Is IP Stopping Innovation

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Are we poised to enter the post-IP age? Has the concept of the patent or trademark as we know it today been so muddled by modern corporate strategy and greed that it no longer serves the purpose it was originally conceived to support? In reading about the upcoming Apple vs. Samsung patent trial one has to wonder how the consumer or public good is served as these two giants of the tablet and smart phone industry prepare to battle it out over the right to own the market. Rather than focusing on how to make their product substantially better than the competitors they prefer to fight over how to block them from competing. The question is – does this hurt innovation?

Patents have been used to support invention since at least 1474 when they were formalized by a Venetian Statute. Even prior to this they existed as ‘letters patent’ issued by the king or queen to inventors in England or even further back in ancient Greece where inventors of new ‘refinements’ were afforded 1 year of profits. In the US the Congress passed the first patent act in 1790 to ‘promote the progress of useful Arts.’ Over the two subsequent centuries patent law has been refined and altered to more appropriately suit the now global marketplace and economy but many aspects of these legal grants have stayed the same.

Do the same rules make sense in the new, constantly evolving digital economy? After all, the original intent of providing patents was to incentivize disclosure of invention for the public good. Is that still happening? Let’s break down some key characteristics of patent law today to review how this helps or hurts innovation.

 

–         Filing Process: the process of applying for a global patent is a byzantine one, involving multiple organizations and sets of laws. For any company hoping to commercialize and protect a new invention the process can be daunting. Not only does this add cost and time to commercialization (often lots of both) of a new innovation, the differences in the examination and discovery process mean that what is novel in one state could be found ‘not inventive’ in another. By the time the examiners and lawyers are finished amending and shifting the filings what is protected in one region might be unprotected or infringing in another! Additionally, this expensive and time consuming process tilts the scales against individuals and small firms, leaving them essentially out of the process. The very people meant to be protected by the patent system – individuals with great ideas – are excluded unless they can muster significant resources to go through the filing process. The patent system then becomes a game that is played by large firms with the resources to engage in de facto patent war with their competitors!

–         Lifetime: patents last for about 20 years – great news if you can get one, bad news if you come up with a substantial but infringing product improvement 5 years later (or even 15 years later!). In the world of telecom and digital this is several lifetimes but in pharmaceuticals this is just the start for a successful product. The differences in these industries mean that a one-size-fits-all approach is not necessarily the best one. As well, the speed of knowledge improvement has so substantially shifted in the digital era that one has to wonder why any law written to support innovation in the age of the horse and carriage is still being used in the age of the Dreamliner!

–         Infringement Liability: the substantial rewards that might be expected from winning a patent lawsuit have led to the rise of an entirely new industry, patent trolls. These companies or firms buy up patents and use them as leverage to extort payment from other companies. It also encourages opposing firms to face off in court rather than work together. All this time litigating drains firm resources and limits real innovation, while providing a disincentive to making new and innovative products without obtaining firm IP protection. Too often companies look at the ability to create a sustainable IP position as a major factor in developing a new product, rather than looking for the best products. We’ve progressed from twenty patents in a year to thousands – shouldn’t the legal system have changed to allow speedy resolution of these cases in a fair and equitable fashion as well?

It’s obvious the current system isn’t doing much to drive innovation in most industries. Perhaps its time that governments and innovators came together to reform the patent system in a way that lets both companies and consumers win. Imagine if Apple and Samsung were to focus the resources currently tied up in lawyers and patents with creating new products – the consumers and companies might never look back!

In the meantime what does this mean for you, the osmotic innovator? Avoid falling into the trap of worrying about maintaining a defendable position at the expense of the consumer experience of your product. Don’t infringe on others IP but wasting resources unnecessarily protecting short term innovations won’t pay off in the end! And if this post interests you take a look at some previous posts on this blog regarding Enlightened IP Strategy – hopefully you’ll start to see a light at the end of the dark IP tunnel.

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