Where do you stand, Open source; IP Rights; or Trade Secrets?
For the past 14 years, I have worked in the field of Intellectual Property (IP) in private as well as public sector IP. I have enjoyed every moment of my IP career and believe that there is a place for IP in the business landscape and development of an economy. With my new career direction in humanity centred Artificial Intelligence (AI), I am realising that capitalism, the current economic model in the majority of the world, may lead to an unpalatable AI future for our society. I am not the only one with this opinion, the World Economic Forum has also raised this issue and thinks that there is a need for a new economic model. My new path and direction has made me question if I have compromised my values by spending last 14 years in field of IP, which led me to explore alternative models in this article.
In gross terms, business and industry have three distinct models on which they operate. Companies like Coca Cola operate on a model of trade secrets where the formula for coke is guarded and only a select few have access to this information. Then there are IP rights, which are accessed by a large number of businesses around the world. This system provides you monopoly or exclusive market access either for a period of time in case of patents and industrial designs or for a longer duration in case of trade marks. The third kind used by a small number of businesses but gaining popularity in recent times is open source and the most notable is linux. There are obvious advantages and drawbacks for each of these models but we will explore these to assess if I need to change my beliefs at all.
Trade secrets are well guarded by executives of an organisation as once they are disclosed, anyone can copy the idea and introduce direct competition for products. Profits and market access drives this protectionism and companies want to be profitable and unique to have exclusive market access over its competitors. Most common example is coca cola’s secret coke formula. Then there are other examples such as KFC original recipe, Twinkies, Krispy Kreme donuts, McDonalds secret big Mac sauce and Google search algorithm etc. So you can see the pattern, the list although not comprehensive but is demonstrating why the companies choose to keep things trade secrets as they are the market leaders in their field and they want to keep it that way.
IP rights come in various shapes and forms. Patents provide monopoly for mostly 20 years to anyone who has an invention on a device, substance, method or process that is useful, new and inventive. We will only discuss patents here as they are closest to trade secrets and open source. In simple terms, you can get a patent and monopoly for 20 years if you have developed a new product or a new way of making a product. The only caveat is, in order to get this 20 year exclusive access to market, one must disclose the product, the way of making this product and the best method of achieving the desired result to the public. The reason for this is to ensure further innovation in the field continues and after 20 years someone else can make and market your product. Most common companies who use this are pharmaceutical companies patenting their drugs and methods of curing diseases. Then there are industries such as mining, energy, pesticides and medical devices who also use the IP right to make exclusive profits. The drawback for companies with patents is that they only get 20 years to exploit the market. The upside is that this is a significant amount of time for them to recoup the investment in research, make money and move on to something new for this cycle to be repeated.
The open source market is in simple terms ‘open to all’. It is based on releasing information to public for them to use, change and further distribute for anyone and everyone to use. The fundamental premise of open source is to make the technology open to the market and letting the market develop the product further. This leads to the open source companies getting access to talent and enhanced products for virtually free of cost. The open source however can lead to ‘good’ and ‘bad’ use of free technology. A classic example of this is 3D printing. 3D printing can be utilised to benefit society with products like prosthetic limbs that can be printed for considerably less cost and in a very short time. However, the same open source technology can be used to print guns. So open source has its limitations as the application of open source and the accountability with open source is no longer in the hands of the creator of the technology.
In gross terms if you compare these three business models to economical models, trade secret is like capitalism, where an organisation exploits its absolute monopoly in the market and is profitable for perpetuity. Open source is similar to socialism where the technology is available for anyone to use and distribute for free. IP rights though is a balance between capitalism and socialism as it provides monopoly for a limited period. The invention is then open to the market for anyone to use and sell. Some may think the 20 year term is too long a monopoly but leaving the duration aside, the model seems to find a good balance between providing a reward for innovation and maintaining openness of the technology in the market.
I personally prefer companies being transparent about what they are inventing rather than being secretive as secrets by definition are ‘knowledge that is kept hidden’. On the other hand, if we went open source way, we may have no control over where the technology takes us. This will lead to a market that is free for all to do whatever they see fit in their personal viewpoint. This has led me to conclude that I have not compromised my values for the past 14 years. In fact, IP rights are the balance between a purely capitalist and a socialist society. May be the World Economic Forum will find an inspiration in IP rights to answer their question on “What is the new economic model for forth industrial revolution?”. However, we will need to create a specific IP right for algorithms and machine learning if we seek open and transparent AI future. If we don’t, then there is nothing stopping companies from keeping AI technology trade secrets, which will compromise transparency and accountability.
About the Author
Hrishikesh Desai is a progressive leader currently a student at 3A institute at the Australian National University. Hrishikesh has experience in federal government in regulation, Intellectual Property and you can connect to him on LinkedIn and Twitter.
