Archive for March, 2013

Mar
07

Abandon the US Patent System? Sure, If Killing Innovation is Your Goal

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Billionaire Mark Cuban, after complaining about patent lawyers making too much money, condemned the US patent system for blocking innovation. He and some other wealthy elites are troubled by US patent rights and would like to dismantle large parts of the system. This is a growing and troubling trend. The voices in the tech community claiming to have a “consensus” against patents are not the ones creating the technology, so argues Gene Quinn at IPWatchdog.com, but those who want patents out of their way so they can more easily exploit the work of others. I think Quinn’s argument has a great deal of merit.

The patent system has plenty of problems that can discourage innovation, but these problems arise from poor law, poor courts, poor examiners, and other problems that weaken the ability to obtain and enforce valid patents for genuine inventions. The solution is not to dismantle patents, but to strengthen them and their quality. The basic patent system is fundamental to encouraging innovation. If my invention can be copied by someone else at no cost, why would I go through all the trouble and cost of bringing it to the market? There is a need to protect property rights in order for an economy to flourish, and the existence of the US patent system has been one of the main reasons for the phenomenal growth of the US economy over the years, while the weakening of property rights in that nation is now contributing to its economic decline.

To overcome innovation fatigue, we need to keep property rights, including intellectual property rights, alive and well. Don’t listen to the rantings of Cuban and his ilk. Understand the basic economic incentives needs for innovation to flourish, and then join me in pressing for a healthier patent system.

Here in China, copyists used to be the foundation of the economy, and there was little need for patents. Now China is changing dramatically and its government and industries see the need to strong IP to encourage invention and innovation for the new China. So here, patents are becoming stronger as America weakens its system progressively with the help of “progressives” like Cuban and some very poor judges and politicians. Chinese companies are racing to build aggressive IP estates while America complains about its patents. At this rate, in the next 10 or 20 years, who will lead and control the global economy?

But wait, haven’t there been studies showing that patents hurt innovation? Allegations, yes, but a careful look at history does not support the argument. Below is Ron Katznelson’s valuable input to the Gene Quinn article mentioned above, taken from the comments section. The links Ron provides should be helpful in debunking popular myths:

However, we have a greater challenge when history is rewritten by those who mischaracterize, distort, or otherwise ignore historical facts to “demonstrate” that patents block downstream development. This revisionism has been going on for the last century and has produced certain myths and false “proofs” of the patent blocking/hold-up hypothesis. The number of scholarly sources that repeat the patent blocking allegation may now be so great that the allegation has become an entrenched and unchallenged “truth.” It is being taught in economics, business and law schools. In my opinion, it is the major source of misguided patent legislation and court opinions. The myths are originally perpetrated to serve agendas that have very little to do with innovation policy.

In every instance so alleged, a further investigation of the real facts surrounding the subject patents reveals that no downstream development suppression occurred, and in some cases the opposite had occurred. The details of some examples that my colleague John Howells and I looked at are detailed in the following papers recently submitted for publication:

The Myth of the Early Aviation Patent Hold-Up – How a U.S. Government Monopsony Commandeered Pioneer Airplane Patents, at http://bit.ly/Aircraft-Patent-Logjam-Myth.

Inventing-around Edison’s incandescent lamp patent: evidence of patents’ role in stimulating downstream development. at http://bit.ly/Inventing-around-Edison.

In each of these studies, we sought to collect, assemble and convey, a definitive and unassailable empirical evidentiary record including primary sources that cannot be characterized as “just another view” of the facts. Similarly, the economic historian George Selgin and his colleague John Turner have debunked patent blocking allegations regarding James Watt’s steam engine:

Strong Steam, Weak Patents, or the Myth of Watt’s Innovation-Blocking Monopoly, Exploded at http://ssrn.com/abstract=1589712 .

We have similar detailed analysis on other alleged patent blocking cases in the pipeline. Hopefully, these and future articles may change the misconceptions that fuel the patent blocking myths.

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