Rethinking the Whole Patent Thing
I was at a garden party yesterday, talking to "Fred," the CEO of a fiber-optics company, about patent litigation. I was opining that litigation often didn't make economic sense, particularly in high tech fields where everyone pretty much has to cross-license everyone else.
He disagreed and we had a lively debate until some kind soul (my husband) reminded us it was a wedding reception for goodness sake and to try to think about something other than business for a minute.
Good advice.
But before going to bed, I picked up the Sunday Times to find Michael Fitzgerald's article, "A Patent is Worth Having, Right? Well, Maybe Not" questioning not just bare-knuckle litigation, but asking why businesses should bother to patent their technology in the first place.
Here's the gist, two researchers have analyzed patent acquisition, commerce, and litigation data gathered for the period 1976 through 1999. What did they find? Pretty much the same thing I was (anecdotally) telling "Fred."
[S]tarting in the late 1990s, publicly traded companies saw patent litigation costs outstrip patent profits. . . . [A]bout $8.4 billion in global profits came directly from patents held by publicly traded United States companies in 1997, rising to about $9.3 billion in 1999, with two-thirds of the profits going to chemical and pharmaceutical companies. Domestic litigation costs alone, meanwhile, soared to $16 billion in 1999 from $8 billion in 1997.
Things have probably become worse since then . . . there were 2,318 patent-related suits in 1999, and 2,830 in fiscal 2006 . . . Worse. . . companies doing the most research and development are sued the most.
All of this research and more will be available next year when B.U. Law School Professor James Bessen and his colleague, Mciahel J. Meurer publish their book "Do Patents Work?" (synopsis and working chapters here).
Apparently, Bessen and Meurer's work doesn't go as far as does the thinking of others such as economists Michele Boldrin and David K. Levine "who argue that the patent system should be abolished." (their work can be found here)
Though others have pointed out flaws in Bessen's work, they admit the numbers are "provocative."
The article is well worth a read and the entire matter serious thought.
Dear Victoria:
That's no Joke! As a life long joke stealer from what I believe is the public domain of humankind, the notion of owning a joke is preposterous even if you paid your writer to create it. Sue me. Remember the conflicting concepts: Copying is the sincerest form of flattery vs. the Tragedy of the Commons. Thanks for your thoughtful contribution to "our"blog. No one invents jokes other than life. If you are in need of any other cliches, or advice contact me.