Patents, while at first glance seem to be rather dry and unremarkable, are invariably affecting everything that you do, especially when it comes to technology — but some are beginning to suggest that patents might be harming innovation, instead of encouraging it.
In the simplest form, in case you are unaware how they work, patents are monopoly rights for a new piece of technology. If you invent a new “widget,” — the go-to term for an invention apparently — it is generally believed that you should be able to benefit from the labour of developing said widget. Simple economics, right? You sweat, you reap the reward, good for everybody. Economists have even found that countries with strong intellectual property (IP) laws tend to have a higher level of economic growth, though there are many confounding variables.
There is a recent argument that patents are actually stifling creativity and innovation rather than encouraging them by preventing new avenues of research that build off of previously patented information, or even something as simple as incremental improvements. With the ubiquity of patents becoming obscene, this argument certainly has merit. MercExchange, for example, arguably owns the patent(s) for “Buy it now” — a single button on their website that when pressed takes you straight to checkout. There was a large and only recently resolved incident in which MercExchange sued eBay for the use of their patents and, though the final results are confidential, at one point it appeared that eBay might be ordered to pay MercExchange as much as US$ 25 million.
This is particularly pertinent when the purpose of patents is held up against what happens in practice. In theory, patents provide the public good with information regarding the production of different technologies so that people can learn from it and in some cases compare it to their own work. The goal of this is twofold: it reduces duplication of effort once a solution to a particular problem has been found, and it encourages further development by researchers who are able to learn from these solutions. In practice, however, many large firms use patent law as a club to beat down potential competition. This occurs largely in the software and technology sectors, where parallel development is very common.
The extremes of this are evident in the prevalence of a new breed of company, one that exists solely to purchase and license other people’s patents. Again, economics suggests that this is simple specialization and is good for everyone, in practice however, the inventor often receives a much lower share of profits than he/she would realize for bringing their product to market. They then make money from inventing professionally: a risky proposition.
Some companies even exist solely to purchase a single piece of IP and sue people who infringe upon it. This has become a significant source of revenue for larger organizations despite the fact that these companies do not develop their own technologies and therefore do not add to the knowledge of the industry as a whole.
The counter-argument is most succinctly and flippantly summarized by cartoonist Scott Kurtz who, in a recent podcast, joked that “you care about [IP] when you have something worth protecting.” Those who spend time to develop a piece of intellectual property and seek to monetize it are, arguably, less likely to pursue it if they cannot profit from it.
In the end, there is no right answer regarding this situation. Economists and other experts continue to argue about what is best for the individual and society as a whole , but what I know is that I will be patenting my next great invention it to prevent anyone from stealing the Shplart.