[EAS] IP and Brains

Peter J. Kindlmann pjk at design.eng.yale.edu
Wed May 4 23:29:18 EDT 2005

Dear Colleagues -

I just emailed you about Lord Broers and his Reith Lectures. There
you will find him a forceful advocate of internationally distributed
R&D, global competition and close control over intellectual property
rights. Quoth Lord Broers:

>  "To be only nationally competitive is to be not competitive."
>  "Companies ceased to make entire products themselves and became
>  assemblers of the world's best, and to do this they had to know the
>  world - both its technologies and its peoples."
>  "It is immensely exhilarating to be player but there are no places
>  reserved for amateurs."

I thought it only fair to add a post-script about today's
contentious landscape of global R&D and IP rights.


"Whether elephants make love or war, it is the grass that
suffers."   --Swahili proverb

(from INNOVATION, 4 May 2005)

       White hat or black hat? University of Colorado economics
professor  Keith Maskus believes intellectual property rights are
good for innovation:  "Defining innovation broadly, I think IP is in
support of development." And  Dana Colarulli of the Intellectual
Property Owners Association (IPO)  agrees: "IP is critical to robust
development; it's the currency of ideas.  IPO believes IP promotes
innovation, and we need to have a balanced system  and look for ways
to invest." Yet a starkly differing view is offered by  Larry Rosen,
former general counsel for the Open Source Initiative and a  leading
open-source supporter; Rosen says "I'm here to represent the
attitudes of many, many, many people around the world who think that
for  the software industry, patents are not the creative engine;
they are the  caboose." He believes that patents typically "serve as
a disincentive  rather than an incentive" to innovation, and
therefore shouldn't exist,  particularly patents for standards.
"Patents that cover industry standards  are far more dangerous than
others, because they allow companies to put up  toll booths on the
information highway... Software is obsolete by the time  it gets out
the door. There is a lot of investment to start a company, but  the
tiny amount of time it takes to do the programming is nothing like
the  time it takes to build a business out of it, and there's no
reason the  patent system should have to protect that." (eWeek 22
Apr 2005)

       Battelle senior researcher Jules Duga sees the beginning of a
fundamental shift in manufacturing: the outsourcing of R&D
activities that  were traditionally considered a company's core
competence: "Specifically  what started as a movement toward
utilizing captive facilities located  primarily in Japan and Western
Europe has blossomed into a significant  increase in the support of
R&D in non-captive, independent-performing  institutions in
developing or re-developing countries." So what's really  going on
here? Speaking to an audience at MIT, General Electric chairman  and
CEO Jeffrey Immelt explained his company's global R&D strategy this
way: "We did it to have access to markets. But also we did it to get
access  to the best brains everywhere in the world. Today we run a
very global  network of R&D." In other words, it's all about brains:
brains are the only  thing saving a company like GE from what he
calls "commodity damnation."  Immelt says, "In this regard the only
source of profit, the only reason to  invest in companies in the
future is their ability to innovate and their  ability to
differentiate. Today, organic growth is the key. It's going to
determine who gets rewarded and it is absolutely the biggest task of
every  company." (IndustryWeek 1 May 2005)

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