Most readers have heard of various “patent wars” which have been happening lately. Many may have heard of “patent trolls” as well. Basically, with more and more patents being created and granted in this Internet era several things are going on in Intellectual Property law.
Let’s start with the basics. A patent is granted to an inventor wherein, in exchange for his revealing the secrets of his invention, he has a 20 year monopoly over the technology. This means that others can build on his invention and invent their own products in the meantime. This encourages innovation and also means that others don’t have to wait 20 years before inventing new products.
Recently, however, this hasn’t been the case. When the total profits from patents are around $4 Billion, but the associated litigation costs are $14 Billion, it is hard to argue that they are helping the economy in any sense. What is going on here?
First of all, the patent office in the United States is falling very much behind in its approval of patents, with a 700,000 patent backlog and a waiting period of three years.
Secondly, the so-called “patent trolls” are buying up patents and using them as lottery tickets. In other words, they are not creating anything but just suing any company they can for infringing upon their patents. Whether they are right or wrong often doesn’t matter, since the other party will usually prefer to settle, rather than fight the case. Needless to say, lawyers on both sides of the case will pick up a percentage of every IP lawsuit they can bring about.
This has the opposite effect of what patents were originally supposed to do: It stifles innovation. Entrepreneurs and small businesses are regularly finding themselves sued for one reason or another, and are therefore often scared to forge ahead in new industries and markets.
Recently, the America Invents Act was passed. This has been touted by politicians (who were quick to pass it) as, well, the “America Invents Act” (some marketing firm might have helped). It is a step in the right direction, in that patent protection is granted from the moment it is filed, rather than issued and, secondly, the patent office itself will have more control over its budget. But will this really stop any of the associated litigation? We doubt it.
So what is the solution? Mark Cuban has mentioned that we should get rid of patents completely, at least in software and processes. According to him most inventors don’t invent for the patent, but to get a new business up and running, so that new patents merely get in the way of innovation. According to him, software should be copyrightable, while if you’re creating a new process “… use it. The benefit is from creating the idea and using it in a business to your advantage. Afraid that some big company might steal the idea? That is life. When you run with the elephants there are the quick and the dead.”
And we are inclined to agree. Business ideas are just too abstract to merit patents, and big companies (remember when Google bought up Motorola for its patents back in August last year?) are finding it much too easy to buy up more and more of these in order to stifle future innovation by suing more small businesses. So when it comes to online businesses, Enough with the Patents.
