The alleged societal benefit of patent law is that it creates a financial incentive to innovate. The societal drawback is that it reduces competition, reduces the spread of innovation, and creates deadweight legal costs.
Perhaps patents are necessary in the pharmaceutical industry. I know very little about that industry but it would seem that some sort of temporary grants of monopoly are necessary to compel companies to spend billions of dollars of upfront R&D.
What I do know about is the software/internet/hardware industry. And I am absolutely sure that if we got rid of patents tomorrow innovation wouldn’t be reduced at all, and the only losers would be lawyers and patent trolls.
Ask any experienced software/internet/hardware entrepreneur if she wouldn’t have started her company if patent law didn’t exist. Ask any experienced venture investor if the non-existence of patent law would have changed their views on investments they made. The answer will invariably be no (unless their company was a patent troll or something related).
Yes, most venture-backed companies file patents (I have filed them myself), but this is because 1) patents can have some defensive value, 2) they can grease the wheels of an acquisition (mostly because big companies want a large patent portfolio for defensive purposes), and 3) occasionally failed startups will get funded by investors whose intention is to go around suing people (hence providing “downside value” for the initial investors).
Articles like this recent one in New York Times promote the urban myth that the main beneficiary of patents are lone inventors whose idea is stolen by the big guys. I have no special knowledge of the situation referred to, but I find it hard to believe in 1995 the idea of tying GPS to mobile devices wasn’t obvious to anyone in the field. Almost all software and technology patents that I’ve ever come across are similarly obvious to practitioners at that time. In theory obviousness is grounds for disallowing patents, but in practice patent examiners grants tons of silly patents.
Take the case of Blackberry and NTP. NTP is a “patent holding company” – a patent troll – whose sole purpose is to sue people. Now, I’ve been around long enough to know that the idea of mobile email is as old as email itself. What RIM did was they actually went and made it a reality. They figured out how to make a simple device that people loved, how to market it, and how to convince investors to give them money for what probably at the time seemed like an overwhelmingly difficult project. The founders of RIM are the heroes of the story. They didn’t need to sue anyone because they built a product and made money by actually selling a product people wanted.
How did having patents help society here? NTP never tried to build any products. No one is claiming RIM took the idea from them. The only beneficiaries here are a company that never built anything and a lot of lawyers.
Software/internet/hardware patents have no benefit to society and should be abolished.
