Does The iPhone Need Patents?
from the questions,-questions dept
A bunch of folks have noted that Steve Jobs seemed mighty excited about the 200 or so patents Apple has filed around some of the technology involved in the iPhone (or whatever it’s going to be called). A few have asked my opinion on the patents — but not knowing what the patents are on, it’s tough to have that much of an opinion on them specifically. However, Tim Lee points us to a blog post from someone who claims that the iPhone shows why patents are necessary, since “The investment necessary to develop a radically new interface like Multi-touch requires that Apple have a way to protect that investment. If Nokia, Sony, and Motorola could all simply copy it in their new phones, why would Apple even bother?” A few others have suggested the same sort of thing, but those two statements together actually seem to contradict each other. If it was so expensive to develop the multi-touch technology (which isn’t new at all and similar technology has been demonstrated publicly in the past), then how would those other companies be able to just copy it? If it’s so easy to copy, then it shouldn’t have cost that much to develop.
Either way, Tim’s response at the Tech Liberation Front is well worth reading, as he points out how silly that argument really is, noting that if the technology works as well as the demo, then Apple is going to make a ton of money with or without patents — because people will buy the phone. In other words, the market is what gives Apple the incentives to develop these technologies, not patents. As Tim says: “Blafkin seems to believe that Nokia, Sony, and Motorola have a magical technology copying machine that can instantaneously duplicate Apple’s innovations. But cloning a breakthrough new user interface is actually quite difficult. Just ask Microsoft, which spent six years trying to clone the Macintosh interface in the late 1980s…. Even if Nokia does a lot better than Microsoft and manages to clone the iPhone interface in, say, 2 years, that still means that they’ll be perpetually 2 years behind. Why would consumers buy a knockoff of the 2007 iPhone from Nokia when they can buy the 2009 version from Apple?” That last point is key. The way to compete isn’t by catching up and “copying” someone else, but to continuously innovate. Then, even if someone else catches up, you’re still ahead — and, if anyone can keep on coming up with new innovations, it appears to be Apple. So, even without patent protection, Apple would make more than enough money to recoup their development costs. But, the downside is that Apple doesn’t need to keep up the same pace of innovation now. Others won’t be able to compete and push Apple to innovate as fast because Apple can block them with patents. At the same time, those who don’t want to live by Apple’s rules (Cingular-only, 2 year contracts, no 3G, no ability to develop additional apps, no VoIP, etc.) but want a phone with a similar design will be out of luck. That’s bad for innovation and bad for the economy.
Comments on “Does The iPhone Need Patents?”
Nooo
This is just like what companies went through with insurance and lawyers. They try and find every conceivable way to cover their arses from lawsuits, having excessive patents is just a natural evolution in that process. It’s still flippin PATHETIC though 🙂
200 Patents
Watching Steve Jobs’ keynote, its clear that he was making a joke when he saud “Boy, have we patented it”. I believe he was referring to the fact that Apple doesn’t have to pay the likes of Creative or the lawyer who sued them for the iTunes interface. This is the state of techology today – defense against frivolous IP lawsuits.
200 is a bit excessive...
I see nothing wrong with having patents, but 20 of them for a phone? I have to get one just to see how revolutionary this thing must be.
As per reverse engineering the technology, I used to work for a firm that did this, oddly enough, to aid attorneys in patent litigation (prove that some new product is infringing on an existing product). Believe it or not, it’s not as difficult as you think and although you don’t normally reverse engineer an exact copy of a “widget”, you can usually figure out more than enough of it to extrapolate the the functionality you don’t have.
Re: 200 is a bit excessive...
Believe it or not, it’s not as difficult as you think and although you don’t normally reverse engineer an exact copy of a “widget”, you can usually figure out more than enough of it to extrapolate the the functionality you don’t have.
It may not be hard to make a copy that seems similar, but to reach the same combination of details, quality and features is extremely difficult.
Look at how many iPod competitors there are out there, many of whom look quite similar to the iPod, but can’t recreate the whole package — INCLUDING the perceived value of having an actual iPod.
It’s just not that easy to copy.
Re: Re: 200 is a bit excessive...
Very few have tried to ‘copy’ the iPod. How many MP3 players have 60 GBs? 30GB? Their main competition is the SanDisk ones whose purpose is to sell flash memory cards. The Zune, in my opinion, is the first real copy because it is the software+hardware model which they copied and which makes the iPod so attractive.
Re: Re: Re: 200 is a bit excessive...
Very few have tried to ‘copy’ the iPod.
Say what?!? Sony, Creative, Archos, Toshiba, etc… etc… the list goes on and on. You are right that not many have successfully copied the iPod, but you’re wrong that very few have *tried*. They have tried, and most have failed — mainly because it’s really not that easy.
How many MP3 players have 60 GBs? 30GB?
The original iPods were not nearly that big. Actually, what you just said very much supports the point I made in the post. What Apple has done is continue to innovate. Just as the other guys catch up to the old iPod, they’re already well on their way to something better that it’s tougher for them to copy for business reasons, not patent ones.
Re: Re: Re:2 200 is a bit excessive...
Like I said before, I used to do this for a living, and it isn’t nearly that difficult for a moderately complex system like an MP3 player. I gotta call foul on the quote above, however, what proof do we have that the companies didn’t try to reproduce the more innovate parts of the iPod because they were patented? Aside from assertions otherwise, we really don’t know unless one of those companies comes forward and says “yes, we tried to copy the iPod, but it was just too darn advanced”. Somehow I don’t see that happening.
Re: Re: Re:3 200 is a bit excessive...
Like I said before, I used to do this for a living, and it isn’t nearly that difficult for a moderately complex system like an MP3 player.
Again, like I said, I’m not just talking about the technology. It’s not just about copying the technology, but the overall look, feel, quality and perception of the device.
Not so easy.
And, by the time you do, the originator has moved on. Not to mention that copycat devices (if they just copycat) are seen as such, which hurts their reputation even more.
Re: Re: Re:2 200 is a bit excessive...
Gee, I wonder why they have not tried to copy it exactly?
In other news …
Apple Computer, maker of the iPod music player, is suing Creative Technology, raising the stakes in the legal dispute over competing devices.
Apple claims Creative Labs, the U.S. division of Creative Technology, infringes four patents in its hand-held digital players. The suit was filed in a Wisconsin District Court on May 15, the same day Creative filed a lawsuit and a trade complaint against Apple.
“Creative proactively held discussions with Apple in our efforts to explore amicable solutions,” Phil O’Shaughnessy, a spokesman for Creative, said. “At no time during these discussions or at any other time did Apple mention to us the patents it raised in its lawsuit.”
Creative filed a complaint with the U.S. International Trade Commission seeking an order to block imports of the iPod, most of which are made in China. A lawsuit the company filed against Apple in District Court in San Francisco is likely to be put on hold while the trade complaint is heard.
The iPod controls 77 percent of the U.S. market, compared with less than 10 percent for Creative.
…not to mention trade dress, trademark, and design patent issues. Cmon Mike, do you really think that only Apple is capable of making that device? Face it, copying = easy, only if there is no such thing as intellectual property. You have been exposed.
Re: Re: Re:2 200 is a bit excessive...
Just to correct the discussion, many examples of a portable mp3 player predate the iPod. Apple did not invent the portable mp3 player. They produced a cool looking one with optimal size, weight and memory ratios for the technology of the time. If there is anything noteworthy about the iPod in function, beyond the software which is adequately protected by copyrights, it is the layout of the front panel with it’s large buttons circumscribing the wheel. Interestingly, this is not optimal. As a matter of ergonomics Apple could have improved the design by rotating the buttons by 45 degrees to the NE,SE,SW,NW positions thus reducing the acuteness of the thumb angle needed to operate them. Having taken apart an iPod I think this was an engineering compromise due to the PCB layout.
Re: Re: Re: 200 is a bit excessive...
nothing is really a copy until they make they make everything look the exact same.
try something more like ‘alternative.’
and things have come pretty close to copying, like in other countries.
Re: Re: 200 is a bit excessive...
Very few have tried to ‘copy’ the iPod. How many MP3 players have 60 GBs? 30GB? Their main competition is the SanDisk ones whose purpose is to sell flash memory cards. The Zune, in my opinion, is the first real copy because it is the software+hardware model which they copied and which makes the iPod so attractive.
Re: 200 is a bit excessive...
Apple has cut its own throat over and over again, beginning in the late 70’s when they propritirized their hardware and limmitted software and hardware access. Locking out developers cost them competative advantage for 35 years. It is quite amazing that the starving deal they made for the music publishing business actually flew. Better deals are out there to be made and hungry lawyers are anxious to feed the ignorant public with better musical hambergers.
R&D Costs
Mike, I usually agree with you, but you are wrong on this one.
“If it’s so easy to copy, then it shouldn’t have cost that much to develop.”
Researching and developing this technology is much more expensive than drawing on the patent applications to copy them. Using your logic, Apple should instead use trade secrets to stop copying instead of patents. Trade secrets are even more restrictive (no term restriction and not public).
If I test a new, say, rake. After numerous iterations, I decide clear plastic is the best material (for whatever reason) and I then implement it to much fanfare, my competitors have little barrier to entry to the clear-plastic rake market.
Just because some forms of intellectual property is bad, don’t think all of it is.
I had posted initial thoughts after watching the keynote: http://copyrightings.blogspot.com/2007/01/worthy-of-patent.html
RIM Again
I would like to suggest the case of RIM, again, for illustrative purposes.
In 1999 I got a Blackberry 957, which did a fantastic job of mobilizing my Exchange email, in push format, in seeming real-time.
Then, sometime in 2006, Nokia, Microsoft, Samsung, Motorola, Good, Palm, and some others finally caught up with competitive products. It’s always baffled me that with such a perfect example right in front of them, none of these competitors could offer a product that held a candle to the Blackberry for 6 years.
No, copying isn’t that easy.
Maybe it’s more about not getting fucked over by a competitor that tries to patent jack them?
does no one remember nextel, with their exclusive “push to talk” walkie-talkie feature? that was copyrighted and patented. however, the copyright was only for so long and then the technology became public domain. hence how you now see, boost mobile and their slogan, “where you at?” along with cingular’s version coupled with verizon, who was about to introduce their own radio cell phone before the nextel/verizon merger.
additionally, the iphone is going to be a highly desireable item simply because of that one little lowerc case “i” in front of the phone. as soon as i saw the phone, i was entranced, and said to myself, that is my next phone. the thing is just cool, and is an uber-geeks wet dream.
i’m glad that steve got a ton of patents for it, that way it will be a long while before cheap imitators come out with their versions but, adversely, it will also be a long time before prices come down to a respectable norm.
my two cents.
Re: Nextel and Boost
Firstly, if it was copyright and then dropped into public domain, that would mean that Nextel (and that feature speccifically) would be at least 70 years old 🙂
No, Boost is a Mobile Virtual Network Operator (MVNO). They essentially “rent” space on Nextel’s network and sell their own plans and offer handsets Nextel doesn’t. Nextel is much more business oriented, Boost is for the kids.
Re: Re:
The problem w/ the Nextel patent is that Cingular, Verizon, AT&T (they were still around at the start of Nextel, right?), Sprint, et al, could have been innovating on the concept of PTT cell phones from the start and Nextel would have been improving on their “invention” as well. Think of how much more improved and advanced it would have been by now. But no. Nextel had their little rest period where they did nothing. I had Nextel for a long time… my first cell phone, actually… and I never saw any improvement over that initial “neat little PTT feature”.
BTW, didn’t Nextel merge w/ Sprint? I have Verizon and I don’t know anything about Nextel coming in.
You’re comment about the desirability of the i-Phone is right though. Read Mike’s comments about why simply copying won’t automatically beat out the original innovator. There is a lot of brand recognition and brand loyalty that would beat out any competition… if there actually was any. But instead, there will be almost no competition because of the artificial monopoly. And all because Apple was the first to put a few existing widgets together. (See my previous statement about what Apple hasn’t actually done here.)
Yeah, they innovated, but they also put an artificial barrier to keep anyone from innovating further behind them.
You’re glad they got the patents? And your reason is “that way it will be a long while before cheap imitators come out with their versions”? That’s bad. That’s why there will be very little innovation. I see what you’re saying about cheap imitations that truly pale in comparison… but why would anyone buy those anyway? That’s not a threat to Apple’s competitiveness. No one will by a piece of crap simply because it’s cheaper than a piece of gold.
Your comment about the price is also right on. If Apple didn’t have their artificial monopoly and had to compete in a truly free market, they would have to be very careful about how they price. I’m not saying that Apple is gouging here, but how much of that price could be shaved off if they had to worry about being undercut by a truly worth-while competitor… which they might…
Keep an eye on LG’s new phone. That’s going to be the only competition for the i-Phone for a while. It’ll also probably be the first new major patent war for the year. However, LG will probably say “Well, since Apple priced here, we’ll price just below them” instead of pricing for competition (which could be a lot lower).
I don’t want to sound like I’m attacking you here, so please don’t feel that I think you’re stupid or anything. I’ve just read through all of the comments back and forth between Mike and a few other posters and I realized your comment illustrated some of those contested points quite clearly.
Cheers.
Reply
It may be worth waiting for details on the hardware/software breakdown of Apple’s patents before degrading the importance of those patents.
It seems to me that no matter the state of Apple’s iPhone, Apple’s product will come out, make millions and/or billions, and in the end go down as another Apple success. Why such the big deal? I do not know. But from my viewpoint, Apple can only win. They get free PR, such as stuff like this, and they have another i-product, and you all know there i-products, whether there good or bad, always make mucho-money. It’s really simple as that. At least as far as I see.
@Danno – I can see that, if you do not have the patents (and since prior art tends to be unaccounted for) some of these patent hoarding and stockpiles may just go and fetch as much patents on the phone as possible.
I mean, yes, they filed patents, but, if they didn’t, I just bet someone (like creative perhaps, or more likely one of the patent companies) would figure out and try and patent the tech, then sue. And with it cheeper to settle…
Flaw in the argument
“If it’s so easy to copy, then it shouldn’t have cost that much to develop”. You might hesitate before advancing your argument on such a debatable premise . The revolutionary ideas are of course the simplest ones, their reception often following a similar path: 1. the idea is absurd and runs counter to science, logic, and common sense; 2. some of it might be interesting in a provocative way but how innovative can it be if it is intended only and ever to shock?; 3: not a bad extrapolation from existing theory and practice but there is little in it that is really new; 3. interesting no doubt but have you seen my article, “the blah of blah viewed blahly?” I thought of it first. 4. It’s so obvious one has to ask why they even bothered. Embarrassing really, shouldn’t have published/designed/manufactured it.
Granted, the little iPhone (lawsuit pending) probably doesn ‘t rank up there with the Big New Things historians of technology try to understand. But your argument reminds me of the vulgar marxist (I’m a refined marxist, so I should know) approach to new technology, seen occasionally in Europe today: property is theft, intellectual property is theft of a higher order, it’s the man-hours and social implications that count. Granted, patents often get in the way of new ideas, and they’re a nightmare for anyone trying something “new” at the lower end of the scale where little is startling. But might we ask: do we respond to innovation as a bureaucracy would or do we stop worrying and try something different?
Re: Flaw in the argument
The revolutionary ideas are of course the simplest ones
Can you give me an example of such a revolutionary idea?
But your argument reminds me of the vulgar marxist (I’m a refined marxist, so I should know) approach to new technology, seen occasionally in Europe today: property is theft, intellectual property is theft of a higher order, it’s the man-hours and social implications that count.
Yikes. My argument is nothing of the sort, and I’m sorry if I implied that in any way. I do not believe property is theft at all. I think property is the key to any marketplace, and the market is a very efficient means of production and innovation. I’m not against property at all.
If anything, my problem with the concept of intellectual property is that it’s about as anti-free market as you can get. You have a government setting up an *artificial* monopoly. That leads to gross inefficiencies which damage the overall market and economy and stunt innovation and production.
LG already has an iPhone announced Dec 06
see http://www.engadgetmobile.com/2006/12/15/the-lg-ke850-touchable-chocolate/
Typical socialist...
This is the thinking of someone who just wants to steal what others create– the primary argument against patents.
For if innovation is so easy that people odn’t need it to be protected, then why is there market value in it?
This article is a prime example of the fundamental inability to think that is taught in the american school system. A regurgitation of ideology while attempting to convince himself, and us, that he’s demolishing arguments.
The bottom line is– people who oppose patents are people who just want to steal technology.
Its the invention of something that takes time– figuring out what works. Once this is done, it is relatively easy to copy (as anyone can tell that a painting could take many hours to paint, but copied in a millisecond via a digital camera– source code is the same way)
Patents are imperfect, but they serve their purpose and they create innovation.
The innovation the author things is being stifled is simply theft. “IF others can steal apples technology, they will force apple to invent faster!”
This is the battle cry of the one who wants something for nothing. The mooch, the looter, the socialist. The man who wants the intelligent (those with ability )to create, and then to not be allowed to profit from their creations as their works are copied and stolen and elivered to everybidy (to those who “need”.)
Re: Typical socialist...
Georgy,
Are you new around here? Your argument is easily destroyed and we’ve done it repeatedly.
Typical socialist…
Nothing of the sort is true. I’m confused how the intellectual property system, which relies on gov’t granted, centralized controlled monopolies is less socialist than simply letting the free market do it’s thing.
This is the thinking of someone who just wants to steal what others create– the primary argument against patents.
You clearly have not read what I have to say about patents. My argument is very clear. That patents often slow down innovation, rather than encourage it. It has nothing to do with “stealing what others create.” It has everything to do with innovation and improving the economy.
For if innovation is so easy that people odn’t need it to be protected, then why is there market value in it?
As has been explained a hundred time. The gov’t is granting monopolies, which allow firms to get monopoly rents — but it’s bad for the overall economy because the money is being wasted, and not put into further innovation.
This article is a prime example of the fundamental inability to think that is taught in the american school system. A regurgitation of ideology while attempting to convince himself, and us, that he’s demolishing arguments.
You want to make an actual point or you want to just call me stupid in a few more words? If you want to actually argue on the points of my post, I’m more than willing to debate me. Calling me stupid (whether true or not) doesn’t support your argument. It just makes me question if you really have one.
The bottom line is– people who oppose patents are people who just want to steal technology.
No. The bottom line is your wrong. There is plenty of evidence that the patent system stifles innovation and slows the economy down. That’s bad for everyone. It has nothing to do with stealing technology.
Its the invention of something that takes time– figuring out what works. Once this is done, it is relatively easy to copy (as anyone can tell that a painting could take many hours to paint, but copied in a millisecond via a digital camera– source code is the same way)
Did you not even read my post? While it may be easy to copy the technology (and, it’s actually not as easy as you make it out to be), there’s a lot more than just the technology that goes into a product.
Patents are imperfect, but they serve their purpose and they create innovation.
You can keep saying that, but it’s difficult to support in the face of so much stifling of innovation done via the patent system. There are multiple effects of the patent system. One is to encourage people to create new patents. One is to charge people to license a patent. Whether or not that actually leads to innovation is a very different question.
Let me put it this way. Say the government suddenly decided they were going to give monopoly protection to Amazon.com. After all, Amazon was “innovative” in coming up with an online bookstore. By your reasoning, they should have a monopoly.
But what would the end result be? It would be that Amazon would be a lot more expensive to use, and there would be a lot less innovation from Amazon to stay ahead of the competition.
So why is it okay for the gov’t to give monopolies on other things?
The innovation the author things is being stifled is simply theft. “IF others can steal apples technology, they will force apple to invent faster!”
I do not understand what you are trying to say here.
This is the battle cry of the one who wants something for nothing. The mooch, the looter, the socialist. The man who wants the intelligent (those with ability )to create, and then to not be allowed to profit from their creations as their works are copied and stolen and elivered to everybidy (to those who “need”.)
No. I do not want something for nothing. Not at all. I am trying to encourage innovation to make the world better for all of us. I do want those who create to profit from their works, but I want them to do so in the most efficient way possible: the free market.
You make a lot of extremely wrong assumptions. I apologize if you read my article and believed it said those things, but your assumptions are wrong, and your argument does not hold up.
Re: Re: Typical socialist...
It seems that the problem with this particular exchange comes from the different views on the “capitalism v. socialism” issue in the West and in the East. In the West socialism is understood as government control over economy. In the East socialism is when they come and take away your property. So you’ll be calling each other socialist forever…
Re: Re: Typical socialist...
“Your argument is easily destroyed and we’ve done it repeatedly.”
If that’s the case, then I welcome you to try. So far, you haven’t gotten past asserting that I am wrong.
You are a socialist and you are apparently incapable of addressing arguments. You say idiotic things like that your position is one of supporting the free market… but that’s obviously wrong– in a free market situation, Apple could lock up its products for more than the 20 years that patents allow.
Bottom line is, you are advocating that others should be allowed to copy the original works of innovators… that is theft, no two ways about it. And that is NOT fostering innovation.
That you cannot defend your position, yet you repeat it (And of course ,claim you’ve demolished my arguments) show that you are not thinking, you are just regurgitating socialist propaganda.
IF you think you are a capitalist, you are one very confused person.
Presume there was no government to enforce patents. And I spent a couple decades inventing a car engine that was about 10 times more efficient than current engines. I sell this engine only under contract that prevents any buyer from duplicating the technology.
You go and steal one of my customers cars. Since you don’t have a contract with me, you copy the technology and start selling it cheap.
Why not sell it cheap? It cost you nothing to invent, you didn’t sink time into innovation, you just copied the product.
What I’m saying is that doing so is theft. You think that doing so will spur me to be more innovative because now I don’t have protection for my invention… but that’s the cry of the socialist who thinks innovators are an endless fount of free goodies.
Reality is that in such a hypothetical I have two choices– retire and leave the market to the theives like you… or go kill you and destroy your factory and reclaim what I stole.
Either of these are moral choices.
The bottom line is– you can’t support innovation by saying that people have a right to steal others work.
Re: Re: Re: Typical socialist...
If that’s the case, then I welcome you to try. So far, you haven’t gotten past asserting that I am wrong.
Hmm. I think most people can read the point for point refutation of your ideas. I didn’t assert that you were wrong. I showed why you were.
You say idiotic things like that your position is one of supporting the free market… but that’s obviously wrong– in a free market situation, Apple could lock up its products for more than the 20 years that patents allow.
I’m curious how a “patent” is a part of the free market? A contract would be. But, a patent is a gov’t granted monopoly. It’s protectionism, which is exactly what the free market is designed to get rid of. Please explain to me how a patent can possibly be a free market concept.
Bottom line is, you are advocating that others should be allowed to copy the original works of innovators… that is theft, no two ways about it. And that is NOT fostering innovation.
No. I am not advocating that at all (you really should read what I write). I advocate that companies focus on innovating and selling in the market, rather than fostering protectionist policies and attitudes that hurt everyone.
As for your claim its theft “no two ways about it” that’s just wrong. It’s not theft. It may be infringement, but infringement is quite different from theft — and even the Supreme Court acknowledged that.
For it to be theft, something needs to have been lost. It’s quite different, and claiming it’s theft is simply wrong.
You then say infringement is not fostering innovatoin, but you don’t explain why. I already explained my position as to why protectionism hinders innovation, but there are plenty of examples I can roll out if you don’t believe it. Where’s your support for the statement?
IF you think you are a capitalist, you are one very confused person.
Yes, how dare I support letting the market set the price. While you support gov’t granted monopolies. Who’s the capitalist?
Presume there was no government to enforce patents. And I spent a couple decades inventing a car engine that was about 10 times more efficient than current engines. I sell this engine only under contract that prevents any buyer from duplicating the technology.
Ok.
You go and steal one of my customers cars. Since you don’t have a contract with me, you copy the technology and start selling it cheap.
Ok.
Why not sell it cheap? It cost you nothing to invent, you didn’t sink time into innovation, you just copied the product.
Well, first of all, you assume that it’s so easy to copy. That may or may not be the case. But assuming it is easy to copy, the originator still has quite a head start, and can do much more. First of all, they have the brand name recognition from being the first to do all the work, and that’s not easy to compete with. Second, since they put so much time, effort and money into the development, it’s quite likely that they understand it a hell of a lot better than some copycat, and thus, they’ll be able to keep making the necessary improvements to keep there’s the best.
This is what happens in the market already. BMW makes fantastic cars. Really solid machines. In fact, they’re called “the ultimate driving machine.” By your reasoning, Hyundai could just start making cars just like BMWs and selling them cheaply.
However, you’re wrong. First of all, it’s not that easy to just copy the BMW. Second, there’s plenty of expense in building cars to such a level, so they wouldn’t be able to price it so cheaply after all. Third, by the time Hyundai had the BMW to take apart, BMW is already working on their next generation offering. Fourth, even if Hyundai could make a perfect replica of a BMW many people wouldn’t buy it because they don’t trust Hyundai’s reputation to BMW’s.
In other words, just being able to copy the technology has nothing to do with the larger issue.
I think a large part of the problem is that you don’t seem to understand the concept of fixed and variable costs. The fixed cost of development is a sunk cost. It doesn’t play into the pricing part of the equation. Pricing is eventually dependent on marginal cost, which doesn’t care about the R&D costs. I would suggest that it might help this conversation if you had a better grasp of economics.
What I’m saying is that doing so is theft. You think that doing so will spur me to be more innovative because now I don’t have protection for my invention… but that’s the cry of the socialist who thinks innovators are an endless fount of free goodies.
Do you have a point here or are you just calling me names. I have clearly pointed out why (1) what you describe is not theft in any sense of the word (based on law or common sense). I have clearly pointed out why the position is free market-based, not socialist. Yet you insist that both are true. What’s your reasoning? That both are true. Sorry, not convincing…
As for the claim that innovators are an endless fount of free goodies, I did not make that claim (and I’d suggest you brush up your reading comprehension skills if that’s what you thought I said). I am saying that innovation is a continuous process. There’s a lot of history to support that, and I’m surprised you seem to be denying it. Economic progress is based on that concept. In fact, about the only ones who disagree with that are some socialists, who believe that economics and innovation is a zero sum game — and you clearly don’t think that you’re a socialist, so perhaps you need to check your economics again.
Reality is that in such a hypothetical I have two choices– retire and leave the market to the theives like you… or go kill you and destroy your factory and reclaim what I stole.
Hmm. That’s a very limited two choices. You have many more than that. You can continue to win in the marketplace by building up your brand value and continuing to out innovate the competing product. That’s a sound strategy that helps everyone do better. I’m surprised it didn’t occur to a capitalist such as yourself.
Either of these are moral choices.
Ahhhhh! Why didn’t you say so? You’re arguing morals. Morals and economics are two separate issues. I’m arguing economics — and the end result is that if everyone does better due to the economics, the moral issues never come into play. Falling back on moral arguments before the economics are concluded confuses the issue. It explains why you’re confused.
The bottom line is– you can’t support innovation by saying that people have a right to steal others work.
That’s not the bottom line, and I never said you support innovation by letting people *steal*. So, you haven’t proven much. You set up a straw man that I didn’t say and then knocked it down. I’m not quite sure what you proved, but good for you.
Re: Re: Typical socialist...
This article is a prime example of the fundamental inability to think that is taught in the american school system. A regurgitation of ideology while attempting to convince himself, and us, that he’s demolishing arguments.
You want to make an actual point or you want to just call me stupid in a few more words? If you want to actually argue on the points of my post, I’m more than willing to debate me. Calling me stupid (whether true or not) doesn’t support your argument. It just makes me question if you really have one.
As if any more proof is needed, notice that I was characterizing your arguments, not you. But you, instead insist that I’m calling you stupid (interesting that you chose to leap to that conclusion) and then claim I’m not making any arguments. (Arguments which you generally ignored or said “I don’t understand this”)
So, while I was in fact, characterizing the nature of your arguments instead of the nature of you, I will now do the latter: Its quite evident that you lack the ability to think logically, or clearly, and that you are simply an automaton with no creative impulse arguing for your right to benefit from your superiors.
When presented with a counter argument, all you can do is claim that you’ve already beaten the counter argument, and call people names– including the amusing tactic of claiming that I’m calling you a name as a method of disparaging me, while at the VERY SAME TIME quoting me describing your argument rather than your person!
The irony here is lost on most readers who won’t follow closely, and I’m sure its lost on you– as I am certain you are too dim to see it.
There, I did call you stupid, finally. Satisfied?
If you want to get the topic off of how dim you are, try responding to my original arguments, or to the elaboration and hypothetical I have since provided. If you can comprehend them.
Ignoring the point...
“It’s not just about copying the technology, but the overall look, feel, quality and perception of the device.”
You’re missing the point. Two things will happen when you “clone” a device with the same look and feel. First, you now have a product you can’t differentiate in the marketplace. Second, the original companies’ lawyers are now going to swarm you over trademark and copyright issues.
Re: Ignoring the point...
You’re missing the point. Two things will happen when you “clone” a device with the same look and feel. First, you now have a product you can’t differentiate in the marketplace. Second, the original companies’ lawyers are now going to swarm you over trademark and copyright issues.
“Can’t” differentiate? Um. No. If I came out with an IDENTICAL iPod tomorrow, I can bet that Apple would continue to sell much better than I could. Why? Because they have much better brand recognition. They have iTunes and agreements with record labels. They also have much better economies of scale so I couldn’t produce it at a reasonable price.
You can have the exact same technology and there are always ways to differentiate.
As for your second point, I’m not sure what that has to do with anything. I think you have totally missed the point. My argument is that even if the technology is the same, there’s more to the device than just copying the technology. If it was that easy, others would be a lot more successful in the marketplace.
Re: Re: Ignoring the point...
Mike maybe YOU personally couldn’t produce in scale, but I betcha Microsoft could. Copying an existing device is far easier than creating it because the process of creation means you’re starting from nothing. Every little issue that comes along you must solve for yourself. When you copy you gain the benefit of all the development work, though you will have your own manufacturing issues to deal with (of course). Give it a rest okay? Like it or not, patents protect that which another company (not some guy with a blog) would be able to copy and sell.
Re: Re: Re: Ignoring the point...
Mike maybe YOU personally couldn’t produce in scale, but I betcha Microsoft could.
Which is why Microsoft has been so successful in copying each Apple product… oh wait, that’s wrong. Microsoft is consistently behind Apple when it comes to innovation. So, uh… what was your point again?
Copying an existing device is far easier than creating it because the process of creation means you’re starting from nothing.
You have the mythological view of innovation that it’s starting from nothing. That’s false. The iPhone didn’t come from nothing. It came from the concepts before it and was modified accordingly.
Like it or not, patents protect that which another company (not some guy with a blog) would be able to copy and sell.
Again, that’s a simplistic and wrong view of patents. Why is everyone so focused on “PROTECTING.” Didn’t you learn that protectionism is bad? It’s bad for the economy. It’s bad for consumers. Why are you okay with it here? We don’t want to encourage protectionism. We want to encourage competition and innovation.
How can they even file a patent??
I’m not much for patent laws. I don’t get it. But what really irks me is the fact that Mr. Jobs over at Apple is claiming credit for developing this technology. NONE of it is new. It’s a cell pone with a large screen, gps, and music capabilities. Been there before. Not even the multitouch is new. That technology has been around for at least two years that I have been aware of. Most likely before that.
But as has been stated before, Apple is the first to come up with a design that incorporates these features in a device that people will actually want to use. Just wait for the next microsoft product to rip off Apple. But they have been playing that game back and forth since the original Apple computers.
Filed patent != Granted patent
I don’t think many of Apple’s patent applications on the iPhone is going to be close to grant, so I’d expect them to be boiled down to some fairly narrow claims on specific features of the multitouch interface by the time they’re through- that shouldn’t provide too much in the way of barriers to other companies copying the bulk of the functionality or interface.
The biggest real piece of IP in this product may be related to how they’re achieving adequate battery life with that screen, the phone chipset and Wifi running together! …If they are;-)
Uhh, no.
Wow what a ridiculous argument, which is actually an argument against ALL patents.
There are a couple ways to protect your inventions, one being patents, where you document it completely but then get legal protection for a set period of time, and the other is basically trying to keep it secret, trade secrets.
The problem with trade secrets and technology such as Apple’s is that these days it’s pretty easy to reverse engineer a lot of. Thus patents are the only way to protect their investment in R&D. And believe me, Apple has put a lot into R&D for the iPhone.
And no, it’s absolutely not true that if something was expensive to research and develop it should be hard to copy. A lot of research that costs a lot of money can be spent on developing a technology, but once that technology is figured out it could be something trivial to copy.
So, say the iPhone really is as great as it seems and Apple does make a buttload of money off of it, why should Apple have to do research for Motorola, Nokia, etc. These are competing for-profit companies we’re talking about, they have no obligation to each other.
If anything, Apple is doing a HUGE service to the consumer by forcing all these other companies to finally innovate, which will hopefully lead to even better technology. I, for one, would like to see other cell phone companies create some technology of their own, rather than just clone everything in the iPhone (I know we’ll see some of that though too…)
The only ones hurt by the iPhone will be the other phone manufacturers if they don’t get off their asses and do some serious innovation, especially in their interfaces… THANK GOD for that. I mean look at some of these (non-iPHone) cell phone interfaces!
Re: Uhh, no.
Wow what a ridiculous argument, which is actually an argument against ALL patents.
It’s not, actually, though it’s close. If the research keeps showing that patents slow the pace of innovation, then what’s wrong with coming out against the patent system?
Thus patents are the only way to protect their investment in R&D.
And here’s where you lose me. Why do you need to “protect” an investment? You make an investment because you want to get a return on it, and what’s wrong with the market (free markets, efficiency, etc) generating that return, rather than a gov’t granted monopoly? It’s a lot more efficient. It’s not about “protecting” an investment. You don’t want to protect investments, you want to encourage investments — and if patents slow down the rate of investment, then you’ve screwed stuff up.
So, say the iPhone really is as great as it seems and Apple does make a buttload of money off of it, why should Apple have to do research for Motorola, Nokia, etc. These are competing for-profit companies we’re talking about, they have no obligation to each other.
You seem to be confusing “doing research for” with “good old fashioned competition” which is good for the market, good for consumers and good for the economy.
If the only thing Motorola, Nokia and others can do is copy Apple, then Apple will still win and make a huge return on investment. People don’t want copies, and by the time Motorola and Nokia come out with their versions of the iPhone, Apple will already be on to something else which will be much better.
Apple v. LG Coming Soon.....
Looks like the first company that may get a taste of those 200 patents on the backside could be LG.
iPhone and LG KE850 Separated at Birth?
What has Apple done that's new here?
I just wanted to throw that question out here… everyone seems to be talking about Apple protecting “everything it’s worked for here”. What have they done that’s new?
From what I can tell (unless I missed something in the article), Apple has done nothing more than take a lot of existing concepts, thingies, and widgets and put them into a single box.
1) Phone
2) mp3 Player
3) PDA
4) Large touch screen
5) multi-touch interface (which is not new)
If that’s the case, why should they be the only one’s allowed to do so? Why should they be the only ones who are allowed to take “other peoples works” and put them underneath their own logo?
Reality
If it’s so easy to copy, then it shouldn’t have cost that much to develop.
This statement makes it clear that you’ve never been involved in real development. The hard work of R&D is to make it look easy.
I just finished a project that involved 3 years of interviews, testing and refinement for an interface. Now someone could come along and copy that interface without doing all the research for WHY it works that way. And under our current copyright/patent systems they would be justifiably in the wrong.
In most projects, part of the business analysis is “barrier to entry.” The cost of someone coming along and following you into a market. That is a business thing – not a legal or ethical thing. And it has nothing to do with patents or other rights.
It’s easy to make Aspirin. Was the original process not worthy of a patent?
Re: Reality
This statement makes it clear that you’ve never been involved in real development.
Well, no, I have, but that’s ok.
I just finished a project that involved 3 years of interviews, testing and refinement for an interface. Now someone could come along and copy that interface without doing all the research for WHY it works that way. And under our current copyright/patent systems they would be justifiably in the wrong.
So you say. But what if they made it even better?
In most projects, part of the business analysis is “barrier to entry.” The cost of someone coming along and following you into a market. That is a business thing – not a legal or ethical thing. And it has nothing to do with patents or other rights.
Indeed. If it’s a business thing, then why is it our public policy to give additional barriers to entry for businesses, rather than ecnouraging a more efficient market?
WAAHHHHHHHHHHH
Apple is the only one in the industry that seems to consistently inovate and give customers decent product for their money. Let them have their patents. Others should have to do the work too in order to reap the benefits. Hurt the economy, hardly. Maybe Nokia and Motorola will work harder to keep business. The customer should win in the end either way!!!
Re: WAAHHHHHHHHHHH
Apple is the only one in the industry that seems to consistently inovate and give customers decent product for their money. Let them have their patents.
Why? If they’re making money from selling that innovation, why do they deserve an extra monopoly that forces the rest of the industry to wait or pay extra to do something similar?
Others should have to do the work too in order to reap the benefits. Hurt the economy, hardly. Maybe Nokia and Motorola will work harder to keep business. The customer should win in the end either way!!!
No. The customer loses. Innovation slows because Nokia and Motorola have to innovate *around* Apple, rather than innovating in addition to them. You do realize that most innovation is built on the backs of those who came earlier, right? Forcing everyone to innovate separately is forcing everyone to reinvent the wheel over and over again. It’s not efficient. It’s not good for the economy and it’s not good for the consumer, since they have to pay extra to cover those fees.
are patents needed?
Mike,
I think we can all agree that the patent system has some serious flaws. However, I think that you place too much emphasis on letting a free market decide on which products/companies are winners or losers.
IMO the patent system is needed to protect individuals and smaller companies from getting their ideas copied by large companies that have the manufacturing and market size to take a great idea to market more successfully than the individual or smaller company.
You may be right that Apple doesn’t need protection. They are a huge company that can get rapid adoption of a new product and can maintain market share while they continue to innovate to stay ahead of the market.
However, IMO that has nothing to do with whether or not a patent system has any validity. Just because the patent system is being abused by patent trolls and the patent office doesn’t seem to have anyone who understands the meaning of “non-obvious” doesn’t mean the patent system isn’t necessary.
Re: are patents needed?
I think we can all agree that the patent system has some serious flaws. However, I think that you place too much emphasis on letting a free market decide on which products/companies are winners or losers.
Why?
IMO the patent system is needed to protect individuals and smaller companies from getting their ideas copied by large companies that have the manufacturing and market size to take a great idea to market more successfully than the individual or smaller company.
Again, why are you in favor of protectionism? Haven’t you learned that protectionism makes things worse for everyone?
Secondly, why do you believe the myth that the bigger company can just as easily copy the smaller one successfully. Haven’t you noticed that small companies tend to outrun larger companies by being more flexible and innovative on an ongoing basis.
Google out innovated Microsoft. Microsoft out innovated IBM. Amazon out innovated Barnes and Noble. On and on and on. There are examples galore. The idea that a big companies can just kill any small company in its space is false. Big companies are slow and make bad decisions, especially against small upstarts.
Furthermore, if the big company CAN bring the concept to market more efficiently than the small company, then SO WHAT? That’s GOOD for everyone. It’ll get more of the product out to customers who want it at a cheaper price. What’s the problem?
However, IMO that has nothing to do with whether or not a patent system has any validity. Just because the patent system is being abused by patent trolls and the patent office doesn’t seem to have anyone who understands the meaning of “non-obvious” doesn’t mean the patent system isn’t necessary.
I haven’t said that the system is totally unnecessary, though I’m beginning to lean that way. If you can show me cases where the patent system actually put in place the right incentives, I’d be willing to consider that. But, I’ve yet to see it. In every case I’ve looked at, the incentives the patent system creates make things worse for everyone by slowing innovation and increasing the costs of innovation and the costs to consumers.
That’s just bad.
Re: Re: are patents needed?
The little guy getting screwed isn’t a myth. I did a quick search and here is just 1 example. That being said, I do think your basic point is worth examining: Does a benefit to society as a whole outweigh the benefits of an individual?
Here is the example of the little guy getting screwed that I found:
http://findarticles.com/p/articles/mi_m0DTI/is_11_27/ai_57475878
Chasteen’s case involved a patent he was awarded for a fuel-injection system for snowmobiles in the late 1980s. He and his partner approached Polaris Industries of Roseau, Minnesota, about a deal. “When we first met with their head engineer, he told us we had made a massive leap in technology,” says Chasteen, 47. Initially, Polaris wanted to buy Chasteen’s system outright. But the inventor didn’t want to sell. Eventually, Polaris verbally agreed to have Chasteen supply them with his engines. After about a year of development, Polaris pulled the plug, claiming it was going to hold off on selling fuel-injected snowmobiles.
Chasteen was dumb-founded when, a short time later, Polaris introduced a fuel-injected snowmobile. He immediately bought one and tore it apart . . . and found it used the very technology he had developed. “We were furious,” Chasteen says. “They’d simply cloned ours.” Chasteen decided to sue Polaris as well as Fuji Heavy Industries, which was supplying Polaris with the fuel-injection system.
After almost 11 years, Chasteen finally got the justice – $70 million worth of it – he deserved. And his isn’t an isolated case.
Re: Re: Re: are patents needed?
oops… forgot to put my name on the follow up comment… don’t like seeing “Anonymous Coward”
counterexample
Actually, one reason Apple was able to keep rivals to the Mac GUI from being serious competitors was precisely because of a patent it held on QuickDraw regions. These were the most efficient known way of doing drawing and clipping with non-rectangular shapes, but because of the patent, nobody else was allowed to use them.
Mikes Degree is in Socialism!
What is “Industrial and Labor Relations” if it isn’t training to be a union shop steward?!
I was right, you were taught to be a socialist in school. A shame, that.
Since you have absoluately no experience as an engineer, and no training in a skill that involves innovation, its not surprising that you hold engineering with such disdain.
Sorry, those who can’t sure have a lot of opinions about those of us who can.
You shouldn’t be so upset that we price your opinions on the market at essentially zero.
I see now this is a blog for ignorant MBA types to spread buzzword complient ignorance to other MBAs. It seems that MBA programs are one of the worst educational values out there— I haven’t met one yet who had a fucking clue. But they all seem to think they were born to be masters of the universe.
One thing about engineering is, it teaches you that you don’t know it all.
Re: Mikes Degree is in Socialism!
What is “Industrial and Labor Relations” if it isn’t training to be a union shop steward?!
Don’t make assumptions about things you know nothing about. It doesn’t make you come out looking well.
The professors I learned from covered a wide variety of theories, and most of the economics I learned came from those trained at University of Chicago — basically the center of free market capitalism. I’m sure you’d like to explain how these theories that they helped me learn are “socialist” yes?
One of the good things about the school, actually, is that they did present so many different ideas, you couldn’t just be convinced of one — but had to weigh and compare them all to actually understand which ones made sense. It was quite useful training — and not socialist at all. In fact, I’d say the majority of the professors there were probably the opposite of the assumption you made.
However, if you want to make yourself look ignorant on a topic you know nothing about, that’s your decision.
Since you have absoluately no experience as an engineer, and no training in a skill that involves innovation, its not surprising that you hold engineering with such disdain.
You again make bad assumptions, and I’d suggest you stop doing so. It’s not helping your case.
I do not have a formal degree in engineering, but to assume that I do not do anything innovative, or have no engineering skills is wrong (very, very wrong).
Are you really saying that only degreed engineers can discuss economics and innovation? Couldn’t I just say you’re not qualified in the topic, since you don’t have a degree in economics? That would be silly, wouldn’t it?
You shouldn’t be so upset that we price your opinions on the market at essentially zero.
You have every right to do so. That’s what the free market is all about. However, there are plenty who price my opinions on the market quite highly. That’s how we stay in business, and we’re doing quite well. So, the free market appears to be working.
I see now this is a blog for ignorant MBA types to spread buzzword complient ignorance to other MBAs. It seems that MBA programs are one of the worst educational values out there— I haven’t met one yet who had a fucking clue. But they all seem to think they were born to be masters of the universe.
Yes, gross generalizations make you look smart.
What’s amusing here is that I actually agree with you about many MBAs, though certainly not all. But, what’s even more amusing is that it’s usually the MBAs who are more upset with these theories than the engineers. So, you’ve just lumped yourself in with a bunch of people who have (as you say) “no fucking clue.” Not sure what that says about you.
One thing about engineering is, it teaches you that you don’t know it all.
I do not claim to know it all, at all. Never have, never will. Part of the reason we keep these comments open is to have discussions to help us learn. If we knew it all, we’d have no comments and just “tell you” the truth. In fact, even your statements help us learn. They help us learn that we need to do a better job expressing our arguments for people who have little to no training in economics and who jump to knee-jerk conclusions about economic theory based on faulty understandings of how the world works.
I appreciate that lesson, and I’ll keep striving to better explain the economics involved here if you’re actually willing to discuss them.
Continuous innovation is absolutely necessary, but it isn’t sufficient. One requires a functioning marketplace in order to cover the costs of innovation today & tomorrow (through entrepreneurial profit)… which is the whole idea behind competition through innovation, or Schumpeter’s view of the economy being one of dynamic disequilibrium, or monopolistic competition.
There’s a whole body of theory emerging from economic New Growth Theory, starting with Paul Romer around 1990, with his paper “Endogenous Technological Change” about how technological change leads to growth.
According to Romer, “growth is driven fundamentally by the accumulation of a partially excludable, nonrival input”. Non-rival goods are goods where more than one person can posses it, e.g. an idea, a copy of a MP3, software, etc. Goods that are partially excludable imply the creator of the good can prevent people from using it or re-producing it to a certain degree. This isn’t just about law, by the way, it’s about the theoretical ability for something to be excluded (whether through physical, technological, legal, or other means).
Knowledge — one of several inputs into successful innovation — is non-rival and at best partially excludable (it will eventually leak out). Intellectual property law is one way to enact this, as are things like DRM, etc.
A fully non-rival, non-excludable good is a public good, and exchange of such goods really isn’t governable by a marketplace. Excludability is the death knell: If I can’t prevent somone from using or reproducing something, I can’t really exchange it in a market as there’s no demand incentive. That means I can’t cover my costs of today, and I can’t cover my costs of tomorrow through profit, leading to no supply incentive.
The environment, for example, could be considered a public good. Any restrictions on the use of the environment can’t really be settled well through a market, they have to be through legal means.
So, the point is this — if we feel that human capital & knowledge capital is valuable & scarce, or perhaps that we feel that time is scarce and time is significant big factor in how much knowledge is generated in a new technology, we have two choices:
– have a public or private body invest in knowledge-intensive goods and fund it via taxes, retained profits from other goods, or donations
– subject knowledge-intensive goods to a market of monopolistic competition. It’s “monopolistic” because there is no standard equilibrium price-taking competition when exchanging non-rival goods.
The former has the benefit of working when the investment is directed at something that can create new customers, new markets and avenues for growth. Examples include the TCP/IP protocol suite and many open source projects. But it also has the potential of squandering tremendous resources because it’s not directly subject to market demand. (Witness the explosion of duplicate projects out there that all “scratch that itch” just a bit differently…)
The latter works too, is more efficient at allocating resources at opportunities in demand, but by nature will lead to onerous temporary restrictions on freedom of use.
My view: Both approaches can work in certain circumstances, but i caution people from having delusions of one system being clearly superior to the other.
In a market system, the trick is to find the balance between utility and restriction. Patents make sense to me. Does the patent system need reform to get rid of trivial or obvious patents? Yes. Does it make sense to reduce the number of years a patent is valid? Yes — innovation cycles are quicker, markets respond faster, etc. Should Apple avoid patents and let the innovation in the iPhone become more of a ‘public good’? Probably not in the short run. It’s not in the interests of their employees, shareholders, or customers, who want Apple to continue to invest in technological change as a way of increasing its capacity for creating wealth. Sometimes it’s better for all to ‘spread the wealth’ rather than keep it localized, but it’s not clear that this is such a case.
Re: Re:
Stu,
Thanks for the well thought out discussion on the economics of the situation. I don’t agree with some of your points, but it is well argued.
According to Romer, “growth is driven fundamentally by the accumulation of a partially excludable, nonrival input”.
I agree with this actually.
A fully non-rival, non-excludable good is a public good, and exchange of such goods really isn’t governable by a marketplace. Excludability is the death knell: If I can’t prevent somone from using or reproducing something, I can’t really exchange it in a market as there’s no demand incentive. That means I can’t cover my costs of today, and I can’t cover my costs of tomorrow through profit, leading to no supply incentive.
This is where it gets tricky. I wouldn’t say it’s a “death knell” though. That’s taking the idea too far, and assuming a static and simple market, rather than a complex dynamic one where goods and services are bundled and the market is always changing through continuous innovation.
Also, the final point you make that you can’t cover the costs of tomorrow applies equally to any static, fully competitive market. Price gets driven to marginal cost and profit margins disappear. That’s why you have dynamic complex markets so that you can create profits.
The environment, for example, could be considered a public good. Any restrictions on the use of the environment can’t really be settled well through a market, they have to be through legal means.
I would resist the urge to call it a public good, because there are other issues involved with public goods that don’t necessarily apply here.
we have two choices:
– have a public or private body invest in knowledge-intensive goods and fund it via taxes, retained profits from other goods, or donations
– subject knowledge-intensive goods to a market of monopolistic competition. It’s “monopolistic” because there is no standard equilibrium price-taking competition when exchanging non-rival goods.
You combine a bunch of things into that first choice, that actually suggests there’s a hell of a lot more than two choices. As I point out above, in a dynamic market, things are a little different because you can continue to innovate. You can also have perceived value in terms of brand, quality or other features. Finally, if you stop looking on the goods in question as goods to be sold, but an unlimited resource to be used to promote another (most likely rivalrous) good, suddenly tremendous new opportunities open up for markets.
You sort of gloss over that possibility in your first option, making it sound like that’s not really possible — but I disagree. It’s not just possible, it’s where the best economic return is likely to come from.
But it also has the potential of squandering tremendous resources because it’s not directly subject to market demand. (Witness the explosion of duplicate projects out there that all “scratch that itch” just a bit differently…)
That’s true of capitalism in general. Yet, it seems to work out okay thanks to fairly efficient capital markets. What we’re good at is testing a lot of stuff quickly and killing off those that aren’t good quickly. There is some inefficiency on the front end, but it shakes out pretty quickly as better overall solutions come out of it.
The latter works too, is more efficient at allocating resources at opportunities in demand, but by nature will lead to onerous temporary restrictions on freedom of use.
I disagree that it’s more efficient. It may mean less upfront allocation of resources, but the actual cost in terms of the long term effect on the market is much greater. You do not get the market to accurately value products this way, and you have tremendous waste if you’ve given monopoly protection to the wrong solution. Even if you choose the right solution, you then delay additional improvements by granting a protectionist state.
My view: Both approaches can work in certain circumstances, but i caution people from having delusions of one system being clearly superior to the other.
Both approaches *can* work, it’s true. But, I think history has made it pretty clear that the first approach is much more likely to work. If you want to focus on the second option, then I think there needs to be strong evidence to explain why the first option is likely to be sub-optimal (i.e., that the market has failed).
In a market system, the trick is to find the balance between utility and restriction. Patents make sense to me. Does the patent system need reform to get rid of trivial or obvious patents? Yes. Does it make sense to reduce the number of years a patent is valid? Yes — innovation cycles are quicker, markets respond faster, etc.
Agreed.
Should Apple avoid patents and let the innovation in the iPhone become more of a ‘public good’?
Again, you throw the phrase “public good” out where it doesn’t belong.
Probably not in the short run. It’s not in the interests of their employees, shareholders, or customers, who want Apple to continue to invest in technological change as a way of increasing its capacity for creating wealth. Sometimes it’s better for all to ‘spread the wealth’ rather than keep it localized, but it’s not clear that this is such a case.
You make an implicit assumption here that the end result is actually worse for Apple if they don’t have protections on these things — and I disagree. I’d argue that the increased competition would push Apple to open up new avenues of revenue discovery, while allowing them to stay much further ahead of competitors by innovating ahead of the curve. I’d argue they’re leaving money on the table by relying on protectionist policies. It’s not about “spreading the wealth” or “keeping it localized.” It’s about increasing the overall pie.
Mike is clueless
Hey, Mike,
Your arguments aren’t worth shit.
Get a life , man….
“If it was so expensive to develop xxxx, then how would those other companies be able to just copy it? If it’s so easy to copy, then it shouldn’t have cost that much to develop.”
Mike, you have to be kidding!
How much time and money do you think went into producing the star wars movies? How much does it cost to hit record on your VCR and have an exact copy of the resulting work?
The innovator ALWAYS incurs the additional cost to develop a product:
Cost of product = development cost + manufacturing cost + profit
But, the copy-cat only has the “manufacturing cost” to deal with:
Cost of product = manufacturing cost + profit
So, if the innovator had to spend $1 million to develop a product, and wants to make $1 profit on each sale, then they may need to sell the product for $1.50, where 50 cents of that serves to reimburse their investment into the R&D of the product.
But, for the copy-cat, then never spent any money on R&D, so there’s no need to add a surcharge, thus they can sell the product for only $1.00 and still make the same $1 profit per sale as the innovator.
So, why would any consumer buy the product from the innovator, when they can buy the exact same thing from the copy-cat for 33% cheaper ($1.00 instead of $1.50)? Answer: They wouldn’t.
So, why would any company bother to spend any money on R&D (to innovate) when they could never get that money back because if they tried to recoup their R&D expense within the product price, it will most certainly set the product’s price above it’s copy-cat competitors? They wouldn’t, thus without patents, innovation would suffer because it wouldn’t make much business sense to spend money to innovate a new product without a high chance to recoup that expense back in addition to making a profit.
Patents help the innovator by giving them a reasonable amount of time to recoup their R&D expense by keeping the copy-cats out of the market, thus making “innovating” a worthwhile activity – which encourages innovation.
Re: Re:
How much time and money do you think went into producing the star wars movies? How much does it cost to hit record on your VCR and have an exact copy of the resulting work?
You are confusing fixed and marginal costs. You shouldn’t compare them.
So, if the innovator had to spend $1 million to develop a product, and wants to make $1 profit on each sale, then they may need to sell the product for $1.50, where 50 cents of that serves to reimburse their investment into the R&D of the product.
You really are misunderstanding sunk costs.
So, why would any consumer buy the product from the innovator, when they can buy the exact same thing from the copy-cat for 33% cheaper ($1.00 instead of $1.50)? Answer: They wouldn’t.
And now you’re misunderstanding how markets work.
So, why would any company bother to spend any money on R&D (to innovate) when they could never get that money back because if they tried to recoup their R&D expense within the product price, it will most certainly set the product’s price above it’s copy-cat competitors? They wouldn’t,
And now you’re misunderstanding how economics works.
They wouldn’t, thus without patents, innovation would suffer because it wouldn’t make much business sense to spend money to innovate a new product without a high chance to recoup that expense back in addition to making a profit.
Ok. I thought I explained all of this above, but apparently I didn’t do a very good job.
You are making a bunch of wrong assumptions here. First, you are assuming a static market, which doesn’t exist. If a company stops innovating, it dies. That’s competition. That’s how the market works. So, companies are always innovating. A copycat can only do so much to catch up, and the innovator should always stay ahead. If they don’t, then they didn’t compete very well.
This is GOOD for innovation and GOOD for everyone, because it keeps companies continuously innovating, making better products, increasing productivity and generally helping everyone.
As for your point that no one would buy from the innovator, that’s false as well. Your pricing argument is also wrong. You don’t price based on the cost of fixed and variable costs, but only on the variable costs (which in your example would be the same). If you don’t understand why, do some research on fixed costs and sunk costs.
There is more than just the copy at stake. The originator can add perceived brand value to the product as well so that people want to stick with the originator (witness my discussion of BMWs and Hyundais above). It’s not so easy to “just copy” as you claim. There are plenty of additional costs involved, and in the end they don’t have the brand reputation to make it matter anyway.
Instead, what happens is the patent gives the originator time to sit back and rest on their laurels, rather than continuing innovation. That’s why innovation slows down, rather than advances. There’s no need to innovate until it gets closer to the patent expiring.
Look at the steam engine, generally considered one of the most important innovations in shaping the industrial age. It was patented, and pretty much nothing happened for many years. It was only after the patent ended that competition and *real* innovation happened, that drove productivity and began the industrial age.
Patents help the innovator by giving them a reasonable amount of time to recoup their R&D expense by keeping the copy-cats out of the market, thus making “innovating” a worthwhile activity – which encourages innovation.
Ah, well, here’s the problem. You claim “a reasonable amount of time.” Who decides what’s reasonable? There’s no reason for the government to do that when the market is perfectly capable of doing it. That’s the lesson the free market teaches you. Gov’t protectionism is actually bad. It helps to let the free market spur on innovation.
The world you describe is a static one where innovation is a one-off thing, rather than a continuous process. Unfortunately, that’s not the world that actually exists, and that’s why patents do more to harm innovation than to help it.
Mike,
First, my main point here is that I think the “exclusivity” protection of a patent is a good thing. Yes, there are other issues with patents such as what is obvious or not. But, from what I understand from all of your posts, it seems like you are against this “exclusivity” power of a patent and instead think that every idea should be up for grabs to whoever can bring it to the market the best. This is the only ONLY point of what I am debating here, so please do not bring up any other issue:
“First, you are assuming a static market”
My “Static” example, as you call it, is perfectly valid and allows for a clear and easy illustration of how a patent’s exclusivity actually creates an “incentive to innovate” as oppose to a world where patents didn’t exist and the most common thought after an idea is initially conceived would then be “why bother spending time to persue/develop my idea if some big company can just come along and steal the final outcome of my research/development and use their larger resources to out market me?”.
There are two main steps in bringing an innovation to the market.
1) Thinking up the innovation
2) Having the resources to successfully bring the innovation to market
A patent is an acknowledgment of the first step.
Many inventors may not have all the resources/skills needed for the second step and require time to develop them – here lies your misguided opinion that the exclusivity of a patent prevents innovations from reaching the market.
A patent is published for the whole public to see, including many companies that have the resources to successfully bring it to market. So, even if an inventor doesn’t have the resources to bring his idea to market, whats to stop a company from licensing the idea from the inventor and bringing it to the market themselves? Thus, if a company can license the technology from an inventor and bring it to market, how is the “exclusivity” of a patent preventing that innovation from reaching the market?
In addition, there are probably ton’s of innovations documented in patents that companies would have probably never thought up on their own! So, the patent system actually increases the chances of an innovation reaching the market, by exposure/disclosure.
However, in your world (where the patent system didn’t exist) the only innovations that would ever reach the market would be the ones that only came from the companies themselfves. All of the ideas from independant inventors that may not have the resources to bring it to market would be lost. So, in your patent-less world, many innovations would never be realized. Howver, luckily in the current patent-world, the only potential hurdle in bringing an innovation to market is the possibility of having to share the profits with the innovation’s creator.
So, in which world do you think an innovation has the best chance to be known and reach the market?
Re: Re:
First, my main point here is that I think the “exclusivity” protection of a patent is a good thing. Yes, there are other issues with patents such as what is obvious or not. But, from what I understand from all of your posts, it seems like you are against this “exclusivity” power of a patent and instead think that every idea should be up for grabs to whoever can bring it to the market the best. This is the only ONLY point of what I am debating here, so please do not bring up any other issue:
Okay, we can look at the exclusivity part of it, but you can simplify a discussion to a level that it’s useless. The purpose of the patent system is to put in place incentives for innovations. Getting more granular than that can make the discussion meaningless.
There are two main steps in bringing an innovation to the market.
1) Thinking up the innovation
2) Having the resources to successfully bring the innovation to market
A patent is an acknowledgment of the first step.
This is a gross simplification, and perhaps explains part of the disconnect in this discussion. First, you use innovation here, when you actually mean invention. There’s an important distinction. An invention is just the idea. An innovation is something that combines an idea and a market successfully. We’re talking about promoting innovation, not invention.
Also, your statement above reinstates the myth that innovation comes in a puff of smoke out of nowhere. That it’s just a random idea that comes fresh and clean from someone’s brilliant mind. That, unfortunately, is not how innovation works at all in almost every case. It’s an ongoing process. A process of understanding, improving, tinkering, marketing, servicing, and much much more.
So, to separate them out so simply is false, and isn’t how the world works.
When you simplify the situation down to make your point, the problem is that you have simplified the situation down to a world that doesn’t exist, and therefore the points you make do not apply. We can start at that point, but as we add back in reality, you will find that your points no longer make sense.
Many inventors may not have all the resources/skills needed for the second step and require time to develop them – here lies your misguided opinion that the exclusivity of a patent prevents innovations from reaching the market.
If it is true that inventors do not have the resources to bring a product to market, that is a business issue. The nice thing about capital markets these days is that capital flow is quite efficient. If someone really has a good idea, there are means to obtain the finances to take them to market . That’s much more true these days than in the past.
A patent is published for the whole public to see, including many companies that have the resources to successfully bring it to market. So, even if an inventor doesn’t have the resources to bring his idea to market, whats to stop a company from licensing the idea from the inventor and bringing it to the market themselves? Thus, if a company can license the technology from an inventor and bring it to market, how is the “exclusivity” of a patent preventing that innovation from reaching the market?
You are making two points here that should be separated. The first is the supposed benefit of the patent in explaining a product. That is, indeed, one benefit of the patent system — though, it’s increasingly not actually used. Most actual patents do not explain an actual product or procedure to the point that it can actually be used to recreate that product. They’re filed to be as broad as possible for economic reasons.
The second point is that the marketability of patents then makes it easier to bring some products to market by easing the licensing process. However, you could just as easily do that through a contractual relationship, rather than a patent licensing scheme. Or it could be accomplished through an employment agreement. There are lots of mechanisms in place in the market that allow this to happen without granting an exclusivity right.
Furthermore, because of the exclusivity right, anyone who comes up with a similar idea independently (or even a better version) is suddenly limited, and needs to pay extra. That money that could have gone into further innovation, instead goes to whoever was lucky enough to get there first, but who had failed to successfully bring the product to market. It’s rewarding failure in the marketplace, which is not a good incentive system.
However, in your world (where the patent system didn’t exist) the only innovations that would ever reach the market would be the ones that only came from the companies themselfves. All of the ideas from independant inventors that may not have the resources to bring it to market would be lost. So, in your patent-less world, many innovations would never be realized. Howver, luckily in the current patent-world, the only potential hurdle in bringing an innovation to market is the possibility of having to share the profits with the innovation’s creator.
You have an idealistic view of the patent world that is entirely false in reality. Honestly, if an inventor cannot figure out a way to bring the product to market without patents, I don’t see how that’s an issue. If I write the best novel in the world, but am unable to get it published, that’s my problem. I don’t ask the gov’t to stop other novelists from writing a book on the same idea because they might have more money that I do.
So, in which world do you think an innovation has the best chance to be known and reach the market?
The real world. The world where we have free flow of ideas and capital, such that capital and ideas and markets get matched up equitably in a manner that best serves society.
As a basic example, look at the steam engine, the basis for the industrial revolution. It was patented, and because of that “exclusivity” not much happened. When it finally went off patent and there was real competition and the market could innovate that progress began. Competition is a wonderful engine in driving innovation forward.
And while you claim that we must look at things in a static world, that world DOES NOT EXIST. The world is dynamic, innovation is dynamic. The point of the patent system (the entire, Constitutionally written point) is to put in place incentives for innovation. If the incentives already exist then there’s no need to put more in place.
You seem to think in your static world that innovation is just two things: think up idea, bring it to market. It’s not. It’s understanding a market, understanding a need, fulfilling that need, and continually improving on it.
The reward, and the incentive for innovation is that there’s demand, and the market will reward the demand monetarily.
I recognize that you’ve painted a simple picture to make your point, but as you add back in reality, and the dynamic nature of any market, you realize that what made sense in your simple static world no longer applies in a dynamic complex world that we actually live in.
Mike,
You did a bunch of rambling on of how my simplistic breakdown is inaccurate. But, after all your rambling, it seems your only argument against the exclusivity of a patent is that whatever money has to be shared with the inventor could have been money spent to further innovating the invention. But, with invention royalties typically being less then 5% of the invention’s price, I’m sure you will agree that your argument is really insignificant.
So, which of the two below situations do you feel will give an idea the best chance to leap from just a thought to a marketable innovation?
A) When an idea is initially conceived, I should patent it so I can develop and market it without the fear of a big company coming along and just stealing it from me.
B) When my idea is initially conceived, I say to myself “why bother spending time to persue/develop my idea when some big company can just come along and steal the final outcome of my research/development and use their larger resources to out market me?”
So, can’t you CLEARLY see that the exclusivity part of a patent serves as a serious incentive to take the idea a step forward as oppose to just abandoning it?
Re: Re:
But, after all your rambling, it seems your only argument against the exclusivity of a patent is that whatever money has to be shared with the inventor could have been money spent to further innovating the invention.
I realize my post was long, but if that’s what you took away from it, I clearly didn’t make my point clear enough. That’s not it at all. The point is simple. Monopolies are inefficient. They’re bad for the market. They’re bad for innovation. They’re bad for everyone. Putting in place a gov’t granted monopoly (actually thousands of them) is really bad policy. It hurts everyone.
So, which of the two below situations do you feel will give an idea the best chance to leap from just a thought to a marketable innovation?
A) When an idea is initially conceived, I should patent it so I can develop and market it without the fear of a big company coming along and just stealing it from me.
B) When my idea is initially conceived, I say to myself “why bother spending time to persue/develop my idea when some big company can just come along and steal the final outcome of my research/development and use their larger resources to out market me?”
I take choice C: When my idea is conceived work to take it to market where I’ll be rewarded for it. If it needs capital, I find capital markets that will provide me the necessary capital. I am confident in my own ability to understand the idea and the market to conclude that I can do a better job of selling it to the market than others. If I don’t understand the product or market that well, then I should be in a different business.
The fact that you don’t see choice C as an option is a little scary.
You set up a false world that doesn’t exist to prove your point. Things don’t work that way. Read my post again, as it explains pretty clearly why the parameters you’ve set up simply don’t exist in the real world.
It’s the MARKET that provides incentive for new innovations. People build new products because the market rewards them for it. If you think someone can easily copy your idea then you have a marketing problem, not a legal one.
“Most actual patents do not explain an actual product or procedure to the point that it can actually be used to recreate that product. They’re filed to be as broad as possible for economic reasons.”
Thats a bunch of B.S.!
Yes, patents are “filed” to be a broad as possible. But, filed patent applications should be irrelevant to any conversation about the patent system because most applications are rejected if they are bogus and never see the light of day. So, it’s irrelevant what gets filed – only issues with approved patents should be of concern.
So, I challenge you to back your statement or retract it…..out of the tens of thousands of *issued* patents, show me just a few samples of patents that don’t accurately describe an invention enough so someone in that field can not reproduce it.
If you can’t come up with some samples, then please stop mentioning such false “facts” because it’s confusing readers into believing that your views are valid, when in reality they are not.
Re: Re:
If you can’t come up with some samples, then please stop mentioning such false “facts” because it’s confusing readers into believing that your views are valid, when in reality they are not.
Do a search on many of the patents we point to here on Techdirt. Over and over and over again they do not describe an invention that can be figured out from the patent. Especially in the software world, patents often describe a general concept.
Have you read the NTP patents? Have you read the “iTunes interface” patent? Have you read the Acacia patents? How about the Clear Channel patent on recording live shows? I can go on and on and on. There are tons of patents that are written broadly as possible. Hell, with the iTunes interface, even the lawyer who wrote the damn patent bragged in a press release about how he wrote it so broadly that it had almost nothing to do with the original invention (which had nothing to do with the iTunes interface).
It’s become clear that you make a lot of money having a broad patent that can later be applied to what someone else does successfully. Patent lawyers know this and an awful lot of them write patents accordingly.
“I take choice C: When my idea is conceived work to take it to market where I’ll be rewarded for it. If it needs capital, I find capital markets that will provide me the necessary capital. I am confident in my own ability to understand the idea and the market to conclude that I can do a better job of selling it to the market than others. If I don’t understand the product or market that well, then I should be in a different business. The fact that you don’t see choice C as an option is a little scary.”
Actually, everything of your choice “C” can still be done even if you choose A or B, so it really doesn’t qualify as a third choice. Each choice of a multiple-choice question should typically be mutually-exclusive. Regardless, your comments of a choice C seem to imply that your real choice would be B (that you don’t wish to seek patent protection).
Yeah, there are resources to help with financing and other hurdles in bringing a new product to market, but those hurdles/resources exists for every other company. And with 9 out of 10 new businesses failing each year, your method of not seeking the help of a patent puts the chance of success for that product at the same 10% that every other new business has. Fortunately, the exclusivity protection of a patent helps raise that percentage significantly
because the “competition” factor is eliminated from all of the other typical challenges of running a new business (management, financing, marketing, etc).
Yeah, if the inventor is good at financing, marketing, management, etc, he could have a good chance of success without a patent. The simple truth is that the exclusivity of a patent can only help to increase the chances of success for that product. Period.
So, since the exclusivity of a patent serves are the primary “incentive to innovate” of a patent, what other arguments do you have against this exclusivity besides your insignificant 5% royalty argument?
“Have you read the NTP patents? Have you read the “iTunes interface” patent? Have you read the Acacia patents?”
Yeah, I read those, and they actually do describe the invention sufficiently to reproduce it. However, they are broad, and that is probably the real issue you have with them.
So, to say “Most actual patents do not explain an actual product or procedure to the point that it can actually be used to recreate that product.”, especially when you use the word “most” as if more then 50% of issued patents do not describe the invention sufficient, is clearly a false “fact” of yours.
Your real gripe seems to be that many of these patents have broad descriptions, making it difficult for someone else to create a similar/better product, thus (in your mind) it stifles innovation. Is this a more accurate assessment of your argument with regard to the descriptions in those patents?
Hey, for a rambling piece of garbage, this is pretty well written. Why doesn’t he just go ahead and sue Yahoo and Microsoft, while he’s at it. Oh, right, the scrambled and turned upside-down angle. Oh well, good luck with that, pro se plaintiff, in forma pauperis. Classic.
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Robust Advice
With all the recent talk of stolen interfaces it appears apple were behind the game on this
RIP Steve Jobs
Yes Apple is one of my favourite , it was doing good and it will rock for ever, even if Steve Jobs is no more. Rest In Peace Steve Jobs.