Wednesday, August 29, 2012

American law is patent nonsense

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The season of US election conventions is upon us. Politicians will issue sentimental proclamations about their faith in America. Meanwhile, from California, we have an object lesson in why that faith has been eroding. A supposed pillar of the nation’s capitalist vigour has been revealed in all its decadence [..].

The poster child for patents is the pharmaceuticals industry. But, as Richard Posner, a federal appeals court judge, has argued, what works in this sector is not necessarily appropriate in communications, software or elsewhere. Bringing a new drug to market is inordinately expensive, mainly because of the need for large clinical trials. Monopoly rights over new drugs provide a needed spur to invention. And because trials take as long as a decade, the 20-year exclusivity typically granted can mean only 10 years of monopoly profits.

The technology industry is different. No clinical trials are needed, so costs of development are lower and the case for monopoly weaker. Certainly, 20-year exclusivity cannot be justified. But as Michele Boldrin and David Levine observe in a new paper, the right policy for Silicon Valley might be to grant no patents whatsoever. Technology innovators are amply rewarded by the first-mover advantage. In the 16 months between the launch of the iPhone and the appearance of its first Android competitor, Apple shipped more than 5m units. Its share price outperformed the S&P 500 index by 20 percentage points.

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While we are on the subject, let us address another "advantage" of patents: that they supposedly encourage people to share the idea behind their innovation -the thinking goes- and if it was not for the patent system, innovators would sit on this information, blocking further exploration and incremental advances.

But in the software world, especially around the kind of "innovation" that you see on mobile phones, browsers, operating systems; the implementation / creation of these things is very straightforward (they are easily copied after all). Because of this ease, the public gains nothing by the disclosure of such information, it does not necessarily enable further innovation, further technique.

Perversely it can even hinder it. If this shit is easy to implement, one would have gained a lot by diversity, having multiple people piling up their own variations one after another, in a speedy fashion, but because of the patent system, this creative speedy incremental innovation is blocked and everyone loses. Except maybe Apple.

So it is patently (!) absurd the system insists on one-size-fits-all approach when it comes to ideas, software, drugs and electronics. Current system benefits noone except big companies who use it as a weapon against not just other big companies, but also to smaller innovators (concentration vs distribution, again). There is nothing free-markety or natural about the patent system either. If one person were to discover fire (and did) in ancient times and many other people around the world did as well, everyone start(ed) using this innovation immediately for their own purposes without waiting on the first guy. If the first innovator "patented" fire, and others were precluded from innovating or using this innovation without permission, I guarantee you the world would be a much different place right now, and not necessarily for the better.

Another thing:

The reason that it, sorta, kinda seemed that the patent system worked until now is precisely for the opposite reason than people might expect. The system seemingly worked because not many people gave much damn about it. If Xerox Parc sued Apple for infringing its ideas during the 80s, Apple would never become today's Apple and ironically one day be able to successfully sue Samsung for the same crime. If Parc took the hammer to then growing Apple and beat the living shit out of it, then Apple fanboys all around the world would not have had shiny little toys to play with today.

Food for thought.

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