Innovation isn’t always good- tech creates significant harms to physical health and the environment that patents fail to internalize. Examples include the opioid crisis, dirty tech that contributes to climate change, social media, and autonomous weapons systems.

Technology, however, also has a dark side. While the economics and IP literature has extensively examined the positive externalities of technology, it has devoted less attention to technology's negative externalities.56 Technology produces a wide range of negative externalities, including serious harms to physical health and the environment. For example, prescription opioids were once heralded as safe and effective painkillers. However, they have caused an epidemic of addiction and misery involving nearly 500,000 overdose deaths in the United States.57 The opioid crisis cost the U.S. economy $631 billion from 2015 to 2018.58 These costs have largely been external to opioid manufacturers and distributors, though recent litigation has aimed to at least partially internalize these negative externalities.59 For generations, "dirty" technologies, from coal-burning power plants to automobiles, have contributed to arguably the greatest threat facing humanity: global climate change.60 Chemical fertilizers ramped up food production, but they have also enormously increased reactive nitrogen levels throughout the environment.61

Technology also generates negative externalities by harming mental health, well-being, and social connectedness. Numerous studies indicate that adolescents and young adults who spend more time on digital media report lower psychological well-being.62 A 2019 poll by the American Psychiatric Association found that thirty-eight percent of adults view social media usage as harmful to mental health.63 Academic performance is negatively correlated with instant messaging, social networking sites, engaging with smartphones, and use of electronic media more generally.64 Heavy use of digital media is also correlated 65 with a loss of empathic accuracy. Developers of computers, Artificial Intelligence, and robots do not bear the psychological costs of users' loss of human connection and intimacy from interacting with machines instead of people.66

Technology also creates negative externalities by threatening physical safety, privacy, -and economic security. One study estimated that social media accounts for about ninety percent of all organized terrorism carried out on the Internet.67 Autonomous weapon systems with no human oversight or input can commit war crimes.6 Drones raise serious privacy concerns, particularly when used by local law enforcement.69 Considering innovation more broadly, financial innovations such as structured financial products and credit default swaps contributed significantly to the Great Recession.7 As noted, a negative externality endemic to the concept of technological progress is that of rendering legacy technologies (and associated jobs) obsolete. For instance, the word-processing programs developed by Microsoft and others led to the demise of the typewriter and displaced those employed by that industry.71 Technology developers profit substantially from their creations, but they are largely insulated from their external costs.