Privacy and Public Goods in
Innovation
Shaun Hendy
@hendysh
Te Pūnaha Matatini - ‘the meeting place of many faces’
Auckland
London
Does it matter?
Wellington City Library
Complex Questions
Health precinct
Innovation
precinct
Complex Data
Applicant(s)
Invention
Inventor(s)
Creating Knowledge
PATENTS AS A MEASURE OF INNOVATION
• How does society fund the creation of new knowledge?
James Watt (17361819)
"Watt steam pumping engine"
by Robert H. Thurston
Matthew Boulton
(1728-1809)
Public Goods
• Rival goods are used up when they are used by a consumer
• Excludable goods can be restricted to only one consumer
Rival
Non-rival
Excludable
Private goods
e.g. food
Club goods
e.g. cinema
Non-excludable
Common goods
e.g. fish stocks
Public goods
e.g. lighthouses
The Economics of Ideas
Knowledge is non-rival
• we can all possess the same knowledge
and only partially excludable
• difficult to keep it from spreading
But knowledge costs money to create!
Knowledge spillovers have a value to the
economy that is as least as great as private
benefits
"Aveiro March 2012-13" by
Alvesgaspar – Licensed under
Creative Commons Attribution-Share
Alike 3.0 via Wikimedia Commons
Intervention Logic: Patents
A patent grants a monopoly to the owner
for use of an invention for a limited period
of time
• Raises the market price of an invention
closer to its value to society
• Requires disclosure of the invention and
the identity of the inventors
Intervention Logic: Patents
• The opportunity for a temporary
monopoly is an incentive for
investment in research and
development
• The disclosure of the invention
means that others can build on the
invention
"Watt steam pumping engine"
by Robert H. Thurston
Public Benefits of Disclosure
• As a publicly available record of the invention process, patents
have allowed researchers to advance our understanding of
innovation
• e.g. The measurement of magnitude and geographic spread of knowledge
spillovers (Jaffe 1987, 1993)
• Many of R&D policies used by governments today draw on the
knowledge generated from patent data
Economic Geography of Innovation
• Bigger cities produce more
patents per capita
• Inventors in bigger cities
have denser collaboration
networks
• Patents from bigger cities
are more diverse
technologically
• On average, patents in
bigger cities are more
novel
Catriona Sissons (PhD)
1975-77
Japanese
companies
Hitachi
EPO Patents (1975-2010)
EPO (1975-2010)
1984-86
Japan
France
USA
Germany
1990-92
Japan
France
USA
Germany
1996-98
Japan
France
USA
Germany
2002-04
Japan
France
USA
Germany
South
Korea
2008-10
Japan
France
USA
Germany
South
Korea
China
China
These companies now
produce 70% of the world’s
patents
Innovation Policies
Innovation Policies
• The government
directly funds private
R&D in New Zealand
based firms (~ 9% of
private R&D)
• The effectiveness of
this public investment
is poorly understood
• There has been little
effort to collect or
share the relevant
data
Evaluation of Innovation Policies
• Records of projects
that were funded are
available
• No counterfactual
information retained
(i.e. what did we not
to fund)
• No records of expert
panel assessments
Evaluation of Innovation Policies
• Information about
applicants not
solicited, citing
privacy act
• Evaluation not
considered as a
lawful purpose of
MBIE?
Evaluation of Innovation Policies
• Royal Society of New Zealand
• Collects information
about applicants
• Retains counterfactual
information
• Retains records of
decision making
processes
• Collects information
on gender!
Adam Jaffe
Summary
• Public availability of patent data has been a huge boon
to our understanding of innovation and innovation
policies
• There are huge gaps in other types of data held by
government regarding its innovation investments
• Need to begin collecting, retaining and facilitating
access to data that would allow design and evaluation
of innovation policies