Re: [Patents] Open ingeneering

[Carsten Svaneborg <zqex@mpipks-dresden.mpg.de>]

Hi!

If your mode of innovation is cumulative, i.e. improvements of earliere
innovations, then you are "standing on the shoulder of giants"
as Newton put it.

If society allows patents in areas where cumulative innovation is the
dominant mode of innovation, then new innovators end up carying
the weight of the giants instead. This is because they need to license
prior innovations before marketing their own innovation, and that
expense grows exponentially with innovation generation for complex
products.

(this is so simple you could put it on a T-shirt ;*)

See "Standing on the Shoulders of Giants: Cumulative Research and the
Patent Law", J. Economic Perspectives, Vol 5, winter 1991, p. 27-41
http://socrates.berkeley.edu/~scotch/giants.pdf


On Thursday 16 October 2003 18:04, Gregory Aharonian wrote:
> Without a patent, my invention (if of any interest to the marketplace)
> is going to be expolited either by a large multinational

If your invention is cumulative, then you invention are probably already
infringing patents owned by large multinationals, and your own patent(s)
won't change that one iota.

What you can do with your own patents, is to crosslicense them against
the patents your own product infringes, and thus get the permission from
the large multinationals to market your product.

If this permission is not granted, then your innovation and your patent
is worthless, because the innovation can not be marketed without
infringing patents.

This creates the very nasty scenario that large multinational companies
can use their patentportfolios to pick and chose which products they
have to compete with, and as a result capitalistic competition is 
twisted into competition about who has the largest patentportfolio.


> Those people who want to control the exploitation of their new invention
> should be just as free to use the patent system to do so.

Society should only allow inventors to exploit their innovations, if it is
in the interest of society to do so, e.g. if it can be rationalised as a
wellfare enhancing policy. Remember the patent gives the right to
restrict not only independent invention but also successive improvements. 


> If you look at the history of technology in all areas, including software
> technology, innovation has benefitted both from altruistic people and from
> greedy people wanting to make use of patents.

What does it mean to "make use of patents"?


Bill Gates 1991: http://ftp.std.com/obi/Bill.Gates/Challenges.and.Strategy
If people had understood how patents would be granted when most of today's 
ideas were invented, and had taken out patents, the industry would be at a 
complete standstill today. I feel certain that some large company will patent 
some obvious thing related to interface, object orientation, algorithm, 
application extension or other crucial technique. If we assume this company 
has no need of any of our patents then the have a 17-year right to take as 
much of our profits as they want. The solution to this is patent exchanges 
with large companies and patenting as much as we can. Amazingly we havn't 
done any patent exchanges tha I am aware of. Amazingly we havn't found a way 
to use our licensing position to avoid having our own customers cause patent 
problems for us. I know these aren't simply problems but they deserve more 
effort by both Legal and other groups. For example we need to do a patent 
exchange with HP as part of our new relationship. In many application 
categories straighforward thinking ahead allows you to come up with 
patentable ideas. A recent paper from the League for Programming Freedom 
(available from the Legal department) explains some problems with the way 
patents are applied to software.

R. Smith, Assistant General Counsel, intellectual property law,  IBM.
Source: Think Magazine 1990 #5

You get value from patents in two ways: through fees, and through licensing 
negotiations that give IBM access to other patents. The IBM patent portfolio 
gains us the freedom to do what we need to do through cross-licensing--it 
gives us access to the inventions of others that are the key to rapid 
innovation. Access is far more valuable to IBM than the fees it receives from 
its 9,000 active patents. There's no direct calculation of this value, but 
it's many times larger than the fee income, perhaps an order of magnitude 
larger.


Robert Barr Cisco Systems:

"So obtaining patents has become for many people and companies an end in 
itself, not to protect an investment in research and development, not to 
license technology to others who need it, but to generate revenue through 
licensing ("holding up") other companies that actually make and sell products 
without even being aware of their patents. They try to patent things that 
other people or companies will unintentionally infringe and then they wait 
for those companies to successfully bring products to the marketplace. They 
place mines in the minefield. The people and companies (I am not just talking 
about individuals here) who file these patents and extract license fees from 
successful businesses play the patent system like a lottery. They gamble that 
people will infringe these patents without ever learning anything from the 
patentee, and without interfering with any effort by the patentee to 
commercially exploit their invention. The long delays in the patent office 
work to their benefit by keeping the eventual coverage of their patents 
indefinite while others produce products. They benefit from the high cost of 
litigation by demanding license fees that are less than the cost of 
litigation, hoping that people will pay even if they don't infringe, or, if 
they do infringe, it will be too costly to change the product. This provides 
opportunities for contingency fee litigators, for licensing companies and 
consulting firms who claim to help people 'mine' their patent portfolios for 
patents that even they didn't know they had. It's hard to see how this 
contributes to the progress of science and the useful arts".


What does these companies use patents for?

The use them not to avoid products from being imitated, but as a strategic
mean to protect them from patent infringement suits, and as crosslicensing
capital, to get access to other companies patentportfolios, or to lay mines
for innovative companies.


> It has worked fine for over 150 years - I mean if anything peokple have
> too many technological inventions they have to deal with

There are a number of historic cases where patents delayed further
improvements, such as Watts patent on the steam engine, Edisons
patent on light bulbs, Wrights patents on stabilisation and controlling 
of airplanes, the Selden patent on manifacturing of cars, which Henry
Ford had to invalidate.

These are all major technological breakthroughs, but where
improvements to the initial invention has been delayed by patents.

Many of these are discussed in:
"On the complex economics of patent scope", R.P. Merges og R.R. Nelson, 
Columbia Law Review, May 1990
http://sp.uconn.edu/~langlois/E382/Scope.html


> The only thing left is to improve the quality of the patent system, to
> eliminate those patents that are either not novel or show no inventive
> step.

That is a view of the patent system, as seen through ultra-pink glasses.

If you restrict the patent system to areas where cumulative innovation
is not important, and to areas where innovation is otherwise to slow and
expensive, then just maybe it will work as intended.

-- 
  mvh. Carsten Svaneborg
http://www.softwarepatenter.dk