Constitutions Promote Innovation. We should all have constitutions!
Recently there have been increased calls across the Israeli political spectrum to create a constitution. Israel is an anomaly. While most countries have one (granted, countries like North Korea, Venezuela and Syria’s constitutions are widely considered to be shams), Israel is part of a very small minority of countries, including The UK, and New Zealand that have a set of centralized laws that attempt to approximate a constitution, albeit, with varying degrees of lesser legal clout. In Israel, this has arguably resulted in the current social upheaval associated with problematic power sharing across the various branches of the government.
While Israel’s Basic Laws go a long way to promote innovation, such as the Basic Laws on the Economy and on Science and Culture, which both promote scientific research and development, recent events have shown that uncertainty regarding the judicial branch can significantly hinder investment in innovation:
historically, states with more predictable and stable constitutional arrangements also tend to be more innovative.
An Israeli constitution, beyond promoting civil society and reinforcing checks and balances amongst the judicial, executive, and legislative branches, can be an invaluable tool for furthering innovation. It will represent to the world that we have the necessary strong central legal framework on which innovative companies and their investors can rely.
Consider the US Constitution, like many countries, it includes provisions for the protection of intellectual property. Article I Section 8, Clause 8, enshrines the ideas that the government ought to promote innovation through providing
“Authors and Inventors the exclusive Right to their respective Writings and Discoveries.”
At the time, the idea that IP rights should be enshrined in the constitution was not universally agreed upon.
Whereas Federalists like Alexander Hamilton and James Madison were proponents, other founding fathers thought that a free market would adequately protect innovation without the need for undue regulation. Democratic-Republicans, like Thomas Jefferson, who supported the free exchange of ideas (but who was ultimately instrumental in creating the first patent laws in the US, and even signed the first US patent), were initially against the inclusion of intellectual property rights in the constitution.
Even with these constitutional protections, an IP system still requires a competent supreme court. Arguably, the US Supreme Court has faltered repeatedly in the area of IP. For example, in upholding the extension of copyright protections under Eldred v. Ashcroft (2003), known pejoratively as the Mickey Mouse Protection Act, as it was designed to protect some of Disney’s earliest works until 2024. MGM v. Grokster (2005) which overly enhanced copyright liability, Bilski v Kappos (2010) which excessively limited the protection for abstract ideas and business methods, or Alice Corp. v. CLS (2014), where the court threw patent law into a decade of disarray and litigation regarding the issue of patentable subject matter, ostensibly to stop the scourge of patent trolls; current data suggests that the court supremely failed.
In addition to IP, there are other constitutional clauses that limited government powers and promoted individual rights including strong private property rights. Many argue that this focus on individuality and limited government are essential and necessary values for an innovation economy; overly restrictive regulations strengthening central governance and limiting individual rights can be the death knell of emerging technologies.
These are presented in the Bill of Rights, the first ten amendments to the US Constitution, added in 1791. It sets out ideas such as freedom of religion, assembly, speech, and the press in the First Amendment, the right to bear arms in the Second Amendment (designed to create disincentives for an overreaching government that might want to limit individual liberties), and the protection of property through the right against undue searches and seizures in the Fourth Amendment. The Fifth and Fourteenth Amendments further protect individual rights through guaranteeing dues process — that both the federal and state governments will not unduly deprive citizens “of life, liberty, or property, without due process of law.” And, the Equal Protection Clause, also in the Fourteenth Amendment, that requires that no state “deny to any person within its jurisdiction the equal protection of the laws” treating all people equally under the law, ostensibly without regard to race, ethnicity, gender, and other protected minorities.
Similarly, freedom of thought and expression without government interference is also invaluable, as it allows innovators to boldly and confidently promote their ideas and research without the fear of government clampdowns. Free speech also guarantees that uncensored ideas and information will be easily shared across society.
Limited government and expansive rights are not always great for innovation, however. As such, the US Constitution’s Commerce Clause — which gives Congress the power to promote and regulate commerce between states, limiting barriers to free enterprise between states and promoting a national marketplace for ideas and innovation — also protects against innovation that could have negative societal effects. To wit, the courts have interpreted this clause to allow for important checks on innovation in light of concerns for the environment. The clause has also provided the support for extensive banking regulations that are necessary to promote and protect access to the capital necessary for innovation.
Some potentially innovation promoting ideas were ultimately not included in the US constitution, including a national patent system supported by Jefferson, a more federalized economy, and Madison’s idea of a direct rather than representational democracy.
Constitutions are not a guarantee that governments will always work to promote innovation. In the US, the courts have sometimes failed to prevent government overreach such as warrantless searches and surveillance, free speech restrictions, property rights violations or excessive fees and penalties, all supported by interpretations of US Constitution.
Moreover, if not designed properly, constitutions can actually be a hinderance on innovation.
Countries that lack stable constitutional frameworks can result in investment-unfriendly uncertainty and unpredictability. Further, overly restrictive intellectual property regulations, such as in India, excessive regulations, such as is the case in Brazil, and, excessive taxes and limitations on access to capital, as is the case in many European nations, can all be detrimental to innovation.
Israel is at a crossroads. However we move forward, we need to make sure that we continue to support innovation through good governance supported by strong laws and hopefully a well written constitution.
Prof. Dov Greenbaum is the director of the Zvi Meitar Institute for Legal Implications of Emerging Technologies at the Harry Radzyner Law School, at Reichman University.