I am always sad to hear of someone dying before their time, thinking of the loss to their family and friends. Wikipedia asserts that she died a week after her 64th birthday, while Gans reports it was due to cancer. An Alaska native and UW Seattle grad, she died a few days before her Seahawks won their first Super Bowl ever.
From a more self-centered perspective, I am sorry to lose the opportunity to read new work, although (as with all in our profession) her prior work will stand as a permanent legacy of her contribution to the field. The appeal of that work wasn’t immediately obvious. I started my career very phenomenon-driven and applied, whereas Scotchmer was more theoretical and abstract. Still, she was very concerned with real world problems, and wrote clearly (usually without greek letters). More importantly, she asked novel, important questions and achieved major success in moving the field forward.
I believe that her work was highly influential on open innovation in two ways: on cumulative innovation and on alternative incentives for innovation.
Innovation Drag and Cumulative Innovation
Reconstructing the trail from my hard disk, I first learned of Scotchmer’s work in November 2005, when I received an early draft of Murray & O'Mahony (2007) — a paper that cited her seminal 2004 book, Innovation and Incentives. That same month, I added citations to her work to a paper that I was writing on 3G cellphone standards, a paper that co-author Rudi Bekkers presented at a workshop four months later.
Both the Murray-O'Mahony and Bekkers-West interest in her work was due to her studies of patent drag. Like the weather, this is something that everyone complains about but nobody does anything about it.
As I found out, this was a question that Scotchmer had been thinking about since the early 1990s. She had a series of papers on the allocation of returns between initial and subsequent patenters (e.g. Green and Scotchmer, 1995; Scotchmer, 1996) as well as fine-tuning the right to exclude (Scotchmer 1991, 1999). (Related work has been done by Nancy Gallini of UBC). Chapters 4 and 5 of Innovation and Incentives also bears on this question.
In our paper, Rudi and I were concerned narrowly with patent drag. (In fact, by the time the paper was published, the patent story was narrowed so much as to eliminate this discussion).
However, the focus of Murray & O'Mahony was much broader. As regular readers know, Fiona and Siobhan synthesized the modern conception of cumulative innovation, the idea that many innovations require the cumulative efforts of multiple actors. If IP policies discourage such cumulative efforts, the rate of innovative progress will be slowed.
The paper is obviously heavily influenced by Scotchmer's work, citing four of them. The linkage is particularly direct to Scotchmer (1991), the Journal of Economic Perspectives article entitled “Standing on the shoulders of giants: cumulative research and the patent law.” As Murray & O'Mahony (2007: 1014) wrote
Last, for cumulative innovation to occur, innovators need assurance of some form of reward, encouraging them to disclose their ideas and provide access to others. Such rewards may be intrinsic but can also include remunerative or reciprocal rewards from follow-on innovators. A system that allows for a flow of rewards between first- and second-generation innovators is necessary but without some ease in distributing rewards among different generations, innovators will have difficulty accumulating knowledge (Scotchmer 1991).Not surprisingly, this message about the negative impact of IP drag also resonates with open source and other advocates of collaborative innovation.
While I read the 2004 book for its work on drag, its main focus — and most innovative contribution — was to step back and ask whether patents are the most appropriate incentive to encourage innovation. The fact that she asks the question suggests the answer might be “no.”
Chapter 2, in particular, considers the role of prizes as an alternative to temporary IP monopolies as an incentive, as with the 18th century English example of the Board of Longitude prize. She considers the deadweight loss of the alternative mechanisms, and extends the ideas in the earlier Gallini & Scotchmer (2002) book chapter.
This idea of structuring incentives (particularly in contests) to maximize innovation is an obvious antecedent to current research on Innocentive and other open innovation tournaments and other contests. As such, it clearly informs (and is cited in) the recent work on contests by Karim Lakhani and Kevin Boudreau.
Scotchmer's citations in innovation studies are much scarcer than the caliber of her contributions would warrant. I’m guessing that was because her orientation was so strongly towards economics (she served as AE of AER, JEP and JEL) unlike those many innovation economists who attend innovation and business conferences, promoting their work to multiple audiences.
Since I don’t attend the AEA (or NBER) conferences, I guess that’s why we never met. I found out today that one of her last publications — Maurer and Scotchmer 2006 — cites me extensively.
Not knowing her personally, I gained a few insights from the Gans and Gandal obit. I learned even more from her CV, which helpfully begins
Suzanne grew up in Alaska, where her grandparents homesteaded after failing as gold rushers.(Note to Europeans: the California gold rush was 1848-1850 while the Alaska gold rush was 1896-1899.)
The link goes to a page labelled “Suzanne Anderson: Stories of Alaska,” which says
daughter of a fisherman.
In retrospect, the most poignant piece was a 1996 article was about an tea made from devil’s club, a spiny rhubarb-like plant found in Alaska. The story focused on her friend Clarence, who from his Tlingit ancestors believed the tea would cure his cancer. As she wrote:
I wish the end of this story was that the devil’s club tea saved my friend Clarence from his cancer. It didn’t, but neither did the medical profession.Scotchmer’s death reminds us that cancer still kills more than a half-million Americans every year, a close second to heart disease (and more than the next three causes combined).
Suzanne Scotchmer, Rest in Peace.
Scotchmer, Suzanne. "Standing on the shoulders of giants: cumulative research and the patent law." Journal of Economic Perspectives 5, 1 (1991): 29-41.
Green, Jerry R., and Suzanne Scotchmer. "On the division of profit in sequential innovation." RAND Journal of Economics 26, 1 (1995): 20-33.
Scotchmer, Suzanne. "Protecting early innovators: should second-generation products be patentable?" Rand Journal of Economics 27, 2 (1996): 322-331.
Scotchmer, Suzanne. "On the optimality of the patent renewal system." RAND Journal of Economics 30, 2 (1999): 181-196.
Gallini, Nancy, and Suzanne Scotchmer. "Intellectual Property: when is it the best incentive system?" In Adam Jaffe and Josh Lerner, eds., Innovation Policy and the Economy, Volume 2, MIT Press, 2002, pp. 51-78.
Scotchmer, Suzanne. Innovation and Incentives. MIT Press, 2004.
Maurer, Stephen M. and and Suzanne Scotchmer. "Open Source Software: The New Intellectual Property Paradigm." In Terrence Hendershott (ed.) Economics and Information Systems, Volume 1. Amsterdam: Elsevier Science, 2006, pp. 285-322.