June 4, 2010

In a brief economics course many years ago, I learned that monopolies are bad, with one exception. A patent is a grant of monopoly by government to encourage invention and technical progress. That sounded good to me.

In my work designing electronics, I occasionally came up with a design idea which I thought might be patentable. I tried doing my own searches to see if the idea was already patented.

I soon got lost in a maze of legal and technical language and unfamiliar technologies and gave up. What I learned from that was that patents made such broad claims that it would be easy to infringe on a patent without knowing it, and I couldn’t guess whether my idea had already been patented.

I consulted my company’s legal department. The answer shocked me. If I file a patent, my idea becomes public and anyone can steal it and beat my employer to the market. The cost of a lawsuit to defend my patent would be more than it would be worth.

On the other hand, if we use the idea without patenting it, we could have a competitive advantage at least for a few years, until somebody else managed to steal the idea. Even then, they could not patent the idea and block our competition, if we could simply show that we had put the idea to practical use before their patent application.

In time I learned the other costs of obtaining the patent. To prove first conception, trial, and confirmation of the idea required detailed records of progress in development, dated and witnessed daily. The keeping of such records can slow development to a snail’s pace. Then, writing up a proper patent application is a major chore. A patent search to see if the idea is already patented is another major chore for a specialist.

I also learned that some inventors collected patents like trophies to display, rather than to produce a product.

There are companies that don’t invent or patent or produce anything, but buy up patents simply to collect royalties from companies that infringe their patents.

I have already described the effects of the patent system on the Drug industry in an earlier post, “Incentives and Bureaucracy” posted April 11, 2010. The effects of drug patents in our health system have probably caused hundreds of thousands of deaths and untold misery.

All in all, my conclusion is that patents impede progress more than they encourage it, and like all government grants of monopoly, impede our economic progress in order to transfer wealth to a favored few. In practice, patents are not a good thing.

Problem solving is necessary to progress and prosperity. There are millions like me who enjoy solving problems and will go on doing it regardless of monetary reward or special recognition. Business success will favor the most innovative producers, and technology will improve rapidly, unimpeded by the burden of qualifying for patents.


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