We are at a point in time where the overwhelming sentiment is against the patent system. Rather than celebrating innovators the public, and our leaders, vilify anyone who has the audacity to seek patent protection. The simple reality is that without a strong patent system investment in innovation will cease. This truth should be self evident to anyone with half a brain, but sadly it is not. There are many truly ignorant individuals who actually believe that investment in research and development will continue even if the day an innovation reaches the market it can be copied without recourse by competitors. What a fairy tale!
As Dr. Kirstina Lybecker has explained: “Incentives are essential to innovation due to the expense of research and development activities, and the public-goods nature of the resulting knowledge.” Indeed, there is no business person in the world who would ever invest the hundreds of millions or billions of dollars necessary to bring ground-breaking innovations to market without the expectation of the competitive advantage provided by a strong patent. In the real world investors seek a reasonable return on investment given the risk, which is quite substantial in the high-tech, innovative world. To ignore this reality one must be firmly planted in fantasy and not the real world.
The reality that it easily takes many hundreds of thousands of dollars in research, development, safety engineering and marketing costs to bring even a simple kitchen gadget to market. With all those sunk costs the innovator couldn’t hope to sell the product for as cheap as those who simply copy having invested nothing in terms of time or money to develop the product. Without a competitive advantage sane people do not invest money in even simple gadgets, which is why it is extraordinarily difficult to get a licensing deal without a patent, and why the first question investors ask is about your patent position. As celebrated inventor Dean Kamen has said, “[t]he first thing the bank or that venture capitalist will say is, ‘Do you have a patent?’” This is the common experiences shared by everyone in the industry. Those who say it isn’t so are simply not credible.
Ignorant Patent Haters
Those who hate patents want to pretend that patents aren’t necessary for some innovations because they cost so little to create. If spending hundreds of thousands to bring a small kitchen gadget to market is a trivial amount I applaud the economic success you have achieved in life, but to virtually everyone that is a meaningful amount of money on the line. But it just isn’t kitchen gadgets, this is true even for software, despite the unrealistic protestations of those who haven’t a clue as to what it takes to create a software program that works. It can take many years and many hundreds of team members to create a software package akin to something you might see from IBM or even a new Apple operating system. These things are not coded by a second year engineering student, and they are not trivial. It is amazing to me that anyone things creating software is trivial given how infrequently software works, how often it needs to be updated and patched, and all of the security vulnerabilities and identity theft issues that even the largest retailers face on an increasing basis.
Assuming arguendo that apps are trivial to create, which isn’t true if you want the app to actually work and do something useful, the reality is that apps are almost never patented. I get contacted every week by people who want to patent an app until they find out how much it will cost. Thanks to the onerous disclosure requirements for software patents you simply cannot get a cheap software patent any more, and it just keeps getting more expensive all the time.
But there is no reason to stop at the economic reality of innovating for an innovator. We can move forward to discuss national economies. The truth is that there is no evidence in modern history for a thriving economy that does not provide innovators strong intellectual property protections. The detractors will scream “correlation is not causation,” but that is merely code for “I choose to ignore all the evidence you have and pretend that you have no evidence.” These small thinkers also then have the unmitigated gall to proclaim that with no evidence to support a patent system they win. Really? They win without a shred of evidence to support their fantasy based theories that ignore the human condition and financial realities?
The World Bank classifies countries based on gross national income (GNI) per capita. High income countries have a GNI per capita of over USD 11,456; upper middle income of USD 3,706 – 11,455; lower middle income of USD 936 – 3,705 and low income of USD 935 or less. Where do you suppose you see the most patenting? If patents inhibit economic growth and opportunities, then you would expect to see a higher percent of patents in the low income economies, but you don’t oddly enough. You find that the overwhelming majority of patent activity is in the high-income economies — upward of 85% of patent activity is in high income economies in fact. With that being the case how can anyone with a straight face argue that patents get in the way of economic development? High-income economies where patent rights are strong see a tremendous amount of patent activity while those lower income, middle income and even upper middle income economies, where patent rights are not very strong and not very desirable, see very little patent activity.
If patents stifle innovation then those countries without a patent system would show run away innovation, which is simply not the case. Countries without a patent system have no innovation, and they also have no economy. I know that is an inconvenient truth for which you have no answer, but facts are facts.
Truthfully, those who erroneously conclude that the patent system inhibits innovation are among the most intellectually dishonest individuals you will ever meet. Either that or they are flat out allergic to the truth, or aren’t observant enough to arrive at an informed conclusion. At the very time that they claim that the patent system inhibits innovation they also lament the fact that there are so many patents on smartphone technologies. They actually complain about a patent thicket that is stopping smartphone innovation. Really? Perhaps they should open their eyes!
The modern smartphone came into being in 2007 when Apple released the iPhone and months later Google et al copied the Apple design and began selling it as a competing product. Since then, in the ensuing 7+ years smartphone technology has grown by leaps and bounds. By October 2013 there were already more than 1 million apps available for download in the Apple Store. Battery life has improved, screen strength has improved dramatically, the devices continue to get thinner, the cameras continue to get better and better, the displays get larger in response to consumer demand. Exactly what has the patent system stopped in the march forward in smartphone technology? NOTHING!
These uninformed patent critics point to the extraordinary number of patent infringement lawsuits filed relative to smartphone technologies. Of course, they are are wrong on the facts. If they had even taken the time to consult Wikipedia they would have realized that this argument is specious!
As pointed out earlier this year in an article on IPWatchdog.com by David Kline and Barney Cassidy, “[t]he estimated 124-plus smartphone patent suits filed between 2009-2012 are less than one-quarter the number of patent suits filed during the first “Telephone Wars” of Alexander Graham Bell’s time. Back then, the American Bell Telephone Company and its successor, AT&T, litigated an astonishing 587 patent cases alone.”
The Definition of “Innovation”
So how is it that people who otherwise seem intelligent and educated on the surface are able to come up with and actually believe the ridiculous things that they say about how the patent system inhibits innovation? It is because they simply do not understand the definition of what it means to innovate.
In April 2013, Susan Michel of Google spoke at American University in Washington, DC. She explained that to innovate is to put a product in the hands of consumers. That is, of course, not what it means to innovate. This is, however, how the patent critics define innovation. They say that the patent system prevents them from innovating because it is preventing them from distributing a product that they have never previously distributed. But that doesn’t mean that the product is new or the the science behind the product is new. New to you does not mean innovation, it may very well mean that you are infringing on the rights of the party or entity that actually created it in the first place.
Merriam-Webster’s dictionary defines innovation in this way: “1: the introduction of something new; 2: a new idea, method, or device: novelty.” Thus, it is rather clear that Michel and those from big-tech who rail against patent trolls are the ones who are misrepresenting and misleading with respect to the true definition of “innovation.”
Innovation is NOT about products in the hands of consumers. Innovation is about advance. Under a definition of the term innovation that focuses on products in the marketplace no university researchers innovate, scientists in Federal Laboratories do not innovate, research and development companies do not innovate, and independent inventors do not innovate. For crying out loud, Thomas Edison would not have been an innovator either based on this definition of innovation. How ridiculous is that? How ridiculous is it to pretend that Edison didn’t innovate, but the companies that licensed his patent rights and took products to market did? This offered definition of innovation strikes me as utter nonsense, but it is the way that patent critics can fool themselves into believing the lie.
All of the objective factual evidence supports the proposition that patents foster innovation. So you can believe the truth is naive, but what seems naive to me is when those without any proof still erroneously reach the conclusions about the patent system based on supposition and superstition. The lack of factual support for the anti-patent viewpoint speaks volumes about its credibility and reliability.
A strong patent system is undeniably of the utmost importance to a high tech economy. There can be no rationale debate otherwise. And given that all of the factual, historical and economic evidence is on the side of a strong patent system being vitally important those who wish to dismantle the system should bear a very heavy burden to prove they are correct. That is a burden they simply cannot meet because they have no objective evidence, only myths, fairy tales, supposition and superstition.
What is also equally indisputable is that companies such as Apple, Google, Priceline and Facebook were all founded on patented technology. But that is another story for another day, but that article is in progress and will once and for all dispel the lie that patents were not necessary for Silicon Valley start-ups. For crying out loud, Google founders filed two patent applications before the company was even founded and before the domain name Google.com was even acquired!
For more reading and volumes of additional proof about just how and why patents foster innovation please see:
- Reality Check: Patents Foster Innovation and Economic Activity
- The Story of How Patents Promote Innovation
- Promoting Innovation: The Economics of Incentives
- The Economic Case for Strong Intellectual Property Protections
- The Importance of Protecting Incremental Innovation
- Mark Cuban is an Idiot, Patents Don’t Impede Innovation
- Why Open Source Stalls Innovation and Patents Advance It
- Myths of the Patent Wars
- Do Patents Truly Promote Innovation?
- Patent Rights: A Spark or Hinderance for the Economy?