Kaggle

April 14th, 2010

At dinner last night (an event to celebrate various research awards won by people at UQ) I was talking with an engineering professor about the question of how to promote innovation without reliance on patents and forms of monopoly rights (usually referred to as intellectual ‘property’). One solution is to offer prizes for valuable discoveries[1]. This is a nice idea, but there are lot of practical problems in setup and administration. Nicholas Gruen has an interesting startup, aiming to simplify this process. Read about it here.

fn1. This doesn’t rule out IP, but it offers a potential alternative.

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  1. Sam
    April 14th, 2010 at 14:12 | #1

    Kaggle seems interesting, however because the prizes are offered by individuals or companies, there is still a positive externality here. Say two firms, A and B both have a need of some technological advance. Further, lets say Firm A advertises on Kaggle, offers a prize to whoever invents a solution to their problem, and in this way a solution is eventually found and posted on the web. The information is now (presumably) public domain, and Firm B can benefit without ever offering a prize. Firm A is now at a competitive disadvantage.

    I think this approach would work best if the entity offering the prize were a public entity, either a government organization or some non-profit group.

  2. O6
    April 14th, 2010 at 14:36 | #2

    Prizes are not an alternative in the strict sense of the term, since by definition they are competitive among entrants/applicants, are normally time-bound, normally limit applicants in other ways etc., whereas applicants for trademarks/patents/copyright only have to meet certain legal requirements and are in principle unlimited in number.
    Prizes also suffer from the law of diminishing returns. (Nobel Prize for the most unusual pizza, anyone?)
    IP’s problems relate to extreme cost (in the case of patents), which rules out many potential applicants, dependance on litigation for enforcement, which again favours the rich (but what doesn’t?), and slavish following of US norms, which yields extension of rights for unreasonable periods and award of patents for ‘improvements’ and modifications that ring fence a prime patent but don’t really stand up as non-obvious etc. in the context of the prime patent. Software and DNA sequence patents are other extensions that don’t have a lot going for it. (In the case of DNA patents, I don’t mean a patent on a novel, non-obvious etc. use of a gene product, which strikes me as legitimate.)

  3. April 14th, 2010 at 15:32 | #3

    Ansari X Prize.

  4. April 14th, 2010 at 17:57 | #4

    Yes there are externalities but they’re only important in the case of extra-marginal projects. There are lots of projects that can fund a prize and some external benefits as well – like the netflix prize. So we should be walking before we run.

    All innovation has (unpredictable) exernalities, but trying to internalise all possible external benefits often buys us more trouble than it’s worth, as we are finding out with software patents for instance.

  5. Freelander
    April 14th, 2010 at 20:37 | #5

    And with genetic, various drug and other medical patents as well.

  6. Peter T
    April 15th, 2010 at 18:19 | #6

    Should thinking about this start with the observation that prizes are already the driver for a lot of innovation – eg in academia and science, and in most medical research. You may get the Fields Prize for a discovery in maths, but you will not get rich.

    The difference, it seems to me, is that prizes go with innovation that finds solutions to defined problems. It is hard to predict the worth of a patent (or copyright) right – most are worthless, so the system is more of a lottery. The problem is when people start trying to gain rights over solutions which are more properly rewarded by prizes.

  7. Chris Warren
    April 16th, 2010 at 08:55 | #7

    Surely prizes are completely neutral, in that if a huge prize is your reward, you can be satisfied with this, and there is no anti-social exploitation.

    By creating a large prize society is indicating it wants something a market cannot provide.

    This may be for subsequent market advantage – but this is after the prize.

    However patents etc. are a manipulation of current and ongoing market conditions to maintain a specific competitive advantage itself based on a degree of monopolisation. As this becomes the norm it creates false expectations for returns and generates instability.

    If an invention or discovery is productive, and the toil and trouble of its development was an efficient use of wealth, then its return should only be the market surplus it obtains as the market adjusts to new conditions.

    Computer software is an example. If this was invented and sold on market conditions Bill Gates would still be well off, but many more poor people right across the globe would have computers decades ago. All these people have suffered huge losses as Gates built his gains.

    Gates has wealth greater than some Third World nations, all due to political interference in the market via patents (which some economists worship).

  8. iain
    April 17th, 2010 at 07:55 | #8

    As I understand it, most of the solutions that organisations like innocentive or ninesigma facilitate become patented.

    There is no real difference between this approach and any other efforts to outsource specific problems. Except that web sourcing, potentially, reaches the widest possible audience of solution providers.

    Paying a contract fee (or “prize”) for a solution to your problem, and then patenting the solution, is obviously not new. How is kaggle different in this regard?

    You have to look to non-profits for practical alternatives to motivating ideas without patents.

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