Tuesday, October 04, 2005

Are true pioneers harmed by the patent system?

James Kanter writes: The real problem is how to fashion a system that promotes innovation, not mere accumulation. If savvy entrepreneurs can manipulate the system by locking down valuable ideas, true pioneers will find it too tough to win rewards for their inventions.

The accumulation of patents which can be licensed can lead to significant income for a company. In 2004, the 12th in a row that IBM was number 1 in receipt of U.S. patents — it earned $1.2 billion from its intellectual property holdings including patents, or about 15 percent of the company's $8.1 billion total income.

''Today's collaborative technologies are presenting a real challenge for patent law,'' Jaffe, the patent expert, said, ''and for the kinds of thinking that emerged at the time of Thomas Edison and Alexander Graham Bell, when individual inventions seemed much more distinct, much less complex.'' Of course, one notes that radio and the aircraft in the early 1900's are perfect examples of collaborative technologies which presented a challenge to patent law one hundred years ago. In each case, the government intervened to break patent logjams.

Josh Lerner: ''Reform is being driven by the sense that the system is out of control. As a result, we are moving into a world where patent holders won't be islands anymore, but knowledge-sharing organizations.'' Arguably, patent reform in 2005 (HR 2795) was driven by industry advocacy. Different industries have different perceptions about what is out of control, as is seen in the case of proposed reforms in injunctions.


In January, 2005 John Kelly, senior vice president for technology and intellectual property at IBM, announced the release of 500 IBM patents for use by open-source programmers. ''This is not a one-time event,'' Kelly said at the time. There was no word on how much the 500 patents were earning in royalties, absolutely or relative to the the unreleased patents.

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