It occurs to me that the whole furore over patents in the software industry really revolves around the role of government in setting the regulatory ground rules for business and government’s influence in the private sector. A recent post in the New York Times about Apple’s decision to patent everything that moves was as eye-opener.
The overall tenor of the post was patent-negative. The Times showed many instances in which patents were used as a business barrier to entry and a tactic to lessen competition. The question was to what degree patents foster innovation or inhibit them in the technology industry given that $20 billion was spent in the last two years alone on patent litigation and purchases. That’s money that could have gone to R&D.
In practice, what Apple was doing was smart business strategy. After a particularly painful patent suit loss, Apple decided to patent everything even when they knew the patent wouldn’t actually be successful. Why? Because an unsuccessful patent application is as good a defensive strategy as a successful application can be on the offensive side. If a competitor tries to sue for patent infringement, Apple could just whip out its unsuccessful patent application and show that the process is not patentable.
Clearly, the lack of software patents before the last decade or two didn’t inhibit innovation. The iPhone is an innovative product built on the back of other previous incremental innovations. I see incrementalism as the key to innovation and the patent concept as one that thwarts it. To me, this smacks of ‘Big Government’ i.e. the price we pay when government sets ground rules that are intrusive and require government to intercede in a way that can create winners and losers. What is happening now is that companies are effectively asking for government-sanctioned barriers to entry or monopolies. In the Pharma world, the rationale for granting this has been that it fosters innovation by making R&D pay off. I can’t speak to the effectiveness of that argument. However, I would say that in the software space, patents are now a weapon. They are used to stop innovation and prevent competition. The way the US patent system works is broken – and the result is higher costs and less innovation for consumers.