Patents discourage innovation---the counterplan solves

Patents discourage innovation. When Steve Jobs and Steve Wozniak started developing the first Apple computers in a garage, they did not worry much about patents. They shared and borrowed ideas from their network of fellow geeks. If they had had to pay royalties on all the software they borrowed, today we would have no email, no smartphones, no What’s App, no Google. The most important software innovations in the US happened before the US began allowing software patenting (in Europe, software patents as such are not possible.) More recently, the pace of innovation slowed.

Today, patents are often used as weapons. In the 1950s, an American inventor filed so-called “submarine patents” to claim an early form of machine vision technology; when others decades later developed bar code and other machine readers he sued to protect his previously unnoticed patents and collected more than $1 billion – even though the real development work had been done by others.

As another example, big companies today routinely cross-license patents to avoid blocking one another – but in the process also block new entrants that could disrupt the market, improve services and lower costs. That hurts consumers and inventors.

Patents are not necessary for economic growth. While the US and Europe have long-established patent systems, China’s high-growth economy does not; only recently has its domestic patent system grown, and its purpose is not so much to protect inventors as to lend credibility to their work.

In fact, patents actually hurt the economy. In the US, the cost of patent trolls – firms that acquire strategic patents and use legal threats to extract steep royalties from real innovators – now amounts to 12 per cent of business R&D spending. It is, in essence, a new tax on innovation.

Society can be more innovative without patents. One study of the Great Exhibition of 1851, the world’s first technology fair in London, found that only 10 per cent of the innovations on display had been patented. More recently, a Carnegie Mellon survey of companies in the mid-1990s found fewer than half of innovations had been patented.  Another survey of European companies found just 25 percent of process innovations and 36 per cent of product innovations were patented. Most innovations were protected using the advantages of a “first mover” or trade secrets.