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In A Way I Do Sort Of Envy The US Its Patent System

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Patent Monopolies – Christian Engström

Patent Monopolies – Christian Engström

I most certainly don’t envy the US its patent system as such, but as a European politician, I am concerned that the US seems to be ahead of us on the road towards a patent system collapse. The region that first abolishes the patent system will get a global first mover advantage.

The quite serious blog IPKat has just conducted a rather funny web poll, where one of the questions was ”Do you envy the US its patent system?”.

I most certainly don’t envy the US its patent system as such — it’s even more screwed up than the European one, which is bad as it is, and will become even worse once the European patent with unitary effect (as opposed to a Unitary Patent) becomes a reality.

But as a European politician with a responsibility for defending European interests, I am concerned that the US seems to be ahead of us on the road towards a patent system collapse.

Patents are government sponsored monopolies, and monopolies are bad for business and bad for economic growth.

The feeling I have is that the patent system in the US is so obviously absurd that more and more big companies are beginning to see it for what it really is, an obstacle to innovation and economic growth. Allegedly, Apple nowadays spends more money on patent litigation than it does on research and development. This means that the companies that are not Apple have to spend just as much to defend themselves, unless they want to get sued out of business.

The patent system in Europe is also harmful to innovation and economic growth, but the US is ahead on the collapse curve. From a regionalistic (or whatever you call it, since the EU is not a nation) perspective, this is a concern.

The region that first abolishes the patent system will get a global first mover advantage. Low levels of patent monopolies are associated with high levels of growth. This has been demonstrated again and again in history, and can be seen by comparing different regions in the world today. (Which has the highest level of economic growth, China or Europe or the US?)

But almost no politicians (except the Pirate Party) see it this way, so it is unfortunately very unlikely that the leadership required will come from the political sphere.

My guess is that the patent system in both the US and Europe will be dismantled in my lifetime (I’m 52). But if and when that happens, it will not be thanks to political leadership, but simply because the big companies that actually produce things will get fed up with spending more and more on defending themselves against ever more aggressive patent trolls.

And when it comes to patent trolls, the US, thanks to its patent system, is ahead of Europe.

More about patent trolls in The Register: Patent trolling surges, but righteous cavalry on the way

This article was originally published at Christian Engström’s blog.

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About The Author: Christian Engström

Christian Engström is a Member of European Parliament (MEP) for the Swedish Pirate Party. He has previously been an activist in FFII in the fight against software patents, and has a background as an entrepreneur and a coder.

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15

  1. 1
    Vincent

    Ahh, but aren’t there several problems(namely some assumptions) with your statement here?

    1)If we abolish patents, we will get growth.

    This assumes that the reason people don’t market new products/are more innovative/ more frequently is solely due to patents, and nothing else – There is a bunch of things to consider that are way more important than patents, particularly when you’re about to launch a new “risky” product.

    1.1)
    If I came up with the next new thing in _something_ (let’s say a media player), that is truly innovative, has never seen before features, and instantly makes you want it (ok, a best of the best case scenario, but still), what would be my motivation as a startup of releasing it? If I can’t protect myself and my company from 50 already established businesses taking over my product and not paying me, why would I ever tell someone I developed it?
    In other words, Companies that already have a pipeline, contacts & money would be free to rip off my product, sell it cheaper than I ever could, and not pay me a single cent.. Ever. Sounds like a wonderful way to encourage innovative thinking & stimulate economic growth, right?

    2)The reason that China has such a high growth is due to not really enforcing copyright or patent laws.

    Well, this may be partly true, since a lot of businesses copy existing products, or run “night shifts”(where workers in the official factory run the machines outside of regular working hours, and then sell the product unlicensed), HOWEVER : This is not a sustainable way of growing, since corporations get quite annoyed when you steal their designs, leading to sanctions and the like (+people start demanding ‘original products’ once the country becomes more prosperous).
    Oh yeah, let’s not forget about how some of the most toxic places on earth are currently in China, since the environmental laws are set aside in favor of rapid growth… (+the rather low standard of living compared to western standards.. Health & safety and all that.. )

    Unlimited growth really isn’t the holy grail you somehow manage to make it look like.. Growth is good, the patent system (particularly in the US) sucks balls, but tearing it down without some form of replacement is not a great solution..

    So, what do you propose to do once the patent system falls? I know I will be drinking a beer in celebration of all the patent trolls that die that day, but other than that, I’m pretty much in the dark as to why it will be such a great day…

    -V

    • 1.1

      If I came up with the next new thing in _something_ (let’s say a media player), that is truly innovative, has never seen before features, and instantly makes you want it (ok, a best of the best case scenario, but still), what would be my motivation as a startup of releasing it?

      Short answer: if you don’t innovate, you don’t have products to sell. That’s a much stronger driver than ever being able to get a monopoly on it (which is frequently awarded after the product is obsolete, anyway). See Ten myths about patents.

    • 1.2
      Anonymous

      Re: 1.1.
      This case is frequently touted in defence of maintaining the patent system, so that we can continue fetishising the first person to have an idea at the expense of the person who executes it the best. But this argument ignores the effect of a competitive marketplace (not to mention that it still takes time for those established companies to clone the product—perhaps poorly—and your head start provides a significant market advantage).

      If you have come up with such a dynamite media player, which is innovative and immediately desirable, then you had better start selling it! It’s going to print money! And then when your player is the hottest thing on the block, of course other companies are going to copy it, because they want a piece of the action. Those copies will make their way to the shelves, and, if the other company is larger and its copies are up to snuff and they can undercut you, then you’ll have to find some way to keep customers buying your version. That could be any number of things: lowering your own marginal costs, relying on your first-mover status and strong branding, or continuing to innovate on the product and staying one step ahead, to name just three.

      This is called “competition”, it is good for consumers (good products at low prices!), and it is exactly what patents are designed to stop. When you have such a great idea or such a great product, it is your job to capitalise on it, not the government’s.

    • 1.3
      j

      > what would be my motivation as a startup of releasing it? If I can’t protect
      > myself and my company from 50 already established businesses taking
      > over my product and not paying me…

      You seem to be under the assumption that the patent system somehow protects you from the established business. Fact is, the established business probably has patents covering some part of your product, and they will use these to force you to hand over your innovation. Even if they lack any actual patent leverage against you, they certainly do have money to drag you from court to court to bankrupt you and take your innovation anyway. There is no one to protect you from that happening.

      Abolishing the patent system will level the playing field by taking these abuses avay. From then on, you will still have copycats. But since you were the first with the new idea, you have a lead in the struggle to continuously improving it. As long as you manage to keep this lead, you will do fine.

      The profit from the period you were the only one, and the profit from the period of leading the pack are all of the morally justifiable reward for your innovation. If someone will out-innovate you, they will have won this right from you, and that is life. Good luck!

    • 1.4
      Imaskar

      The concept of patent was established to promote research and development (to make sure it is profitable to the patent holder). Beautiful concept, except nowadays its being abused and (as the article mentions it in the case of Apple) corporations would rather sue others than work towards technological progress that benefits society.
      Perhaps abolishing the patent system isn’t the answer either but finding a right balance between protecting the patent and promoting actual research, if the corporations sit on the patent without innovating and profit from what they made for years, the first objective of patent(the way it was conceived) is not achieved.
      (I might be wrong but I think the ideas presented in the Case for Copyright Reform reflects some of this logic. It’s been a while since I read it and I was on the plane so I might no have understood everything Rick and Christian meant.)

    • 1.5
      d.

      “If I came up with the next new thing in _something_ (let’s say a media player), that is truly innovative, has never seen before features, and instantly makes you want it (ok, a best of the best case scenario, but still), what would be my motivation as a startup of releasing it? ”

      This is a fallacious argument. It assumes that it is even possible to come up with an invention that is so good, so much better than everything already on the market, that everyone would suddenly want it. This just doesn’t happen anymore. The age of Great Inventions is over. We’re not going to get another lighbulb or steam engine. The more time goes on, the more granular inventions become. Inventions become smaller and smaller improvements to existing technology. Just look at any patent granted in the last 10 years, and they’re basically “take x and y and put it in z” or “like x, but it also does y”.

      The “small inventor” argument is particularly fallacious because the current patent system does not protect the small inventor, at all. The small inventor cannot afford patents, or to market their product. They cannot afford to defend their patents in court. Even if they have a patent, someone can still sue them for violating a similar patent, because the patent language has become so vague.

      So what if there were no patents? Someone makes and invention and markets it. They still get protection on their trademark, so no one else can still make a Brand X Widget. Play your cards right, get enough publicity, and you can milk the first-to-market advantage to the full extent. After that, it’s just a matter of providing better service than your competitors. You’ll just have to keep constantly innovating, instead of suing others. Those that can’t keep adapting and innovating will die out instead of being protected by patents. People aren’t going to stop innovating just because there are no patents. People won’t stop trying to improve and strive for greatness just because there are no patents.

      When 3d-printing advances, we’ll get plenty of small-scale shops that can produce items in a small scale. Innovate, produce, and move on when the competition arrives. Patents would only be in the way. Consumers don’t benefit from patents, because patents limit competition. With more competition, consumers get better products and services, for less money, and that’s a good thing. It creates a healthy market.

  2. 2
    Anonymous

    people are more concerned with keeping their own pockets well lined than ensuring there is innovation in companies, countries or regions. politicians, in the main, are of exactly the same frame of mind, being more concerned with making sure they get ‘campaign contributions’ (read this as bribes!) than anything else. until there is a serious shake up of what politicians can and cannot accept, from whom, under what circumstances, why and when, things wont change. it’s the same as the entertainment industries. it’s safer for them to try to dish out money to politicians to keep things as they are rather than change their business model. it’s also easier because of the money and power politicians have given them, to sue ordinary people, that have no way of defending themselves, than updating their practices. how many people have noticed that it’s only the ordinary people that get sued? when convicted, as surely they are, the fines are astronomical and the jail time ridiculously harsh. never is it a big company like Google under the hammer though is it? they can afford to go to court, we cant! it’s a typical bully way of acting and governments and courts condone it by doing nothing to curb it but everything possible to enhance it!

    • 2.1
      Imaskar

      >how many people have noticed that it’s only the ordinary people that get sued?

      I’m afraid I must disagree.
      1. Suing ordinary people who don’t have as much money as corporations if counter-productive even if their twisted logic. Legal battles between Google, Samsung, Apple etc. happen all the time, after all that’s where the money is.

      2. In case of the entertainment industry (MPAA, RIAA and the merry bunch) you’re right. Ordinary people get sued and in their view “not ordinary” is someone who can actually fight a legal battle with them. Its not even suing anymore, its harassment. They bug off once people stand up for themselves because they don’t want a lengthy legal battle that would be more costly to them than the money they expect from innocent people.

      btw Rick, I noticed comments on your page now appear much faster than they used to don’t know if it used to be some of a technical issue but kudos :)

      • 2.1.1
        Anonymous

        i was referring to only ordinary people being sued by the entertainment industries. i dont recall any of the industries going after the likes of Google for copyright infringement. agreed, the companies you mention above are always after each other but that is over disputes concerning patents. mostly, Apple wanting to freely use any other companies inventions/discoveries for free but wanting paying when anyone wants to use their stuff. greedy, selfish, one sided attitude that was prominent when Jobs was alive and has continued now

        • Etsypalooza

          Anonymous where did you get the idea that Apple isn’t paying for other companys inventions? Apple and their subcontractors pays hundreds of millions yearly for licenses and royalties regarding Apples products.
          Google and its other companies has been sued countless times for copyright infringement.

  3. 3
    Etzypalooza

    During the last 100 years the world has seen millions of inventions and more products than ever before and yet during those 100 years patents have increased manifold, how can you then claim that patents hamper innovation?

    • 3.1
      harveyed

      The 1900s was also the first century when the majority of the inhabitants did not have to work on farms to provide enough food for survival… and the first century when university level education was starting to become a reality for large percentages of the population.

      Compare the US to China for a second or two. Which of the countries has had most growing protectionist IP legislation the last 30 years? Which has had the highest economic growth during same period of time?

      • 3.1.1
        Etzypalooza

        Chinas growth have come largely thanks to the US-companys who have set up factories and invested 100′s of billions of dollars in China, this would not have been possible without strong IP-rights in both USA and China.

        • harveyed

          IP rights are not respected in China. You have more immaterial piracy & counterfeiting there than in most places in the world.

        • Etzypalooza

          IP-Rights are strong in China but of course there are a lot of piracy there but mostly of simler products. Anyone in China pirating big brands products in large scale will most likely spend a few years in prison sooner or later.

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