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
    Tyshaun, 18 Jan 2006 @ 7:36am

    Re: No Subject Given

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

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