Chapter 1 - Countless Ideas

Our riches did not come from piling brick on brick, or bachelor’s degree on bachelor’s degree, or bank balance on bank balance, but from piling idea on idea.

Deirdre Nansen McCloskey

In her massive book, Bourgeois Equality—How Ideas, Not Capital or Institutions, Enriched the World, Deirdre Nansen McCloskey makes the compelling case that what she calls the Great Enrichment—the unprecedented and gigantic improvement in the standards of living for everyone throughout the world, which has occurred since 1800—is the result of ideas, nurtured by liberty and dignity for commoners, and not by the accumulation of capital or the establishments of institutions.

No better example of the power of ideas is the smartphone, and its distant cousin, the cell phone, used every day by seven billion of the eight billion people on earth. The speed with which this massive transformation of instant world-wide communication took place is truly remarkable. My daughter flies to Paris, takes a selfie in front of the Eifel Tower, and immediately texts it to me. Better still, she can FaceTime with me from half-way around the world—all in living color.

The smartphone started out as just a wireless telephone but has now become the most widely-used camera in the world, taking more photos in one year (estimated to be well over three trillion) than all of the photos ever taken on film in the entire history of film cameras.

Most people probably take their smartphones for granted—something to get frustrated with when it is not working properly. But imagine what your grandparents would think of today’s smartphones. It is a world they couldn’t imagine. How did this happen? What were some of the big ideas that went into making it all possible? And were there institutional barriers that slowed down its development?

In the chapters to follow, we will explore some of the scientific discoveries and technological inventions that made your smartphone possible. We will consider the motivations that make scientists pursue new knowledge, make inventors invent, make entrepreneurs start new companies, all necessary ingredients for you to be able to tap a small screen held in your hand, and send a photograph half-way around the world—just like magic!

You may think you know why scientists, engineers, inventors, and entrepreneurs do what they do—money, fame, recognition, satisfaction. These undoubtedly play a role, but there is more to it than that. If you were to ask many scientists, engineers, inventors, and entrepreneurs why they do what they do, and if they really think about it and are honest, many will reply, because it is fun! Many can’t believe that they are paid to have so much fun.

The fun parts of their jobs are doing the things they love to do: detailed mathematical calculations, thinking up new ideas, conducting experiments, designing something new that no one else has ever done before, manufacturing new products, getting people to buy their product. The list of fun things to do is long. Unfortunately, so is the list of un-fun things, including spending time trying to get a patent attorney to understand your invention. But, you say, patents are important, and so it is time well spent. In this and future chapters, I will argue “no they aren’t” and “no it isn’t.” I will make the case that the entire patent system should be abolished!

Let’s begin by asking why we have patents and why you think they are important. As far as United States patents are concerned, the answer is in Article I, Section 8 of the U.S. Constitution, which states, in part,

“The Congress shall have 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.”

So, the purpose is “to promote the Progress of Science and useful Arts.” We’ve now had over 200 years to see if patents have lived up to their noble purpose. We will look at many specific examples in future chapters, but it doesn’t take much thought to realize that the very idea of a patent is not likely “to promote the Progress of Science and useful Arts,” but rather to have exactly the opposite effect. The reason for this is stated boldly on the U.S. Patent Office website, where under the heading What is a Patent? you read the following:

“The right conferred by the patent grant is, in the language of the statute and of the grant itself, “the right to exclude others from making, using, offering for sale, or selling” the invention in the United States or “importing” the invention into the United States. What is granted is not the right to make, use, offer for sale, sell or import, but the right to exclude others from making, using, offering for sale, selling or importing the invention. Once a patent is issued, the patentee must enforce the patent without aid of the USPTO. [italics added].

So, there you have it, a legal monopoly. Don’t spend your time improving your product, inventing a new one, satisfying new customer needs, thinking up new needs the customer is unaware of; no, spend your time in court, fighting off presumed encroachers of your patent, the validity of which may be up to a judge or jury with little knowledge of the underlying technical issues. All at a huge cost of time and money.

This point was made with respect to biotechnology firms in an August 23, 2016 column in the Wall Street Journal by Alex Berezow and Neal Mody. They cite cases in which the U.S. Court of Appeals sometimes invalidated a patent and other times upheld a patent with little regard for the underlying science. However, their solution that “Congress ought to create a court that focuses specifically on patents that involve extremely complicated technology…staffed with judges and experts who have backgrounds in software, artificial intelligence, nanotechnology, biotechnology and other scientific fields” is completely off the mark. Putting aside the problem of finding such experts willing to waste their time going through the minutia of what was written when, the kind of thing that eats up hours of time in the current patent legal system, such experts would make a much bigger contribution to society by using their skills to move science forward, to develop new technologies, to invent new devices and processes, to start new companies, to create new jobs, in short, to do something useful.

In this book, we will ask the question, “Did the patent system really help in the development of the electric motor, the telegraph, the telephone, wireless telegraphy, radio, television, the camera, and the computer?” Your smartphone uses descendants of all these inventions. But did patent fights slow down progress? Was precious time lost? Did the five-year patent battle between Kodak and Polaroid divert their attention from the growing challenge from digital photography, which ended up sending both companies into bankruptcy?

We will pay attention to the differences between scientists, whose goal is to understand how nature works, and inventors, whose goal is to produce some useful device or product. No inventor would be able to invent anything without relying on the work of the scientists. Both scientists and inventors want recognition for their achievements, scientists by publishing their results, inventors by obtaining a patent. But do patents always reward the actual inventor? We will see that inventions are slippery things, seldom the result of the work of any single person. In fact, we will see that the central idea in any patent is always the cumulative result of countless previous ideas of others, without which the new idea would be impossible. We must ask the question: does it makes any sense to assign property rights to each such incremental new idea? If it doesn’t, then the patent system should be abolished.

So, who are some of the scientists and inventors whose ideas have led to the smartphone? In the following chapters, you will meet a few of the many thousands of scientists and engineers whose work has given you the smartphone you use today. The most basic thing about a smartphone is that it communicates using electromagnetic waves. Who first came up with that idea?