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Source link: http://archive.mises.org/9299/matsushita-and-the-patent/

Matsushita and the Patent

January 24, 2009 by

A reader sends this:

In 1932, Konosuke Matsushita (founder of Matsushita Electric/Panasonic) negotiated with a man to use Japanese core patents for the radio. The man had acquired the patents from someone else, but had no intention of manufacturing radios or creating jobs, he just wanted to extract a princely rent for them. Mr Matsushita thought him to be arrogant, but eventually paid a princely sum of 22,000 yen to buy the two patents. The retail price of an electric iron was 3 yen at the time, so 22,000 yen was a fortune.

Mr Matsushita didn’t use the patents to create a monopoly for his company. He put the patents in the public domain so any manufacturer could use them, free of charge. He wanted many competitors to build an industry that would create jobs, drive down costs, fuel innovation and enhance the lives of everyone. He was happy to compete for market share and asked his employees to do it by building the best radios they could at the best cost.

{ 30 comments }

newson January 24, 2009 at 7:34 am

what a terrible ip socialist. thank god he died a pauper.

Karlos January 24, 2009 at 7:34 am

Nice piece of historic information. And? Is Jeff suggesting the emperor should have confiscated the patent from the wicked, evil, greedy man who didn’t want to contribute to the welfare of greater society?

newson January 24, 2009 at 7:59 am

to karlos,
it may have been more pragmatism than altruism that lead matsushita to allow open access to the patent. when a market is immature and fast-growing, it can pay to seed the competition. they help build consumer demand and product profile. everyone benefits and no one loses. a small slice of a huge cake may be bigger than one single cupcake.

Bruce Koerber January 24, 2009 at 8:56 am

The market process is the equivalent of language. In that sense patents function like a banning on translations. Whole segments of the world’s population will be unaware of the fullness of human potential and maybe the segment that would complete the picture remains out of touch.

Division of labor leads to specialized contributions and that is natural. Mutual benefits of trade leads to the disappearance of barriers and this too is natural.

Patents are unnatural and are a form of inteventionism.

heuristic January 24, 2009 at 9:09 am

Was that quote from a published source? if so, could you let us know because I would like to read more of it.

Jeffrey Tucker January 24, 2009 at 9:21 am

I don’t know. It’s just what he sent in email, his own words. Research it further and get back to us.

Marco January 24, 2009 at 10:42 am

He didn’t die a pauper, he died a billionaire!

Go Matsushita, go!

Lars January 24, 2009 at 11:26 am

A man works on developing a berry-picker that will increase berry-picking efficiency by 10 times. After many years he finally manages to make a prototype tool by which he can demonstrate this. The tool will last for 1 month, and he will need to labor for 1 year in order to afford building a new one. He understands that if he could mass-fabricate and sell such berry-picking tools, he would not have to be poor and, at the same time, help others to save time on berrypicking. His problem is that he cannot afford fabricating them. He can search for a business partner that can afford, but if he is unlucky, rumor about the new fantastic berry-picking tool spreads, a company starts to manufacture and sell them, without giving a thought to the inventor. Having spent all his savings on development, he ends up not affording to buy the berry-picker from the company fabricating it.

Karlos January 24, 2009 at 11:40 am

Lars – sure, but the society became aware of the fullness of his potential and he contributed to the common good, isn’t it great?! I mean what’s a small sorry life of some berry growing schmuck compared to the glorious unhindered flow of berry-picker development right?

heuristic January 24, 2009 at 11:52 am

It may be from the book Matsushita Leadership, by John P. Kotter. Then again, it may be fictitious.

Bruce Koerber January 24, 2009 at 11:54 am

There were twenty people scattered around the globe that had the same idea of how to make a better berry picker, all at the same time. But the one you know deserves to be declared the owner of ideas that came from the ether, why is that?

The economy has certain essential elements that are real world elements that cannot be imagined away. Capital is one of them.

Whoever can put together the combination of economic ingredients to bring an idea from the invisible and into the visible is the producer. But even then there are no guarantees that the decision was a good decision.

Is this cruel? No. It is what inspires humans to become better in all ways!

heuristic January 24, 2009 at 12:02 pm

Lars and Karlos, you both assume that the berry-picker-maker is incapable of taking account of the circumstances of the patentless world in which he lives – a most unAustrian assumption. If he is that incapable of adapting to the world around him then he is rightly displaced from the occupation of entrepreneur and has to go back to working for someone else.

ktibuk January 24, 2009 at 12:16 pm

Sorry for multiple posts, But there are so many IP posts these days I dont want this to go to obscurity.

Straw man argument is exactly what IP socialists are doing.

Notice all the posts from Kinsella and Tucker. Also notice the examples given in the book they are promoting.

They are basicly against patent laws, which have problems beyond IP being a property or not.

They build a straw man equating patents with IP, and thus try to abolish private property.

They have no intellectual courage so they can not bring up pirates copying full movies and songs as examples but only examples that doesn’t really create any problems, like ‘humming a tune while walking” or “forgetting a book on the beach”. But when libertarians bring this copying thing, they change the argument to the scarcity issue.

Which is a non issue anyways because the act of copying without the consent of the owner is aggression. And aggression is an ethics issue, unlike scarcity which is an economics issue.

Just like fraud, or theft without confronting the owner.

You have to ask the question, in which circumstances would the owner let someone copy his work, unless he gives out it freely? The answer is clear. By the threat of aggression. So we may conclude that, copying something without the actual consent of the owner is aggression. Just like fraud is actually aggression, although no real threat is used.

Also IP socialist keep claiming that the owners of IP are actually trying to coerce the copyer. Which is both absurd and unbelievable. Of course they keep bringing up patents which are actually guilty of this to confuse.

There are two person. A wrote a novel, B copied it. Would there have been a book or am act copying if A hadnt wrote the book? No. So the situation must follow the following steps as far as logic goes.

A writes the book, B aggress against A by copying the book, without A’s consent. B initiated the aggression there fore any force A may use after the fact is in fact ethical.

IP socialists always confuse property with protection of property, and they also confuse property with value. Logically protection issue must come after the homesteading. Protection issue can not precede homesteading. To claim this is logically absurd. Property is having the right to do whatever one wants with something. Robinson Crusoe owns the fish he catches, he can do whatever he wants with it. He doesn’t have to wait for Friday to come to the island, to make the fish his property. If he did he would die.

Also somethings economic value, has nothing to do with property rights. Something maybe so abundant that it may in fact be free. But “free” is about value and valuations. It is not an ethical concept thus it is not directly related to the property issue.

Some IP may leak. It is hard to control IP. It may become a free good. But even this doesn’t change the fact that the IP is the producers. This may not mean anything as far as exchange economy, but it means a lot ethically.

Even the IP socialist subconsciously knows this. They may advocate mooching of the creator by being a parasite, but when it comes to giving due to the creator they seem to not be able to go that far and deny the creators part in all of this.

Yes, Rawling created Harry Potter. You may mooch of her but at least give her her due, right? Promise it wont cost you nothing. And when you are used to taking something for nothing, giving something that doesn’t cost anything couldn’t hurt, right?

There are so many fallacies in IP socialists claims that it is hard to expose all of them on comments sections on this blog.

But if you follow this blog enough you can see the IP socialists blogging here are actually the worst enemies of their positions.

Since they don’t have a comprehensive, contradiction-free theory, the more they post the more they expose themselves. They even use all the classical socialists arguments. They analyze IP as it relates to economics but they don’t dare bring up or respond to calculation arguments. Just repeating a bunch of memorized lines.

So keep at it boys. You may be bloating the blog with this IP thing and cause people to spend their scarce time on these instead of on stuff about the worst financial crises the world has ever seen, but IP is an important issue to.

Martin OB January 24, 2009 at 12:20 pm

Lars – Maybe if he just announce the gist of his idea to the world, he would have spent no money in developing a prototipe (manufacturing companies would) and he would take all the credit for being the man who had the basic idea. Then, thanks to his berry-picker expert fame, maybe a berry-picker manufacturer would hire him to oversee production and introduce improvements before the competition. Or maybe he can earn a living as a berry-picking teacher and expertise certifier.

The incentive to keep the idea secret until it’s fully baked is counterbalanced by the incentive to be the first to announce it.

By the way, the idea that patents give a chance to the humble lone inventor against the big corporation has always been a myth and increasingly so. Technological improvements are becoming ever more complicated and interdisciplinary, something that only a big, well-funded laboratory can develop to a patentable degree, and patent applications are expensive.

In the real life, the lone inventor who would make a buck by selling his device to retail shops is deterred by the huge risk of marginally infringing a corporation’s patents.

Karlos January 24, 2009 at 12:37 pm

And I’ll give you another example of how better off we would be without patents and copyright laws that are supposedly barriers to the free flow of ideas.

Imagine a future non-IP world. Imagine also, for the sake of the simplicity of the argument, that books (as well as newspaper and magazines) have completed their shift to the electronic realm and the printed ones became a quaint curiosity.

In such a world, an Austrian economist writes a great book about the evils of central banks, which is really thorough, well researched and massive. Because there are no copyright laws and because he is a IP opponent anyway, he’ll post it on the Internet to be downloaded freely. So far so good.

But the book is let’s say in Hungarian and our Austrian economist needs it to be translated in many different languages, so he can see his idea spreading all over the world. Now, since there are hardly any traditional publishers (why should anyone bear the cost of translation, if the book would be available for free?), how many translators would be willing to spend several months translating this massive tome just for the fun of it? Or how many rich patrons would be willing to sponsor it? How many languages will the book end up being translated into? Would the ideas of our Austrian economist find more readers in the IP or non-IP world?

Before you answer, don’t forget that maybe this particular book would eventually find a rich patron who would pay for its many different translations, but what about other books? What about the publishing business as a whole? Would there be more books and more translations in a non-IP world or less? Would you prefer a hindered flow or an unhindered trickle?

———————————————————————

Now, to make things very clear, I don’t like many existing copyright and patent laws as well (particularly the industrial and software patents, that are a breeding ground of fraud and corruption on a massive scale) and I understand what some of my like minded libertarian friends are trying to express, but I sincerelly believe that in their enthusiasm and zeal they are overlooking or ignoring all the enormous benefits and cultural achievements that exists solely as a colloraly of intelectual property. And I also believe they underestimate, how drastically different would the world without IP be (certainly for the worse in many respects).

After reading Boldrin’s and Levine’s book (which is absolutely wonderful, by the way) I still maintain that the authors and Jeffrey and many others have fallen in the old Bastiat’s “what is seen and what is not seen” trap. They point out, very eloquently and thoroughly, all the shortcommings of IP, which are certainly very much annoying and very much visible. But the fail to account for many of the possible shortcommings of the theoretical world withouth IP.

scott t January 24, 2009 at 12:48 pm

“…assume that the berry-picker-maker is incapable of taking account of the circumstances of the patentless world in which he lives…”

this is probably close to how ideas/innovations would make their way to fabricators. rather than worrying about idea rumors spreading (it would likely be taken into account) fabricators would more likely be concerned with market conditions and the viability of the idea they are presented with…it is in their interest to efficiently ‘make’ demanded real goods to stay afloat.

if an inventor found the time previously to develop some particular good or process and it actually did work….my guess is that they would be sought
out for further collaboration often involving payment.

Nathan January 24, 2009 at 1:40 pm

I wish those that are commenting negatively would read the actual book. It is free for download to anyone.

Calling those against intellectual property “IP Socialist” is the very definition of an ad hominem attack. A government is required to create and enforce IP. A lack of IP is libertarianism by definition.

We are not advocating that people be forced to publish their ideas and inventions, a true socialist aim. We are simply saying that copying of ideas is a fundamental part of successful free markets. The owning of an idea itself is not a natural or tangible right.

Francisco Torres January 24, 2009 at 2:54 pm

Nice piece of historic information. And? Is Jeff suggesting the emperor should have confiscated the patent from the wicked, evil, greedy man who didn’t want to contribute to the welfare of greater society?

The suggestion is to abolish patents, period. Patents are nothing less than letters of marque offered by the government, and not true property rights. Patents are “property” by government fiat.

Auctionguy10 January 24, 2009 at 3:35 pm

Karlos- “But the book is let’s say in Hungarian and our Austrian economist needs it to be translated in many different languages, so he can see his idea spreading all over the world. Now, since there are hardly any traditional publishers (why should anyone bear the cost of translation, if the book would be available for free?), how many translators would be willing to spend several months translating this massive tome just for the fun of it?”

A whole lot of translators would be willing to spend several months translating a “massive tome.” Have you heard of rom hacking and translations? Where individuals take video game software that was previously only in japanese- translate and re-code the game into english? They do this because those games were never translated into english by the companies who made them- so they decided to take up the responsibility. This is massive work for some games which have 30-40 or more hours worth of heavy in-game text- yet it is done anyway. Once it is translated everyone knows the name of the team or person that has worked on it- and no one else ever takes credit. If anyone ever does try to claim credit is completely ostracized and ridiculed by the community. These translators work for no pay and a few ask for donations to continue their work but that’s about as far as it goes. No one suffers and more people get to enjoy a work that previously might never have been translated.(Infact only after a few translations became successful- did the original companies that created the software decided to bring it overseas and translate it themselves) A world without IP would not be a world where almost nothing is translated or published- that is nonsense.

Auctionguy10 January 24, 2009 at 3:40 pm

Infact people have re-translated games from japanese to english(like Chrono Trigger) that were already released stateside with an english translation because they felt it wasn’t accurate enough. For no pay besides their own satisfaction.

Francisco Torres January 24, 2009 at 4:12 pm

A writes the book, B [aggressively assaults] A by copying the book, without A’s consent. B initiated the aggression there fore any force A may use after the fact is in fact ethical.

Unless B steals the book from A’s house, then B is in the possession of a book that B purchased, thus B would be copying his own property. What you’re talking about is not books but the arrangement of symbols within the pages of books and then arguing that the arrangement is the property of A, which flies in the face of what is property and how it is defined. Both Kinsella and Tucker argue that IP laws broadly define certain ideas as property, because it would become impossible to explicitly define it, since it requires a definition for each instance where an idea comes to fruition – which is the reason why patents exist, PRECISELY because the State has to define the scope of ownership, artificially, for each instance, rather than the obvious approach with TRUE property, which is limited, defined and exclusive in ANY instance. This is true for a house, land, a glass of water, a Plasma TV – there is no need to define each item on paper so as to be able to possess them (and I don’t mean defining their ownership through an invoice). The common denominator is scarcity in the face of other economic actors. The concept of private property is meant to solve scarcity problems and not to create scarcity by fiat.

IP socialists always confuse property with protection of property, and they also confuse property with value. Logically protection issue must come after the homesteading. Protection issue can not precede homesteading. To claim this is logically absurd.

Protection is only logical in the face of competing actors. And protection makes logical sense if property is scarce in the face of competing actors, otherwise “protection” would become an irrational endeavor. There is no confusion from the part of free market theorists, which you label with disdain as “IP socialists”.

Property is not confused with value – property IS value, otherwise people would not protect it or trade it. Property is not confused with its protection, rather property requires a person to protect it (if a person did not see a reason or need to protect something, then that person does not regard such as his property). The reason something becomes property is because of how acting man regards it.

Robinson Crusoe owns the fish he catches, he can do whatever he wants with it. He doesn’t have to wait for Friday to come to the island, to make the fish his property. If he did he would die.

The fish are not REGARDED as property by Crusoe unless Friday appears in the picture, because Crusoe does not need to. Once Friday appears, any fish he catches will become scarce resources in the face of the new economic actor who has NOT fished out his own food yet. As an example, my son does not think of his toys as his UNTIL someone tries to take one from him, but that does not stop him from playing with his toys.

Of course Crusoe owns the fish he caught, and Crusoe may think the fish are his, but that does not ipso facto make the fish Property – there is no NEED to define the fish as so. Crusoe would not have to protect his fish from others nor would he find them valuable enough to hold for trade, as long as no other actors appear in the scene and fish exist in the sea. Property is defined when there are various economic actors faced with scarcity, otherwise there is no logical need to establish property and property rights. There is no need to place ownership of sunlight, for instance.

Which is a non issue anyways because the act of copying without the consent of the owner is aggression. And aggression is an ethics issue, unlike scarcity which is an economics issue.

This argument begs the question. You assume the validity of ownership of ideas in order to conclude that copying them is aggression. This is a fallacy.

David Spellman January 24, 2009 at 5:57 pm

The libertarian view is that private property can be owned and defended. You can wield a shotgun to keep people off your land, or you can hire someone else to do it.

By extension, you can defend your tools, furniture, improvements, and goods (such as farm produce you grew on the land). Its all the product of your labor, and the basis for ownership is that you were the first to make improvements on the land.

So if you labor on a tangible article or real estate, it makes defensible property. But then if you labor on “intellectual” property, such as thinking great thoughts, composing music, being funny, or filming a scene, this does not produce property that can be defended?

If you can wield a shotgun and say “Get off my land because I was here first!” why can’t you wield a shotgun and say “Stop copying my book because I wrote the story first?” Why can’t you say “Go labor to write your own story if you don’t want to pay to read mine?” It sounds just like “Go buy your own land and improve it instead of living off my land and labor!”

And the argument that enforcing intellectual property laws is an artificially granted state monopoly applies equally well as an argument that private ownership of land and real property is a state granted monopoly. We could just as easily repeal the laws governing ownership of everything and it would be a free-for-all to take whatever we want by force.

And if we leave the State out of the picture, then all property is subject to the constraint that you have the power to protect it. Private property is a hollow concept if you can’t keep squatters off your land. Intellectual property is perfectly legitimate if you can prevent people from appropriating your ideas, methods, or works of art.

And any argument about human progress or the good of society is ridiculous. People benefit just as well from looting the capital and goods of a rich industrialist as a brilliant musician or author. Perhaps the difference really is that we all have material goods we want defeneded, but most of us lack the ability to ever produce the intellectual goods we crave, so we like making that exception.

The arguments against intellectual property smelt everything of value down to ingots as though only hard goods merit defense. All property rights depend upon either mutual respect or counteractive force. Real estate does not defend itself, only the person laying claim upon it does. And arguably, no libertarian philosophy will save you from a stronger party taking away your land. Arguing against intellectual property sounds a lot like “Let’s you and me agree to take Jones’ property for ourselves.” There is no moral high ground, only self-interest.

David Spellman January 24, 2009 at 6:07 pm

For example…

A man builds a bridge across a river and charges tolls to cross. That’s property and we will defend it to the death.

A man writes a play and charges fees to acting companies who wish to perform it. Tough luck, we get your work of art for free!

newson January 24, 2009 at 6:25 pm

to marco:
irony: it’s quite popular here in australia, less elsewhere.

go, matsushita, go!

newson January 24, 2009 at 6:38 pm

to david spellman:
shakespeare did alright. maybe he combined business smarts with artistic talent.

Francisco Torres January 24, 2009 at 10:35 pm

If you can wield a shotgun and say “Get off my land because I was here first!” why can’t you wield a shotgun and say “Stop copying my book because I wrote the story first?”

If somebody took your book and was copying it without your permission, that would be stealing your property – if we’re talking about a block of sheets made of wood pulp. If the person copying a block of sheets made of wood pulp OWNS the block sheets made of wood pulp, then you cannot go to him and wield a gun in his face just because the arrangements of the symbols in each sheet were arranged by you AT SOME OTHER TIME, on a totally different set of sheets of paper, because you would be committing an act of aggression. And THAT is, in a nutshell, IP law: An act of aggression against people making use of their own property (in the case above, the block of sheets of wood pulp.)

Gil January 24, 2009 at 11:19 pm

“And if we leave the State out of the picture, then all property is subject to the constraint that you have the power to protect it.”

That’s what I’ve been saying all along! Mind you I have pointed out too that someone will always be owning the land. Hence someone (private or not) will have a personal monopoly over a geographical area which they can back up with private force. Likewise who’s to say people couldn’t privately enforce I.P. it’d be tricky without a central government but so would a lone farmer against an army of invaders.

newson January 25, 2009 at 3:05 am

gil says:
“Likewise who’s to say people couldn’t privately enforce I.P. it’d be tricky without a central government but so would a lone farmer against an army of invaders.”

um, how exactly would this work? if one borough decided that within its boundaries ip would be protected, how would they managed to deal with ideas that leaked out into the next borough? raise an army and invade?

the whole structure of your argument hangs on having a uniform national ip code. as this will mean that copying migrates to countries of lax ip regimes, the response must be to erect and enforce an universal ip structure.

take a break and download “team america: world police”.

Silas Barta January 25, 2009 at 5:38 pm

The man had acquired the patents from someone else, but had no intention of manufacturing radios or creating jobs, he just wanted to extract a princely rent for them.

Wow, what a horrible man! That’s like those evil terrorists who buy land and other assets without any intent to manufacture stuff or create good, quality jobs, but rather, merely to extract a princely rent for them.

Oh, wait, I forgot, in that case it’s 100% good and noble.

newson January 26, 2009 at 5:44 am

sails barta says:
“Wow, what a horrible man! That’s like those evil terrorists who buy land and other assets without any intent to manufacture stuff or create good, quality jobs, but rather, merely to extract a princely rent for them.”

hooray for the state, who can use eminent domain to expropriate, or rezone to effectively alienate property from evil landlords! and who watches over the artists and the creators, ever vigilant lest their precious thougths be whisked away from them without due recompense.

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