Research Shanzhai

In the Teece formulation, innovation represents a competition among first movers, imitators, and infrastructure.  Each aims for a share of the value of something new and worthwhile.  Patents might be thought to aid the inventor, giving him or her a chance to be first mover.  But most patents are immediately assigned by employees to employers, putting most inventions in the hands of established players, who may use those same patents to prevent others from practicing, or in a variation cross-licensing so that only patent holders can practice, making the practice and craft communities dependent on products that are purchased rather than goods and services that are made in the moment, when desired.  Infrastructure also aims to take its share through supply of raw materials and parts, regulation, standards, and existing IP positions.  The thumbs in the pie may become so plentiful that the pie is mostly all thumbs before anyone tries to add a filling of something new.

If by patent reform people mean re-arranging the thumbs in the pie somewhat, then one can see how others might call for getting rid of the pie altogether.  But the problem isn’t the pie–it’s the thumbs!   Getting rid of patents is like getting rid of the pie pan.  The thumbs will still be there, with all the filling.  Infrastructure, in particular, is voracious.  If one redirects inventions and their patents from big existing companies to startups, then the investors rig for selling the startups right back to the big existing companies.  Lots of efforts in innovation are really there to save the operating status of the status quo–(i) incremental improvements to force new purchases of the same products; (ii) mitigation of badnesses created by the status quo’s preferred operations–so, yes, clean up the pollution and solve the problem of laid off workers; and (iii) efficiencies of all sorts, especially ones in which software or robots replace humans–labor-saving devices.

Even varieties of “green” initiatives serve this purpose.  Biofuels aim to preserve the fuel distribution network by substituting a new input.  Electric and natural gas cars aim to preserve the car as we know it, substituting a different energy source.   It’s all worthy, even if the established players in a market need things to be this way so they preserve their standing.  The status quo, however, mostly wants to change in status-preserving ways, on its own terms, when it is good and ready, according to plans that consider carefully status preservation and enhancement.  No one plans to go under so the economy might benefit.

Against all this are other forms of innovation, ones that are not so kind to the status quo, or at least the status quo doesn’t think they are.  High tech and disruptive tech both aim to obsolesce the status quo technology, one from “advanced research” and the other from a competitively incompatible operating model that serves the underserved that don’t want to take the upmarket drift of feature bloat and refinement.  These forms of innovation provide a new first mover status–a first mover for the transformation of a marketplace.

Shanzhai offers a play that advances the interests of imitation.  It is a way of extending a status quo product well into the long tail of late adopters and underserved adopters.  Here’s a very well put together talk on Shanzhai by Rainer Wessler at Frog.  The argument for shanzhai favors the development of the craft of re-creating with variation.  It is an argument both for imitation and for expansion of an infrastructure.  If one aims to sell products via smartphones, then one really doesn’t care what smartphone is used, and one might care very much that some MBAs somewhere have decided that the optimal price function to maximize profits means cutting out half of a country’s population for now.  Shanzhai craft, producing imitation products, ignoring the regulatory system being exploited by the MBAs to preserve their profit maximization planning, delivers product anyway.  While the hardware folks may howl, and the operating system folks wink, the folks who do business on smartphones and sell smartphone data services, love it madly.

For university research, one has to see, first of all, that research is shanzhai.  It is chock full of replication and imitation.  It is by imitating an experiment that one is able to reproduce it and check its results.  It is absurd to think that universities secure patents to prevent such activity from taking place.  But TLOs are not ready to declare all their patents available for research uses–so it must be that those TLOs are banking on the uncertainty of their position to thwart imitation of their research, especially by industry.  Talk about being nasty about collaboration.  Research is also shanzhai in that what matters more than anything is that something works, and that those who figure it out first get recognized for doing so.  Other than that, it is anything goes, as Paul Feyerabend would argue.

If university research is shanzhai, then the first order of business in working with IP is to understand how IP has anything at all to do with shanzhai research.  It does to the extent that it serves to promote a commons of craft.  That’s what open source software does in its reliance on copyright.  Patents can do the same thing in documenting, say, standards.  It is when the IP practices that support shanzhai meet the established interests of the status quo that IP practice must adapt.  Here, universities have largely capitulated, and based their entire IP programs on meeting the speculative monopoly interests of a particular class of investors, who want an exclusive position in something new before they can bring themselves to invest in it, for fear of imitators stealing some portion of their hoped-for market.  No matter that perhaps a 3 to 1 ROI is really good–it has to be 10 to 1 or it’s all just a sob story of wasted effort and pirates ruining all the fun.   But really?

It may be that the key thing that needs to be done is a re-assessment of the shanzhai research commons border with the established companies of the status quo and the investors who love them and want to make more.  What is the role of the craft commons to this corporate-based style of profit-making?  How does the public domain, or commons based on IP, figure at this interface?  How does craft work move into corporate settings, and what happens to craft when corporations fence off lines of improvement with patent positions, deployed the old-fashioned way, to prevent craft from further practice?

That’s the problem for patent management at universities, and especially under Bayh-Dole.  It’s not how to better offer up IP as gifts to the rich and wanna-be rich for “commercialization”.  It is how to feed both the research/shanzhai/craft/practice culture while engaging commercial market activity.  Both, not one or the other.  That’s the central problem for IP management at universities, whether inventors own, universities come to own, or the government takes ownership. Same problem.  The solution lies in how patent rights are divided between these two innovation cultures.


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