This summer, I wrote on the competing moral frameworks of theft and competition in our patent system as it relates to the Internet, and how theft has the upper-hand now. I noted that it was the equivalent of flopping in basketball, where rules meant to protect competition work to destroy competition when they are abused.
The New York Times has a great article yesterday about the patent system, which does a nice job about putting some meat on the costs and the consequences of patent rules that are being abused.
Litigation and Defensive Patent Litigation Related Strategies Are Outpacing Innovation Spend
“In the smart phone industry alone, according to a Stanford University analysis, as much as $20 billion was spent on patent litigation and patent purchases in the last two years — an amount equal to eight Mars rover missions. Last year, for the first time, spending by Apple and Google on patent lawsuits and unusually big-dollar patent purchases exceeded spending on research and development of new products, according to public filings.”
Software-Related to Patents Are Broader and Conceptual Than In Other Areas Where Patents Work Better
“Patents are vitally important to protecting intellectual property. Plenty of creativity occurs within the technology industry, and without patents, executives say they could never justify spending fortunes on new products. And academics say that some aspects of the patent system, like protections for pharmaceuticals, often function smoothly.
However, many people argue that the nation’s patent rules, intended for a mechanical world, are inadequate in today’s digital marketplace. Unlike patents for new drug formulas, patents on software often effectively grant ownership of concepts, rather than tangible creations. Today, the patent office routinely approves patents that describe vague algorithms or business methods, like a software system for calculating online prices, without patent examiners demanding specifics about how those calculations occur or how the software operates.
As a result, some patents are so broad that they allow patent holders to claim sweeping ownership of seemingly unrelated products built by others. Often, companies are sued for violating patents they never knew existed or never dreamed might apply to their creations, at a cost shouldered by consumers in the form of higher prices and fewer choices.”
Patents Are Adding Additional Cost to R&D and Final Products
“Patents for software and some kinds of electronics, particularly smartphones, are now so problematic that they contribute to a so-called patent tax that adds as much as 20 percent to companies’ research and development costs, according to a study conducted last year by two Boston University professors.”
PB&J Patents Illustrate Absurdity of Patent Rules.
“In 1999, for instance, two men received a patent for a crustless, sealed peanut butter and jelly sandwich. (The J. M. Smucker company acquired the patent and used it to sue other food makers. In 2007, after press scrutiny, federal officials canceled the patent.)”
The Position That Patent System Just Sets Default Rules Is Wrong Because It is Too Costly For Start-Ups To Navigate, Ultimately Inhabiting Innovation
“Others say the system works fine.
“Intellectual property is property, just like a house, and its owners deserve protection,” said Jay P. Kesan, a law professor at the University of Illinois. “We have rules in place, and they’re getting better.
“And if someone gets a bad patent, so what?” he said. “You can request a re-examination. You can go to court to invalidate the patent. Even rules that need improvements are better than no rules at all.””
