Legal Issues

by Mike Masnick




The Case For Patents Harming Innovation

from the fleeting-competitive-advantage dept

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

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


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

    Re: Do your homework first...

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

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