Posts Tagged: "incentivizing innovation"

It is almost impossible to believe this report is the work product of the Obama Administration. The section on patents, which begins on page 134, reads like a cross between a Monty Python skit and a Soviet era, propaganda laden news report. Perhaps the Obama Administration is trying to rewrite history and brainwash the entire industry into believing that President Obama has been a tremendous defender of the U.S. patent system. Simply stated, the Obama Administration can write all they want about the importance of the patent system and how patents are critically important for innovation, but the reality is that the future of American innovation has been forfeited (or at least heavily mortgaged) by a calculated, intentional, and willful dismantling of the U.S. patent system for the benefit a handful of politically well connected companies that helped President Obama get elected and then re-elected.

The declines in productivity growth in recent years are undisputed. There is some controversy over the causes of these declines, particularly, the sources of the declines in technology investment. However, the arguments of the present article elucidating a decline in the patent system suggest a clear and potent explanation for the declines in technology investment and in productivity growth…. The tech cartel has been relentless in denying opportunities for patent holders to enforce patents. The three main ways for attacking patents include instituting IPRs in the PTO, constraining enforcement in federal court and limiting damages. Each of these must be retuned.

Believing that innovation does not come from risk taking inventors, entrepreneurs, start ups, or even from the likes of Silicon Valley, is naïve in the extreme. Unfortunately, this “you didn’t build that” belief system seems to permeate President Obama’s thinking with respect to innovation, and has trickled down within the Administration. This view is also shared by many in Congress too. Sadly, this fatalistic view removes the virtues of work and ignores the sacrifices it takes to succeed. Worst, such a world-view belittles risk taking, which is an absolute prerequisite to business success, particularly with respect to innovation.

The dilemma for developing countries is primarily a function of two things: lack of access to existing medicines and absence of innovation on the treatments and cures that are needed. Admittedly each of these can be linked to intellectual property rights, but poverty is at the heart of both issues. Fundamentally, drugs are not available because there is no market for them and the necessary market incentives are absent. To facilitate innovation, especially on ‘diseases of poverty’ the UN and member states need to commit to cultivating market incentives and removing obstacles.

Consumers benefit most when patents are strongest and act to block actors. When competitors are blocked that means they cannot simply copy and flood the market with knock-offs or products that at their core are essentially identical. Competitors that are blocked by strong patents have a choice. Either they ignore the patent rights and infringe, which is sometimes the choice made particularly when a small company or individual owns the patent and it is believed they can be bullied. Alternatively, competitors must figure out how to design around the patents in place and find new, creative ways to do what they want to do. When patents are designed around that is when paradigm shifting innovation can and does happen. Unfortunately, thanks to the Supreme Court and Congress we have a patent system that today incentivizes copycats and bullying of innovators.

CUBAN: I have invested in more than 150 companies and never has having or not having a patent impacted the final decision. Small businesses can and do become great without patents. The problem for little guys with patents is that no patent lives in a vacuum. Particularly with software and technology. There is always a work around and you can always find a patent that enables the big guy to sue the little guy. So with just few exceptions the current system doesn’t protect anyone.

Like a lemming running off a cliff, Fortune author Jeff John Roberts ignores easily verifiable historical truths in what can really only be described as a hit piece on the patent system and patents in general. The lack of intellectual integrity, or even intellectual curiosity, is astonishing… It is absolutely necessary to quash any suggestion that here is a “short supply” of medical miracles today. Medical research is still turning up incredible findings. A quick scan of health news shows plenty of academic innovation leading to tomorrow’s medical miracles. That the author could make such an utterly absurd statement has to call into question the broader motivations. Of course, authors do unfortunately sometimes exaggerate, misrepresent and even lie. What is truly astonishing is how the Editors of Fortune allowed such a falsehood to be published. Do they do no fact checking at all at Fortune?

The patent system our government has created over the last decade incentivizes stealing patent rights rather than engaging in an arm length negotiation. This is antithetical to basic, fundamental principles embedded throughout American law. The laws in the United States are supposed to be certain, stable and understandable. By minimizing externalities and keeping transaction costs low bargaining of rights will ensue, which will lead to an efficient outcome. Obstacles to bargaining and/or poorly defined property rights lead to an inefficient marketplace. To fix the patent system we must return to certainty and strong patent rights, which will push actors into arm-length negotiations rather than into costly patent litigation.

In what can only be characterized as a bizarre, rambling, and intellectually dishonest article, ‘The Economist’ has inexplicably taken the position that patents are not necessary for innovation. The complexity of innovation today and the required investment necessary to innovate, as well as the highly speculative nature of innovation, seems lost on the author. It is surprising, and disappointing, that a publication like The Economist would turn a blind-eye to the underlying financial realities of innovation. Truthfully, The Economist owes its readers a sincere apology for this entire article. Some could, and probably should, call into question the motivations for building an anti-patent argument upon such a rotten foundation.

I recently received an inquiry from an IPWatchDog reader, posing several questions about the links between intellectual property protections, innovation and job creation. (Thank you, Marcus!) The interrelated nature of IP, innovation and jobs is essential to economic prosperity and important enough to explore again. Marcus:   I’m curious about two positions that are taken in your writing. First, you state…

Sadly, what seemed so evident to Abraham Lincoln is now all but lost on many elected officials. For over 200 years the U.S. patent system stoked the fire of creative genius by enticing creative persons to innovate by giving them incentive to do so in the form of a patent. Increasingly over the last 10 years the U.S. patent system has chipped away at that incentive. How far rights can be eroded without completely compromising the entire system is a question we shouldn’t have to ponder, but these are not ordinary times.

If a weak patent system were the answer you would expect countries that have a weak patent system, or no patent system at all, to have run away innovation. What you see, however, is the exact opposite. Those that want to dismantle the patent system or further weaken patent rights should bear a heavy burden to demonstrate the veracity of their claims. They should be required to prove that innovation at current levels will at a minimum be guaranteed to maintain at current levels if we are to take a leap of faith and disregard what history, common sense and the law of economics predicts will happen.

IBM is proud to be the top recipient of US patents for the 22nd consecutive year. It should come as no surprise that we believe in a strong patent system. Patents protect and promote the business of all innovators. In addition, patents enhance our economy – indeed, many attribute US economic leadership to the robust US patent system. While the patent system is certainly not perfect, many of the attacks being leveled against it are unjustified and unreasonable. As a whole, the patent system promotes innovation, period. Some self-proclaimed experts argue otherwise. They are simply mistaken.

In a least one instance, a major laboratory test provider has indicated (in confidence) that it would not be entering the Ebola testing market for three principle reasons: (1) the lack of availability of exclusivity for genetic testing; (2) the liability attendant in disease diagnostics; and (3) the limited reimbursements available due to emerging cost control measures under Affordable Care Act reforms.