Early in my career, I had the opportunity to work in cardiovascular research and development. Among the many projects I worked on, one was a coronary-artery bypass graft for situations when an individual's primary coronary arteries would become occluded, or plugged, with plaque. This is called vascular occlusion, and will kill you if not caught early.
Here are two examples from last week alone:
First: The United States House of Representatives passed the Leahy-Smith America Invents Act, now in front of the Senate and headed quickly to the willing signature of the President. For those of you not monitoring it, the Act changes the current patent approval system from 'first to invent' to 'first to file'
What does this mean and why is it important? Ok, lets say that there are ten people in the United States thinking about an idea at any given point in time (which is a low number in my experience). Now these ten people spend between $5000 and $10000 each to file a patent application for their idea. If you are a big company, this is a small number, but if you are a new struggling startup, this is a significant investment.
So far so good, right? The patent office will investigate these similar applications and determine which has the most merit, and which do not. Well, not exactly. The patent office used to award patents based on the patent application that reflected the invention of this technology, not just the conceptualization. You may sit in 'pending' mode for years while you shipped technology that exploited your applied concept, but at least that would be considered superior to someone who merely thought up a similar or overlapping idea and then did nothing with it whatsoever.
That is about to change with the aforementioned and completely misnamed America Invents Act. Now, whomever gets there first with a patent application gets the patent. This is great for patent factories with thousands of researchers like IBM, Microsoft, General Electric and DuPont that have tens of thousands of patents on the books, because it creates a gigantic mine field for any startup wishing to innovate. You can't move into the technology field in any strong way without falling afoul of one of the leviathan technology companies and their extensive patent portfolios.
The argument from these firms is that they only use the patents 'defensively', which is translated as 'when some company comes after us for infringing on their patents, we will whip out our book of patents and point at the ones that the ones they are violating, and we'll come to a cross-licensing agreement'. This reinforces this leviathan oligarchy, but it still precludes innovation from smaller firms. You can't go a day in the technology news without seeing a big firm suing a small hot startup for stepping on this or that patent.
'Defensive' my ass. It's called 'killing any potential competition in the cradle'. It is the occlusion in the innovation artery and it's causing innovation to die in this country due to lack of bloodflow.
At least this wholesale patent system sellout to the graying technology companies came at a good price. The leadership in Congress received an average of over $1.5M EACH from the companies supporting this legislation, like IBM, Microsoft, Dupont and GE, and the companies also received 100% 'AYE' votes for their (on average) $500,000 paid per Representative. Coin-operated democracy at it's finest.
Second data point last week:
Patents are a big deal, and the old-boy club isn't accepting new members. Case in point: Apple, Sony, Research in Motion, EMC, Ericsson and Microsoft (again) collectively bid $4.5 Billion for the winning offer for 6000+ patents owned by the now-defunct Nortel, topping a $900M bid from Google. Google doesn't have many patents compared to these other giants (Microsoft has over 3100 patents alone, while Google has less than 1000). This shows the power of this patent monopoly, and the strange bedfellows the patent patricians are willing to go to in order to exclude the patent plebians.
I'd almost be willing to chalk this up to the capitalist system and just wait for the market to patiently work this poison out of it's system, but these large companies have now begun cauterizing these arteries of innovation instead of just monopolizing them with patents to their own financial ends. What we are seeing more and more are these large companies throwing whole portions of their business under the proverbial bus in order to appease demanding shareholders in this down economy. Just look at what my once-employer Cisco is doing in their collaboration business: divesting of large swaths of product and market and refocusing on their core competencies. Were I still a shareholder, I may view this positively. As an innovator, I see that they purchased up a number of companies in collaboration, staked out a bunch of the landscape, patent protected all of it, and then just walked away. They closed-off this market to new innovation, as you'd be walking into the minefield of their patent portfolio. They effectively cauterized that artery. No innovation can happen there unless it is small scale, because as soon as it gets traction, someone will say 'hey, we have a patent on that' and go shake down the startup to either cease and desist operations or pay exhorbitant fees to the patent holder for a license.
Innovation is the lifeblood of this country's economy, as it is in many others. Anything that slows it down or impedes it's progress is working at cross purposes with any possible economic recovery. I am disgusted with our Congress for passing this travesty of an Act, and at the techno-patricians for having paid for it. They are not just stagnating internally, they are inflicting this stagnation on the entire system by their manipulation of the patent system. If this system had existed when Microsoft, Google, IBM and Apple were starting, they would have never have grown into what they are today. They would have been smothered in the cradle.
And now they are stacking the deck to fortify their hegemony by closing off the arteries of innovation to new companies.