Intellectual property rights have a downside: They slow innovation down in fast-evolving sectors

But the very same Isaac Newton also dabbled in alchemy, a field in which practitioners were notoriously secretive about their experiments in transmuting base metal into gold. Given that he had no ‘shoulders to stand on,’ Newton was far less successful as an alchemist than as a scientist.

Innovators need an incentive to continue inventing. While science has traditionally flourished because of patronage, technology typically tends to succeed when it is profitable.

This is why we developed intellectual property law, an artificial monopoly designed to ensure that innovators have an incentive to invent.

In exchange for disclosing their inventions to the public, inventors are granted patent protection that effectively gives them a temporary monopoly over the exploitation of their inventions, letting them monetize them exclusively for that period.

However, from the very early days of patent protection, it was clear that such a monopoly could quickly lead to complacency, extinguishing the very inventive spark it was supposed to nourish.

Anyone who tells the history of the Industrial Revolution usually begins with the story of James Watt and his remarkable flash of genius. It is said that one day, as he watched his kettle boil, he had an insight that led to the invention of the steam engine—and the complete re-imagining of motive power. It’s a story of how inventive brilliance, rewarded by ownership protected by law, led to civilizational progress.

The reality was somewhat less impressive. The patent Watt was granted in 1769 for his invention was framed in terms so broad that it encompassed all of steam power. When it was due to expire, he successfully lobbied British Parliament to extend it until 1800. During those three decades, innovations in steam engine design slowed perceptibly as Watt worked diligently to block the efforts of other engineers who were looking to develop smaller, cheaper and more efficient steam engines.

As a result, it was not until after the patent expired that Richard Trevithick was able to build the first high-pressure steam engine capable of powering a steam locomotive—kick-starting the mass transportation revolution in the process.

A century later, the aviation industry was similarly hamstrung. After the Wright brothers demonstrated that controlled, powered flight was possible, they secured a patent drafted so broadly that they were able to slow down progress in aviation. Instead of improving the design of their aircraft, they sued others who were working on making planes safer, faster and more reliable.

The ensuing intellectual property slugfest brought the American aviation industry to its knees, so much so that by the beginning of World War I, the government had no option but to force manufacturers into a patent pool that compelled them to cross-license claims so that planes needed for the war could be built.

The patent system was designed to address a fundamental market failure—the fact that the high sunk costs of innovation, combined with the low cost of imitation, offer too scant an incentive to continue innovating. We attempted to address this issue by granting inventors a limited window of exclusivity to recoup their investments. What this did, however, was encourage rent-seeking, leading patent holders to maximize the extraction of value over inventing something new.

But there is a further challenge. Patent law grants a standard 20-year monopoly to all inventions, regardless of the time and money invested in development. As economist Alex Tabarrok points out, this has led to disproportionate outcomes, given that different sectors need varying levels of protection. While software evolves too quickly to be effectively patented, mechanical inventions may merit a moderate term of protection.

Among all the categories of innovation, drugs probably deserve the full extent of the 20-year protection, given how expensive they are to develop and trivially cheap to copy.

But even this analysis is no longer sufficiently accurate. Artificial intelligence has shortened innovation time scales in even the most complex of disciplines. DeepMind’s AlphaFold has solved the once-insurmountable protein folding problem and made drug discovery, which used to be like prospecting in the dark, an increasingly tractable problem. If ever there was a time to revisit the design of our intellectual property protection regime, it is now.

When the process of innovation shifts from trial-and-error to automated inference, the ‘sweat of the brow’ argument collapses. In a world where it no longer takes decades of painstaking experimentation to invent something new, a 20-year patent is not an incentive but a windfall.

Intellectual property was supposed to ensure that innovators could stand on the shoulders of those who came before them, not prevent others from climbing up. As discovery becomes faster and cheaper, an extended monopoly is no longer a bridge but a wall.

A legal framework built for slow, human-scale inventiveness cannot govern a world in which ideas can be generated at the speed of thought. It has to evolve, or risk suffocating the very progress it was designed to protect.

The author is a partner at Trilegal and the author of ‘The Third Way: India’s Revolutionary Approach to Data Governance’. His X handle is @matthan.