Linked by Dmitrij D. Czarkoff on Fri 31st Aug 2007 08:54 UTC
Editorial This article is an answer to "Competition Is Not Good" by Kroc and reading it wouldn't be comfortable without switching to and from the original article. I wrote it just because I do strongly disagree with Kroc and I believe I can prove that he is not as close to truth as it may seem from the first glance.
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RE
by butters on Fri 31st Aug 2007 19:04 UTC in reply to "RE"
butters
Member since:
2005-07-08

If the patenting system did not exist, the inventor would have much less of a reason to develop this process

This is where I start having problems with the patent system in its current form. The inventor didn't stay up nights honing his nitrogen-treating process because he figured that it would be a 30-year windwall for his company. He did it because he realized that nitrogen treating would make the alloy better (or whatever it does, not a metallurgist), and therefore more likely to succeed in the market.

I find it hard to believe that, in the absence of a patent system, the inventor would have thought briefly about nitrogen treatment before deciding it wasn't worth the effort. He probably would have been motivated to bring superior alloys to the market before his competitors discovered the new method.

In a competitive market, timing is everything. The value of a technology is much higher for the company that brings it to market first. There's brand association with the technology, and even in the absence of a patent system, it would take a significant period of time (years for non-trivial technologies) for competitors to bring it to market.

Meanwhile, back in patent land, the metallurgy firm has no motivation to refine its nitrogen process or invent new processes because they are already a generation ahead of the competition. The 30-year limited monopoly also implies a 30-year limited stagnancy. The patent holder will milk the patent for all it's worth while no one in the market is innovating in this technological space.

We live in a dog-eat-dog world of vicious competition and rapid innovation. You either innovate or get run over by your competition. Competitors should be driven to innovate out of necessity. The patent system in its current form only serves to slow down this process. It artificially inflates the value and lifetime of an innovation. It ignores the obvious reality that innovations build on one another.

I'm not in favor of eliminating the patent system. My primary recommendation for fixing it is to establish a new method for determining the duration of patent protection. Once a patent is granted, a panel of at least three examiners skilled in the field will each recommend a duration based on how long it would likely take for the invention to become an expected characteristic of competing products in the market. The average (possibly dropping the extremes) becomes the duration of the patent.

In the case of most software patents, the duration would fall in the 1-5 year range. For an industrial process, maybe 10-15 years. In today's competitive landscape, it is tough to imagine a patentable invention that is deserving of a monopoly in excess of 15 years. That's a long time to milk a single innovation.

No one would have had a problem with the one-click shopping patent if the patent office decided that customers would expect such a simple online shopping experience within two years. Sure, give Amazon a two-year head start for their effort. Maybe they can get a 5-year patent on the technology behind their distributed clustering storage system. Much more reasonable.

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