Wednesday, September 19, 2012

On patents and innovation

I'm often tempted to write a post about patent law and its ambiguous-at-best impact on innovation, but for some reason I never actually do it. In part, I think that's because I assume I've already covered it on the blog, but in searching through my history it seems like I haven't (maybe here, and here, kinda sorta, but those are sort of different points).

At any rate, in the wake of the overly broad and frankly pretty ridiculous court ruling that went in Apple's favor against Samsung in the companies' ongoing patent war, I thought this was a useful time to broach that topic once and for all. To set the table for this argument, I'll first share with you a nice little chart from Alex Tabarrok over at the Marginal Revolution blog.

In layman's terms, Tabarrok's chart argues that while some level of patent protection is necessary in order to protect intellectual property and encourage experimentation and innovation in the business realm, there comes a tipping point at which overly strong (or overly specific) patent protections become counter-productive.

At that point (which we have now passed), large companies begin to use their vast legal resources to patent everything under the sun (read this piece for an example of how it goes down), even those things which are not yet commercially viable and which they have no intention of bringing to market. They do this simply to protect their dominant market position, preventing smaller competitors from threatening their near-monopolies.

Apple, for one, has become particularly aggressive in its manipulation of patent law, literally attempting to patent every aspect of every product that it manufactures, in an obvious attempt to prevent competitors from entering into any market in which Apple operates. That's ironic, given Apple and Steve Jobs' well-known, unapologetic history of being an imitator and/or thief of other companies' intellectual property—but Apple doesn't care much about irony or intellectual consistency, just piles of money.

Regardless of the details of the cases discussed in that last link, Apple and Microsoft are indisputably stronger companies today because of the competition between the two of them (oh, and Xerox, don't forget about Xerox). Now, Apple is trying to stifle just that kind of competition in the present day, and so far courts are falling for it.

That may not last for long, though, if U.S. Circuit Judge Richard Posner (whom I've written about here and here) has anything to say about it. In this ruling and others, Posner has consistently referred to a "dysfunctional patent system" in this country, one that has run amok and now operates contrary to the public interest (that last remark is a direct rebuke of the primary justification of patent law in the first place). Will Posner be able to do anything about it? In the short run, it's doubtful, but I certainly hold out hope.

In the long run, our economy's only hope for rescuing itself from its current malaise is not via money printing or trade sanctions against China (so please, guys, seriously, stop trying that dumb shit), but through innovation—real, honest, serious innovation, the kind that makes us all legitimately more productive and prosperous. Our country has been great for the last century not because it has protected its largest corporations' market positions, but because it has allowed and enabled start-ups to thrive without smacking down their creations on dubious patent grounds.

So let's hope our country's future is determined a little bit more by Richard Posner and a little bit less by Apple—no matter how much you like your new iPhones, believe me, you shouldn't be rooting for Apple, at least not anymore. I know I'm not.

[Marginal Revolution]

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