something to be “fixed” to make the Net safe for protected content? The rules would also shape the economic interests that drove future policy. Would we try to build the system around the model of proprietary content dispensed in tightly controlled chunks? Would fair use be made technologically obsolescent? Would we undercut the various nontraditional methods of innovation, such as free software, before they ever managed to establish themselves? What would become of libraries in the digital world, of the ideal that access to books had important differences from access to Twinkies? After I concluded this lengthy and slightly incoherent cri de coeur, there was a long pause; then the editor said politely, “Are you sure you couldn't make some of these points about a free speech issue, like the Communications Decency Act, maybe?”

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The answer in a word is no. Saying “theft is theft” is exactly the error that the Jefferson Warning is supposed to guard against. We should not assume that intellectual property and material property are the same in all regards. The goal of creating the limited monopoly called an intellectual property right is to provide the minimum necessary incentive to encourage the desired level of innovation. Anything extra is deadweight loss. When someone takes your car, they have the car and you do not. When, because of some new technology, someone is able to get access to the MP3 file of your new song, they have the file and so do you. You did not lose the song. What you may have lost is the opportunity to sell the song to that person or to the people with whom they “share” the file. We should not be indifferent to this kind of loss; it is a serious concern. But the fact that a new technology brings economic benefits as well as economic harm to the creation, distribution, and sale of intellectual property products means that we should pause before increasing the level of rights, changing the architecture of our communications networks, creating new crimes, and so on.

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The Sony story provides us with some useful lessons—first, this 20/20 downside vision is a poor guide to copyright policy. Under its sway, some companies will invariably equate greater control with profit and cheaper copying with loss. They will conclude, sometimes rightly, that their very existence is threatened, and, sometimes wrongly, that the threat is to innovation and culture itself rather than to their particular way of delivering it. They will turn to the legislature and the courts for guarantees that they can go on doing business in the old familiar ways. Normally, the marketplace is supposed to provide correctives to this kind of myopia. Upstart companies, not bound by the habits of the last generation, are supposed to move nimbly to harvest the benefits from the new technology and to outcompete the lumbering dinosaurs. In certain situations, though, competition will not work:

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Intellectual property is a brilliant social invention which presents us with great benefits but also with a multitude of dangers:

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1. the danger that the monopoly is unnecessary to produce the innovation, or that it is broader or lasts for longer than is necessary to encourage future production;

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3. that it will restrict access in ways that discourage “follow-on” innovation;

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The list of dangers goes on and on, and so does the list of exceptions, limitations, and restraints designed to prevent them. We restrict the length of intellectual property rights. (At least, we used to. The framers thought it so important to do so that they put the need to have a limited term in the Constitution itself; nevertheless both Congress and the Supreme Court seem to have given up on that one.) We restrict the scope of intellectual property rights, so that they cannot cover raw facts or general ideas, only the range of innovation and expression in between. (At least, we used to. Developments in database protection, gene patents, and business method patents are clearly eroding those walls.) As with fair use, we impose limitations on the rights when we hand them out in the first place. The exclusive right conferred by copyright does not include the right to prevent criticism, parody, classroom copying, decompilation of computer programs, and so on. (Though as the next chapter shows, a number of recent legal changes mean that the practical ability to exercise fair use rights is seriously threatened.)

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The fact that the Court expressed this concern through an analogy to patent law was, at first sight, fairly surprising. Courts do not normally look at copyrights in quite the same way as they look at patents. For one thing, patent rights are stronger, though they are harder to obtain and last for a shorter period of time. For another, while courts often express concern about the dangers of a patent-driven monopoly over a particular technology, it is strange to see that concern in the context of copyright law. An unnecessary monopoly over a plow or a grain elevator may, as Jefferson pointed out, slow technological development. But a monopoly over Snow White or “Ode on a Grecian Urn”? We do not normally think of rights over expression (the realm of copyright) threatening to sweep within their ambit an entire new technological invention (the realm of patent).

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The scholarly literature on Napster, copyright, and peer-to-peer technologies generally is both wide and deep. In addition to Litman's book, some personal favorites include: Raymond Shih Ray Ku, “The Creative Destruction of Copyright: Napster and the New Economics of Digital Technology,” University of Chicago Law Review 69 (2002): 263–324; Mark A. Lemley and R. Anthony Reese, “Reducing Digital Copyright Infringement Without Restricting Innovation,” Stanford Law Review 56 (2003–2004): 1345–1434; Jane C. Ginsburg, “Separating the Sony Sheep From the Grokster Goats: Reckoning the Future Business Plans of Copyright-Dependent Technology Entrepreneurs,” University of Arizona Law Review 50 (2008): 577–609; Justin Hughes, “On the Logic of Suing One's Customers and the Dilemma of Infringement-Based Business Models,” Cardozo Arts and Entertainment Law Journal 22 (2005): 725–766; Douglas Lichtman and William Landes, “Indirect Liability for Copyright Infringement: An Economic Perspective,” Harvard Journal of Law and Technology 16 (2003): 395–410; and Glynn S. Lunney, Jr., “Fair Use and Market Failure: Sony Revisited,” Boston University Law Review 82 (2002): 975–1030.

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The critics of the DMCA conjure up a world in which it will be illegal to lend each other books or songs, where it will be impossible for us to copy even small fragments of digital work for criticism or parody, where encryption research will be severely “chilled,” and where large quantities of the public domain will be enclosed together with the copyrighted content that the DMCA is supposed to protect. (The Electronic Frontier Foundation's “Unintended Consequences” studies give concrete examples.)【162 See Electronic Frontiers Foundation, “Unintended Consequences,” available at ‹http://www.eff.org/wp/unintended-consequences-seven-years-under-dmca›. 】 They think the DMCA undoes the balance at the heart of copyright law, that it can be used to entrench existing businesses and their business methods, that it threatens speech, competition, privacy, and innovation itself. In short, they think the DMCA is the worst intellectual property law Congress has ever passed and view the adoption of similar laws around the world with a reaction little short of horror.

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In one obvious sense copyright actually aids free speech. By providing an incentive to create works, copyright “add[s] the fuel of interest to the fire of genius,”【166 Abraham Lincoln, Lecture on Discoveries and Inventions (April 6, 1858), available at ‹http://showcase.netins.net/web/creative/lincoln/speeches/discoveries.htm›. 】 and thus helps to create the system of decentralized creative production and distribution I described in Chapter 1. But copyright also restrains speech. At its base, it allows an individual to call upon the state to prevent someone from speaking or expressing themselves in a particular way. This may involve a simple refusal to let the speaker use some text, picture, verse, or story in their message, or it may involve a refusal to let them transform it in some way.

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Sometimes we need to give innovators property rights that allow them to prevent second-comers from free riding on their efforts. We have to do so because it is necessary to encourage future innovation. On the other hand, sometimes we not only allow the second-comer to free ride, we positively encourage it, believing that this is an integral part of competition and that there are adequate incentives to encourage innovation without the state stepping in. Intellectual property policy, indeed a large part of the policy behind all property rights, is about drawing the line between the two situations. Too far in one direction and innovation suffers because potential investors realize good ideas will immediately be copied. Too far in the other direction and monopolies hurt both competition and future innovation.

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Now how about the case in point? What does Apple get in the way of property rights? Think back to my description of the intellectual property system in Chapter 1. They can get patents over those aspects of the iPod—both hardware and software—that are sufficiently innovative. Patents are what we use to protect inventions. They also get a copyright over the various pieces of software involved. That protects them only against someone who copies their code, not someone who writes new software to do the same thing. Copyrights are what we use to protect original expression. They get rights under trademark law over the name and perhaps parts of the design of the product—maybe the distinctive look of the iPod—though that is a bit more complex. All of these rights, plus being the first to break into the market in a big way, the brilliance of the design, and the tight integration between the hardware and the service, produce a formidable competitive advantage. The iPod is a very good product.

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Of course, the critics have a point. The DMCA is a very badly drafted law. As I have tried to show here, its key provisions were probably unnecessary and are, in my view, unconstitutional. If coupled with a number of other legal “innovations” favored by the content industry, the DMCA could play a very destructive role. In general, in fact, the Farmers' Tale is fairly accurate in describing both the origins of and the threats posed by the DMCA. Yet the single largest of those threats—the idea that the DMCA could be used to fence off large portions of the public domain and to make the fair use provisions of the Copyright Act essentially irrelevant—is still largely a threat rather than a reality. In some cases, fair use rights are curtailed. But for most citizens and for the majority of media, the DMCA has had relatively little effect. Digital rights management (DRM) certainly exists; indeed it is all around us. You can see that every time you try to play a DVD bought in another part of the world, open an Adobe eBook, or copy a song you have downloaded from iTunes. But so far, the world of legally backed digital rights management has not brought about the worst of the dystopian consequences that some people, including me, feared might result.

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Those who are interested in the tensions between copyright law and free expression are the beneficiaries of an explosion of scholarship. I cannot begin to cite it all here. Melville Nimmer's article from 1970, “Does Copyright Abridge the First Amendment Guarantees of Free Speech and Press?” UCLA Law Review 17 (1970): 1180–1204, is a required starting place though its full impact was not to be felt for some time. Lawrence Lessig, “Copyright's First Amendment,” UCLA Law Review 48 (2001): 1057–1074, provides a lovely reflection of the impact of Nimmer's arguments more than 30 years on. Neil Netanel's book Copyright's Paradox (Oxford: Oxford University Press, 2008), is the single most comprehensive work in the field and a fascinating read. Netanel's arguments, and those of Yochai Benkler, “Free as the Air to Common Use: First Amendment Constraints on Enclosure of the Public Domain,” New York University Law Review 74 (1999): 354–446, and Jed Rubenfeld, “The Freedom of Imagination: Copyright's Constitutionality,” Yale Law Journal 112 (2002): 1–60, have been influential on my own thinking in many areas. Bernt Hugenholtz has demonstrated that the concern about a tension between copyright law and freedom of expression is by no means limited to the United States. P. Bernt Hugenholtz, “Copyright and Freedom of Expression in Europe” in Expanding the Boundaries of Intellectual Property: Innovation Policy for the Information Society, ed. Rochelle Dreyfuss, Diane Zimmerman, and Harry First (Oxford: Oxford University Press, 2001), at 341. (This entire volume is superb, it should be noted.) L. Ray Patterson—an inspiration to the current generation of copyright scholars—summed up the intellectual current well when he compared the DMCA to the methods of censorship imposed by the seventeenth century Licensing Act. L. Ray Patterson, “The DMCA: A Modern Version of the Licensing Act of 1662,” Journal of Intellectual Property Law 10 (2002): 33–58.

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That story is repeated in the biography on Charles's Web site. “Charles reworded the gospel tune ‘Jesus Is All the World to Me' adding deep church inflections to the secular rhythms of the nightclubs, and the world was never the same.”【182 Forever Ray, available at ‹http://www.raycharles.com/the_man_biography.html›. 】 Michael Lydon, Charles's most impressive biographer, simply reports that “Jesus Is All the World to Me” is described as the song's origin in another published source,【183 Michael Lydon, Ray Charles (New York: Routledge, 2004), 419: “Arnold Shaw, in The Rockin' 50's says that ‘I Got a Woman' is based on Jesus is All the World to Me. Because Renald Richard left Ray's band before the song was recorded, he was not at first properly credited: some record labels list [Ray Charles] alone as the songwriter. Richard, however, straightened that out with Atlantic, and he has for many years earned a substantial income from his royalties.” 】 and this origin is cited repeatedly elsewhere in books, newspaper articles, and online,【184 See Stephens, “Soul,” 32. The standard biographical literature also repeats the same story:
In 1954 an historic recording session with Atlantic records fused gospel with rhythm-and-blues and established Charles' “sweet new style” in American music. One number recorded at that session was destined to become his first great success. Secularizing the gospel hymn “My Jesus Is All the World to Me,” Charles employed the 8- and 16-measure forms of gospel music, in conjunction with the 12-measure form of standard blues. Charles contended that his invention of soul music resulted from the heightening of the intensity of the emotion expressed by jazz through the charging of feeling in the unbridled way of gospel.
“Ray Charles,” Encyclopedia of World Biography, 2nd ed., vol. 3 (Detroit, Mich.: Gale Research, 1998), 469. Popular accounts offer the same story:
This young, blind, black, gravelly-voiced singer brought together the most engaging aspects of black music into one form and began the process of synthesis that led to soul and, ultimately, funk a decade later. He would turn around gospel standards like “My Jesus Is All the World to Me,” recreating it as “I Got a Woman[.]”
Ricky Vincent, Funk: The Music, The People, and the Rhythm of the One (New York: St. Martin's Griffin, 1996), 121. See also Joel Hirschhorn, The Complete Idiot's Guide to Songwriting (New York: Alpha Books, 2004), 108: “I Got a Woman was Ray's rewrite of ‘My Jesus Is All the World to Me.' ”
Charles himself was more equivocal about the origins of the song:
So I was lucky. Lucky to have my own band at this point in my career. Lucky to be able to construct my musical building to my exact specifications. And lucky in another way: While I was stomping around New Orleans, I had met a trumpeter named Renolds [sic] Richard who by thus time was in my band. One day he brought me some words to a song. I dressed them up a little and put them to music. The tune was called “I Got a Woman,” and it was another of those spirituals which I refashioned in my own way. I Got a Woman was my first real smash, much bigger than [“]Baby Let Me Hold Your Hand[.]” This spiritual-and-blues combination of mine was starting to hit.
Charles and Ritz, Brother Ray, 150. 】 though the most detailed accounts also mention Renald Richard, Charles's trumpeter, who is credited with co-writing the song.【185 See Lydon, Ray Charles, 419. 】

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If I am right, Charles's “merger” of gospel and blues relied on a very direct process of transposition. The transposition was not just of themes: passion for woman substituted for passion for God. That is a familiar aspect of soul.【193 Robert Lashley, “Why Ray Charles Matters,” Blogcritics Magazine, December 17, 2005, ‹http://blogcritics.org/archives/2005/12/17/032826.php:›
But it was the staggering, nearly byzantine ambition that encompassed Charles' musical mind which is the foundation for his art. You can hear it in his first imprint on the pop music world, 1955's I Got A Woman. The shuffling big beat borrows from Louis Jordan's big band fusion, the backbeat is 2/4 gospel. The arrangement is lucid, not quite jazz, not quite blues, definitely not rock and roll but something sophisticated altogether. The emotions are feral, but not quite the primitiveness of rock and roll. It is the sound of life, a place where there is an ever flowing river of cool. It, you might ask? Rhythm and Blues, Ray Charles' invention.
A volcano bubbling under the surface, Ray spent the mid 50's crafting timeless songs as if there were cars on an assembly[.] Start with the blasphemous fusion of Hallelujah I [L]ove Her So and This Little Girl of Mine, where Ray changes the words from loving god to loving a woman, yet, in the intensity of his performance, raises the question if he's still loving the same thing.
The anonymous encyclopedists at Wikipedia agree:
Many of the most prominent soul artists, such as Aretha Franklin, Marvin Gaye, Wilson Pickett and Al Green, had roots in the church and gospel music and brought with them much of the vocal styles of artists such as Clara Ward and Julius Cheeks. Secular songwriters often appropriated gospel songs, such as the Pilgrim Travelers' song “I've Got A New Home,” which Ray Charles turned into “Lonely Avenue,” or “Stand By Me,” which Ben E. King and Lieber and Stoller adapted from a well-known gospel song, or Marvin Gaye's “Can I Get A Witness,” which reworks traditional gospel catchphrases. In other cases secular musicians did the opposite, attaching phrases and titles from the gospel tradition to secular songs to create soul hits such as “Come See About Me” for the Supremes and “99½ Won't Do” for Wilson Pickett.
“Urban Contemporary Gospel,” Wikipedia, ‹http://en.wikipedia.org/wiki/urban_contemporary_gospel›. 】 It is what allows it to draw so easily from gospel's fieriness and yet coat the religion with a distinctly more worldly passion. Sex, sin, and syncopation—what more could one ask? But Charles's genius was to take particular songs that had already proved themselves in the church and on the radio, and to grab large chunks of the melody and structure. He was not just copying themes, or merging genres, he was copying the melodies and words from recent songs.

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Ray Charles's creation of “I Got a Woman” is only one case. By itself, it proves nothing. Yet, if we find that the seminal, genre-creating artworks of yesteryear would be illegal under the law and culture of today, we have to ask ourselves “is this really what we want?” What will the music of the future look like if the Clara Wards and Will Lamartine Thompsons of today can simply refuse to license on aesthetic grounds or demand payment for every tiny fragment? Tracing the line further back, it is fascinating to wonder whether gospel, blues, and jazz would have developed if musical motifs had been jealously guarded as private property rather than developed as a kind of melodic and rhythmic commons. Like most counterfactuals, that one has no clear answer, but there is substantial cause for skepticism. If copyright is supposed to be promoting innovation and development in culture, is it doing its job?

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The Legendary K.O. samples Kanye West, who uses a fragment from Ray Charles, who may have taken material from Will Lamartine Thompson or, more likely, from Clara Ward (who herself borrowed from a gospel standard). The chain of borrowing I describe here has one end in the hymns and spirituals of the early 1900s and the other in the twenty-first century's chaotic stew of digital sampling, remix, and mashup. Along the way, we have the synthesis of old and the invention of new musical genres—often against the wishes of those whose work is serving as the raw material. One way of viewing this story is that each of these musicians (except for some imaginary original artist, the musical source of the Nile) is a plagiarist and a pirate. If they are licensing their material or getting it from the public domain, then they may not be lawbreakers but they are still unoriginal slavish imitators. If one's image of creativity is that of the romantic, iconoclastic creator who invents the world anew with each creation, those conclusions seem entirely appropriate. The borrowing here is rampant. Far from building everything anew, these musicians seem quite deliberately to base their work on fragments taken from others.

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The indispensable guide to music history is J. Peter Burkholder, Donald Jay Grout, and Claude V. Palisca, A History of Western Music, 7th ed. (New York: W. W. Norton, 2006). For those who have access through a university or library the Grove Music database is the single most comprehensive computer-aided source: [recenlty moved to] Oxford Music Online, ‹http://www.oxfordmusiconline.com/public/› [Ed. note: originally published as ‹http://www.grovemusic.com/index.html›; link has changed]. A fascinating book by Frederic Scherer, Quarter Notes and Bank Notes: The Economics of Music Composition in the Eighteenth and Nineteenth Centuries (Princeton, N.J.: Princeton University Press, 2004), explores different incentive systems—such as patronage or markets enabled by intellectual property rights—and their respective effect on musical aesthetics and musical production. Scherer is one of the foremost contemporary economists of innovation. To have him writing about the practices of court composers and manuscript publishers is completely fascinating. At the end of the day, he diplomatically refuses to say whether patronage or market mechanisms produced “better” music but the careful reader will pick up indications of which way he leans.

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Over the last forty years, much has changed in the way that scientific research and technological development are organized, funded, and institutionally arranged. Much has also changed in the type of scientific and technical material that is covered by intellectual property rights, the ways that material is covered, the parties who hold the rights, and the state of research and development at which rights claims are made. Many academics who study both science's organizational structure and the intellectual property claims that surround it are concerned about the results. To say this is not to conjure up a tragically lost world of pure research science, untainted by property claims or profit motives. That world never existed and it is probably a good thing too. Intellectual property rights, and the profit motive more generally, have a vital and beneficial role in moving innovations from lab bench to bedside, from computer simulation to actual flight. The question is not whether intellectual property rights are useful as part of scientific and technological development. The question is what type of rights they should be, where in the research process those rights are best deployed, how they should coexist with state funded basic scientific and technological research, how broad they should be, how they should deal with new technologies, how long they should last, how they should treat follow-on innovations.

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The two defining technologies of the last thirty years are biotechnology and the networked computer. Each is both product and platform. Innovations themselves, they are also constitutive technologies that enable still more innovations. But at several historical moments in the development of each we came perilously close to breaking technology with law.【202 See, e.g., Pamela Samuelson, Randall Davis, Mitchell D. Kapor, and J. H. Reichman, “A Manifesto Concerning the Legal Protection of Computer Programs,” Columbia Law Review 94 (1994): 2308–2431; Michael A. Heller and Rebecca S. Eisenberg, “Can Patents Deter Innovation? The Anticommons in Biomedical Research,” Science 280 (1998): 698–701. 】 Some would say that it was not just a close shave: we actually have hampered or limited the full potential of technology, slowing down its dynamism with a host of overbroad software patents, gene patents, and materials transfer agreements. Others are more optimistic. They think that a series of rapid improvisations by courts, scientists, programmers, and businesspeople has largely mitigated any problems caused by the process of legal expansion.【203 Wes Cohen's empirical studies, for example, suggest that some of the potential dangers from overbroad gene patents have been offset by widespread lawbreaking among academic research scientists, who simply ignore patents that get in their way, and by more flexible licensing practices than the anticommons theorists had predicted. John P. Walsh, Ashish Arora, and Wesley Cohen, “Effects of Research Tool Patents and Licensing on Biomedical Innovation,” in Patents in the Knowledge-Based Economy, ed. W. Cohen and S. A. Merrill (National Research Council, 2003), 285–340. 】 But if mistakes were made, it is important to know what they were lest we continue or repeat them. If there were “fixes,” it is important to know if they can be replicated.

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So were there mistakes? If so, have they been fixed, and how? Drawing on an article I co-wrote with my brilliant colleague Arti Rai,【204 Arti Rai and James Boyle, “Synthetic Biology: Caught between Property Rights, the Public Domain, and the Commons,” PLoS Biology 5 (2007): 389–393, available at ‹http://biology.plosjournals.org/perlserv/?request=get-document&doi=10.1371/journal.pbio.0050058&ct=1›. 】 this chapter suggests some answers to those questions by sketching out some details of the legal history of those technologies, concluding with a discussion of a single promising new technology that shares aspects of both—synthetic biology. The answers are important. Behind the abstract words “innovation” or “technological development” there are lives saved or lost, communicative freedoms expanded or contracted, communities enabled or stunted, wealth generated or not. The subject would benefit from informed, sophisticated, democratic attention. It is not something you want to leave a host of lawyers and lobbyists to decide among themselves.

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Machines and other functional innovations are normally the domain of patent rights. One can patent the mousetrap, and then one gets an exclusive right to the actual mechanically enabled method of catching mice, not just the artistic flourishes on the blueprint. Patents have more demanding criteria than copyrights. The invention needs to be novel and have utility, or usefulness; I cannot get a patent over something that would have been an obvious idea to an insider in the relevant field of technology, a “person having ordinary skill in the art,” or PHOSITA, in the jargon of patent lawyers. But once I get my patent, it gives me a very strong power to exclude others from the invention—even if they came up with it independently. The right lasts for twenty years. Follow-on innovators who improve on my idea can get a patent on that improvement. They can block me from using the improvement. I can block them from using the original invention. Thus we have an incentive to negotiate if either of us wants to bring the improved innovation to market.

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So where did software fit? Was it copyrightable writing or patentable invention? There are two issues here. The first is whether there should be any intellectual property rights over software at all. The basic case for that proposition is simple, a classic example of the public goods problem described in the first chapter. Software costs money to create, but is cheap to copy. When a youthful The Enclosure of Science and Technology Bill Gates wrote his 1976 letter to the wonderfully named Dr. Dobb's Journal of Computer Calisthenics & Orthodontia, he put the point clearly.

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Though there are quibbles about the facts in Gates's letter—critics claim he himself did a lot of free riding on public domain code and government-funded computer time—his basic point is that software needs to be protected by (enforceable) property rights if we expect it to be effectively and sustainably produced. Some software developers disagree. But assuming one concedes the point for the sake of argument, there is a second question: should software be covered by copyright or patent, or some unidentified third option? In practice, software ended up being covered by both schemes, partly because of actions by Congress, which included several references to software in the Copyright Act, and partly as a result of decisions by the Copyright Office, the Patent and Trademark Office, and judges. One could copyright one's code and also gain a patent over the “nonobvious,” novel, and useful innovations inside the software.

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At first, it was the use of copyright that stirred the most concern. As I explained in the last chapter, copyright seems to be built around an assumption of diverging innovation—the fountain or explosion of expressive activity. Different people in different situations who sit down to write a sonnet or a love story, it is presumed, will produce very different creations rather than being drawn to a single result. Thus strong rights over the resulting work are not supposed to inhibit future progress. I can find my own muse, my own path to immortality. Creative expression is presumed to be largely independent of the work of prior authors. Raw material is not needed. “Copyright is about sustaining the conditions of creativity that enable an individual to craft out of thin air an Appalachian Spring, a Sun Also Rises, a Citizen Kane.”【206 Paul Goldstein, “Copyright,” Journal of the Copyright Society of the U.S.A. 38 (1991): 109–110. 】

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Seeing that software failed to fit the Procrustean bed of copyright, many scholars presumed the process of forcing it into place would be catastrophic. They believed that, lacking patent's high standards, copyright's monopolies would proliferate widely. Copyright's treatment of follow-on or “derivative” works would impede innovation, it was thought. The force of network effects would allow the copyright holder of whatever software became “the standard” to extract huge monopoly rents and prevent competing innovation for many years longer than the patent term. Users of programs would be locked in, unable to shift their documents, data, or acquired skills to a competing program. Doom and gloom abounded among copyright scholars, including many who shared Mr. Gates's basic premise—that software should be covered by property rights. They simply believed that these were the wrong property rights to use.

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Copyright did indeed cause problems for software developers, though it is hard to judge whether those problems outweighed the economic benefits of encouraging software innovation, production, and distribution. But the negative effects of copyright were minimized by a remarkably prescient set of actions by courts and, to a much lesser extent, Congress, so that the worst scenarios did not come to pass. Courts interpreted the copyright over software very narrowly, so that it covered little beyond literal infringement. (Remember Jefferson's point about the importance of being careful about the scope of a right.) They developed a complicated test to work out whether one program infringed the details of another. The details give law students headaches every year, but the effects were simple. If your software was similar to mine merely because it was performing the same function, or because I had picked the most efficient way to perform some task, or even because there was market demand for doing it that way, then none of those similarities counted for the purposes of infringement. Nor did material that was taken from the public domain. The result was that while someone who made literal copies of Windows Vista was clearly infringing copyright, the person who made a competing program generally would not be.

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In addition, courts interpreted the fair use doctrine to cover “decompilation”—which is basically taking apart someone else's program so that you can understand it and compete with it. As part of the process, the decompiler had to make a copy of the program. If the law were read literally, decompilation would hardly seem to be a fair use. The decompiler makes a whole copy, for a commercial purpose, of a copyrighted work, precisely in order to cause harm to its market by offering a substitute good. But the courts took a broader view. The copy was a necessary part of the process of producing a competing product, rather than a piratical attempt to sell a copy of the same product. This limitation on copyright provided by fair use was needed in order to foster the innovation that copyright is supposed to encourage. This is a nice variation of the Sony Axiom from Chapter 4.

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These rulings and others like them meant that software was protected by copyright, as Mr. Gates wanted, but that the copyright did not give its owner the right to prevent functional imitation and competition. Is that enough? Clearly the network effects are real. Most of us use Windows and most of us use Microsoft Word, and one very big reason is because everyone else does. Optimists believe the lure of capturing this huge market will keep potential competitors hungry and monopolists scared. The lumbering dominant players will not become complacent about innovation or try to grab every morsel of monopoly rent, goes the argument. They still have to fear their raptor-like competitors lurking in the shadows. Perhaps. Or perhaps it also takes the consistent threat of antitrust enforcement. In any event, whether or not we hit the optimal point in protecting software with intellectual property rights, those rights certainly did not destroy the industry. It appeared that, even with convergent creativity and network effects, software could be crammed into the Procrustean bed of copyright without killing it off in the process. Indeed, to some, it seemed to fare very well. They would claim that the easy legal protection provided by copyright gave a nascent industry just enough protection to encourage the investment of time, talent, and dollars, while not prohibiting the next generation of companies from building on the innovations of the past.

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The creators of free and open source software were able to use the fact that software is copyrighted, and that the right attaches automatically upon creation and fixation, to set up new, distributed methods of innovation. For example, free and open source software under the General Public License—such as Linux—is a “commons” to which all are granted access. Anyone may use the software without any restrictions. They are guaranteed access to the human-readable “source code,” rather than just the inscrutable “machine code,” so that they can understand, tinker, and modify. Modifications can be distributed so long as the new creation is licensed under the open terms of the original. This creates a virtuous cycle: each addition builds on the commons and is returned to it. The copyright over the software was the “hook” that allowed software engineers to create a license that gave free access and the right to modify and required future programmers to keep offering those freedoms. Without the copyright, those features of the license would not have been enforceable. For example, someone could have modified the open program and released it without the source code—denying future users the right to understand and modify easily. To use an analogy beloved of free software enthusiasts, the hood of the car would be welded shut. Home repair, tinkering, customization, and redesign become practically impossible.

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So much for copyright. What about patents? U.S. patent law had drawn a firm line between patentable invention and unpatentable idea, formula, or algorithm. The mousetrap could be patented, but not the formula used to calculate the speed at which it would snap shut. Ideas, algorithms, and formulae were in the public domain—as were “business methods.” Or so we thought.

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The Court of Appeals for the Federal Circuit (the United States's leading patent court) seems to believe that computers can turn unpatentable ideas into patentable machines. In fact, in this conception, the computer sitting on your desk becomes multiple patentable machines—a word processing machine, an e-mail machine, a machine running the program to calculate the tensile strength of steel. I want to stress that the other bars to patentability remain. My example of mile-to-kilometer conversion would be patentable subject matter but, we hope, no patent would be granted because the algorithm is not novel and is obvious. (Sadly, the Patent and Trademark Office seems determined to undermine this hope by granting patents on the most mundane and obvious applications.) But the concern here is not limited to the idea that without a subject matter bar, too many obvious patents will be granted by an overworked and badly incentivized patent office. It is that the patent was supposed to be granted at the very end of a process of investigation and scientific and engineering innovation. The formulae, algorithms, and scientific discoveries on which the patented invention was based remained in the public domain for all to use. It was only when we got to the very end of the process, with a concrete innovation ready to go to market, that the patent was to be given. Yet the ability to couple the abstract algorithm with the concept of a Turing machine undermines this conception. Suddenly the patents are available at the very beginning of the process, even to people who are merely specifying—in the abstract—the idea of a computer running a particular series of algorithmic activities.

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This invention relates to novel molecular constructs that act as various logic elements, i.e., gates and flip-flops. . . . The basic functional unit of the construct comprises a nucleic acid having at least two protein binding sites that cannot be simultaneously occupied by their cognate binding protein. This basic unit can be assembled in any number of formats providing molecular constructs that act like traditional digital logic elements (flips-flops, gates, inverters, etc.).

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What is the concern? After all, this is cutting-edge science. These seem like novel, nonobvious inventions with considerable utility. The concern is that the change in the rules over patentable subject matter, coupled with the Patent and Trademark Office's handling of both software and biotechnology, will come together so that the patent is not over some particular biological circuit, but, rather, over Boolean algebra itself as implemented by any biotechnological means. It would be as if, right at the beginning of the computer age, we had issued patents over formal logic in software—not over a particular computer design, but over the idea of a computer or a binary circuit itself.

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But it is here that the story takes a new turn, something that neither Jefferson nor the philosophers of the Scottish Enlightenment had thought of, something that goes beyond their cautions not to confuse intellectual property with physical property, to keep its boundaries, scope, and term as small as possible while still encouraging the desired innovation.

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The first set of concerns is that the granting of intellectual property rights far “upstream”—that is very close to basic science—is impeding the process of science and technology. In addition, scholars have argued that the sheer volume of intellectual property claims will produce an anti-commons effect or patent thicket. Michael A. Heller and Rebecca S. Eisenberg, “Can Patents Deter Innovation? The Anticommons in Biomedical Research,” Science 280 (1998): 698–701. The argument here is that the closer one is to basic research the stronger the case is for leaving the information untouched by property rights—allowing all to draw on it and develop “downstream” innovations, which can then be covered by intellectual property rights. In practice, two concerns are often alluded to: the fact that much of the basic research is state funded and conducted in nonprofit universities and the belief that the transaction costs of licensing will inhibit research or concentrate it in a few hands. Research on genes indicating a propensity to breast cancer is a frequently cited example of the latter problem. Fabienne Orsi and Benjamin Coriat, “Are ‘Strong Patents' Beneficial to Innovative Activities? Lessons from the Genetic Testing for Breast Cancer Controversies,” Industrial and Corporate Change 14 (2005): 1205–1221. But here, too, anecdote outweighs evidence. Timothy Caulfield, Robert M. Cook-Deegan, F. Scott Kieff, and John P. Walsh, “Evidence and Anecdotes: An Analysis of Human Gene Patenting Controversies,” Nature Biotechnology 24 (2006): 1091–1094. On the other side of this debate is the argument that having intellectual property rights, even on state-funded university research, will facilitate commercialization—allowing the commercial investor to know that it will acquire sufficient rights to exclude others from the innovation. This is the premise behind “Bayh-Dole,” the act (P.L. 96-517, Patent and Trademark Act Amendments of 1980; codified in 35 U.S.C. § 200–212 and implemented by 37 C.F.R. 401) that sets up the framework for technology transfer from state funded university research.

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To date, the evidence for the anti-commons effect inside academia has been equivocal, at best. Walsh, Cohen, and Arora found no such effect—but one main reason for the absence of problems appeared to be that scientists were simply flouting the law (or were ignorant of it). John P. Walsh, Ashish Arora, and Wesley M. Cohen, “Effects of Research Tool Patents and Licensing on Biomedical Innovation,” in Patents in the Knowledge-Based Economy, ed. Wesley M. Cohen and Stephen A. Merrill (Washington D.C.: National Academies Press, 2003), 285–340. I would question whether a research system based on massive law-breaking is sustainable, particularly after the U.S. Court of Appeals for the Federal Circuit clarified for us that there effectively is no academic research exemption in U.S. patent law. Madey v. Duke University, 307 F.3d 1351 (Fed. Cir. 2002). The National Research Council's committee on the subject found few problems now but possible cause for concern in the future. Committee on Intellectual Property Rights in Genomic and Protein Research and Innovation, National Research Council, Reaping the Benefits of Genomic and Proteomic Research: Intellectual Property Rights, Innovation, and Public Health (Washington D.C.: National Academy Press, 2005). A study by the American Academy for the Advancement of Science also reported few problems, though a closer reading revealed that licensing produced delays in research—some of them considerable—but did not cause it to be abandoned. The effects were greatest on industry scientists. American Association for the Advancement of Science, Directorate for Science and Policy Programs, International Intellectual Property Experiences: A Report of Four Countries (Washington, D.C.: AAAS, 2007), available at ‹http://sippi.aaas.org/Pubs/SIPPI_Four_Country_Report.pdf›. Fiona Murray and Scott Stern, “Do Formal Intellectual Property Rights Hinder the Free Flow of Scientific Knowledge? An Empirical Test of the Anti-Commons Hypothesis,” Journal of Economic Behavior & Organization 63 (2007): 648–687, found a definite but modest anti-commons effect, restricting further research and publication on patented materials. Similar concerns have been raised about access to scientific data. J. H. Reichman and Paul Uhlir, “A Contractually Reconstructed Research Commons for Scientific Data in a Highly Protectionist Intellectual Property Environment,” Law and Contemporary Problems 66 (2003): 315–462.

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What about the opposite question? Are we getting benefits from the process of increasing the use of intellectual property rights in basic university research? The best study of the effects of the current university technology transfer process found little definitive evidence of net benefits and some cause for concern that the traditional role of universities in freely supplying knowledge is being undermined. David Mowery, Richard Nelson, Bhaven Sampat, and Arvids Ziedonis, Ivory Tower and Industrial Innovation: University-Industry Technology Transfer Before and After the Bayh-Dole Act (Palo Alto, Calif.: Stanford Business Press, 2004).

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Beyond the questions about the effects of upstream intellectual property rights on basic research lay the much harder questions about the effects of intellectual property rights on the development of technologies. Here there is much evidence that decisions about patent scope are vital and, as Robert Merges and Richard Nelson reveal, that poor decisions can hamper or cripple the development of disruptive technologies. Robert Merges and Richard R. Nelson, “On the Complex Economics of Patent Scope,” Columbia Law Review 90 (1990): 839–916; Suzanne Scotchmer, “Standing on the Shoulders of Giants: Cumulative Research and the Patent Law,” Journal of Economic Perspectives 5 (1991): 29–41. The fear, highlighted in this chapter, is that poor decisions about patent scope and subject matter can inhibit technological change. On the subject of that fear, there is much more evidence. James Bessen and Michael J. Meurer, Patent Failure: How Judges, Bureaucrats, and Lawyers Put Innovators at Risk (Princeton: N.J.: Princeton University Press, 2008); and Adam Jaffe and Josh Lerner, Innovation and Its Discontents: How Our Broken Patent System is Endangering Innovation and Progress, and What To Do About It (Princeton, N.J.: Princeton University Press, 2004).

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From one perspective, Creative Commons looks like a simple device for enabling exercise of authorial control, remarkable only for the extremely large number of authors making that choice and the simplicity with which they can do so. From another, it can be seen as re-creating, by private choice and automated licenses, the world of creativity before law had permeated to the finest, most atomic level of science and culture—the world of folk music or 1950s jazz, of jokes and slang and recipes, of Ray Charles's “rewording” of gospel songs, or of Isaac Newton describing himself as “standing on the shoulders of giants” (and not having to pay them royalties). Remember, that is not a world without intellectual property. The cookbook might be copyrighted even if the recipe was not. Folk music makes it to the popular scene and is sold as a copyrighted product. The jazz musician “freezes” a particular version of the improvisation on a communally shared set of musical motifs, records it, and sometimes even claims ownership of it. Newton himself was famously touchy about precedence and attribution, even if not about legal ownership of his ideas. But it is a world in which creativity and innovation proceed on the basis of an extremely large “commons” of material into which it was never imagined that property rights could permeate.

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My point here is that Creative Commons licenses or the tools of free and open source software—to which I will turn in a moment—represent something more than merely a second-best solution to a poorly chosen rule. They represent a visible example of a type of creativity, of innovation, which has been around for a very long time, but which has reached new salience on the Internet—distributed creativity based around a shared commons of material.

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The arguments in this book so far have taken as a given the incentives and collective action problems to which intellectual property is a response. Think of Chapter 1 and the economic explanation of “public goods.” The fact that it is expensive to do the research to find the right drug, but cheap to manufacture it once it is identified provides a reason to create a legal right of exclusion. In those realms where the innovation would not have happened anyway, the legal right of exclusion gives a power to price above cost, which in turn gives incentives to creators and distributors. So goes the theory. I have discussed the extent to which the logic of enclosure works for the commons of the mind as well as it did for the arable commons, taking into account the effects of an information society and a global Internet. What I have not done is asked whether a global network actually transforms some of our assumptions about how creation happens in a way that reshapes the debate about the need for incentives, at least in certain areas. This, however, is exactly the question that needs to be asked.

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For anyone interested in the way that networks can enable new collaborative methods of production, the free software movement, and the broader but less political movement that goes under the name of open source software, provide interesting case studies.【216 See Glyn Moody, Rebel Code: Linux and the Open Source Revolution (Cambridge, Mass.: Perseus Pub., 2001); Peter Wayner, Free for All: How Linux and the Free Software Movement Undercut the High-Tech Titans (New York: HarperBusiness, 2000); Eben Moglen, “Anarchism Triumphant: Free Software and the Death of Copyright,” First Monday 4 (1999), ‹http://firstmonday.org/htbin/cgiwrap/bin/ojs/index.php/fm/article/view/684/594› [Ed. note: originally published as ‹http://firstmonday.org/issues/issue4_8/index.html›, the link has changed]. 】 Open source software is released under a series of licenses, the most important being the General Public License (GPL). The GPL specifies that anyone may copy the software, provided the license remains attached and the source code for the software always remains available.【217 Proprietary, or “binary only,” software is generally released only after the source code has been compiled into machine-readable object code, a form that is impenetrable to the user. Even if you were a master programmer, and the provisions of the Copyright Act, the appropriate licenses, and the DMCA did not forbid you from doing so, you would be unable to modify commercial proprietary software to customize it for your needs, remove a bug, or add a feature. Open source programmers say, disdainfully, that it is like buying a car with the hood welded shut. See, e.g., Wayner, Free for All, 264. 】 Users may add to or modify the code, may build on it and incorporate it into their own work, but if they do so, then the new program created is also covered by the GPL. Some people refer to this as the “viral” nature of the license; others find the term offensive.【218 See Brian Behlendorf, “Open Source as a Business Strategy,” in Open Sources: Voices from the Open Source Revolution, ed. Chris DiBona et al. (Sebastopol, Calif.: O'Reilly, 1999), 149, 163. 】 The point, however, is that the open quality of the creative enterprise spreads. It is not simply a donation of a program or a work to the public domain, but a continual accretion in which all gain the benefits of the program on pain of agreeing to give their additions and innovations back to the communal project.

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What is remarkable is not merely that the software works technically, but that it is an example of widespread, continued, high-quality innovation. The really remarkable thing is that it works socially, as a continuing system, sustained by a network consisting both of volunteers and of individuals employed by companies such as IBM and Google whose software “output” is nevertheless released into the commons.

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In the language of computer programmers, the issue here is “does it scale?” Can we generalize anything from this limited example? How many types of production, innovation, and research fit into the model I have just described? After all, for many innovations and inventions one needs hardware, capital investment, and large-scale, real-world data collection—stuff, in its infinite recalcitrance and facticity. Maybe the open source model provides a workaround to the individual incentives problem, but that is not the only problem. And how many types of innovation or cultural production are as modular as software? Is open source software a paradigm case of collective innovation that helps us to understand open source software and not much else?

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Again, I think this is a good question, but it may be the wrong one. My own guess is that an open source method of production is far more common than we realize. “Even before the Internet” (as some of my students have taken to saying portentously), science, law, education, and musical genres all developed in ways that are markedly similar to the model I have described. The marketplace of ideas, the continuous roiling development in thought and norms that our political culture spawns, owes much more to the distributed, nonproprietary model than it does to the special case of commodified innovation that we think about in copyright and patent. Not that copyright and patent are unimportant in the process, but they may well be the exception rather than the norm. Commons-based production of ideas is hardly unfamiliar, after all.

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Still, this does not answer the question of whether the model can scale still further, whether it can be applied to solve problems in other spheres. To answer that question we would need to think more about the modularity of other types of inventions. How much can they be broken down into chunks suitable for distribution among a widespread community? Which forms of innovation have some irreducible need for high capital investment in distinctly nonvirtual components—a particle accelerator or a Phase III drug trial? Again, my guess is that the increasing migration of the sciences toward data- and processing-rich models makes much more of innovation and discovery a potential candidate for the distributed model. Bioinformatics and computational biology, the open source genomics project,【229 See ‹http://www.ensembl.org›. 】 the BioBricks Foundation I mentioned in the last chapter, the possibility of distributed data scrutiny by lay volunteers【230 See, e.g., NASA's “Clickworkers” experiment, which used public volunteers to analyze Mars landing data, available at ‹http://clickworkers.arc.nasa.gov/top›. 】 —all of these offer intriguing glances into the potential for the future. Finally, of course, the Internet is one big experiment in, as Benkler puts it, peer-to-peer cultural production.【231 Benkler, “Coase's Penguin,” 11. 】

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If these questions are good ones, why are they also the wrong ones? I have given my guesses about the future of the distributed model of innovation. My own utopia has it flourishing alongside a scaled-down, but still powerful, intellectual property regime. Equally plausible scenarios see it as a dead end or as the inevitable victor in the war of productive processes. These are all guesses, however. At the very least, there is some possibility, even hope, that we could have a world in which much more of intellectual and inventive production is free. “ ‘Free' as in ‘free speech,' ” Richard Stallman says, not “free as in ‘free beer.' ”【232 Free Software Foundation, ‹http://www.gnu.org/philosophy/free-sw.html› [Ed. note: originally published at ‹http://www.gnu.ai.mit.edu/philosophy/free-sw.html›, the link has changed]. 】 But we could hope that much of it would be both free of centralized control and low- or no-cost. When the marginal cost of reproduction is zero, the marginal cost of transmission and storage approaches zero, the process of creation is additive, and much of the labor doesn't charge, the world looks a little different.【233 Exhibit A: the Internet—from the software and protocols on which it runs to the multiple volunteer sources of content and information. 】 This is at least a possible future, or part of a possible future, and one that we should not foreclose without thinking twice. Yet that is what we are doing. The Database Protection Bills and Directives, which extend intellectual property rights to the layer of facts;【234 See, e.g., the Database Investment and Intellectual Property Antipiracy Act of 1996, HR 3531, 104th Cong. (1996); The Consumer Access Bill, HR 1858, 106th Cong. § 101(1) (1999); see also Council Directive 96/9/EC of the European Parliament and the Council of 11 March 1996 on the Legal Protection of Databases, 1996 Official Journal of the European Union, L77 (27.03.1996): 20–28. 】 the efflorescence of software patents;【235 See generally Julie E. Cohen and Mark A. Lemley, “Patent Scope and Innovation in the Software Industry,” California Law Review 89 (2001): 1–58; see also Pamela Samuelson et al., “A Manifesto Concerning the Legal Protection of Computer Programs,” Columbia Law Review 94 (1994): 2308–2431. 】 the UCITA-led validation of shrinkwrap licenses that bind third parties;【236 Uniform Computer Information Transactions Act, available at ‹http://www.law.upenn.edu/bll/archives/ulc/ucita/2002final.htm›. 】 the Digital Millennium Copyright Act's anticircumvention provisions【237 17 U.S.C. § 1201 (2002). 】 —the point of all of these developments is not merely that they make the peer-to-peer model difficult, but that in many cases they rule it out altogether. I will assert this point here, rather than argue for it, but I think it can be (and has been) demonstrated quite convincingly.【238 This point has been ably made by Pamela Samuelson, Jessica Litman, Jerry Reichman, Larry Lessig, and Yochai Benkler, among others. See Pamela Samuelson, “Intellectual Property and the Digital Economy: Why the Anti-Circumvention Regulations Need to Be Revised,” Berkeley Technology Law Journal 14 (1999): 519–566; Jessica Litman, Digital Copyright: Protecting Intellectual Property on the Internet (Amherst, N.Y.: Prometheus Books, 2001); J. H. Reichman and Paul F. Uhlir, “Database Protection at the Crossroads: Recent Developments and Their Impact on Science and Technology,” Berkeley Technology Law Journal 14 (1999): 793–838; Lawrence Lessig, “Jail Time in the Digital Age,” New York Times (July 30, 2001), A17; and Yochai Benkler, “Free as the Air to Common Use: First Amendment Constraints on Enclosure of the Public Domain,” New York University Law Review 74 (1999): 354–446. Each has a slightly different focus and emphasis on the problem, but each has pointed out the impediments now being erected to distributed, nonproprietary solutions. See also James Boyle, “Cruel, Mean, or Lavish? Economic Analysis, Price Discrimination and Digital Intellectual Property,” Vanderbilt Law Review 53 (2000): 2007–2039. 】

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The point is, then, that there is a chance that a new (or old, but under-recognized) method of production could flourish in ways that seem truly valuable—valuable to free speech, innovation, scientific discovery, the wallets of consumers, to what William Fisher calls “semiotic democracy,”【239 William W. Fisher III, “Property and Contract on the Internet,” Chicago-Kent Law Review 73 (1998): 1217–1218. 】 and, perhaps, valuable to the balance between joyful creation and drudgery for hire. True, it is only a chance. True, this theory's scope of operation and sustainability are uncertain. But why would we want to foreclose it? That is what the recent expansions of intellectual property threaten to do. And remember, these expansions were dubious even in a world where we saw little or no possibility of the distributed production model I have described, where discussion of network effects had yet to reach the pages of The New Yorker,【240 See James Boyle, “Missing the Point on Microsoft,” Salon.com (April 7, 2000), ‹http://www.salon.com/tech/feature/2000/04/07/greenspan/index.html›. 】 and where our concerns about the excesses of intellectual property were simply the ones that Jefferson, Madison, and Macaulay gave us so long ago.

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Out of this pattern of habit and influence, and out of much deeper notions about authorship and invention that I have explored elsewhere, developed an ideology, a worldview. Call it maximalism. Its proponents sincerely believed in it and pursued it even when it did not make economic sense. (Think how lucky the movie industry is that it lost the Sony

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Economic determinism does not explain the rules we have. Neither are those rules simply a result of the manipulation of elected officials by incumbent industries through crafty campaign contributions and distorted evidence (though to be sure, there was a lot of that as well). Many of the people who put forward this worldview—both lobbyists and lobbied—sincerely believe that more rights will always lead to more innovation, that all property rights are the same, that we do not need to think about both the input and output sides of the equation, that cheaper copying techniques automatically require greater protections, and so on. What of the modest suggestions I put forward here? We could sum them up thus: do not apply identical assumptions to physical and intellectual property. Focus on both the inputs to and the outputs of the creative process; protecting the latter may increase the cost of the former. Look both at the role of the public domain and the commons of cultural and scientific material and at the need to provide incentives for creativity and distribution through exclusive rights. More rights will not automatically produce more innovation. Indeed, we should confine rights as narrowly as possible while still providing the desired result. Look at the empirical evidence before and after increasing the level of protection. Pay attention to the benefits as well as the costs of the new technologies and the flowering of creativity they enable.

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We are living through an existence-proof that there are other methods of generating innovation, expression, and creativity than the proprietary, exclusionary model of sole control. True, these methods existed before. Yet they tended to be local or invisible or both. The Internet has shown conclusively and visibly that—at least in certain sectors—we can have a global flowering of creativity, innovation, and information sharing in which intellectual property rights function in a very different way than under the standard model of proprietary control. In some cases, intellectual property rights were simply irrelevant—much of the information sharing and indexing on the Web falls within this category. In some cases they were used to prevent exclusivity. Think of Creative Commons or the General Public License. In some, they were actually impediments. Software patents, for example, have a negative effect on open source software development—one that policy makers are only now slowly beginning to acknowledge.

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What would it mean to pay attention to the changes I have described? It would mean assessing the impact of rules on both proprietary and nonproprietary production. For example, if the introduction of a broad regime of software patents would render open source software development more difficult (because individual contributors cannot afford to do a patent search on every piece of code they contribute), then this should be reflected as a cost of software patents, to be balanced against whatever benefits the system brought. A method for encouraging innovation might, in fact, inhibit one form of it.

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The main thrust of the argument here is still firmly within the Jeffersonian, Scottish Enlightenment tradition. Jefferson does not wish to give the patent to Oliver Evans because he believes the invention will be (and has been) generated anyway without the granting of an intellectual property right and that there are sufficient information retrieval methods to have practical access to it. In this case, the information retrieval method is not Google. It is a polymath genius combing his library in Monticello for references to Persian irrigation methods. The “embarrassment” caused by the unnecessary patent is added expense and bureaucracy in agriculture and impediments to further innovators, not the undermining of open source software. But it is the same principle of cautious minimalism, the same belief that much innovation goes on without proprietary control and that intellectual property rights are the exception, not the rule. When Benjamin Franklin, a man who surely deserved patents under even the most stringent set of tests, chooses to forgo them because he has secured so much benefit from the contributions of others, he expresses Shirky's norm nicely.

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Attempts to form a commons may also backfire. The coordination problems are legion. There are difficulties of compatibility in licenses and the process, no matter how easy, still imposes transaction costs. Nevertheless, with all of these qualifications, the idea of the privately created commons is an important addition to the world view that Jefferson provided, a new tool in our attempt to craft a working system of innovation and culture. No one who looks at the Web can doubt the power of distributed, and frequently uncompensated, creativity in constructing remarkable reference works, operating systems, cultural conversations, even libraries of images and music. Some of that innovation happens largely outside of the world of intellectual property. Some of it happens in privately created areas of sharing that use property rights and open, sometimes even machine-readable, licenses to create a commons on which others can build. The world of creativity and its methods is wider than we had thought. That is one of the vital and exciting lessons the Internet teaches us; unfortunately, the only one our policy makers seem to hear is “cheaper copying means more piracy.”

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Benkler's work is hardly the only resource however. Other fine works covering some of the same themes include: Cass R. Sunstein, Infotopia: How Many Minds Produce Knowledge (New York: Oxford University Press, 2006), and Rishab Aiyer Ghosh, ed., CODE: Collaborative Ownership and the Digital Economy (Cambridge, Mass.: MIT Press, 2005), which includes an essay by me presenting an earlier version of the “second enclosure movement” argument. Clay Shirky's recent book, Here Comes Everybody: The Power of Organizing without Organizations (New York: Penguin Press, 2008), is an extremely readable and thoughtful addition to this body of work—it includes a more developed version of the speech I discuss. Eric Von Hippel's Democratizing Innovation (Cambridge, Mass.: MIT Press, 2005), is a fascinating account of the way that innovation happens in more places than we have traditionally imagined—particularly in end-user communities. In one sense, this reinforces a theme of this chapter: that the “peer production” and “distributed creativity” described here is not something new, merely something that is given dramatically more salience and reach by the Web. Dan Hunter and F. Gregory Lastowka's article, “Amateur-to-Amateur,” William & Mary Law Review 46 (2004): 951–1030, describes some of the difficulties in adapting copyright law to fit “peer production.” Finally, Jonathan Zittrain's The Future of the Internet—And How to Stop It (New Haven, Conn.: Yale University Press, 2008)—also relevant to Chapter 10—argues that if the democratically attractive aspects of the Internet are to be saved, it can only be done through enlisting the collective energy and insight of the Internet's users.

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Perhaps some of the arguments in this book have convinced you. Perhaps it is a mistake to think of intellectual property in the same way we think of physical property. Perhaps limitations and exceptions to those rights are as important as the rights themselves. Perhaps the public domain has a vital and tragically neglected role to play in innovation and culture. Perhaps relentlessly expanding property rights will not automatically bring us increased innovation in science and culture. Perhaps the second enclosure movement is more troubling than the first. Perhaps it is unwise to extend copyright again and again, and to do so retrospectively, locking up most of twentieth-century culture in order to protect the tiny fragment of it that is still commercially available. Perhaps technological improvements bring both benefits and costs to existing rights holders—both of which should be considered when setting policy. Perhaps we need a vigorous set of internal limitations and exceptions within copyright, or control over content will inevitably become control over the medium of transmission. Perhaps the Internet should make us think seriously about the power of nonproprietary and distributed production.

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So how do we decide the ground rules of the information age? Representatives of interested industries come to regulators and ask for another heaping slice of monopoly rent in the form of an intellectual property right. They have doom-laden predictions, they have anecdotes, carefully selected to pluck the heartstrings of legislators, they have celebrities who testify—often incoherently, but with palpable charisma—and they have very, very simple economic models. The basic economic model here is “If you give me a larger right, I will have a larger incentive to innovate. Thus the bigger the rights, the more innovation we will get. Right?”

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As I have tried to show here using the words of Jefferson and Macaulay and examples such as term extension, software copyrights, and garage door openers, this logic is fallacious. Even without data, the “more is better” idea is obviously flawed. Copyrighting the alphabet will not produce more books. Patenting E=mc2 will not yield more scientific innovation. Intellectual property creates barriers to, as well as incentives toward, innovation. Jefferson agonized over the issue of when the benefits exceed the costs of a new right. “I know well the difficulty of drawing a line between the things which are worth to the public the embarrassment of an exclusive patent, and those which are not.” It is not clear that contemporary policy makers approach issues with anything like the same sophistication or humility. But it would be an equal mistake to conclude, as some do, that expansions of intellectual property are never justified. Extensions of rights can help or hurt, but without economic evidence beforehand and review afterward, we will never know. This point should be obvious, banal, even deeply boring, but sadly it is not.

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Second, are the principal beneficiaries of the database right in Europe producing databases they would not have produced otherwise? Obviously, if a society is handing over a database right for a database that would have been created anyway, it is overpaying—needlessly increasing prices for consumers and burdens for competitors. This goes to the design of the right—has it been crafted too broadly, so that it is not being targeted to those areas where it is needed to encourage innovation?

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Third, and this one is harder to judge, is the new right promoting innovation and competition rather than stifling it? For example, if the existence of the right allowed a one-time surge of newcomers to the market who then use their rights to discourage new entrants, or if we promoted some increase in databases but made scientific aggregation of large amounts of data harder overall, then the database right might actually be stifling the innovation it is designed to foment.

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Finally, is the database right encouraging scientific innovation or hurting it? Here the evidence is merely suggestive. Scientists have claimed that the European database right, together with the perverse failure of European governments to take advantage of the limited scientific research exceptions allowed by the directive, have made it much harder to aggregate data, to replicate studies, and to judge published articles. In fact, academic scientific bodies have been among the strongest critics of database protection. But negative evidence, by its nature, is hard to produce; “show me the science that did not get done!” Certainly, both U.S. science and commerce have benefited extraordinarily from the openness of U.S. data policy. I will deal with this issue in the next part of this chapter.

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This little story contains a larger truth. It is true that innovation and information goods will, in general, tend to be less excludable and less rival than a ham sandwich, say. But, in practice, some of them will be linked or connected in their social setting to other phenomena that are highly excludable. The software can easily be copied—but access to the help lines can be restricted with ease. Audiences cannot easily be excluded from viewing television broadcasts, but advertisers can easily be excluded from placing their advertisements in those programs. The noncopyrightable court decisions are of most use when embedded within a technical system that gives easy access to other material—some of it copyrighted and all of it protected by technical measures and contractual restrictions. The music file can be downloaded; the band's T-shirt or the experience of the live concert cannot. Does this mean that we never need an intellectual property right? Not at all. But it does indicate that we need to be careful when someone claims that “without a new intellectual property right I am doomed.”

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There are also a few places where the reasoning in the report left one scratching one's head. One goal of the database right was to help close the gap between the size of the European and U.S. database markets. Even before the directive, most European countries already gave greater protection than the United States to compilations of fact. The directive raised the level still higher. The theory was that this would help build European market share. Of course, the opposite is also possible. Setting intellectual property rights too high can actually stunt innovation. In practice, as the Commission's report observes, “the ratio of European / U.S. database production, which was nearly 1:2 in 1996, has become 1:3 in 2004.”【248 Ibid., 22. 】 Europe had started with higher protection and a smaller market. Then it raised its level of protection and lost even more ground. Yet the report was oddly diffident about the possibility that the U.S. system actually works better.

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A couple of things are worth noting here. The first is that the Committee is quite prepared to believe that the effects of term extension would not benefit performers or provide incentives for creativity, and even to believe that it would hurt the balance of trade. The second is the curious argument in the last sentence. Other countries have stronger systems of rights and are less successful. We should change our regime to be more like them! Obviously the idea that a country's creative industries might be less successful because their systems of rights were stronger does not occur to the Committee for a moment. Though it proclaims itself to be unaffected by economic thought, it is in fact deeply influenced by the “more rights equals more innovation” ideology of maximalism that I have described in these pages.

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Most of us feel the pull of this argument. I certainly do. But as I pointed out in Chapter 2, there are considerable problems with such an idea. First, it runs against the premises of actual copyright systems. In the United States, for example, the Constitution resolutely presents the opposite picture. Exclusive rights are to encourage progress in science and the useful arts. The Supreme Court has elaborated on this point many times, rejecting both labor-based “sweat of the brow” theories of copyright and more expansive visions based on a natural right to the products of one's genius—whether inventions or novels. Britain, too, has a history of looking to copyright as a utilitarian scheme—though with more reference to, and legal protection of, particular “moral rights” than one finds in the United States. But even in the most expansive “moral rights” legal systems, even in the early days of debate about the rights of authors after the French Revolution, it is accepted that there are temporal limits on these rights. If this is true of authors, it is even more true of performers, who are not granted the full suite of author's rights in moral rights jurisdictions, being exiled to a form of protection called “neighboring” rights.

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The move toward evidence-based policy has garnered considerable support in academia, but, as yet, only a little traction among policy makers. Readers interested in exploring the issue further can find a series of my Financial Times's articles on the subject at ‹http://www.ft.com/techforum›. James Bessen and Michael J. Meurer, Patent Failure: How Judges, Bureaucrats, and Lawyers Put Innovators at Risk (Princeton, N.J.: Princeton University Press, 2008), is a sterling example of the way in which we could and should be looking at policy proposals. That book's list of references provides a nice overview of recent work in the field. As the title indicates, Bessen and Meurer do not grade our current system highly. Adam Jaffe and Josh Lerner, Innovation and Its Discontents: How Our Broken Patent System is Endangering Innovation and Progress, and What To Do About It (Princeton, N.J.: Princeton University Press, 2004), offers an earlier, and similar, assessment backed by data rather than faith. For us to have evidence-based policy, we need actual evidence. Here the work of empiricists such as my colleague Wes Cohen has proven vital. Much of this work is comparative in nature—relying on the kind of “natural experiment” I describe in this chapter. A fine example is provided by Wesley M. Cohen, Akira Goto, Akiya Nagata, Richard R. Nelson, and John P. Walsh, “R&D Spillovers, Patents and the Incentives to Innovate in Japan and the United States,” Research Policy 31 (2002): 1349–67.

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The first question is a thought experiment I introduced in Chapter 4. You have to design an international computer network. One group of scientists describes a system that is fundamentally open: open protocols and open systems so that anyone could connect to the system and offer information or products to the world. Another group—scholars, businesspeople, bureaucrats—points out the problems. Anyone could connect to the system! They could do anything! The system itself would not limit them to a few approved actions or approved connections. There would be porn, and piracy, and viruses, and spam. Terrorists could put up videos glorifying themselves. Your neighbor's site could compete with the New York Times or the U.S. government in documenting the war in Iraq. Better to have a well-managed system in which official approval is required to put up a site, where only a few selected actions are permitted by the network protocols, where most of us are merely recipients of information, where spam, viruses, and piracy (and innovation and participatory culture and anonymous speech) are impossible. Which network design would you have picked? Remember, you have no experience of blogs, or mashups, or Google; no experience of the Web. Just you and your cognitive filters.

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I am not postulating some sinister “Breakages, Limited” that stifles technological innovation. I am merely pointing out the imbalance between our intuitive perceptions of the virtues and dangers of open and closed systems, an imbalance I share, quite frankly.

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I have argued that our policies are distorted not merely by industry capture or the power of incumbent firms, but by a series of cultural and economic biases or presuppositions: the equation of intellectual property to physical property; the assumption that whenever value is created, an intellectual property right should follow; the romantic idea of creativity that needs no raw material from which to build; the habit of considering the threats, but not the benefits, of new technologies; the notion that more rights will automatically bring more innovation; the failure to realize that the public domain is a vital contributor to innovation and culture; and a tendency to see the dangers of openness, but not its potential benefits.【257 Of course, these are not the only assumptions, arguments, and metaphors around. Powerful counterweights exist: the ideas of Jefferson and Macaulay, which I described here, but also others, more loosely related—the Scottish Enlightenment's stress on the political and moral benefits of competition, free commerce, and free labor; deep economic and political skepticism about monopolies; the strong traditions of open science; and even liberalism's abiding focus on free speech and access to information. If you hear the slogan “information wants to be free,” you may agree or disagree with the personification. You may find the idea simplistic. But you do not find it incomprehensible, as you might if someone said “housing wants to be free” or “food wants to be free.” We view access to information and culture as vital to successful versions of both capitalism and liberal democracy. We apply to blockages in information flow or disparities in access to information a skepticism that does not always apply to other social goods. Our attitudes toward informational resources are simply different from our attitudes toward other forms of power, wealth, or advantage. It is one of the reasons that the Jefferson Warning is so immediately attractive. It is this attitudinal difference that makes the political terrain on these issues so fascinating. 】

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1. Drug patents do help produce drugs. Jettisoning them is a bad idea—though experimenting with additional and alternative methods of encouraging medical innovation is a very good one.

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Organizing has also taken place around particular cases—such as Eldred v. Ashcroft, the challenge to the Sonny Bono Copyright Term Extension Act.【265 Eldred v. Ashcroft, 537 U.S. 186 (2003). Once again, Professor Lessig had the central role as counsel for petitioners. 】 Activity is not confined to the world of copyright. The Public Patent Foundation combats “patent creep” by exposing and challenging bad patents.【266 See ‹http://www.pubpat.org/›. 】 It would be remiss not to mention the international Access to Knowledge, or A2K, movement, inspired by the work of Jamie Love.【267 See Access to Knowledge, ‹http://www.cptech.org/a2k/›. Some of Mr. Love's initiatives are discussed at ‹http://www.cptech.org/jamie/›. 】 While its focus is on the kinds of issues represented by the access-to-medicines movement, it has made the idea of balance in intellectual property and the protection of the public domain one of its central components. Mr. Love himself is also the central figure behind the idea of a Research and Development Treaty which would amend international trade agreements to make intellectual property merely one of a whole range of economic methods for stimulating innovation.【268 Tim Hubbard and James Love, “A New Trade Framework for Global Healthcare R&D,” PLoS Biology 2 (2004): e52. 】 His work has touched almost every single one of the movements discussed here.

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The Access to Knowledge movement has many institutional variants. The Development Agenda at the World Intellectual Property Organization (WIPO), put forward by India and Brazil, includes similar themes, as do the Geneva Declaration and the Adelphi Charter produced by the United Kingdom's Royal Society for the Encouragement of Arts, Manufactures and Commerce.【269 WIPO Development Agenda, available at ‹http://www.cptech.org/ip/wipo/da.html›. The Geneva Declaration on the Future of the World Intellectual Property Organization, available at ‹http://www.cptech.org/ip/wipo/futureofwipodeclaration.pdf›. In the interest of full disclosure, I should note that I wrote one of the first manifestos that formed the basis for earlier drafts of the Declaration. James Boyle, “A Manifesto on WIPO and the Future of Intellectual Property,” Duke Law & Technology Review 0009 (2004): 1–12, available at ‹http://www.law.duke.edu/journals/dltr/articles/PDF/2004DLTR0009.pdf›. The Adelphi Charter on Creativity, Innovation, and Intellectual Property, available at ‹http://www.adelphicharter.org/›. The Charter was issued by the British Royal Society for the Encouragement of Arts, Manufactures and Commerce (RSA). For discussion of the Charter see James Boyle, “Protecting the Public Domain,” Guardian.co.uk (October 14, 2005), available at ‹http://education.guardian.co.uk/higher/comment/story/0,9828,1591467,00.html›; “Free Ideas,” The Economist (October 15, 2005), 68. Again, in the interest of full disclosure, I should note that I advised the RSA on these issues and was on the steering committee of the group that produced the Charter. 】 History is full of wordy charters and declarations, of course. By themselves they mean little. Yet the level of public and media attention paid to them indicates that intellectual property policy is now of interest beyond a narrow group of affected industries. To underscore this point, several major foundations have introduced intellectual property initiatives, something that would have been inconceivable ten years ago.【270 An example is the MacArthur Foundation Program on Intellectual Property and the Public Domain: “The General Program . . . was begun in 2002 as a short-term project to support new models, policy analysis, and public education designed to bring about balance between public and private interests concerning intellectual property rights in a digital era.” See www.macfound.org/grantmaking_guidelines_ippd [Ed. note: originally published as ‹http://www.macfound.org/site/c.lkLXJ8MQKrH/b.943331/k.DA6/General_Grantmaking__Intellectual_Property.htm›, the link changed]. The Ford Foundation has a similar initiative. Frédéric Sultan, “International Intellectual Property Initiative: Ford Foundation I-Jumelage Resources,” available at ‹http://www.vecam.org/ijumelage/spip.php?article609›. 】

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If one looks at these institutions and actors and at the range of issues on which they focus—from software to drug patents, from reverse engineering to access to archival records—the obvious question is, how did they overcome the collective action problem? What ties together a critique of digital locks and the access-to-medicines movement? Again, I think the answer points to the usefulness of the environmental analogy. As I pointed out, the invention of the “environment” trope tied together groups whose interests, considered at a lower level of abstraction, seemed entirely different—hunters and birdwatchers, antipollution protesters and conservation biologists. The idea of the “environment” literally created the self-interest or set of preferences that ties the movement together. The same is true here. Apparently disparate interests are linked by ideas of the protection of the public domain and of the importance of a balance between protection and freedom in cultural and scientific ecology.【272 This process runs counter to the assumptions of theorists of collective action problems in a way remarkable enough to have attracted its own chroniclers. See Amy Kapczynski, “The Access to Knowledge Mobilization and the New Politics of Intellectual Property,” Yale Law Journal 117 (2008): 804–885. Economists generally assume preferences are simply given, individuals just have them and they are “exogenous” to the legal system in the sense that they are unaffected by the allocation of legal rights. The emergence of the movements and institutions I am describing here paints a different picture. The “preferences” are socially constructed, created through a collective process of debate and decision which shifts the level of abstraction upwards; and, as Kapczynski perceptively notes, they are highly influenced by the legal categories and rights against which the groups involved initially defined themselves. 】

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But even a broad range of initiatives and institutions would not, in and of themselves, produce results. One must convince people that one's arguments are good, one's institutional innovations necessary, one's horror stories disturbing. Environmentalism has managed to win the battle for clarity—to make its points clearly enough that they ceased to be dismissed as “arcane” or technical, to overcome neglect by the media, to articulate a set of concerns that are those of any educated citizen. The other striking phenomenon of the last ten years is the migration of intellectual property issues off the law reviews or business pages and onto the front pages and the editorial pages. Blogs have been particularly influential. Widely read sites such as Slashdot and BoingBoing have multiple postings on intellectual property issues each day; some are rants, but others are at a level of sophistication that once would have been confined to academic discussion.【273 See “News for Nerds: Stuff That Matters,” ‹http://www.slashdot.org›, and “A Directory of Wonderful Things,” ‹http://www.boingboing.net›. 】 Scientists passionately debate the importance of open access to scholarly journals. Geographers and climatologists fume over access to geospatial data. The movement has been pronounced enough to generate its own reaction. The popular comics site “xkcd” has strips critical of the Digital Millennium Copyright Act,【274 Pub. L. No. 105-304, 112 Stat. 2860 (1998) (codified as amended in scattered sections of 5, 17, 28, and 35 U.S.C.). 】 but also a nerdily idyllic picture of a stick figure reclining under a tree and saying, “Sometimes I just can't get outraged over copyright law.”【275 For the former see “Content Protection,” ‹http://xkcd.com/c129.html›, and “Digital Rights Management,” ‹http://xkcd.com/c86.html›. For the latter, see “Copyright,” ‹http://xkcd.com/c14.html›. 】 That cartoon now resides on my computer desktop. (It is under a Creative Commons license, ironically enough.)

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A better intellectual property system will not cure AIDS or rheumatoid arthritis or Huntington's disease or malaria. Certainly not by itself. Patents have already played a positive role in contributing to treatments for the first two, though they are unlikely to help much on the latter two; the affected populations are too few or too poor. But overly broad, or vague, or confusing patents could (and I believe have) hurt all of those efforts—even those being pursued out of altruism. Those problems could be mitigated. Reforms that made possible legal and facilitated distribution of patented medicines in Africa might save millions of lives. They would cost drug companies little. Africa makes up 1.6 percent of their global market. Interesting alternative methods have even been suggested for encouraging investment in treatments for neglected diseases and diseases of the world's poor. At the moment, we spend 90 percent of our research dollars on diseases that affect 10 percent of the global population. Perhaps this is the best we can do, but would it not be nice to have a vigorous public debate on the subject? Some possible innovations are much easier. A simple rule that required the eventual free publication online of all government-funded health research, under open licenses, rather than its sequestration behind the paywalls of commercial journals, could help fuel remarkable innovations in scientific synthesis and computer-aided research while giving citizens access to the research for which they have already paid.

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There is cause for both concern and optimism. Concern, because it is still hard for courts, legislators, policy makers, and citizens to see beyond the word “property” to the reality underneath. I started this book with the question from my son about the online catalogue of the Library of Congress: “Where do you click to get the book?” In 2003 the Supreme Court heard Eldred v. Ashcroft, the challenge to retrospective copyright term extension. Over two strong dissents, the Court upheld the constitutionality of the act against both First Amendment and Copyright Clause challenges. The dead had their copyrights extended yet again. The widest legal restriction of speech in the history of the Republic—putting off-limits most twentieth-century books, poems, films, and songs for another twenty years without a corresponding speech benefit or incentive—can proceed without significant First Amendment review. Does such a decision mean the task this book undertakes—to take seriously the contributions of the public domain to innovation, culture, and speech—is ultimately doomed, whatever its intellectual merits, to face a hostile or uncomprehending audience? Admittedly, Eldred focused specifically on two particular constitutional claims. Still, the attitude of the majority toward the importance of the public domain—whether in the textual limitations on Congress's power or the application of the First Amendment—can hardly be cause for optimism. And yet . . . The media reaction was remarkable.

 The Wealth of Networks - How Social Production Transforms Markets and Freedom

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Much of the early work in this project was done at New York University, whose law school offered me an intellectually engaging and institutionally safe environment to explore some quite unorthodox views. A friend, visiting when I gave a brown-bag workshop there in 1998, pointed out that at very few law schools could I have presented "The Commons as a Neglected Factor of Information Policy" as an untenured member of the faculty, to a room full of law and economics scholars, without jeopardizing my career. Mark Geistfeld, in particular, helped me work though the economics of sharing--as we shared many a pleasant afternoon on the beach, watching our boys playing in the waves. I benefited from the generosity of Al Engelberg, who funded the Engelberg Center on Innovation Law and Policy and through it students and fellows, from whose work I learned so much; and Arthur Penn, who funded the Information Law Institute and through it that amazing intellectual moment, the 2000 conference on "A Free Information Ecology in the Digital Environment," and the series of workshops that became the Open Spectrum Project. During that period, I was fortunate enough to have had wonderful students and fellows with whom I worked in various ways that later informed this book, in particular Gaia Bernstein, Mike Burstein, John Kuzin, Greg Pomerantz, Steve Snyder, and Alan Toner.

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It is easy to miss these changes. They run against the grain of some of our most basic Economics 101 intuitions, intuitions honed in the industrial economy at a time when the only serious alternative seen was state Communism--an alternative almost universally considered unattractive today. The undeniable economic success of free software has prompted some leading-edge economists to try to understand why many thousands of loosely networked free software developers can compete with Microsoft at its own game and produce a massive operating system--GNU/Linux. That growing literature, consistent with its own goals, has focused on software and the particulars of the free and open-source software development communities, although Eric von Hippel's notion of "user-driven innovation" has begun to expand that focus to thinking about how individual need and creativity drive innovation at the individual level, and its diffusion through networks of likeminded individuals. The political implications of free software have been central to the free software movement and its founder, Richard Stallman, and were developed provocatively and with great insight by Eben Moglen. Free software is but one salient example of a much broader phenomenon. Why can fifty thousand volunteers successfully coauthor Wikipedia, the most serious online alternative to the Encyclopedia Britannica, and then turn around and give it away for free? Why do 4.5 million volunteers contribute their leftover computer cycles to create the most powerful supercomputer on Earth, SETI@Home? Without a broadly accepted analytic model to explain these phenomena, we tend to treat them as curiosities, perhaps transient fads, possibly of significance in one market segment or another. We [pg 6] should try instead to see them for what they are: a new mode of production emerging in the middle of the most advanced economies in the world-- those that are the most fully computer networked and for which information goods and services have come to occupy the highest-valued roles.

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From a more substantive and global perspective focused on human development, the freedom to use basic resources and capabilities allows improved participation in the production of information and information-dependent components of human development. First, and currently most advanced, the emergence of a broad range of free software utilities makes it easier for poor and middle-income countries to obtain core software capabilities. More importantly, free software enables the emergence of local capabilities to provide software services, both for national uses and as a basis for participating in a global software services industry, without need to rely on permission from multinational software companies. Scientific publication is beginning to use commons-based strategies to publish important sources of information in a way that makes the outputs freely available in poorer countries. More ambitiously, we begin to see in agricultural research a combined effort of public, nonprofit, and open-source-like efforts being developed and applied to problems of agricultural innovation. The ultimate purpose is to develop a set of basic capabilities that would allow collaboration among farmers and scientists, in both poor countries and around the globe, to develop better, more nutritious crops to improve food security throughout the poorer regions of the world. Equally ambitious, but less operationally advanced, we are beginning to see early efforts to translate this system of innovation to health-related products.

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All these efforts are aimed at solving one of the most glaring problems of poverty and poor human development in the global information economy: Even as opulence increases in the wealthier economies--as information and innovation offer longer and healthier lives that are enriched by better access to information, knowledge, and culture--in many places, life expectancy is decreasing, morbidity is increasing, and illiteracy remains rampant. Some, although by no means all, of this global injustice is due to the fact that we have come to rely ever-more exclusively on proprietary business models of the industrial economy to provide some of the most basic information components of human development. As the networked information economy develops new ways of producing information, whose outputs are not treated as proprietary and exclusive but can be made available freely to everyone, it offers modest but meaningful opportunities for improving human development everywhere. We are seeing early signs of the emergence of an innovation [pg 15] ecosystem made of public funding, traditional nonprofits, and the newly emerging sector of peer production that is making it possible to advance human development through cooperative efforts in both rich countries and poor.

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The idea is simple to explain, and distinct from a naïve determinism. Different technologies make different kinds of human action and interaction easier or harder to perform. All other things being equal, things that are easier to do are more likely to be done, and things that are harder to do are less likely to be done. All other things are never equal. That is why technological determinism in the strict sense--if you have technology "t," you should expect social structure or relation "s" to emerge--is false. Ocean navigation had a different adoption and use when introduced in states whose land empire ambitions were effectively countered by strong neighbors--like Spain and Portugal--than in nations that were focused on building a vast inland empire, like China. Print had different effects on literacy in countries where religion encouraged individual reading--like Prussia, Scotland, England, and New England--than where religion discouraged individual, unmediated interaction with texts, like France and Spain. This form of understanding the role of technology is adopted here. Neither deterministic nor wholly malleable, technology sets some parameters of individual and social action. It can make some actions, relationships, organizations, and institutions easier to pursue, and others harder. In a challenging environment--be the challenges natural or human--it can make some behaviors obsolete by increasing the efficacy of directly competitive strategies. However, within the realm of the feasible--uses not rendered impossible by the adoption or rejection of a technology--different patterns of adoption and use [pg 18] can result in very different social relations that emerge around a technology. Unless these patterns are in competition, or unless even in competition they are not catastrophically less effective at meeting the challenges, different societies can persist with different patterns of use over long periods. It is the feasibility of long-term sustainability of different patterns of use that makes this book relevant to policy, not purely to theory. The same technologies of networked computers can be adopted in very different patterns. There is no guarantee that networked information technology will lead to the improvements in innovation, freedom, and justice that I suggest are possible. That is a choice we face as a society. The way we develop will, in significant measure, depend on choices we make in the next decade or so.

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At the physical layer, the transition to broadband has been accompanied by a more concentrated market structure for physical wires and connections, and less regulation of the degree to which owners can control the flow of [pg 25] information on their networks. The emergence of open wireless networks, based on "spectrum commons," counteracts this trend to some extent, as does the current apparent business practice of broadband owners not to use their ownership to control the flow of information over their networks. Efforts to overcome the broadband market concentration through the development of municipal broadband networks are currently highly contested in legislation and courts. The single most threatening development at the physical layer has been an effort driven primarily by Hollywood, over the past few years, to require the manufacturers of computation devices to design their systems so as to enforce the copyright claims and permissions imposed by the owners of digital copyrighted works. Should this effort succeed, the core characteristic of computers--that they are general-purpose devices whose abilities can be configured and changed over time by their owners as uses and preferences change--will be abandoned in favor of machines that can be trusted to perform according to factory specifications, irrespective of what their owners wish. The primary reason that these laws have not yet passed, and are unlikely to pass, is that the computer hardware and software, and electronics and telecommunications industries all understand that such a law would undermine their innovation and creativity. At the logical layer, we are seeing a concerted effort, again headed primarily by Hollywood and the recording industry, to shape the software and standards to make sure that digitally encoded cultural products can continue to be sold as packaged goods. The Digital Millennium Copyright Act and the assault on peer-to-peer technologies are the most obvious in this regard.

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Social and economic organization is not infinitely malleable. Neither is it always equally open to affirmative design. The actual practices of human interaction with information, knowledge, and culture and with production and consumption are the consequence of a feedback effect between social practices, economic organization, technological affordances, and formal constraints on behavior through law and similar institutional forms. These components of the constraints and affordances of human behavior tend to adapt dynamically to each other, so that the tension between the technological affordances, the social and economic practices, and the law are often not too great. During periods of stability, these components of the structure within which human beings live are mostly aligned and mutually reinforce [pg 27] each other, but the stability is subject to shock at any one of these dimensions. Sometimes shock can come in the form of economic crisis, as it did in the United States during the Great Depression. Often it can come from an external physical threat to social institutions, like a war. Sometimes, though probably rarely, it can come from law, as, some would argue, it came from the desegregation decision in Brown v. Board of Education. Sometimes it can come from technology; the introduction of print was such a perturbation, as was, surely, the steam engine. The introduction of the highcapacity mechanical presses and telegraph ushered in the era of mass media. The introduction of radio created a similar perturbation, which for a brief moment destabilized the mass-media model, but quickly converged to it. In each case, the period of perturbation offered more opportunities and greater risks than the periods of relative stability. During periods of perturbation, more of the ways in which society organizes itself are up for grabs; more can be renegotiated, as the various other components of human stability adjust to the changes. To borrow Stephen Jay Gould's term from evolutionary theory, human societies exist in a series of punctuated equilibria. The periods of disequilibrium are not necessarily long. A mere twenty-five years passed between the invention of radio and its adaptation to the mass-media model. A similar period passed between the introduction of telephony and its adoption of the monopoly utility form that enabled only one-to-one limited communications. In each of these periods, various paths could have been taken. Radio showed us even within the past century how, in some societies, different paths were in fact taken and then sustained over decades. After a period of instability, however, the various elements of human behavioral constraint and affordances settled on a new stable alignment. During periods of stability, we can probably hope for little more than tinkering at the edges of the human condition.

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Chapter 2 - Some Basic Economics of Information Production and Innovation

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The technical economic answer is that certain characteristics of information and culture lead us to understand them as "public [pg 36] goods," rather than as "pure private goods" or standard "economic goods." When economists speak of information, they usually say that it is "nonrival." We consider a good to be nonrival when its consumption by one person does not make it any less available for consumption by another. Once such a good is produced, no more social resources need be invested in creating more of it to satisfy the next consumer. Apples are rival. If I eat this apple, you cannot eat it. If you nonetheless want to eat an apple, more resources (trees, labor) need to be diverted from, say, building chairs, to growing apples, to satisfy you. The social cost of your consuming the second apple is the cost of not using the resources needed to grow the second apple (the wood from the tree) in their next best use. In other words, it is the cost to society of not having the additional chairs that could have been made from the tree. Information is nonrival. Once a scientist has established a fact, or once Tolstoy has written War and Peace, neither the scientist nor Tolstoy need spend a single second on producing additional War and Peace manuscripts or studies for the one-hundredth, one-thousandth, or one-millionth user of what they wrote. The physical paper for the book or journal costs something, but the information itself need only be created once. Economists call such goods "public" because a market will not produce them if priced at their marginal cost--zero. In order to provide Tolstoy or the scientist with income, we regulate publishing: We pass laws that enable their publishers to prevent competitors from entering the market. Because no competitors are permitted into the market for copies of War and Peace, the publishers can price the contents of the book or journal at above their actual marginal cost of zero. They can then turn some of that excess revenue over to Tolstoy. Even if these laws are therefore necessary to create the incentives for publication, the market that develops based on them will, from the technical economic perspective, systematically be inefficient. As Kenneth Arrow put it in 1962, "precisely to the extent that [property] is effective, there is underutilization of the information."【7 The full statement was: "[A]ny information obtained, say a new method of production, should, from the welfare point of view, be available free of charge (apart from the costs of transmitting information). This insures optimal utilization of the information but of course provides no incentive for investment in research. In a free enterprise economy, inventive activity is supported by using the invention to create property rights; precisely to the extent that it is successful, there is an underutilization of information." Kenneth Arrow, "Economic Welfare and the Allocation of Resources for Invention," in Rate and Direction of Inventive Activity: Economic and Social Factors, ed. Richard R. Nelson (Princeton, NJ: Princeton University Press, 1962), 616-617. 】 Because welfare economics defines a market as producing a good efficiently only when it is pricing the good at its marginal cost, a good like information (and culture and knowledge are, for purposes of economics, forms of information), which can never be sold both at a positive (greater than zero) price and at its marginal cost, is fundamentally a candidate for substantial nonmarket production.

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This widely held explanation of the economics of information production has led to an understanding that markets based on patents or copyrights involve a trade-off between static and dynamic efficiency. That is, looking [pg 37] at the state of the world on any given day, it is inefficient that people and firms sell the information they possess. From the perspective of a society's overall welfare, the most efficient thing would be for those who possess information to give it away for free--or rather, for the cost of communicating it and no more. On any given day, enforcing copyright law leads to inefficient underutilization of copyrighted information. However, looking at the problem of information production over time, the standard defense of exclusive rights like copyright expects firms and people not to produce if they know that their products will be available for anyone to take for free. In order to harness the efforts of individuals and firms that want to make money, we are willing to trade off some static inefficiency to achieve dynamic efficiency. That is, we are willing to have some inefficient lack of access to information every day, in exchange for getting more people involved in information production over time. Authors and inventors or, more commonly, companies that contract with musicians and filmmakers, scientists, and engineers, will invest in research and create cultural goods because they expect to sell their information products. Over time, this incentive effect will give us more innovation and creativity, which will outweigh the inefficiency at any given moment caused by selling the information at above its marginal cost. This defense of exclusive rights is limited by the extent to which it correctly describes the motivations of information producers and the business models open to them to appropriate the benefits of their investments. If some information producers do not need to capture the economic benefits of their particular information outputs, or if some businesses can capture the economic value of their information production by means other than exclusive control over their products, then the justification for regulating access by granting copyrights or patents is weakened. As I will discuss in detail, both of these limits on the standard defense are in fact the case.

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Nonrivalry, moreover, is not the only quirky characteristic of information production as an economic phenomenon. The other crucial quirkiness is that information is both input and output of its own production process. In order to write today's academic or news article, I need access to yesterday's articles and reports. In order to write today's novel, movie, or song, I need to use and rework existing cultural forms, such as story lines and twists. This characteristic is known to economists as the "on the shoulders of giants" effect, recalling a statement attributed to Isaac Newton: "If I have seen farther it is because I stand on the shoulders of giants."【8 Suzanne Scotchmer, "Standing on the Shoulders of Giants: Cumulative Research and the Patent Law," Journal of Economic Perspectives 5 (1991): 29-41. 】 This second quirkiness [pg 38] of information as a production good makes property-like exclusive rights less appealing as the dominant institutional arrangement for information and cultural production than it would have been had the sole quirky characteristic of information been its nonrivalry. The reason is that if any new information good or innovation builds on existing information, then strengthening intellectual property rights increases the prices that those who invest in producing information today must pay to those who did so yesterday, in addition to increasing the rewards an information producer can get tomorrow. Given the nonrivalry, those payments made today for yesterday's information are all inefficiently too high, from today's perspective. They are all above the marginal cost--zero. Today's users of information are not only today's readers and consumers. They are also today's producers and tomorrow's innovators. Their net benefit from a strengthened patent or copyright regime, given not only increased potential revenues but also the increased costs, may be negative. If we pass a law that regulates information production too strictly, allowing its beneficiaries to impose prices that are too high on today's innovators, then we will have not only too little consumption of information today, but also too little production of new information for tomorrow.

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The efficiency of regulating information, knowledge, and cultural production through strong copyright and patent is not only theoretically ambiguous, it also lacks empirical basis. The empirical work trying to assess the impact of intellectual property on innovation has focused to date on patents. The evidence provides little basis to support stronger and increasing exclusive [pg 39] rights of the type we saw in the last two and a half decades of the twentieth century. Practically no studies show a clear-cut benefit to stronger or longer patents.【10 Adam Jaffe, "The U.S. Patent System in Transition: Policy Innovation and the Innovation Process," Research Policy 29 (2000): 531. 】 In perhaps one of the most startling papers on the economics of innovation published in the past few years, Josh Lerner looked at changes in intellectual property law in sixty countries over a period of 150 years. He studied close to three hundred policy changes, and found that, both in developing countries and in economically advanced countries that already have patent law, patenting both at home and abroad by domestic firms of the country that made the policy change, a proxy for their investment in research and development, decreases slightly when patent law is strengthened!【11 Josh Lerner, "Patent Protection and Innovation Over 150 Years" (working paper no. 8977, National Bureau of Economic Research, Cambridge, MA, 2002). 】 The implication is that when a country--either one that already has a significant patent system, or a developing nation--increases its patent protection, it slightly decreases the level of investment in innovation by local firms. Going on intuitions alone, without understanding the background theory, this seems implausible--why would inventors or companies innovate less when they get more protection? Once you understand the interaction of nonrivalry and the "on the shoulders of giants" effect, the findings are entirely consistent with theory. Increasing patent protection, both in developing nations that are net importers of existing technology and science, and in developed nations that already have a degree of patent protection, and therefore some nontrivial protection for inventors, increases the costs that current innovators have to pay on existing knowledge more than it increases their ability to appropriate the value of their own contributions. When one cuts through the rent-seeking politics of intellectual property lobbies like the pharmaceutical companies or Hollywood and the recording industry; when one overcomes the honestly erroneous, but nonetheless conscience-soothing beliefs of lawyers who defend the copyright and patent-dependent industries and the judges they later become, the reality of both theory and empirics in the economics of intellectual property is that both in theory and as far as empirical evidence shows, there is remarkably little support in economics for regulating information, knowledge, and cultural production through the tools of intellectual property law.

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Where does innovation and information production come from, then, if it does not come as much from intellectual-property-based market actors, as many generally believe? The answer is that it comes mostly from a mixture of (1) nonmarket sources--both state and nonstate--and (2) market actors whose business models do not depend on the regulatory framework of intellectual property. The former type of producer is the expected answer, [pg 40] within mainstream economics, for a public goods problem like information production. The National Institutes of Health, the National Science Foundation, and the Defense Department are major sources of funding for research in the United States, as are government agencies in Europe, at the national and European level, Japan, and other major industrialized nations. The latter type--that is, the presence and importance of market-based producers whose business models do not require and do not depend on intellectual property protection--is not theoretically predicted by that model, but is entirely obvious once you begin to think about it.

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The actual universe of information production in the economy then, is not as dependent on property rights and markets in information goods as the last quarter century's increasing obsession with "intellectual property" might [pg 42] suggest. Instead, what we see both from empirical work and theoretical work is that individuals and firms in the economy produce information using a wide range of strategies. Some of these strategies indeed rely on exclusive rights like patents or copyrights, and aim at selling information as a good into an information market. Many, however, do not. In order to provide some texture to what these models look like, we can outline a series of ideal-type "business" strategies for producing information. The point here is not to provide an exhaustive map of the empirical business literature. It is, instead, to offer a simple analytic framework within which to understand the mix of strategies available for firms and individuals to appropriate the benefits of their investments--of time, money, or both, in activities that result in the production of information, knowledge, and culture. The differentiating parameters are simple: cost minimization and benefit maximization. Any of these strategies could use inputs that are already owned--such as existing lyrics for a song or a patented invention to improve on--by buying a license from the owner of the exclusive rights for the existing information. Cost minimization here refers purely to ideal-type strategies for obtaining as many of the information inputs as possible at their marginal cost of zero, instead of buying licenses to inputs at a positive market price. It can be pursued by using materials from the public domain, by using materials the producer itself owns, or by sharing/bartering for information inputs owned by others in exchange for one's own information inputs. Benefits can be obtained either in reliance on asserting one's exclusive rights, or by following a non-exclusive strategy, using some other mechanism that improves the position of the information producer because they invested in producing the information. Nonexclusive strategies for benefit maximization can be pursued both by market actors and by nonmarket actors. Table 2.1 maps nine ideal-type strategies characterized by these components.

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- A defining cost-reduction mechanism for Mickey is that it applies creative people to work on its own inventory, for which it need not pay above marginal cost prices in the market. This strategy is the most advantageous in an environment of very strong exclusive rights protection for a number of reasons. First, the ability to extract higher rents from the existing inventory of information goods is greatest for firms that (a) have an inventory and (b) rely on asserting exclusive rights as their mode of extracting value. Second, the increased costs of production associated with strong exclusive rights are cushioned by the ability of such firms to rework their existing inventory, rather than trying to work with materials from an evershrinking public domain or paying for every source of inspiration and element of a new composition. The coarsest version of this strategy might be found if Disney were to produce a "winter sports" thirty-minute television program by tying together scenes from existing cartoons, say, one in which Goofy plays hockey followed by a snippet of Donald Duck ice skating, and so on. More subtle, and representative of the type of reuse relevant to the analysis here, would be the case where Disney buys the rights to Winniethe-Pooh, and, after producing an animated version of stories from the original books, then continues to work with the same characters and relationships to create a new film, say, Winnie-the-Pooh--Frankenpooh (or Beauty and the Beast--Enchanted Christmas; or The Little Mermaid--Stormy the Wild Seahorse). The third exclusive-rights-based strategy, which I call "RCA," is barter among the owners of inventories. Patent pools, cross-licensing, and market-sharing agreements among the radio patents holders in 1920-1921, which I describe in chapter 6, are a perfect example. RCA, GE, AT&T, and Westinghouse held blocking patents that prevented each other and anyone else from manufacturing the best radios possible given technology at that time. The four companies entered an agreement to combine their patents and divide the radio equipment and services markets, which they used throughout the 1920s to exclude competitors and to capture precisely the postinnovation monopoly rents sought to be created by patents.

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The most common models of industrial R&D outside of pharmaceuticals, however, depend on supply-side effects of information production. One central reason to pursue research is its effects on firm-specific advantages, like production know-how, which permit the firm to produce more efficiently than competitors and sell better or cheaper competing products. Daily newspapers collectively fund news agencies, and individually fund reporters, because their ability to find information and report it is a necessary input into their product--timely news. As I have already suggested, they do not need copyright to protect their revenues. Those are protected by the short half-life of dailies. The investments come in order to be able to play in the market for daily newspapers. Similarly, the learning curve and knowhow effects in semiconductors are such that early entry into the market for [pg 46] a new chip will give the first mover significant advantages over competitors. Investment is then made to capture that position, and the investment is captured by the quasi-rents available from the first-mover advantage. In some cases, innovation is necessary in order to be able to produce at the state of the art. Firms participate in "Learning Networks" to gain the benefits of being at the state of the art, and sharing their respective improvements. However, they can only participate if they innovate. If they do not innovate, they lack the in-house capacity to understand the state of the art and play at it. Their investments are then recouped not from asserting their exclusive rights, but from the fact that they sell into one of a set of markets, access into which is protected by the relatively small number of firms with such absorption capacity, or the ability to function at the edge of the state of the art. Firms of this sort might barter their information for access, or simply be part of a small group of organizations with enough knowledge to exploit the information generated and informally shared by all participants in these learning networks. They obtain rents from the concentrated market structure, not from assertion of property rights.【15 Levin et al., "Appropriating the Returns," 794-796 (secrecy, lead time, and learningcurve advantages regarded as more effective than patents by most firms). See also F. M. Scherer, "Learning by Doing and International Trade in Semiconductors" (faculty research working paper series R94-13, John F. Kennedy School of Government, Harvard University, Cambridge, MA, 1994), an empirical study of semiconductor industry suggesting that for industries with steep learning curves, investment in information production is driven by advantages of being first down the learning curve rather than the expectation of legal rights of exclusion. The absorption effect is described in Wesley M. Cohen and Daniel A. Leventhal, "Innovation and Learning: The Two Faces of R&D," The Economic Journal 99 (1989): 569-596. The collaboration effect was initially described in Richard R. Nelson, "The Simple Economics of Basic Scientific Research," Journal of Political Economy 67 (June 1959): 297-306. The most extensive work over the past fifteen years, and the source of the term of learning networks, has been from Woody Powell on knowledge and learning networks. Identifying the role of markets made concentrated by the limited ability to use information, rather than through exclusive rights, was made in F. M. Scherer, "Nordhaus's Theory of Optimal Patent Life: A Geometric Reinterpretation," American Economic Review 62 (1972): 422-427. 】

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I began this chapter with a puzzle--advanced economies rely on nonmarket organizations for information production much more than they do in other sectors. The puzzle reflects the fact that alongside the diversity of market-oriented business models for information production there is a wide diversity of nonmarket models as well. At a broad level of abstraction, I designate this diversity of motivations and organizational forms as "Joe Einstein"--to underscore the breadth of the range of social practices and practitioners of nonmarket production. These include universities and other research institutes; government research labs that publicize their work, or government information agencies like the Census Bureau. They also include individuals, like academics; authors and artists who play to "immortality" rather than seek to maximize the revenue from their creation. Eric von Hippel has for many years documented user innovation in areas ranging from surfboard design to new mechanisms for pushing electric wiring through insulation tiles.【16 Eric von Hippel, Democratizing Innovation (Cambridge, MA: MIT Press, 2005). 】 The Oratorio Society of New York, whose chorus [pg 48] members are all volunteers, has filled Carnegie Hall every December with a performance of Handel's Messiah since the theatre's first season in 1891. Political parties, advocacy groups, and churches are but few of the stable social organizations that fill our information environment with news and views. For symmetry purposes in table 2.1, we also see reliance on internal inventories by some nonmarket organizations, like secret government labs that do not release their information outputs, but use it to continue to obtain public funding. This is what I call "Los Alamos." Sharing in limited networks also occurs in nonmarket relationships, as when academic colleagues circulate a draft to get comments. In the nonmarket, nonproprietary domain, however, these strategies were in the past relatively smaller in scope and significance than the simple act of taking from the public domain and contributing back to it that typifies most Joe Einstein behaviors. Only since the mid-1980s have we begun to see a shift from releasing into the public domain to adoption of commons-binding licensing, like the "copyleft" strategies I describe in chapter 3. What makes these strategies distinct from Joe Einstein is that they formalize the requirement of reciprocity, at least for some set of rights shared.

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Once we recognize that there are diverse strategies of appropriation for information production, we come to see a new source of inefficiency caused by strong "intellectual property"-type rights. Recall that in the mainstream analysis, exclusive rights always cause static inefficiency--that is, they allow producers to charge positive prices for products (information) that have a zero marginal cost. Exclusive rights have a more ambiguous effect dynamically. They raise the expected returns from information production, and thereby are thought to induce investment in information production and innovation. However, they also increase the costs of information inputs. If existing innovations are more likely covered by patent, then current producers will more likely have to pay for innovations or uses that in the past would have been available freely from the public domain. Whether, overall, any given regulatory change that increases the scope of exclusive rights improves or undermines new innovation therefore depends on whether, given the level of appropriability that preceded it, it increased input costs more or less than it increased the prospect of being paid for one's outputs.

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We now have the basic elements of a clash between incumbent institutions and emerging social practice. Technologies of information and cultural production initially led to the increasing salience of commercial, industrialmodel production in these areas. Over the course of the twentieth century, [pg 57] in some of the most culturally visible industries like movies and music, copyright law coevolved with the industrial model. By the end of the twentieth century, copyright was longer, broader, and vastly more encompassing than it had been at the beginning of that century. Other exclusive rights in information, culture, and the fruits of innovation expanded following a similar logic. Strong, broad, exclusive rights like these have predictable effects. They preferentially improve the returns to business models that rely on exclusive rights, like copyrights and patents, at the expense of information and cultural production outside the market or in market relationships that do not depend on exclusive appropriation. They make it more lucrative to consolidate inventories of existing materials. The businesses that developed around the material capital required for production fed back into the political system, which responded by serially optimizing the institutional ecology to fit the needs of the industrial information economy firms at the expense of other information producers.

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The quintessential instance of commons-based peer production has been free software. Free software, or open source, is an approach to software development that is based on shared effort on a nonproprietary model. It depends on many individuals contributing to a common project, with a variety of motivations, and sharing their respective contributions without any single person or entity asserting rights to exclude either from the contributed components or from the resulting whole. In order to avoid having the joint product appropriated by any single party, participants usually retain copyrights in their contribution, but license them to anyone--participant or stranger--on a model that combines a universal license to use the materials with licensing constraints that make it difficult, if not impossible, for any single contributor or third party to appropriate the project. This model of licensing is the most important institutional innovation of the free software movement. Its central instance is the GNU General Public License, or GPL. [pg 64]

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Amazon uses a mix of mechanisms to get in front of their buyers of books and other products that the users are likely to purchase. A number of these mechanisms produce relevance and accreditation by harnessing the users themselves. At the simplest level, the recommendation "customers who bought items you recently viewed also bought these items" is a mechanical means of extracting judgments of relevance and accreditation from the actions of many individuals, who produce the datum of relevance as byproduct of making their own purchasing decisions. Amazon also allows users to create topical lists and track other users as their "friends and favorites." Amazon, like many consumer sites today, also provides users with the ability [pg 76] to rate books they buy, generating a peer-produced rating by averaging the ratings. More fundamentally, the core innovation of Google, widely recognized as the most efficient general search engine during the first half of the 2000s, was to introduce peer-based judgments of relevance. Like other search engines at the time, Google used a text-based algorithm to retrieve a given universe of Web pages initially. Its major innovation was its PageRank algorithm, which harnesses peer production of ranking in the following way. The engine treats links from other Web sites pointing to a given Web site as votes of confidence. Whenever someone who authors a Web site links to someone else's page, that person has stated quite explicitly that the linked page is worth a visit. Google's search engine counts these links as distributed votes of confidence in the quality of the page pointed to. Pages that are heavily linked-to count as more important votes of confidence. If a highly linked-to site links to a given page, that vote counts for more than the vote of a site that no one else thinks is worth visiting. The point to take home from looking at Google and Amazon is that corporations that have done immensely well at acquiring and retaining users have harnessed peer production to enable users to find things they want quickly and efficiently.

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By this time, however, the century-old engineering assumptions that underlay the regulation-versus-property conceptualization of the possibilities open for the institutional framework of wireless communications had been rendered obsolete by new computation and network technologies.【28 For the full argument, see Yochai Benkler, "Some Economics of Wireless Communications," Harvard Journal of Law and Technology 16 (2002): 25; and Yochai Benkler, "Overcoming Agoraphobia: Building the Commons of the Digitally Networked Environment," Harvard Journal of Law and Technology 11 (1998): 287. For an excellent overview of the intellectual history of this debate and a contribution to the institutional design necessary to make space for this change, see Kevin Werbach, "Supercommons: Towards a Unified Theory of Wireless Communication," Texas Law Review 82 (2004): 863. The policy implications of computationally intensive radios using wide bands were first raised by George Gilder in "The New Rule of the Wireless," Forbes ASAP, March 29, 1993, and Paul Baran, "Visions of the 21st Century Communications: Is the Shortage of Radio Spectrum for Broadband Networks of the Future a Self Made Problem?" (keynote talk transcript, 8th Annual Conference on Next Generation Networks, Washington, DC, November 9, 1994). Both statements focused on the potential abundance of spectrum, and how it renders "spectrum management" obsolete. Eli Noam was the first to point out that, even if one did not buy the idea that computationally intensive radios eliminated scarcity, they still rendered spectrum property rights obsolete, and enabled instead a fluid, dynamic, real-time market in spectrum clearance rights. See Eli Noam, "Taking the Next Step Beyond Spectrum Auctions: Open Spectrum Access," Institute of Electrical and Electronics Engineers Communications Magazine 33, no. 12 (1995): 66-73; later elaborated in Eli Noam, "Spectrum Auction: Yesterday's Heresy, Today's Orthodoxy, Tomorrow's Anachronism. Taking the Next Step to Open Spectrum Access," Journal of Law and Economics 41 (1998): 765, 778-780. The argument that equipment markets based on a spectrum commons, or free access to frequencies, could replace the role planned for markets in spectrum property rights with computationally intensive equipment and sophisticated network sharing protocols, and would likely be more efficient even assuming that scarcity persists, was made in Benkler, "Overcoming Agoraphobia." Lawrence Lessig, Code and Other Laws of Cyberspace (New York: Basic Books, 1999) and Lawrence Lessig, The Future of Ideas: The Fate of the Commons in a Connected World (New York: Random House, 2001) developed a rationale based on the innovation dynamic in support of the economic value of open wireless networks. David Reed, "Comments for FCC Spectrum Task Force on Spectrum Policy," filed with the Federal Communications Commission July 10, 2002, crystallized the technical underpinnings and limitations of the idea that spectrum can be regarded as property. 】 The dramatic decline in computation cost and improvements in digital signal processing, network architecture, and antenna systems had fundamentally changed the design space of wireless communications systems. Instead of having one primary parameter with which to separate out messages--the [pg 88] frequency of oscillation of the carrier wave--engineers could now use many different mechanisms to allow much smarter receivers to separate out the message they wanted to receive from all other sources of electromagnetic radiation in the geographic area they occupied. Radio transmitters could now transmit at the same frequency, simultaneously, without "interfering" with each other--that is, without confusing the receivers as to which radiation carried the required message and which did not. Just like automobiles that can share a commons-based medium--the road--and unlike railroad cars, which must use dedicated, owned, and managed railroad tracks--these new radios could share "the spectrum" as a commons. It was no longer necessary, or even efficient, to pass laws--be they in the form of regulations or of exclusive property-like rights--that carved up the usable spectrum into exclusively controlled slices. Instead, large numbers of transceivers, owned and operated by end users, could be deployed and use equipment-embedded protocols to coordinate their communications.

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People have different innate capabilities; personal, social, and educational histories; emotional frameworks; and ongoing lived experiences, which make [pg 111] for immensely diverse associations with, idiosyncratic insights into, and divergent utilization of existing information and cultural inputs at different times and in different contexts. Human creativity is therefore very difficult to standardize and specify in the contracts necessary for either market-cleared or hierarchically organized production. As the weight of human intellectual effort increases in the overall mix of inputs into a given production process, an organization model that does not require contractual specification of the individual effort required to participate in a collective enterprise, and which allows individuals to self-identify for tasks, will be better at gathering and utilizing information about who should be doing what than a system that does require such specification. Some firms try to solve this problem by utilizing market- and social-relations-oriented hybrids, like incentive compensation schemes and employee-of-the-month-type social motivational frameworks. These may be able to improve on firm-only or market-only approaches. It is unclear, though, how well they can overcome the core difficulty: that is, that both markets and firm hierarchies require significant specification of the object of organization and pricing--in this case, human intellectual input. The point here is qualitative. It is not only, or even primarily, that more people can participate in production in a commons-based effort. It is that the widely distributed model of information production will better identify the best person to produce a specific component of a project, considering all abilities and availability to work on the specific module within a specific time frame. With enough uncertainty as to the value of various productive activities, and enough variability in the quality of both information inputs and human creative talent vis-a-vis any set of production ` opportunities, freedom of action for individuals coupled with continuous communications among the pool of potential producers and consumers can generate better information about the most valuable productive actions, and the best human inputs available to engage in these actions at a given time. Markets and firm incentive schemes are aimed at producing precisely this form of self-identification. However, the rigidities associated with collecting and comprehending bids from individuals through these systems (that is, transaction costs) limit the efficacy of self-identification by comparison to a system in which, once an individual self-identifies for a task, he or she can then undertake it without permission, contract, or instruction from another. The emergence of networked organizations (described and analyzed in the work of Charles Sabel and others) suggests that firms are in fact trying to overcome these limitations by developing parallels to the freedom to learn, [pg 112] innovate, and act on these innovations that is intrinsic to peer-production processes by loosening the managerial bonds, locating more of the conception and execution of problem solving away from the managerial core of the firm, and implementing these through social, as well as monetary, motivations. However, the need to assure that the value created is captured within the organization limits the extent to which these strategies can be implemented within a single enterprise, as opposed to their implementation in an open process of social production. This effect, in turn, is in some sectors attenuated through the use of what Walter Powell and others have described as learning networks. Engineers and scientists often create frameworks that allow them to step out of their organizational affiliations, through conferences or workshops. By reproducing the social production characteristics of academic exchange, they overcome some of the information loss caused by the boundary of the firm. While these organizational strategies attenuate the problem, they also underscore the degree to which it is widespread and understood by organizations as such. The fact that the direction of the solutions business organizations choose tends to shift elements of the production process away from market- or firm-based models and toward networked social production models is revealing. Now, the self-identification that is central to the relative information efficiency of peer production is not always perfect. Some mechanisms used by firms and markets to codify effort levels and abilities--like formal credentials--are the result of experience with substantial errors or misstatements by individuals of their capacities. To succeed, therefore, peer-production systems must also incorporate mechanisms for smoothing out incorrect self-assessments--as peer review does in traditional academic research or in the major sites like Wikipedia or Slashdot, or as redundancy and statistical averaging do in the case of NASA clickworkers. The prevalence of misperceptions that individual contributors have about their own ability and the cost of eliminating such errors will be part of the transaction costs associated with this form of organization. They parallel quality control problems faced by firms and markets.

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The overarching point is that social production is reshaping the market conditions under which businesses operate. To some of the incumbents of the industrial information economy, the pressure from social production is experienced as pure threat. It is the clash between these incumbents and the new practices that was most widely reported in the media in the first five years of the twenty-first century, and that has driven much of policy making, legislation, and litigation in this area. But the much more fundamental effect on the business environment is that social production is changing the relationship of firms to individuals outside of them, and through this changing the strategies that firms internally are exploring. It is creating new sources of inputs, and new tastes and opportunities for outputs. Consumers are changing into users--more active and productive than the consumers of the [pg 127] industrial information economy. The change is reshaping the relationships necessary for business success, requiring closer integration of users into the process of production, both in inputs and outputs. It requires different leadership talents and foci. By the time of this writing, in 2005, these new opportunities and adaptations have begun to be seized upon as strategic advantages by some of the most successful companies working around the Internet and information technology, and increasingly now around information and cultural production more generally. Eric von Hippel's work has shown how the model of user innovation has been integrated into the business model of innovative firms even in sectors far removed from either the network or from information production--like designing kite-surfing equipment or mountain bikes. As businesses begin to do this, the platforms and tools for collaboration improve, the opportunities and salience of social production increases, and the political economy begins to shift. And as these firms and social processes coevolve, the dynamic accommodation they are developing provides us with an image of what the future stable interface between market-based businesses and the newly salient social production is likely to look like. [pg 128] [pg 129]

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The alternative of building some portions of our telecommunications and information production and exchange systems as commons was not understood in the mid-1990s, when the policy that resulted in this market structure for communications was developed. As we saw in chapter 3, however, wireless communications technology has progressed to the point where it is now possible for users to own equipment that cooperates in mesh networks to form a "last-mile" infrastructure that no one other than the users own. Radio networks can now be designed so that their capital structure more closely approximates the Internet and personal computer markets, bringing with it a greater scope for commons-based peer production of telecommunications infrastructure. Throughout most of the twentieth century, wireless communications combined high-cost capital goods (radio transmitters and antennae towers) with cheaper consumer goods (radio receivers), using regulated proprietary infrastructure, to deliver a finished good of wireless communications on an industrial model. Now WiFi is marking the possibility of an inversion of the capital structure of wireless communication. We see end-user equipment manufacturers like Intel, Cisco, and others producing [pg 154] and selling radio "transceivers" that are shareable goods. By using ad hoc mesh networking techniques, some early versions of which are already being deployed, these transceivers allow their individual owners to cooperate and coprovision their own wireless communications network, without depending on any cable carrier or other wired provider as a carrier of last resort. Almost the entire debate around spectrum policy and the relative merits of markets and commons in wireless policy is conducted today in terms of efficiency and innovation. A common question these days is which of the two approaches will lead to greater growth of wireless communications capacity and will more efficiently allocate the capacity we already have. I have contributed my fair share of this form of analysis, but the question that concerns us here is different. We must ask what, if any, are the implications of the emergence of a feasible, sustainable model of a commons-based physical infrastructure for the first and last mile of the communications environment, in terms of individual autonomy?

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Although this development had its roots in the industrial structure of radio production as it emerged from the first two decades of innovation and businesses in the twentieth century, it was shaped significantly by political-regulatory choices during the 1920s. At the turn of the twentieth century, radio was seen exclusively as a means of wireless telegraphy, emphasizing [pg 191] ship-to-shore and ship-to-ship communications. Although some amateurs experimented with voice programs, broadcast was a mode of point-to-point communications; entertainment was not seen as its function until the 1920s. The first decade and a half of radio in the United States saw rapid innovation and competition, followed by a series of patent suits aimed to consolidate control over the technology. By 1916, the ideal transmitter based on technology available at the time required licenses of patents held by Marconi, AT&T, General Electric (GE), and a few individuals. No licenses were in fact granted. The industry had reached stalemate. When the United States joined the war, however, the navy moved quickly to break the stalemate, effectively creating a compulsory cross-licensing scheme for war production, and brought in Westinghouse, the other major potential manufacturer of vacuum tubes alongside GE, as a participant in the industry. The two years following the war saw intervention by the U.S. government to assure that American radio industry would not be controlled by British Marconi because of concerns in the navy that British control over radio would render the United States vulnerable to the same tactic Britain used against Germany at the start of the war--cutting off all transoceanic telegraph communications. The navy brokered a deal in 1919 whereby a new company was created-- the Radio Corporation of America (RCA)--which bought Marconi's American business. By early 1920, RCA, GE, and AT&T entered into a patent cross-licensing model that would allow each to produce for a market segment: RCA would control transoceanic wireless telegraphy, while GE and AT&T's Western Electric subsidiary would make radio transmitters and sell them under the RCA brand. This left Westinghouse with production facilities developed for the war, but shut out of the existing equipment markets by the patent pool. Launching KDKA Pittsburgh was part of its response: Westinghouse would create demand for small receivers that it could manufacture without access to the patents held by the pool. The other part of its strategy consisted of acquiring patents that, within a few months, enabled Westinghouse to force its inclusion in the patent pool, redrawing the market division map to give Westinghouse 40 percent of the receiving equipment market. The first part of Westinghouse's strategy, adoption of broadcasting to generate demand for receivers, proved highly successful and in the long run more important. Within two years, there were receivers in 10 percent of American homes. Throughout the 1920s, equipment sales were big business.

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Radio stations, however, were not dominated by the equipment manufacturers, or by anyone else for that matter, in the first few years. While the [pg 192] equipment manufacturers did build powerful stations like KDKA Pittsburgh, WJZ Newark, KYW Chicago (Westinghouse), and WGY Schenectady (GE), they did not sell advertising, but rather made their money from equipment sales. These stations did not, in any meaningful sense of the word, dominate the radio sphere in the first few years of radio, as the networks would indeed come to do within a decade. In November 1921, the first five licenses were issued by the Department of Commerce under the new category of "broadcasting" of "news, lectures, entertainment, etc." Within eight months, the department had issued another 453 licenses. Many of these went to universities, churches, and unions, as well as local shops hoping to attract business with their broadcasts. Universities, seeing radio as a vehicle for broadening their role, began broadcasting lectures and educational programming. Seventy-four institutes of higher learning operated stations by the end of 1922. The University of Nebraska offered two-credit courses whose lectures were transmitted over the air. Churches, newspapers, and department stores each forayed into this new space, much as we saw the emergence of Web sites for every organization over the course of the mid-1990s. Thousands of amateurs were experimenting with technical and format innovations. While receivers were substantially cheaper than transmitters, it was still possible to assemble and sell relatively cheap transmitters, for local communications, at prices sufficiently low that thousands of individual amateurs could take to the air. At this point in time, then, it was not yet foreordained that radio would follow the mass-media model, with a small number of well-funded speakers and hordes of passive listeners. Within a short period, however, a combination of technology, business practices, and regulatory decisions did in fact settle on the model, comprised of a small number of advertiser-supported national networks, that came to typify the American broadcast system throughout most of the rest of the century and that became the template for television as well.

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One Web-based tool and an emerging cultural practice around it that extends the basic characteristics of Web sites as media for the political public sphere are Web logs, or blogs. Blogs are a tool and an approach to using the Web that extends the use of Web pages in two significant ways. Technically, blogs are part of a broader category of innovations that make the web "writable." That is, they make Web pages easily capable of modification through a simple interface. They can be modified from anywhere with a networked computer, and the results of writing onto the Web page are immediately available to anyone who accesses the blog to read. This technical change resulted in two divergences from the cultural practice of Web sites [pg 217] in the 1990s. First, they allowed the evolution of a journal-style Web page, where individual short posts are added to the Web site in short or large intervals. As practice has developed over the past few years, these posts are usually archived chronologically. For many users, this means that blogs have become a form of personal journal, updated daily or so, for their own use and perhaps for the use of a very small group of friends. What is significant about this characteristic from the perspective of the construction of the public sphere is that blogs enable individuals to write to their Web pages in journalism time--that is, hourly, daily, weekly--whereas Web page culture that preceded it tended to be slower moving: less an equivalent of reportage than of the essay. Today, one certainly finds individuals using blog software to maintain what are essentially static Web pages, to which they add essays or content occasionally, and Web sites that do not use blogging technology but are updated daily. The public sphere function is based on the content and cadence--that is, the use practice--not the technical platform.

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The second critical innovation of the writable Web in general and of blogs in particular was the fact that in addition to the owner, readers/users could write to the blog. Blogging software allows the person who runs a blog to permit some, all, or none of the readers to post comments to the blog, with or without retaining power to edit or moderate the posts that go on, and those that do not. The result is therefore not only that many more people write finished statements and disseminate them widely, but also that the end product is a weighted conversation, rather than a finished good. It is a conversation because of the common practice of allowing and posting comments, as well as comments to these comments. Blog writers--bloggers-- often post their own responses in the comment section or address comments in the primary section. Blog-based conversation is weighted, because the culture and technical affordances of blogging give the owner of the blog greater weight in deciding who gets to post or comment and who gets to decide these questions. Different blogs use these capabilities differently; some opt for broader intake and discussion on the board, others for a more tightly edited blog. In all these cases, however, the communications model or information-flow structure that blogs facilitate is a weighted conversation that takes the form of one or a group of primary contributors/authors, together with some larger number, often many, secondary contributors, communicating to an unlimited number of many readers.

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Despite the caution required in overstating the role that the networked information economy can play in solving issues of justice, [pg 302] it is important to recognize that information, knowledge, and culture are core inputs into human welfare. Agricultural knowledge and biological innovation are central to food security. Medical innovation and access to its fruits are central to living a long and healthy life. Literacy and education are central to individual growth, to democratic self-governance, and to economic capabilities. Economic growth itself is critically dependent on innovation and information. For all these reasons, information policy has become a critical element of development policy and the question of how societies attain and distribute human welfare and well-being. Access to knowledge has become central to human development. The emergence of the networked information economy offers definable opportunities for improvement in the normative domain of justice, as it does for freedom, by comparison to what was achievable in the industrial information economy.

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The opportunities that the network information economy offers, however, often run counter to the central policy drive of both the United States and the European Union in the international trade and intellectual property systems. These two major powers have systematically pushed for ever-stronger proprietary protection and increasing reliance on strong patents, copyrights, and similar exclusive rights as the core information policy for growth and development. Chapter 2 explains why such a policy is suspect from a purely economic perspective concerned with optimizing innovation. [pg 303] A system that relies too heavily on proprietary approaches to information production is not, however, merely inefficient. It is unjust. Proprietary rights are designed to elicit signals of people's willingness and ability to pay. In the presence of extreme distribution differences like those that characterize the global economy, the market is a poor measure of comparative welfare. A system that signals what innovations are most desirable and rations access to these innovations based on ability, as well as willingness, to pay, overrepresents welfare gains of the wealthy and underrepresents welfare gains of the poor. Twenty thousand American teenagers can simply afford, and will be willing to pay, much more for acne medication than the more than a million Africans who die of malaria every year can afford to pay for a vaccine. A system that relies too heavily on proprietary models for managing information production and exchange is unjust because it is geared toward serving small welfare increases for people who can pay a lot for incremental improvements in welfare, and against providing large welfare increases for people who cannot pay for what they need.

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The networked information economy improves justice from the perspective of every single one of these theories of justice. Imagine a good that improves the welfare of its users--it could be software, or an encyclopedia, or a product review. Now imagine a policy choice that could make production of that good on a nonmarket, peer-production basis too expensive to perform, or make it easy for an owner of an input to exclude competitors-- both market-based and social-production based. For example, a government might decide to: recognize patents on software interfaces, so that it would be very expensive to buy the right to make your software work with someone else's; impose threshold formal education requirements on the authors of any encyclopedia available for school-age children to read, or impose very strict copyright requirements on using information contained in other sources (as opposed to only prohibiting copying their language) and impose high penalties for small omissions; or give the putative subjects of reviews very strong rights to charge for the privilege of reviewing a product--such as by expanding trademark rights to refer to the product, or prohibiting a reviewer to take apart a product without permission. The details do not matter. I offer them only to provide a sense of the commonplace kinds of choices that governments could make that would, as a practical matter, differentially burden nonmarket producers, whether nonprofit organizations or informal peer-production collaborations. Let us call a rule set that is looser from the perspective of access to existing information resources Rule Set A, and a rule [pg 306] set that imposes higher costs on access to information inputs Rule Set B. As explained in chapter 2, it is quite likely that adopting B would depress information production and innovation, even if it were intended to increase the production of information by, for example, strengthening copyright or patent. This is because the added incentives for some producers who produce with the aim of capturing the rents created by copyright or patents must be weighed against their costs. These include (a) the higher costs even for those producers and (b) the higher costs for all producers who do not rely on exclusive rights at all, but instead use either a nonproprietary market model--like service--or a nonmarket model, like nonprofits and individual authors, and that do not benefit in any way from the increased appropriation. However, let us make here a much weaker assumption--that an increase in the rules of exclusion will not affect overall production. Let us assume that there will be exactly enough increased production by producers who rely on a proprietary model to offset the losses of production in the nonproprietary sectors.

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It is easy to see why a policy shift from A to B would be regressive from the perspective of theories like Rawls's or Ackerman's. Under Rule A, let us say that in this state of affairs, State A, there are five online encyclopedias. One of them is peer produced and freely available for anyone to use. Rule B is passed. In the new State B, there are still five encyclopedias. It has become too expensive to maintain the free encyclopedia, however, and more profitable to run commercial online encyclopedias. A new commercial encyclopedia has entered the market in competition with the four commercial encyclopedias that existed in State A, and the free encyclopedia folded. From the perspective of the difference principle, we can assume that the change has resulted in a stable overall welfare in the Kaldor-Hicks sense. (That is, overall welfare has increased enough so that, even though some people may be worse off, those who have been made better off are sufficiently better off that they could, in principle, compensate everyone who is worse off enough to make everyone either better off or no worse off than they were before.) There are still five encyclopedias. However, now they all charge a subscription fee. The poorest members of society are worse off, even if we posit that total social welfare has remained unchanged. In State A, they had access for free to an encyclopedia. They could use the information (or the software utility, if the example were software) without having to give up any other sources of welfare. In State B, they must choose between the same amount [pg 307] of encyclopedia usage as they had before, and less of some other source of welfare, or the same welfare from other sources, and no encyclopedia. If we assume, contrary to theory and empirical evidence from the innovation economics literature, that the move to State B systematically and predictably improves the incentives and investments of the commercial producers, that would still by itself not justify the policy shift from the perspective of the difference principle. One would have to sustain a much stricter claim: that the marginal improvement in the quality of the encyclopedias, and a decline in price from the added market competition that was not felt by the commercial producers when they were competing with the free, peer-produced version, would still make the poorest better off, even though they now must pay for any level of encyclopedia access, than they were when they had four commercial competitors with their prior levels of investment operating in a competitive landscape of four commercial and one free encyclopedia.

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From the perspective of liberal theories of justice, then, the emergence of the networked information economy is an unqualified improvement. Except under restrictive assumptions inconsistent with what we know as a matter of both theory and empirics about the economics of innovation and information production, the emergence of a substantial sector of information production and exchange that is based on social transactional frameworks, rather than on a proprietary exclusion business model, improves distribution in society. Its outputs are available freely to anyone, as basic inputs into their own actions--whether market-based or nonmarket-based. The facilities it produces improve the prospects of all who are connected to the Internet-- whether they are seeking to use it as consumers or as producers. It softens some of the effects of resource inequality. It offers platforms for greater equality of opportunity to participate in market- and nonmarket-based enterprises. This characteristic is explored in much greater detail in the next segment of this chapter, but it is important to emphasize here that equality of opportunity to act in the face of unequal endowment is central to all liberal theories of justice. As a practical matter, these characteristics of the networked information economy make the widespread availability of Internet access a more salient objective of redistribution policy. They make policy debates, which are mostly discussed in today's political sphere in terms of innovation and growth, and sometimes in terms of freedom, also a matter of liberal justice.

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The Human Development Report was initiated in 1990 as an effort to measure a broad set of components of what makes a life livable, and, ultimately, attractive. It was developed in contradistinction to indicators centered on economic output, like gross domestic product (GDP) or economic growth alone, in order to provide a more refined sense of what aspects of a nation's economy and society make it more or less livable. It allows a more nuanced approach toward improving the conditions of life everywhere. As [pg 310] Sen pointed out, the people of China, Kerala in India, and Sri Lanka lead much longer and healthier lives than other countries, like Brazil or South Africa, which have a higher per capita income.【107 Amartya Sen, Development as Freedom (New York: Knopf, 1999), 46-47. 】 The Human Development Report measures a wide range of outcomes and characteristics of life. The major composite index it tracks is the Human Development Index. The HDI tries to capture the capacity of people to live long and healthy lives, to be knowledgeable, and to have material resources sufficient to provide a decent standard of living. It does so by combining three major components: life expectancy at birth, adult literacy and school enrollment, and GDP per capita. As Figure 9.1 illustrates, in the global information economy, each and every one of these measures is significantly, though not solely, a function of access to information, knowledge, and information-embedded goods and services. Life expectancy is affected by adequate nutrition and access to lifesaving medicines. Biotechnological innovation for agriculture, along with agronomic innovation in cultivation techniques and other, lower-tech modes of innovation, account for a high portion of improvements in the capacity of societies to feed themselves and in the availability of nutritious foods. Medicines depend on pharmaceutical research and access to its products, and health care depends on research and publication for the development and dissemination of information about best-care practices. Education is also heavily dependent, not surprisingly, on access to materials and facilities for teaching. This includes access to basic textbooks, libraries, computation and communications systems, and the presence of local academic centers. Finally, economic growth has been understood for more than half a century to be centrally driven by innovation. This is particularly true of latecomers, who can improve their own condition most rapidly by adopting best practices and advanced technology developed elsewhere, and then adapting to local conditions and adding their own from the new technological platform achieved in this way. All three of these components are, then, substantially affected by access to, and use of, information and knowledge. The basic premise of the claim that the emergence of the networked information economy can provide significant benefits to human development is that the manner in which we produce new information--and equally important, the institutional framework we use to manage the stock of existing information and knowledge around the world--can have significant impact on human development. [pg 311]

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One can usefully idealize three types of information-based advantages that developed economies have, and that would need to be available to developing and less-developed economies if one's goal were the improvement in conditions in those economies and the opportunities for innovation in them. These include information-embedded material resources--consumption goods and production tools--information, and knowledge.

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Information-Embedded Tools. One level deeper than the actual useful material things one would need to enhance welfare are tools necessary for innovation itself. In the areas of agricultural biotechnology and medicines, these include enabling technologies for advanced research, as well as access to materials and existing compounds for experimentation. Access to these is perhaps the most widely understood to present problems in the patent system of the developed world, as much as it is for the developing world--an awareness that has mostly crystallized under Michael Heller's felicitous phrase "anti-commons," or Carl Shapiro's "patent thicket." The intuition, whose analytic basis is explained in chapter 2, is that innovation is encumbered more than it is encouraged when basic tools for innovation are proprietary, where the property system gives owners of these tools proprietary rights to control innovation that relies on their tools, and where any given new innovation requires the consent of, and payment to, many such owners. This problem is not unique to the developing world. Nonetheless, because of the relatively small dollar value of the market for medicines that treat diseases that affect only poorer countries or of crop varieties optimized for those countries, the cost hurdle weighs more heavily on the public or nonprofit efforts to achieve food security and health in poor and middle-income countries. These nonmarket-based research efforts into diseases and crops of concern purely to these areas are not constructed to appropriate gains from [pg 313] exclusive rights to research tools, but only bear their costs on downstream innovation.

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Scientific and economic data present a parallel conceptual problem, but in a different legal setting. In the case of both types of data, much of it is produced by government agencies. In the United States, however, raw data is in the public domain, and while initial access may require payment of the cost of distribution, reworking of the data as a tool in information production [pg 314] and innovation--and its redistribution by those who acquired access initially--is considered to be in the public domain. In Europe, this has not been the case since the 1996 Database Directive, which created a propertylike right in raw data in an effort to improve the standing of European database producers. Efforts to pass similar legislation in the United States have been mounted and stalled in practically every Congress since the mid1990s. These laws continue to be introduced, driven by the lobby of the largest owners of nongovernment databases, and irrespective of the fact that for almost a decade, Europe's database industry has grown only slowly in the presence of a right, while the U.S. database industry has flourished without an exclusive rights regime.

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The production of information and knowledge is very different from the production of steel or automobiles. Chapter 2 explains in some detail that information production has always included substantial reliance on nonmarket actors and on nonmarket, nonproprietary settings as core modalities of production. In software, for example, we saw that Mickey and romantic maximizer-type producers, who rely on exclusive rights directly, have accounted for a stable 36-37 percent of market-based revenues for software developers, while the remainder was focused on both supply-side and demand-side improvements in the capacity to offer software services. This number actually overstates the importance of software publishing, because it does not at all count free software development except when it is monetized by an IBM or a Red Hat, leaving tremendous value unaccounted for. A very large portion of the investments and research in any of the information production fields important to human development occur within the category that I have broadly described as "Joe Einstein." These include both those places formally designated for the pursuit of information and knowledge in themselves, like universities, and those that operate in the social sphere, but produce information and knowledge as a more or less central part of their existence--like churches or political parties. Moreover, individuals acting as social beings have played a central role in our information [pg 316] production and exchange system. In order to provide a more sector-specific analysis of how commons-based, as opposed to proprietary, strategies can contribute to development, I offer here a more detailed breakdown specifically of software, scientific publication, agriculture, and biomedical innovation than is provided in chapter 2.

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The promise of the commons-based strategies explored in the remainder of this chapter is that they can be implemented without changes in law-- either national or international. They are paths that the emerging networked information economy has opened to individuals, nonprofits, and publicsector organizations that want to help in improving human development in the poorer regions of the world to take action on their own. As with decentralized speech for democratic discourse, and collaborative production by individuals of the information environment they occupy as autonomous agents, here too we begin to see that self-help and cooperative action outside the proprietary system offer an opportunity for those who wish to pursue it. In this case, it is an opportunity to achieve a more just distribution of the world's resources and a set of meaningful improvements in human development. Some of these solutions are "commons-based," in the sense that they rely on free access to existing information that is in the commons, and they facilitate further use and development of that information and those information-embedded goods and tools by releasing their information outputs openly, and managing them as a commons, rather than as property. Some of the solutions are specifically peer-production solutions. We see this most clearly in software, and to some extent in the more radical proposals for scientific publication. I will also explore here the viability of peerproduction efforts in agricultural and biomedical innovation, although in those fields, commons-based approaches grafted onto traditional publicsector and nonprofit organizations at present hold the more clearly articulated alternatives.

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Other types of documents, for example, primary- and secondary-education textbooks, are in a much more rudimentary stage of the development of peer-production models. First, it should be recognized that responses to illiteracy and low educational completion in the poorer areas of the world are largely a result of lack of schoolteachers, physical infrastructure for classrooms, demand for children's schooling among parents who are themselves illiterate, and lack of effectively enforced compulsory education policy. The cost of textbooks contributes only a portion of the problem of cost. The opportunity cost of children's labor is probably the largest factor. Nonetheless, outdated materials and poor quality of teaching materials are often cited as one limit on the educational achievement of those who do attend school. The costs of books, school fees, uniforms, and stationery can amount to 20? 30 percent of a family's income.【113 A good regional study of the extent and details of educational deprivation is Mahbub ul Haq and Khadija ul Haq, Human Development in South Asia 1998: The Education Challenge (Islamabad, Pakistan: Human Development Center). 】 The component of the problem contributed by the teaching materials may be alleviated by innovative approaches to textbook and education materials authoring. Chapter 4 already discussed some textbook initiatives. The most successful commons-based textbook authoring project, which is also the most relevant from the perspective of development, is the South African project, Free High School Science Texts (FHSST). The FHSST initiative is more narrowly focused than the broader efforts of Wikibooks or the California initiative, more managed, and more successful. Nonetheless, in three years of substantial effort by a group of dedicated volunteers who administer the project, its product is one physics [pg 327] high school text, and advanced drafts of two other science texts. The main constraint on the efficacy of collaborative textbook authoring is that compliance requirements imposed by education ministries tend to require a great degree of coherence, which constrains the degree of modularity that these text-authoring projects adopt. The relatively large-grained contributions required limit the number of contributors, slowing the process. The future of these efforts is therefore likely to be determined by the extent to which their designers are able to find ways to make finer-grained modules without losing the coherence required for primary- and secondary-education texts. Texts at the post-secondary level likely present less of a problem, because of the greater freedom instructors have to select texts. This allows an initiative like MIT's Open Courseware Initiative to succeed. That initiative provides syllabi, lecture notes, problem sets, etc. from over 1,100 courses. The basic creators of the materials are paid academics who produce these materials for one of their core professional roles: teaching college- and graduate-level courses. The content is, by and large, a "side-effect" of teaching. What is left to be done is to integrate, create easy interfaces and search capabilities, and so forth. The university funds these functions through its own resources and dedicated grant funding. In the context of MIT, then, these functions are performed on a traditional model--a large, well-funded nonprofit provides an important public good through the application of full-time staff aimed at non-wealth-maximizing goals. The critical point here was the radical departure of MIT from the emerging culture of the 1980s and 1990s in American academia. When other universities were thinking of "distance education" in terms of selling access to taped lectures and materials so as to raise new revenue, MIT thought of what its basic mandate to advance knowledge and educate students in a networked environment entailed. The answer was to give anyone, anywhere, access to the teaching materials of some of the best minds in the world. As an intervention in the ecology of free knowledge and information and an act of leadership among universities, the MIT initiative was therefore a major event. As a model for organizational innovation in the domain of information production generally and the creation of educational resources in particular, it was less significant.

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While computation and access to existing scientific research are important in the development of any nation, they still operate at a remove from the most basic needs of the world poor. On its face, it is far from obvious how the emergence of the networked information economy can grow rice to feed millions of malnourished children or deliver drugs to millions of HIV/AIDS patients. On closer observation, however, a tremendous proportion of the way modern societies grow food and develop medicines is based on scientific research and technical innovation. We have seen how the functions of mass media can be fulfilled by nonproprietary models of news and commentary. We have seen the potential of free and open source software and open-access publications to replace and redress some of the failures of proprietary software and scientific publication, respectively. These cases suggest that the basic choice between a system that depends on exclusive rights and business models that use exclusion to appropriate research outputs and a system that weaves together various actors--public and private, organized and individual--in a nonproprietary social network of innovation, has important implications for the direction of innovation and for access to its products. Public attention has focused mostly on the HIV/AIDS crisis in Africa and the lack of access to existing drugs because of their high costs. However, that crisis is merely the tip of the iceberg. It is the most visible to many because of the presence of the disease in rich countries and its cultural and political salience in the United States and Europe. The exclusive rights system is a poor institutional mechanism for serving the needs of those who are worst off around the globe. Its weaknesses pervade the problems of food security and agricultural research aimed at increasing the supply of nourishing food throughout the developing world, and of access to medicines in general, and to medicines for developing-world diseases in particular. Each of these areas has seen a similar shift in national and international policy toward greater reliance on exclusive rights, most important of which are patents. Each area has also begun to see the emergence of commons-based models to alleviate the problems of patents. However, they differ from each other still. Agriculture offers more immediate opportunities for improvement [pg 329] because of the relatively larger role of public research--national, international, and academic--and of the long practices of farmer innovation in seed associations and local and regional frameworks. I explore it first in some detail, as it offers a template for what could be a path for development in medical research as well.

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Food Security: Commons-Based Agricultural Innovation

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Agricultural innovation over the past century has led to a vast increase in crop yields. Since the 1960s, innovation aimed at increasing yields and improving quality has been the centerpiece of efforts to secure the supply of food to the world's poor, to avoid famine and eliminate chronic malnutrition. These efforts have produced substantial increases in the production of food and decreases in its cost, but their benefits have varied widely in different regions of the world. Now, increases in productivity are not alone a sufficient condition to prevent famine. Sen's observations that democracies have no famines--that is, that good government and accountability will force public efforts to prevent famine--are widely accepted today. The contributions of the networked information economy to democratic participation and transparency are discussed in chapters 6-8, and to the extent that those chapters correctly characterize the changes in political discourse, should help alleviate human poverty through their effects on democracy. However, the cost and quality of food available to accountable governments of poor countries, or to international aid organizations or nongovernment organizations (NGOs) that step in to try to alleviate the misery caused by ineffective or malicious governments, affect how much can be done to avoid not only catastrophic famine, but also chronic malnutrition. Improvements in agriculture make it possible for anyone addressing food security to perform better than they could have if food production had lower yields, of less nutritious food, at higher prices. Despite its potential benefits, however, agricultural innovation has been subject to an unusual degree of sustained skepticism aimed at the very project of organized scientific and scientifically based innovation. Criticism combines biological-ecological concerns with social and economic concerns. Nowhere is this criticism more strident, or more successful at moving policy, than in current European resistance to genetically modified (GM) foods. The emergence of commons-based production strategies can go some way toward allaying the biological-ecological fears by locating much of the innovation at the local level. Its primary benefit, however, [pg 330] is likely to be in offering a path for agricultural and biological innovation that is sustainable and low cost, and that need not result in appropriation of the food production chain by a small number of multinational businesses, as many critics fear.

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Scientific plant improvement in the United States dates back to the establishment of the U.S. Department of Agriculture, the land-grant universities, and later the state agricultural experiment stations during the Civil War and in the decades that followed. Public-sector investment dominated agricultural research at the time, and with the rediscovery of Mendel's work in 1900, took a turn toward systematic selective breeding. Through crop improvement associations, seed certification programs, and open-release policies allowing anyone to breed and sell the certified new seeds, farmers were provided access to the fruits of public research in a reasonably efficient and open market. The development of hybrid corn through this system was the first major modern success that vastly increased agricultural yields. It reshaped our understanding not only of agriculture, but also more generally of the value of innovation, by comparison to efficiency, to growth. Yields in the United States doubled between the mid-1930s and the mid-1950s, and by the mid-1980s, cornfields had a yield six times greater than they had fifty years before. Beginning in the early 1960s, with funding from the Rockefeller and Ford foundations, and continuing over the following forty years, agricultural research designed to increase the supply of agricultural production and lower its cost became a central component of international and national policies aimed at securing the supply of food to the world's poor populations, avoiding famines and, ultimately, eliminating chronic malnutrition. The International Rice Research Institute (IRRI) in the Philippines was the first such institute, founded in the 1960s, followed by the International Center for Wheat and Maize Improvement (CIM-MYT) in Mexico (1966), and the two institutes for tropical agriculture in Colombia and Nigeria (1967). Together, these became the foundation for the Consultative Group for International Agricultural Research (CGIAR), which now includes sixteen centers. Over the same period, National Agricultural Research Systems (NARS) also were created around the world, focusing on research specific to local agroecological conditions. Research in these centers preceded the biotechnology revolution, and used various experimental breeding techniques to obtain high-yielding plants: for example, plants with shorter growing seasons, or more adapted to intensive fertilizer use. These efforts later introduced varieties [pg 331] that were resistant to local pests, diseases, and to various harsh environmental conditions.

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The agricultural research that went into much of the Green Revolution did not involve biotechnology--that is, manipulation of plant varieties at the genetic level through recombinant DNA techniques. Rather, it occurred at the level of experimental breeding. In the developed world, however, much of the research over the past twenty-five years has been focused on the use of biotechnology to achieve more targeted results than breeding can, has been more heavily based on private-sector investment, and has resulted in more private-sector ownership over the innovations. The promise of biotechnology, and particularly of genetically engineered or modified foods, has been that they could provide significant improvements in yields as well as in health effects, quality of the foods grown, and environmental effects. Plants engineered to be pest resistant could decrease the need to use pesticides, resulting in environmental benefits and health benefits to farmers. Plants engineered for ever-higher yields without increasing tilled acreage could limit the pressure for deforestation. Plants could be engineered to carry specific nutritional supplements, like golden rice with beta-carotene, so as to introduce necessarily nutritional requirements into subsistence diets. Beyond the hypothetically optimistic possibilities, there is little question that genetic engineering has already produced crops that lower the cost of production [pg 333] for farmers by increasing herbicide and pest tolerance. As of 2002, more than 50 percent of the world's soybean acreage was covered with genetically modified (GM) soybeans, and 20 percent with cotton. Twenty-seven percent of acreage covered with GM crops is in the developing world. This number will grow significantly now that Brazil has decided to permit the introduction of GM crops, given its growing agricultural role, and now that India, as the world's largest cotton producer, has approved the use of Bt cotton--a GM form of cotton that improves its resistance to a common pest. There are, then, substantial advantages to farmers, at least, and widespread adoption of GM crops both in the developed world outside of Europe and in the developing world.

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This combination of social-economic and postcolonial critique, environmentalism, public-health concerns, consumer advocacy, and farm-sector protectionism against the relatively industrialized American agricultural sector reached a height of success in the 1999 five-year ban imposed by the European Union on all GM food sales. A recent study of a governmental Science Review Board in the United Kingdom, however, found that there was no [pg 335] evidence for any of the environmental or health critiques of GM foods.【117 First Report of the GM Science Review Panel, An Open Review of the Science Relevant to GM Crops and Food Based on the Interests and Concerns of the Public, United Kingdom, July 2003. 】 Indeed, as Peter Pringle masterfully chronicled in Food, Inc., both sides of the political debate could be described as having buffed their cases significantly. The successes and potential benefits have undoubtedly been overstated by enamored scientists and avaricious vendors. There is little doubt, too, that the near-hysterical pitch at which the failures and risks of GM foods have been trumpeted has little science to back it, and the debate has degenerated to a state that makes reasoned, evidence-based consideration difficult. In Europe in general, however, there is wide acceptance of what is called a "precautionary principle." One way of putting it is that absence of evidence of harm is not evidence of absence of harm, and caution counsels against adoption of the new and at least theoretically dangerous. It was this precautionary principle rather than evidence of harm that was at the base of the European ban. This ban has recently been lifted, in the wake of a WTO trade dispute with the United States and other major producers who challenged the ban as a trade barrier. However, the European Union retained strict labeling requirements. This battle among wealthy countries, between the conservative "Fortress Europe" mentality and the growing reliance of American agriculture on biotechnological innovation, would have little moral valence if it did not affect funding for, and availability of, biotechnological research for the populations of the developing world. Partly as a consequence of the strong European resistance to GM foods, the international agricultural research centers that led the way in the development of the Green Revolution varieties, and that released their developments freely for anyone to sell and use without proprietary constraint, were slow to develop capacity in genetic engineering and biotechnological research more generally. Rather than the public national and international efforts leading the way, a study of GM use in developing nations concluded that practically all GM acreage is sown with seed obtained in the finished form from a developed-world supplier, for a price premium or technology licensing fee.【118 Robert E. Evenson, "GMOs: Prospects for Productivity Increases in Developing Countries," Journal of Agricultural and Food Industrial Organization 2 (2004): article 2. 】 The seed, and its improvements, is proprietary to the vendor in this model. It is not supplied in a form or with the rights to further improve locally and independently. Because of the critique of innovation in agriculture as part of the process of globalization and industrialization, of environmental degradation, and of consumer exploitation, the political forces that would have been most likely to support public-sector investment in agricultural innovation are in opposition to such investments. The result has not been retardation of biotechnological innovation [pg 336] in agriculture, but its increasing privatization: primarily in the United States and now increasingly in Latin America, whose role in global agricultural production is growing.

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Private-sector investment, in turn, operates within a system of patents and other breeders' exclusive rights, whose general theoretical limitations are discussed in chapter 2. In agriculture, this has two distinct but mutually reinforcing implications. The first is that, while private-sector innovation has indeed accounted for most genetically engineered crops in the developing world, research aimed at improving agricultural production in the neediest places has not been significantly pursued by the major private-sector firms. A sector based on expectation of sales of products embedding its patents will not focus its research where human welfare will be most enhanced. It will focus where human welfare can best be expressed in monetary terms. The poor are systematically underserved by such a system. It is intended to elicit investments in research in directions that investors believe will result in outputs that serve the needs of those with the highest willingness and ability to pay for their outputs. The second is that even where the products of innovation can, as a matter of biological characteristics, be taken as inputs into local research and development--by farmers or by national agricultural research systems--the international system of patents and plant breeders' rights enforcement makes it illegal to do so without a license. This again retards the ability of poor countries and their farmers and research institutes to conduct research into local adaptations of improved crops.

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The central question raised by the increasing privatization of agricultural biotechnology over the past twenty years is: What can be done to employ commons-based strategies to provide a foundation for research that will be focused on the food security of developing world populations? Is there a way of managing innovation in this sector so that it will not be heavily weighted in favor of populations with a higher ability to pay, and so that its outputs allow farmers and national research efforts to improve and adapt to highly variable local agroecological environments? The continued presence of the public-sector research infrastructure--including the international and national research centers, universities, and NGOs dedicated to the problem of food security--and the potential of harnessing individual farmers and scientists to cooperative development of open biological innovation for agriculture suggest that commons-based paths for development in the area of food security and agricultural innovation are indeed feasible.

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First, some of the largest and most rapidly developing nations that still [pg 337] have large poor populations--most prominently, China, India, and Brazil-- can achieve significant advances through their own national agricultural research systems. Their research can, in turn, provide a platform for further innovation and adaptation by projects in poorer national systems, as well as in nongovernmental public and peer-production efforts. In this regard, China seems to be leading the way. The first rice genome to be sequenced was japonica, apparently sequenced in 2000 by scientists at Monsanto, but not published. The second, an independent and published sequence of japonica, was sequenced by scientists at Syngenta, and published as the first published rice genome sequence in Science in April 2002. To protect its proprietary interests, Syngenta entered a special agreement with Science, which permitted the authors not to deposit the genomic information into the public Genbank maintained by the National Institutes of Health in the United States.【119 Elliot Marshall, "A Deal for the Rice Genome," Science 296 (April 2002): 34. 】 Depositing the information in GenBank makes it immediately available for other scientists to work with freely. All the major scientific publications require that such information be deposited and made publicly available as a standard condition of publication, but Science waved this requirement for the Syngenta japonica sequence. The same issue of Science, however, carried a similar publication, the sequence of Oryza sativa L.ssp. indica, the most widely cultivated subspecies in China. This was sequenced by a public Chinese effort, and its outputs were immediately deposited in GenBank. The simultaneous publication of the rice genome by a major private firm and a Chinese public effort was the first public exposure to the enormous advances that China's public sector has made in agricultural biotechnology, and its focus first and foremost on improving Chinese agriculture. While its investments are still an order of magnitude smaller than those of public and private sectors in the developed countries, China has been reported as the source of more than half of all expenditures in the developing world.【120 Jikun Huang et al., "Plant Biotechnology in China," Science 295 (2002): 674. 】 China's longest experience with GM agriculture is with Bt cotton, which was introduced in 1997. By 2000, 20 percent of China's cotton acreage was sown to Bt cotton. One study showed that the average acreage of a farm was less than 0.5 hectare of cotton, and the trait that was most valuable to them was Bt cotton's reduced pesticide needs. Those who adopted Bt cotton used less pesticide, reducing labor for pest control and the pesticide cost per kilogram of cotton produced. This allowed an average cost savings of 28 percent. Another effect suggested by survey data--which, if confirmed over time, would be very important as a matter of public health, but also to the political economy of the agricultural biotechnology debate--is that farmers [pg 338] who do not use Bt cotton are four times as likely to report symptoms of a degree of toxic exposure following application of pesticides than farmers who did adopt Bt cotton.【121 Huang et al., "Plant Biotechnology." 】 The point is not, of course, to sing the praises of GM cotton or the Chinese research system. China's efforts offer an example of how the larger national research systems can provide an anchor for agricultural research, providing solutions both for their own populations, and, by making the products of their research publicly and freely available, offer a foundation for the work of others.

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Alongside the national efforts in developing nations, there are two major paths for commons-based research and development in agriculture that could serve the developing world more generally. The first is based on existing research institutes and programs cooperating to build a commons-based system, cleared of the barriers of patents and breeders' rights, outside and alongside the proprietary system. The second is based on the kind of loose affiliation of university scientists, nongovernmental organizations, and individuals that we saw play such a significant role in the development of free and open-source software. The most promising current efforts in the former vein are the PIPRA (Public Intellectual Property for Agriculture) coalition of public-sector universities in the United States, and, if it delivers on its theoretical promises, the Generation Challenge Program led by CGIAR (the Consultative Group on International Agricultural Research). The most promising model of the latter, and probably the most ambitious commons-based project for biological innovation currently contemplated, is BIOS (Biological Innovation for an Open Society).

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PIPRA is a collaboration effort among public-sector universities and agricultural research institutes in the United States, aimed at managing their rights portfolio in a way that will give their own and other researchers freedom to operate in an institutional ecology increasingly populated by patents and other rights that make work difficult. The basic thesis and underlying problem that led to PIPRA's founding were expressed in an article in Science coauthored by fourteen university presidents.【122 Richard Atkinson et al., "Public Sector Collaboration for Agricultural IP Management," Science 301 (2003): 174. 】 They underscored the centrality of public-sector, land-grant university-based research to American agriculture, and the shift over the last twenty-five years toward increased use of intellectual property rules to cover basic discoveries and tools necessary for agricultural innovation. These strategies have been adopted by both commercial firms and, increasingly, by public-sector universities as the primary mechanism for technology transfer from the scientific institute to the commercializing firms. The problem they saw was that in agricultural research, [pg 339] innovation was incremental. It relies on access to existing germplasm and crop varieties that, with each generation of innovation, brought with them an ever-increasing set of intellectual property claims that had to be licensed in order to obtain permission to innovate further. The universities decided to use the power that ownership over roughly 24 percent of the patents in agricultural biotechnology innovations provides them as a lever with which to unravel the patent thickets and to reduce the barriers to research that they increasingly found themselves dealing with. The main story, one might say the "founding myth" of PIPRA, was the story of golden rice. Golden rice is a variety of rice that was engineered to provide dietary vitamin A. It was developed with the hope that it could introduce vitamin A supplement to populations in which vitamin A deficiency causes roughly 500,000 cases of blindness a year and contributes to more than 2 million deaths a year. However, when it came to translating the research into deliverable plants, the developers encountered more than seventy patents in a number of countries and six materials transfer agreements that restricted the work and delayed it substantially. PIPRA was launched as an effort of public-sector universities to cooperate in achieving two core goals that would respond to this type of barrier--preserving the right to pursue applications to subsistence crops and other developing-world-related crops, and preserving their own freedom to operate vis-a-vis each other's patent portfolios.

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The basic insight of PIPRA, which can serve as a model for university alliances in the context of the development of medicines as well as agriculture, is that universities are not profit-seeking enterprises, and university scientists are not primarily driven by a profit motive. In a system that offers opportunities for academic and business tracks for people with similar basic skills, academia tends to attract those who are more driven by nonmonetary motivations. While universities have invested a good deal of time and money since the Bayh-Dole Act of 1980 permitted and indeed encouraged them to patent innovations developed with public funding, patent and other exclusive-rights-based revenues have not generally emerged as an important part of the revenue scheme of universities. As table 9.2 shows, except for one or two outliers, patent revenues have been all but negligible in university budgets.【123 This table is a slightly expanded version of one originally published in Yochai Benkler, "Commons Based Strategies and the Problems of Patents," Science 305 (2004): 1110. 】 This fact makes it fiscally feasible for universities to use their patent portfolios to maximize the global social benefit of their research, rather than trying to maximize patent revenue. In particular, universities can aim to include provisions in their technology licensing agreements that are aimed at the dual goals of (a) delivering products embedding their innovations [pg 340] to developing nations at reasonable prices and (b) providing researchers and plant breeders the freedom to operate that would allow them to research, develop, and ultimately produce crops that would improve food security in the developing world.

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Notes:
a. Large ambiguity results because technology transfer office reports increased
revenues for yearend 2003 as $178M without reporting expenses; University
Annual Report reports licensing revenue with all "revenue from other
educational and research activities," and reports a 10 percent decline in this
category, "reflecting an anticipated decline in royalty and license income"
from the $133M for the previous year-end, 2002. The table reflects an assumed
net contribution to university revenues between $100-120M (the entire decline
in the category due to royalty/royalties decreased proportionately with the
category).
b. University of California Annual Report of the Office of Technology Transfer
is more transparent than most in providing expenses--both net legal expenses
and tech transfer direct operating expenses, which allows a clear separation of
net revenues from technology transfer activities.
c. Minus direct expenses, not including expenses for unlicensed inventions.
d. Federal- and nonfederal-sponsored research.
e. Almost half of this amount is in income from a single Initial Public
Offering, and therefore does not represent a recurring source of licensing
revenue.
f. Technology transfer gross revenue minus the one-time event of an initial
public offering of LiquidMetal Technologies.

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While PIPRA shows an avenue for collaboration among universities in the public interest, it is an avenue that does not specifically rely on, or benefit in great measure from, the information networks or the networked information economy. It continues to rely on the traditional model of publicly funded research. More explicit in its effort to leverage the cost savings made possible by networked information systems is the Generation Challenge Program (GCP). The GCP is an effort to bring the CGIAR into the biotechnology sphere, carefully, given the political resistance to genetically modified foods, and quickly, given the already relatively late start that the international research centers have had in this area. Its stated emphasis is on building an architecture of innovation, or network of research relationships, that will provide low-cost techniques for the basic contemporary technologies of agricultural research. The program has five primary foci, but the basic thrust is to generate improvements both in basic genomics science and in breeding and farmer education, in both cases for developing world agriculture. One early focus would be on building a communications system that allows participating institutions and scientists to move information efficiently and utilize computational resources to pursue research. There are hundreds of thousands of samples of germplasm, from "landrace" (that is, locally agriculturally developed) and wild varieties to modern varieties, located in databases around the world in international, national, and academic institutions. There are tremendous high-capacity computation resources in some of the most advanced research institutes, but not in many of the national and international programs. One of the major goals articulated for the GCP is to develop Web-based interfaces to share these data and computational resources. Another is to provide a platform for sharing new questions and directions of research among participants. The work in this network will, in turn, rely on materials that have proprietary interests attached to them, and will produce outputs that could have proprietary interests attached to them as well. Just like the universities, the GCP institutes (national, international, and nonprofit) are looking for an approach aimed to secure open access to research materials and tools and to provide humanitarian access to its products, particularly for subsistence crop development and use. As of this writing, however, the GCP is still in a formative stage, more an aspiration than [pg 342] a working model. Whether it will succeed in overcoming the political constraints placed on the CGIAR as well as the relative latecomer status of the international public efforts to this area of work remains to be seen. But the elements of the GCP certainly exhibit an understanding of the possibilities presented by commons-based networked collaboration, and an ambition to both build upon them and contribute to their development.

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The most ambitious effort to create a commons-based framework for biological innovation in this field is BIOS. BIOS is an initiative of CAMBIA (Center for the Application of Molecular Biology to International Agriculture), a nonprofit agricultural research institute based in Australia, which was founded and is directed by Richard Jefferson, a pioneer in plant biotechnology. BIOS is based on the observation that much of contemporary agricultural research depends on access to tools and enabling technologies-- such as mechanisms to identify genes or for transferring them into target plants. When these tools are appropriated by a small number of firms and available only as part of capital-intensive production techniques, they cannot serve as the basis for innovation at the local level or for research organized on nonproprietary models. One of the core insights driving the BIOS initiative is the recognition that when a subset of necessary tools is available in the public domain, but other critical tools are not, the owners of those tools appropriate the full benefits of public domain innovation without at the same time changing the basic structural barriers to use of the proprietary technology. To overcome these problems, the BIOS initiative includes both a strong informatics component and a fairly ambitious "copyleft"-like model (similar to the GPL described in chapter 3) of licensing CAMBIA's basic tools and those of other members of the BIOS initiative. The informatics component builds on a patent database that has been developed by CAMBIA for a number of years, and whose ambition is to provide as complete as possible a dataset of who owns what tools, what the contours of ownership are, and by implication, who needs to be negotiated with and where research paths might emerge that are not yet appropriated and therefore may be open to unrestricted innovation.

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The licensing or pooling component is more proactive, and is likely the most significant of the project. BIOS is setting up a licensing and pooling arrangement, "primed" by CAMBIA's own significant innovations in tools, which are licensed to all of the initiative's participants on a free model, with grant-back provisions that perform an openness-binding function similar to copyleft.【124 Wim Broothaertz et al., "Gene Transfer to Plants by Diverse Species of Bacteria," Nature 433 (2005): 629. 】 In coarse terms, this means that anyone who builds upon the [pg 343] contributions of others must contribute improvements back to the other participants. One aspect of this model is that it does not assume that all research comes from academic institutions or from traditional governmentfunded, nongovernmental, or intergovernmental research institutes. It tries to create a framework that, like the open-source development community, engages commercial and noncommercial, public and private, organized and individual participants into a cooperative research network. The platform for this collaboration is "BioForge," styled after Sourceforge, one of the major free and open-source software development platforms. The commitment to engage many different innovators is most clearly seen in the efforts of BIOS to include major international commercial providers and local potential commercial breeders alongside the more likely targets of a commons-based initiative. Central to this move is the belief that in agricultural science, the basic tools can, although this may be hard, be separated from specific applications or products. All actors, including the commercial ones, therefore have an interest in the open and efficient development of tools, leaving competition and profit making for the market in applications. At the other end of the spectrum, BIOS's focus on making tools freely available is built on the proposition that innovation for food security involves more than biotechnology alone. It involves environmental management, locale-specific adaptations, and social and economic adoption in forms that are locally and internally sustainable, as opposed to dependent on a constant inflow of commoditized seed and other inputs. The range of participants is, then, much wider than envisioned by PIPRA or the GCP. It ranges from multinational corporations through academic scientists, to farmers and local associations, pooling their efforts in a communications platform and institutional model that is very similar to the way in which the GNU/Linux operating system has been developed. As of this writing, the BIOS project is still in its early infancy, and cannot be evaluated by its outputs. However, its structure offers the crispest example of the extent to which the peer-production model in particular, and commons-based production more generally, can be transposed into other areas of innovation at the very heart of what makes for human development--the ability to feed oneself adequately.

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PIPRA and the BIOS initiative are the most salient examples of, and the most significant first steps in the development of commons-based strategies to achieve food security. Their vitality and necessity challenge the conventional wisdom that ever-increasing intellectual property rights are necessary to secure greater investment in research, or that the adoption of proprietary [pg 344] rights is benign. Increasing appropriation of basic tools and enabling technologies creates barriers to entry for innovators--public-sector, nonprofit organizations, and the local farmers themselves--concerned with feeding those who cannot signal with their dollars that they are in need. The emergence of commons-based techniques--particularly, of an open innovation platform that can incorporate farmers and local agronomists from around the world into the development and feedback process through networked collaboration platforms--promises the most likely avenue to achieve research oriented toward increased food security in the developing world. It promises a mechanism of development that will not increase the relative weight and control of a small number of commercial firms that specialize in agricultural production. It will instead release the products of innovation into a selfbinding commons--one that is institutionally designed to defend itself against appropriation. It promises an iterative collaboration platform that would be able to collect environmental and local feedback in the way that a free software development project collects bug reports--through a continuous process of networked conversation among the user-innovators themselves. In combination with public investments from national governments in the developing world, from the developed world, and from more traditional international research centers, agricultural research for food security may be on a path of development toward constructing a sustainable commons-based innovation ecology alongside the proprietary system. Whether it follows this path will be partly a function of the engagement of the actors themselves, but partly a function of the extent to which the international intellectual property/trade system will refrain from raising obstacles to the emergence of these commons-based efforts.

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To the extent that the United States and Europe are creating a global innovation system that relies on patents and market incentives as its primary driver of research and innovation, these wealthy democracies are, of necessity, choosing to neglect diseases that disproportionately affect the poor. There is nothing evil about a pharmaceutical company that is responsible to its shareholders deciding to invest where it expects to reap profit. It is not immoral for a firm to invest its research funds in finding a drug to treat acne, which might affect 20 million teenagers in the United States, rather than a drug that will cure African sleeping sickness, which affects 66 million Africans and kills about fifty thousand every year. If there is immorality to be found, it is in the legal and policy system that relies heavily on the patent system to induce drug discovery and development, and does not adequately fund and organize biomedical research to solve the problems that cannot be solved by relying solely on market pull. However, the politics of public response to patents for drugs are similar in structure to those that have to do with agricultural biotechnology exclusive rights. There is a very strong patentbased industry--much stronger than in any other patent-sensitive area. The rents from strong patents are enormous, and a rational monopolist will pay up to the value of its rents to maintain and improve its monopoly. The primary potential political push-back in the pharmaceutical area, which does [pg 346] not exist in the agricultural innovation area, is that the exorbitant costs of drugs developed under this system is hurting even the well-endowed purses of developed-world populations. The policy battles in the United States and throughout the developed world around drug cost containment may yet result in a sufficient loosening of the patent constraints to deliver positive side effects for the developing world. However, they may also work in the opposite direction. The unwillingness of the wealthy populations in the developed world to pay high rents for drugs retards the most immediate path to lower-cost drugs in the developing world--simple subsidy of below-cost sales in poor countries cross-subsidized by above-cost rents in wealthy countries.

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Universities are internally conflicted about their public and market goals. [pg 348] Dating back to the passage of the Bayh-Dole Act, universities have increased their patenting practices for the products of publicly funded research. Technology transfer offices that have been set up to facilitate this practice are, in many cases, measured by the number of patent applications, grants, and dollars they bring in to the university. These metrics for measuring the success of these offices tend to make them function, and understand their role, in a way that is parallel to exclusive-rights-dependent market actors, instead of as public-sector, publicly funded, and publicly minded institutions. A technology transfer officer who has successfully provided a royalty-free license to a nonprofit concerned with developing nations has no obvious metric in which to record and report the magnitude of her success (saving X millions of lives or displacing Y misery), unlike her colleague who can readily report X millions of dollars from a market-oriented license, or even merely Y dozens of patents filed. Universities must consider more explicitly their special role in the global information and knowledge production system. If they recommit to a role focused on serving the improvement of the lot of humanity, rather than maximization of their revenue stream, they should adapt their patenting and licensing practices appropriately. In particular, it will be important following such a rededication to redefine the role of technology transfer offices in terms of lives saved, quality-of-life measures improved, or similar substantive measures that reflect the mission of university research, rather than the present metrics borrowed from the very different world of patent-dependent market production. While the internal process is culturally and politically difficult, it is not, in fact, analytically or technically complex. Universities have, for a very long time, seen themselves primarily as dedicated to the advancement of knowledge and human welfare through basic research, reasoned inquiry, and education. The long-standing social traditions of science have always stood apart from market incentives and orientations. The problem is therefore one of reawakening slightly dormant cultural norms and understandings, rather than creating new ones in the teeth of long-standing contrary traditions. The problem should be substantially simpler than, say, persuading companies that traditionally thought of their innovation in terms of patents granted or royalties claimed, as some technology industry participants have, to adopt free software strategies.

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Universities working together can cooperate to include in their licenses provisions that would secure freedom to operate for anyone conducting research into developing-world diseases or production for distribution in poorer nations. The institutional details of such a licensing regime are relatively complex and arcane, but efforts are, in fact, under way to develop such licenses and to have them adopted by universities.【127 The detailed analysis can be found in Amy Kapzcynzki et al., "Addressing Global Health Inequities: An Open Licensing Paradigm for Public Sector Inventions," Berkeley Journal of Law and Technology (Spring 2005). 24. See Jean Lanjouw, "A New Global Patent Regime for Diseases: U.S. and International Legal Issues," Harvard Journal of Law & Technology 16 (2002). 25. S. Maurer, A. Sali, and A. Rai, "Finding Cures for Tropical Disease: Is Open Source the Answer?" Public Library of Science: Medicine 1, no. 3 (December 2004): e56. 】 What is important here, for understanding the potential, is the basic idea and framework. In exchange for access to the university's patents, the pharmaceutical licensees will agree not to assert any of their own rights in drugs that require a university license against generics manufacturers who make generic versions of those drugs purely for distribution in low- and middle-income countries. An Indian or American generics manufacturer could produce patented drugs that relied on university patents and were licensed under this kind of an equitable-access license, as long as it distributed its products solely in poor countries. A government or nonprofit research institute operating in South Africa could work with patented research tools without concern that doing so would violate the patents. However, neither could then import the products of their production or research into the developed world without violating the patents of both the university and the drug company. The licenses would create a mechanism for redistribution of drug products and research tools from the developed economies to the developing. It would do so without requiring the kind of regulatory changes advocated by others, such as [pg 350] Jean Lanjouw, who have advocated policy changes aimed similarly to achieve differential pricing in the developing and developed worlds.24 Because this redistribution could be achieved by universities acting through licensing, instead of through changes in law, it offers a more feasible political path for achieving the desired result. Such action by universities would, of course, not solve all the problems of access to medicines. First, not all health-related products are based on university research. Second, patents do not account for all, or perhaps even most, of the reason that patients in poor nations are not treated. A lack of delivery infrastructure, public-health monitoring and care, and stable conditions to implement disease-control policy likely weigh more heavily. Nonetheless, there are successful and stable government and nonprofit programs that could treat hundreds of thousands or millions of patients more than they do now, if the cost of drugs were lower. Achieving improved access for those patients seems a goal worthy of pursuit, even if it is no magic bullet to solve all the illnesses of poverty.

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This proposal about medicine is, at this stage, the most imaginary among the commons-based strategies for development suggested here. However, it is analytically consistent with them, and, in principle, should be attainable. In combination with the more traditional commons-based approaches, university research, and the nonprofit world, peer production could contribute to an innovation ecology that could overcome the systematic inability of a purely patent-based system to register and respond to the health needs of the world's poor. [pg 354]

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Welfare, development, and growth outside of the core economies heavily depend on the transfer of information-embedded goods and tools, information, and knowledge from the technologically advanced economies to the developing and less-developed economies and societies around the globe. These are important partly as finished usable components of welfare. Perhaps more important, however, they are necessary as tools and platforms on which innovation, research, and development can be pursued by local actors in the developing world itself--from the free software developers of Brazil to the agricultural scientists and farmers of Southeast Asia. The primary obstacles to diffusion of these desiderata in the required direction are the institutional framework of intellectual property and trade and the political power of the patent-dependent business models in the information-exporting economies. This is not because the proprietors of information goods and tools are evil. It is because their fiduciary duty is to maximize shareholder value, and the less-developed and developing economies have little money. As rational maximizers with a legal monopoly, the patent holders restrict output and sell at higher rates. This is not a bug in the institutional system we call "intellectual property." It is a known feature that has known undesirable side effects of inefficiently restricting access to the products of innovation. In the context of vast disparities in wealth across the globe, however, this known feature does not merely lead to less than theoretically optimal use of the information. It leads to predictable increase of morbidity and mortality and to higher barriers to development.

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The rise of the networked information economy provides a new framework for thinking about how to work around the barriers that the international intellectual property regime places on development. Public-sector and other nonprofit institutions that have traditionally played an important role in development can do so with a greater degree of efficacy. Moreover, the emergence of peer production provides a model for new solutions to some of the problems of access to information and knowledge. In software and communications, these are directly available. In scientific information and some educational materials, we are beginning to see adaptations of these models to support core elements of development and learning. In food security and health, the translation process may be more difficult. In agriculture, we are seeing more immediate progress in the development of a woven [pg 355] fabric of public-sector, academic, nonprofit, and individual innovation and learning to pursue biological innovation outside of the markets based on patents and breeders' rights. In medicine, we are still at a very early stage of organizational experiments and institutional proposals. The barriers to implementation are significant. However, there is growing awareness of the human cost of relying solely on the patent-based production system, and of the potential of commons-based strategies to alleviate these failures.

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Ideally, perhaps, the most direct way to arrive at a better system for harnessing innovation to development would pass through a new international politics of development, which would result in a better-designed international system of trade and innovation policy. There is in fact a global movement of NGOs and developing nations pursuing this goal. It is possible, however, that the politics of international trade are sufficiently bent to the purposes of incumbent industrial information economy proprietors and the governments that support them as a matter of industrial policy that the political path of formal institutional reform will fail. Certainly, the history of the TRIPS agreement and, more recently, efforts to pass new expansive treaties through the WIPO suggest this. However, one of the lessons we learn as we look at the networked information economy is that the work of governments through international treaties is not the final word on innovation and its diffusion across boundaries of wealth. The emergence of social sharing as a substantial mode of production in the networked environment offers an alternative route for individuals and nonprofit entities to take a much more substantial role in delivering actual desired outcomes independent of the formal system. Commons-based and peer production efforts may not be a cure-all. However, as we have seen in the software world, these strategies can make a big contribution to quite fundamental aspects of human welfare and development. And this is where freedom and justice coincide.

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Since the middle of the 1990s, we have seen intensifying battles over the institutional ecology within which the industrial mode of information production and the newly emerging networked modes compete. Partly, this has been a battle over telecommunications infrastructure regulation. Most important, however, this has meant a battle over "intellectual property" protection, very broadly defined. Building upon and extending a twenty-five-year trend of expansion of copyrights, patents, and similar exclusive rights, the last half-decade of the twentieth century saw expansion of institutional mechanisms for exerting exclusive control in multiple dimensions. The term of copyright was lengthened. Patent rights were extended to cover software and business methods. Trademarks were extended by the Antidilution Act of 1995 to cover entirely new values, which became the basis for liability in the early domain-name trademark disputes. Most important, we saw a move to create new legal tools with which information vendors could hermetically seal access to their materials to an extent never before possible. The Digital Millennium Copyright Act (DMCA) prohibited the creation and use of technologies that would allow users to get at materials whose owners control through encryption. It prohibited even technologies that users can employ to use the materials in ways that the owners have no right to prevent. Today we are seeing efforts to further extend similar technological regulations-- down to the level of regulating hardware to make sure that it complies with design specifications created by the copyright industries. At other layers of the communications environment, we see efforts to expand software patents, to control the architecture of personal computing devices, and to create ever-stronger property rights in physical infrastructure--be it the telephone lines, cable plant, or wireless frequencies. Together, these legislative and judicial [pg 381] acts have formed what many have been calling a second enclosure movement: A concerted effort to shape the institutional ecology in order to help proprietary models of information production at the expense of burdening nonmarket, nonproprietary production.【152 For a review of the literature and a substantial contribution to it, see James Boyle, "The Second Enclosure Movement and the Construction of the Public Domain," Law and Contemporary Problems 66 (Winter-Spring 2003): 33-74. 】 The new enclosure movement is not driven purely by avarice and rent seeking--though it has much of that too. Some of its components are based in well-meaning judicial and regulatory choices that represent a particular conception of innovation and its relationship to exclusive rights. That conception, focused on mass-mediatype content, movies, and music, and on pharmaceutical-style innovation systems, is highly solicitous of the exclusive rights that are the bread and butter of those culturally salient formats. It is also suspicious of, and detrimental to, the forms of nonmarket, commons-based production emerging in the networked information economy.

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This new enclosure movement has been the subject of sustained and diverse academic critique since the mid-1980s.【153 Early versions in the legal literature of the skepticism regarding the growth of exclusive rights were Ralph Brown's work on trademarks, Benjamin Kaplan's caution over the gathering storm that would become the Copyright Act of 1976, and Stephen Breyer's work questioning the economic necessity of copyright in many industries. Until, and including the 1980s, these remained, for the most part, rare voices--joined in the 1980s by David Lange's poetic exhortation for the public domain; Pamela Samuelson's systematic critique of the application of copyright to computer programs, long before anyone was paying attention; Jessica Litman's early work on the political economy of copyright legislation and the systematic refusal to recognize the public domain as such; and William Fisher's theoretical exploration of fair use. The 1990s saw a significant growth of academic questioning of enclosure: Samuelson continued to press the question of copyright in software and digital materials; Litman added a steady stream of prescient observations as to where the digital copyright was going and how it was going wrong; Peter Jaszi attacked the notion of the romantic author; Ray Patterson developed a user-centric view of copyright; Diane Zimmerman revitalized the debate over the conflict between copyright and the first amendment; James Boyle introduced erudite criticism of the theoretical coherence of the relentless drive to propertization; Niva Elkin Koren explored copyright and democracy; Keith Aoki questioned trademark, patents, and global trade systems; Julie Cohen early explored technical protection systems and privacy; and Eben Moglen began mercilessly to apply the insights of free software to hack at the foundations of intellectual property apologia. Rebecca Eisenberg, and more recently, Arti Rai, questioned the wisdom of patents on research tools to biomedical innovation. In this decade, William Fisher, Larry Lessig, Litman, and Siva Vaidhyanathan have each described the various forms that the enclosure movement has taken and exposed its many limitations. Lessig and Vaidhyanathan, in particular, have begun to explore the relations between the institutional battles and the freedom in the networked environment. 】 The core of this rich critique has been that the cases and statutes of the past decade or so have upset the traditional balance, in copyrights in particular, between seeking to create incentives through the grant of exclusive rights and assuring access to information through the judicious limitation of these rights and the privileging of various uses. I do not seek to replicate that work here, or to offer a comprehensive listing of all the regulatory moves that have increased the scope of proprietary rights in digital communications networks. Instead, I offer a way of framing these various changes as moves in a large-scale battle over the institutional ecology of the digital environment. By "institutional ecology," I mean to say that institutions matter to behavior, but in ways that are more complex than usually considered in economic models. They interact with the technological state, the cultural conceptions of behaviors, and with incumbent and emerging social practices that may be motivated not only by self-maximizing behavior, but also by a range of other social and psychological motivations. In this complex ecology, institutions--most prominently, law--affect these other parameters, and are, in turn, affected by them. Institutions coevolve with technology and with social and market behavior. This coevolution leads to periods of relative stability, punctuated by periods of disequilibrium, which may be caused by external shocks or internally generated phase shifts. During these moments, the various parameters will be out of step, and will pull and tug at the pattern of behavior, at the technology, and at the institutional forms of the behavior. After the tugging and pulling has shaped the various parameters in ways that are more consistent [pg 382] with each other, we should expect to see periods of relative stability and coherence.

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In each layer, the policy debate is almost always carried out in local, specific terms. We ask questions like, Will this policy optimize "spectrum management" in these frequencies, or, Will this decrease the number of CDs sold? However, the basic, overarching question that we must learn to ask in all these debates is: Are we leaving enough institutional space for the socialeconomic practices of networked information production to emerge? The networked information economy requires access to a core set of capabilities--existing information and culture, mechanical means to process, store, and communicate new contributions and mixes, and the logical systems necessary to connect them to each other. What nonmarket forms of production need is a core common infrastructure that anyone can use, irrespective of whether their production model is market-based or not, proprietary or not. In almost all these dimensions, the current trajectory of technologicaleconomic-social trends is indeed leading to the emergence of such a core common infrastructure, and the practices that make up the networked information economy are taking advantage of open resources. Wireless equipment manufacturers are producing devices that let users build their own networks, even if these are now at a primitive stage. The open-innovation ethos of the programmer and Internet engineering community produce both free software and proprietary software that rely on open standards for providing an open logical layer. The emerging practices of free sharing of information, knowledge, and culture that occupy most of the discussion in this book are producing an ever-growing stream of freely and openly accessible content resources. The core common infrastructure appears to be emerging without need for help from a guiding regulatory hand. This may or may not be a stable pattern. It is possible that by some happenstance one or two firms, using one or two critical technologies, will be able to capture and control a bottleneck. At that point, perhaps regulatory intervention will be required. However, from the beginning of legal responses to the Internet and up to this writing in the middle of 2005, the primary role of law has been reactive and reactionary. It has functioned as a point of resistance to the emergence of the networked information economy. It has been used by incumbents from the industrial information economies to contain the risks posed by the emerging capabilities of the networked information environment. What the emerging networked information economy therefore needs, in almost all cases, is not regulatory protection, but regulatory abstinence.

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As chapter 3 explained, by the time that legislatures in the United States and around the world had begun to accede to the wisdom of the economists' critique, it had been rendered obsolete by technology. In particular, it had been rendered obsolete by the fact that the declining cost of computation and the increasing sophistication of communications protocols among enduser devices in a network made possible new, sharing-based solutions to the problem of how to allow users to communicate without wires. Instead of having a regulation-determined exclusive right to transmit, which may or may not be subject to market reallocation, it is possible to have a market in smart radio equipment owned by individuals. These devices have the technical ability to share capacity and cooperate in the creation of wireless carriage capacity. These radios can, for example, cooperate by relaying each other's messages or temporarily "lending" their antennae to neighbors to help them decipher messages of senders, without anyone having exclusive use of the spectrum. Just as PCs can cooperate to create a supercomputer in SETI@Home by sharing their computation, and a global-scale, peer-to-peer data-storage and retrieval system by sharing their hard drives, computationally intensive radios can share their capacity to produce a local wireless broadband infrastructure. Open wireless networks allow users to install their own wireless device--much like the WiFi devices that have become popular. These devices then search automatically for neighbors with similar capabilities, and self-configure into a high-speed wireless data network. Reaching this goal does not, at this point, require significant technological innovation. The technology is there, though it does require substantial engineering [pg 404] effort to implement. The economic incentives to develop such devices are fairly straightforward. Users already require wireless local networks. They will gain added utility from extending their range for themselves, which would be coupled with the possibility of sharing with others to provide significant wide-area network capacity for whose availability they need not rely on any particular provider. Ultimately, it would be a way for users to circumvent the monopoly last mile and recapture some of the rents they currently pay. Equipment manufacturers obviously have an incentive to try to cut into the rents captured by the broadband monopoly/oligopoly by offering an equipment-embedded alternative.

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At the logical layer, most of the efforts aimed to secure a proprietary model and a more tightly controlled institutional ecology follow a similar pattern to the efforts to regulate device design. They come from the needs of the content-layer businesses--Hollywood and the recording industry, in particular. Unlike the physical transmission layer, which is historically rooted in a proprietary but regulated organizational form, most of the logical layer of the Internet has its roots in open, nonproprietary protocols and standards. The broad term "logical layer" combines a wide range of quite different functionalities. The most basic logical components--the basic protocols and standards for Internet connectivity--have from the beginning of the Internet been open, unowned, and used in common by all Internet users and applications. They were developed by computer scientists funded primarily with public money. The basic Internet Protocol (IP) and Transmission Control Protocol (TCP) are open for all to use. Most of the basic standards for communicating were developed in the IETF, a loosely defined standardssetting body that works almost entirely on a meritocratic basis--a body that Michael Froomkin once suggested is the closest earthly approximation of Habermas's ideal speech situation. Individual computer engineers contributed irrespective of formal status or organizational affiliation, and the organization ran on the principle that Dave Clark termed "rough consensus and running code." The World Wide Web protocols and authoring conventions HTTP and HTML were created, and over the course of their lives, shepherded by Tim Berners Lee, who has chosen to dedicate his efforts to making [pg 413] the Web a public good rather than cashing in on his innovation. The sheer technical necessity of these basic protocols and the cultural stature of their achievement within the engineering community have given these open processes and their commonslike institutional structure a strong gravitational pull on the design of other components of the logical layer, at least insofar as it relates to the communication side of the Internet.

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The point here is not, however, to revisit the legal correctness of that decision, but to illustrate the effects of the DMCA as an element in the institutional ecology of the logical layer. The DMCA is intended as a strong legal barrier to certain technological paths of innovation at the logical layer of the digital environment. It is intended specifically to preserve the "thing-" or "goods"-like nature of entertainment products--music and movies, in particular. As such, it is intended to, and does to some extent, shape the technological development toward treating information and culture as finished goods, rather than as the outputs of social and communications processes that blur the production-consumption distinction. It makes it more difficult for individuals and nonmarket actors to gain access to digital materials that the technology, the market, and the social practices, left unregulated, would have made readily available. It makes practices of cutting and pasting, changing and annotating existing cultural materials harder to do than the technology would have made possible. I have argued elsewhere that when Congress self-consciously makes it harder for individuals to use whatever technology is available to them, to speak as they please and to whomever [pg 418] they please, in the interest of some public goal (in this case, preservation of Hollywood and the recording industry for the public good), it must justify its acts under the First Amendment. However, the important question is not one of U.S. constitutional law.

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The battles over p2p and the DMCA offer some insight into the potential, but also the limits, of tweaking the institutional ecology. The ambition of the industrial cultural producers in both cases was significant. They sought to deploy law to shape emerging technologies and social practices to make sure that the business model they had adopted for the technologies of film and sound recording continued to work in the digital environment. Doing so effectively would require substantial elimination of certain lines of innovation, like certain kinds of decryption and p2p networks. It would require outlawing behavior widely adopted by people around the world--social sharing of most things that they can easily share--which, in the case of music, has been adopted by tens of millions of people around the world. The belief that all this could be changed in a globally interconnected network through the use of law was perhaps naïve. Nonetheless, the legal efforts have had some impact on social practices and on the ready availability of materials [pg 429] for free use. The DMCA may not have made any single copyright protection mechanism hold up to the scrutiny of hackers and crackers around the Internet. However, it has prevented circumvention devices from being integrated into mainstream platforms, like the Windows operating system or some of the main antivirus programs, which would have been "natural" places for them to appear in consumer markets. The p2p litigation did not eliminate the p2p networks, but it does seem to have successfully dampened the social practice of file sharing. One can take quite different views of these effects from a policy perspective. However, it is clear that they are selfconscious efforts to tweak the institutional ecology of the digital environment in order to dampen the most direct threats it poses for the twentieth-century industrial model of cultural production. In the case of the DMCA, this is done at the direct cost of making it substantially harder for users to make creative use of the existing stock of audiovisual materials from the twentieth century--materials that are absolutely central to our cultural selfunderstanding at the beginning of the twenty-first century. In the case of p2p networks, the cost to nonmarket production is more indirect, and may vary across different cultural forms. The most important long-term effect of the pressure that this litigation has put on technology to develop decentralized search and retrieval systems may, ultimately and ironically, be to improve the efficiency of radically decentralized cultural production and distribution, and make decentralized production more, rather than less, robust to the vicissitudes of institutional ecology.

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Throughout most of its history, software has been protected primarily by copyright, if at all. Beginning in the early 1980s, and culminating formally in the late 1990s, the Federal Circuit, the appellate court that oversees the U.S. patent law, made clear that software was patentable. The result has been that software has increasingly become the subject of patent rights. There is now pressure for the European Union to pass a similar reform, and to internationalize the patentability of software more generally. There are a variety of policy questions surrounding the advisability of software patents. Software [pg 438] development is a highly incremental process. This means that patents tend to impose a burden on a substantial amount of future innovation, and to reward innovation steps whose qualitative improvement over past contributions may be too small to justify the discontinuity represented by a patent grant. Moreover, innovation in the software business has flourished without patents, and there is no obvious reason to implement a new exclusive right in a market that seems to have been enormously innovative without it. Most important, software components interact with each other constantly. Sometimes interoperating with a certain program may be absolutely necessary to perform a function, not because the software is so good, but because it has become the standard. The patent then may extend to the very functionality, whereas a copyright would have extended only to the particular code by which it was achieved. The primary fear is that patents over standards could become major bottlenecks.

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From the perspective of the battle over the institutional ecology, free software and open-source development stand to lose the most from software patents. A patent holder may charge a firm that develops dependent software in order to capture rents. However, there is no obvious party to charge for free software development. Even if the patent owner has a very open licensing policy--say, licensing the patent nonexclusively to anyone without discrimination for $10,000--most free software developers will not be able to play. IBM and Red Hat may pay for licenses, but the individual contributor hacking away at his or her computer, will not be able to. The basic driver of free software innovation is easy ubiquitous access to the state of the art, coupled with diverse motivations and talents brought to bear on a particular design problem. If working on a problem requires a patent license, and if any new development must not only write new source code, but also avoid replicating a broad scope patent or else pay a large fee, then the conditions for free software development are thoroughly undermined. Free software is responsible for some of the most basic and widely used innovations and utilities on the Internet today. Software more generally is heavily populated by service firms that do not functionally rely on exclusive rights, copyrights, or patents. Neither free software nor service-based software development need patents, and both, particularly free and open-source software, stand to be stifled significantly by widespread software patenting. As seen in the case of the browser war, in the case of Gnutella, and the much more widely used basic utilities of the Web--Apache server software, a number of free e-mail servers, and the Perl scripting language--free and open-source [pg 439] software developers provide central chunks of the logical layer. They do so in a way that leaves that layer open for anyone to use and build upon. The drive to increase the degree of exclusivity available for software by adopting patents over and above copyright threatens the continued vitality of this development methodology. In particular, it threatens to take certain discrete application areas that may require access to patented standard elements or protocols out of the domain of what can be done by free software. As such, it poses a significant threat to the availability of an open logical layer for at least some forms of network use.

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Sustained and careful work, most prominently by Jerome Reichman and Paul Uhlir, has shown that the proposed database right is unnecessary and detrimental, particularly to scientific research.【190 J. H. Reichman and Paul F. Uhlir, "Database Protection at the Crossroads: Recent Developments and Their Impact on Science and Technology," Berkeley Technology Law Journal 14 (1999): 793; Stephen M. Maurer and Suzanne Scotchmer, "Database Protection: Is It Broken and Should We Fix It?" Science 284 (1999): 1129. 】 Perhaps no example explains this point better than the "natural experiment" that Boyle has pointed to, and which the United States and Europe have been running over the past decade or so. The United States has formally had no exclusive right in data since 1991. Europe has explicitly had such a right since 1996. One would expect that both the European Union and the United States would look to the comparative effects on the industries in both places when the former decides whether to keep its law, and the latter decides whether to adopt one like it. The evidence is reasonably consistent and persuasive. Following the Feist decision, the U.S. database industry continued to grow steadily, without [pg 450] a blip. The "removal" of the property right in data by Feist had no effect on growth. Europe at the time had a much smaller database industry than did the United States, as measured by the number of databases and database companies. Maurer, Hugenholz, and Onsrud showed that, following the introduction of the European sui generis right, each country saw a one-time spike in the number of databases and new database companies, but this was followed within a year or two by a decline to the levels seen before the Directive, which have been fairly stagnant since the early 1990s.【191 See Stephen M. Maurer, P. Bernt Hugenholtz, and Harlan J. Onsrud, "Europe's Database Experiment," Science 294 (2001): 789; Stephen M. Maurer, "Across Two Worlds: Database Protection in the U.S. and Europe," paper prepared for Industry Canada's Conference on Intellectual Property and Innovation in the KnowledgeBased Economy, May 23-24 2001. 】 Another study, more specifically oriented toward the appropriate policy for government-collected data, compared the practices of Europe--where government agencies are required to charge what the market will bear for access to data they collect--and the United States, where the government makes data it collects freely available at the cost of reproduction, as well as for free on the Web. That study found that the secondary uses of data, including commercial- and noncommercial-sector uses--such as, for example, markets in commercial risk management and meteorological services--contributed vastly more to the economy of the United States because of secondary uses of freely accessed government weather data than equivalent market sectors in Europe were able to contribute to their respective economies.【192 Peter Weiss, "Borders in Cyberspace: Conflicting Public Sector Information Policies and their Economic Impacts" (U.S. Dept. of Commerce, National Oceanic and Atmospheric Administration, February 2002). 】 The evidence suggests, then, that the artificial imposition of rents for proprietary data is suppressing growth in European market-based commercial services and products that rely on access to data, relative to the steady growth in the parallel U.S. markets, where no such right exists. It is trivial to see that a cost structure that suppresses growth among market-based entities that would at least partially benefit from being able to charge more for their outputs would have an even more deleterious effect on nonmarket information production and exchange activities, which are burdened by the higher costs and gain no benefit from the proprietary rights.

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As this very brief overview demonstrates, most of the formal institutional moves at the content layer are pushing toward greater scope and reach for exclusive rights in the universe of existing information, knowledge, and cultural resources. The primary countervailing forces in the content layer are similar to the primary countervailing forces in the logical layer--that is, social and cultural push-back against exclusivity. Recall how central free software and the open, cooperative, nonproprietary standard-setting processes are to the openness of the logical layer. In the content layer, we are seeing the emergence of a culture of free creation and sharing developing as a countervailing force to the increasing exclusivity generated by the public, formal lawmaking system. The Public Library of Science discussed in chapter 9 is an initiative of scientists who, frustrated with the extraordinarily high journal costs for academic journals, have begun to develop systems for scientific publication whose outputs are immediately and freely available everywhere. The Creative Commons is an initiative to develop a series of licenses that allow individuals who create information, knowledge, and culture to attach simple licenses that define what others may, or may not, do with their work. The innovation represented by these licenses relative to the background copyright system is that they make it trivial for people to give others permission to use their creations. Before their introduction, there were no widely available legal forms to make it clear to the world that it is free to use my work, with or without restrictions. More important than the institutional innovation of Creative Commons is its character as a social movement. Under the moniker of the "free culture" movement, it aims to encourage widespread adoption of sharing one's creations with others. What a mature movement like the free software movement, or nascent movements like the free culture movement and the scientists' movement for open publication and open archiving are aimed at is the creation of a legally selfreinforcing domain of open cultural sharing. They do not negate propertylike rights in information, knowledge, and culture. Rather, they represent a [pg 456] self-conscious choice by their participants to use copyrights, patents, and similar rights to create a domain of resources that are free to all for common use.

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Complex modern societies have developed in the context of mass media and industrial information economy. Our theories of growth and innovation assume that industrial models of innovation are dominant. Our theories about how effective communications in complex societies are achieved center on market-based, proprietary models, with a professional commercial core and a dispersed, relatively passive periphery. Our conceptions of human agency, collective deliberation, and common culture in these societies are embedded in the experience and practice of capital-intensive information and cultural production practices that emphasize proprietary, market-based models and starkly separate production from consumption. Our institutional frameworks reflect these conceptual models of information production and exchange, and have come, over the past few years, to enforce these conceptions as practiced reality, even when they need not be.

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This book began with four economic observations. First, the baseline conception that proprietary strategies are dominant in our information production system is overstated. The education system, [pg 461] from kindergarten to doctoral programs, is thoroughly infused with nonproprietary motivations, social relations, and organizational forms. The arts and sciences are replete with voluntarism and actions oriented primarily toward social-psychological motivations rather than market appropriation. Political and theological discourses are thoroughly based in nonmarket forms and motivations. Perhaps most surprisingly, even industrial research and development, while market oriented, is in most industries not based on proprietary claims of exclusion, but on improved efficiencies and customer relations that can be captured and that drive innovation, without need for proprietary strategies of appropriation. Despite the continued importance of nonproprietary production in information as a practical matter, the conceptual nuance required to acknowledge its importance ran against the grain of the increasingly dominant thesis that property and markets are the roots of all growth and productivity. Partly as a result of the ideological and military conflict with Communism, partly as a result of the theoretical elegance of a simple and tractable solution, policy makers and their advisers came to believe toward the end of the twentieth century that property in information and innovation was like property in wristwatches and automobiles. The more clearly you defined and enforced it, and the closer it was to perfect exclusive rights, the more production you would get. The rising dominance of this conceptual model combined with the rent-seeking lobbying of industrialmodel producers to underwrite a fairly rapid and substantial tipping of the institutional ecology of innovation and information production in favor of proprietary models. The U.S. patent system was overhauled in the early 1980s, in ways that strengthened and broadened the reach and scope of exclusivity. Copyright was vastly expanded in the mid-1970s, and again in the latter 1990s. Trademark was vastly expanded in the 1990s. Other associated rights were created and strengthened throughout these years.

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A genuine shift in the way we produce the information environment that we occupy as individual agents, as citizens, as culturally embedded creatures, and as social beings goes to the core of our basic liberal commitments. Information and communications are core elements of autonomy and of public political discourse and decision making. Communication is the basic unit of social existence. Culture and knowledge, broadly conceived, form the basic frame of reference through which we come to understand ourselves and others in the world. For any liberal political theory--any theory that begins with a focus on individuals and their freedom to be the authors of their own lives in connection with others--the basic questions of how individuals and communities come to know and evaluate are central to the project of characterizing the normative value of institutional, social, and political systems. Independently, in the context of an information- and innovation-centric economy, the basic components of human development also depend on how we produce information and innovation, and how we disseminate its implementations. The emergence of a substantial role for nonproprietary production offers discrete strategies to improve human development around the globe. Productivity in the information economy can be sustained without the kinds of exclusivity that have made it difficult for knowledge, information, and their beneficial implementations to diffuse beyond the circles of the wealthiest nations and social groups. We can provide a detailed and specific account of why the emergence of nonmarket, nonproprietary production to a more significant role than it had in the industrial information economy could offer improvements in the domains of both freedom and justice, without sacrificing--indeed, while improving--productivity.

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The same capabilities to make information and knowledge, to innovate, and to communicate that lie at the core of the gains in freedom in liberal societies also underlie the primary advances I suggest are possible in terms of justice and human development. From the perspective of a liberal conception of justice, the possibility that more of the basic requirements of human welfare and the capabilities necessary to be a productive, self-reliant individual are available outside of the market insulates access to these basic requirements and capabilities from the happenstance of wealth distribution. From a more substantive perspective, information and innovation are central components of all aspects of a rich meaning of human development. Information and innovation are central to human health--in the production and use of both food and medicines. They are central to human learning and the development of the knowledge any individual needs to make life richer. And they are, and have for more than fifty years been known to be, central to growth of material welfare. Along all three of these dimensions, the emergence of a substantial sector of nonmarket production that is not based on exclusivity and does not require exclusion to feed its own engine contributes to global human development. The same economic characteristics that make exclusive rights in information a tool that imposes barriers to access in advanced economies make these rights a form of tax on technological latecomers. [pg 468] What most poor and middle-income countries lack is not human creativity, but access to the basic tools of innovation. The cost of the material requirements of innovation and information production is declining rapidly in many domains, as more can be done with ever-cheaper computers and communications systems. But exclusive rights in existing innovation tools and information resources remain a significant barrier to innovation, education, and the use of information-embedded tools and goods in low- and middle-income countries. As new strategies for the production of information and knowledge are making their outputs available freely for use and continuing innovation by everyone everywhere, the networked information economy can begin to contribute significantly to improvements in human development. We already see free software and free and open Internet standards playing that role in information technology sectors. We are beginning to see it take form in academic publishing, raw information, and educational materials, like multilingual encyclopedias, around the globe. More tentatively, we are beginning to see open commons-based innovation models and peer production emerge in areas of agricultural research and bioagricultural innovation, as well as, even more tentatively, in the area of biomedical research. These are still very early examples of what can be produced by the networked information economy, and how it can contribute, even if only to a limited extent, to the capacity of people around the globe to live a long and healthy, well-educated, and materially adequate life.

 Through The Looking-Glass

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'But oh!' thought Alice, suddenly jumping up, 'if I don't make haste I shall have to go back through the Looking-glass, before I've seen what the rest of the house is like! Let's have a look at the garden first!' She was out of the room in a moment, and ran down stairs--or, at least, it wasn't exactly running, but a new invention of hers for getting down stairs quickly and easily, as Alice said to herself. She just kept the tips of her fingers on the hand-rail, and floated gently down without even touching the stairs with her feet; then she floated on through the hall, and would have gone straight out at the door in the same way, if she hadn't caught hold of the door-post. She was getting a little giddy with so much floating in the air, and was rather glad to find herself walking again in the natural way.

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CHAPTER VIII - 'It's my own Invention'

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'I see you're admiring my little box.' the Knight said in a friendly tone. 'It's my own invention--to keep clothes and sandwiches in. You see I carry it upside-down, so that the rain can't get in.'

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'To guard against the bites of sharks,' the Knight replied. 'It's an invention of my own. And now help me on. I'll go with you to the end of the wood--What's the dish for?'

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'First you take an upright stick,' said the Knight. 'Then you make your hair creep up it, like a fruit-tree. Now the reason hair falls off is because it hangs DOWN--things never fall UPWARDS, you know. It's a plan of my own invention. You may try it if you like.'

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He looked so vexed at the idea, that Alice changed the subject hastily. 'What a curious helmet you've got!' she said cheerfully. 'Is that your invention too?'

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'I was coming to that,' the Knight said. 'The song really IS "A-SITTING ON A GATE": and the tune's my own invention.'

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'But the tune ISN'T his own invention,' she said to herself: 'it's "I GIVE THEE ALL, I CAN NO MORE."' She stood and listened very attentively, but no tears came into her eyes.

 Two Bits - The Cultural Significance of Free Software

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Why? Because it is in Free Software and its history that the issues raised—from intellectual property and piracy to online political advocacy and "social" software—were first figured out and confronted. Free Software's roots stretch back to the 1970s and crisscross the histories of the personal computer and the Internet, the peaks and troughs of the information-technology and software industries, the transformation of intellectual property law, the innovation of organizations and "virtual" collaboration, and the rise of networked social movements. Free Software does not explain why these various changes have occurred, but rather how individuals and groups are responding: by creating new things, new practices, and new forms of life. It is these practices and forms of life—not the software itself—that are most significant, and they have in turn served as templates that others can use and transform: practices of sharing source code, conceptualizing openness, writing copyright (and copyleft) licenses, coordinating collaboration, and proselytizing for all of the above. There are explanations aplenty for why things are the way they are: it's globalization, it's the network society, it's an ideology of transparency, it's the virtualization of work, it's the new flat earth, it's Empire. We are drowning in the why, both popular and scholarly, but starving for the how.

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The answers in part III make clear that, so far, these concerns are alive and well in the modulations of Free Software: Creative Commons and Connexions each struggle to come to terms with new ways of creating, sharing, and reusing content in the contemporary legal environment, with the Internet as infrastructure. Chapters 8 and 9 provide a detailed analysis of a technical and legal experiment: a modulation that begins with source code, but quickly requires modulations in licensing arrangements and forms of coordination. It is here that Two Bits provides the most detailed story of figuring out set against the background of the reorientation of knowledge and power. This story is, in particular, one of reuse, of modifiability and the problems that emerge in the attempt to build it into the everyday practices of pedagogical writing and cultural production of myriad forms. Doing so leads the actors involved directly to the question of the existence and ontology of norms: norms of scholarly production, borrowing, reuse, citation, reputation, and ownership. These last chapters open up questions about the stability of modern knowledge, not as an archival or a legal problem, but as a social and normative one; they raise questions about the invention and control of norms, and the forms of life that may emerge from these [pg 18] practices. Recursive publics come to exist where it is clear that such invention and control need to be widely shared, openly examined, and carefully monitored.

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The Napster shutdown in 2000 soured music fans and geeks alike, and it didn't really help the record labels who perpetrated it either. For many geeks, Napster represented the Internet in miniature, an innovation that both demonstrated something on a scope and scale never seen before, and that also connected people around something they cared deeply about—their shared interest in music. Napster raised interesting questions about its own success: Was it successful because it allowed people to develop new musical interests on a scope and scale they had never experienced before? Or was it successful because it gave people with already existing musical interests a way to share music on a scope and scale they had never experienced before? That is to say, was it an innovation in marketing or in distribution? The music industry experienced it as the latter and hence as direct competition with their own means of distribution. Many music fans experienced it as the former, what Cory Doctorow nicely labeled "risk-free grazing," meaning the ability to try out an almost unimaginable diversity of music before choosing what to invest one's interests (and money) in. To a large extent, Napster was therefore a recapitulation of what the Internet already meant to geeks.

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Bone's affinity for transhumanist stories of evolutionary theory, economic theory, and rapid innovation sets the stage for the rest of his message. The crucial rhetorical gambit here is the appeal to inevitability (as in the emphatic "there is no doubt that this will happen"): Bone establishes that he is speaking to an audience that is accustomed to hearing about the inevitability of technical progress and the impossibility of legal maneuvering to change it, but his audience may not necessarily agree with these assumptions. Geeks occupy a spectrum from "polymath" to "transhumanist," a spectrum that includes their understandings of technological progress and its relation to human intervention. Bone's message clearly lands on the far transhumanist side.

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On the other side of the spectrum, however, this view of the unregulatable nature of the Internet has been roundly criticized, most prominently by Lawrence Lessig, who is otherwise often in sympathy with geek culture. Lessig suggests that just because the Internet has a particular structure does not mean that it must always be that way.【50 Lessig, Code and Other Laws of Cyberspace. See also Gillespie, "Engineering a Principle" on the related history of the "end to end" design principle. 】 His argument has two prongs: first, that the Internet is structured the way it is because it is made of code that people write, and thus it could have been and will be otherwise, given that there are changes and innovations occurring all the time; second, that the particular structure of the Internet therefore governs or regulates behavior in particular ways: Code is Law. So while it may be true that no one can make the Internet "closed" by passing a law, it is also true that the Internet could become closed if the technology were to be altered for that purpose, a process that may well be nudged and guided by laws, regulations, and norms.

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Adrian routinely analyzes the rhetorical and practical uses of technology in healthcare with this kind of subtlety; clearly, such subtlety of thought is rare, and it sets Adrian apart as someone who understands that intervention into, and reform of, modern organizations and styles of thought has to happen through reformation—through the clever use of technology by people who understand it intimately—not through revolution. Reformation through technical innovation is opposed here to control through the consolidation of money and power.

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Sean and Adrian are avowedly scientific and technical people; like Feyerabend, they assume that their interlocutors believe in good science and the benefits of progress. They have little patience for Luddites, for new-agers, for religious intolerance, or for any other non-Enlightenment-derived attitude. They do not despise the present, because they have a well-developed sense of how provisional the conventions of modern technology and business are. Very little is sacred, and rules, when they exist, are fragile. Breaking them pointlessly is immodest, but innovation is often itself seen as a way of transforming a set of accepted rules or practices to other ends. Progress is limited intervention.【78 One of the ways Adrian discusses innovation is via the argument of the Harvard Business School professor Clayton Christensen's The Innovator's Dilemma. It describes "sustaining vs. disruptive" technologies as less an issue of how technologies work or what they are made of, and more an issue of how their success and performance are measured. See Adrian Gropper, "The Internet as a Disruptive Technology," Imaging Economics, December 2001, ‹http://www.imagingeconomics.com/library/200112-10.asp› (accessed 19 September 2006). 】

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For many observers, transhumanists are a lunatic fringe, bounded on either side by alien abductees and Ayn Rand-spouting objectivists. However, like so much of the fringe, it merely represents in crystalline form attitudes that seem to permeate discussions more broadly, whether as beliefs professed or as beliefs attributed. Transhumanism, while probably anathema to most people, actually reveals a very specific attitude toward technical innovation, technical intervention, and political life that is widespread among technically adept individuals. It is a belief that has everything to do also with the timeline of progress and the role of technology in it.

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In figure 1, on the left hand of the timeline, there is history, or rather, there is a string of technological inventions (by which is implied that previous inventions set the stage for later ones) spaced such that they produce a logarithmic curve that can look very much like the doomsday population curves that started to appear in the 1960s. Each invention is associated with a name or sometimes a nation. Beyond the edge of the graph to the right side is the future: history changes here from a series of inventions to an autonomous self-inventing technology associated not with individual inventors but with a complex system of evolutionary adaptation that includes technological as well as biological forms. It is a future in which "humans" are no longer necessary to the progress of science and technology: technology-as-extension-of-humans on the left, a Borg-like autonomous technical intelligence on the right. The fundamental [pg 89] operation in constructing the "singularity" is the "reasoned extrapolation" familiar to the "hard science fiction" writer or the futurist. One takes present technology as the initial condition for future possibilities and extrapolates based on the (haphazardly handled) evidence of past technical speed-up and change.

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There is still a role for technical invention, but it is strongly distinguished from political, legal, cultural, or social interventions. For most transhumanists, there is no rhetoric here, no sophistry, just the pure truth of "it works": the pure, undeniable, unstoppable, and undeconstructable reality of technology. For the transhumanist attitude, the reality of "working code" has a reality that other assertions about the world do not. Extreme transhumanism replaces the life-world with the world of the computer, where bad (ethically bad) ideas won't compile. Less-staunch versions of transhumanism simply allow the confusion to operate opportunistically: the progress of technology is unquestionable (omniscient), and only its effects on humans are worth investigating.

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The pure transhumanist, then, is a countermodern. The transhumanist despises the present for its intolerably slow descent into the [pg 93] future of immortality and superhuman self-improvement, and fears destruction because of too much turbulent (and ignorant) human resistance. One need have no individual conception of the present, no reflection on or synthetic understanding of it. One only need contribute to it correctly. One might even go so far as to suggest that forms of reflection on the present that do not contribute to technical progress endanger the very future of life-intelligence. Curiosity and technical innovation are not historical features of Western science, but natural features of a human animal that has created its own conditions for development. Thus, the transhumanists' historical consciousness consists largely of a timeline that makes ordered sense of our place on the progress toward the Singularity.

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Frank Hecker, a sales manager, made the link between the developers and management: "It was obvious to [developers] why it was important. It wasn't really clear from a senior management level why releasing the source code could be of use because nobody ever made the business case."【89 Moody, Rebel Code, 193. 】 Hecker penned a document called "Netscape Source Code as Netscape Product" and circulated it to various people, including Andreessen and Netscape CEO Jim Barksdale. As the title suggests, the business case was that the source code could also be a product, and in the context of Netscape, whose business model was "give it away and make it up on the stock market," such a proposal seemed less insane than it otherwise might have: "When Netscape first made Navigator available for unrestricted download over the Internet, many saw this as flying in the face of conventional wisdom for the commercial software business, and questioned how we could possibly make money ‘giving our software away.' Now of course this strategy is seen in retrospect as a successful innovation that was a key factor in Netscape's rapid growth, and rare is the software company today that does not emulate our strategy in one way or another. Among other things, this provokes the following question: What if we were to repeat this scenario, only this time with source code?"【90 Frank Hecker, quoted in Hamerly and Paquin, "Freeing the Source," 198. 】

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Coordinating Collaborations One of the selling points of Free Software, and especially of its marketing as Open Source, is that it leverages the work of thousands or hundreds of thousands of volunteer contributors across the Internet. Such a claim almost inevitably leads to spurious talk of "self-organizing" systems and emergent properties of distributed collaboration. The Netscape press release promised to "harness the creative power of thousands of programmers on the Internet by incorporating their best enhancements," and it quoted CEO Jim Barksdale as saying, "By giving away the source code for future versions, we can ignite the creative energies of the entire Net community and fuel unprecedented levels of innovation in the browser market."【94 "Netscape Announces Plans to Make Next-Generation Communicator Source Code Available Free on the Net," Netscape press release, 22 January 1998, ‹http://wp.netscape.com/newsref/pr/newsrelease558.html› (accessed 25 Sept 2007). 】 But as anyone who has ever tried to start or run a Free Software project knows, it never works out that way.

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In the end, the release of the Mozilla source code was both a success and a failure. Its success was long in coming: by 2004, the Firefox Web browser, based on Mozilla, had started to creep up the charts of most popular browsers, and it has become one of the most visible and widely used Free Software applications. The failure, however, was more immediate: Mozilla failed to reap the massive benefits for Netscape that the 1995 give-away of Netscape Navigator had. Zawinski, in a public letter of resignation in April 1999 (one year after the release), expressed this sense of failure. He attributed Netscape's decline after 1996 to the fact that it had "stopped innovating" and become too large to be creative, and described the decision to free the Mozilla source code as a return to this innovation: "[The announcement] was a beacon of hope to me. . . . [I]t was so crazy, it just might work. I took my cue and ran with it, registering the domain that night, designing the structure of the organization, writing the first version of the web site, and, along with my co-conspirators, explaining to room after room of Netscape employees and managers how free software worked, and what we had to do to make it work."【97 Jamie Zawinski, "resignation and postmortem," 31 March 1999, ‹http://www.jwz.org/gruntle/nomo.html›. 】 For Zawinski, the decision was both a chance for Netscape to return to its glory and an opportunity [pg 107] to prove the power of Free Software: "I saw it as a chance for the code to actually prosper. By making it not be a Netscape project, but rather, be a public project to which Netscape was merely a contributor, the fact that Netscape was no longer capable of building products wouldn't matter: the outsiders would show Netscape how it's done. By putting control of the web browser into the hands of anyone who cared to step up to the task, we would ensure that those people would keep it going, out of their own self-interest."【98 Ibid. 】

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Raymond was determined to reject the philosophy of liberty that Stallman and the Free Software Foundation represented, but not in order to create a political movement of his own. Rather, Raymond (and the others at the Freeware Summit) sought to cash in on the rising tide of the Internet economy by turning the creation of Free Software into something that made more sense to investors, venture capitalists, and the stock-buying public. To Raymond, Stallman and the Free Software Foundation represented not freedom or liberty, but a kind of dogmatic, impossible communism. As Raymond was a committed libertarian, one might expect his core beliefs in the necessity of strong property rights to conflict with the strange communalism of Free Software—and, indeed, his rhetoric was focused on pragmatic, business-minded, profit-driven, and market-oriented uses of Free Software. For Raymond, the essentially interesting component of Free Software was not its enhancement of human liberty, but the innovation in software production that it represented (the "development model"). It was clear that Free Software achieved something amazing through a clever inversion of strong property rights, an inversion which could be expected to bring massive revenue in some other form, either through cost-cutting or, Netscape-style, through the stock market.

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If two radically opposed ideologies can support people engaged in identical practices, then it seems obvious that the real space of politics and contestation is at the level of these practices and their emergence. These practices emerge as a response to a reorientation of power and knowledge, a reorientation somewhat impervious to [pg 117] conventional narratives of freedom and liberty, or to pragmatic claims of methodological necessity or market-driven innovation. Were these conventional narratives sufficient, the practices would be merely bureaucratic affairs, rather than the radical transformations they are.

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Even after the invention of programming languages, programming "on" a computer—sitting at a glowing screen and hacking through the night—was still a long time in coming. For example, only by about 1969 was it possible to sit at a keyboard, write source code, instruct the computer to compile it, then run the program—all without leaving the keyboard—an activity that was all but unimaginable in the early days of "batch processing."【118 See Waldrop, The Dream Machine, 142-47. 】 Very few programmers worked in such a fashion before the mid-1970s, when text editors that allowed programmers to see the text on a screen rather [pg 123] than on a piece of paper started to proliferate.【119 A large number of editors were created in the 1970s; Richard Stallman's EMACS and Bill Joy's vi remain the most well known. Douglas Engelbart is somewhat too handsomely credited with the creation of the interactive computer, but the work of Butler Lampson and Peter Deutsch in Berkeley, as well as that of the Multics team, Ken Thompson, and others on early on-screen editors is surely more substantial in terms of the fundamental ideas and problems of manipulating text files on a screen. This story is largely undocumented, save for in the computer-science literature itself. On Engelbart, see Bardini, Bootstrapping. 】 We are, by now, so familiar with the image of the man or woman sitting at a screen interacting with this device that it is nearly impossible to imagine how such a seemingly obvious practice was achieved in the first place—through the slow accumulation of the tools and techniques for working on a new kind of writing—and how that practice exploded into a Babel of languages and machines that betrayed the promise of the general-purpose computing machine.

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Meanwhile, for the computer industry in the 1960s, portable source code was largely a moot point. Software and hardware were [pg 124] two sides of single, extremely expensive coin—no one, except engineers, cared what language the code was in, so long as it performed the task at hand for the customer. Each new machine needed to be different, faster, and, at first, bigger, and then smaller, than the last. The urge to differentiate machines from each other was not driven by academic experiment or aesthetic purity, but by a demand for marketability, competitive advantage, and the transformation of machines and software into products. Each machine had to do something really well, and it needed to be developed in secret, in order to beat out the designs and innovations of competitors. In the 1950s and 1960s the software was a core component of this marketable object; it was not something that in itself was differentiated or separately distributed—until IBM's famous decision in 1968 to "unbundle" software and hardware.

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Set against this backdrop, the invention, success, and proliferation of the UNIX operating system seems quite monstrous, an aberration of both academic and commercial practice that should have failed in both realms, instead of becoming the most widely used portable operating system in history and the very paradigm of an "operating system" in general. The story of UNIX demonstrates how portability became a reality and how the particular practice of sharing UNIX source code became a kind of de facto standard in its wake.

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UNIX was first written in 1969 by Ken Thompson and Dennis Ritchie at Bell Telephone Labs in Murray Hill, New Jersey. UNIX was the dénouement of the MIT project Multics, which Bell Labs had funded in part and to which Ken Thompson had been assigned. Multics was one of the earliest complete time-sharing operating systems, a demonstration platform for a number of early innovations in time-sharing (multiple simultaneous users on one computer).【126 On time sharing, see Lee et al., "Project MAC." Multics makes an appearance in nearly all histories of computing, the best resource by far being Tom van Vleck's Web site ‹http://www.multicians.org/›. 】 By 1968, Bell Labs had pulled its support—including Ken Thompson—from the project and placed him back in Murray Hill, where he and [pg 126] Dennis Ritchie were stuck without a machine, without any money, and without a project. They were specialists in operating systems, languages, and machine architecture in a research group that had no funding or mandate to pursue these areas. Through the creative use of some discarded equipment, and in relative isolation from the rest of the lab, Thompson and Ritchie created, in the space of about two years, a complete operating system, a programming language called C, and a host of tools that are still in extremely wide use today. The name UNIX (briefly, UNICS) was, among other things, a puerile pun: a castrated Multics.

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The absence of an economic or corporate mandate for Thompson's and Ritchie's creativity and labor was not unusual for Bell Labs; researchers were free to work on just about anything, so long as it possessed some kind of vague relation to the interests of AT&T. However, the lack of funding for a more powerful machine did restrict the kind of work Thompson and Ritchie could accomplish. In particular, it influenced the design of the system, which was oriented toward a super-slim control unit (a kernel) that governed the basic operation of the machine and an expandable suite of small, independent tools, each of which did one thing well and which could be strung together to accomplish more complex and powerful tasks.【127 Some widely admired technical innovations (many of which were borrowed from Multics) include: the hierarchical file system, the command shell for interacting with the system; the decision to treat everything, including external devices, as the same kind of entity (a file), the "pipe" operator which allowed the output of one tool to be "piped" as input to another tool, facilitating the easy creation of complex tasks from simple tools. 】 With the help of Joseph Ossana, Douglas McIlroy, and others, Thompson and Ritchie eventually managed to agitate for a new PDP-11/20 based not on the technical merits of the UNIX operating system itself, but on its potential applications, in particular, those of the text-preparation group, who were interested in developing tools for formatting, typesetting, and printing, primarily for the purpose of creating patent applications, which was, for Bell Labs, and for AT&T more generally, obviously a laudable goal.【128 Salus, A Quarter Century of UNIX, 33-37. 】

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Over the course of 1974-77 the spread and porting of UNIX was phenomenal for an operating system that had no formal system of distribution and no official support from the company that owned it, and that evolved in a piecemeal way through the contributions [pg 129] of people from around the world. By 1975, a user's group had developed: USENIX.【134 Bell Labs threatened the nascent UNIX NEWS newsletter with trademark infringement, so "USENIX" was a concession that harkened back to the original USE users' group for DEC machines, but avoided explicitly using the name UNIX. Libes and Ressler, Life with UNIX, 9. 】 UNIX had spread to Canada, Europe, Australia, and Japan, and a number of new tools and applications were being both independently circulated and, significantly, included in the frequent releases by Bell Labs itself. All during this time, AT&T's licensing department sought to find a balance between allowing this circulation and innovation to continue, and attempting to maintain trade-secret status for the software. UNIX was, by 1980, without a doubt the most widely and deeply understood trade secret in computing history.

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The struggle should be seen not as one between the rebel forces of UNIX development and the evil empire of lawyers and managers, but as a struggle between two modes of stabilizing the object known as UNIX. For the lawyers, stability implied finding ways to make UNIX look like a product that would meet the existing legal framework and the peculiar demands of being a regulated monopoly unable to freely compete with other computer manufacturers; the ownership of bits and pieces, ideas and contributions had to be strictly accountable. For the programmers, stability came through redistributing the most up-to-date operating system and sharing all innovations with all users so that new innovations might also be portable. The lawyers saw urgency in making UNIX legally stable; the engineers saw urgency in making UNIX technically stable and compatible with itself, that is, to prevent the forking of UNIX, the death knell for portability. The tension between achieving legal stability of the object and promoting its technical portability and stability is one that has repeated throughout the life of UNIX and its derivatives—and that has ramifications in other areas as well.

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From the perspective of intellectual property, ideas, designs, and source code are everything—if a company were to release the source code, and allow other vendors to build on it, then what exactly would they be left to sell? Open systems did not mean anything like free, open-source, or public-domain computing. But the fact that competition required some form of collaboration was obvious as well: standard software and network systems were needed; standard markets were needed; standard norms of innovation within the constraints of standards were needed. In short, the challenge was not just the creation of competitive products but the creation of a standard infrastructure, dealing with the technical questions of availability, modifiability, and reusability of components, and the moral questions of the proper organization of competition and collaboration across diverse domains: engineers, academics, the computer industry, and the industries it computerized. What follows is the story of how UNIX entered the open-systems fray, a story in which the tension between the conceiving of openness and the demands of intellectual property is revealed.

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Figuring out the moral and technical order of open systems went haywire around 1986-88, when there were no fewer than four competing international standards, represented by huge consortia of computer manufacturers (many of whom belonged to multiple consortia): POSIX, the X/Open consortium, the Open Software Foundation, and UNIX International. The blind spot of open systems had much to do with this crazy outcome: academics, industry, and government could not find ways to agree on standardization. One goal of standardization was to afford customers choice; another was to allow competition unconstrained by "artificial" means. A standard body of source code was impossible; a standard "interface definition" was open to too much interpretation; government and academic standards were too complex and expensive; no particular corporation's standard could be trusted (because they could not be trusted to reveal it in advance of their own innovations); and worst of all, customers kept buying, and vendors kept shipping, and the world was increasingly filled with diversity, not standardization.

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X/Open represented a subtle transformation of standardization efforts and of the organizational definition of open systems. While [pg 158] the /usr/group standard was developed by individuals who used UNIX, and the POSIX standard by an acknowledged professional society (IEEE), the X/Open group was a collective of computer corporations that had banded together to fund an independent entity to help further the cause of a standard UNIX. This paradoxical situation—of a need to share a standard among all the competitors and the need to keep the details of that standardized product secret to maintain an advantage—was one that many manufacturers, especially the Europeans with their long experience of IBM's monopoly, understood as mutually destructive. Hence, the solution was to engage in a kind of organizational innovation, to create a new form of metacorporate structure that could strategically position itself as at least temporarily interested in collaboration with other firms, rather than in competition. Thus did stories and promises of open systems wend their way from the details of technical design to those of organizational design to the moral order of competition and collaboration, power and strategy. "Standards" became products that corporations sought to "sell" to their own industry through the intermediary of the consortium.

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What this proliferation of UNIX standards and consortia most clearly represents, however, is the blind spot of open systems: the difficulty of having collaboration and competition at the same time in the context of intellectual-property rules that incompletely capture the specific and unusual characteristics of software. For participants in this market, the structure of intellectual property was unassailable—without it, most participants assumed, innovation would cease and incentives disappear. Despite the fact that secrecy haunted the industry, its customers sought both openness and compatibility. These conflicting demands proved irresolvable.

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Until the mid-1980s, the TCP/IP protocols were resolutely research-oriented, and not the object of mainstream commercial interest. Their development reflected a core set of goals shared by researchers and ultimately promoted by the central funding agency, the Department of Defense. The TCP/IP protocols are often referred to as enabling packet-switched networks, but this is only partially correct; the real innovation of this set of protocols was a design for an "inter-network," a system that would interconnect several diverse and autonomous networks (packet-switched or circuit-switched), without requiring them to be transformed, redesigned, or standardized—in short, by requiring only standardization of the intercommunication between networks, not standardization of the network itself. In the first paper describing the protocol Robert Kahn and Vint Cerf motivated the need for TCP/IP thus: "Even though many different and complex problems must be solved in the design of an individual packet-switching network, these problems are manifestly compounded when dissimilar networks are interconnected. Issues arise which may have no direct counterpart in an individual network and which strongly influence the way in which Internetwork communication can take place."【196 Kahn and Cerf, "A Protocol for Packet Network Intercommunication," 637. 】

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This "infrastructure" is at once technical (protocols and standards and implementations) and moral (expressing ideas about the proper order and organization of commercial efforts to provide high-tech software, networks, and computing power). As with the invention of UNIX, the opposition commercial-noncommercial (or its doppelgangers public-private, profit-nonprofit, capitalist-socialist, etc.) [pg 178] doesn't capture the context. Constraints on the ability to collaborate, compete, or withdraw are in the making here through the technical and moral imaginations of the actors involved: from the corporate behemoths like IBM to (onetime) startups like Sun to the independent academics and amateurs and geeks with stakes in the new high-tech world of networks and software.

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This is a convenient ex post facto description, however. Neither Stallman nor anyone else started out with the intention of hacking copyright law. The hack of the Free Software licenses was a response to a complicated controversy over a very important invention, a tool that in turn enabled an invention called EMACS. The story of the controversy is well-known among hackers and geeks, but not often told, and not in any rich detail, outside of these small circles.【213 See Wayner, Free for All; Moody, Rebel Code; and Williams, Free as in Freedom. Although this story could be told simply by interviewing Stallman and James Gosling, both of whom are still alive and active in the software world, I have chosen to tell it through a detailed analysis of the Usenet and Arpanet archives of the controversy. The trade-off is between a kind of incomplete, fly-on-the-wall access to a moment in history and the likely revisionist retellings of those who lived through it. All of the messages referenced here are cited by their "Message-ID," which should allow anyone interested to access the original messages through Google Groups (「http://groups.google.com)」. 】

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Appreciate the innovation represented by EMACS: before the UNIX-dominated minicomputer era, there were very few programs for directly manipulating text on a display. To conceive of source code as independent of a program running on a machine meant first conceiving of it as typed, printed, or hand-scrawled code which programmers would scrutinize in its more tangible, paper-based form. Editors that allowed programmers to display the code in front of them on a screen, to manipulate it directly, and to save changes to those files were an innovation of the mid- to late 1960s and were not widespread until the mid-1970s (and this only for bleeding-edge academics and computer corporations). Along with a few early editors, such as QED (originally created by Butler Lampson and Peter Deutsch, and rewritten for UNIX by Ken Thompson), one of the most famous of these was TECO (text editor and corrector), written by Dan Murphy for DEC's PDP-1 computer in 1962-63. Over the years, TECO was transformed (ported and extended) to a wide variety of machines, including machines at Berkeley and MIT, and to other DEC hardware and operating systems. By the early 1970s, there was a version of TECO running on the Incompatible Time-sharing System (ITS), the system in use at MIT's Artificial Intelligence (AI) Lab, and it formed the basis for EMACS. (Thus, EMACS was itself conceived of as a series of macros for a separate editor: Editing MACroS for TECO.)

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Both Stallman and Unipress received various attacks and defenses from observers of the controversy. Many people pointed out that Stallman should get credit for "inventing" EMACS and that the issue of him infringing on his own invention was therefore ironic. Others proclaimed the innocence and moral character of Unipress, which, it was claimed, was providing more of a service (support for EMACS) than the program itself.

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Some readers interpreted the fact that Stallman had rewritten the display code, whether under pressure from Unipress or not, as confirmation of the ideas expressed in "The GNU Manifesto," namely, that commercial software stifles innovation. According to this logic, precisely because Stallman was forced to rewrite the code, rather than build on something that he himself assumed he had permission [pg 199] to do, there was no innovation, only fear-induced caution.【243 Joaquim Martillo, Message-ID: 287@mit-athena.uucpp : "Trying to forbid RMS from using discarded code so that he must spend time to reinvent the wheel supports his contention that ‘software hoarders' are slowing down progress in computer science." 】 On the other hand, latent within this discussion is a deep sense of propriety about what people had created; many people, not only Stallman and Gosling and Zimmerman, had contributed to making EMACS what it was, and most had done so under the assumption, legally correct or not, that it would not be taken away from them or, worse, that others might profit by it.

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The final component of Free Software is coordination. For many participants and observers, this is the central innovation and essential significance of Open Source: the possibility of enticing potentially huge numbers of volunteers to work freely on a software project, leveraging the law of large numbers, "peer production," "gift economies," and "self-organizing social economies."【261 Research on coordination in Free Software forms the central core of recent academic work. Two of the most widely read pieces, Yochai Benkler's "Coase's Penguin" and Steven Weber's The Success of Open Source, are directed at classic research questions about collective action. Rishab Ghosh's "Cooking Pot Markets" and Eric Raymond's The Cathedral and the Bazaar set many of the terms of debate. Josh Lerner's and Jean Tirole's "Some Simple Economics of Open Source" was an early contribution. Other important works on the subject are Feller et al., Perspectives on Free and Open Source Software; Tuomi, Networks of Innovation; Von Hippel, Democratizing Innovation. 】 Coordination in Free Software is of a distinct kind that emerged in the 1990s, directly out of the issues of sharing source code, conceiving open systems, and writing copyright licenses—all necessary precursors to the practices of coordination. The stories surrounding these issues find continuation in those of the Linux operating-system kernel, of the Apache Web server, and of Source Code Management tools (SCMs); together these stories reveal how coordination worked and what it looked like in the 1990s.

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Although the Apache Group makes decisions as a whole, all of the actual work of the project is done by individuals. The group does not write code, design solutions, document products, or provide support to our customers; individual people do that. The group provides an environment for collaboration and an excellent trial-by-fire for ideas and code, but the creative energy needed to solve a particular problem, redesign a piece of the system, or fix a given bug is almost always contributed by individual volunteers working on their own, for their own purposes, and not at the behest of the group. Competitors mistakenly assume Apache will be unable to take on new or unusual tasks because of the perception that we act as a group rather than follow a single leader. What they fail to see is that, by remaining open to new contributors, the group has an unlimited supply of innovative ideas, and it is the individuals who chose to pursue their own ideas who are the real driving force for innovation.【286 Roy T. Fielding, "Shared Leadership in the Apache Project." 】

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Although openness is widely touted as the key to the innovations of Apache, the claim is somewhat disingenuous: patches are just that, patches. Any large-scale changes to the code could not be accomplished by applying patches, especially if each patch must be subjected to a relatively harsh vote to be included. The only way to make sweeping changes—especially changes that require iteration and testing to get right—is to engage in separate "branches" of a project or to differentiate between internal and external releases—in short, to fork the project temporarily in hopes that it would soon rejoin its stable parent. Apache encountered this problem very early on with the "Shambhala" rewrite of httpd by Robert Thau. [pg 227]

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The Bitkeeper controversy illustrates again that adaptability is not about radical invention, but about critique and response. Whereas controlled design and hierarchical planning represent the domain of governance—control through goal-setting and orientation of a collective or a project—adaptability privileges politics, properly speaking, the ability to critique existing design and to [pg 236] propose alternatives without restriction. The tension between goal-setting and adaptability is also part of the dominant ideology of intellectual property. According to this ideology, IP laws promote invention of new products and ideas, but restrict the re-use or transformation of existing ones; defining where novelty begins is a core test of the law. McVoy made this tension explicit in his justifications for Bitkeeper: "Richard [Stallman] might want to consider the fact that developing new software is extremely expensive. He's very proud of the collection of free software, but that's a collection of re-implementations, but no profoundly new ideas or products. . . . What if the free software model simply can't support the costs of developing new ideas?"【300 Quoted in Jeremy Andrews, "Interview: Larry McVoy," Kernel Trap, 28 May 2002, ‹http://Kerneltrap.org/node/222›. 】

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Similarly, Bill Joy's distribution of BSD and James Gosling's distribution of GOSMACS were both ad hoc, noncorporate experiments in "releasing early and often." These distribution schemes had a purpose (beyond satisfying demand for the software). The frequent distribution of patches, fixes, and extensions eased the pain of debugging software and satisfied users' demands for new features and extensions (by allowing them to do both themselves). Had Thompson and Ritchie followed the conventional corporate model of software production, they would have been held responsible for thoroughly debugging and testing the software they distributed, and AT&T or Bell Labs would have been responsible for coming up with all innovations and extensions as well, based on marketing and product research. Such an approach would have sacrificed adaptability in favor of planning. But Thompson's and Ritchie's model was different: both the extension and the debugging of software became shared responsibilities of the users and the developers. Stallman's creation of EMACS followed a similar pattern; since EMACS was by design extensible and intended to satisfy myriad unforeseen needs, the responsibility rested on the users to address those needs, and sharing their extensions and fixes had obvious social benefit.

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Other examples of intellectual-property issues fill the books and talks of Creative Commons advocates, stories of blocked innovation, stifled creativity, and—the scariest point of all (at least for economist-lawyers)—inefficiency due to over-expansive intellectual-property laws and overzealous corporate lawyer-hordes.【314 Lessig's output has been prodigious. His books include Code and Other Laws of Cyber Space, The Future of Ideas, Free Culture, and Code: Version 2.0. He has also written a large number of articles and is an active blogger (「http://www.lessig.org/blog/)」. 】 Lessig often preaches to the converted (at venues like South by Southwest Interactive and the O'Reilly Open Source conferences), and the audiences are always outraged at the state of affairs and eager to learn what they can do. Often, getting involved in the Creative Commons is the answer. Indeed, within a couple of years, Creative Commons quickly became more of a movement (a modulation of the Free/Open Source movement) than an experiment in writing licenses.

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The problem of publication that Connexions confronts is thus not simply caused by the invention or spread of the Internet, much less that of Free Software. Rather, it is a confrontation with the problems of producing stability and finality under very different technical, legal, and social conditions—a problem more complex even than the "different print cultures in particular historical circumstances" that Johns speaks of in regard to the book. Connexions faces two challenges: that of figuring out the difference that today introduces with respect to yesterday, and that of creating or modifying an infrastructure in order to satisfy the demands of a properly authoritative knowledge. Connexions textbooks of necessity look different from conventional textbooks; they consist of digital documents, or "modules," that are strung together and made available through the Web, under a Creative Commons license that allows for free use, reuse, and modification. This version of "publication" clearly has implications for the meaning of authorship, ownership, stewardship, editing, validation, collaboration, and verification.

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This denaturalization of the notion of "publication" is responsible for much of the surprise and concern that greets Connexions and projects like it. Often, when I have shown the system to scholars, they have displayed boredom mixed with fear and frustration: "It can never replace the book." On the one hand, Connexions has made an enormous effort to make its output look as much like conventional books as possible; on the other hand, the anxiety evinced is justified, because what Connexions seeks to replace is not the book, which is merely ink and paper, but the entire publishing process. The fact that it is not replacing the book per se, but the entire process whereby manuscripts are made into stable and tangible objects called books is too overwhelming for most scholars to contemplate—especially scholars who have already mastered the existing process of book writing and creation. The fact that the legal system is built to safeguard something prior to and not fully continuous with the practice of Connexions only adds to the concern that such a transformation is immodest and risky, that it endangers a practice with centuries of stability behind it. Connexions, however, is not the cause of destabilization; rather, it is a response to or recognition of a problem. It is not a new problem, but one that periodically reemerges: a reorientation of knowledge and power that includes questions of enlightenment and rationality, democracy and self-governance, liberal values and problems of the authority and validation of knowledge. The salient moments of correlation are not the invention of the printing press and the Internet, but the struggle to make published books into a source of authoritative knowledge in the seventeenth and eighteenth centuries and the struggle to find ways to do the same with the Internet today.【334 See Johns, The Nature of the Book; Warner, The Letters of the Republic. 】

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UNIX and Open Systems should thus be seen as early stages of a collective technical experiment in transforming our imaginations of order, especially of the moral order of publics, markets, and self-governing peoples. The continuities and the gradualness of the change are more apparent in these events than any sudden rupture or discontinuity that the "invention of the Internet" or the passing of new intellectual-property laws might suggest. The "reorientation of knowledge and power" is more dance than earthquake; it is stratified in time, complex in its movements, and takes an experimental form whose concrete traces are the networks, infrastructures, machines, laws, and standards left in the wake of the experiments.

ocn 900:

Anderson, Jane, and Kathy Bowery. "The Imaginary Politics of Access to Knowledge." Paper presented at the Contexts of Invention Conference, Cleveland, Ohio, 20-23 April 2006.

ocn 916:

Boczkowski, Pablo. Digitizing the News: Innovation in Online Newspapers. Cambridge, Mass.: MIT Press, 2004.

ocn 1134:

Rose, Mark. Authors and Owners: The Invention of Copyright. Cambridge, Mass.: Harvard University Press, 1995.

ocn 1162:

Tuomi, Ilkka. Networks of Innovation: Change and Meaning in the Age of the Internet. New York: Oxford University Press, 2002.

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Von Hippel, Eric. Democratizing Innovation. Cambridge, Mass.: MIT Press, 2005.

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Parts of this book have been published elsewhere. A much earlier version of chapter 1 was published as "Geeks, Social Imaginaries and Recursive Publics," Cultural Anthropology 20.2 (summer 2005); chapter 6 as "The EMACS Controversy," in Mario Biagioli, Martha Woodmansee, and Peter Jaszi, eds., Contexts of Invention (forthcoming); and parts of chapter 9 as "Punt to Culture," Anthropological Quarterly 77.3.

 Viral Spiral - How the Commoners Built a Digital Republic of Their Own

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Viral spiral? Viral, a term borrowed from medical science, refers to the way in which new ideas and innovations on the Internet can proliferate with astonishing speed. A video clip, a blog post, an advertisement released on the Internet tumbles into other people's consciousness in unexpected ways and becomes the raw feedstock for new creativity and culture. This is one reason the Internet is so powerful — it virally propagates creativity. A novel idea that is openly released in the networked environment can often find its way to a distant person or improbable project that can really benefit from it. This recombinative capacity — efficiently coordinated through search engines, Web logs, informal social networks, and other means— radically accelerates the process of innovation. It enlivens democratic culture by hosting egalitarian encounters among strangers and voluntary associations of citizens. Alexis de Tocqueville would be proud.

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The spiral of viral spiral refers to the way in which the innovation of one Internet cohort rapidly becomes a platform used by later generations to build their own follow-on innovations. It is a corkscrew paradigm of change: viral networking feeds an upward spiral of innovation. The cutting-edge thread achieves one twist of change, positioning a later thread to leverage another twist, which leverages yet another. Place these spirals in the context of an open Internet, where they can sweep across vast domains of life and catalyze new principles of order and social practice, and you begin to get a sense of the transformative power of viral spirals.

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The viral spiral began with free software (code that is free to use, not code at no cost) and later produced the Web. Once these open platforms had sufficiently matured, tech wizards realized that software's great promise is not as a stand-alone tool on PCs, but as a social platform for Web-based sharing and collaboration. The commoners could then begin to imagine: How might these tools be used to overcome the arbitrary and confusing limitations of copyright law? One answer, the Creative Commons (CC) licenses, a free set of public licenses for sharing content, helped mitigate the legal risks of sharing of works under copyright law. This innovation, in turn, helped unleash a massive wave of follow-on innovations.

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Self-styled commoners can now be found in dozens of nations around the world. They are locally rooted but internationally aware citizens of the Internet. They don't just tolerate diversity (ethnic, cultural, aesthetic, intellectual), they celebrate it. Although commoners may have their personal affinities — free software, open-access publishing, remix music, or countless others — they tend to see themselves as part of a larger movement. They share an enthusiasm for innovation and change that burbles up from the bottom, and are known to roll their eyes at the thick-headedness of the mainstream media, which always seem to be a few steps behind.

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If there is an element of self-congratulatory elitism at times, it stems from the freedom of commoners to negotiate their own rules and the pleasure of outmaneuvering conventional institutions. The commoners know how to plug into the specialized Web sites and practitioner communities that can provide just-in-time, highly specialized expertise. As Herbert Simon, the computer-oriented social scientist, once put it, “The meaning of ‘knowing' today has shifted from being able to remember and repeat information to being able to find and use it.” 【1 Cited by John Seely Brown, former chief scientist, Xerox Palo Alto Research Center, at Open Educational Resources conference, Houston, Texas, March 29, 2007. 】 Commoners realize that this other way of being, outside hierarchical institutions, in the open space where viral spirals of innovation are free to materialize, is an important source of their insurgent power.

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The salience of electronic commerce has, at times, obscured an important fact — that the commons is one of the most potent forces driving innovation in our time. Individuals working with one another via social networks are a growing force in our economy and society. This phenomenon has many manifestations, and goes by many names — “peer production,” “social production,” “smart mobs,” the “wisdom of crowds,” “crowdsourcing,” and “the commons.”【3 “Social production” and “peer production” are associated with the work of Yale law professor Yochai Benkler, especially in his 2006 book, The Wealth of Networks. “Smart mobs” is a coinage of Howard Rheingold, author of a 2003 book by the same name.“Crowdsourcing” is the name of a blog run by Jeff Howe and the title of a June 2006 Wired article on the topic.“Wisdom of crowds” is a term coined by James Surowiecki and used as the title of his 2004 book. 】 The basic point is that socially created value is increasingly competing with conventional markets, as GNU/Linux has famously shown. Through an open, accessible commons, one can efficiently tap into the “wisdom of the crowd,” nurture experimentation, accelerate innovation, and foster new forms of democratic practice.

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As we will see in chapter 1, Richard Stallman, the legendary hacker, played an indispensable first-mover role by creating a sovereign domain from which to negotiate with commercial players: free software. The software commons and later digital commons inspired by it owe an incalculable debt to Stallman's ingenious legal innovation, the General Public License, or GPL, launched in 1989. The GPL is a license for authorizing anyone to use a copyrighted software program so long as any copies or derivative versions are also made available on the same terms. This fairly simple license enables programmers to contribute code to a common pool without fear that someone might privatize and destroy the commons.

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Science as a commons. The world of scientific research has long depended on open sharing and collaboration. But increasingly, copyrights, patents, and university rules are limiting the flow of scientific knowledge. The resulting gridlock of rights in knowledge is impeding new discoveries and innovation. Because of copyright restrictions and software incompatibilities, scientists studying genetics, proteins, and marine biology often cannot access databases containing vital research. Or they cannot easily share physical samples of lab samples. When the maker of Golden Rice, a vitamin-enhanced bioengineered rice, tried to distribute its seeds to millions of people in poor countries, it first had to get permissions from seventy patent holders and obtain six Material Transfer Agreements (which govern the sharing of biomedical research substances).【18 Interview with John Wilbanks, “Science Commons Makes Sharing Easier,” Open Access Now, December 20, 2004, available at ‹http://www.biomedcentral.com/openaccess/archive/?page=features&issue=23›. 】

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The problem of acquiring, organizing, and sharing scientific knowledge is becoming more acute, paradoxically enough, as more scientific disciplines become dependent on computers and the networked sharing of data. To help deal with some of these issues, the Creative Commons in 2005 launched a new project known as the Science Commons to try to redesign the information infrastructure for scientific research. The basic idea is to “break down barriers to sharing that are hindering innovation in the sciences,” says John Wilbanks, executive director of Science Commons. Working with the National Academy of Sciences and other research bodies, Wilbanks is collaborating with astronomers, archaeologists, microbiologists, and medical researchers to develop better ways to make vast scientific literatures more computer-friendly, and databases technically compatible, so that they can be searched, organized, and used more effectively.

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I am no bystander in this story, it must be said, but a commoner who has grappled with the quandaries of copyright law and the public domain for nearly twenty years. In 2001, after co-founding Public Knowledge, a Washington advocacy group to defend the public's stake in copyright and Internet policies, I went on to write books on the market enclosure of myriad commons and on the absurd expansions of copyright and trademark law. Over the course of this work, I discovered how a commons analysis can help us understand the digital revolution. It can help us see that it is not just about technological innovation, but about social and legal innovations. Reading Elinor Ostrom and Yochai Benkler, in particular — two leading theorists of the commons — I came to realize that social communities, and not just markets, must be recognized as powerful vehicles for creating value. I realized that many basic assumptions about property rights, as embedded in copyright law and neoclassical economics, fail to take account of the generative power of online communities.

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Finally, it was becoming painfully apparent to yet another amorphous band of renegades — artists, musicians, writers, scientists, educators, citizens — that copyright law and technological controls were artificially restricting their creative freedoms. With scant public attention, the music, film, and publishing industries were using their clout to protect their archaic business models at the expense of innovation and the commons. This onslaught ultimately provoked one exemplary commoner, Eric Eldred, to team up with legal scholar Lawrence Lessig to mount an unprecedented constitutional challenge to copyright law, the focus of chapter 3.

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Two problems quickly emerged, however. If people did not communicate their innovations back to the group, divergent streams of incompatible code would produce a Tower of Babel effect. Second, if the code and its derivations were not shared with everyone, the usefulness of the program would slowly decline. The flow of innovation would dissipate.

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Software was simply becoming too lucrative for it to remain a shared resource — an attitude that enraged Stallman. He was determined to preserve the integrity of what we would now call the software commons. It was an immense challenge because copyright law makes no provisions for community ownership of creative work beyond “joint authorship” among named individuals. Stallman wanted to devise a way to ensure that all the talent and innovation created by commoners would stay in the commons. The idea that an outsider — a university administrator, software entrepreneur, or large company — could intrude upon a hacker community and take its work was an appalling injustice to Stallman.

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The real innovation of Linux, writes Eric S. Raymond, a leading analyst of the technology, was “not technical, but sociological”:

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[S]upporters of the Open Source Initiative were willing to acknowledge a role for proprietary software and unwilling to ban any link between open-source software and proprietary software. Richard Stallman aptly characterized the differences: “We disagree on the basic principles but agree more or less on the practical recommendations. So we can and do work together on many specific projects.”【34 Elliot Maxwell, citing Wikipedia entry on “Open Source Movement,” in “Open Standards Open Source and Open Innovation,” in Innovations: Technology, Governance, Globalization 1, no. 3 (Summer 2006), p. 134, note 56. 】

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It was not long before other large tech companies realized the benefits of going open source. Amazon and eBay both saw that they could not affordably expand their large computer infrastructures without converting to GNU/Linux. GNU/Linux is now used in everything from Motorola cell phones to NASA supercomputers to laptop computers. In 2005, BusinessWeek magazine wrote, “Linux may bring about the greatest power shift in the computer industry since the birth of the PC, because it lets companies replace expensive proprietary systems with cheap commodity servers.”【39 Steve Hamm, “Linux Inc.,” BusinessWeek, January 31, 2005. 】 As many as one-third of the programmers working on open-source projects are corporate employees, according to a 2002 survey.【40 Cited by Elliot Maxwell in “Open Standards Open Source and Open Innovation,” note 80, Berlecon Research, Free/Libre Open Source Software: Survey and Study — Firms' Open Source Activities: Motivations and Policy Implications, FLOSS Final Report, Part 2, at www.berlecon.de/studien/downloads/200207FLOSS _Activities.pdf. 】

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Historically, copyright has been regarded as a “bargain” between the public and authors. The public gives authors a set of monopoly rights to help them sell their works and earn rewards for their hard work. In return, the public gets the marketable output of creators— books, films, music — and certain rights of free access and use. The primary justification of copyright law is not to protect the fortunes of authors; it is to promote new creative works and innovation. By giving authors a property right in their works — and so helping them to sell those works in the marketplace — copyright law aims to promote the “progress of human knowledge.”

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The deconstruction of copyright law over the past twenty years has been a significant intellectual achievement. It has exposed the copyright law's philosophical deficiencies, showed how social practice deviates from it, and revealed the antisocial effects of expanding copyright protection. Critics knew that it would be impossible to defend the fledgling cyberculture without first documenting how copyright law was metastasizing at the expense of free expression, creative innovation, consumer rights, and market competition.

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The real answer, of course, was all of the above. Building a new digital republic would require a wholesale engagement with the politics of effecting democratic change and the challenges of building a cultural movement. It would require the invention of a shared technological infrastructure, and the development of legal tools to secure the commons. All were intertwined. But as a practical matter, anyone who aspired to stop the mass-media-driven expansions of copyright law had to choose where to invest his or her energy. In the mid-1990s, Lawrence Lessig decided that the greatest leverage would come through law.

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Although it was only a one-person project, Eldritch Press was not just an idiosyncratic innovation. The convergence of telecommunications, personal computers, and software in the 1990s, otherwise known as the Internet, was facilitating an explosion of new genres of public expression. We are still grappling with how this new type of media system is different from broadcasting and other mass media. But we do know this: it invites mass participation because the system doesn't require a lot of capital or professional talent to use. The system favors decentralized interactivity over centralized control and one-way communication. Ordinary people find it relatively inexpensive and versatile. Since everyone has roughly the same access and distribution capacities, the Internet is perhaps the most populist communication platform and egalitarian marketplace in human history.

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This was not the goal of the computer scientists who invented the Internet, of course. Working under the auspices of the U.S. military, they were chiefly concerned with building a communications system that would allow academic researchers to share computerized information cheaply and easily. The idea was that intelligence and innovation would arise from the “edges” of a “dumb” network, and not be controlled by a centralized elite in the manner of broadcasting or book publishing. The Internet — a network of networks — would be a platform open to anyone who used a shared set of freely accessible “protocols,” or standardized code, for computer hardware and software.〖*4 The Internet protocols that enable different computers and networks to connect despite their differences is TCP/IP, which stands for TransmissionControl Protocol/Internet Protocol. These protocols enabled the commons known as the Internet to emerge and function, and in turn to host countless other commons “on top” of it. 〗

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What was radically new about the network architecture was its freedom: No special qualifications or permissions were needed to communicate or “publish.” No one needed to pay special fees based on usage. Anyone could build her own innovative software on top of the open protocols, It is a measure of the system's power that it has spawned all sorts of innovations that were not foreseen at the outset: in the 1990s, the World Wide Web, instant messaging, peer-to-peer file sharing, and Web logs, and, in the 2000s, podcasts, wikis, social networking software, and countless other applications. The open, shared protocols of the Internet provided an indispensable communications platform for each of these innovations to arise.

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In short, there was no stampede for starting a public-domain conservancy or a set of licenses. Some worried that the CC licenses would be a “case of innovation where's there's no current demand.” Another person pointed out, more hopefully, that it could be a case of “changing the market demand with a new model.”【152 Oren Bracha and Dotan Oliar, “Memo: May 7th Consensus Regarding the Creative Commons Project,” August 20, 2001, p. 3, note 9. 】

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Creative Commons had the good fortune to introduce its licenses just as the Great Value Shift was picking up momentum. The types of distributed innovation first seen in free software were now popping up in every imaginable corner of cyberspace. The social content was not just about listservs and newsgroups, but instant messaging networks, Web logs, podcasts, wikis, social networking sites, collaborative archives, online gaming communities, and much else.

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We do not yet have well-accepted theoretical models for understanding this new “socioeconomic space”; the online environments are still so new, and much is still in flux.【183 An excellent overview of these new spaces is Don Tapscott and Anthony D. Williams, Wikinomics: How Mass Collaboration Changes Everything (New York: Portfolio, 2006). 】 But it has not escaped the notice of major corporations that online social dynamics can result in some radically more effective models for organizing employees and engaging with customers. A BusinessWeek cover story touted “The Power of Us” in June 2005, profiling the ways in which companies like Procter & Gamble use mass collaboration for R&D; Hewlett-Packard had created a virtual stock market among its staff to gather collective estimates that have improved sales forecasts.【184 Robert D. Hof, “The Power of Us: Mass Collaboration on the Internet Is Shaking Up Business,” BusinessWeek, June 20, 2005, pp. 73–82. 】 The Economist has written about the “fortune of the commons” that can result when there are open technical standards, and business professors such as Henry Chesbrough have examined new “open business models.”【185 “The Fortune of the Commons,” Economist, May 8, 2003; Henry Chesbrough, Open Business Models: How to Thrive in the New Innovation Landscape (Cambridge, MA: Harvard Business School Press, 2006). 】

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Centralized Media also dictate certain economic and social identities for people. There are “sellers,” who are the prime source of expertise, innovation, and production, and there are “consumers,” who passively buy, or don't buy, what is offered. Sellers mostly determine what choices are offered to buyers, and they tend to have greater market power and information than consumers. Interactions between sellers and consumers are mostly brief and transactional; there is little ongoing conversation or relationship between seller and buyer.

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Large media companies are struggling to support some huge financial, administrative, and marketing burdens simply to “tread water” and retain some measure of their customary market dominance. This helps explain why Centralized Media are so keenly focused on influencing Congress and the Federal Communications Commission. They want to lock in competitive advantages through regulation. (Consider the fierce battles over media ownership rules, spectrum allocation policies, anticopying technology mandates such as the “broadcast flag,” new copyright and trademark protections, must-carry rules for cable operators, and on and on.) Centralized Media's great interest in securing legal and regulatory privileges for themselves suggests their relative weakness and decline. For them, it is easier to chase market advantages through political interventions than through innovation, superior performance, and price.

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The most significant shifts in the history of capitalism have come when new mechanisms lower the costs of managing risk and serving latent market demand. We are apparently in such a stage of economic transformation today. The genius of the Renaissance banks and the Dutch insurance and shipping companies, for example, was to reinvent the structure of markets through new financial and legal instruments that enabled commercial trust and transparency to work on a larger scale. The limited liability corporation was also a powerful innovation for diversifying risk, coordinating people, and deploying capital on a scale that was previously impossible.【186 I am indebted to my friend John Clippinger for this insight, as explained in his book A Crowd of One: The Future of Individual Identity (New York: Public Affairs, 2007), chapter 7, “Transforming Trust: Social Commerce in Renaissance Florence,” pp. 97–114. 】

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Another seminal social innovation has been Wikipedia, a strange and wondrous cultural eruption. Founded by Jimmy Wales and Larry Sanger in January 2001, the English-language Wikipedia began to gain serious momentum in the months after the CC licenses were released, and by early 2003 hosted 100,000 articles. (A “wiki” is a special type of Web site that allows anyone who accesses it to add or modify its contents.) After two years, Wikipedia had amassed a collection of 400,000 articles and inspired the launch of affiliated Wikipedias in more than 100 languages. In May 2008,

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The burden of Lessig's 2001 book The Future of Ideas was to argue that the Internet constitutes a great, underappreciated commons. It can serve as the infrastructure for tremendous wealth and innovation if its “layers” — the hardware, software, and content— remain sufficiently open and usable by all. The problem, he warned with great prescience, is that policymakers are generally blind to the value of the commons and markets are too eager to reap short-term individual gains. They fail to appreciate that too much private control at any “layer” of the Internet — through proprietary hardware or software, or excessive copyright or patent protection — can stifle personal freedom, market competition, and innovation. Lessig wanted to name the book Dot.commons, but his publisher rejected it as too obscure.

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One of the key advantages of treating key infrastructure (such as Internet transmission protocols and computer operating systems) as a commons is that people have the freedom to modify and improve them, with resulting benefits for all. Innovation and competition can flourish more readily. At the content layer, much of the appeal of the commons is the creative freedom, above and beyond what the market may enable. Precisely because it is a commons, and not a market, people's freedoms are not constrained by marketability. A commons is a noncommercial, nongovernmental space that is free from corporate manipulations and government meddling. It offers a qualitatively different type of experience than the marketplace or government power. A commons tends to be more informal, a place where people know you by name, and where your contributions are known and welcomed. A commons based on relationships of trust and reciprocity can undertake actions that a business organization requiring extreme control and predictable performance cannot.

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Precisely because a commons is open and not organized to maximize profit, its members are often willing to experiment and innovate; new ideas can emerge from the periphery. Value is created through a process that honors individual self-selection for tasks, passionate engagement, serendipitous discovery, experimental creativity, and peer-based recognition of achievement. The Open Prosthetics Project, for example, invites anyone to contribute to the design of a prosthetic limb and/or the specification of limbs that ought to be designed, even if they don't know how to do it.【192 ‹http://www.openprosthetics.org›. 】 This has generated such unexpected innovations as limbs specifically adapted for rock climbers and an arm designed for fishing. Athletes who engage in “extreme sports” — skiing, biking, surfing — have been a rich source of ideas for new products, just as software hackers are among the first to come up with innovative programming ideas.

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Part of the value proposition of the commons at the content layer is that it can host a more diverse range of expression — personal, social, and creative — than the market, in part because it does not have the burden of having to sustain costly overhead and sell a product. It has other goals — the personal interests and whims of the commoners — and it can often meet those needs inexpensively. Yet the commons does in fact generate many marketable innovations, thanks to its open accessibility, the social relationships it enables and the free sharing and circulation of work.

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But the commons is about securing user freedoms, and not necessarily about prevailing in a market. Web 2.0 may or may not protect both concerns. Like the commons, Web 2.0 relies upon user-generated content, network effects, and bottom-up innovation. But Web 2.0 entrepreneurs, at the end of the day, need to make money. Their sites need to adopt business practices that protect revenue streams. Facebook is catering to advertisers, not users, when they sift through masses of users' personal data in order to sell targeted advertising. MySpace at one point refused to let its users connect to rival Web sites and outside software “widgets.”【193 Rachel Rosmarin, “Why MySpace Blinked,” Forbes, April 24, 2007. 】 In this sense, Web 2.0 media may be “open,” but they are not necessarily “free,” as in freedom. Web 2.0 entrepreneurs are more likely to focus on protecting their market advantages than advancing user freedoms. The two issues may overlap substantially, but they are not identical.

ocn 521:

Science-fiction writer William Gibson once wrote, “The future is already here; it's just not well-distributed yet.” That sums up the Great Value Shift circa 2003. The efficiencies and affordances made possible by the Internet were there. They were enabling all sorts of pioneers to build new business models, new creative genres, and new online communities — but these innovations were unevenly distributed. More to the point, their potential was unevenly perceived, especially in many precincts of Washington officialdom and the corporate world. The challenge for amateurs venturing onto open platforms was to validate the new sorts of socially created value enabled by the Internet.

ocn 581:

This would be legally acknowledging the now obvious state of modern audio/visual creativity in which quoting, sampling, direct referencing, copying and collaging have become a major part of modern inspiration. [A sampling option would] stop legally suppressing it and start culturally encouraging it — because it's here to stay. That's our idea for encouraging a more democratic media for all of us, from corporations to the individual.【225 Glenn Otis Brown, “Mmm . . . Free Samples (Innovation la),” Creative Commons blog, March 11, 2003, at ‹http://creativecommons.org/weblog/entry/3631›. 】

ocn 597:

When the CC licenses were first launched, many regarded them as a boring legal license that may or may not really matter. The real surprise was how the CC licenses became a focal object for organizing a movement. As more users began to adopt the licenses in 2003 and 2004, they ceased being just a set of legal permissions and became a cool social brand. The CC licenses and logo became symbols of resistance against the highly controlled, heavily marketed, Big Brother worldview that Hollywood and the record industry seem to embody. The CC licenses offered a way to talk about one's legal and creative rights in the Internet age, and to cite to a positive alternative — the sharing economy. With no paid advertising to speak of, the CC logo came to symbolize an ethic and identity, one that stood for artistic integrity, democratic transparency, and innovation.

ocn 602:

Even as the machine was getting built, Lessig was taking steps to stoke up a movement. In 2004, Lessig published his third book in five years, Free Culture. The book described, as the subtitle put it, “how big media uses technology and the law to lock down culture and control creativity.” Lessig's earlier books, Code and The Future of Ideas, had critiqued the alarming trends in copyright law, explained the importance of the commons, and set forth a philosophical rationale for what became the CC licenses. Now Free Culture provided a wide-ranging survey of how incumbent industries with old business models — for recorded music, film, broadcasting, cable television — were (and are) curbing traditional creative freedoms and technological innovations. Drawing explicitly on the ideas of freedom developed by Richard Stallman in the 1980s, and upon legal history, politics, and colorful stories, Lessig argued that industry protectionism poses a profound harm to creators, business, and democratic culture — and that action needed to be taken.

ocn 675:

The use of CC licenses for government information and publicly funded materials is inspiring similar efforts in other countries. Governments are coming to realize that they are one of the primary stewards of intellectual property, and that the wide dissemination of their work — statistics, research, reports, legislation, judicial decisions — can stimulate economic innovation, scientific progress, education, and cultural development. Unfortunately, as Anne Fitzgerald, Brian Fitzgerald, and Jessica Coates of Australia have pointed out, “putting all such material into the public domain runs the risk that material which is essentially a public and national asset will be appropriated by the private sector, without any benefit to either the government or the taxpayers.”【282 iCommons annual report, 2007, ‹http://www.icommons.org/annual07›. 】 For example, the private sector may incorporate the public-domain material into a value-added proprietary model and find other means to take the information private. The classic instance of this is West Publishing's dominance in the republishing of U.S. federal court decisions. Open-content licenses offer a solution by ensuring that taxpayerfinanced works will be available to and benefit the general public.

ocn 704:

Although most international commoners seem to be culturally progressive and politically engaged, they cannot be situated along a left-right ideological spectrum. This is because commoners tend to be more pragmatic and improvisational than ideological. They are focused on building specific projects to facilitate sharing and creativity, based on open-source principles. Their enthusiasm is for cool software, effective legal interventions, and activist innovations, not sectarian debate.

ocn 771:

If genes, seeds, indigenous medicines, agricultural innovations, artistic designs, music, and the various ecological and cultural resources of the South are not treated as private property, but instead as elements of the public domain, then anyone can exploit them freely. This can lead to serious injustices, as powerful corporations swoop in to exploit resources that are available to all in the public domain.

ocn 812:

Two-thirds of Magnatune's revenues comes from licensing its music to films, ads, television, and shops. Like so many open business models, it has carved out a mid-tier niche between “expensive and proprietary” and “cheap and crummy.” Most mainstream music licensing involves either expensive, highly lawyered deals with record labels or insipid stock music from royalty-free CDs. Magnatune's innovation is to offer high-quality music in multiple genres at flatrate licenses for sixteen different usage scenarios. The deals can be easily consummated via the Web; artists share in half the proceeds. No accounting flimflam. To date, Magnatune has licensed its music to more than one thousand indie films and many commercials.

ocn 818:

Why this inexorable trend toward openness? Because on open networks, excessive control can be counterproductive. The overall value that can be created through interoperability is usually greater than the value that any single player may reap from maintaining its own “walled network.”【342 See Elliot E. Maxwell, “Open Standards, Open Source, and Open Innovation: Harnessing the Benefits of Openness,” Innovations:Technology, Governance, Globalization 1, no. 3 (Summer 2006), at ‹http://www.emaxwell.net›. 】 For a company to reap value from interoperability, however, it must be willing to compete on an open platform and it must be willing to share technical standards, infrastructure, or content with others. Once this occurs, proprietary gains come from competing to find more sophisticated ways to add value in the production chain, rather than fighting to monopolize basic resources. Advantage also accrues to the company that develops trusting relationships with a community of customers.

ocn 828:

Unfortunately, there is no clear consensus about how exactly to define an “open business.” Accordingly, assessments of their social, political, or economic virtue can be slippery. Some analysts such as Henry Chesbrough regard a business as “open” if it relaxes or modifies its intellectual property controls, or changes its organizational practices, as a way to reap value from open networks.【349 Henry Chesbrough, Open Business Models: How to Thrive in the New Innovation Landscape (Cambridge, MA: Harvard Business School Press, 2006). 】 Others believe that an open business should use open-source software, and support the copying and sharing of works through CC or other open-content licenses. Sometimes the idea of open business is yoked to a vaguely defined notion of “social responsibility.” It is not always clear whether this ethic is a moral gloss or a structural feature, but in general open businesses strive to practice a more open, accountable, and socially enlightened vision of commerce.

ocn 866:

For businesses operating on open networks, it is a mistake to regard people merely as customers; they are collaborators and even coinvestors. As more companies learn to interact closely with their customers, it is only natural that conversations about the product or service become more intimate and collaborative. The roles of the “consumer” and “producer” are starting to blur, leading to what some business analysts call the “prosumer”【368 Don Tapscott and Anthony D. Williams, Wikinomics: How Mass Collaboration Changes Everything (New York Portfolio, 2006), chapter 5, “The Prosumers.” 】 and the “decentralized co-creation of value.”【369 David Bollier, The Rise of Collective Intelligence: Decentralized Co-creation of Value as a New Paradigm of Commerce and Culture (Washington, DC: Aspen Institute Communications and Society Program, 2008). 】 The basic idea is that online social communities are becoming staging areas for the advancement of business objectives. Businesses see these communities as cost-effective ways to identify promising innovations, commercialize them more rapidly, tap into more reliable market intelligence, and nurture customer goodwill.

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Amateurs who share with one another through a loose social commons have always been a source of fresh ideas. Tech analyst Elliot Maxwell (citing Lessig) notes how volunteers helped compile the Oxford English Dictionary by contributing examples of vernacular usage; how the Homebrew Computer Club in the San Francisco Bay area developed many elements of the first successful personal computer; and how sharing among auto enthusiasts helped generate many of the most important early automotive innovations.【370 Elliot Maxwell, “Open Standards, Open Source, and Open Innovation: Harnessing the Benefits of Openness,” Innovations:Technology, Governance, Globalization 1, no. 3 (Summer 2006), at ‹http://www.emaxwell.net›, p. 150. 】 In our time, hackers were the ones who developed ingenious ways to use unlicensed electromagnetic spectrum as a commons, which we now know as Wi-Fi. They tinkered with the iPod to come up with podcasts, a new genre of broadcasting that commercial broadcasters now emulate.【371 Elliot E. Maxwell drew my attention to these examples in his excellent essay “Open Standards, Open Source, and Open Innovation.” 】 Numerous self-organized commons have incubated profitable businesses. Two movie buffs created the Internet Movie Database as separate Usenet newsgroups in 1989; six years later they had grown so large that they had merged and converted into a business that was later sold to Amazon.【372 Wikipedia entry, IMDB, at ‹http://en.wikipedia.org/wiki/Internet_Movie_Database›. 】 The Compact Disc Database was a free database of software applications that looks up information about audio CDs via the Internet. It was originally developed by a community of music fans as a shared database, but in 2000 it had grown big enough that it was sold and renamed Gracenote.【373 Wikipedia entry, CDDB, at ‹http://en.wikipedia.org/wiki/CDDB›. 】

ocn 868:

A commons can be highly generative because its participants are tinkering and innovating for their own sake — for fun, to meet a challenge, to help someone out. Amateurs are not constrained by conventional business ideas about what may be marketable and profitable. They do not have to meet the investment expectations of venture capitalists and Wall Street. Yet once promising new ideas do surface in the commons, market players can play a useful role in supplying capital and management expertise to develop, improve, and commercialize an invention.

ocn 869:

Because online commons are such a rich source of new ideas, the most farsighted companies are trying to learn how they might be harnessed to help them innovate and compete more effectively. MIT professor Eric von Hippel is one of the foremost researchers of this process. His 2005 book Democratizing Innovation describes how the leading participants in high-performance sports — extreme skiing, mountain biking, skateboarding, surfing, and hot-rodding — are forming “innovation communities” that work closely with manufacturers.【374 Eric von Hippel, Democratizing Innovation (Cambridge, MA: MIT Press, 2005), available at ‹http://mitpress.mit.edu/democratizing_innovation_pdf›. 】 The most active practitioners of these sports are intimately familiar with the equipment and have their own imaginative ideas about what types of innovations the sport needs. Indeed, many of them have already jerry-rigged their own innovations — better cockpit ventilation in sailplanes, improved boot and bindings on snowboards, a method for cutting loose a trapped rope used by canyon climbers. For companies willing to listen to and collaborate with users, says von Hippel, “communities of interest are morphing into communities of creation and communities of production.”

ocn 870:

“Users that innovate can develop exactly what they want, rather than relying on manufacturers to act as their (often very imperfect) agents,” von Hippel writes. “Moreover, individuals users do not have to develop everything they need on their own: they can benefit from innovations developed and freely shared by others.”【375 Ibid., p. 1 】 Besides finding empirical examples of this trend, von Hippel has developed a theoretical vocabulary for understanding how collaborative innovation occurs. He probes the user motivations for “free revealing” of their knowledge, the attractive economics that fuel “users' low-cost innovation niches,” and the public policies that sometimes thwart user-driven innovation (patent rights for a field may be fragmented, anticopying restrictions such as the Digital Millennium Copyright Act may prevent user tinkering, etc.).

ocn 871:

User-driven innovation is not as esoteric as the “extreme sports” examples may suggest. It is, in fact, a growing paradigm. In one of the more celebrated examples, Lego, the Danish toymaker, invited some of its most fanatic users to help it redesign its Mindstorms robotics kit. The kits are meant to let kids (and adults) build a variety of customized robots out of a wild assortment of plastic Lego pieces, programmable software, sensors, and motors.【376 Tapscott and Williams, Wikinomics, pp. 130–31. 】 In 2004, when some Lego users reverse-engineered the robotic “brain” for the Mindstorms kit and put their findings on the Internet, Lego at first contemplated legal action. Upon reflection, however, Lego realized that hackers could be a valuable source of new ideas for making its forthcoming Mindstorms kit more interesting and cool.

ocn 873:

Another improbable success in distributed, user-driven innovation is Threadless, a Chicago-based t-shirt company. Threadless sells hundreds of original t-shirt designs, each of which is selected by the user community from among more than eight hundred designs submitted every week. The proposed designs are rated on a scale of one to five by the Web site's more than 600,000 active users. Winners receive cash awards, recognition on the Web site, and their names on the t-shirt label. Every week, Threadless offers six to ten new t-shirts featuring the winning designs.

ocn 874:

In 2006, the company sold more than 1.5 million t-shirts without any traditional kind of marketing. Its business model is so rooted in the user community that Threadless co-founders Jake Nickell and Jacob DeHart have declined offers to sell their t-shirts through conventional, big-name retailers. Threadless's business model has helped it overcome two major challenges in the apparel industry, write Harvard Business School professor Karim R. Lakhani and consultant Jill A. Panetta — the ability “to attract the right design talent at the right time to create recurring fashion hits,” and the ability “to forecast sales so as to be better able to match production cycles with demand cycles.”【378 Karim R. Lakhani and Jill A. Panetta, “The Principles of Distributed Innovation,” Research Publication No. 2007-7, Berkman Center for Internet & Society, Harvard Law School, October 2007, at ‹http://papers.ssrn.com/abstract_id=1021034›. See also Darren Dahl, “Nice Threads,” Southwest Airlines Spirit, December 2006. 】

ocn 877:

It is hard to predict what new models of “decentralized cocreation of value” will take root and flourish, but the experiments are certainly proliferating. Staples, the office supplies store, now hosts a contest inviting the public to suggest inventions that Staples can develop and sell under the its brand name.【380 William J. Bulkeley, “Got a Better Letter Opener?” Wall Street Journal, July 13, 2006. 】 A number of massmarket advertisers have hosted competitions inviting users to create ads for their products. One of the more interesting frontiers in userdriven innovation is tapping the audience for investment capital.

ocn 892:

Like so many other sectors confronting the Great Value Shift, science in the late 1990s found itself caught in a riptide. The proprietarian ethic of copyright and patent law was intensifying (as we saw in chapter 2), spurring scientists and universities to claim private ownership in knowledge that was previously treated as a shared resource.【386 See, e.g., Jennifer Washburn, University Inc.: The Corporate Corruption of Higher Education (New York: Basic Books, 2005); Derek Bok, Universities in the Marketplace: The Commercialization of Higher Education (Princeton, NJ: Princeton University Press, 2003); Sheldon Krimsky, Science in the Private Interest: Has the Lure of Profits Corrupted Biomedical Research (New York: Rowman & Littlefield, 2003); and Corynne McSherry, Who Owns Academic Work? Battling for Control of Intellectual Property (Cambridge, MA: Harvard University Press, 2001). 】 Yet at the same time the Internet was demonstrating the remarkable power of open sharing and collaboration. Even as market players sought to turn data, genetic knowledge, and much else into private property rights, a growing number of scientists realized that the best ideals of science would be fulfilled by recommitting itself to its core values of openness and sharing. Open platforms could also strengthen the social relationships that are essential to so much scientific inquiry.【387 John Seely Brown and Paul Duguid, The Social Life of Information (Cambridge, MA: Harvard Business School Pulishing, 2000). See also, e.g., Jane E. Fountain, “Social Capital: Its Relationship to Innovation in Science and Technology,” Science and Public Policy 25, no. 2 (April 1998), pp. 103–15. 】

ocn 895:

There has even been the emergence of open-source biotechnology, which is applying the principles of free software development to agricultural biotech and pharmaceutical development.【389 See, e.g., Rockefeller Foundation, “2005 Bellagio Meeting on Open Source Models of Collaborative Innovation in the Life Sciences” [report], Bellagio, Italy, September 2005. See also Janet Elizabeth Hope, “Open Source Biotechnology,” Ph.D. diss., Australian National University, December 2004. 】 Richard Jefferson, the founder of Cambia, a nonprofit research institute in Australia, launched the “kernel” of what he calls the first opensource biotech toolkit. It includes patented technologies such as TransBacter, which is a method for transferring genes to plants, and GUSPlus, which is a tool for visualizing genes and understanding their functions.【390 Interview with Richard Jefferson, September 7, 2006. See also ‹http://www.cambia.org›. 】 By licensing these patented research tools for open use, Jefferson hopes to enable researchers anywhere in the world— not just at large biotech companies or universities — to develop their own crop improvement technologies.

ocn 900:

As Web 2.0 innovations have demonstrated the power of the Great Value Shift, the convergence of open source, open access, and open science has steadily gained momentum.【394 John Willinsky, “The Unacknowledged Convergence of Open Source, Open Access and Open Science,” First Monday 10, no. 8 (August 2005), at ‹http://firstmonday.org/issues/issue10_8/willinsky/index.html›. 】 Creative Commons was mindful of this convergence from its beginnings, but it faced formidable practical challenges in doing anything about it. “From the very first meetings of Creative Commons,” recalled law professor James Boyle, a CC board member, “we thought that science could be the killer app. We thought that science could be the place where Creative Commons could really make a difference, save lives, and have a dramatic impact on the world. There is massive, unnecessary friction in science and we think we can deal with it. Plus, there's the Mertonian ideal of science, with which Creative Commons couldn't fit more perfectly.”【395 Interview with James Boyle, August 15, 2006. 】

ocn 902:

Science Commons aims to redesign the “information space” — the technologies, legal rules, institutional practices, and social norms — so that researchers can more easily share their articles, datasets, and other resources. The idea is to reimagine and reinvent the “cognitive infrastructures” that are so critical to scientific inquiry. Dismayed by the pressures exerted by commercial journal publishers, open-access publishing advocate Jean-Claude Guédon has called on librarians to become “epistemological engineers.”【396 Jean-Claude Guédon, “In Oldenburg's Long Shadow: Librarians, Research Scientists, Publishers and the Control of Scientific Publishing,” at ‹http://www.arl.org/resources/pubs/mmproceedings/138guedon.shtml›. 】 They need to design better systems (technical, institutional, legal, and social) for identifying, organizing, and using knowledge. The payoff? Speedier research and greater scientific discovery and innovation. It turns out that every scientific discipline has its own special set of impediments to address. The recurring problem is massive, unnecessary transaction costs. There is an enormous waste of time, expense, bureaucracy, and logistics in acquiring journal articles, datasets, presentations, and physical specimens.

ocn 905:

It was fortunate to have some deep expertise not just from its board members, but from two Nobel Prize winners on its scientific advisory panel (Sir John Sulston and Joshua Lederberg) and several noted scholars (patent scholar Arti Rai, innovation economist Paul David, and open-access publishing expert Michael B. Eisen). The director of Science Commons, John Wilbanks, brought a rare mix of talents and connections. He was once a software engineer at the World Wide Web Consortium, specializing in the Semantic Web; he had founded and run a company dealing in bioinformatics and artificial intelligence; he had worked for a member of Congress; and he was formerly assistant director of the Berkman Center at Harvard Law School.

ocn 908:

In 2006, Science Commons embarked upon three “proof of concept” projects that it hopes will be models for other scientific fields. The first initiative, the Scholar's Copyright Project, aspires to give scientists the “freedom to archive and reuse scholarly works on the Internet.” It is also seeking to make the vast quantities of data on computerized databases more accessible and interoperable, as a way to advance scientific discovery and innovation.

ocn 929:

What may sound like an arcane policy battle in fact has serious implications for ordinary Americans. The breast cancer patient seeking the best peer-reviewed articles online, or the family of a person with Huntington's disease, can clearly benefit if they can acquire, for free, the latest medical research. Scientists, journalists, health-care workers, physicians, patients, and many others cannot access the vast literature of publicly funded scientific knowledge because of high subscription rates or per-article fees. A freely available body of online literature is the best, most efficient way to help science generate more reliable answers, new discoveries, and commercial innovations.

ocn 965:

The ability to locate materials based on their descriptions in journal articles is often limited by lack of sufficient information about origin and availability, and there is no standard citation for such materials. In addition, the process of legal negotiation that may follow can be lengthy and unpredictable. This can have important implications for science policy, especially when delays or inability to obtain research materials result in lost time, productivity and research opportunities.【423 Thinh Nguyen, “Science Commons: Material Transfer Agreement Project,” Innovations, Summer 2007, pp. 137–43, at ‹http://www.mitpressjournals.org/doi/pdf/10.1162/itgg.2007.2.3.137›. 】

ocn 968:

Corporations sometimes have MTAs with onerous terms that prevent academic researchers from using a reagent or research tool. Individual scientists sometimes balk at sharing a substance because of the time and effort needed to ship it. Or they may wish to prevent another scientist from being the first to publish research results. Whatever the motivation, MTAs can act as a serious impediment to verification of scientific findings. They can also prevent new types of exploratory research and innovation.

ocn 973:

At one level, it is ironic that one of the oldest commons-based communities, academic science, has taken so long to reengineer its digital infrastructure to take advantage of the Internet and open digital systems. Yet academic disciplines have always clung tightly to their special ways of knowing and organizing themselves. The arrival of the Internet has been disruptive to this tradition by blurring academic boundaries and inviting new types of cross-boundary research and conversation. If only to improve the conversation, more scientists are discovering the value of establishing working protocols to let the diverse tribes of science communicate with one another more easily. Now that the examples of networked collaboration are proliferating, demonstrating the enormous power that can be unleashed through sharing and openness, the momentum for change is only going to intensify. The resulting explosion of knowledge and innovation should be quite a spectacle.

ocn 1000:

While Connexions and MIT's OpenCourseWare have understandably garnered a great deal of attention, all sorts of fascinating educational projects, big and small, have popped up on the Internet as Web 2.0 innovations matured. Some of these projects have become celebrated, such as Wikipedia, the Public Library of Science, and the Internet Archive. Others, though less celebrated, represent a dazzling mosaic of educational innovation and new possibilities. In a sense, the Long Tail has come to education; even the most obscure subjects have a sustainable niche on the Internet. The groundswell has even produced its own theorists, conveners, and infrastructure builders. Utah State University hosts the Center for Open Sustainable Learning, which is a clearinghouse for open educational tools. Carnegie Mellon has an Open Learning Initiative that designs educational courses. And so on.

ocn 1021:

Legend has it that, upon leaving Independence Hall on the final day of the Constitutional Convention in 1787, Benjamin Franklin was approached by a woman, who asked, “Well, Doctor, what have we got — a Republic or a Monarchy?” Franklin famously replied, “A Republic, if you can keep it.” The American colonies had imagined and engineered a new constitutional order, but its survival would depend on countless new struggles and innovations. An American civic culture had to be invented.

ocn 1030:

Perhaps the most enduring contribution of the free software, free culture, and other “open movements” has been their invention of a new species of citizenship. Despite significant differences of philosophy and implementation, these commons share some basic values about access, use, and reuse of creative works and information. No matter their special passions, the commoners tend to be improvisational, resourceful, self-directed, collaborative, and committed to democratic ideals. They celebrate a diversity of aesthetics, viewpoints, and cultures. They are egalitarian in spirit yet respectful of talent and achievement. There is a strong predilection to share because the accrual of digital contributions (code, content, metatags) will lead to a greater good for all and perhaps even democratic change. But there is no hostility to commercial activity — indeed, there is a lively admiration for entrepreneurialism — so long as it does not violate basic creative and civic freedoms or core principles of the Internet (openness, interoperability, sharing). The disagreements that do exist center on how best to achieve those goals.

ocn 1065:

The beauty of this “ideological straddle” is that it enables a diverse array of players into the same tent without inciting sectarian acrimony. (There is some, of course, but mostly at the margins.) Ecumenical tolerance is the norm because orthodoxies cannot take root at the periphery where innovation is constantly being incubated. In any case, there is a widespread realization in the networked world that shared goals are likely to require variable implementations, depending on specific needs and contexts.

ocn 1068:

This, truly, is the animating force of the viral spiral: the capacity to build one's own world and participate on a public stage. (Cicero: “Freedom is participation in power.”) When such energies are let loose in an open, networked environment, all sorts of new and interesting innovations emerge. Since an online commons does not have the burden of turning a profit or supporting huge overhead, it can wait for serendipity, passion, and idiosyncratic brilliance to surface, and then rely on the Internet to propagate the fruits virally.

ocn 1071:

Theory has its limits. The building of the digital republic was in many ways animated by theory, of course, chiefly the rejection of certain theories of copyright law and the invention of new narratives about creativity and the commons. But this project has not been an intellectual, theory-driven enterprise so much as a vast, collective enterprise of history-making citizenship. Using the affordances of digital technologies, individuals have stepped out of their customary or assigned roles to invent entirely new vehicles for creativity, social life, business, politics, science, and education. Individuals have come together to make some remarkable new tools and institutions to serve their needs and preferences.

 Democratizing Innovation

1. LES contains four types of measures. Three ("benefits recognized early," "high benefits expected," and "direct elicitation of the construct") contain the core components of the lead user construct. The fourth ("applications generation") is a measure of a number of innovation-related activities in which users might engage: they "suggest new applications," they "pioneer those applications," and (because they have needs or problems earlier than their peers) they may be "used as a test site" (Morrison, Midgely, and Roberts 2004).

 Free Culture - How Big Media Uses Technology and the Law to Lock Down Culture and Control Creativity

160. See Joseph Menn, "Universal, EMI Sue Napster Investor," Los Angeles Times, 23 April 2003. For a parallel argument about the effects on innovation in the distribution of music, see Janelle Brown, "The Music Revolution Will Not Be Digitized," Salon.com, 1 June 2001, available at link #42. See also Jon Healey, "Online Music Services Besieged," Los Angeles Times, 28 May 2001.

 The Public Domain - Enclosing the Commons of the Mind

5. U.S. Patent No. 6,004,596 (filed Dec. 21, 1999), available at ‹http://patft.uspto.gov/netahtml/PTO/srchnum.htm› (search “6,004,596”). As is required, the patent refers extensively to the “prior art”—in this case prior art in sealing sandwiches. It also refers to the classic scientific reference work “50 Great Sandwiches by Carole Handslip 81–84, 86, 95, 1994.” Is this patent ridiculous? Yes, clearly so. But not so ridiculous that its eventual owner, Smucker's, refrained from sending out cease and desist letters to competing sandwich manufacturers, and, when one of those competitors successfully requested the Patent and Trademark Office to reexamine the patent, from appealing the resulting rejection all the way through the Board of Patent Appeals and Interferences to the Court of Appeals for the Federal Circuit. The judges there were less than sympathetic at oral argument. “Judge Arthur Gajarsa noted that his wife often squeezes together the sides of their child's peanut butter and jelly sandwiches to keep the filling from oozing out. ‘I'm afraid she might be infringing on your patent!' he said.” The court found that the PTO got it right the second time around and agreed with the Board of Patent Appeals in rejecting the patent. Portfolio Media, “Peanut Butter and Jelly Case Reaches Federal Circuit,” IPLaw360 (April 7, 2005), available at ‹http://www.iplawbulletin.com›. For the Board of Patent Appeals's learned discussion of whether the patent was anticipated by such devices as the “Tartmaster,” complete with disputes over expert testimony on the subjects of cutting, crimping, and “leaking outwardly” and painstaking inquiries about what would seem obvious to a “person having ordinary skill in the art of sandwich making,” see ‹http://des.uspto.gov/Foia/ReterivePdf?system=BPAI&flNm=fd031754› and ‹http://des.uspto.gov/Foia/ReterivePdf?system=BPAI&flNm=fd031775›. One could conclude from this case that the system works (eventually). Or one could ask who cares about silly patents like this—even if they are used in an attempt to undermine competition? The larger point, however, is that an initial process of examination that finds a crimped peanut butter and jelly sandwich is “novel and nonobvious” is hardly going to do better when more complex technologies are at stake. I take that point up in Chapter 2 with reference to Thomas Jefferson's discussion of patents and in Chapter 7 on synthetic biology. For a more general discussion of the flaws of the patent system see Adam B. Jaffe and Josh Lerner, Innovation and Its Discontents: How Our Broken Patent System Is Endangering Innovation, and Progress and What To Do About It (Princeton, N.J.: Princeton University Press, 2004).

19. Unfortunately, the reality turns out to be less rosy. James Bessen, “Patents and the Diffusion of Technical Information,” Economics Letters 86 (2005): 122: “[S]urvey evidence suggests that firms do not place much value on the disclosed information. Moreover, those firms that do read patents do not use them primarily as a source of information on technology. Instead, they use them for other purposes, such as keeping track of competitors or checking for infringement. There are, in fact, sound theoretical reasons why the disclosed information may not be very valuable. [Fritz] Machlup and [Edith] Penrose report that the argument about diffusion is an old one, popular since the mid-19th century. They also point out that, at least through the 1950s, economists have been skeptical about this argument. The problem, also recognized in the mid-19th century, is that ‘only unconcealable inventions are patented,' so patents reveal little that could not be otherwise learned. On the other hand, ‘concealable inventions remain concealed.' ” [Citations omitted.]

21. For contrasting views of the sequence of events, see John Feather, “Publishers and Politicians: The Remaking of the Law of Copyright in Britain 1775–1842,” pt. 2, “The Rights of Authors,” Publishing History 25 (1989): 45–72; Mark Rose, Authors and Owners: The Invention of Copyright (Cambridge, Mass.: Harvard University Press, 1993).

44. Adam Mossoff, “Who Cares What Thomas Jefferson Thought about Patents? Reevaluating the Patent ‘Privilege' in Historical Context,” Cornell Law Review 92 (2007): 953–1012. In a thoughtful, carefully reasoned, and provocative article, Professor Mossoff argues that Jefferson's views have been misused by the courts and legal historians, and that if we understand the use of the word “privilege” in historical context, we see that the “patent privilege” was influenced by a philosophy of natural rights as well as the antimonopolist utilitarianism described here. I both agree and disagree.
Professor Mossoff's central point—that the word “privilege” was not understood by eighteenth-century audiences as the antonym of “right”—is surely correct. To lay great stress on the linguistic point that the patent right is “merely” a “privilege” is to rest one's argument on a weak reed. But this is not the only argument. One could also believe that intellectual property rights have vital conceptual and practical differences with property rights over tangible objects or land, that the framers of the Constitution who were most involved in the intellectual property clause were deeply opposed to the confusion involved in conflating the two, and that they looked upon this confusion particularly harshly because of an intense concern about state monopolies. One can still disagree with this assessment, of course; one can interpret Madison's words this way or that, or interpret subsequent patent decisions as deep statements of principle or commonplace rhetorical flourishes. Still it seems to me a much stronger argument than the one based on the privilege–right distinction. I am not sure Professor Mossoff would disagree.
Professor Mossoff is also correct to point out that a “legal privilege” did sometimes mean to an eighteenth-century reader something that the state was duty-bound to grant. There was, in fact, a wide range of sources from which an eighteenth-century lawyer could derive a state obligation to grant a privilege. Eighteenth-century legal talk was a normative bouillabaisse—a rich stew of natural right, common law, utility, and progress—often thrown together without regard to their differences. Some lawyers and judges thought the common law embodied natural rights, others that it represented the dictates of “progress” and “utility,” and others, more confusingly still, seemed to adopt all of those views at once.
Nevertheless, I would agree that some eighteenth-century writers saw claims of common-law right beneath the assertion of some “privileges” and that a smaller number of those assumed common-law right and natural right to be equivalent, and thus saw a strong state obligation to grant a particular privilege based on natural right, wherever that privilege had been recognized by English or U.S. common law. But here is where I part company with Professor Mossoff.
First, I do not believe that the most important architects of the intellectual property clause shared that view when it came to patents and copyrights. Jefferson, of course, was not one of those who believed the state was so bound. “Society may give an exclusive right to the profits arising from [inventions], as an encouragement to men to pursue ideas which may produce utility, but this may or may not be done, according to the will and convenience of the society, without claim or complaint from any body” (Letter to McPherson, 334, emphasis added). More importantly, Jefferson's thinking about patents was infused by a deeply utilitarian, antimonopolist tinge. So, I would argue, was Madison's.
The quotations from Madison which I give later show clearly, to me at least, that Madison shared Jefferson's deeply utilitarian attitude toward patent and copyright law. I think there is very good reason to believe that this attitude was dominant among the Scottish Enlightenment thinkers whose writings were so influential to the framers. I do not think it is an exaggeration to say that the American Revolution was violently against the world of monopoly and corruption that was the supposed target of the English Statute of Monopolies (itself hardly a natural rights document). Yes, those thinkers might fall back into talking about how hard an inventor had worked or construing a patent expansively. Yes, they might think that within the boundaries of settled law, it would be unjust to deny one inventor a patent when the general scheme of patent law had already been laid down. But that did not and does not negate the antimonopolist and, for that matter, utilitarian roots of the Constitution's intellectual property clause.
Second, while I agree that there were strands of natural right thinking and a labor theory of value in the U.S. intellectual property system, and that they continue to this day—indeed, these were the very views that the Feist decision discussed in Chapter 9 repudiated, as late as 1991—I think it is easy to make too much of that fact. Is this signal or noise? There are conceptual reasons to think it is the latter. Later in this chapter I discuss the evolution of the droits d'auteur tradition in France. Here, at the supposed heart of the natural rights tradition, we find thinkers driven inexorably to consider the question of limits. How far does the supposed natural right extend—in time, in space, in subject matter? It is at that moment that the utilitarian focus and the fear of monopoly represented by Jefferson and Madison—and, for that matter, Locke and Condorcet—become so important.
Professor Mossoff is correct to criticize the focus on the word “privilege,” and also correct that the ideas of natural right and the labor theory of value always color attitudes toward intellectual property claims. But it would be an equal and opposite mistake to ignore two points. First, intellectual property rights are profoundly different from physical property rights over land in ways that should definitively shape policy choices. Second, partly because of those differences, and because of the influence of free-trade Scottish Enlightenment thought on the American Revolution in particular, there was a powerful antimonopolist and free-trade sentiment behind the copyright and patent clause. Simply read the clause. Congress is given the power “to promote the Progress of Science and useful Arts, by securing for limited Times to Authors and Inventors the exclusive Right to their respective Writings and Discoveries.” Does this really read like the work of a group of believers in natural right? On the contrary, it reads like a limited grant of power to achieve a particular utilitarian goal. That sentiment—nicely encapsulated in but by no means limited to the words of Jefferson—is still a good starting place for an understanding of intellectual property.

46. For example, in a letter to Madison commenting on the draft of the Constitution: “I like it, as far as it goes; but I should have been for going further. For instance, the following alterations and additions would have pleased me: . . . Article 9. Monopolies may be allowed to persons for their own productions in literature, and their own inventions in the arts, for a term not exceeding . . . years, but for no longer term, and no other purpose.” Letter from Thomas Jefferson to James Madison (August 28, 1789), in Writings of Thomas Jefferson, vol. 7, 450–451.

47. “Monopolies tho' in certain cases useful ought to be granted with caution, and guarded with strictness against abuse. The Constitution of the U.S. has limited them to two cases—the authors of Books, and of useful inventions, in both which they are considered as a compensation for a benefit actually gained to the community as a purchase of property which the owner might otherwise withhold from public use. There can be no just objection to a temporary monopoly in these cases: but it ought to be temporary because under that limitation a sufficient recompence and encouragement may be given. The limitation is particularly proper in the case of inventions, because they grow so much out of preceding ones that there is the less merit in the authors; and because, for the same reason, the discovery might be expected in a short time from other hands. . . . Monopolies have been granted in other Countries, and by some of the States in this, on another principle, that of supporting some useful undertaking, until experience and success should render the monopoly unnecessary, and lead to a salutary competition . . . But grants of this sort can be justified in very peculiar cases only, if at all; the danger being very great that the good resulting from the operation of the monopoly, will be overbalanced by the evil effect of the precedent; and it being not impossible that the monopoly itself in its original operation, may produce more evil than good. In all cases of monopoly, not excepting those