poly: Patenting Economic Institutions

From: Robin Hanson <hanson@econ.berkeley.edu>
Date: Mon Aug 24 1998 - 09:11:35 PDT

David Brin forwarded the following article to me.
I agree about the ultimate importance of new institutions
and ways of doing things. But I'm not sure I like letting
people patent them.

Given that a big thing I do is invent social institutions,
I should be thrilled. Except that I can't patent any ideas
I've published, which is most of them. And our experience
with software patents hasn't been good for software innovation.

>The social ripples of technology</B></FONT></TD></TR>
><TR><TD VALIGN=top>
><FONT SIZE=-1>By Jon Katz</FONT><P>
>SAN FRANCISCO (Wired) - According to Langdon Winner, a
>scholar of technology whose writings (including Autonomous
>Technology) I admire, the secondary consequences and impacts of
>technological change are often far more significant than the
>results thought to be "primary" at the time.<P>
>During the Industrial Revolution, for example, many
>thousands of instrumental and technological changes were
>introduced -- new ways of finding fuel, making textiles,
>powering locomotives.<P>
>But, Winner argues in an essay called "Artifact/Ideas and
>Political Culture" published in 1997 in Albert Teich's
>Technology and the Future, those aren't the things that made the
>Industrial Revolution so important in human history.<P>
>"What matters," Winner writes, "is that a whole new kind
>of society was created. The truly enduring part of that
>revolution, the truly significant aspect, is the multiplicity of
>relationships between people and between humans and technology
>we call Industrial Society, results many of which arose largely
>as so-called 'secondary' consequences of technological change."<P>
>The gurus, pundits, and prophets of the digital age, many of
>whom have been published in Wired magazine, fervently believed
>that the Internet and the Web would transform society. Many of
>them suggested that these changes would be utopian in scope,
>wiping away poverty, as well as corrupt and inefficient
>political, media, and economic institutions and models, and
>replacing them with a civil, rational, and more humane and
>prosperous society.<P>
>Cyber writers are far less idealistic about digital culture
>these days, and for good reason. In the reign of Monica Lewinsky
>and Kenneth Starr, our political and media institutions appear
>to be ever more noxious, corrupt, and remote, and corporation
>after corporation has come thundering into cyberspace very much
>untransformed. Far from corporations, media, and government
>being changed by the Net, the question now is whether the Net we
>know can possibly survive these forces.<P>
>Every now and then an event occurs that reminds us that
>groundbreaking things are, in fact, happening under our noses,
>causing us to sit up like deer in a meadow and sniff the wind,
>suddenly alert to one of Winner's "secondary" transformative
>Recently, a small start-up company in Connecticut, Priceline
>of Stamford, was awarded a broad patent by the U.S. government
>after the company convinced the patent office that it had --
>using digital technology -- invented a new way of doing business
>fundamentally different from any other form of commerce in
>existence today.<P>
>The Priceline patent is the first awarded since the U.S.
>Court of Appeals, Fourth District of Columbia Circuit affirmed
>last month that a "practical application of a mathematical
>algorithm, formula, or calculation" could be recognized and
>thus protected from competitors.<P>
>Priceline's patent award is expected to touch off a stampede
>of similar applications as corporations exploring new ways to
>make money via the Net seek similar protection and recognition.
>This is enormously significant, as patent awards would ratify
>innovation and potentially make it vastly more profitable.<P>
>In the Priceline system, consumers submit an electronic bid,
>called a "conditional purchase offer," to buy goods or
>services -- automobiles or airline tickets -- from unknown
>sellers at a fixed price. They guarantee their offer with a
>credit card number.<P>
>Priceline then takes responsibility for presenting these
>offers to sellers anywhere in the country or the world. The
>sellers can accept or reject the offers, depending on the
>availability of their products. (There are, for example, an
>estimated 500,000 empty airline seats flying each day and many
>Americans who want to fly cheaply.)<P>
>If you want to fly from New York City to Chicago on a given
>day, you can contact Priceline and set certain conditions -- the
>number of layovers, the total flight not to exceed a certain
>length of time, the cost of the ticket not to exceed a certain
>The airlines, using their own computerized ticket and
>reservations systems, can check out the offers. The first
>company that responds and meets all of the buyer's conditions
>gets the sale. Essentially, computers negotiate with computers
>to match what potential flyers want with the seats airlines
>might have to offer.<P>
>Priceline, which recently expanded this notion to car
>purchases in the New York City area, does most of its business
>on the Web, but obviously it could use other electronic
>technologies as well, including email, voicemail, or faxes. The
>company makes money from service fees on its purchasing
>transactions. But with the patent grant, it expects to make most
>of its money by licensing its electronic methods to other
>electronic commerce companies.<P>
>Priceline officials have said they plan eventually to expand
>online product lines to hotel rooms, credit cards, computers,
>home mortgages, life insurance, and vacation packages.<P>
>Priceline's scheme clearly suggests one of Winner's
>"secondary" impacts of technology on society.<P>
>Most people have relatively few choices when they want to
>buy an inexpensive airline ticket, a car, or a refrigerator.
>They can go to one of a number of nearby stores, compare prices,
>and decide what to buy.<P>
>Now they have the option of choosing a price and giving
>countless vendors the chance to bid. For better or worse, this
>could transform the way we think of shopping, as well as the way
>in which we do it.<P>
>Conceivably, it could alter the nature and balance of power
>between vendors and consumers, and restructure long-standing
>capitalistic business and sales traditions. This new business
>model appears to have the potential to give enormous new powers
>to people who want to buy things, since their price is being
>offered to many thousands, even millions, of possible sellers.<P>
>Much of our political and media culture is still mired in
>musty notions of the Internet as a dangerous and decivilizing
>zone, in which legions of Net-addicted zombies steal our credit
>cards, bombard our children with dirty pictures, and break into
>Pentagon computers in order to start World War III.<P>
>They are missing one of the biggest stories of modern times.
>Before our eyes, and in narrow but expanding ways, the nature of
>society is beginning to be transformed.<P>
>A new political world is always embodied in the tools and
>instruments of modern technology, argues Winner.<P>
>Winner goes on to say, "The technological world is filled
>with artifact/ideas of great consequence for modern political
>culture. Things often speak louder than words. Among the many
>ideas present in the structure of contemporary technological
>devices and systems are the following:<P>
>Power is centralized.<P>
>The few talk and the many listen.<P>
>There are barriers between social classes.<P>
>The world is hierarchically structured.<P>
>The good things are distributed unequally.<P>
>Women and men have different kinds of competence.<P>
>One's life is open to continual inspection."<P>
>How strange that a little-known start-up company in
>Connecticut hustling cars and airplane tickets, using new
>technology to come up with a new way for connecting buyers and
>sellers of things would serve as so striking an emblem for the
>tantalizing notion that at least some of the ideas listed above
>are already beginning to change.<P>

Robin Hanson
hanson@econ.berkeley.edu http://hanson.berkeley.edu/
RWJF Health Policy Scholar, Sch. of Public Health 510-643-1884
140 Warren Hall, UC Berkeley, CA 94720-7360 FAX: 510-643-8614
Received on Mon Aug 24 16:11:31 1998

This archive was generated by hypermail 2.1.8 : Tue Mar 07 2006 - 14:45:30 PST