I decided to re-post Brad Feld’s latest blog along with a few personal experiences to support his topic.
Speaking with Entrepreneurs every week who are worried if their product will ‘infringe’ on someone’s patent. Better yet they wonder if all or part of their application has to be patentable in order to receive funding. Most don’t have the money to find out either way.
I agree with Brad that software patents slow down innovation. Most entrepreneurs can’t afford to pay the ‘vig’ (explained below) so they soldier on and pray they don’t get noticed by the patent police. Some soldier on and hope they can grow large enough before they get noticed… oh wait, isn’t that a legal strategy?
Example 1: Spoke with an entrepreneur who was interviewed by litigators just to see if they were large enough to bring suit. Good for them, they were found unworthy. It makes me wondered what happens then, does the entrepreneur get placed on the ‘patient no fly list‘ in case they fly above a certain value, or better yet board an unexpecting company willing to purchase?
Example 2: How about the entrepreneur who get’s a letter staing he’s infringing on a patient, then finds out his patient was filed 3 months before. I here the saying, “Patients are only valuable if your willing to defend them” and defending them takes money, a lot of money. Did that company try to bully the entrepreneur out of the market with a lawsuit? I think so, but surprise! the entrepreneur decided to pursue the lawsuit and drown themselves in legal fees because they, “won’t be bullied.” My point is now both companies are spending valuable energy worrying about the lawsuit and not working on their products. — and further innovation.
After reading Brad’s post I would love to hear your comments…
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Feed: Feld Thoughts
Posted on: Saturday, January 30, 2010 6:26 PM
Author: Brad Feld
Subject: Do Patents Slow Down Innovation?
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I had a very interesting meeting yesterday with an MIT Professor who I’ve known for a long time. He is anti-software patent, as am I. However, he suggested something I hadn’t really spent much time thinking about, namely that patents slow down innovation. Some very credible folks have been talking about this for a little while, including James Bessen and Michael Meurer in their excellent book Patent Failure: How Judges, Bureaucrats, and Lawyers Put Innovators at Risk. In my conversation Friday, I heard a very interesting example. Regularly, patent advocates tell me how important patents are for the biotech and life science industries. However, there apparently is academic research in the works that shows that patents actually slow down innovation in biotech. The specific example we discussed was that there is increasing evidence that when a professor or company gets a patent in the field of genetics research, other researchers simply stop doing work in that specific area. As a result, the number of researchers on a particular topic decreases, especially if the patent is broad. It’s not hard to theorize that this results in less innovation around this area over time. I’m just starting to read some papers about this stuff, including those by MIT Professor Fiona Murray. If you are interested, Stuart Macdonald’s paper When means become ends: considering the impact of patent strategy on innovation frames the discussion nicely. And Stephan Kinsella’s excellent essay Reducing the Cost of IP Law absolutely nails this. I’m still obsessed with my mission to “abolish software patents” especially after receiving yet another email from a new startup that claims to be a “Patent Insurance Company.” A number of these have popped up recently in the past few years, including several that are funded by VCs. Their pitch is that you pay them an annual fee, license any patents you have to them, and they will “protect you” against any patent litigation. Whenever I hear this pitch, all I can think about is Al Capone walking the streets of Chicago going door to door offering “protection” to all of the local businessmen if they will pay his vig every week. |
