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Imagine There's No Patents.

The Beatles famously imagined there's no heaven, but I'm asking you to imagine for a moment that there's no patents--no U. S. Patent Office, no patent lawyers, no patent notices on products, no patent numbers. How would the world of product design and development be different?

In their book The Captured Economy, Brink Lindsey and Steven Teles argue that while there would be some drawbacks to abolishing patents, there would be some good consequences as well. One of the best consequences I can think of is the downfall of patent trolls and others who game the system. Patent trolls are not inventors, in any conventional sense of the term. Instead, they go around filing patents for things they never intend to make or use, except for the purpose of essentially blackmailing truly productive inventors and firms with lawsuits based on the troll's cobbled-together patent portfolio of so-called "submarine patents." When a firm is faced with the choice of either pursuing a long and uncertain lawsuit to its expensive conclusion, or settling outright with a patent troll for a fixed sum, the least bad alternative is often to pay the troll's demand for blackmail.

Another variation on patent trolling was recently described in The New Yorker. Under a 2011 change in the patent laws, if a patent is owned by a "sovereign entity" it is exempt from certain types of legal challenges and is therefore more valuable. A patent lawyer named Michael Shore is exploiting this probably unintended loophole in the law by arranging deals between holders of genuinely valuable patents and Native American tribes.

The patentee gets the protection that the sovereign-entity status of the tribe provides, and the tribe gets lots of cash. But that cash has to come from somewhere--namely, the pockets of those who buy the patented item.

The original purpose of patent laws was to protect the rights of inventors who might not otherwise invest the time and money it takes to develop a product if anyone could come along and copy their inventions for profit. For most of history, inventions were hard to develop, often taking years of experiments and trials. And lawsuits, while costly, were not out of proportion to the value of the patents themselves. But Lindsey and Teles cite a study covering the years 1984 to 1999 that compared the value of U. S. public firms' patent portfolios with the litigation costs of defending those patents. With the exception of the chemical and pharmaceutical industries, the expense of defending patents during that time was about four times the value of the patents themselves. And things have probably gotten worse since then. So for most companies, obtaining and defending patents is a losing proposition, at least by this measure.

To those who fear that abolishing the patent system would put an end to technical innovation, the opposite argument's Exhibit A is China.

Compared to the U. S., enforcement of all types of intellectual property law in China is notoriously weak. The current Chinese patent laws date back only to 1984, and China has joined international intellectual-property agreements only within the last 20 to 25 years. Yet despite the weak enforcement of patent laws, Chinese industry has shown increasingly impressive innovation, outstripping the U. S. in many areas such as solar power and high-energy-density batteries.

Lindsey and Teles argue that the main effect of patent laws is to empower already powerful corporations and groups to stifle startups and competition from less powerful inventors and small companies. In U. S. patent law, the first person to file a patent is the winner who takes all the rights. Even if the first to file wasn't the first to invent, the first filer can, and often does, stop other inventors from using the fruits of their own inventiveness in the case of nearly simultaneous inventions, which often happens in rapidly advancing fields. So in this way, a law intended to let inventors benefit from their own inventions actually stops them from doing so.

It would probably be too disruptive at this point simply to abolish all U.

S. patent laws. But the exercise of thinking what life would be like without patents shows that the patent system, especially as it is now when patents are easier than ever to obtain, has genuine drawbacks and costs that even inventors don't always consider.

Have you had an unfortunate or unexpected experience with patents or patent law? Send responses to PDD

Karl Stephan, Professor of Electrical Engineering, Texas State University
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Title Annotation:Final Thought
Author:Stephan, Karl
Publication:Product Design & Development
Date:Jan 1, 2018
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