The Innovator’s Open Source Dilemma
What benefits technology development more, the presence or absence of secrecy? Historically, strong patent protection or trade secrecy has been necessary to permit the maturation of new and powerful inventions. The glass blowers of Venice depended on state protection to maintain their competitive advantage and retain their market position. Edison and contemporaries relied critically on patents as they worked towards electrifying American homes. Intel and other chip designers have relied on a combination of patent war chests and obfuscated trade secrets to protect their designs, and biotech companies have amassed powerful portfolio of protections around discovered drugs. In short a combination of legal patents and secrecy have been necessary to secure the capital needed to find new inventions.
However, the patent system has been facing a powerful set of shocks over the last few decades. The first threat is in fact quite old. Weaker technological powers have always sought to crack the secrets of stronger technological powers. Historically, American industrialists stole the secrets of textile milling from British entrepreneurs. More recently, Western companies have widely accused Chinese firms of not respecting patents or trade secrets. These threats to the invention status quo (while quite possibly true) are quite manageable. While geopolitical shifts may shift one power or the other into technological dominance, nations will need to preserve their internal patents in order to allow local companies to compete fairly with each other. It’s unlikely that patent theft by Chinese firms (alleged or real) will seriously change the patent status quo.
However, in the last two decades, a more profound challenge to the intellectual property regime has emerged. The rise of the open source movement, alongside the growth of the internet and distributed communities of researchers and programmers has meant that loosely coordinated teams are now capable of constructing intellectual edifices of staggering complexity. The Linux kernel has probably consumed thousands of people-years of development effort and continues to thrive today. Continuing work on high level programming languages, the continuing decrease in processor costs, and the flourishing market in cloud computing have enabled open source developers to build increasingly powerful software tools with decreasing amounts of effort. Open source has until recently been solely a software phenomenon, but the advent of 3D printing means that instrument construction and manufacturing are starting to migrate into the open realm due to the strong efforts of the maker community.
Open source offers a profound threat to the patent based innovation ecosystem. As I have argued elsewhere, software patents have become increasingly meaningless. As software eats the world, patents themselves will start to come under threat, as software enabled tooling makes it feasible to duplicate increasingly complex technological systems with relatively minimal effort. Of course, this process will be quite gradual. It has taken decades for open source software to become a powerful movement, and decades more will be required for open hardware and open biology to reach maturity.
That said, it’s worth planning for a world where patents aren’t worth what they used to be. UC Berkeley and the Broad recently had a public brawl over CRISPR patents, with the Broad emerging victorious (in the US at least). But what happens in five or ten years, when software enabled protein design tools enable the easy creation of synthCRISPRs that bypass the Broad’s patents? Biotechs who have staked their companies on the possession of CRISPR IP might find themselves ripe for disruption. It makes sense for every business to carefully inspect their troves of patents and and understand the open source risk for each. This challenge is fundamentally difficult however, since incumbents have staked their fortunes on the defensibility of their intellectual property, and will likely be resistant to acknowledging the true magnitude of open source risk.
This mismatch between incumbents and newcomers provides a powerful advantage for those aware of it. The next wave of disruptive startups must make clear-sighted bets on the growth of open source and plan for the commoditization of currently locked-down technologies.
Acknowledgements: Thanks to David Dindi and Vijay Pande for insightful discussions on open and closed source technologies.