Monday, November 9, 2009

A proposal on patent reform

In theory the purpose of patents is to increase the public domain by providing temporary incentives to spur innovation. In that spirit patents are supposed to be limited to things that would not be obvious to one versed in the art.

However patents have lead to many problems.

First is the question of which ideas are obvious, and which are not. This is not a simple question at all. The patent office has resolved this question by being fairly lenient about which patents are granted, thinking that the issue can always be resolved in litigation. However people are reluctant to litigate, so invalid patents are acquired in great number. The theory goes that any individual one is unlikely to stand up, but if I threaten you with a dozen patents at once, my odds of having at least one stand up are pretty good. This set of incentives leads to a lot of overly broad patents that are pretty obvious, which causes uncertainty for others.

Second you have the issue of how long patents are good for. When it comes to drugs, a multi-year search and FDA approval can only be recouped from a long patent. When it comes to software a 17 year patent warps the market for many generations of technologies. Thus there can be no simple balance between encouraging innovation and unnecessarily hobbling further advancement. (Many people in software think patents shouldn't apply there. Certainly patents do a lot of damage in the software world, but as Paul Graham points out, if you're against software patents then you're against patents in general.)

Third we have the challenge that areas that change rapidly have a lot of opportunity for being the first to face a particular problem. If you're first to face a problem then it is easy to get a patent. Given that the patent office is lenient on granting them, you're likely to get it. So we tend to see very intense patent activity in areas that change rapidly. However those are exactly the areas where patents do the most to inhibit further progress!

My proposal addresses these issues.

I propose that no patent shall be accepted unless the technologies that make the discovery feasible and commercially viable have been broadly available for at least a decade.

If the problem has been solvable and a solution desirable for at least a decade but nobody has done it, that is evidence that the solution is not obvious to one versed in the art. Conversely if the solution quickly occurs to someone fairly shortly after the problem has become both solvable and commercially interesting, that is evidence that it wasn't really that hard. Furthermore it is exactly advancements in fields that are rapidly changing where patent protection does the most economic harm.

Why did I choose a decade? I chose it as a round number that is fairly close to half the length that a patent lasts. My theory being that if nobody has discovered it in that length of time, then the odds are reasonably high that nobody would have discovered it in the time the patent restricted the use of the invention, and therefore we have evidence that the net economic result caused by granting the patent is positive.

Of course, like any attempt at compromise on a controversial issue, I am sure it will satisfy nobody. But I don't think it is that bad either.

10 comments:

Loup Vaillant said...

Define : "feasible", "commercially viable", "the technologies that make the discovery feasible and commercially viable", "broadly available" and "desirable".

These terms may be sufficient for an informal discussion between people of good faith, but I'm afraid good definitions of these (accurate enough to be used in the law) don't exist. Even "software patent" barely have a good enough legal definition. Even "prior art", while easily definable, isn't easily enforceable.

btilly said...

I agree that those terms leave room for honest debate. But I submit that the appropriate question is not to ask how clear those terms are in the abstract, but instead to ask whether they are clearer than having patent examiners, lawyers and judges try to make informed decisions based on what is obvious to one versed in the art. Particularly when the art in question is changing rapidly.

Loup Vaillant said...

But of course. In that case, your terms are obviously clearer. My bad.

PS: I was talking about dishonest debate, most likely to happen in court.

Dale B. Halling said...

Your premise is flawed. First of all, those people who create a new invention are entitled by right and morality to a patent (property right in their invention). You have no right to the product of other people's minds.

Second, a strong patent system is associated with increased technological innovation and diffusion. Technological innovation is required to increase real per capita incomes. The three major downturns in the US economy in the last century (30, 70s and this decade) have all been associated with a weakening of the patent system (For more information see http://hallingblog.com/2009/10/26/foreigners-receive-more-patents-than-u-s/). Your proposals are clearly directed at weakening out patent system. The result of your proposals would be economic stagnation.

Loup Vaillant said...

On your second point, I know of other sources which says exactly the opposite. We won't reach any conclusion by pointing to them.

Moving on to your first point, I'd like to state what I understood:

When I have an idea nobody has applied before, no one have the right to use it without my prior permission.

To me, not giving the permission would be extraordinarily selfish. To quote Dr Tae: "Knowledge isn't like a cheeseburger". So don't try to apply to ideas the rules of physical goods.

About premises, I have one that sound quite reasonable: "we should make the world a better place (as a whole)". You may limit that statement to your country if you will.

You will note that the percentage of the citizens which are granted patents are extremely low, borderline negligible. So, we don't really care about doing them any good, if we are doing any harm to the rest of the society. The problem, is, these patent holders are special: they do society good (by innovating).

Patents are all about innovation. The idea is to increase the rate of innovation at the expense of certain liberties. Not doing patent holders any good, because that particular effect would be negligible. We're only interested in the indirect, broad effects on innovation and liberties.

Which brings us back to square 1: does the patent system increase innovation? If it does, is it worth the loss of liberties? To me, these are the only questions worth investigating. Supposed right to control the use of my ideas is irrelevant.

I am not an Economist said...

@Dale Halling

YOUR premise is flawed, I did read your blog page and quite simply you are wrong. Innovation is stifled by patents. If I 'copy' your idea then you must innovate to survive in the marketplace.
A patent gives you an incentive to not innovate for the term of the patent and leaves me hanging.
You used all the knowledge available to you to come to your idea and now I can't because you won the patent race.

You state "You have no right to the product of other people's minds."

Patents give you the right to prevent me from using the product of my mind simply because you filed papers first.

Most new ideas are arrived at nearly simultaneously by those working the same areas and the current system only encourages overly broad and hasty patent filings because of the winner takes all mentality of the current system.

A patent is a privilege.

I have a right to make a living and there are finite ways to do so, if my right to make a living is blocked by others privileges then we don't have much of a free society.

Privileges are directly opposed to rights. Either we have all have rights or some have privileges. The real argument is about what kind of society we want to have.

btilly said...

@Dale Halling: Your first point is absolutely incorrect under US law. The authority for intellectual property law in the USA comes from paragraph 8 of section 8 of article 1 which reads, To promote the Progress of Science and useful Arts, by securing for limited Times to Authors and Inventors the exclusive Right to their respective Writings and Discoveries; If you go back to the writings and debates during the Constitution it is abundantly clear that the progress Jefferson was referring to is the progress in what is available for public use.

That said, different countries have different bases for intellectual property law. In many there is the idea that people have moral rights to their discoveries, though that usually applies more to copyright law than patent law.

Regarding your second point, the roles of patents in innovation is hotly debated. However the following facts are not in serious dispute.

-Innovative people don't see patent filings as a source of new ideas. In fact innovative people often deliberately avoid knowing about patents that are out there for the simple reason that the penalties for violating a patent are much worse if you do it knowingly.

-Even the most well-intentioned of patents with very mild licensing requirements have disastrous effect on open source software, which is an area that drives a lot of innovation today.

- There are well-documented areas where patents have stifled competition. A classic example is that progress in the airplane industry in the USA was blocked by conflicting patents until the federal government declared it of national importance and imposed compulsory licensing to let everyone use everyone else's patents.<

-Many very innovative people would like to see the patent system scaled back or (in some extreme cases) abolished.

Given those facts I see claims that patents support innovation as statements requiring real evidence, rather than statements that are self-evident. Speaking personally, I believe patents provide a trade-off. They impose real costs for in return for potential benefits and the net effect can go either way. For instance I would point to inventions such as the zipper, radio buttons, and intermittent windshield wipers as examples where patents were reasonable. I would also hasten to add that these days the bad apples far outnumber the good ones.

Miguel said...

The Patent System is like salt. Too much, and its just an immense barrier to innovation. This is not a case of either one (no patents) versus the other (heavy patent system). Contrary to what some say, a patent system does not create innovation, at most gives firms with technological products the possibility to litigate in a court system, if they have the money for it. Historically, the patent system was practically first implemented in Britain in the XVIII century to protect the textile manufactures and prevent any business man to start its own textile factory. Later, in the XIX century it served to prevent the imports of foreign machinery and goods. Typically, the more advanced the industry in a country the more strong would be the enforcement of the patent system. So, in a developing country, let's say the US or Germany in the mid XIX century, it was typical to build machinery copied from the UK. When these countries became capable of developing their own machinery they also became strong proponents of a Patent system. In contrast, other countries like the Netherlands, that lived from trade and practised free trade, even abolished the patent system from 188?-1913, arguing that it was blocking the country's economic development (Phillips, the technological giant started by producing the patented light bulbs of Mr. Edison). So, my point is that a patent system is a mixed blessing. If you're a developed nation, the big companies crush the innovation done by small-medium companies due to the huge litigation fees involved in a patent dispute. If you're a developing nation, then its outright wrong to have a strong IP as your technological companies will never be able to innovate in order to compete with the multinationals. On the other hand, an IP system will allow a growing industry niche resist in the market to the attacks of the competition. So, it really comes down to the weighing of the general public (citizens) right to use innovation fostered in their society against the just reward of the inventor. I believe, the scale at the moment is too biased to the side of the inventor/corporation. There's too much salt in the food...

Loup Vaillant said...

If I understand correctly, patent systems originally were a disguised form of protectionism. I mean, they were designed to protect the current big industrial companies of the country, by preventing innovation (hence the trade-of you speak of).

I personally would love to see a proof that the actual purpose of at least some patent systems was to shut innovation down.

Did I understand correctly?

Miguel said...

Patents are not a disguised form of protectionism. They are by definition protectionism. The point is whether the protectionism or temporary monopoly given to the patent proprietor is serving the society or not. You can research the history of the patent system in your country and find out the initially (until beginning of the 20th century in the US) there wasn't done any prior search against a new patent application. Anyone, just needed to find a lawyer to draft the application, pay the fees and he would have his patent. Further there wasn't any recognition of foreign patents. So, you could have a patent for a sewing machine in Europe but in the US someone would file the same sewing machine and get the US patent. They even mentioned in the patent description that it was based on the machine by Mr. X from France. So you see, it was a very crude form of protection. If you need examples of the trade barrier disguised as patent, just check the history of the sewing machines SINGER, initially made in UK, but later made in Germany and smuggled into the UK. Or the history of Phillips in the Netherlands, where by abolishing the patent system they were able to manufacture and sell the light bulbs of Edison in Europe.
Note that the purpose of any patent system is solely to give monopoly rights to the patent proprietor. It does not follow necessarily that this helps innovation. I could cite the percentage of actual implementations (products) to the total number of patents for a given company in any area but this number can vary from less than 1% to 50% depending on whether it is a large or a small company. So, for a "joe the plumber" kind of company and the society the patent system is a good thing. But, if the patent arouses the interest of a large company "joe" usually sells or licenses his inventions because he cannot pay the litigation fees.
If that patent ends up developed into a product, that depends on the market strategy of the large company. Usually, it does not. Its one more patent for a defensive strategy against a competing large company. It will never see an implementation. Note that, I'm not saying that there are fantastic hidden technologies in the patent portfolios of the large companies, but just wanted to note that for an innovative small-medium company the patent system is under the present conditions more of a threat than a blessing (if they wish to pursue that technology). But, as Paul Graham has pointed out many times in his essays, the fate of small company (start-up) is mostly the takeover/sale strategy. And in this context, the patent is just another asset valuing the start-up. So, you see even though the rhetoric surrounding the patent system might mention the innovation as purpose, its just another business tool. And in business, the priority is not the society but the stockholders...