If Patents Were Abolished…

Notes

If patents were abolished, innovation would thrive

My first exposure to patents was as the employee of a highly innovative company in the fast-moving field of video editing technology. After my employer was acquired by a global corporation, I was told to consider how the work I had done might be patented. The purpose of acquiring an arsenal of patents, I was told, was not to sue other companies for infringements of our patents, but to defend ourselves if we were sued by other companies for infringements of their patents. Well, the Cold War, with its nuclear philosophy of Mutually Assured Destruction, was still a reality back in those days; I suppose such screwy thinking seemed normal.

The trouble is, though the Berlin Wall has long been reduced to rubble, the MADness of patents persists. It made no sense to me, when technology was moving so fast that the innovations we were frantically making to keep ahead of the competition would be obsolete within a year or two, to waste time filing patent applications instead. It still makes no sense to me, yet the legal framework that has increasingly throttled innovation for decades, remains intact.

In the world of patents, absurdities abound. Patents are supposed to be original: so did rectangles with rounded corners not exist before Apple patented them in 2012? Patents are also supposed to be non-obvious: so how is it that, according to a recent episode of This American Life, some 5,000 people simultaneously invented and patented "an online backup system"? Perhaps it wasn't so non-obvious after all.

It's impossible to not to conclude that the government officials who handle patent applications are simply not very good at recognising true innovation. And why would they be? Most of the time, neither the engineers nor the managers at that highly innovative company of which I was once an employee were very good at recognising which of our ideas would prove successful: at least, not until we had tried and thoroughly tested them. Why would we expect a government official without our intimate knowledge of our work to evaluate our ideas better than we can ourselves? Indeed, why do we consider it appropriate for government officials to evaluate commercial ideas? Wasn't it those on the other side of the Cold War who went in for that kind of thing?

Much of the recent reaction against the patent system concerns patent trolls: shell companies that assemble portfolios of absurdly broad patents, without ever creating the products these patents are supposed to protect. The trolls use the patents to threaten individuals and small businesses with specious patent infringement law suits; their victims, who can't afford to defend themselves in court, are forced to pay crippling royalties. This is clearly unconscionable, and people are right to be angry at such blatant extortion, but in my mind, what these patent trolls do is no different from what any patent holder does. Sure, corporations such as Apple and Microsoft actually create products, but when their legal departments file patent infringement law suits against others, it's not because they feel aggrieved that their inventions have been stolen from them. Rather, it's because it's an irresistable tool, routinely used to wound the competition, if it's the likes of Samsung or Google, or to kill them off if it's someone smaller. Apple shareholders don't care whether that patent for rectangles with rounded corners is reasonable, they care only that it helps prevent Samsung, or anyone else, from competing with Apple on a level playing field.

Economists have weighed in with studies that seek to determine whether patents encourage innovation, as originally intended, or whether they actually discourage it. With admirable directness, a recent paper begins: "The case against patents can be summarized briefly: there is no empirical evidence that they serve to increase innovation and productivity…" I thoroughly approve of such investigations into whether policies are effective, and it's gratifying that these economists conclude that patents are patently ineffective; but for me, there's a larger issue at play.

Big business has little to lose from patents: sure, the law suits can be a distraction, but they have legions of lawyers to deal with all that. Big business does, however, have much to gain from patents: like most government regulation, patents represent a barrier to entry. If you're in the phone business, and if your lawyers can persuade a government official to grant you a patent on rectangles with rounded corners, then you can make it difficult for anyone else to get in on the business. You won't even have to create good products any more, since you'll have the power to prevent anyone else from creating good products themselves.

It's the small businesses and the individuals who lose. Without the resources to fight million-dollar court cases, they're at the mercy of anyone who holds a patent, regardless of whether it's actually enforcable. Many would-be entrepreneurs with innovative ideas never dare venture into the cut-throat world of business, knowing that a single, spurious patent law suit could wipe them out.

And so, ultimately, we all lose, forced to settle for last year's or last decade's patent-protected products, instead of the fruits of unfettered innovation that we could enjoy, if only patents were abolished.