Patent Proliferation: Innovation or Overindulgence?

Posted on 02-24-2017 by
Tags: innovation , patent trolls , intellectual property , patent

Seat 1000 Americans in an auditorium: How many patents do they equal?

(It’s not a trick question)

The answer: 9.3 patents ... that is, counting over a 38 year period. 

Ted C. Jones, Ph.D recently blogged about these numbers for Stewart Title Guaranty Company. In his blog, Another Top-10 List — Most Patents 1977-2015, Jones reports that the U.S., from 1977-2015, literally conquered the patent world. Over this period, the U.S. ranked #1 for patents issued per 1000 people. And in terms of total patents, the U.S. (3,030,080 patents) outdistanced #2 Japan (1,069,394 patents) by nearly 3-to-1.

Is Innovation a Big Numbers Game?

Jones highlights “innovation” as an indicator of potential future economic growth.

But what is innovation?

Jones defines one measurement: 

A measure of innovation is the number of patents registered.

I agree with Jones.

But some don’t think so.

Patent Surplus: Does It Create A Sloppy Patent System?

Financial executive Robert Pozen once had this to say about the U.S. patent system:

The quality of American patents has been deteriorating for years; they are increasingly issued for products and processes that are not truly innovative ....

Some agree with this deterioration, pointing to the vast increase in patents and the associated time/costs. Patent Progress illustrated these concerns with the smartphone. Estimating 250,000 active U.S. smartphone patents and assuming an average of 20 patent claims each:

Researchers calculated that it would take roughly 2,000,000 patent attorneys working full-time to compare every software-producing firm’s products with every software patent issued in a given year.

The need (or lack thereof) for patent protection is another argument against the patent system. Judge Richard A. Posner, writing for the Atlantic, once said:

[T]he need for patent protection in order to provide incentives for innovation varies greatly across industries.

Excluding pharmaceuticals, Posner argued that many industries don’t need patent protection because:

  • invention costs are low;
  • first inventors gain  a competitive advantage; and
  • many products are soon superseded, eliminating the need for a patent monopoly.

Too Many Patents: Is The Clutter Killing Us?

Despite Posner’s argument, I agree with Ted C. Jones and his definition of innovation:

A measure of innovation is the number of patents registered.

In attacking high registration numbers, some argue that too many patents result in too many lawsuits. But according to Lex Machina, as reported by IP Watchdog, patent infringement suits dropped 22% in 2016.

And remember those smartphone stats from earlier? Real Clear Markets, looking at smartphones, noted that:

Smart phone wars involved 125 cases at their peak; paltry compared to the 800 involving the light bulb.

The Patent System: 240 Years In The Making

Is the patent system perfect? Of course not. But I’d rather have too many patents than not enough. Two-hundred forty years ago, we didn’t have enough, and it resulted in espionage instead of innovation. According to biographer Ron Chernow, Alexander Hamilton, along with Tench Coxe, worked to steal British industrial secrets and defied English law in doing so. In his book Alexander Hamilton, Chernow wrote:

Right before joining the Treasury, he [Coxe] posted a man ... to England to snoop around factories and surreptitiously make models of textile machinery.

In the early years of our Republic, innovation sometimes meant snooping ... it meant stealing instead of creating. Two centuries later, we no longer have to snoop because the U.S. leads the world in patents ... in innovation.  

Americans are boiling over with ideas, some great, some good, some bad. They may not all be earth-shattering ideas, but I’m glad the Patent Office is has plenty to choose from. As Dilbert-creator Scott Adams once said:

Great minds don't think alike. If they did, the Patent Office would only have about 50 inventions.

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