Paper ball-catching, blowfish and a world without patents

Contrary to conventional notions, strong patent regimes don't necessarily promote creativity and innovation

My daughters and I spent a lazy Saturday afternoon crafting paper balls that puffed up like a blowfish. Incidentally, blowfish is a symmetric block cipher, designed in 1993 by Bruce Schneier and included in a large number of cipher suites and encryption products. It was not restricted by any patents and was available to all cryptographic software developers. For this reason, blowfish can be considered a code word for something that can be freely used.

We spent the entire afternoon figuring out various methods of tossing the paper ball around without damaging it, perfecting the art of ensuring it sails through the air into the other person's arms without losing speed. This involved a calculation of distance, speed and angle. Let's call this research and development. The three-member team came up with multiple suggestions to ensure that our paper balls lasted longer. Then we decided to play a little game, with numbers, rules for what can be considered a fair throw and distance that should be maintained between the players. Let's call this perfect competition. (CONFLICT VS COOPERATION)

What was earlier a relaxed game of paper ball-catching and blowfish, in what can be termed a mutually friendly and creative environment for the intellectual exchange of ideas and innovation, transformed instantly into a cut-throat game to win. The eight-year-old daughter won on a consistent basis and decided that her method was superior and determined that her style of throwing the paper ball should not be copied by the other players. This resulted in arguments and loss of playtime. The three-year-old, in her zest to win, decided to cheat on distance and lowered the determined height for tossing the ball to win, resulting in a certain element of duplicity. The quality of the game that was fun earlier and engaged us as a family broke down into an outright squabble. People viewing this family interaction said, "We just enjoyed watching you guys make the paper balls and play together and discover new methods to keep the game going."

How is this situation any different from the patent battle in which Apple and Samsung are engaged? For humour's sake, we can imagine Apple as my eight-year-old, Samsung as my three-year-old and other family members as customers.

James Allworth's article in the Harvard Business Review blog about "Who cares if Samsung copied Apple", brilliantly argued that irrespective of what the courts say in the end about Samsung copying Apple, "what would happen if companies were allowed to copy each other"? He maintains that patents did not prevent Apple, Samsung and Nokia from copying each other, with numerous lawsuits flying around. Nor did it prevent them from innovating their product portfolio. Apple, despite its earlier lawsuit against Microsoft in the 1990s, did not stop innovating. Conversely, the exact opposite occurred - they created the iMac, the iPod, the iPhone and the iPad. Copying the competition's strategies and products does not stifle innovation, argue Kal Raustiala and Chris Sprigman's in the book, The Knockoff Economy: How Imitation Sparks Innovation?. They claim that "great innovations often build on existing ones - and that requires the freedom to copy" and that's the way to rise above a stifling environment. This provides customers a wider range of products to choose from and keeps companies on their toes to find the next cool new product. However, speaking to the CEO of a smaller information technology company in India, he counter-argued that "only patents prevented the big fish from copying their products and losing whatever market share they had gained".

Looking at it from a game theory perspective with implications for a parallel environment minus patents, one can conclude that it opens up a secret garden, reducing creative and intellectual handicaps. The Nash Equilibrium of a game maintains that a player's reaction is construed with relation to the action of other players, provided they are in the same equilibrium or using similar strategies. This can sometimes result in a prisoner's dilemma with each player pursuing their own self-interest, resulting in both players being worse off over a period of time.

However, supporters of intellectual property (IP) maintain that patents are required especially in products or innovations that can be easily reverse engineered. Their three concerns are that the creator of IP should be paid, IP stimulates products development and innovation, an industry without IP will lose steam with time.

A paper by Petra Moser about Innovation Without Patents: Evidence From World Fairs indicates that out of 8,000 British and American innovations at world fairs between 1851 and 1915, the majority of innovations - 89 per cent of British exhibits in 1851 - were not patented. This suggests that there are no correlation between quality and quantity of innovation and patents. Despite the legal battle between Apple and Microsoft, Apple still went ahead to produce fabulous new products, suggesting that innovation and product development will happen with and without patents, also dispelling concerns that the industry will lose steam. Maybe a lazy Saturday afternoon of throwing around paper balls that can puff up like blowfish is an alternate scenario.

The author is a Research Fellow at the National CSR Hub, Tata Institute of Social Sciences