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Does Innovation Lead to Prosperity for All?


Written by Joseph Allen
Allen & Associates
Posted: Jul 28, 2014 @ 12:30 pm

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There’s a famous Chinese curse “May you live in interesting times” which certainly applies now. It seems that every cornerstone we’ve relied on has slipped, creating instability in all aspects of modern life. As humorist Ogden Nash remarked: “Progress might have been all right once, but it has gone on too long.”

We live in a world where seemingly everyone has a cell phone —and a rifle. Every day we learn of breathtaking scientific discoveries and atrocities straight from the Dark Ages. Thanks to technology images of beheadings travel instantly around the world.

Debates rage over hot button topics widening divisions in society. One is over the merits (or demerits) of the patent system. That’s really a subset of a larger question: does innovation lead to prosperity for most people or does it merely widen the gap between the haves and have not’s?

What, if anything, should be done to correct “income inequality” is a point of contention in our political system. President Obama says that growing income inequality and a lack of upward mobility is “the defining challenge of our time.” Sen. Elizabeth Warren (D-MA) ads: “Trickle down (economics) doesn’t work. Never did.”

Administration critic Dinesh D’Souza sees sinister motives at play: “Their goal is to shift the fulcrum of power in our society away from the entrepreneur and toward a new group, which is an alliance of the political class, the intellectual class, and the media. Those are three camps that feel the same way, have the same skills, and so on. They also have equal resentment against entrepreneurs.”

Not much common ground between these views.

Whether innovation benefits the masses or just the elites has major policy ramifications. If the later, shouldn’t government insure a fair division of the economic pie? And is the patent system critical for economic growth or a tool for the powerful to plunder the helpless?

The International Economy invited “twenty noted observers” to consider Does Innovation Lead to Prosperity for All? Here’s a sample of the replies:

  • There is a “modern” sector here with booming profits, successful innovation, global competitiveness, and good jobs, although not enough of them. More and more of the U.S. workforce is being forced into low-wage, low-productivity jobs, or out of the workforce… The jobs carry little training and the workers typically turn over very quickly and gain little experience…The economic forces driving the shift to a dual economy are skill-biased technical change and increased global competition. If these forces continue and there is a steadily expanding pool of marginalized workers, then I would conclude that innovation is not leading to prosperity for all. The answer is not to have less innovation, but to do a better job of taking advantage of it… the list includes restoration of full employment, improving skills and education, and making the United States a more attractive location to produce and manufacture. None are easy to do. Martin Baily, Brookings Institution
  • Advances in fields as diverse as nanotechnology, information technology, and global supply chain management hold the promise of unprecedented levels of prosperity for humanity as a whole, but they have led to widely held concerns about the future of the middle class in the West. The past few decades have seen significant improvements in the standard of living of the poorest citizens of the world and solid gains for the planet’s most privileged… Economist Xavier Sala-i-Martin of Columbia University has found that hundreds of millions have been lifted out of extreme poverty over the past half century, and that rates of extreme poverty have been reduced by 50 percent… All of these blessings are driven, one way or another, by innovation. The dangers posed by innovation pale in comparison. What political leaders should do is make the case for progress for the many, while helping those whose futures are suddenly bleaker prepare for as painless a transition as possible. Stan Veuger, American Enterprise Institute
  • Technology can be used as a weapon to benefit some groups in society at the expense of others. This has been the case for the last three decades. The wealthy and powerful have used technology to benefit themselves at the expense of most of the public. This is most clearly the case with patent law, as large companies in many industries, most importantly pharmaceuticals, have pushed to get ever stronger and longer patents. As a result, we now spend $360 billion a year on drugs (2 percent of GDP or four times the food stamp budget) that would cost 10-20 percent of this amount in the absence of patent protection. Dean Baker, Center for Economic and Policy Research
  • So what’s the key to generating greater levels of empowering innovation? Competition—and the more the better. As economist Joseph Berliner once put it: “… the effect of competition is not only to motivate profit-seeking entrepreneurs to seek yet more profit but to jolt conservative enterprises into adoption of new technology and the search for improved processes and products.” Vibrant economies need plenty of fast-growing startups to generate empowering innovation and to also push incumbents themselves to become more innovative. And if incumbents can’t compete, government needs to let them fail. Free and frequent entry and exit of firms is critical. Government has to make sure tax, regulatory, and spending policy is neither impending the creation of new startups nor giving incumbents an unfair advantage. Some politicians think “innovation policy” means spending taxpayer money on promising young firms favored by bureaucrats. Rather, innovation policy means ensuring that the status quo is continually challenged by upstart rivals and threat of failure. James Pethokoukis, American Enterprise Institute
  • In most places and most times, elites prefer to loot and hoard rather than to produce and share. The twenty-first century is no exception. Today’s high-tech civilization is perfectly compatible with parasitic elites of strikingly different kinds—from royal autocrats like the Saudis to African generals who loot their post-colonial countries to China’s kleptocratic communist “princelings.” Even formerly liberal democracies like the United States are increasingly dominated by rentiers of too-big-to-fail finance and tech tycoons who, having once invented something useful, then try to milk super profits indefinitely thanks to government-created intellectual property rents. Michael Lind, New American Frontier

These answers suggest vastly different roles for our government. Historically government largely assumed the role of an umpire in the free enterprise ballgame: making sure that companies sell safe products and play by fundamental rules. Government also funds most of the country’s basic research leaving the risk and expense of commercializing resulting inventions to private sector licensees. This model spurred a resurgence of American innovation, restoring our lead in every field of technology over the past 30 years.

However, some want government to go much further by directly aiding their favorites, combining the roles of umpire and player. The team with the umpire on its side has a significant advantage. But government follows conventional wisdom which rarely spots, or even encourages technologies disrupting the status quo– and often joins the wrong team.

So it was in the international race to develop heavier than air flying machines a century ago. The U.S. government awarded the highly regarded director of the Smithsonian Institution, Dr. Samuel Langley, the then princely sum of $70,000 to develop an airplane. Launched from a catapult in Washington, DC with great fanfare, Langley’s machine plunged straight into the Potomac River “like a handful of mortar.” A few months later two bicycle mechanics from Dayton, Ohio flew the machine they developed in their spare time with $2,000 of their own money at Kitty Hawk, North Carolina. The Wright brothers disdained government funds because of the bureaucratic micromanagement that came with it. Langley blamed his failure on inadequate government funding— still the favored excuse when federal programs flop.

How to create a prosperous economy– and the appropriate role of government– is a pivotal issue of our time. It would seem looking at living standards around the world over the past 50 years that innovation is clearly a good thing for the vast majority. However, that may not be so apparent to more than 92 million now idled from the U.S. workforce. Will they see themselves as victims of exploitation by the powerful deserving ever increasing compensation from the government or temporarily sidelined participants in the most successful economic engine in history who just need a helping hand to get back in the game? This debate hasn’t always ended well:

A democracy cannot exist as a permanent form of government. It can only exist until the voters discover that they can vote themselves money from the Public Treasury. From that moment on, the majority always votes for the candidate promising the most benefits from the Public Treasury with the result that a democracy always collapses over loose fiscal policy always followed by dictatorship.

~ Alexander Fraser Tyler, The Decline and Fall of the Athenian Republic

But that could never happen here, could it?


About the Author

Joe Allen is a 30-year veteran of national efforts to foster public/private sector commercialization partnerships, and author of numerous articles on technology management for national publications. Joe served as a Professional Staff Member on the U.S. Senate Judiciary Committee with former Senator Birch Bayh (D-IN), and was instrumental in working behind the scenes to ensure passage of the historic Bayh-Dole Act. Joe has served as the Executive Director of Intellectual Property Owners, Inc., a trade association representing major R&D companies, he was involved in the creation of the Court of Appeals for the Federal Circuit, and he also served at the U.S. Department of Commerce as the Director of the Office of Technology Commercialization. From 1992 until 2004, Allen was with the National Technology Transfer Center (NTTC), becoming President in 1997. Clients included NASA, the Department of Defense, EPA, the Department of Veterans Affairs, and the Department of Commerce. Between 2004 until 2007, Allen was the Vice President and General Manager of the West Virginia High Technology Consortium Foundation. In 2008, Joe founded Allen & Associates to continue to facilitate public/private partnerships between universities, federal laboratories and industry.

31 comments
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  1. Mr. Allen, you write:

    Debates rage over hot button topics widening divisions in society. One is over the merits (or demerits) of the patent system. That’s really a subset of a larger question: does innovation lead to prosperity for most people or does it merely widen the gap between the haves and have not’s?

    I would respectfully submit that such is a multi-faceted false choice kind of proposition.

    What exactly do you mean by “innovation”? Different folk have different definitions.
    What exactly do you mean by “prosperity”? Again, different people have different definitions.
    What exactly do you mean by “haves and have not’s”? If I “have” severe asthma due to air pollution and you “have” a fully air-conditioned McMansion with wide screen HD TV, are we both members of the “haves” sector?

    The issues are much more nuanced and difficult to identify as well as to debate than what the above post suggests.

    Automation and mechanization have definitely put many people out of work: farm hands, telephone switchboard operators, policemen directing traffic at every street corner, assembly line workers who used to do the welding before the robots moved in, etc. Is it all “good”? Is it all “bad”? Neither answer satisfies.

  2. 1. “92 million idled from the workforce…” According to the article cited, the true figure for unemployed is 9.8 million. 92 million is the figure for Americans not in the workforce.

    2. ” some want government to go much further by directly aiding their favorites…” – Yes, because it is a way of creating jobs – or at least, local ones. European countries offer US corporations significant tax breaks in return for opening local factories or R&D centers.

    3. “So what’s the key to generating greater levels of empowering innovation? Competition” – the patent system rewards innovation by limiting competition. A difficult balance to strike – A free-for-all would curtail return on investment, while IP protection excludes competitors from the market.

  3. “Technology can be used as a weapon to benefit some groups in society at the expense of others”
    This is highly misleading and erroneous.

    No private “group” holds any “weapon” at the expense of others. Apple’s iPhone, Microsoft’s products, and Pfizer’s Viagra, are not things people quake in their beds thinking about. They do not buy security systems and put up fences to deter these “weapons” which could harm them. Quite simply to avoid these purported “threats” they need only ignore them. To the degree anyone does not value these things they can simply not purchase them, not trade value (money) for an apparent disvalue (the thing they apparently don’t want). Everyone is free to do this. The fact of the matter is these things are in fact of great value and benefit a great many people, which is why they voluntarily choose to trade for them, and pay a good deal for them. the amount of payment people are willing to make reflects this great value to them.

    Far from weapons, technologies are the benefactor of mankind, and its availability is what has enabled so many to lift themselves out of poverty, or simply to new heights of entertainment, communication, productivity, or sexuality…

    Tisk Tisk to you Dean Baker of the Center for Economic and Policy Research

  4. Benny-

    Not sure why you took issue with “92 million idled from the workforce.” That is really an accurate description. If anything, your explanation is what is misleading. There are far more than 9.8 million who are unemployed. If you were familiar with unemployment and how the statistics were calculated you would know that to be true. You cease to be counted as unemployed if you stop looking for work, or if you are unemployed for so long that you run out of unemployment insurance coverage. Of course, you are unemployed if you don’t have a job, so the government definition of unemployed is not at all realistic. There are far more unemployed than the government counts, and everyone agrees that the labor participation rate is lower than at any point since at least the 1970s.

    Second, your keynesian philosophy on creating jobs and spurring economic activity has really been thoroughly debunked at this point. It had been thoroughly debunked even before President Obama embarked on the path, but now we once again have fresh proof that the government cannot spend the way to economic prosperity or job creation. The stimulus spent billions and created very few jobs. It would have been better for the economy to just hand that money over to people rather than to spend $300,000 (or more) to create a $30,000 a year job. You simply cannot spend your way to prosperity, period. When government gets out of the way is when there is economic prosperity. Historical fact and continued attempts to prove historical fact incorrect prove the point every generation or so.

    Only someone unfamiliar with the patent system could take issue with the fact that competition is fostered by the patent system. Look at the smartphone industry. Do you seek a lack of competition on any level? No. There is also no decrease in innovation, but rather nearly unbridled advancements of innovation. Competition is fostered by companies trying to advance their position relative to competitors, which is undeniably fostered by a patent system that allows investment to be rewarded when it leads to products or services deemed worthy by consumers.

  5. Anon,
    “unemployed” and “not part of the workforce” are two completely different statistics. The figure of 92 million includes students, pensioners, those who choose not to seek employment, disabled, etc. The figure of 9.8 million unemployed I took from the cited article. Did you read it?

    I didn’t refer to “spurring economic activity” in my second point. I referred to shifting the existing activity. Perhaps I shouldn’t have used the term “creating jobs”.

    Patents stifle competition because patent holders use their rights to exclude others from their market and gain a monopoly. The same system fosters innovation because it guarantees a return on R&D. As I said, it’s a delicate balance.

  6. Not sure whether “idled” is apt. I took the Link and found this:

    ” The amount (not seasonally adjusted) of Americans not in the labor force in April rose to 92,594,000, almost 1 million more than the previous month. In March, 91,630,000 Americans were not in the labor force, which includes an aging population that is continuing to head into retirement.”

    It left me wondering whether the 91 million figure includes within the ranks of those “not in the labor force” new-born American babies as well as people disgracefully idling away the 8th and 9th decades of their lives. I assume that the new-born babes have not yet been assigned to the “labor force”, but In what sense Gene have they chosen to “idle” themselves from it?

  7. Gene at 4:

    “You simply cannot spend your way to prosperity, period. When government gets out of the way is when there is economic prosperity. Historical fact and continued attempts to prove historical fact incorrect prove the point every generation or so.”

    I’m no fan of how Obama’s stimulus plan. But I would argue that the huge jump in GDP per capita in the US during World War II, a time of massive government spending relative to the size of the US economy, pretty much rebuts the above statements.

    US Real GDP Per Capital (in 1990 dollars)

    1939 $6561
    1940 $7010
    1941 $8206
    1942 $9741
    1943 $11,518
    1944 $12,333
    1945 $11,709

  8. Rational person at 7

    Unfortunately your example is not an example only of government spending/stimulus.

    What you have observed is a free people motivated by more than a weekly paycheck, the desire to live, and live free, in the face of the rise of the worst kind of tyranny spreading across a large part of the rest of the civilized world.

    If your example was truly a make work project it would perhaps rebut Gene’s statement, but insofar as what you may be seeing in the numbers is the productivity of motivated private individuals in the face of war, the example fails.

  9. A Rational Person-

    You say: “But I would argue that the huge jump in GDP per capita in the US during World War II, a time of massive government spending relative to the size of the US economy, pretty much rebuts the above statements.”

    I don’t know how you can make the leap you are making. GDP stands for gross domestic product. If the government spends more then the gross domestic product will go up, but that doesn’t mean that the spending creates a better economy. Sure, if you spend for a few years and then cut back and pay off the debt that could work to address an extraordinary situation like a global war and the need to fight to win, but it doesn’t change the reality that as government spends more debt increases and eventually debt has to be paid off. If debt is not paid off we will turn out like Greece. We already owe more than our annual GDP, which is a dangerous thing.

    The government brings in only a fraction of what it spends without a balanced budget anywhere in sight. That is clearly unsustained spending, and on top of that the spending isn’t even increasing economic activity or even creating more jobs.

    I stand by the statement I made because it universally holds true. You cannot spend more than you bring in and expect that the increased spending will result in economic prosperity. If it would then we wouldn’t need any bankruptcy courts and Greece would be the most economically stable country in the world.

    -Gene

  10. Benny-

    Would love for you to explain how patents in the smartphone arena have stifled competition. Of course, you can’t.

    Yes, unemployed and not part of the workforce are two different things, but to say that they are unrelated is nonsense. You and Max can talk about babies and retirees all you want, but the reality is the economy sucks, job participation is at an abysmal low, 47% of those with a job in the U.S. work full-time, while the other 53% who are counted as having a job work part-time. People are dropping out of the workforce because there aren’t jobs. See:

    http://www.usnews.com/opinion/articles/2014/07/23/the-real-unemployment-rate-and-the-dearth-of-full-time-jobs

    So while you want to argue about babies and retirees the problem is the Obama economy excels at producing extremely low wage part-time jobs and continues to bleed full-time jobs. Anyway you cut that it isn’t good and what you said was misleading.

    Finally, as for retirees, let’s not forget that when social security was passed the average life expectancy was 60 years for men and 64 for women, while in 2010 the averages were just under 77 for men and just over 81 for women. There are a lot of retirees who are voluntarily out of the job market as well. People used to work until they died, now people don’t work for decades prior to death. So let’s not pretend that all seniors are irrelevant and can’t be included in any count of those who aren’t in the workforce as if being 65+ means you are no longer relevant because you couldn’t possibly want a job.

    -Gene

  11. Gene @9:

    LOL with the World War II example.

    It is well accepted that the US “prospered” just after WW II because we had bombed our industrial competitors (Germany and Japan) back to the stone age if not to earlier times. Now that Germany is back to full force, and we’ve shipped all our manufacturing jobs overseas, our factory-less Yankee ingenuity and low tax rates are not helping us all that much.

  12. Gene, @10
    I’m not in the smartphone industry. I’m in the appliance industry. I can easily explain how IP prevents direct competition in this industry by restricting patented features to single manufacturers. Direct competition, as opposed to indirect – I have to find a different gimmick than Acme Appliance to tempt you with, but I can’t improve on Acmes’ gimmick because he won’t license it.

    As for “the Obama economy” – raise your head and look up. The problem isn’t restricted to the Obama economy, it is the same throughout the developed world, including the EU.

  13. Compare the USA with Germany. The “Rhineland Capitalism” government in Germany is big and very “Hands On”. As noted above, Germany is no longer “bombed back into the Stone Age” but, to the contrary, is “back to full force”. How did that happen then? I live in Germany and find satisfaction high, confidence high and therefore investment high. Immigrants with work skills are desparately needed, to keep the wheels of high wage high quality always innovative manufacturing industry turning.

    Why are Investors not investing in the US economy? Perhaps because it is beyond their imagination that consumers in the USA will ever again consume? What reason do they have for any confidence whatsoever?

    So, what do you do, to raise confidence in would-be investors, that investment will make profits, because US consumers will soon be confidently consuming again?

  14. MaxDrei,

    Thank you for affirming my understanding of what has been happening lately in Germany versus USA.

    You may find it unbelievable, but many people in the USA really do believe that “America is exceptional”; that we have this thing called “Yankee ingenuity”; and that with a lot of good times talk by our politicians we Americans will “out-innovate, out-compete, out-do” (meaning we will win win win over) our international competitors (ROW).

    At the very same time that they are crowing about “innovation”, our American politicians (and Supreme Court) are dismantling the American patent system. It is death by a thousand reformist cuts. By the time they (SCOTUS / politicians / is there a difference?) are finished, they will be “shocked, shocked” to discover that the American inventor has stopped inventing and simply given up because fighting the bureaucracy of 101 rejections, of KSR last-piece-in-the-obvious-puzzle rejections has become too daunting. :-(

  15. “…the American inventor has stopped inventing…” So the American inventor will stop inventing if he can’t get a patent? Isn’t that a bit far-fetched?

  16. Here’s the thing though Step. Germany’s patent system ain’t nothing like the “strong” one that operates in the USA. If it were, Germany would not be in the healthy position it is today. Any success the USA has enjoyed is despite its dysfunctional patent system, not because of it. You are right to reform it away. Better late than never.

    Every country considers itself to be exceptional and has a pride in its native ingenuity. How many countries invented things like i) calculus ii) the telephone iii) the computer. They all say they did. Meanwhile, Hollywood presents it as if America invented everything. Americans love that.

    Americans have by now stopped inventing though, you say? Surely not. Wilfully blind to the reality of the market, are you? Just look around.

    And what’s more, stopped because of: the bureaucracy of 101 rejections. Don’t be ridiculous. Just because a few patent attorneys are twiddling their thumbs instead of writing patent applications on softie-woftie “Internet Business Method” subject matter does NOT mean that “America has ceased to innovate” (even if it is 1000 cuts for those few attorney businesses).

  17. MaxDrei @ 16

    Lots of people have “ideas”.

    But few pursue their idea beyond the gee, I have an idea phase.

    It is the lure of obtaining exclusive patent rights that drives to the next stage and the next.

    You may not like software inventions. However you must admit that such inventions have dramatically changed the way all of us experience life. For example, just 20 years ago (1994) who would have imagined that a German and American patent attorney would be having a near real time back-and-forth on a thing called an Internet “blog”?

  18. Ah, of course Step. The Internet. Good example. Patent on that, is there? Strong patent system prompted its invention, did it?

  19. MaxDrei-

    Of course a strong patent system prompted the invention of the Internet as we know it.

    Oh, wait… the Internet isn’t a singular invention, is it? So that has to mean that a whole lot of different people contributed to the creation of the overall system known as the Internet. In fact, so many different people contributed incremental advances, improvements and innovations that no one even agrees on who invented the Internet.

    The only way your mocking statement makes sense at all is if you assume that the Internet was a singular innovation that didn’t require incentivizing to create. But we know that is not true.

    -Gene

  20. Gene, you write:

    “…a strong patent system prompted the invention of the Internet” as if it were an indisputable fact, prefacing your words with “Of course”.

    I can’t tell. Are you being serious, or ironic? Or are you relying on your appended proviso “as we know it” for wiggle room, so that, while I’m talking about the initial conception of the Internet, you mean the thing as it is today, in all its magnificent, sophisticated, mature glory.

  21. MaxDrei-

    Perhaps I’m being both serious and with a sense of irony. You seemed to take issue with Step and suggested that the Internet is not a good example of an invention that was prompted by the patent system. That is fair enough, although horribly misleading.

    First, you now talk about the conception of the Internet. If you are talking about the concept of the Internet, it is important to keep in mind that concepts are not patentable.

    Second, science fiction and imagination has as much to do as anything with respect to promoting concepts. But for sophisticated inventions there there is a lot of time between the initial idea (or concept) and a legally identifiable conception (which requires knowledge, appreciation and a game plan) and then still far more time between conception and even a constructive reduction to practice. With most, if not nearly all, sophisticated inventions there needs to be some reward or incentive to push people from concept and theory into actually bringing an invention into being. This is self evident because of the time, money and energy required to move from conception to even a constructive reduction to practice.

    So there are several ways to fund things. One is through government funding, which the early Internet is a famous example, as is so much of the basic science research that goes on at American universities and funded by the US government. But the federal government funds less and less, and even what they fund is always on the basic scientific or theoretical level and rarely, if ever, on a practical commercialization level.

    It would be revisionist history to suggest that the Internet was not prompted to be created by the rewards presented by the patent system, and on a more simplistic level the rewards available through a federal copyright registration. Much like the reality that software uses all available limits of hardware, creative minds continually marched forward with the development of the Internet from its infancy. As hardware and systems were in place they became used to the max, which fueled more development and advance. Many, if not the overwhelming majority, of those advances were done by companies who sought and received patent protection for a variety of reasons. Even the open source community sought patents to ensure that they had the rights to give to consortium members, which is not something they would have done absent the fear of others patenting them, so the patent system caused even those companies to march forward.

    The Internet is really a perfect example of just how and why the patent system fosters innovation.

    -Gene

  22. Gene,

    Those who don’t know better are fooled by the “the” in the phrase “the Internet”.

    In truth the Internet is a vast and complex network of servers, routers, switches, mirror sites, optical fiber cable, etc., etc.

    Thousands upon thousands of inventors have contributed in the background to make the apparent “magic” work.

    Because you run a sophisticated web site, no doubt you are aware of the HTML coding, the CSS style sheets, the Javascripts, etc. Lay users have not a clue. It just works. Magic.

    Similarly those who are not in the trenches of day to day patent practice have no clue regarding the blood, sweat and details that go into each patent.

  23. Gene thank goodness we agree, on at least four things, namely:

    1. A properly functioning patent system promotes progress in science and useful arts

    2. But for government, there would be no patent system

    3. Another good thing is the Internet.

    4, In your words “there are several ways to fund things. One is through government funding, which the early Internet is a famous example”

  24. Gene at 21 –
    Quote – ” open source community sought patents to ensure that they had the rights….which is not something they would have done absent the fear of others patenting them”
    I’ll need help with that one – why would I fear others patenting inventions which are already in the public domain (other than through the ineptness of a patent examiner) ?
    Incidentally, Linus Torvalds, originator of the open source operating system Linux, is named inventor or co-inventor of 18 US patents. Just sayin’.

  25. To Benny at # 24:

    Asia practises something called “defensive patenting”. That’s relevant here.

    But it is a bit of a misnomer. The defence is built by filing patent applications and taking them through to 18 month “A” publication. These publications are very effective at neutralising the later filings of others, and they are just as effective whether they are pursued through to issue or abandoned after A publication.

    For an example of “defensive patenting” consider China. China files thousands upon thousands of PCT applications but then abandons them after they WO-publish.

    Of course, if you are in a litigious field, say, the medical devices field, and in the US market, then you are going to need “something to trade” , ready for when an established player uses its huge US patent portfolio to try to run you out of town. That’s another example of “defensive patenting” but here you do need to take your filings through to issue and, after that, keep them in force. otherwise you have nothing with which you can trade patent rights.

    Not sure that the Founding Fathers foresaw such trading in patent portfolios, but no matter. Technological progress in medical devices is ever more impressive, ever more beneficial to you and me, and hugely helped by the patent system. Note also how many brilliant inventions are made by practising doctors who are NOT employees of the corporations that make the devices. Pharma is often cited as the best advertisement for the patent system. I think medical devices is better advert because i) some of the best inventions come from “independent” Inventors and ii) ordinary people can relate better to engineering than to pharma.

  26. MaxDrei,
    Why defensive patenting, and not defensive publication? Publishing in a trade magazine or on IP.com (as our company has done in the past) is a darn sight cheaper and easier and is also immediate – no 18 month period during which the invention is not considered prior art.

  27. Why Benny? Well you might not want to broadcast to the world quite yet all the details of your newest prototype. But the 18 month Patent Office delay might give you the best of both worlds. 18 months more of secrecy AND, when the WO publishes, its prior art effect´(on the patent applications of your competitors) is backdated to the priority date, 18 months earlier.

    Is that a good reason?

    No? OK, here’s another. For as long as your pat appln is pending, it can be run through to issue. Your competitors don’t know if you will do that. How much is it worth to you, to plant that degree of investment uncertainty in the minds of your competitors?

    And thanks for your intelligent question. It’s refreshing.

  28. Benny-

    I see why you need help with my simple, straight forward statement. You seek to alter the statement with the erroneous belief that what is patented is already in the public domain. Nice try, but that type of ridiculous logic is not how debate is forwarded. Either you know or you should know that patents are not awarded to things that are already in the public domain. It is easy to conclude in the abstract, as you do here, that patent examiners issue patents on things in the public domain, but we all also know that not to be true.

    If you want to talk about specifics that is fine, but everyone knows that in the software space the public decries as obvious that which is obvious now but wasn’t obvious 15 or 20 years ago when it was conceived, which is the proper question. To say that the Alice invention was obvious when it was conceived in the 1990s simply isn’t true.

    -Gene

  29. On a base level, it seems like innovation leads to monetary prosperity for the innovators, and then everyone else downstream that benefits from that innovation is prospering from whatever tech, medicine, etc. that was created. It may not be the most beneficial for all in terms of money, but the new function (Ex. if it was some miracle drug) is ideally where everyone benefits.

  30. Gene,
    That’s not helpful. I’ll repeat your own quote – ” Even the open source community sought patents to ensure that they had the rights to give to consortium members, which is not something they would have done absent the fear of others patenting them”. Since we both know that you can’t patent something which the open source community has placed in the public domain – you quoted that back at me – I am still unclear on your statement – to wit, why does the open source community fear that others will obtain patent rights to open source, published software ? It’s not an argument – it’s a question. .

  31. While it has little to do with Allen’s thesis, the quotation about Athenian democracy is apocryphal. The Scottish judge whose name was taken for the quote is Tytler, not Tyler, aka Lord Woodhouselee. While he did author a number of works on history, there is no record that he wrote anything about the fall of the Athenian Republic. The quotation was concocted from comments about 2000 presidential election. It takes no imagination to figure out which side came up with the comment.