Tuesday, July 7, 2009

Intellectual Property vs. Global Warming

The damage done by intellectual property goes well beyond the prevention of the downloading of music. Yesterday's story about a Goldman Sachs employee downloading proprietary information was not exactly an example of a violation of intellectual property laws, but rather a theft of trade secrets -- perhaps a distinction without a difference.

Below, is a story about Toyota, supposedly benign force in the green economy by virtue of the Prius. Here is another side of the story in which Toyota is using intellectual property to make competition difficult.

One might be sympathetic to Toyota if you were selling socks or toothpaste, but global warming seems to be too important to be gamed by such shenanigans.

Murphy, John. 2009. "Toyota Builds Thicket of Patents Around Hybrid To Block Competitors." Wall Street Journal (1 July): p. B 1.
The Obama administration's tough new fuel-efficiency standards could pose problems for some car makers, but Toyota Motor Corp. is hoping to benefit. The Japanese company is betting the rules will give an advantage to its expanding lineup of hybrid vehicles, and it also aims to boost revenue by licensing to other car makers the patents that protect its fuel-saving technologies. Since it started developing the gas-electric Prius more than a decade ago, Toyota has kept its attorneys just as busy as its engineers, meticulously filing for patents on more than 2,000 systems and components for its best-selling hybrid. Its third-generation Prius, which hit showrooms in May, accounts for about half of those patents alone. Toyota's goal: to make it difficult for other auto makers to develop their own hybrids without seeking licensing from Toyota.


ProGrowthLiberal said...

Knowledge has zero social marginal cost to disseminate but of course the private sector feels compelled to impose a price in the form of royalties. Then again - Toyota might just end up owning the Ford plants in the US (they already own a lot of their own US plants). Then again - should there be an "arm's length" charge from the US subsidiaries back to the Japanese parent under the tax and transfer pricing rules? If so, how high will likely be a debate between the IRS and the Japanese NTA.

paul said...

I don't fully understand the reasoning for why Toyota shouldn't profit from their investment. You probably want something like the "reasonable and nondiscriminatory" licensing rules for patents that become part of standards, but if we get through this mess, part of what gets us through is investors putting down piles of money to invent and develop new green stuff with the intention of having larger (and still usable) piles of money at the end of the process. Licensing fees are part of that process.

(And if you think GM hasn't been patenting every one of its hybrid-related innovations out the wazoo, think again.) I wonder which US car flack fed that story to the WSJ...

digitalfirehose said...

Toyota will achieve plenty of profit with the first mover advantage. Shouldn't that be enough for any inventor? Every inventor is influenced by and is a product of the culture that he lives in. He does not acquire his ideas in a vacuum.

To say that he came up with his own ideas by his own wit, and his alone is a far stretch.

So if you're worried that without patents inventors will no longer invent, think again. Look at Linux. It's used everywhere because it's free. It drips with inventive genius as it works in the major stock exchanges, on your cell phones, in your TVs, on IBM's Blue Gene and eventually on your computer. There are no patents encumbering Linux. That is, unless you work for a company called Microsoft.

My point is, inventors invent because that is what they love to do. What stops them from inventing? Doing patent searches. And if we're going to solve the global warming issue, we can't encumber the ideas with patents.

hapa said...

as a manufacturer in japan, looking across at china, i'd patent everything i could think of, and find out later if there'd already been a claim. it takes one to know one, they say.

gummints will have to set up the RD&D programs to build the new equipment if people want that. big-equipment companies are looking at fierce fights for a decade -- with full lawyers.