The Patent Problem

Patents have become a difficult thing. Their original purpose was to encourage innovation by causing design ideas to be published rather than being kept secret. Unfortunately, they don’t serve that purpose in a fast moving industry. They do the opposite. They actually discourage innovation in an areas with heavy or critical patent coverage. In a fast moving, high value industry, by the time the IP in the patent becomes cost effective to incorporate, either because the patent has expired or the patent holder has become willing to license at a reasonable price, the window of opportunity has usually closed. Bright people move on to other areas with greater freedom to act rather than make the incremental contributions that might help all of us. Frankly, it’s a mess right now and an inhibitor to innovation and overall economic progress.

One possible solution to this might be to come up with an adaptive patent lifetime calculation. You might be able to do this by first, defining an industry by the products produced by that industry then annually calculating the average time on the market plus average product development time for that industry. A patent’s life could be some percentage of this, say 20% for lack of a better number. There would be the usual maneuvering, sandbagging and hedging, of course, and you have the “new industry” problem when there is no reference. These are likely tractable problems. In any case, this might help the patent system extract itself from the 1800s when the pace of things was rather different. It’s ironic that the original life of a patent in the U.S. was 14 years, which is still a long time for some industries, but probably closer to where it needs to be.

From a system perspective, patent life introduces a very long delay into an industry. An interesting area of research might be if and how this creates business cycles for different industries. Old industries with periodic bursts of innovation might be one place to look. There’s also that problem that participants in an industry with closely held IP may be shooting themselves in the foot since for some industries as innovation wains so does market adoption.