Putting innovation in the public domain reduces design around incentives that improve overall innovation

A second and closely related problem is that putting innovations into the public domain removes the design-around incentives that have improved many markets involving patented products. The patent creates a protected market that induces rivals to invest into designing around the patent. These design-around efforts generate substitutes to the patented good, diminishing the market power of the patentee and increasing the variety of products available to consumers. Indeed, often the second or third iteration of some product is the best. The iPhone, for example, is a far superior product in comparison to the Blackberry, and especially in comparison to the IBM Simon, the first smartphone to enter the market.