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Thursday, June 12, 2014

No. 000015 Why we need strong robust, anti-fragile government New study suggests patent trolls really are killing startups---

Regardless of your politics, all must agree: New business start-ups have been falling for a number of years.


FiveThirtyEightEconomics, who prepared this chart, has more as does the Brookings Institute, here.

We will leave the tax cut debate role in this to another day and instead focus today on a substantial factor, the lack of robust anti-fragile government.

The need to discuss the role of robust anti-fragile government was suggested to me by this headline.

New study suggests patent trolls really are killing startups
Patent reform advocates have long argued that "patent trolls"—companies that do nothing but sue over patents—are harmful to innovation, not just a plague on big companies. A new study attempted to find out if there's any real data behind that accusation or if it's just a few sad anecdotes.
Turns out there is a very real, and very negative, correlation between patent troll lawsuits and the venture capital funding that startups rely on. A just-released study [PDF] by Catherine Tucker, a professor of marketing at MIT's Sloan School of Business, finds that over the last five years, VC investment "would have likely been $21.772 billion higher... but for litigation brought by frequent litigators."
The perceptive reader will see the paradox here from which the need for a robust, healthy government arises. Our experience, alone, informs us that some level of protection of patents and other forms of intellectual property (copyrights, trade secrets, etc.) is a good thing.

Our experience, alone, also informs us of moderation in all things, that too much of a good thing is a bad thing.

Further, our experience, alone, also informs us that we will never achieve equilibrium in our efforts. Science and technology are ever changing, as are the means and methods of doing business. Accordingly, even if we had a good patent system last week, it could need change and adaption, this week.

Last, our experience, alone, also informs us that mistakes will be made, even when all act with the best of intentions.

The Lesson: When President Reagan said, “Government is not the solution to our problem; government is the problem,” he was wrong and misleading.

We live in a complex World dominated by systems and networks. Like our system of patents, our systems have no tendency toward equilibrium. Nor will our networks remain either open (we rely on the police and other public safety officers to clear highway accidents and monitor speed and driver conduct) or secure without a robust, anti-fragile government.

And, when the devil is in the details, as with our patent system, we need incredible amounts of information, then good judgment in its application.

The sum of it all. Late last month the Senate dropped proposed patent reform legislation. The story is best reported by the Washington Post:

Who’s behind the last-minute push to thwart patent reform?

The usual suspects: K Street lobbyists (for research universities).

Now I know enough about patent litigation to be dangerous— putting me substantially ahead of most in being able to understand these issues—but I could not, from the publicly available information, call a ball or a strike here.

The question I would ask is, Why do lobbyists have any credibility in this at all? What I see is a persistent refusal to work at a robust, anti-fragile patent system for an extended period of time.

Ronald Reagan struck out at government 35 years ago. The fruit is now we have a patent system no longer able to re-generate itself internally. If you look at the newspapers headlines through this lens you will see the story persistently repeating itself (VA).

In sum, it is past time to return to the blocking and tackling of making government work.