What If You Could Invest Directly In Shares Of Intellectual Property?

from the bad-bad-incentives dept

We're always interested in alternative proposals to the current mess with intellectual property, and Dr. James Lyons-Weiler, Director of the Bioinformatics Analysis Core at the University of Pittsburgh, recently asked for our thoughts on his proposal (for which he forgot to send us the link!) about creating an IP share market. The basic idea is that rather than just letting people invest in companies that own certain IP, you would create shares in the IP itself -- so you could buy a piece of a patent, and potentially receive dividends if the patent were licensed. The benefits that he notes are that companies would receive immediate revenue for certain patents, while also getting a clear sense of which patents the market thinks are most valuable. In fact, he notes that this could help organizations invest more wisely in R&D, getting a better sense of which concepts are most likely to be monetizable.

Lyons-Weiler has certainly put a lot of thought into this, and is clearly open to understanding what the downsides of such a proposal might be, so I'm hoping he doesn't mind my criticism of the idea. While the "pros" he list sound reasonably accurate, I would think that the cons greatly outweigh the pros. Most specifically, they focus the investment on the patent (i.e., the invention) rather than the actual innovation that is necessary to make it work in the market place. That's the distortionary effect of patents (putting too much emphasis on the invention over the innovation), and such a market would likely increase that. It overvalues the idea and undervalues the execution. On top of that it would damage one of the areas where many patent system supporters insist patents are most necessary: long-term investing in inventions. Such a market would undoubtedly favor ideas closer to monetization, but supposedly the reason for granting such long patent terms is to give inventors a longer time horizon in which to monetize. So, while it's nice to see new ideas suggested, I don't find this one particularly compelling.

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  • identicon
    Lonnie E. Holder, 24 Feb 2009 @ 8:00pm

    An invention is an innovation...

    Mike:

    As I pointed out in a post a few days ago, an invention is an innovation. To deny an invention is an innovation is to deny the definition of innovation, which is something new. You will recall that I provided several references that defined invention as innovation. You also provided links to references, at least one of which also did the same thing.

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    • icon
      Mike (profile), 24 Feb 2009 @ 10:30pm

      Re: An invention is an innovation...

      As I pointed out in a post a few days ago, an invention is an innovation.

      No, an invention is a single act. Innovation is a process. An invention may be a part of the process of innovation. We are talking about the commonly accepted economic definitions of these terms.

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      • identicon
        Anonymous Coward, 24 Feb 2009 @ 10:46pm

        Re: Re: An invention is an innovation...

        You are a little less playful than you've been in the past.

        Kinda sad in it's own ways.

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      • identicon
        Lonnie E. Holder, 25 Feb 2009 @ 5:35am

        Re: Re: An invention is an innovation...

        Mike:

        I think you belittle the efforts required for invention. The inventions I have been involved with have not been "single acts." In general, they involve a concept, an implementation, testing, refining the implementation, testing, verifying the implentation meets the original goals, refining the invention, verifying it can be produced, modifying the implementation if necessary. Until all these steps are complete, there is no invention.

        I have never been involved in an invention that is a "single act." I do not even know how you define invention as a "single act," given the number of times I have had to prototype and verify and change the design to make it work. The invention is NOT the idea, as misguided individuals seem to think. The invention is NOT a model. The invention IS a device that will function for its intended purpose, the implementation of an idea. Your single act can take decades.

        The commonly accepted economic definition of invention from many sources is that it forms one-third of the innovation process. I have provided references.

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        • identicon
          mobiGeek, 25 Feb 2009 @ 8:34am

          Re: Re: Re: An invention is an innovation...

          And you continually deny that while that process of invention is underway, that others are equally heads down on a similar vein. It just so happens that the patent gets granted to the one who crosses the line first.

          So the effort of any and all other parties is completely denied. In fact, the person with the BETTER answer in the exam is denied by the person who submits the paper first.

          The problem isn't that Mike sees invention as a single act. It is that patent-granting is a single synchronous event that puts an abrupt and unnatural end to a series of parallel activities.

          In addition, a successful invention often involves a small investment (a few man-months or man-years of a small team of scientists or engineers) whereas successful innovation typically involves many man-years effort across a wide array of skills (manufacturing, sales, management, marketing).

          To deny the value of innovation over the stifling crush of the patent process is ridiculous.

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          • identicon
            Lonnie E. Holder, 25 Feb 2009 @ 4:35pm

            Re: Re: Re: Re: An invention is an innovation...

            And you continually deny that while that process of invention is underway, that others are equally heads down on a similar vein. It just so happens that the patent gets granted to the one who crosses the line first.

            How often does this actually happen?

            So the effort of any and all other parties is completely denied. In fact, the person with the BETTER answer in the exam is denied by the person who submits the paper first.

            I think you exaggerate. First, if someone has a "better" way than the person getting the first patent, then obviously they have a different way, which is almost certainly patentable. Second, as has been pointed out by many people many times, there are many parallel paths. Just because one path out of thosands is blocked, all the other possibilities remain to be explored and exploited. There are at least as many inventions as there are business models.

            The problem isn't that Mike sees invention as a single act. It is that patent-granting is a single synchronous event that puts an abrupt and unnatural end to a series of parallel activities.

            That is generally absurd. Invention goes on with exponential increasing volume. Obviously, if every patent put an "abrupt and unnatural [whatever the hell that means] end" to anything, then all invention would likely have halted by now. Instead, we have predictions that we will create more information and knowledge in the next few years than we have created since the beginning of regarded history. You will have to provide some evidence that society has come to a grinding halt because of patents.

            In addition, a successful invention often involves a small investment (a few man-months or man-years of a small team of scientists or engineers) whereas successful innovation typically involves many man-years effort across a wide array of skills (manufacturing, sales, management, marketing).

            lol...You have never developed a product, have you? Your ignorance of product development puts you in a realm where I am unable to explain to you the depths of your errors in the above statements.

            To deny the value of innovation over the stifling crush of the patent process is ridiculous.

            I believe you are in error. I have never denied the value of innovation. In fact, I have been involved with the invention portion of innovation almost since the beginning of my career, decades ago. Further, you have failed to prove that there is a "stifling crush of the patent process."

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        • icon
          Mike (profile), 25 Feb 2009 @ 10:15am

          Re: Re: Re: An invention is an innovation...

          I think you belittle the efforts required for invention. The inventions I have been involved with have not been "single acts." In general, they involve a concept, an implementation, testing, refining the implementation, testing, verifying the implentation meets the original goals, refining the invention, verifying it can be produced, modifying the implementation if necessary. Until all these steps are complete, there is no invention.

          But that's not what you patent. A lot of what you describe above is *innovation*. But the part that you patent does not cover all of what you describe above. That's the problem.

          I am not "belittling" invention at all. I am just saying that *invention* is a small part of *promoting the progress*. Invention is quite important as a part of the process, but it is NOT, by any stretch of the imagination, the entire process. And, what's quite problematic is how patents block so many others from actually innovating.

          The invention is NOT the idea, as misguided individuals seem to think. The invention is NOT a model. The invention IS a device that will function for its intended purpose, the implementation of an idea. Your single act can take decades.

          But the implementation of the idea is worthless if you can't find a market for it. You get no "progress" if no one is interested in your implementation.

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          • identicon
            Anonymous Coward, 25 Feb 2009 @ 11:08am

            Re: Re: Re: Re: An invention is an innovation...

            But that's not what you patent. A lot of what you describe above is *innovation*. But the part that you patent does not cover all of what you describe above. That's the problem.

            If that is not what you patent, then you would be wise to look for another attorney who actually understands your business and your business plan. Sadly, I cannot even begin to count the number of times I have witnessed patents being secured that do not even cover the product that will actually be marketed.

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          • identicon
            Lonnie E. Holder, 25 Feb 2009 @ 4:40pm

            Re: Re: Re: Re: An invention is an innovation...

            Mike:

            All the things I described are part of what I consider to be the invention process. When you work for a manufacturing company, having an unproduceable concept has no value, and certainly no patentable value. If an engineer brought an invention to me that was not produceable, I would be forced to advise the inventor that he did not have a patentable invention. Incidentally, I have done so.

            Incidentally, how many people have actually been blocked from inventing or innovating because of patents?

            As for finding a market, typically that has not been a problem. We know who our OEM's are. Indeed, most of the "sales force" that I have worked with have been engineers and frequently inventors. Of course, you will have that with any highly engineered equipment. The people that know the product the best can be the best sales people. Certainly the OEM's prefer engineers.

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            • icon
              Mike (profile), 25 Feb 2009 @ 6:14pm

              Re: Re: Re: Re: Re: An invention is an innovation...

              All the things I described are part of what I consider to be the invention process. When you work for a manufacturing company, having an unproduceable concept has no value, and certainly no patentable value. If an engineer brought an invention to me that was not produceable, I would be forced to advise the inventor that he did not have a patentable invention. Incidentally, I have done so.

              I'm not sure why you can't seem to understand this. The invention itself is only a part of the "PRODUCT". Just because it's "produceable" does not mean it's what the market wants.

              Incidentally, how many people have actually been blocked from inventing or innovating because of patents?

              A HUGE number. We write about lawsuits practically every day where people are blocked from innovating the way they believe will best serve the market. It's a huge travesty.

              As for finding a market, typically that has not been a problem. We know who our OEM's are. Indeed, most of the "sales force" that I have worked with have been engineers and frequently inventors. Of course, you will have that with any highly engineered equipment. The people that know the product the best can be the best sales people. Certainly the OEM's prefer engineers.

              That KNOWLEDGE is part of the innovation. That's the point which you can't seem to get through your head.

              I'm really surprised how much trouble you're having understanding such a basic concept.

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              • identicon
                Lonnie E. Holder, 25 Feb 2009 @ 7:07pm

                Re: Re: Re: Re: Re: Re: An invention is an innovation...

                Mike:

                I have been trying to understand why, with all this time and effort spent by anti-IP forces, that regulation in all areas continues to increase (I personally think additional regulation is unnecessary, but that is another matter). However, I think I understand now. You have an inability to communicate with the people making the decisions.

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                • icon
                  Mike (profile), 25 Feb 2009 @ 10:48pm

                  Re: Re: Re: Re: Re: Re: Re: An invention is an innovation...

                  You have an inability to communicate with the people making the decisions.

                  Ah, nice. A parting insult from Lonnie.

                  Actually, a lot of folks are listening and are absolutely understanding the problem. However, when you are going up against massive entrenched interests, who are willing to spend billions defending their monopolies, change doesn't happen overnight.

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  • identicon
    Lonnie E. Holder, 24 Feb 2009 @ 8:03pm

    There are all kinds of distortions...

    Mike:

    Of course, when an invention is created to be produceable, as many are, and in the manufacturing industries, most are, and the invention is a design ready to go into production, and nothing new is done to the product after it is designed, then the invention innovation requires no transformation innovation and probably minimal commercialization innovation, so the bulk of the innovation is indeed in the invention.

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    • identicon
      Thomas Jefferson, 24 Feb 2009 @ 11:36pm

      Re: There are all kinds of distortions...

      He who receives an idea from me, receives instruction himself without lessening mine; as he who lights his taper at mine, receives light without darkening me. That ideas should freely spread from one to another over the globe, for the moral and mutual instruction of man, and improvement of his condition, seems to have been peculiarly and benevolently designed by nature, when she made them, like fire, expansible over all space, without lessening their density in any point, and like the air in which we breathe, move, and have our physical being, incapable of confinement or exclusive appropriation. Inventions then cannot, in nature, be a subject of property. Society may give an exclusive right to the profits arising from them, as an encouragement to men to pursue ideas which may produce utility, but this may or may not be done, according to the will and convenience of the society, without claim or complaint from anybody.

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      • identicon
        Thomas Jefferson, 25 Feb 2009 @ 4:50pm

        Re: Re: There are all kinds of distortions...

        An inventor ought to be allowed a right to the benefit of his invention for some certain time.

        I was quite surprised, only two months after signing the patent law that it is has "'given a spring to invention beyond [my] conception.]

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  • identicon
    Anonymous Coward, 24 Feb 2009 @ 8:23pm

    Lonnie,

    So would you invest directly in shares of "Intellectual Property" ?

    I think that is the subject anyways ...

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  • identicon
    Lonnie E. Holder, 24 Feb 2009 @ 8:23pm

    Defining Innovation

    Sometimes you think things are nice and easy, only to find out that they are hard. Take, for example, invention. In the manufacturing world, the whole point of invention is frequently to develop a novel, produceable product. Done deal.

    On the other hand, there are those who want to separate the invention of the product from selling it. Perhaps that makes sense in some fields. For others, perhaps not so much. For example, let us say that you want to develop a new tire that channels water away from the tire to improve traction in rain. You work on the design, you test it, and ultimately you come up with a new tread design that does exactly that. The invention is done.

    Question: The invention is complete. It was designed to be manufacturable. Nothing else needs done to the invention to prepare it for selling, because manufacturing is done by previously existing processes. How does innovation enter this picture? Well, since the product was invented in a form that met a specific purpose, and was invented to be produceable, the only thing left for "innovation" to do is to present the product to customers and arrange for distribution. However, there is a problem with this picture, and that is that there is nothing new beyond the invention portion of the process, so everything that happened once the invention was complete cannot be called innovation or it becomes antithetical to the basic definition, which requires something to be new.

    Okay, since something new did happen, the tire, and since the tire did become commercially successful, then innovation had to happen somewhere. It did. Back to that in a moment.

    In 1986, Bruce D. Merrifield (Forces of Change Affecting High Technology Industries) defined innovation as consisting of three phases, invention, translation and commercialization.

    In 1992, George Land and Beth Jarman (Breakpoint and Beyond: Mastering the Future Today) noted that innovation included, among other things, invention, exploratory management, duplication, modification and improvement.

    Also in 1992, William G. Howard and Bruce R. Guile (Profiting from Innovation) noted that the innovation life cycle included three phases, beginning with emergence, which incorporates the development of a product, manufacture of the product, and its placement in the market.

    In 1980, Modesto A. Maidique (Entrepreneurs, Champions and Technological Innovation) describe five phases for the innovation process. Step two was invention.

    The current definition of innovation at the Bnet Business dictionary begins "the creation, development and implementation of a new product, process..."

    Mike was kind enough to provide a link to informationworld, which states that invention is a subset of innovation. Mike has also provided links where some people define innovation as not including invention.

    Stepping back, just what does this mean for a definition of innovation? It means that there is no one, universally accepted, definition of innovation. It appears that the classic definition of innovation encompasses invention. Since about 2004, there appears to be a movement to segregate invention from innovation, for reasons I am unable to fathom.

    Now, back up to the tire example. Further, consider any highly engineered product that is, in effect, a gestalt. It is quite common to develop these products in a way that, once they have been invented, the "innovation" portion of the activity, meaning the new portion, is complete. This is generally true for many items, especially complex mechanisms such as combines, tractors, etc. Indeed, since the engineers doing the inventing are the ones selecting the materials to meet the requirements for the product, the product has to be complete on invention, or it will not work.

    Converse example: I have worked with manufacturing and marketing people wanting to change a product, to "innovate" it. However, such "innovations" typically are one of two things. Either they turn out badly, or they are a part of a new invention that frequently needs additional design engineering work to turn the idea into a produceable invention.

    Where does this leave the definition of innovation and invention? Well, if you are trying to say that innovation is not invention, then no where, because lots of people define innovation as a macroscopice phenomenon that encompases invention, and because there is an array of situations that range from the bulk of innovation being focused on invention to the bulk of innovation being focused on produceability and incremental improvement. When you deny that innovation includes innovation, then you deny innovation happens in many industries.

    I wonder whether the huge range of definitions for innovation happen because innovation can be focused at various stages, either invention, transformation and commercialization, depending on the product involved. There is no one answer.

    I also wonder whether there is wishful thinking on the part of some people who consider themselves innovators, believing that invention is unnecessary or undesirable. I see this when people claim that invention is relatively unimportant, and innovation is important.

    I liken this claim by the light bulb that it is the most important thing because it is supplies light and therefore contains the most value, and thus the generator that creates the electricity is a tiny fraction of the process. Well, a typical consumer only knows the light bulb, and certainly the consumer is only buying electricity because it causes the bulb to work, but the moment the generator dies, the bulb will not work regardless of how loudly the consumer complains or wishes. Customers in several Midwest states found out the difference between delivery of a good and the creation that goes behind it when their power went out recently after an ice storm.

    To be truly objective, all parts of the process should have equal value initially. Yet, there are two ways to view the invention portion of innovation and the transformation and commercialization portions of innovation. Since many innovators focused on transformation and commercialization claim that their portion of the process is more significant than the invention portion of innovation, then invention is highly leveraged, and from that viewpoint, more important. After all, if one invention innovation can yield ten transformation and commercialization innovations, which is more important? On the other hand, the customer truly values a product that perfoms a useful function, which, from a customer's viewpoint, is the most important part.

    When we stand back and view innovation as a process that extends from conceptualization to prototype, to testing and final design, manufacturing, and marketing, we realize that we need all the pieces of the puzzle to make innovation work.

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    • identicon
      eleete, 24 Feb 2009 @ 8:47pm

      Re: Defining Innovation

      In your words, "which is something new". Please tell me an invention that is totally new. I would be all for giving a monopoly on things that are in fact NEW, but what is it that you believe is a NEW invention ?

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    • identicon
      eleete, 24 Feb 2009 @ 9:05pm

      Re: Defining Innovation

      How long has the wheel been around Lonnie ? How long have tires been around ?? What you are saying is that ultimate protection in the form of a monopoly should be awarded for derivative works. Is that not what you are saying ? Someone taking something in existence and applying another concept/material/production method, which too is in existence, should be afforded a monopoly ? I find it creative but not worthy of a monopoly. Especially when these monopolies are set up in ways that inhibit me (or any other) from applying the same concepts/materials/production methods without paying a hefty fee. We ALL stand on the shoulders of Giants EVERY day. Do we not ? What is the point of a monopoly ? I think Parker Bros had it right when they tied Monopoly to the BANK, the Money. I would truly love to give ANYONE a monopoly on something that was genuinely CREATED, not discovered, adapted or derived from. Again I ask if you have a firm example that meets that criteria. Otherwise you have a situation, as we do today, where someone can take two things already in existence, derive or transform them (which is Not invention, or creation) and set up a healthy little tollbooth for something they adapted/transformed or derived from things already in existence. This, as I see it, is the greatest harm to innovation and invention. As a programmer, I can tell you that it is not productive for me to run to the patent office and THEN check out copyrights as i attempt to do something with a computer language (or even a photograph, song, movie...). The harm is clearly caused by not allowing me to stand on those shoulders just as others have. Unique invention is so rare it is worthy of a monopoly. Adaptation, Derivation and transformation are a natural incident. A natural progression. What are IP laws trying to provide incentive for Progress ? Then they really should get out of the way of progress. Let us all stand on those shoulders. Award the most unique, the truly new, the true Invention. Not the incremental change.

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      • identicon
        eleete.com, 24 Feb 2009 @ 9:10pm

        Re: Re: Defining Innovation

        What are IP laws trying to provide incentive for Progress ?
        should have read
        What are IP laws trying to provide? Incentive for Progress ?

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        • identicon
          Anonymous Coward, 24 Feb 2009 @ 9:54pm

          Re: Re: Re: Defining Innovation

          At the time the first Patent Law was enacted in 1790, and continuing to date, the term "progress" has been used to reflect the dissemination of information to the public. A significant part of the quid pro quo under patent law is supposed to be the disclosure of the important features of an invention in exchange for the grant of a patent.

          The same can be said for copyright law...the publication of an author's original work in exchange for the grant of a patent registration. In the context of copyright law this was particularly clear from the original Copyright Act of 1790 up until the enactment of the Copyright Act of 1976. With the 1976 Act the focus shifted from publication to creation, so that even unpublished works fall within the scope of current copyright law. Of course, it did not help when in the 90's international harmonization of US and foreign copyright law led the US to abandon the need for copyright notices and the marked increase in the length of copyright terms.

          Interestingly, while patent law has changed to varying degrees as new technologies have arisen, patent law still bears much resemblance to what was originally enacted in 1790. Sure, some details have changed, the process has become more complex and expensive, and some persons have started to game the system, but the system nevertheless remains somewhat in consonance with its roots. Copyright, on the other hand, has strayed from its roots to such a great extent that it bears very little resemblance to what was originally enacted in 1790.

          I have always been intrigued with the fact that these two bodies of law emanated from a common "constitutional womb", and yet over the years have diverged from each other to such a remarkable extent.

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          • identicon
            eleete, 24 Feb 2009 @ 10:12pm

            Re: Re: Re: Re: Defining Innovation

            Righton, things were always meant to degrade into the public domain. Current polluticians keep retarding that fact to the point that they favor a monopoly indefinitely. In direct contrast to the Constitution of the US. Id say as a result of lobbyists, corrupt polluticians and corporate interests. A horrible infringement on the PEOPLES rights. The public domain should flourish not diminish.

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            • identicon
              eleete, 24 Feb 2009 @ 10:16pm

              Re: Re: Re: Re: Re: Defining Innovation

              Perhaps TechDirt readers could elaborate on the horrors of content and creations being in the public domain ? I'd entertain a conversation on that. Why are things that are public domain so horrible ?

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      • identicon
        Lonnie E. Holder, 25 Feb 2009 @ 5:29am

        Re: Re: Defining Innovation

        eleete:

        As it turns out, guiding water away from the contact surfaces of a tire is difficult. People tried for years to create a design that would be truly effective, and failed. However, finally someone came up with a design shown experimentally to significantly move water away from the center of a tire. Of course, it was all in how the treads were configured.

        Did the inventors of tread designs that helped guide water more effectively than standard tread designs create a "derivative" work? Define derivative. It took about 150 years of figuring to come up with a truly effective design. How derivative is that?

        You say show me a "totally new invention." Let us not be hyperbolic. You could theoretically argue that no invention in the history of man has ever been a "totally new invention." However, that also belittles the significant effort it can take to invent.

        Consider, for example, the microwave oven. It took Amana significant effort to figure out how to effectively use RF radiation to cook food. That was most certainly inventive. Was it derivative? How could it be? Microwaves were bounced off objects to detect their position, not cook food. Was it discovered? Sort of. The people playing with RF discovered that certain materials got hot in the presence of microwaves, but that in itself did not invent a microwave oven, it merely showed that there was a concept that might be exploited if it could be harness in an invention. Was it adapted? Well, adapted from what? No one else had a microwave oven to adapt from.

        Do I believe the microwave oven and the inventions related to it deserved a patent? Not for me to say. Our Constitution says that they microwave oven inventions deserved the opportunity to be considered inventions. Certainly the patents given to Amana gave them a chance to find a market for their microwave and to recoup the significant investment they made in the microwave oven. Of course, it took many other inventions to take Amana's microwave and make it a household item, but the most significant inventions that did that happened well after Amana's patents expired. Indeed, in the early days of the microwave oven it was seen as an interesting, expensive, curiosity, and there were few who were interested in "standing on the shoulder of" the giants who invented the microwave. Often it takes the inventors of such devices to find and make the market, because many manufacturers do not see the sales justifying the investment.

        When Motorola came up with the cellular concept and proved it could work, that was a unique concept. Indeed, it was so unique that it took more than another decade to get the grinding wheels of progress to realize that anyone would be interested in it.

        However, inventions come in all shapes and sizes. At what point is an invention not worthy of a patent. I recall a story several years ago about someone coming up with a clothes hangar that could be inserted through the neck of a pullover. I thought to myself how cool that was. Was it inventive? Well, clothes hangars have been around for hundreds of years and no one else created a device that did what this one did. However, this is what invention is all about. Seeing the hangar now you might wonder why someone did not invent it before. That is the exact point. We are five thousand years into our history. If something was easy to invent because it was adapted or derivative or whatever, why was it not already invented? Where were the simultaneous inventors of the hangar? They were not there. Simple device, simple, very cool invention.

        You keep saying that patents stand in the way of progress. However, as has been pointed out many times before, mankind has progressed so fast that we no longer have the technical people to keep up (until the current recession, of course). Thousands of companies had thousands of projects and ideas that were held up, not for patents, but for people to work the projects.

        I also find it interesting that with the exception of software, which I know little about from a patent viewpoint, and certain patent trolls, there is very little conflict over patents. Have there been some instances wherre "progress" has been halted because of patents? Possibly so. I think it is interesting that if something in fact blocks "progress," then it most like was "unique, the truly new, the true invention." Otherwise, there was most likely a way to design around the supposed "invention," which is what happens 99% of the time.

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      • identicon
        What??, 25 Feb 2009 @ 8:36am

        Re: Re: Defining Innovation

        So do you apply this to songs or books - the underlying words already exist? What about TV shows - I believe there are only a few themes and they all use them (over and over again). What would be protected in your world? Fire - surely not, lighting caused it. The wheel - surely not, trees have been rolling down hill forever. Give us an example of what you would protect?

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        • identicon
          angry dude, 25 Feb 2009 @ 8:46am

          Re: Re: Re: Defining Innovation

          "Scarce goodies"

          ...like the domain name "techdirt.com" only Mike Masnick can use, denying the rest of us its use

          Mikey, I want your domain name, why don't you give it up for the benefit of humanity ?
          The world will be a better place without your shitty blog

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    • identicon
      Egon Spenkle, 24 Feb 2009 @ 10:34pm

      Re: Defining Innovation

      All innovation can be priced at:

      www.govliquidation.com

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    • icon
      Mike (profile), 24 Feb 2009 @ 10:40pm

      Re: Defining Innovation

      On the other hand, there are those who want to separate the invention of the product from selling it.

      Strawman alert. No one I know has tried to "separate" the two things. What people have done, which you seem to have a lot of trouble understanding, is recognizing that "the invention" by itself is only a part of the innovation process.

      It seems really odd that you keep pushing back on this.

      However, there is a problem with this picture, and that is that there is nothing new beyond the invention portion of the process, so everything that happened once the invention was complete cannot be called innovation or it becomes antithetical to the basic definition, which requires something to be new.

      Lonnie, I'm curious if you've ever worked on the business or sales side. From the statement above, I would guess not. Claiming that the product sells itself suggests a near total cluelessness for how business is done.

      I also wonder whether there is wishful thinking on the part of some people who consider themselves innovators, believing that invention is unnecessary or undesirable. I see this when people claim that invention is relatively unimportant, and innovation is important.

      I don't see anyone claiming the invention is unimportant. Yet another strawman from Lonnie (you do that an awful lot).

      What we have said, quite clearly, is that innovation is the part that is important in promoting the progress. That's been shown by study after study after study. The invention alone adds little to the economic impact. It's the innovation -- the process of making it a real *product* that is where the benefit to society comes in.

      When we stand back and view innovation as a process that extends from conceptualization to prototype, to testing and final design, manufacturing, and marketing, we realize that we need all the pieces of the puzzle to make innovation work.

      Another bizarre strawman from Lonnie. No one has said you don't need invention. I'm not sure why you keep stating that other than a ridiculous need to play up the importance of invention and justify your own job.

      reply to this | link to this | view in chronology ]

      • identicon
        eleete, 24 Feb 2009 @ 11:07pm

        Re: Re: Defining Innovation

        I couldn't, for the life of me, understand the comments in the other post about Mike not addressing opposing views. Forgive me for not posting a link to those comments. Well said Mike. I wish those others would pay attention to the fact that you always addresses opposing points of view quite eloquently.

        reply to this | link to this | view in chronology ]

      • identicon
        Lonnie E. Holder, 25 Feb 2009 @ 5:45am

        Re: Re: Defining Innovation

        Mike:

        On the other hand, there are those who want to separate the invention of the product from selling it.

        Strawman alert. No one I know has tried to "separate" the two things. What people have done, which you seem to have a lot of trouble understanding, is recognizing that "the invention" by itself is only a part of the innovation process.

        Excuse me? Let me copy again a statement I made above:

        It appears that the classic definition of innovation encompasses invention. Since about 2004, there appears to be a movement to segregate invention from innovation, for reasons I am unable to fathom.

        I stand by this statement. About half the references I reviewed consider innovation to consist of invention, transformation and commercialization. The other half seem to think there is invention followed by innovation. I do not believe the latter definition, I do believe the former.

        However, there is a problem with this picture, and that is that there is nothing new beyond the invention portion of the process, so everything that happened once the invention was complete cannot be called innovation or it becomes antithetical to the basic definition, which requires something to be new.

        Lonnie, I'm curious if you've ever worked on the business or sales side. From the statement above, I would guess not. Claiming that the product sells itself suggests a near total cluelessness for how business is done.

        Was that my point? Let me try again. If I have an invention that was designed to be produceable, and I already have a process to make the product, then the only remaining steps are to bring the product to the attention of possible buyers and to sell and distribute the product. Since the sales forces and the distribution forces already exist from sales of previous products, where is the "something new" part of the latter half of the process?

        I also wonder whether there is wishful thinking on the part of some people who consider themselves innovators, believing that invention is unnecessary or undesirable. I see this when people claim that invention is relatively unimportant, and innovation is important.

        I don't see anyone claiming the invention is unimportant. Yet another strawman from Lonnie (you do that an awful lot).

        What we have said, quite clearly, is that innovation is the part that is important in promoting the progress. That's been shown by study after study after study. The invention alone adds little to the economic impact. It's the innovation -- the process of making it a real *product* that is where the benefit to society comes in.


        Okay, that may be true for the products studied, or for some products. You have yet to answer my question regarding an engineered product that, once invented, is a "real product." As I have stated before, I expect an invention to be manufacturable and saleable on completion. If the invention is neither, then the inventor needs to get back to work and make the invention work.

        When we stand back and view innovation as a process that extends from conceptualization to prototype, to testing and final design, manufacturing, and marketing, we realize that we need all the pieces of the puzzle to make innovation work.

        Another bizarre strawman from Lonnie. No one has said you don't need invention. I'm not sure why you keep stating that other than a ridiculous need to play up the importance of invention and justify your own job.

        Because it drives me crazy when I hear people make statements that invention is an insignificant portion of the process or that invention is a tiny fraction (which has been used) of innovation. That is not "strawman," that is fact. I also believe it is fact that there are probably situations where invention may well be the least significant part of the innovation process. However, I also believe that there are situations where the invention is the most significant part of the process.

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        • identicon
          angry dude, 25 Feb 2009 @ 7:10am

          Re: Re: Re: Defining Innovation

          "people make statements that invention is an insignificant portion of the process or that invention is a tiny fraction (which has been used) of innovation"

          You mean morons like Masnick and the rest of techdirt lemming-punks here who illegally download stuff on the internet and steal cookies from someone's else cookie jar

          It's a part of a punk culture Mikey cultivates on his shitty blog

          reply to this | link to this | view in chronology ]

        • identicon
          mobiGeek, 25 Feb 2009 @ 9:24am

          Re: Re: Re: Defining Innovation

          Your view that sales and marketing of a new product is only the process of leveraging existing processes clearly highlights your lack of understanding of business.

          Marketing and selling a new product is not simply a search/replace job on existing product materials. It is not simply calling up previous customers and up-selling them.

          You still think that because an invention was published in such a way that it is "producable" that the process is nearly complete. You claim that inventors are being denied their rightful valuation in the innovation process. However you CLEARLY are denying the actual business of manufacturing, management (HR, finance, admin), marketing, and sales that get a product into consumers hands.

          In addition, what percentage of the MILLIONS of patents awarded (or pending) by the USPTO are of the "produceable" quality? Many, Many patents I have reviewed are particularly terse and overwhelmingly broad. And in many cases they differ minutely from processes that others developed independently.

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        • icon
          Mike (profile), 25 Feb 2009 @ 10:22am

          Re: Re: Re: Defining Innovation

          Was that my point? Let me try again. If I have an invention that was designed to be produceable, and I already have a process to make the product, then the only remaining steps are to bring the product to the attention of possible buyers and to sell and distribute the product. Since the sales forces and the distribution forces already exist from sales of previous products, where is the "something new" part of the latter half of the process?

          As mobigeek noted, you've just totally insulted a lot of people involved in the process. I honestly find it difficult to believe you've ever worked on the sales or marketing side if you really think that it's just about "bringing attention" to the product. Yikes.

          If you study the history of new products entering a market, it's nearly impossible to find ones that "just sell themselves" if you call some attention to them. I've got a long list of research on the introduction of new goods into markets and I can't think of any examples that match the process you describe.

          Take, for example, the invention of the zipper. Yes, the common zipper. It took about 30 years to actually get the zipper to a point that people wanted to buy it -- despite having a pretty strong ability to just go out and let people know about it.

          Lonnie, to be frank, I find your views on innovation rather insulting. You claim you've worked on the business side, but if that's true, you've just insulted almost everyone you've worked with.


          Okay, that may be true for the products studied, or for some products. You have yet to answer my question regarding an engineered product that, once invented, is a "real product."


          But it's not. Inventions don't just sell themselves. Turning it into a real product is an ongoing process -- much of which you described, falsely including it in the "invention" description.

          As I have stated before, I expect an invention to be manufacturable and saleable on completion. If the invention is neither, then the inventor needs to get back to work and make the invention work.

          That's INNOVATION.

          Because it drives me crazy when I hear people make statements that invention is an insignificant portion of the process or that invention is a tiny fraction (which has been used) of innovation.

          No one says it's insignificant. But it IS a small part of promoting the progress. And THAT IS THE PROBLEM. Because the patent stops at the invention part, it limits EVERYONE ELSE who is innovating around similar inventions.

          I also believe it is fact that there are probably situations where invention may well be the least significant part of the innovation process. However, I also believe that there are situations where the invention is the most significant part of the process.

          Most research has shown how rare that is... but if that's what you need to believe to justify your work...

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          • identicon
            Lonnie E. Holder, 25 Feb 2009 @ 5:04pm

            Re: Re: Re: Re: Defining Innovation

            As mobigeek noted, you've just totally insulted a lot of people involved in the process. I honestly find it difficult to believe you've ever worked on the sales or marketing side if you really think that it's just about "bringing attention" to the product. Yikes.

            I will let them know about your concern. However, I doubt most of them will care. Most of the people on the sales side are engineers and many of them are inventors.

            If you study the history of new products entering a market, it's nearly impossible to find ones that "just sell themselves" if you call some attention to them. I've got a long list of research on the introduction of new goods into markets and I can't think of any examples that match the process you describe.

            When you are dealing with OEM's and you understand their needs well, it is easy to know how to meed those needs. The only issue is how well you meet the needs. The closer you match their needs and wants, the easier the sale.

            Lonnie, to be frank, I find your views on innovation rather insulting. You claim you've worked on the business side, but if that's true, you've just insulted almost everyone you've worked with.

            As I said, I will let them know. I doubt they will either think they have been insulted or care if they did. Most people I have worked with on the sales and marketing side have been engineers, and many of those are also inventors. In fact, some of the non-engineers are inventors as well.

            But it's not. Inventions don't just sell themselves. Turning it into a real product is an ongoing process -- much of which you described, falsely including it in the "invention" description.

            I am sorry that I have failed to explain to you. My fault. However, I do not know how to rectify the situation. Would it help to show you dozens of patents on products that are identical in production as they are in the patents?

            As I have stated before, I expect an invention to be manufacturable and saleable on completion. If the invention is neither, then the inventor needs to get back to work and make the invention work.

            That's INNOVATION.

            I thought we already agreed that invention is INNOVATION. I make the same offer I made above. Would you like to know patent numbers of mechanisms that are identical in the patents to the product that went into production?

            Because it drives me crazy when I hear people make statements that invention is an insignificant portion of the process or that invention is a tiny fraction (which has been used) of innovation.

            No one says it's insignificant. But it IS a small part of promoting the progress. And THAT IS THE PROBLEM. Because the patent stops at the invention part, it limits EVERYONE ELSE who is innovating around similar inventions.

            Yes, that is true. Now, how many times has a patent actually stopped progress? We know of two for sure (the Wright Brothers and Watt). How many other times has a patent stopped progress? On the other hand, how many times have patents stimulated others to develop another, frequently better product that did not infringe the first patent. This is exactly the BENEFIT. A patent may stop one path, but all the other infinite number of paths remain available to be exploited.

            I also believe it is fact that there are probably situations where invention may well be the least significant part of the innovation process. However, I also believe that there are situations where the invention is the most significant part of the process.

            Most research has shown how rare that is... but if that's what you need to believe to justify your work...

            I guess I have always worked on the rare inventions. But then again, we need to consider those as well.

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            • icon
              Mike (profile), 25 Feb 2009 @ 6:22pm

              Re: Re: Re: Re: Re: Defining Innovation

              When you are dealing with OEM's and you understand their needs well, it is easy to know how to meed those needs. The only issue is how well you meet the needs. The closer you match their needs and wants, the easier the sale.

              Right. Thank you for proving my point. What you describe above is exactly how innovation plays a bigger role in promoting the progress than invention does.

              If you can't understand why that shows why innovation is a bigger part than invention, I can't keep leading you down that path.

              Would you like to know patent numbers of mechanisms that are identical in the patents to the product that went into production?

              Um... what does that have to do with ANYTHING?!?

              I think we're talking at cross purposes here. You seem to think I've said something I haven't, and you seem totally unable to understand what innovation covers. The fact that a patent covers what's in the product is rather meaningless and has nothing to do with this discussion.

              Yes, that is true. Now, how many times has a patent actually stopped progress?

              No one said it *stopped* progress, but there's TONS of evidence that it significantly and regularly HINDERS progress. And, for a program designed to *PROMOTE* progress, that's a huge problem.

              On the other hand, how many times have patents stimulated others to develop another, frequently better product that did not infringe the first patent. This is exactly the BENEFIT

              Oh god, no. Not in a million years. What you just described is making progress much more efficient, by making others take an inefficient route to innovation just for the sake of "being different." That's not a benefit. That's a huge problem.

              A patent may stop one path, but all the other infinite number of paths remain available to be exploited.

              Creating massive inefficiencies in its wake.

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              • identicon
                Lonnie E. Holder, 25 Feb 2009 @ 7:14pm

                Re: Re: Re: Re: Re: Re: Defining Innovation

                Mike:

                When you are dealing with OEM's and you understand their needs well, it is easy to know how to meed those needs. The only issue is how well you meet the needs. The closer you match their needs and wants, the easier the sale.

                Right. Thank you for proving my point. What you describe above is exactly how innovation plays a bigger role in promoting the progress than invention does.

                Except that it is the inventors who know the customers and the needs. Why do you keep speaking of innovation and invention as if they were two separate things? I thought we already agreed that invention was one portion of innovation?

                If you can't understand why that shows why innovation is a bigger part than invention, I can't keep leading you down that path.

                Since inventors are pretty much working the process from beginning to end, I guess not.

                Would you like to know patent numbers of mechanisms that are identical in the patents to the product that went into production?

                Um... what does that have to do with ANYTHING?!?

                You keep thinking that something magical happens to the invention after it is created, when the invention that is sold is what is patented. The bulk of the innovation is done, the customer is satisfied, the patent application is filed. Life is good.

                I think we're talking at cross purposes here. You seem to think I've said something I haven't, and you seem totally unable to understand what innovation covers. The fact that a patent covers what's in the product is rather meaningless and has nothing to do with this discussion.

                I am merely trying to point out that the product is finished when the patent application is filed. There is no more work on the product to be done.

                Yes, that is true. Now, how many times has a patent actually stopped progress?

                No one said it *stopped* progress, but there's TONS of evidence that it significantly and regularly HINDERS progress. And, for a program designed to *PROMOTE* progress, that's a huge problem.

                Except, the "evidence" is isolated to a few areas. What about all hundreds of areas other than the few mentioned in these studies where progress seems to be going on quite nicely?

                On the other hand, how many times have patents stimulated others to develop another, frequently better product that did not infringe the first patent. This is exactly the BENEFIT

                Oh god, no. Not in a million years. What you just described is making progress much more efficient, by making others take an inefficient route to innovation just for the sake of "being different." That's not a benefit. That's a huge problem.

                Ah yes. So, when someone develops a terrible invention, it is always better to copy the terrible invention than to spend more money to develop something competitive that might be better.

                A patent may stop one path, but all the other infinite number of paths remain available to be exploited.

                Creating massive inefficiencies in its wake.

                Creating massive opportunities in its wake.

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                • icon
                  Mike (profile), 25 Feb 2009 @ 10:57pm

                  Re: Re: Re: Re: Re: Re: Re: Defining Innovation

                  Except that it is the inventors who know the customers and the needs. Why do you keep speaking of innovation and invention as if they were two separate things? I thought we already agreed that invention was one portion of innovation?

                  Uh. Yes, we have agreed that invention is a part of innovation, but what you keep avoiding addressing (mental block?) is the fact that since it's only a PART of innovation, the fact that when you put patents on it, you HINDER EVERYONE ELSE.

                  I'm not sure why this is so difficult for you to understand.

                  Since inventors are pretty much working the process from beginning to end, I guess not.

                  If that were true, there would be no patent lawsuits. But there are, indicating (once again) that you are wrong.

                  You keep thinking that something magical happens to the invention after it is created, when the invention that is sold is what is patented. The bulk of the innovation is done, the customer is satisfied, the patent application is filed. Life is good.

                  It's nothing magical. But it is an ongoing process. You seem to (incorrectly) think that "life is good" after the patent is filed. Run a business for a while and then you'll understand that's not how things work. Innovation is a CONSTANT ongoing process. But it can't be a constant ongoing process if OTHERS get to throw TOLLBOOTHS and ROADBLOCKS in your way.

                  I am merely trying to point out that the product is finished when the patent application is filed. There is no more work on the product to be done.


                  Wow. I can't respond to that, other than to say I've yet to see an industry where that's true. Can you share an example, because I've never seen that. Ever. It doesn't exist.

                  Except, the "evidence" is isolated to a few areas. What about all hundreds of areas other than the few mentioned in these studies where progress seems to be going on quite nicely?

                  That's simply not true. The "evidence" has been shown in multiple industries, across different countries, time periods, technologies... everything.

                  And "progress going nicely" isn't the point is it? If progress is going SLOWER than without patents, isn't that a huge problem? That's what the evidence has shown.

                  Ah yes. So, when someone develops a terrible invention, it is always better to copy the terrible invention than to spend more money to develop something competitive that might be better.

                  Um. Did anyone say that? No. Did I say that? No. You are simply making stuff up. Are you really that desperate that you can't respond to what I said?

                  No one said anything about copying a terrible invention. You love these strawmen.

                  I guess it's because you're unable to address the actual point.

                  Creating massive opportunities in its wake.

                  Study a little economics. You don't create opportunities by limiting resources. You shrink them. Patents do not create opportunities. They limit them.

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      • identicon
        Lonnie E. Holder, 25 Feb 2009 @ 5:51am

        Re: Re: Defining Innovation

        Mike:

        And yes, I have worked on both the sales and business side. I have an MBA in addition to my technical degrees and I directly worked with OEM customers for several years. Indeed, I was responsible for some new sales to some OEM customers. However, I could not have done it without having an invention that worked! Quite challenging, interesting and rewarding.

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  • identicon
    Anonymous Coward, 24 Feb 2009 @ 8:39pm

    Pittsburgh's offerings to society stopped around the time of Andy Warhol's death. Call me when you get something above that.

    reply to this | link to this | view in chronology ]

  • icon
    GeneralEmergency (profile), 24 Feb 2009 @ 8:46pm

    Another bad idea...

    ...in the long, sad history of bad ideas.

    If this proposal were to come to pass, it would likely fuel an -explosion- in patent related litigation, either in companies becoming more aggressive in seeking out real or imagined infringers, or by share holders suing the patent management entity because they think a third party -is- infringing on the patent and are NOT being sued.

    Underpinning all of this increased litigation risk is the simple fact that most patents are deliberately verbally complex and over-reaching, and we all know that a lawyer's primary job is to argue over what words mean. Patent is a subjective legal minefield today and implementation of a Patent Share system would only exacerbate this problem, diverting still more economic capital into the lawyer hole.

    I'm firmly in the camp that thinks that Patent has become more of an economic hindrance than a benefit. At the core of this belief is Mike's very astute observance that most innovation is incremental in nature, and if the infringement risk barriers were removed from the marketplace, innovation would accelerate, not diminish.

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  • identicon
    Andrew, 24 Feb 2009 @ 10:04pm

    Curious on a point that I didn't see....

    Companies, in many legal ways, are thought of as individuals and have certain rights. So if there were shares of IP out there then wouldn't a Company (or the owner's) have the right to buy those shares? Then sense they owned a share of a particular IP then they wouldn't need to license it since they would be an owner, which would defeat the purpose of this little money making scheme.

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  • identicon
    Am I missing something, 25 Feb 2009 @ 8:31am

    Everyone is jumping

    It seems that a number of people are jumping on this as being a bad idea since it puts the patent out there for use outside of the entity. Doesn't this already exist? It is called a patent pool. The only problem is an individual can't invest in it. Patent pools are generally the preview of large corporations.

    Also, most of the arguments against this concept can be applied to a company that develops the invention and then does not commercialize it or stops short of offering it to the market.

    When will you guys get that 'inventing' is a unique talent. It is akin to being able to sing well, write a book, etc. Our society often rewards these talents handsomely. Why should we not do the same for invention? Isn't this the purpose of establishing a patent office?

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    • identicon
      mobiGeek, 25 Feb 2009 @ 9:43am

      Re: Everyone is jumping

      I don't think anyone is against it because it puts the "patent out there". Patents are already put out there for licensing purposes.

      Inventing is NOT a *unique* talent. If it was, we wouldn't have case after case after case where one company is sued for independently "inventing" similar technology. We wouldn't have so many convolutedly worded patents that essentially boil down to "we did the next obvious thing".

      Are there inventions that are truly a breakthrough? Sure there are, but they are EXTREMELY few and far between.

      Does the existence of the patent system promote progress to the invention process? Does it do that more effectively than a free-market approach would (i.e. where the people/companies that execute the entire innovation process are chosen or rejected by the market) rather than an artificial government-selected "winner"...a system that is absolutely proven to be abused thus hurting science/technology, consumers and society at large?

      reply to this | link to this | view in chronology ]

      • identicon
        angry dude, 25 Feb 2009 @ 10:38am

        Re: Re: Everyone is jumping

        "artificial government-selected "winner"...

        Mudaaaaaaaaaaaaaaaaaaaaaaaak

        You call people like Edison, Tesla, Carlson, Gould, Dolby etc etc etc. "artificial government-selected winners" ???

        YOu need to clear your brains (if anything is left there) little techdirt punk

        I can help you with that

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        • identicon
          mobiGeek, 25 Feb 2009 @ 12:48pm

          Re: Re: Re: Everyone is jumping

          I recall entities such as : NTP, Intellectual Ventures, Texas MP3 Technologies, RTI, Saereate LLC, ....

          reply to this | link to this | view in chronology ]

      • identicon
        Lonnie E. Holder, 25 Feb 2009 @ 5:11pm

        Re: Re: Everyone is jumping

        Mobigeek:

        I love your statement: "Inventing is NOT a "unique" talent. If it was, we wouldn't have case after case where on company is sued for independently "inventing" similar technology.

        The USPTO issues about 180,000 patents per year. There are about 2800 patent lawsuits filed each year. That means that roughly 1.6% of the patents filed each year.

        Mike has previously stated that the number of times copying has actually occurred is "very, very rare." The number of times copying is alleged in patent suits is about 10%, if I recall correctly. Using this comparison as a baseline, then one company suing another company for independently "inventing" similar technology is very, very rare.

        reply to this | link to this | view in chronology ]

        • icon
          Mike (profile), 25 Feb 2009 @ 6:24pm

          Re: Re: Re: Everyone is jumping

          Using this comparison as a baseline, then one company suing another company for independently "inventing" similar technology is very, very rare.

          I've read this over and over again and I honestly can't fathom your reasoning. By those numbers it would appear that the opposite of what you say is true. That is it's QUITE COMMON for patent lawsuits to involve independent inventing.

          reply to this | link to this | view in chronology ]

          • identicon
            Lonnie E. Holder, 25 Feb 2009 @ 7:19pm

            Re: Re: Re: Re: Everyone is jumping

            Mike:

            I was using comparison to the percentages you pointed to see whether "independent" invention was rare or not. The number of lawsuits for patent infringement is comparable to the number of times copying had actually occurred in patents (considering what you posted about Lemley's study). Since you referred to similar percentages as being "very, very rare," then the numbers of independent inventions, using patent lawsuits as an indicator, is similarly "very, very rare."

            reply to this | link to this | view in chronology ]

            • icon
              Mike (profile), 25 Feb 2009 @ 11:01pm

              Re: Re: Re: Re: Re: Everyone is jumping

              I was using comparison to the percentages you pointed to see whether "independent" invention was rare or not. The number of lawsuits for patent infringement is comparable to the number of times copying had actually occurred in patents (considering what you posted about Lemley's study). Since you referred to similar percentages as being "very, very rare," then the numbers of independent inventions, using patent lawsuits as an indicator, is similarly "very, very rare."

              I'm still trying to parse this and coming up with nothing that makes sense. The numbers you're pointing to say the opposite: which is that independent invention is actually quite common. I really don't see how we're talking about the same thing since you seem to have come up with a totally different definition of independent invention.

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  • identicon
    Anonymous Coward, 25 Feb 2009 @ 8:52am

    In answer to your question, I have very serious reservations that patents should be treated in a manner akin to negotiable instruments. They were supposedly created to facilitate exploitation by an inventor, his licensee, or his assignee. Treating them as mere pieces of paper separate from the underlying invention is not what I believe the framers of out Constitution had in mind.

    A contemporary example is Ocean Tomo and the auctioning of existing patents.

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  • identicon
    Gene Cavanaugh, 25 Feb 2009 @ 9:17am

    Patents

    Again, Michael, total agreement! I am a patent attorney, and while I don't endorse the ideas some advocate of "no patents", I strongly endorse the suggestion of investing in the execution of an idea, with the patent merely protecting the idea from fiscal bullying (I know of too many cases of better financed people attempting to rob an original inventor, usually simply because they can, and in doing so they save a few bucks!).
    However, inventions, and protections of those inventions, should always be associated with execution - in fact, without execution, the patent (or other IP) should be easily voidable.

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  • identicon
    Anonymous Coward, 25 Feb 2009 @ 10:05am

    "they focus the investment on the patent (i.e., the invention) rather than the actual innovation that is necessary to make it work in the market place. That's the distortionary effect of patents (putting too much emphasis on the invention over the innovation)..."

    heh Mike, the patent is the title to the invention and represents the right to it. if you don't have the right to what you have created or bought like the house you live in, you have nothing. if you still feel that way, give me your address so i can come over and kick your silly tail out and move in. :)

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    • identicon
      angry dude, 25 Feb 2009 @ 10:41am

      Re:

      On the opposite

      patent does not convey the right to manufacture a product: it only gives the right to exclude others from practicing invention

      This is for a good reason

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    • identicon
      angry dude, 25 Feb 2009 @ 10:43am

      Re:

      Yeah, I'd like to piss on Mikey's front door too

      reply to this | link to this | view in chronology ]

    • identicon
      mobiGeek, 25 Feb 2009 @ 12:55pm

      Re:

      Take someone's house, they no longer have the house. Take the idea...and now two people have the idea. No one is out anything.

      One can argue that the "inventor" (which is completely a misnomer, it should be "first-to-file-paperwork-or") is denied the opportunity to generate revenue. But that too is not correct. If they are better at EXECUTING (i.e. INNOVATING) on that invention, given the head start they are afforded by being "first", then the market will reward them. If they cannot compete in a free and open market, then they are not the better INNOVATORS.

      Mr Lonnie is quick to poo-poo the sales and marketing angle of selling a product. So why not simply produce the product in secret and then do the simple thing of dumping it on the market. No one would be able to beat you because you'd be WAY ahead of the game and just waiting to rake in the dough.

      Or is it not that simple?

      In which case, why is "first to the USPTO" such a simplistic approach that people wish to support?

      reply to this | link to this | view in chronology ]

      • identicon
        Anonymous Coward, 25 Feb 2009 @ 1:30pm

        Re: Re:

        "First-to-file-the-paperwork" has never been a part of US law. It is a part of the patent law in virtually all other countries, and goes under the name "First to File".

        The standard in the US has always been the "First to Invent", though this standard that traces its roots back to the Patent Act of 1790 has been under siege by certain groups who advocate adopting the international standard of First to File. This change was one of the several provisions contained in the most recent version of patent reform legislation, The Patent Reform Act of 2006 (which went nowhere primarily because the word "reform" in its title was largely a misnomer).

        reply to this | link to this | view in chronology ]

        • identicon
          mobiGeek, 25 Feb 2009 @ 2:11pm

          Re: Re: Re:

          The written law, the intent of the law and the practice of the law differ widely, as has been pointed out many, many times in this forum.

          The only thing that really matters is the practice of the law. And in that practice, de facto is first-to-file. In the high-tech world, often the only "inventing" going on is the process of filing a broadly defined idea (think "wireless email").

          reply to this | link to this | view in chronology ]

          • identicon
            Willton, 25 Feb 2009 @ 2:39pm

            Re: Re: Re: Re:

            The only thing that really matters is the practice of the law. And in that practice, de facto is first-to-file. In the high-tech world, often the only "inventing" going on is the process of filing a broadly defined idea (think "wireless email").

            You've clearly never heard of an interference proceeding.

            reply to this | link to this | view in chronology ]

            • identicon
              mobiGeek, 25 Feb 2009 @ 2:52pm

              Re: Re: Re: Re: Re:

              You've clearly not got better things to do when running your business than monitoring the process of other entity's patent applications.

              Me, I have my "inventions" to turn into viable business ventures. Being slowed down/halted because someone else put A and B together before we got around to it...well...

              reply to this | link to this | view in chronology ]

    • icon
      Mike (profile), 25 Feb 2009 @ 2:47pm

      Re:

      heh Mike, the patent is the title to the invention and represents the right to it.

      Not at all. Actually, if what you claim is true, that the patent is "title to the invention" then it is blatant theft from anyone else who comes up with that idea independently, because you are forcing them not to make use of THEIR OWN inventions.

      if you don't have the right to what you have created or bought like the house you live in, you have nothing. if you still feel that way, give me your address so i can come over and kick your silly tail out and move in. :)

      That makes no sense. A house is a scarce good. An invention is not. You still have every right to sell PRODUCTS in the marketplace.

      So, no, you have a lot more than nothing. You have products and you have the knowhow to create new and better products as well.

      If you kick me out of my house, I no longer have that house. If I come up with an invention, you still have every right to market your products. You have lost nothing. You still have everything, in fact.

      reply to this | link to this | view in chronology ]

  • identicon
    Lonnie E. Holder, 25 Feb 2009 @ 8:09pm

    These conversations have become boring...

    I started reading these posts with great interest. Certainly Mike frequently has good points. However, Mike often has points that are off base (in my opinion).

    What is most disappointing is that there appears to be no common ground when it comes to patents. People that post comments here are all over the place. If there was underlying value regarding the comments on patents, then some sort of "patent reform" movement might well gain traction. However, even the "anti-IP" people are unable to agree on exactly what that means.

    There is also the practical viewpoint.

    If this web site was somehow marshalling forces to make improvements, it might well be an intriguing and interesting concept. However, it just seems to be a place to complain about things that people do not like. I can hear complaining from a lot of different places. Guess what? Complaining does NOTHING. Offering and pursuing solutions does.

    Then, of course, there are the numerous times where patents were implemented in countries that then showed a positive benefit from patents. Even in the case of the infamous Swiss chemical product patents, when Switzerland permitted "product" patents in 1977, Swiss exports of chemical products almost doubled, leading expanded exports. Clearly, the Swiss thought this was a success.

    China considered the lack of creation of domestic plant varieties insufficient to keep pace with plant diseases. The Chinese governments did a survey among the various entities with the capability to create new plant varieties. Their universal response as to why they did not create new plant varieties was because the varieties could be easily copied, so there was insufficient payback for the investment it required to develop new plants. China decided to implement protection for new plant species and suddenly hundreds of new varieties of plants were created, helping keep the price of food sufficiently low enough for the average citizen to be able to afford to eat (the option was more expensive imported food).

    The United States did the same thing in 1970. The government was concerned that the development of new plants was running about a dozen per year throughout the 1960s. However, more than 50% of all food crops were threatened by disease, and many non-food crops (e.g., cotton) were similarly threatened. The plant variety protection act was passed in 1970, and the number of new plants created per year leaped to about 300 per year. While people have pointed to a study that shows that the PVPA did nothing for wheat and corn, there is another study on cotton that shows that the PVPA was crucial for the health of cotton industries.

    Of course, there are other studies that show the value of patents.

    Do patents "divert" investment? Probably. However, the question is: diverted from what? The vague answer is "from something the market wants more." I love that answer, because there is zero proof that is true. For all we know, that money will end up as lottery tickets or in slot machines (that may well be what the market wants, but the market wanted subprime loans too; look where that got us). It is possible that is more desirable from a market viewpoint. Maybe it will all end up in Yu-Gi-Oh cards.

    To some extent, I feel the time I have spent here has been a waste. I do not seem to have affected anyone's opinion, I have been unable to get anyone to see the value of the facts and studies I have prevented. Beating my head against the wall is an interesting pastime, but it just makes my head bruised.

    There are a few "anti-IP" web sites on the internet. There are hundreds, possibly thousands of "pro-IP" web sites on the internet. There are about 139 countries that are signatories of the Patent Cooperation Treaty (PCT), and most of the countries that have yet to become signatories either have little in the way of invention, or have their own patent system (sometimes both).

    In spite of the glee that some people have when they point to Jefferson's statements about the patent system, he also noted that inventors should be entitled to control their inventions for a time, and he was surprised at how invention appeared to increase after the implementation of the patent system.

    The patent system is far from perfect. There have been a lot of abuses in the last couple of decades. Though the abuses get a lot of press, the vast majority of patents, somewhere around 97%, are never the source of a controversy.

    People on this web site keep decrying that "independent inventors" are getting the shaft. Yet, only about 600 interferences occur each year, a tiny fraction of the 330,000 patent applications being filed. If "independent invention" was happening to any extent, there should be more interferences and more lawsuits. Indeed, if society saw that there was a real problem with "independent invention," something would have been done by now. The number of cases of "independent invention" analytically is small; insufficient to raise even an eyebrow with IP watchdogs.

    Thus, the problem is credibility. In general, people do not see a problem with intellectual property. When web sites exaggerate the problems or misstate them, as tends to happen often, credibility becomes even less, especially among the very people who have the most ability to change the laws.

    If sites such as this one are going to have any real affect on intellectual property, they are going to have to take a different approach and do a better job of educating people. Until that happens, not only will things not change, they are likely to get worse.

    As fun as it has been hanging around in here, it tends to be the same people, with the same comments, over and over again. It has gotten boring for me.

    Ya'll have fun...

    reply to this | link to this | view in chronology ]

    • icon
      Mike (profile), 25 Feb 2009 @ 11:22pm

      Re: These conversations have become boring...

      What is most disappointing is that there appears to be no common ground when it comes to patents

      Oh gosh. How dare different people have different opinions. This is an open forum, and we ascribe to no party line. However, I find it odd that you claim there is "no common ground." There are a large number of people here who do recognize the harm done by patents. The fact that you refuse to recognize that doesn't change that.

      If there was underlying value regarding the comments on patents, then some sort of "patent reform" movement might well gain traction. However, even the "anti-IP" people are unable to agree on exactly what that means.

      Um. What? You have set up some artificial standard that makes no sense. Because we haven't created a new patent law, our comments are meaningless? Yikes. That makes no sense.

      If this web site was somehow marshalling forces to make improvements, it might well be an intriguing and interesting concept. However, it just seems to be a place to complain about things that people do not like. I can hear complaining from a lot of different places. Guess what? Complaining does NOTHING. Offering and pursuing solutions does.

      Lonnie. You and I had this discussion before and you are completely full of it here. The only person *complaining* is you. We have been working for well over a decade, showing plenty of individuals and companies how they don't need to rely on patent monopolies to do better in business. We take a very proactive and helpful approach. And, yes, some of that includes showing the downsides as well, but to claim that we only complain is simply wrong. As was pointed out to you multiple times, you have a long history of complaining on this site and have done nothing "positive" or "constructive" here yourself. Recently, in fact you've gone beyond "complaining" and focused more on "insulting."

      Then, of course, there are the numerous times where patents were implemented in countries that then showed a positive benefit from patents.

      You repeat this over and over again, despite the fact that it has been debunked. What those studies have shown is that money and effort was diverted into areas covered by patents, but that's an inefficient market process. What no one has shown is why that process is more efficient than allowing the market to allocate resources.

      Do patents "divert" investment? Probably. However, the question is: diverted from what? The vague answer is "from something the market wants more." I love that answer, because there is zero proof that is true

      Um. Other than all of economic history. But, you know... why bother with that...

      To some extent, I feel the time I have spent here has been a waste. I do not seem to have affected anyone's opinion, I have been unable to get anyone to see the value of the facts and studies I have prevented. Beating my head against the wall is an interesting pastime, but it just makes my head bruised.

      Perhaps it's because all of the "facts and studies" you've shown have been debunked as not proving what you seem to think they've proven.

      There are a few "anti-IP" web sites on the internet. There are hundreds, possibly thousands of "pro-IP" web sites on the internet. There are about 139 countries that are signatories of the Patent Cooperation Treaty (PCT), and most of the countries that have yet to become signatories either have little in the way of invention, or have their own patent system (sometimes both).


      Yes, it's no secret that many people believe the myth of patents. But the actual research shows it's a myth. There was a time when most people believed the world was flat, too.

      In spite of the glee that some people have when they point to Jefferson's statements about the patent system, he also noted that inventors should be entitled to control their inventions for a time, and he was surprised at how invention appeared to increase after the implementation of the patent system.

      Indeed. We've discussed in detail Jefferson's embrace of the patent system, but also his concerns. Then we've showed how the actual evidence now shows that his concerns were accurate, and the cons of the patent system greatly outweigh the pros. At the time Jefferson was around, such evidence didn't exist, and so they could only guess at whether the pros outweighed the cons or vice versa.

      People on this web site keep decrying that "independent inventors" are getting the shaft. Yet, only about 600 interferences occur each year, a tiny fraction of the 330,000 patent applications being filed. If "independent invention" was happening to any extent, there should be more interferences and more lawsuits.

      Um. Really? That's your argument? Because there aren't *enough* lawsuits there isn't a problem. WOW. Stunning. I don't know what to say to that. And I'm not sure where you get that 600 number from. That's simply not true. There are a lot more accusations of infringement than that.

      You do, of course, realize that lawsuits are often the last stage of a long process. That threats and settlements are often made because it's cheaper. And the chilling effects of these are very powerful.

      Indeed, if society saw that there was a real problem with "independent invention," something would have been done by now.

      Now that's a logical wonder. Apparently no laws need changing today, because if they did, they would have been changed already. Hell, based on that, we should disband the Congress.

      In general, people do not see a problem with intellectual property

      Yes, because most of the effects are hidden. It's called an externality. You should look it up.

      When web sites exaggerate the problems or misstate them, as tends to happen often, credibility becomes even less, especially among the very people who have the most ability to change the laws.

      The only exaggerating has been from you, in diminishing the actual damage being done by patents.

      As fun as it has been hanging around in here, it tends to be the same people, with the same comments, over and over again. It has gotten boring for me.

      Heh. And thus Lonnie signs off... leaving behind him a final statement full of incorrect and debunked ideas.

      I have to admit, when Lonnie first showed up, I enjoyed his comments. He added a different perspective and was willing to engage in thoughtful discussions -- even though we disagreed. Unfortunately, in the last few weeks that's disintegrated, and he's fallen back on repeating debunked statements or simply making up facts that are blatantly untrue. He claims he's frustrated banging his head against the wall, but maybe he should take a look at that wall.

      Still, sorry to see you go. I figured you had a real chance to dig in and understand the dangerous impact of gov't granted monopolies. It's too bad we didn't get that far. Sometime in the future, perhaps.

      reply to this | link to this | view in chronology ]

  • identicon
    Anonymous Coward, 25 Feb 2009 @ 9:29pm

    Food Fight

    Whoo Hoo

    and Angry Dude is back - what more could a lurker want

    reply to this | link to this | view in chronology ]

    • identicon
      angry dude, 25 Feb 2009 @ 9:57pm

      Re: Food Fight

      angry dude is tired these days of all the bullshit going on

      reading this shitty blog only saddens me even more

      have a nice life, punks

      reply to this | link to this | view in chronology ]

  • identicon
    Guy Carmichael, 27 Feb 2009 @ 7:15am

    Patents as financial products

    Does the idea sound familiar?

    I refer you to the EPO's Scenarios for the Future (2007),see page 47 of 128, which suggested there could be a future world (ca. 2025) in which:
    "Patents have a well-understood value in their own right as well as combined in portfolios – they’re more like the more exotic financial products of the 20th century and the uncertainty of their value over time makes them attractive to speculators."

    reply to this | link to this | view in chronology ]

  • identicon
    James Lyons-Weiler, 4 Mar 2009 @ 3:16pm

    IP Share Market

    Apologies to techdirt for not sending the link to the article.

    http://www.the-scientist.com/article/display/55363/

    I am glad to see that my little proposal has stimulated a discussion on innovation. A do (seriously) appreciate the time and thought people have put into the concept. I'll respond a little to each. But before I do, I will say that the opinion article has resulted in more unsolicited phone calls and emails than anything I have done in the past.

    On innovation. I see invention, patent, and new uses of existing patents all as innovation. I also see the strategic use of R&D funds by an exec as innovation. The undue emphasis on idea vs. application comment misses the point, and it's my fault for not communicating clearly enough: the IP Share Market would exist to raise funds int he R&D stage to get products (applications of IP) to market.

    The aggregate con's include that the market is a 'little money-maker'... well, certainly! There are many, many (relatively small) projects frozen in development in large companies that could use a little R&D cash to bring them to the next phase. The point of doing business is to make money. The IP Share Market will help inform us on what the popular idea of a good idea is. Will this stifle innovation? In my view, no; companies would not be required to list all of their IP; moreover, they would be able to program other R&D funds electively toward ideas that were not popular, or secret. That is, the IP Share Market would not place constraints on existing means of doing business.

    The concern over long-term investment is a good one; the answer is that the companies that list the stock would be required to provide three options (1) buy the stock back on the day the invention (or novel patent application, say); (2) offer equity in shares of company stock; and (3) offer a royalty on profits once the IP goes to market. This would promote long-term investment, and provide antidilution protection (contrast to current VC practices). (Thanks John Maki for discussions in SF on these points.)

    For further fodder for conversation, other con's that have come my way:

    a. companies will tend to list low-value IP in hopes of cashing in;
    b. competitors will manipulate IP value;
    c. what's to stop companies from spending the money invested for a particular piece of IP on other projects?
    d. insider trading risk by those who can see the future and put 2 or 3 pieces of IP together and pre-invest;
    e. general investors are not intelligent enough to discern good IP from poor;

    Some of my counterpoints on these points are

    a. companies would be listing prospecti of individual IP. Would they not want to build an excellent reputation, above all, so investors look for more IP that they offer? A bad reputation would seem to prevent repeat investment in that particular company's IP.

    b. investment in IP would not lead to votes on how the project should be, or should not be done. money down is money 'for'.

    c & d. regulation. c. insider trading is always a prosecutable risk. d. listing companies would be subject to the rules & regs enforced by the Commodity Futures Trading Commission, perhaps w/random audits for enforcement.

    e. The middle class (in the US anyway) is actually very well educated. I'm calling for an opportunity for brass-knuckle investment, where the investor comes to know what they are behind. We have become lazy investors, dependent on brokers, and portfolios. We don't use the brains we have.

    At the Executive Summit in San Francisco last week, 1/3 of the biotech and pharma companies polled said they would in fact participate in the IP Share Market by listing IP.

    The question is, whether investors will participate. VCs currently lose a major percentage in year 1 and year 2. There is a backlog of investment capital, and everyone is afraid to lose more in the stock market. Perhaps if they knew there money was going to promote an idea -- or many ideas -- that they thought were worthwhile, investors might loosen up.

    I'm happy to say I've had offers of partnerships; there are active folks in the investment business who have expressed great enthusiasm for the concept of the IP Share Market.

    I look forward to focused, detailed comments.

    Also, more info here:

    http://ipshareguy.vox.com/

    reply to this | link to this | view in chronology ]


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