Learning-By-Doing: A Q&A with Jim Bessen

TAP recently stole some time from James Bessen’s busy schedule to discuss his research over the past few years, particularly his recent work on patents. Bessen, who goes by Jim, wrote the first WYSIWYG (what-you-see-is-what-you-get) PC publishing software in 1983 and founded a company, Bestinfo, in 1984. He later transitioned into academia, which led him to his current position as a Lecturer in Law at Boston University of Law, where he also does research on the economics of technological innovation.TAP: You were a CEO for a software company before you became a scholar. What made you interested in pursuing academic work?

Jim Bessen: I was struck by how the real world of innovation seemed to differ from what I had learned in the classroom. Of course, economic analysis of innovation had progressed tremendously during the 1980s and 1990s while I was working. Nevertheless, a couple realities of my experience prompted me to want to do research. For one, I expected business success to follow more or less directly from the innovation itself (the first WYSIWYG desktop publishing system); instead, we discovered that our customers had a lot to learn in order to use the new technology well and we had a lot to learn to help them and to better adapt the product to specific needs. Learning-by-doing has been a focus of my research.

Also, we began at a time when software was mainly not patented; during the mid-1990s software patents came on in a big way. The effect of patents on a technology that was highly innovative without them is still controversial and an issue for research.

TAP: Why has patent litigation become so frequent and costly? Why is this important?

Bessen: Mike Meurer and I argue in Patent Failure that patent litigation has exploded because too many patents have been granted with "fuzzy boundaries" so that innovative companies cannot tell in advance whether technology they are developing is already covered by someone else's patents. This has come about because of a number of legal changes beginning in the mid-1990s and has been especially severe in patents on software and methods of doing business.

Because people developing innovative technologies are the ones who have to pay for this costly litigation, the effect is like a "tax on innovation" – while it doesn't prevent innovation, it does slow things down.

TAP: Your most recent paper looks at the direct costs from NPE disputes (“The Direct Costs from NPE Disputes”). You found that most of the defendants were actually small- to medium-sized firms. How do patent trolls affect these firms differently than larger firms?

Bessen: While small firms pay less from these NPE patent assertions, they pay more relative to their size. Effectively, small firms are taxed at a higher rate. This is especially detrimental because small firms have been such an important source of innovation in the U.S.

TAP: Your book, Patent Failure, highlights the problems caused by poorly defined property rights, and has been cited by the U.S. Supreme Court and the Federal Trade Commission. What are the biggest problems with the way these rights are defined?

Bessen: There are quite a few problems, including: patents claims are allowed to include vague terms such as "information manufacturing machine"; interpretation by courts of abstract patent claims is unpredictable (this is a problem with software and business method patents); patent applicants can keep patent claims hidden for years using continuations; and there are far, far too many patents that are only trivially different in some fields. Note, however, that in some areas, such as chemicals and pharmaceuticals, most patent boundaries are well-defined.

TAP: Congress passed the Patent Reform Act last fall, the first large-scale reform to U.S. patent laws in 60 years. How has the reform changed the patent landscape?

Bessen: Unfortunately, I don't think it changes it very much in these critical areas.

TAP: Another one of your research areas is 19^th century technology. What’s your most interesting finding?

Bessen: It has long been assumed that technology then was "de-skilling," that factory production workers had little skill. I find that actually there were significant investments in the skills of ordinary factory workers then and these were, in fact, critical to the success of new technologies. The effect of technology on worker skills, jobs, and wages during the Industrial Revolution is similar, in many ways, to the effects of information technologies today.

TAP: What songs are the most-played on your MP3 player these days?

Bessen: MP3s are so yesterday! I listen mainly to Spotify and love the way I can discover all sorts of obscure recordings, new and old. With classical music, it is great to listen to different performances of the same piece. A recent find: "Simone Dinnerstein, Bach: A Strange Beauty."