Patent Paradox

Suppose you want to protect an idea you’ve come up with. It’s a great idea, and you’re sure it’ll produce massive profits over time, so you’d prefer to be able to invest your own money in it to make sure it’s executed well.

You’re confident in the plan, but you’re nervous that you’ll have to bet the farm if you want to succeed. This idea requires you to invest even more money than you have right now, so you might need partners and investors too. This endeavor is complex.

The general solution that our society offers today is called a patent. Patents constitute one category of protection for intellectual property, along with copyrights and trademarks.

The main idea is that you can write a detailed description of whatever your moneymaking scheme is—maybe it’s a new type of stapler, or maybe it’s an entirely new type of technology. Then, nobody else can use your idea without you being able to sue their pants off in court… and probably win.

So, this is a good thing, right? People who have ideas they want to try out are more likely to try them?

Well… not so fast.

Because of this very protection, a paradox is created. One person’s green light to go forward with an idea is another person’s red light not to take any action.

This is now commonly called the patent paradox, after a phrase used in this widely read and distributed paper by Bronwyn H. Hall & Rosemarie H. Ziedonis. Here, the pair outline how and why this happens through the lens of the semiconductor industry, with research focused on the 80s and early 90s:

This article revisits this “patent paradox” in the semiconductor industry, where the gap between the relative ineffectiveness of patents (as reported in surveys) and their widespread use is particularly striking.

They sum up the argument succinctly:

Instead of being driven by a desire to win strong legal rights to a standalone technological prize, these firms appear to be engaged in “patent portfolio races” aimed at reducing concerns about being held up by external patent owners and at negotiating access to external technologies on more favorable terms.

In other words, patent filing (at least in the semiconductor industry) seems to have the exact opposite of the desired effect. Instead of filing a patent so that you can throw yourself into an idea and make the idea a reality, what actually ends up happening is that bigger firms—or people with lots of money—will purchase dozens of defensive patents, designed to prevent any possible competition.

Preventing competition also prevents the marketplace of ideas from doing its work, where better ideas win out against the so-so ideas. We need this competitive aspect so that there’s never a make-it, take-it winner of everything all the time, forever.

Patents also tend to prevent cooperation, too. Even if you want to collaborate with someone else on a project, it’s possible that you might void your IP protections if you choose to work with them. Our legal system is certainly an adhocracy in this regard, with lots of spiraling unintended consequences everywhere.

What does a perfect system look like? I’m really not sure there is such a thing, but pointing out the paradoxes is a good first step toward figuring out a better way forward.

I see tremendous value in protecting an idea, especially if you’re going to give up everything you own to chase the idea. As a society, we want to encourage these sorts of risks to be taken. This is exactly how things improve.

At the same time, we don’t want to throw out the diamonds in the doodypoop and punish potential cooperation, nor do we want protectionism simply to prevent better ideas from coming along.

Could attribution be the key?

If you make me chuckle with a meme you just created, and I then share that meme with a couple thousand readers, some of whom also chuckle, then it might be reasonable to reward the person who came up with the idea… The fundamental problem is that it’s just so much to try to track. There are billions of humans, many of whom are contributing dozens of ideas on a daily basis. Prior to the internet, this sort of idea would just seem impossible, cordoned off into the world of wouldn’t-it-be-nice.

I don’t know if micro-payments for ideas solves the patent paradox, but it’s at least one potential idea that technology might be able to aid in implementing. Got any better ideas? Let’s hear ‘em!