If Patents Are So Important To Innovation, Why Do Innovative Companies Keep Opening Up Their Patents Rather Than Enforcing Them?

from the questions-to-ponder... dept

To hear many politicians (and, tragically, many academics) tell the story, patents and patent policy are keys to innovation. Indeed, many studies trying to measure innovation use the number of patents as a proxy. For years, we've argued that there is little evidence that patents are in any way correlated with innovation. Indeed, in practice, we often see patents get in the way of innovation, rather than being a sign of innovation. If anything, an influx of patents seems to indicate a decline in innovation, because as the saying goes, smart companies innovate, while failed companies litigate. Litigating patents tends to happen when a more established company no longer is able to compete by innovation, and has to bring in the courts to block and stop more nimble competitors.

Indeed, over and over again we seem to see the most innovative companies eschewing the anti-competitive powers that patents give them. I was reminded of this recently with the announcement that payments company Square had agreed to put all of its crypto patents into a new non-profit called the Crypto Open Patent Alliance to help fight off the unfortunate number of crypto patent trolls that are showing up.

Of course, we see this throughout the companies generally considered to be the most innovative. A decade ago, Twitter came up with a very clever Innovator's Patent Agreement, which effectively would block patent trolls from ever being able to use Twitter's patents, should they somehow fall into trollish hands. A bunch of other top internet companies including Google, Dropbox, Asana, and Newegg launched the License on Transfer network, as a basic poison pill to, again, stop patent trolls.

And, most famously, Elon Musk flat out gave away Tesla's patents and encouraged anyone else to use them to compete with Tesla, license-free.

If patents really were so vital to innovation, why would all of these innovative companies be so quick to give them up? And why is it so incredibly rare that any of them assert patents against competitors? Instead, so much of the patent litigation we see is against those innovative companies coming from a variety of patent trolls (frequently lawyers who never innovated at all) or also ran companies which may have been innovative in the past but have long since seen their innovative days in the rearview mirror.

It would be nice if policymakers, the media, and academics finally started recognizing the idea that patents are not just a bad proxy for actual innovation, but often antithetical to innovation, and we can see all the evidence we need for that in the fact that the most innovative companies are "devaluing" in their own patents to improve the ecosystem, rather than enforce those patents.

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Filed Under: open innovation, patent trolls, patents, sharing
Companies: square


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  1. identicon
    OGquaker, 24 Sep 2020 @ 6:52pm

    America Invents Act 2011

    The Leahy–Smith act "no longer concerns itself with actual inventorship" (Madstad Engineering Inc. v. USPTO)
    In late 2012 i sat through a six hour tag-team dog&pony show put on by the USPTO in the local library, "zoomied" for everybody in America. The audience was 99% lawyers and corporate hacks, in those 6 hours i was probably the only inventor present. Hours were spent on how to work around a reticent inventor, establish their death, loss of contact, or a sudden employment agreement found after filing Your Patent application. IP was discussed solely as real estate, pharmaceutical and life patents dominated the hours. A good friend died last month, cordless telephone US3644681 1969, mobile decoder US3979562 1974, worth nothing to him. So he made millions in actual real estate, Fuk Um.
    2011 AIA: An Entity can file an application on behalf of an inventor who assigned or is under an obligation to assign the invention rights to the Entity (OR if the Entity otherwise has financial interest in the invention), without seeking the inventor's execution of the application.
    Disclaimer: My nephew has 22 worthless GUI patents with Microsoft, he works for Google.


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