Patents: Essential, if flawed – by “Brian S”

The patent system purports to encourage innovation, but it is unclear whether it successfully does so. The idea is that if an inventor gets credit for his work, there is greater reward for invention, thus a greater incentive to invest time and effort into inventing. Patents can have the counter-productive effect, however, of inhibiting innovation, perhaps due to fear of infringing; this potential ramification is supported by at least one interesting study. But does the good outweigh the bad?

One major use of patents – to deter competition – seems problematic in light of the existence of anti-trust laws and prohibitions on monopolies. Shouldn’t we want everyone to have access to a new invention, and leave it to the forces of the market to decide who makes the best use of it? Well, perhaps not. If one company spends millions in research and development and another company simply steals the idea as soon as it comes out, the second company saves the millions and gleans an advantage by refusing to innovate. In some sense, we have a version of the prisoner’s dilemma wherein both companies are individually better off by refusing to innovate, yet both suffer if neither innovates. Patents are, then, the theoretical solution to this: if a company innovates, it alone can reap the rewards of the new invention.

In the case of Amazon’s 1-Click, however, it is unclear whether Amazon truly invested a great deal of resources in what many consider to be an “obvious” (and thus unpatentable) development. If they did invest a great deal, and the technology is non-obvious, Amazon is righteously defending itself against moochers (in the form of Barnes and Noble). If not, Amazon has devised a cheap ploy meant to unjustly hurt a rival business. The line between these two poles is sufficiently blurred so as to be a cause for concern.

Another difficulty is that the financial cost of applying for a patent, while likely trivial for a corporation, presents a barrier to the everyman – the one arguably most likely to actually need a patent, as he may have great post-hoc difficulty, should a company quickly grab his idea, in proving prior invention. In other countries, where patents are a matter of first-to-file rather than first-to-invent, obtaining a patent becomes even more indispensable. Yet at the same time it is difficult to do away with or significantly lessen the fees, lest we encourage spam (and, after all, there is a labor cost in processing each application).

Ultimately, a patent is proof, of sorts, that one actually invented something. This can translate to confidence among investors, market-share among consumers, or an extra footnote in the history books. While there are certainly valid concerns about the implementation of the current patent system, the idea behind it is highly sensible: we want to give credit for an invention where credit is due. Until we can invent a better system to do this (and patent it, of course), we have to live with the one we’ve got.

(And finally, although software patents seem to be especially problematic, there is at least one paper arguing that the negative impact of software patents has been negligible.)