Patents and Tacit Knowledge

I’m currently reading Virginia Postrel’s excellent The Future and Its Enemies. Chapter four gives an excellent exposition of tacit knowledge. It occurs to me that the insights of the chapter bear directly on patent policy:

As Polanyi suggested, much of our most important knowledge is tacit—difficult to articulate, even to ourselves. Contrary to Sale’s imaginings, such knowledge is expensive to share, assuming it can be transferred at all. It is “sticky,” in management scholar Eric von Hippel’s term: “costly to acquire, transfer, and use in a new locus.” Von Hippel notes, for instance, the difficulty of duplicating a scientific apparatus. Subtle information about the lab environment, or procedures that people at the original site take for granted, can make the difference between success and failure. “It’s very difficult to make a carbon copy,” say s a researchers quoted by von Hippel. “You can make a near one, but if it turns out that what’s critical is the way he glued his transducers, and he forgets to tell you that the technician always puts a copy of Physical Review on top of them for weight, well, it could make all the difference.

As a result of this stickiness, tacit knowledge often travels only through apprenticeship, the trial-and-error process of learning from a master. (A form of “apprenticeship” is essentially how as children we learn such complex basic skills as speech. Writing in the 1950s, Polanyi argued that the art of scientific research, as opposed to the scientific information that can be taught in a classroom, had still not passed much beyond the European centers where it had originated centuries earlier: without the opportunity offered to young scientists to serve an apprenticeship in Europe, and without the migration of European scientists to new countries, research centres overseas could hardly have made much headway.”

The application to patent debates should be pretty obvious. Some patent proponents blithely assume that you can copy an invention as easily as you can copy a song or a piece of paper. It’s pretty often, for example, to see an argument that without patent protection, a small software company wouldn’t be able to negotiate on an equal footing with a large one, because the large one will simply listen to the smaller company’s pitch, take careful notes, and then steal the company’s idea without paying a penny.

The problem with this story is that it completely ignores the role of tacit knowledge in duplicating technology. If it’s difficult to duplicate a scientific expermient when the technical details of that experiment are publicly available, how much more difficult is it to duplicate a new technology based on the fragmentary information you get from a technology demo? A company seeking to duplicate a competitor’s technology will typically be forced to go through virtually the same trial-and-error process the original company went through. Which means that in many cases, licensing the smaller company’s technology will be the faster and cheaper than trying to re-invent the wheel.

Obviously, the force of this argument will vary with the degree to which products embody tacit knowledge. For example, it seems like pharmaceutical products would be easier to copy than others because they can be characterized by their chemical formulas. Software seems to be at the opposite extreme—especially if copyright law prevents the verbatim copying of source code. There’s a tremendous amount of tacit knowledge embedded in any software product of non-trivial complexity, so the idea that software companies can duplicate their competitor’s products quickly and easily is unrealistic.

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