Nobel-winning economist Eric Maskin — let’s scrap patents on software

Nobel-winning Harvard economist Eric Maskin has a letter in today’s NY Times where he argues that patents for software should be scrapped. His point echos something we say in The Knockoff Economy — i.e., in creative industries where a lot of innovation involves incremental improvements to and extensions of others’ work (what we refer to as “tweaking”), patents (and copyrights) are often not necessary and indeed may impede creativity by discouraging tweaking.  Here’s Maskin’s take:

“[I]n the software industry, progress is highly sequential: progress is typically made through a large number of small steps, each building on the previous ones. If one of those steps is patentable, then the patent holder can effectively block (or at least slow down) subsequent progress by setting high license fees.

Moreover, like any other monopolist, it has the incentive to set such fees.

Thus, in an industry with highly sequential innovation, it may be better for society to scrap patents altogether than try to tighten them.”