Patents Don't Pay

tarball_tinkerbell sends us to the NY Times for word on a book due out next year that claims that beginning in the late 1990s, on average patents cost companies more than they earned them. A big exception was pharmaceuticals, which accounted for 2/3 of the revenues attributable to patents. The authors of the book Do Patents Work? (synopsis and sample chapters), James Bessen and Michael J. Meurer of the Boston University School of Law, have crunched the numbers and say that, especially in the IT industry, patents no longer make economic sense. Their views are less radical than those of a pair of Washington University at St. Louis economists who argue that the patent system should be abolished outright.

Patent Business Model

It doesn't surprise me that patents tend to be expensive & useless. The only place they are of any real use is in court. Any business model that has "time in court" from the get-go is probably not such a great model.

Re:Patent Business Model

Any business model that has "time in court" from the get-go is probably not such a great model.

Except for a law firm.

Re:Patent Business Model

Any business model that has "time in court" from the get-go is probably not such a great model.

Except for a law firm.

Most law firms are lousy business models too.

Re:Patent Business Model

The only place they are of any real use is in court.

It also has use in keeping competitors out of the market, by (dishonestly) telling competitors that they must pay to overcome some ridiculous and undeserved government-mandated monopoly. That isn't to say that all patents are ridiculous, or even that we should get rid of them, but it would be difficult to measure the value of intimidating would-be competitors out of the business.

Another Use for Patents

Another use: Defending yourself in case you're accused of violating somebody else's patent. The more obvious patents you have, the more likely somebody else is to violate one of yours. If you ever get accused, you then may have the option of negotiating some cross-license deal.

So many companies are basically investing a lot of money into patents due to an issue caused by patents themselves.

Not really surprising

Especially in the world of computers it seems that so many of the patents are of questionable validity. A lot of software-related patents end up getting invalidated due to prior art when the patent holder tries to enforce it. Why do you think Microsoft isn't publicizing the list of patents that it claims linux infringes on? Tons of people will try to dig up prior art as soon as they know what patents MS claims are being infringed upon.

Re:Not really surprising

It's a nice thought but I wouldn't expect to see any significant changes in a long time. Companies like Microsoft that have huge investments in proprietary software are going to use the threats of patents to try to combat the growth of linux and open source software in general. I'm sure they'll continue to do that for as long as they possibly can. Even companies like Amazon, with their dubious one-click patent, use them as weapons in going after the competition. Unless/until something significant happens that puts an end to the abuse of dubious software patents I have a feeling they'll be around for quite some time.

This is also the Pirate Party's stance

The Pirate Party also claims [piratpartiet.se], with good justification (although a bit less of it in English), that patents should be abolished outright. Good to see some others chime in.

Re:This is also the Pirate Party's stance

What about pharmaceuticals (mentioned in the article)? That is actually my line of work - any commercially viable synthetic pharmaceutical can be made by a trained chemist in a couple weeks. All of the actual cost is in deciding what molecule to make, not in making the molecule itself. It may be feasible in the Libertarian circumstance where (1) chemical intermediates are available to the general public and (2) drugs are not subject to regulatory approval.

Hell, even if the general public were allowed to buy chemicals and lab equipment, they could make their own pharmaceuticals, since patents only apply to commercial use. Another "good" (bad) reason for the war on drugs.

Re:This is also the Pirate Party's stance

Does this mean a non-profit can circumvent a patent simply by making and giving a drug away away?

Re:This is also the Pirate Party's stance

>>What about pharmaceuticals

Since you work in the industry, you are probably a bit biased. But here's my $.02:

Pharmaceuticals should be developed by government grants and the IP turned over to Public Domain. A list of the 20 worst ailments that *could* be treated with drugs should be created. Then, funding would go from the Federal Government to Universities willing to work on those problems.

Opportunity Costs

Are they counting opportunity costs? If having a patent allows you to get into patent detente with other patentholders, then the patent saves you the license fees/amount you'd be sued by that you'd accrue if you tried to operate without it. That's where the value of patents truly lies.

Its about raising the barrier of entry

If the big companies all file for a bunch of patents it raises the barrier of entry very high for would be competitors. They may not get any revenue from these patents but they save a lot from not having to deal with smaller companies taking their business.

I mean the whole point of the patent is to give its inventor exclusive license to be free from competition, the author of this piece doesnt take that into account at all. Im not saying that this is good or bad for innovation, just that there is significant financial incentive that the writer fails to account for.

Patent Hawk already piling on

The Patent Hawk (rate for patent consultation: $140/hr) is already heaping scorn [patenthawk.com] on the review.

Patents do pay

From the 1990's, for publicly traded companies only. Mainly due to litigation costs.

For others patents did better:

Mr. Bessen said that besides girding the pharmaceutical industry, the system did seem to work reasonably well for small companies and individual inventors.

I know slashdot editors hate IP as much as they hate nuance, but the headline does not refect this guy's research.

If you can't tell the boundries, it ain't property

That looks like a promising chapter. It the sample it talks about the obvious problems with vague, fuzzy patents. I think one strong possible answer for the software patent problem, is to only allow patents on an exact piece of code. it's like supplying a blueprint. A program that does the same thing as you patent, but doesn't share the same code is not covered by your patent.

Re:If you can't tell the boundries, it ain't prope

This has been invented already.

Its called "copyright".

Don Lancaster has been preaching this for ages

He's always considered patents to be a gigantic ripoff for everyone but patent attorneys. A lot of people dismissed his anti-patent rantings in the early 90s as net.kookery, but it appears he was ahead of his time.

information vs things

google started the trend: information is the most valuable thing in the world. a close second are the people who control and can quickly assess and manage information (as a group) are the second most valuable thing.

No longer are the widgets and doohickeys manufactured in large plants the items of value - and the concomitant world of patents to protect them. Frankly we have way too much stuff already, and mostly the need for more physical stuff is artificially manufactured by ads and more-pompous-than-thou one-upmanship insecurity. It's bags o bits, and bags o water that are the future, my boy.

In short: "Well, duh."

Won't help

Everyone thinks they are special. It's a fundamental human attribute.

How else would you explain the people who play the lottery? Gamble at casinos? Think that out of all the millions of oppressed masses, _they_ are the ones who will live the American dream and become someone?

It makes life more interesting; without that drive there would be little innovation, little hard work and drive, few no obsessively hard workers spending three years of nights in a garage writing software, no interest in going for American Idol... ok, scratch that last one.

In the same way companies, which are only an aggregation of people, will think that they can be the one out of a million who will benefit from patents. Even if you can empirically and theoretically show that they are being taken up the arse by a banana. Human nature. Infuriating, isn't it?

Re:Won't help

How else would you explain the people who play the lottery? Gamble at casinos? Think that out of all the millions of oppressed masses, _they_ are the ones who will live the American dream and become someone?

Um, except... people DO win the lottery, some people do win at a casino and then have the brains to get up and leave, and people who don't have everything they wish they could have aren't "oppressed." People DO live the dream. Not everyone does or is equipped to.

Human nature. Infuriating, isn't it?

Why look at it that way? I'd rather just sit back and be impressed by the people who DO invent a new process or widget that hugely benefits us all when they put it to work, or marvel at the less creative people who none the less have the discipline to just work their asses off and build something of value to improve their circumstances and leave as a legacy to their kids. That plenty of less insightful or lazy people take a sloppy stab at that sort of thing and don't get anywhere with it MAY be like gambling badly in a casino, but it's mostly just less intelligent or worldly people behaving according to their nature and experience (and idle hopes). But human nature, if you can define such a thing at all, has also provided us with refridgeration, anti-biotics, incomprehensibly cool integrated technology widgets that would be considered magic not many decades ago, and so on. It's not infuriating, it's amazing. And if someone thinks they're on to something, and end up patenting something that they don't have the wherewithal to turn into a viable part of their business... well, too bad. Some airlines fly with a lot of empty seats, lots of expensive theatrical productions play to empty theatres, and plenty of great chefs have no-one to cook for because the restaurant's on the wrong side of the street during rush hour.

Re:Won't help

And if someone thinks they're on to something, and end up patenting something that they don't have the wherewithal to turn into a viable part of their business... well, too bad. Some airlines fly with a lot of empty seats, lots of expensive theatrical productions play to empty theatres, and plenty of great chefs have no-one to cook for because the restaurant's on the wrong side of the street during rush hour.

Erm, yeah, but the difference is that those businesses aren't prohibiting competitors (and their customers) from benefitting from their incompetence; businesses who sit on patents are.

How is he determinig profit?

I RTFA, and I still don't know how he counted profits.

1. A percentage of the profits from patented inventions.
2. Licensing the patents.
3. Engaging in a reciprocal arrangement with other companies vis-a-vie patent portfolios.
4. Discouraging small competitors from making non-infringing competing products because of potential legal fees.
5. Using one product to help sell another because of compatibility.

And that doesn't even factor in the fact that many IT patents last, what, 17 years. So it's also a gamble on the future needing that IP.

Wright brothers are another good example

They first flew under barely controllable circumstances Dec 17, 1903, but then spent several years trying to keep it secret, or at least not publicize it, while they made it practical. They used wing warping which physically bent the wings to control roll, and in order to get around this patented idea, Curtis, in 1908 I think, invented ailerons, hinged sections of wing which have been in use ever since. The Wrights spent the next ten years in court over the matter, and it wasn't settled until the US government forced a settlement when it joined WW I. The Wrights never did much at all after the first few years except sue the competition in court. Everyone else made advances in the technology, but not the Wrights, and they later had to merge just to keep the name in business.

A real lesson in the relative merits of innovation to stay at the front of the pack instead of dying in court battles.

hmm...

I'd be curious what percentage of patents were actually researched for this project and how they were selected. I'm not against the theory that patents can hurt more than help, but I find it difficult to believe that they had enough time to properly research a vast amount of patents. Especially trying to narrow it down to financial losses and gains for specific patents.

Contributing factor

Today, a patent can certainly be useless.

Let's say you invent some new physical item, obtain a patent and line up licensing with a manufacturer to produce the product. In the first six months you manage to line up significant interest in large retailers for this product and the money starts flowing in.

Two months later you discover your retailers are deserting you and are buying an identical product made in China. Your revenue ceases because nobody wants your overpriced product when they can buy the cheap knockoff made in China. Unless there are substantial reasons to purchase your original (which there probably aren't), nobody is interested.

You are now looking at your investors that put up the money to get the product manufactured and advertised. They would like the big returns you were promising them and looked like they were going to get. Instead, you are bankrupt and have no friends (they were all investors).

50 years ago US Customs would have blocked the import of a patent-violating product. I don't know when they stopped, but today it is common to find products made in foreign countries that violate US patents and other licensing agreements. Where do you think all those cheap DVD players come from when it is $5 per player for the license? Any player under $100 retail is unlicensed and the Customs folks know it.

Rule 1: If it is a physical product that can be duplicated, it will be.
Rule 2: International trade is a race to the bottom with the lowest cost winning, always.
Rule 3: Patents and copyrights are only as good as the enforcement behind them.

Today, enforcement is a joke. You can sue someone in the US for violating a patent, but if they are violating it from outside the US (say, from China) you can't sue them. China would laugh - they don't enforce US laws. Customs will not block imports. Do you believe you can sue Wal-Mart for selling the product? You can't prevent people from getting cheap stuff - it is almost the 11th item on the Bill of Rights these days.

What this means is that patents are only good as tokens to impress potential buyers of a company with.

So how do you keep something from being duplicated? Have some encrypted software required to operate the device. The R&D effort to duplicate the development would make copying the product too expensive. Sure, they can copy the hardware but without copying the software they have a useless piece of junk. Maybe you can license the software to them, but doing so would be suicide - it turns your company from a hardware vendor into a software supplier.

Patents were never supposed to make money

The purpose of patents were to improve inovation and make the results available to society. Before patents were introduced, people would try to protect their inventions by keeping the details as secret as possible. Patents are supposed to get them to reveal the details by getting a timelimited monopoly in return. Then others can keep inovating by building on top and eventually the inventions will become free for everybody to use. And anybody who sticked with the old habbit of keeping the details secret rather than patenting it would run the risk of somebody else being granted a patent on the intention.

That is how it was supposed to work in the theory.

In reality we see abuse such as companies patenting things they didn't really invent, companies patenting trivialities, and patents that don't include all the details which were the purpose of patents in the first place. If software patents weren't bad enough in itself, it is made even worse by them not containing the full source of a working implementation. If patent applications were really being treated within the original spirit of patents, any software patent application not comming with the full source would be rejected. And of course once the patent is granted, the source is published available for anybody to use as long as they have a licensee for the patent. Once the patent expires, the source can be used essentially the same way you can use BSD licensed source.

Somebody seems to have forgotten why patents were introduced. And some companies seems to want to not only keep, but also extent patents (and copyright as well) because they want to make money from it. If making money is the only reason for keeping those kinds of protections in place, they should be abandoned. But for gods sake, don't make the big mistake of abandoning them only for economical reasons. Rather think the system over again and adjust it to serve its original purpose, even if that means companies will make less money on average.

An argument for doing away with drug patents

Drug companies don't do the basic research that leads to new treatments. Drug companies do research necessary to bring drugs to market. In the past they had agreements that forced university researchers to keep mum if they found adverse side effects of the drug under test. Treatments that don't result in profit for the drug companies aren't researched. Drug companies often make minor changes to a drug just so they can keep it patented for another seventeen years.

Drug companies game the patent system like crazy. We would probably be much better off without drug patents. Research could then be re-directed to non-drug (cheaper) treatments.

Re:An argument for doing away with drug patents

I have always wondered where people get this idea that drug companies dont do research, they just take something from universities, slap a patent on it and sell it. Yes, some of this stuff is based on things that had some basic work done in universities, but guess who funds that research! Yup, evil old big pharma! These university departments get huge sums of money from those nasty drug companies.

Pfizer spent 8 billion dollars on research and development last year.
Merck spent 5 billion.
Novartis spent 5 billion.
And so on, all the big pharma companies have R&D budgets of that size.

So my question then, is if you honestly believe that this R&D isnt producing anything meaningful, where on earth is this money going? You think they are just flushing money down a rathole since according to you they have never actually produced anything meaningful? Really, I want to know, do you seriously believe that all these billions in R&D are just wasted? Do you think that for the past century they have continued blowing all this money, never seen any results from it, and noone ever stopped to say "oh hey where are all those billions going?"

Drug companies may try to game the system some with patents, but its not like they are just sitting there not producing anything of value. There may be some validity to the complaints people have about big pharma, but you lose credibility when you claim that they dont produce anything of value.

Defensive patents

Unfortunately, it's better for you to get a patent for X than it is for you to allow company Y to patent your X and then sue your S off.

Bad math

They only counted the dollar value of having a patent vs. not having it.

They didn't count the value of the leverage of having a large portfolio when used against another company that has a large portfolio.

If a large company unilaterally stopped accumulating patents, pretty soon it would have to start paying everyone, not just the patent-holding companies, royalties on patents it needs to license. As it is, you can just horse-trade your patents and call it even.

Without a systemic fix, large software companies like MS and IBM won't totally abandon patents any time soon.

Measure of innovation

The system is, unfortunately, rigged such that a modern startup needs patents. First, they need to stockpile them against existing companies who would rather litigate than compete. Secondly, they need to be able to measure, in some tangible way, how much "innovation" they've done, for the benefit of investors.

The latter point is critical. The value of a startup should be based on how valuable the products are. A patent is an asset which increases the value of the company, even if it's a loss-maker by itself. It's used as a measure of how much innovative stuff is in your product, even though the only value of the innovation is in the product itself.

I'd like to hear some suggestions as to how we could show the value of innovation without patents. I'm sure there must be a better way.

Maybe some patents are money-makers

on average patents cost companies more than they earned them.

"On Average"? We are all aware of the way software companies will create patent "minefields" to entangle other companies, and I have to think that the word "on average" means that SOME patents are money-makers for companies, but a large number of patents (perhaps the ones they use to entangle competitors) might cost more money than their worth. If that's the case, then the article isn't really an argument against patents per se, but an argument against the patent-frenzy that some companies are involved in. It's an argument against excessive patenting - in contradiction to the title of this post: "Patents Don't Pay".

In other news...

In other news, insurance policies often cost people more than they claim from them. To my mind, patents are just a form of insurance - against other companies, that would otherwise be allowed to compete fairly with the patent holding company.

ch-ch-changes to patent law

I just filed for a patent and the comments here don't reflect the current situation re: software patents. Basically, the Supremes made it a lot harder to get a patent. The intent is to increase the value of good patents, filter out the copycat trash, and reduce litigation overall. A patent is a "teaching". You give up trade secret protection in return for patent protection. It's not code; that's protected by copyright. I think the premise of the NYTimes article is silly. Patents are part of a large IP 'eco-system' and judging the value of patents requires looking at the whole system. From my point of view (small company, great new idea) I think a patent will make my company more valuable in an acquisition. I absolutely have no intent or interest in defending this thing. Leave that to the stable of attorneys in the acquiring company. Thus is is absolutely a good for the small company / entrepreneur to have patent protection in that it motivates me to both innovate and then publish the innovation.

been there, done that

DO

There was a guy once, who had a great idea. Why not make an institution where people will submit their money making ideas, along with their cash. In return, he would guarantee that no two people would use the same idea.

He immediately patented the idea, and started making money of it. Others, however, were not that happy.

Some claimed that his patent was obvious, and that its null and void. Others claimed that it impinges on their own ideas about institutions where people submit their ideas and money. Radical voices insisted that making money out of ideas like this hurts the economy. Reasonable voices claimed that it has been done before.

Eventually, after 5 years, his patent rights expired, and everyone started making institutions who will guarantee that no two people can use the same idea if you pay them. Bitter patent battles raged between the institutions, with regards to who owes what ideas.

Eventually, someone came up with a great idea. Why not make an institution where people will submit their ideas about institutions where people will submit their money making ideas, along with their cash, in exchange for a guarantee that no two institutions will use the same idea.

UNTIL HEAD(explodes)

Justification for longer patent times

Wanna bet that this will in certain circles not be seen as the proof that the patent law is broken, but rather that patent length is not long enough to get a return of investment, and thus it needs to be prolongued, preferably forever?

Drug patents should be outlawed

I'm a big proponent of dismantelling drug patents. Now a bunch of people will cry "Bloody Mary" and claim that the patents are needed to fund additional research for new drugs. Here's a brilliant idea: They aren't!

Here's the alternative:

Rather than drug companies rolling in massive profits (which, might I add, are calculated AFTER R&D expenses), provide grants for drug research. Even better, provide purses for people who come up with cures and treatments. This will still stimulate pharmaceutical research, possibly even moreso than what it already is today. If somebody can see "Hey, I can get this much money for finding something out" as opposed to "I might be able to sell the rights for this much if I find something out," you'll probably get more people engaged in the business because a reduced risk in payout. As a side-effect, finding a cure for AIDS will probably also result in a team winning countless awards, medals, titles, et. al, which would also result in fame and, get this: more money.

Lowering the Average

I wonder how the average profitability of actual patents would rise if the patent rolls were purged of all those that are created and maintained for solely "defensive" registration.

Patents that are never used to stop an infringer, but rather to protect the registrant's use of the invention. If those patents were instead published into the public domain, they would have exactly the same defensive value. But publishing them into the public domain would cost very little compared to patenting them.

The rest of the patents would have their costs deducted from their greater value in stopping infringement. Those might actually look profitable.

While that analysis might not seem good for the invention industry choked by patents, it could actually turn patenting into a much rarer case. If most patents are in fact used solely to protect an invention from being stopped on "infringement" grounds, then most inventions would just be in the public domain, not patented.

Then the rest of the patents, and their system, could actually be reformed as a much smaller process. Make them expire once 10x their investment cost (stated at registration) is recouped, or after 5-15 years (depending on the invention). Require working models of all patents again, and prohibit patenting anything but a photo/electro/mechanical device. Software and math can be only copyrighted, business processes have no protection whatsoever. If there are so many fewer patents, stopping some of their types that are unworkable will be more manageable.

Then the rest that are left can actually be patented for the promotion of science and the useful arts.

How do they figure out what a patent is worth?

It sounds like they were looking at how much patents made in licensing or in lawsuits. But what about patents that are neither licensed out nor lead to a lawsuit? The third way to make money off a patent is to be the exclusive provider of whatever is covered by the patent.

China

You can't stop China (the US won't even try since they own our debt) so there is no real value to patents anymore.

That's it, the end. Make a product, China will rip it off and sell it for 1/2 the price. Make a web/software product and they will copy it. I've had one of my websites mirrored entirely, tweaked, and put up in China (for an open source product, so I don't know WTF the point was).

Patents would have some value if they were enforced, but they are not. Add to that the fact that less then 1% of patents are in any way valid to start, and the system is just silly. They do let large companies intimidate small companies, and easily put them out of business with lawyer costs, so the system lives on.

Very true - here's my China/patent story.

Watching that happen to the company I used to work for. It's a really funny thing to watch. I'll tell the story without too much detail to avoid any hot water that might land myself in.

My former company - they make a widget. A specialized consumer widget. Other companies make similar widgets. They all began a patent war.

Widget for my former company has feature A and feature B. Other company patents the idea of combining features A and B in the widget. Company now has to make two widgets, one that does A and one that does B, even though the functions are complimentary and easily related. Obvious. And so on, and so on, and so on. The company would pay you if you had a patent idea there, so they would have something new to beat each other up with. Situation continues for years, with these small companies carving up the widget patent space so tightly it becomes a maze of legal decisions to simply make a non-infringing widget. Two main players emerged, my former company and one other.

Then, super-huge conglomerate X shows up in this widget space, and buys both major companies in the battle, as well as a couple of the small ones. Anyone see the punch line yet?

They didn't care about the companies - they wanted their patent libraries to lock out competition. Soon as they shored up their position in the market, they dismissed the engineering staff for all the companies but one - and outsourced the widget to China. And now that widget's market is locked up. There are no entry level players in this widget market anymore. Just megacompany X, and their single Chinese knockoff.

Sometimes everyone loses a patent war.

Patents

A lot of patents won't make a company that much money by themselves (i.e. through licensing and lawsuits). But they give companies leverage with which to push around other companies - the result being that there's diminished competition in that area. So they won't be losing as many potential sales of their product to other competitors.

Premise is Dead Wrong

I've only worked for small companies and every single one of them (six?) have been dragged through courts on patent/trademark issues. Usually both. Usually from the leader of the industry.

I also suspect he can't possibly quantify the amount of money submarine patent owners are making. After all they are taking on the biggest of the big companies in the U.S. The money to lawyer-up doesn't just appear.

So, it does pay. It puts small companies at a perpetual disadvantage. Considering the author's publisher, it will probably get way more consideration than it should.

I didn't bother reading TFA, so mod me down if it doesn't matter.

It's all coming to an end

There's been detente between the big guys for ages -- you nuke my product line, I'll nuke your product line, so lets do neither.

The problem is Intellectual Ventures. They have no products. They just have patents. They can nuke, but they cannot be nuked. This model is spreading...honestly, just like nukes themselves.

The detente is over. It's just a question of what now.

The Patent System is screwed, but is never going..

away, so, the question is what to do about it NOW.

Whoever says patents were never intended to make money has obviously never run a business. The profit margin on a States sponsored monopoly is whatever the market will bear, not what your competition, (Who didn't endure the original R&D expense) feels like giving it away for. Of course you are going to make money with a patent, if you can keep everyone else off your backs! The only way that will ever happen is if the patent laws are indeed enforced, including by Customs at the boarder. (And I'd like to see sanctions against countries who continuously violate this {Ehhoumf CHINA! Ehhoumf}

As far as pharma patents? Screw them. Now don't get me wrong, I appreciate the billions that go into Pharma research, What I do not appreciate is the lies that come out of that research. (because not only do they own the R&D industry, they own the FDA and the better part of the medical profession also!) Nor do I appreciate that they will take a drug that makes them money (And has made them ALL of their R&D money back.) make one non-functional or trivial difference to it, and re-patent it, and start pushing it as the only drug for a MD to prescribe, at full price! Heaven (And the malpractice insurance company) help an MD that doesn't prescribe this new and "Improved" drug and something goes wrong from one of the "minor" side effects.

At the same time, a great number of software patents are ridiculous. I remember being taught years ago in Engineering school, that if an idea was so simple and obvious that any engineer would take that or a similar approach, the idea was not patentable! That standard alone would toss some large number of software patents out the window. Like one-click-shopping. If that's not an obvious idea, I don't know what is!

What we need there is some people in the patent office who REALLY understand what they are doing, and really understand the market to be able to make some rational decisions on what constitutes a real in ovation, or what is just profiteering at the expense of the community.

While I'm at it, their ought to be a "Quick Arbitration" initial step for patents where, rather than giga-buck liars (Um, Lawyers) who spend years hashing something out, and cost everyone involved the entire GDP of 10% of the worlds countries, the actual inventors (or CTO's If you don't understand your own tech, you shouldn't be able to use it!) sit down with a board of experts in the field for an afternoon, and hash it out. If they can't come to a real conclusion, then it goes to the courts. This will keep a lot of smaller companies from rolling on their backs and peeing on them self when some gorilla starts screaming "Patent Infringement" even when the small company is in the right, simply because they cant afford the first round of expenses, forget a real legal battle.

Patents were supposed protect inventors and their hard work. The system has turned it into a game of lawyers and cheap overseas manufacturing, not protecting the weak and right, but whoever can bring the biggest guns to the table, or who can afford to not show up at all.

Just my first .02...

Burglar Alarms also "lose" money.

The fundamental flaw here is assuming that the benefits of holding a patent are easily measured.

Patents are sought as much to prevent copying and defensively to ensure your right to sell your product as to seek royalties from others. Any real evaluation would have to guestimate those values, and it would be very inexact.

In my crude estimation, many or most companies overinvest in patent protection versus other forms of protection such as pre-emptive public disclosure. But even looking at a single invention it is hard to determine the probable value of each form of protection. The fact that these determinations are frequently made by patent lawyers may slightly bias this process.

But those are all complex micro-economic tradeoffs. They are really irrelevant to public policy discussions. If many homeowners overspend on home alarm systems it certainly would not mean that we should legalize home invasions.

The case for patent reform is when it blocks usage of valid algorithms that were so obvious that they should not have belonged to anyone. The degree to which a patent holder can force their competitors to re-invent the obvious is actually one of the unmeasured "benefits' of holding a patent that they forgot to measure. Of course that just shows that what needs to be measured here is a lot more complex than was done. It's the macro-benefit of encouraging R&D spending that is the promised benefit of a patent system. The arbitrary nature of what can obtain a patent is the biggest drain on that potential. That calls for reform, not abolishment.

patents

I am currently in the process of patenting a simple invention. I am doing this because the device is so extremely simple, someone would be able to figure it out just by looking at it. I am worried that someone else will see, and patent it. Then i would be unable to use my own idea without having to pay someone else, who stole my own idea. I would love to not waste the time any money involved in the whole patent process. is there any way to get around the whole patent process completely, and not have to risk someone stealing your thunder?

Patents *do* pay: lawfirms

Imagine the kind of money these lawfirms must be making. By the time it's said and done the lawfirms get about half the settlement. And these IT patent lawsuits are often in the hundreds of millions, if not billions.

The growth of the number of lawers in the USA is explosive, and for good reason. You don't want all those new lawyers to have nothing to do, now do you?

Article: Inividual patents are still good

This article is saying that being a big company with an R&D department designed to churn-out patents isn't worth it because the litigation costs more than the patents bring you.

The article is not saying that patents in general, or even software patents, aren't worth it. It only looks at aggregate statistics for the entire market. So if you are a developer or engineer who creates something new and unique and wants to patent it to protect yourself, go and do it. Nothing in this article is saying you should not.

Patents = bad

Patents clearly are "good" for monopolies, and bad for consumers, postponing many technologies from reaching society until the expiration of the patent and preventing new ideas based on those patents from being created, slowing the overall advancement of new ideas. If some kind of compensation is to be given to an inventor other than the advantages that already exist, the idea must be shared with society and the time should be shortened or the current system completely changed.

patents aren't for companies

They're for individual inventors so that they can innovate.
Goliath companies have much more resources and can clone the ideas if you guys get your way.