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Business Impact

Wanted: National Parks for Knowledge

Seth Shulman promotes remedies for the troubled marketplace of ideas.

Land-grab fever has gripped intellectual property rights, says Seth Shulman. And he insists that only new approaches-such as “national parks for knowledge”-can protect the free flow of ideas that benefits us all.

Speaking at last month’s Technology Review Innovators Forum, the veteran commentator warned that patent law is stifling new ideas.

“In the midst of all this exciting change, I’m struck by how poorly we understand the context of the change and really what’s involved in nurturing innovation,” Shulman added.

Shulman, author of Owning the Future, a critical survey of intellectual property (IP) policy, pointed to three factors underlying the field’s rising importance.

First, Shulman said, we’re seeing a flood of patentable new knowledge. Second, the economy has shifted from manufacturing toward knowledge-based services. Finally, he said, laws increasingly treat knowledge as if it were like any other commodity-but it is not.

Patent Palooka

Until recently, intellectual property “was a small blip on the legal profession’s screen,” Shulman said. “Now it has become, at many of the nation’s top law schools, the most popular area of specialty, and is also the area of law with the highest fee structure. That’s worrisome to me because I think it bodes for more tangles of litigation down the road”

One legal landmark, Shulman said, was the 1998 case of State Street Bank vs. Signature Financial Group. State Street asked the court to invalidate a Signature patent on an accounting practice known as “Hub and Spoke,” a method for calculating returns from multiple mutual funds. State Street argued that neither algorithms nor business methods were subject to patent law.

The trial judge agreed. But Signature won its appeal, opening a floodgate on patent applications and infringement suits.

Today, the decision protects patents such as Number 5,373,560-held by a mathematician for, among other things, two very large prime numbers.

Vive La Difference

The problem, Shulman emphasized, is that patent law ignores important differences between intellectual property and other commodities. Not only is knowledge not depleted by its use, he said, it actually grows through sharing. Conversely, restricting the free flow of information slows innovation.

Overly guarded IP rights can cause demonstrable harm, he said. The harm ranges from doctors patenting medical procedures (and thereby restricting their use) to academics guarding their findings from colleagues to businesses suing each other over seemingly obvious ideas, such as Amazon.com’s “one-click shopping” patent.

Community Rights

The remedy, Shulman suggested, is to take a lesson from real estate. “We have a much more nuanced understanding of ownership in relation to land,” he remarked.

For example, although the law respects an individual’s right to own property, it also gives the community-through zoning and other regulations-some say in that property’s use. Likewise, “IP zoning” could compel patent holders to license some intellectual property, or share it for research and non-profit uses. And “IP-free zones,” similar to national parks, could keep some areas of knowledge-such as the human genome sequence-free to all.

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