Tim Lee, over at the Technology Liberation Front, is pointing to the latest story about Transmeta suing Intel for patent infringement, where he notes that it's a case of the market loser litigating. This is an issue we've discussed in the past, but it's a good example to highlight. One of the points of patent protection is to add incentives for innovation, encouraging companies to invest in a space, knowing that if they succeed, they have some protectionist policies allowing them to hold a monopoly for a period of time. However, it's never quite clear why this kind of protection is necessary if the market gives all the incentives that are needed for innovation. One of the consequences of tinkering with the market, then, is that you get results that go against everything that "free marketers" should believe in. As with this case, it allows the company that failed in the market, because it failed to execute properly, to then come back and sue those who succeeded. This is the same thing that happened in the RIM-NTP case. NTP had completely failed in the market and did nothing but take millions away from the company that had executed properly. The market is there for a reason, and it rewards the companies that successfully deliver the product people want. In cases like this, patents allow the companies that screwed up to take money from those that succeed. It's difficult to understand how this is a good policy for promoting innovation.
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