The Case For Patents Harming Innovation

from the fleeting-competitive-advantage dept

Last year, we noted that SAP was one of a few big tech companies that had mostly avoided stocking up on software patents, claiming that the company was in the business of selling products, not intellectual property. It appears things may be changing. Patrick Ross at PFFI (huge supporters of software patents) points to a quote from SAP talking about how they're now increasing their patent activities with this quote that goes against what we heard just a few months ago: "Those who drive innovation need patents. Those who don't imitate." Tim Lee rips this logic to shreds beautifully by saying: "In the past, SAP was an innovative company that was able to stay ahead of the competition by virtue of their superior technology. However, now that they're a fat, lazy incumbent, they're discovering the joys of using patent law as a club against their more innovative competitors." What's much more likely, is that it's not this rush to innovate that's driving SAP's newly discovered love of patents, but the recognition that with patent litigation today, software patents are all about nuclear stockpiling. You need to have as many patents as possible, so that when you're sued, you can sue back. What that has to do with innovation is well beyond us.

However, the more important point comes later in Lee's analysis. He basically picks up on the point we've been suggesting for a while. Companies and investors love things like patents because they think it gives them a "sustainable competitive advantage." However, a really sustainable competitive advantage means you don't have to innovate, and society ends up losing out because the fat, lazy incumbent isn't driving any new innovation. Competition drives innovation, and it's an ongoing process. Instead of a sustainable competitive advantage a successful business is really about repeatedly innovating to build continual fleeting competitive advantages. That is, you keep innovating and it no longer matters if your competitors are just copying you -- you have the advantage in the marketplace by actually innovating. This keeps innovation going, rather than stagnating, and it brings to market much better products. All without the need for patents. As Lee correctly points out, this might mean the original creator doesn't get to squeeze every last right out of something -- but that's actually better for everyone. It drives the companies to continue to be innovative, creates real competition, a real market, and better products for everyone.



Reader Comments (rss)

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  1.  
    identicon
    Anonymous Coward, Jan 18th, 2006 @ 6:19am

    No Subject Given

    I don't know about everyone else, but I can say that if I came up with a new process or product, and I knew I wouldn't be compensated by companies using my new process or product (through patent licensing), then I don't think I would even bother following through to develop it. In a more altruistic world people would innovate just for innovation sake, but in the world we live in we must have a system of guaranteed compensation. If you want to talk about reforming patent law, that's one thing. Doing away with it, though? That's silly.

     

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  2.  
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    mbuel76, Jan 18th, 2006 @ 6:44am

    Re: No Subject Given

    Benjamin Franklin didn't think so... he didn't patent his inventions because he felt the world would be a better place with them. And he was still reasonably wealthy.

    I think you can still make money, while not having a chokehold over your inventions... and the real inventors are always looking ahead to the next idea.

    If we contrast this to Edison who was always patenting his inventions, he got stuck on the idea that AC line transmission was a bad idea, and tried to keep Tesla out of the business through various shady tactics... it's Edison's model of invention that has carried through to today unfortunately. How soon we forget the problems of patents....

    The inventor of the steam shovel patented his invention... and people stayed away in droves because he asked for so much money to use his particular steam shovel. When the patent died off, other companies started making steam shovels and the industrial revolution took off.

     

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  3.  
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    dude, Jan 18th, 2006 @ 7:02am

    About Ben Franklin

    Jealousy and Envy deny the merit or the novelty of your invention; but Vanity, when the novelty and merit are established, claims it for its own... One would not therefore, of all faculties, or qualities of the mind, wish for a friend, or a child, that he should have that of invention. For his attempts to benefit mankind in that way, however well imagined, if they do not succeed, expose him, though very unjustly, to general ridicule and contempt; and if they do succeed, to envy, robbery, and abuse.
    -Ben Franklin, 1755
    I think good old Ben Franklin knew very well what it means to be an inventor...
    Of course, if you are independently wealthy, like he was, you can afford to invent for the sake of invention...

     

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  4.  
    identicon
    Jose Gandullia, Jan 18th, 2006 @ 7:28am

    Re: No Subject Given

    The world would be a much better place without patents. Without patents, you might not bother developing something, but someone else will. Who ? whoever is capable of building it better. Why ? because they'll have the advantage of being 1st to market.

    Particularly in software, you can protect yourself by not revealing your source code. If it's non-trivial, then a software developer would have a hard time re-creating it. If it can be easily re-created, then it's trivial and doesn't deserve a patent in the 1st place. If it's hard to re-create, but someone does it anyway, then they deserve to compete with you.

    Given a similar problem, 2 developers will come up with similar solutions. Why should whoever builds it 1st be protected by an artificial monopoly and the rest of the world be prevented from using that solution when progress depends on it ?

    Patents create artificial monopolies, without them there is more competition, and society wins. As for individuals and companies, whoever is capable of building better products will win, instead of whoever builds them 1st.

    On top of it tax payers and companies have to spend billions on the patent office and on patent lawyers. Money saved by companies could go to R&D, higher salaries, more profits. Money saved by government can go to education, healthcare, and/or lower taxes.

     

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  5.  
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    karo E, Jan 18th, 2006 @ 7:31am

    No Subject Given

    I agree that the patents have become the tools of fat and lazy.
    To think that patents are the key to survival for today’s “innovators” and current economy I have quick history lesson. How one can tie history of stealth technology and military dominance to single mathematical theory and its origins. (Prior art? Patents? All step aside for the advancement of “one” against the “other”.
    If you have the time Google these:
    Hopeless diamond
    Pyotr Ufimtsev

     

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  6.  
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    Tyshaun, Jan 18th, 2006 @ 7:36am

    Re: No Subject Given

    I don't have a problem with the concept of a patent, just the system we have in place for issuing them. I've recently gone through the process at work, along with others in my team, of producing a patent for the first time. The patent is for a new programming algorithm that we haven't implemented yet in production software. I realized that the standards for getting that patent approved are entirely to lax and make no provisions for whether or not you use the technology you have patented! My idea to change the current system would be:
    1. If you are awarded a patent, you must implement the functionality in some type of product within say 5 years of being awarded. That should make some of the patent portfolios some companies collect a little smaller, and at the same time allow for the general public to benefit from the patent. Also, if you have no intention of using the patent, why should you be allowed to sit on it and prevent others from using the knowledge freely?
    2. Implement the standard several people have been discussing about whether or not a potential patent is just a natural extension of existing knowledge. This may come in the form of having more subject matter experts in the patent office.
    3. Have a challenge procedure in place for newly issued patents. Companies should be able to say, "hey, I can prove that I was 2 or 3 months away from coming up with the same thing that just got patented and maybe this patent falls into the "natural extension of knowledge" family rather than an actual unique or geniunely new idea/concept.

     

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  7.  
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    Tyshaun, Jan 18th, 2006 @ 7:44am

    Re: No Subject Given

    I disagree with you Jose Gandullia:
    The basic problem with a pure free-market system that you are proposing is that innovation is tied to potential profits. What I mean by that is that a company (say a pharmaceutical) will be far less likely to dedicate billions to R&D for a new drug if they know that there's no legal protection from that product once it reaches the market. Your arguement is based around the assumption that if someone can figure out how you did something, they should be able to do it to. Well, that works well when you're talking about a black box system, like computer code, but what about a pharmaceutical compound where there are well established procedures in place for reverse engineering it, and in fact, the company MUST publish the formula as part of the distribution process. By your arguement, generic drugs would automatically be made, and no company would ever bother putting money into R&D to make new drugs that they know will be copied and sold more cheaply by another company (the other company not having to re-coup the cost of R&D).

     

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  8.  
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    dude, Jan 18th, 2006 @ 8:08am

    Do your homework first...

    It is obvious to me that you know NOTHING about patents and patent law...
    Patent does not give you the right to make a complete product - you may need many other patents to make some high tech products like cell phones.
    Does it mean that e.g. Qualcom should be stripped of their CDMA patents because they just can't make cell phones themselves ?
    Or does Nokia have to be stripped of their patents too because although they can produce actual cell phones those cell phones would be of
    little use without e.g. CDMA, GSM etc.
    You obviously didn't do your homework as far as patenting is concerned...

     

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  9.  
    identicon
    Tyshaun, Jan 18th, 2006 @ 8:24am

    Re: Do your homework first...

    I think I know a fair bit about patent law and I'm always amused when people use language like "It is obvious to me that you know NOTHING..." and "You obviously didn't do your homework as far as patenting is concerned..."
    First, for your etification there are products on the market that are single patent solution, usually this occurs in the pharmaceutical market and not in areas of high technology (programming, devices, etc). The patent problem is more than just a technology one remember.
    Second, my intent in saying that patents would have to be used in 5 years doesn't mean that companies have to necessarily use them themselves. I am well aware of companies like IBM etc that have generated standards for years that they haven't necessarily used, however, the fact that they give permission to others to use the standard, and their is interest in the standard, is the point of my suggestion. Perhaps the idea was to complicated for your obviously narrow way of thinking but the point of the 5 year restriction is simply to say that if someone gets a patent, somehow it needs to be implemented in a solution within a reasonable period of time to prevent companies from generating portfolios of "future tech" that they have no intent on using EVER, and wait for others to come up with the idea and sue them.
    My suggestions were just that, suggestions. Of course they don't address every particular case, but I do think the assertion that I know nothing about the process shows only that you have a fairly caustic manner of discussing and critiquing others ideas. I leave my response with two simple questions:
    1. How many patents do you hold?
    2. What "dude" would you do to alleviate the problem?

     

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  10.  
    identicon
    Jose G, Jan 18th, 2006 @ 8:44am

    Re: Tyshaun

    Tyshaun: Point taken.

    My biggest problem is with software patents, business method patents, and the like. There should be no software patents. As you point out there are a few industries like pharmaceuticals where patents make more sense.

    Even then, patent reform is necessary. As the rate of invention accelerates, the lifetime of patents needs to shorten. 20 years is forever in technology. Where was technology in 1986 ? That is a very long monopoly. I would say 5 years is a much more reasonable term for a patent.

     

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  11.  
    identicon
    Craig, Jan 18th, 2006 @ 8:55am

    Consider academics

    Those of us in academic environments often invent things and then publish extensively about those inventions (that's how we're allowed to *remain* in academia). Granted, not everything a university researcher invents can be put into use by the university -- that's what licensing is for. But without patents to enable that licensing, any company could just come along and use that invention without compensating the institution that paid for its development in the first place. Talk about corporate welfare!

     

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  12.  
    identicon
    dude, Jan 18th, 2006 @ 9:12am

    Re: Do your homework first...

    I am just a little guy with one pending patent.
    It's been 4 years since I filed it and I still don't have a first office action from PTO.
    (It's a "killer" patent for a very narrow field, by the way, the closest analogy would be RSA patent for the field of applied cryptography)
    I guess 2 more years to go until I get it.
    As I was recently told by some people... my patented invention is already all over the place,used by many big companies and NOBODY even bothered to ask me for a license: they implemented it right from my published patent application and 2 technical papers.
    I offered everybody a very cheap license 3 years ago and NOBODY even replied.
    This is how it works in the real world.
    Ben Franklin was right...
    I am starting to regret about this whole invention thing, damn it...
    And I would never ever started it without a promise of a patent.
    Just like the rest of us, little guys...

     

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  13.  
    identicon
    Jason Etchason, Jan 18th, 2006 @ 12:13pm

    Re: No Subject Given

    Patents are antagonistic to the prosperity of a society. It is a society as a whole that breeds inventors and their creations. Therefore society as a whole should be equally compensated for the ideas it creates. It is like saying the Postal Service can claim ownership on mail that they've already delivered. The creator is just the vessel through which an idea is transported. A journey that starts with necessity and ends a tangeable solution. For this voyage they should be recogonized, but at it's en the cargo must be unloaded to and distributed throughout society where it rightfully belongs.

     

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  14.  
    identicon
    angry dude, Jan 18th, 2006 @ 12:36pm

    Hey, fuck you, man...

    From a small inventor and on behalf of all independent inventors, fuck you, idiot !
    "society breeds inventors" what the fuck ?
    I have my own parents...
    "The creator is just the vessel" what the fuck ?
    You are a fucking vessel full of shit.
    I am not a vessel, I am a regular citizen of this
    country who needs to pay taxes and bills.
    You can't use "recognition" to pay your bills,
    only money will do.
    Got it now, idiot ?

     

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  15.  
    identicon
    PINK-O, Jan 18th, 2006 @ 12:50pm

    Re: No Subject Given

    Holy Holy PINK-O crap Batman!
    I have an idea, since you are just the vessel that we as a society created; I think that we should all divvy up your pay check at the end of the week. Really, I have not seen my cut yet!
    Seriously, isn’t there some sort of Communist blog that you should be reading instead of this one?

     

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  16.  
    identicon
    YankInOz, Jan 19th, 2006 @ 5:22am

    Re: No Subject Given

    Interesting - how many ideas have you givine away freely - most especially after spending your hard earned money - often putting your house up for mortgage - to pay for your idea?

    Or are you a blood sucker who just leaches from others? I am sure you are the jerk who cuts inline at the cinema, too.

    I have developed - so I am told by a MIT professor whose speciality of research is the area of research of which I am engaged - a paradigm shift in a core technology.

    Do I just give it away? After having spent almost 1/2 million USD on the development? I don't need to recoup any of that.

    I have worked years and educated myself in this area. Spent 20 hour days working a job and working on my projects. that has no value? Right!

    (BTW: Ben Franklin was rich because of his inventive nature - not in spite of it.)

    I am sure there are many lazy a$$es who would love to suck the blood out of other's but can't get the energy to lift their heads up from the counch.

    Yes, many people may have a similar idea - and yet one person is willing to work and make an effort to see the idea to fruition and he or she must be penalised?

    Because?

    As others have siad so eloquently, "Phuque off and don't let the door hit you on the way down!"

     

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  17.  
    icon
    Mike (profile), Jan 19th, 2006 @ 10:41am

    Re: No Subject Given

    Interesting - how many ideas have you givine away freely - most especially after spending your hard earned money - often putting your house up for mortgage - to pay for your idea?

    You miss the point. If you have such a great idea, then build a business out of it. It's not the idea that has value, but the business model. So build a business. Don't whine that the world owes you money.

     

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  18.  
    identicon
    dude, Jan 19th, 2006 @ 11:01am

    Re: No Subject Given

    Mike, it is you who apparently misses the point and regularly misstates the main goal of the patent system.
    Business model has value only for generating money and for getting some people wealthy,
    but NO value whatsoever for the "progress of sciences and useful arts"
    I repeat, NO value at all...

     

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  19.  
    icon
    Mike (profile), Jan 19th, 2006 @ 11:49am

    Re: No Subject Given

    Business model has value only for generating money and for getting some people wealthy,
    but NO value whatsoever for the "progress of sciences and useful arts"
    I repeat, NO value at all...


    I would question that assumption greatly. The point of capitalism is that it's the business models that show what progress of science and arts is actually useful.

    If successful business models can be built, then it shows that the progress had value. If that's the case, then it's the competition over business models where the value is built, not in the patents.

     

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  20.  
    identicon
    Anonymous Coward, Apr 6th, 2007 @ 11:52am

    no shit thats better for everyone. case in point big oil buys all competing patents and nobody can product anything thats competing with thier monopoly

     

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  21.  
    identicon
    Dennis Wilson, Jun 1st, 2008 @ 2:19pm

    Re: Consider academics

    "But without patents to enable that licensing, any company [did you mean taxpayer?] could just come along and use that invention without compensating the institution that paid for its development in the first place." "Academic environments" are funded by taxpayers. Everything that comes out of them SHOULD be public domain!

     

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  22.  
    identicon
    Alpheus, Nov 5th, 2010 @ 10:49am

    Re: No Subject Given

    "In a more altruistic world people would innovate just for innovation sake, but in the world we live in we must have a system of guaranteed compensation."

    We do not /have/ a system of guaranteed compensation. A patent is only /marginally/ a part of producing profit. In addition to producing the product, you need to sell it, support it, fit it, and improve it over time, if possible. If your business is small, getting caught up in a patent lawsuit could destroy /all of this/; if you are a poor businessman, you /will not/ make a product, even if your idea is fantastic.

    If a potentially profitable idea is truly innovative, it will be hard to duplicate, and you will have a long lead-time to market. If it's not that innovative, you can /still/ have some lead-time implementing it, until the competition "tools up" to the idea--in the meantime, you are free to look for other innovations (which may not be patentable "innovations" per se, but simply ways to improve the product via cheaper-but-better materials, or better ergonomics, or even the production and sale of it), and can still make money on the product.

    Patents can, and often do, interfere with all of this.

     

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