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
    YankInOz, 19 Jan 2006 @ 5:22am

    Re: No Subject Given

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

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

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

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

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

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

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

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

    Because?

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

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