There are a lot of people that say patents stifle innovation and halt progress. I am not one of these people, because it seems like if patents did not exist, companies would not pour as nearly as much money into research and development of new technology if they knew once the product hit the market it could just be cloned by competitors.
To counter this, some say the free market would take care of the problem by letting companies compete based on being first to market, pricing, brand reputation, warranties, product quality, etc. On the other hand, it seems like in a world without patents, the company who originally developed the product could never come out on top because they’d have to sell their product at a higher price to recoup the R&D costs… And a lot of people just want the cheapest product available (which would be sold by the company that just cloned the product instead of developed it themselves).
So what say you? Do patents stifle innovation or embrace it by letting companies know that money invested in R&D won’t be wasted?
Interesting post. A lot of fodder for discussion here, since intellectual property rights is a huge, cross-national, multi-trillion dollar underpinning of the modern economy.
I’ll start with one thought.
I actually think patent law can be tinkered with, and durations-of-protection rolled back, if they are accompanied by a corresponding decrease in regulation. We would all benefit as a result.
Take FDA-approved drugs as an example. Patent law is a very hot topic there. Pharma companies consistently try and push the boundaries of patent law to get protection for what (some would say) are minor twiddles to existing products. Generic competitors build factories, and quite literally have a guy waiting to flip the switch on at 12:01am the morning after the patent expires so they can compete at much lower prices.
But why are the stakes so high? Why are the patent law battles so fierce? Why does it take nearly $1 billion and 7-10 years to bring a new drug to market (which eats up a lot of the 20-year patent protection)?
It’s because of the government and FDA testing.
If there was no FDA requirement for testing, drug companies could spend far less money per drug and innovate more, more frequently. More drugs would come to market faster. Independent testing companies could fill the void that the FDA currently occupies, offering consumers varying ranges of testing (from almost none, to current-or-better-than FDA standards) in exchange for faster and cheaper access.
A drug company would also have to build and maintain a reputation for safety and efficacy which would be just as valuable, or perhaps more valuable, as the current FDA ‘stamp’ of approval. That would form a natural barrier to entry that is currently distorted by patent law and the cost of the approval process.
So yes, you could probably roll back patent protections a bit. If they are accompanied by a corresponding decrease in regulation. And we would all be better off. Drugs would be cheaper, more available at earlier times, and consumers would have a lot more choice. Pharma companies could avoid spending gajillions of dollars on testing and lawyers and instead, plow it back into innovation.
That’s one example. You can also point to the recording and music industry in recent years and look at other examples.
I won’t speak for all areas of innovation, but as a software engineer I am convinced that software patents surely do stifle innovation. They are used as weapons by large corporations and become pretty much a minefield for all software developers. It’s nearly impossible to check for prior patents for every line of code you write without a legal department the size of IBM’s or Microsoft’s, actually, even they can’t. They get away with it by having thousands of sofware patents, so for any one they infringe on they are sure to own another patent or twenty that the litigator infringes. Thus they cross-license the patents. Smaller and medium sized companies don’t have that kind of war chest and have no chance.
Trivial software patents are pretty much the norm as well. They are broad and overarching, often impossible to avoid. Here one example is picked apart.
Luckily we have avoided this nightmare for now in the EU, by means of effective lobbying by many organizations and thousands of developers and software companies. Though the war continues even after victory in this battle. The outlook looks more bleak on your side of the Atlantic.
The US allowance of patents for software (as such, without technical effect) and business methods has long been something of a laughing stock in the rest of the IP world and is one of the major stumbling blocks to a feasible, worldwide patent as opposed to having to go via many different Patent Offices to get global coverage.
Having said that, there are some areas (eg. drugs and medical treatments) where expensive research really would become uneconomic without a strong monopoly to potect that investment. I know it sounds like what Big Pharma are bound to say, and I wish it wasn’t so, but I’ve been to many seminars by their representatives and they convince me (under pretty strong questioning) that patents are a necessary evil in this regard.
Having said that, there is no reason why the bar for awarding a patent cannot be raised significantly. Inventive Step in particular needs a radical overhaul, IMO.
Natural risk-aversion tendencies on the part of big, publicly traded companies
The fact that increased regulation + patent protection always benefits established incumbents, by raising barriers to entry for newer, smaller, less-capitalized competitors
Reason number 2 above is why you often see major players in a forming or existent oligopoly decide to ‘partner’ with the government, when it’s obvious the government is going to create new regulations (and corresponding barriers to entry). They want a seat at the table, to influence legislation to their advantage.
Plus, they’re not really that bummed that there is a table to begin with, since that means higher costs for any new upstart who might challenge them.
GE and the light-bulb thing, as part of Waxman’s recent foray into 1000-page cap-and-trade legislation, was a recent example. Of course GE supports the whole ‘green movement’, and wants the government to mandate changes to certain types of light bulbs. They make them. Few other people do. It costs a ton of money to build a new lightbulb factory, and GE has already sunk that money into the ground. They would like to get a nice return from that.
Of course Big Pharma wants the current patent system in place, with the costs associated with it. Oh…they’ll bitch from time to time if they get surprised by something in the FDA process, especially if they promised their shareholders something else.
But if that process wasn’t in place there would suddenly be dozens of fiesty little biotech and drug startups who would be instant competitors. That’s worse for them.
A person could set down and write some code for some task, and completely in a vacuum (other then language documentation) unknowingly violate several patents.
This serves to “encourage the useful arts and sciences” how?
I think not. If there were no patents, a start up with a truly innovative invention could be easily squashed by the big guys. It can still happen, but the small company now at least has a shot at protecting its intellectual property.
Given that, I agree with all the bad things said about software patents. I’ve sometimes reviewed patents at work, and have almost always found prior art. The Patent Office isn’t even trying anymore, since they now get funded from fees and thus have an incentive to push through as many as possible. My first two patents, in the late '80s, require my patent attorney and me to respond to reasonable questions on prior art. Almost all patents had to be defended before being issued. For my last two, five or six years ago, the patent office didn’t even try. No challenge at all, just issued. They weren’t any more original than the first two.
I wouldn’t be surprised if 50% or more of the patents issued in the last decade or so are total junk - maybe over 90% of software patents. Patents are necessary, but the current implementation sucks.
Not just code. The rules now say that knowingly infringing is worse than unknowingly infringing, so the very worst thing you can do is to look up something you are doing in the patent database. Ignorance truly is bliss here. I’m involved with hardware design, where patents are not quite so bogus, and no one ever tries to see if something they design is infringing. There are so many cross-licensing agreements, most of the time it won’t matter, and even if it does the patent holder would have to find out about it, sometimes difficult to do, and have enough money to fight a big company for years.
In my company, after they did away with the money you got when you filed and when it was issued, hardly anyone files any more. I don’t - I’ve got plenty of plaques already.
Yeah, I have considerably weaker feelings when it comes to things like software patents where many procedural ideas can be independently “invented” but result in a patent violation. I know the same thing can happen in say mechanical patents, but it’s much more rare.
So in other words, IdahoMuleMan, you want to compromise by, on the one hand, decreasing regulation, but then compensating for that by, on the other hand, decreasing regulation.
Back on topic, would it improve matters if it was possible to challenge a patent? That way, if someone else patents something and won’t let you use it, and you can find prior art, you could get the patent overturned so you could still use it.
Sure you can challenge a patent - and wait five years for the court to rule one way or another, which is probably going to mean you miss your market window by a slight bit.
You can try to negotiate, but that isn’t going to work so well if a competitor holds the patent.
The best way seems to be ignore the patent, build and ship the product, and defend against a cease and desist order on the grounds of major damage to your company. Unless you are ripping off a patent really blatantly, you might well come out ahead in the long run. The trick is to use the revenue to build a next generation product which doesn’t infringe, so you can agree to stop shipping an obsolete product when the case gets settled.
Abuses and bad administration aside (both of which all two regularly occur), patents are important for innovation for two reasons:
[ol]
[li]As previously stated the increase the profit motive by offereing a temporary monopoly to the inventor.[/li][li]They discourage secret technology. If you create something novel and new and want to enjoy the protection of the patent, you have to at least inform the public about the nature of your innovation, therefore allowing others to work on improvements and alternates. Without patents every company would work hard to keep there products workings hidden from view and discourage collaborations between innovators.[/li][/ol]
A side effect of (2) is that if someone offers what seems a completely innovative product it is possible to take a look at the patents involved to see if they make any sense in the application.
I know a little about this subject. A couple of considerations:
Remember that patents do have firm, unextendable expiration dates. They always have, even back in their origin in the Venetian Republic. They are a compromise intended to give the inventor some reward and incentive, while at the same time publicizing the innovation to the world (that’s what the word “patent” comes from). A patent search is, in short, a way to learn about what’s happening in innovation in whatever field you’re looking at. The system has worked pretty well for centuries in accomplishing both objectives. Yes, there’s plenty of room to argue that the innovation pace is so rapid in some fields, like software, that patent life is effectively infinite, just like there’s room to argue that the expense required to implement a patented technology in other fields cannot be paid off during the period of exclusivity it offers. There’s also the argument that having to get around someone else’s patent that you don’t wish to pay royalties for is a stimulus to innovation in its own right.
The filing system is not yet worldwide, but it’s pretty close. There are only 3 places a patent is normally filed now - the US, Japan, and the European Patent Office. It’s pretty much automated now, and the laws are now harmonized globally including reciprocity.
There are other ways to protect intellectual property without making them patent to the world - the use of trade secrets and nondisclosures is the most common, and may be easier and cheaper.
Patents can be infringed even consciously if the business decision is made that the risks of being found out are low enough compared to the payoff. All a patent does is give the holder the right to sue - it’s really up to the holder to discover infringements and do his own enforcement that way, and some just can’t afford the time or, especially, money to do so effectively. Even so, you can argue in court that the patent ought not to have been issued anyway, or has some other defect that prevents its enforcement, and that argument I understand works more often than not.
All that said, there’s certainly a lot of incredible crap that’s gotten through, especially in the US. Examiners are often inexperienced and overloaded, and it’s just easier sometimes to approve a filing and move on. There’s apparently some effort underway to improve that situation, but in my experience it’s only slowed down the cycle time. If you think you’re being substantially impeded by a garbage patent, you really ought to consider just going ahead anyway.
Patents are incredibly important to innovation, because the only alternative to patents is to hide functionality by trying to keep it secret or to ensnarl users in legal paperwork to prevent disclosure. The public disclosure aspect of patent law allows state-of-the-art research and design to be made available to everyone to learn from.
And without the financial protection of patents, high-risk, high-cost research would be stifled. The drug company example has been mentioned, but all R&D would be affected. Companies do non-commercial R&D work all the time. Microsoft spends billions on R&D projects that have no current commercial application. What value do they get out of it? Well, part of it is that even if a product can’t be marketed, the research can generate patents for new processes or designs discovered as part of the overall research. This then becomes part of the intellectual capital of the company - it can be licensed or sold to defray the cost of research or even make the research profitable.
Without the ability to monetize portions of advanced research, companies would do a lot less of it.
This doesn’t mean the patent system is perfect. It clearly needs some reform to bring it in line with the unique needs of the information age. Software patents are too easy to get, for one thing. But in general, patents are a very good thing for our economy and our society.
Why? Extracting rent from everyone to serve a few is a necessary evil?
Suppose when a patent was granted it went up for auction, the winning bid going entirely to the inventor(s). 90% of the time, the government steps in, pays the winning bid (which it didn’t make) and immediately places the patent in the public domain. 10% of the time, the winner is actually granted the patent. We know that in the general case, the inventor(s) receive fair compensation. But 90% of the time, there’s no shitty monopoly.
Win?
90% of the time, the invention can be put to immediate use by those who can use it best without contractual overhead. Win-win?
90% of the time, the economy as a whole immediately benefits and in the long run, the government collects more in taxes from the improvement to the economy happening sooner rather than later. Win-win-win?
90% too much, how about 75%? 50%? Is there no room for improvement in our patent system? The only way to benefit the economy is to grant monopolies which we know are not good for the economy? Hmmm.
Because of the ability to monetize portions of advanced research, much research is duplicated unnecessarily by those hoping to capitalize on monopoly rents. Boooooo.
Sometimes this is good. IBM used to have three groups developing something, since they found competition made everything go faster. Much research is funded by the government, which can control the amount of duplication. For research inside companies, real innovation is covered by trade secrets, before work is ready to be patented, so it is unlikely to be duplicated. Racing to productize known research results can cause duplication, but the market will determine who does it best - and fastest. Would you rather have the loser have the exclusive rights to something?
All R&D is risky. Why would anyone do it without the prospect of a monetary return?
That’s ridiculous. Remove the FDA and the drug industry would peddle poison just like they did before the FDA existed. And they’d still have lots of lawyers, to fend off suits from all the people killed by their “medicines”. Well, the ones that don’t consist of a guy in a garage brewing up “medicine” from a recipe he got off the Internet. Your private testing companies would inevitably simply be rubber stamps for the drug companies, if not outright subsidiaries.
Industry revenue would crash because fewer people would dare use American made medicine at all, and other nations would embargo them. Prices would rise because they’d need to make up the shortfall. And a lot of people would die.