[abalone]

The elephant in the room is that taxpayers are subsidizing private tech industry that gets to keep all the profits from commercializations of public research, save for the pittance they sometimes pay for tech transfer licenses.

There is a bit a selective outrage going on here. How dare those universities try to profit from taxpayer research! The nerve!

Meanwhile tech companies make billions of profits on these inventions without paying a dime back to the government, apart from the taxes that all companies pay.

At least the pittance that some pay back to universities via tech transfer helps support further public research. The government grants don't always cover the full cost of labs and professorships.

[vermontdevil]

One reason why grants don't always cover the full cost of labs/professorships is because Universities would grab a significant % of the grant into "general overhead" fund. Just another source of revenue for the University as a whole.

[refurb]

The elephant in the room is that taxpayers are subsidizing private tech industry that gets to keep all the profits from commercializations of public research, save for the pittance they sometimes pay for tech transfer licenses.

I work in the biotech industry and from my perspective, I don't see a problem at all with private companies getting rich off of the development of public research. Keep in mind that the company is fronting the hundreds of millions of dollars it takes to commercialize a product. Shouldn't they profit off it?

Also, the few example of drugs that have been discovered in an academic setting, the universities got wealthy off of the royalty rights. Hell, Northwestern sold a portion of those rights to Lyrica for $700M cash.[1]

[1]http://www.northwestern.edu/newscenter/stories/2007/12/lyric...

[abalone]

> Shouldn't they profit off it?

Not saying they shouldn't profit at all. The question is whether they should pay something back to the government for doing all the early stage investment.

Consider: Seed Investor A puts 70% of the funding in at the earliest most risky stage. Venture Capitalist B puts in 30% of the funding to take it to market. Yet all of the profits go to VC B, save for a small percentage of sales/payroll. Would you call that a fair deal?

Except it's not an analogy. Taxpayers are the seed investor. They are massively subsidizing the tech industry.

Which is made even more ironic by how "Libertarian" and "anti big government" Silicon Valley likes to fashion itself. Silicon Valley! A kind of psychological overcompensation, if you ask me. Silicon Valley is a product of DARPA and government spending.[1] Not entirely of course... just the earliest, most risky, most sustained stage of investment over the decade plus it takes to produce fruit, which is then plucked and brought to market. The question is not whether private industry has a role to play or should profit, but rather should private industry keep all of the profits? I think this makes people very uncomfortable, to admit that the state plays a huge role in our allegedly "free market capitalist" economy.

[1] The High Return on Investment for Publicly Funded Research https://www.americanprogress.org/issues/technology/report/20...

[ganeumann]

As a taxpayer I'm certainly entitled to think that the work I am paying for, I own. Just as in almost any other business relationship.

As far as I can see, if a professor runs a lab, he or she gets grants to fund it. If they can not get grants, they don't run a lab. The profits from university patents and tech transfer feed the general fund, they don't generally all go back to academic work. That general fund subsidizes many things, like the administrators' and football coach's salaries and the glitzy new student union. I don't really want to subsidize those things.

If you really want the NSF-funded work to subsidize more research, then the NSF should own and license the patents. But personally, I'd rather the research be free and have it benefit society.

[abalone]

> I'd rather the research be free and have it benefit society.

I do too, but the system of private corporations collecting all the profits of public investment is a twisted concept of "benefiting society". Benefiting society ought to mean that the profits of public investment get distributed among the taxpayers in an equitable manner, not just the 1%.

Not just by commercializing & marketing products, but actually paying an appropriate share of profits back to the government as you would an early stage investor. Or, conversely, making the products available at a proportionately lower cost, thus benefiting society in a manner proportionate to the risk of the taxpayer investment.

[throwawaykf05]

How much of the total government budget did your taxes contribute to? And how much of that budget was assigned to fund research? How many people share your sentiment that your tax money should benefit corporations (domestic and foreign) that don't pay their fare share of taxes? And how many of these even would have agreed to fund this research due to their political biases (think anti-vaxxers and vaccine research)? Would all your collective tax contributions give you a say in this matter?

I don't think this issue is nearly as easy as "publicly funded research should be free".

Additionally, is it better (along any number of metrics) to make it free and let existing companies use it, or patent it and give a startup a better chance of commercializing it? (If there are any studies on this question I'd love to read them.)

>But personally, I'd rather the research be free and have it benefit society.

"Benefit society" sounds nice in theory, but it glosses over an important and long-standing economic problem, that of free-riders. Which is exactly what grandparent comment refers to.

[ganeumann]

Your entire first paragraph is straw men. It doesn't matter how much any individual pays, it doesn't matter what any individual's sentiment is. If Google pays a researcher to do some research, they own it, regardless of how much any individual shareholder paid of that amount or what any individual's sentiment about that research is. Those things are irrelevant.

It's not as easy as "publicly funded research should be free", I agree. As I said, it's that funded research should benefit the funders.

Startups don't benefit from patents. There is plenty of (probably publicly funded) research to show that. Here's a recent paper on patents and innovation: https://www.aeaweb.org/articles.php?doi=10.1257/jep.27.1.3, or read Joel Mokyr's "The Enlightened Economy" or "The Lever of Riches" and see how James Watt held up the widespread commercialization of the steam engine by refusing to allow his patents to be used downstream (or read the NBER financed study on the impact of patents on downstream innovation: http://www.nber.org/papers/w20269). This paper (http://papers.ssrn.com/sol3/papers.cfm?abstract_id=2029098) is probably the most targeted towards whether patents help startups or not. The conclusion they came to was "the patent system was working 'neither well nor poorly for [startups]' and tended to favor larger companies."

And last, if it benefits "society", that is, all people, how can there be free riders? If you mean it benefits non-taxpayers as well as taxpayers, well, that is one of the points of taxes (as opposed to fees.)

[tzs]

> It's not as easy as "publicly funded research should be free", I agree. As I said, it's that funded research should benefit the funders.

It does benefit the funders in the case of government grants. The NSF gives a researcher a grant to scientifically study some specific thing. The researcher makes scientific discoveries about the thing.

The researcher publishes the research, and also (possibly in collaboration with people who were not involved in the research) thinks about how the new science can be applied to produce real world products. The research gets patents on some of those real world applications of the research results.

Note that the public that contributed to funding the research did benefit. The research was released, and they can use it as the basis of further research, or think up useful applications for it (and patent those if someone hasn't already).

I think people tend to confuse the research (which is often paid for by government grants, at least in part), and development of practical commercial applications for the results of the research, which is generally not paid for by government grants.

Note that if the researcher had not worked on coming up with practical applications and patented them, but instead just published the research and moved on to the next project, that doesn't mean there would not be patents. Anyone would be free to take the published research, figure out how to apply it to practical problems, and likely get a patent on that use of the research results. Their patents would not cover the underlying research--just the use of it as described in their patent.

[ganeumann]

Fair enough in theory. But in my experience both the research and the commercialization efforts leading to patents are paid for via grants. Perhaps that would be a fair trade, since the University provides the opportunity for all of this to happen, except that the University usually also taxes the grants to pay overhead. They have their cake and eat it too.

[throwawaykf05]

> If Google pays a researcher to do some research, they own it, regardless of how much any individual shareholder paid of that amount...

Do you assume you are Google rather than the shareholder that you get any say in what happens with that research?

> Here's a recent paper on patents and innovation...

I would take with a jarful of salt anything Boldrin and Levine say. This is a rehash of their "Against Intellectual Monopoly" book, and they do the same mischaracterizing of other research, mis-portraying of actual events and claiming outright falsehoods.

Case in point, the myth that Watt's patents held up steam development (which you too repeated): https://news.ycombinator.com/item?id=6865980. What's really egregious is they refused to admit the truth when called out on it.

Another comment pointing more falsehoods on their part: https://news.ycombinator.com/item?id=7890441

And before anyone else mentions it, the "Wright patent held up US aircraft industry" thing is a myth too: http://papers.ssrn.com/sol3/papers.cfm?abstract_id=2355673

The startup / patents paper indeed is interesting, thanks, but the results are more nuanced than the quote you selected: patents do help startups with financing and making successful exits, but they cannot be leveraged effectively because enforcing them is more expensive. That is something that can be fixed if people focused on it rather than the "patent troll" bogeyman.

The "Cumulative Innovation" paper is new to me, but a quick glance suggests some problems with it right away:

1. They derive a model to evaluate their claims, and unless backed up by solid empirical proof, this can be made to support arbitrary hypotheses (see this exchange on an unrelated field: https://news.ycombinator.com/item?id=9082932).

2. Their final data set is very small (1200 or so patents out of millions) and highly biased, since they relate only to litigated patents, and even then, on those they deem to be the "stronger" ones. Indeed, they admit that most other patents being invalidated has no effect whatsoever on their metric for downstream innovation. Even if valid, it is impossible to generalize these results to all patents as a whole.

On the other hand, there are many, many papers that point out the benefits of patent systems that you may not have considered. Yet another comment of mine mentioning some:

https://news.ycombinator.com/item?id=8155043

The number of links to my own comments should give you a hint as to how often I debate this topic on HN :-) As usual, I'll wrap up by saying it's a complex and nuanced topic, and point to a meta-study that looks at a large number of other studies that explore both the pros and cons of current patent systems:

"Recent Research on the Economics of Patents" - Bronwyn H. Hall, Dietmar Harhoff, (Google for PDF.)

[ganeumann]

Meh, I still think your first paragraph is straw men. I do have some voice in the matter, as I do with the government. That I have very little voice is not really the point here.

Thanks for the links. A couple of new papers to read there.

FWIW, my assertion that Watt held up development of the high-pressure steam engine and thus the locomotive came from Mokyr, not from Boldrin and Levine. I hold Mokyr in pretty high esteem, so I trust his interpretation, but I have not read the primary sources myself. It's interesting that the paper you mention has had almost no cites...even though it mentions that Mokyr et al commented on it. If they believed it threatened their views, you would think they would respond.

I tried to be evenhanded with the last paper by cutting to a neutral quote. I agree with your interpretation, but what that says to me is that patents are, on average, neither good nor bad for a startup. The plethora of papers arguing one way or the other, almost all with some flawed methodology (c.f. "do patents cause more patents to be filed?" or "why doesn't stronger patent law cause more patents to be filed?", etc.) says to me that there is not yet an answer to this question. This is a problem because patent law consumes a ton of resources, so there should be a rather more definitive answer about its efficacy. (It also seems eminently answerable, albeit with a lot more work defining and collecting metrics; I think, given that academics generally despise "business" questions, that simply counting patents is about all the work they are willing to do. That last paper I cited is the most actual roll-up-your-sleeves work I have seen addressing the question.)

My slant comes from 30+ years in the computer industry, 20 of it backing startups. My general rule of thumb is that if a founder's pitch puts a ton of emphasis on their patents, I pass. Patents have simply proved an ineffective way to defend a new business, in my experience.

Of course, if I were in a discovery-based business, like pharma, rather than an engineering-based business, I would have seen a different sequence of events and so have a different opinion.

[throwawaykf05]

My point was that you do have a little say, but so do millions of others, and a lot of these are conflicting, which makes it difficult to settle on a policy.

> It's interesting that the paper you mention has had almost no cites

I assume you mean the "Strong Steam" paper? I guess it is not as highly cited since most simply don't question the myth and cite those that propagate the myth instead. However, the paper is well-researched and compelling. I also found it a surprisingly good read, fascinating for the historical perspective it offers of technology and industry at the time.

> If they believed it threatened their views, you would think they would respond.

I'm not sure about Mokyr, but Boldrin and Levine did respond, and as the second paper shows, they responded by simply changing their falsehoods.

I mostly agree with your views on the papers in this field. However, I don't think the question is easily answerable because from most of the papers I've read, comparing the benefits and costs of patents is like comparing apples and oranges.

> Patents have simply proved an ineffective way to defend a new business, in my experience.

I actually agree. My experience comes from a startup that was ripped off by the big guys and prevailed with patents, but only after it almost died and most of the original team was laid off. As such the patents could not defend the business, and were only good for some after-the-fact remediation.

To me, this makes it seem like patent law needs to be strengthened to avoid such cases, but more and more "patent reform" is all about making it easier for the big guys to defend themselves.