Blocking innovation and research

Software patents block innovation and research. This is in addition to the decades of proof that software progress happens without patents.

Analyses

This has been summed up by Lord Justice Jacob in the 2006 UK ruling Aerotel v. Telco:^{[reference needed]}

The patent system is there to provide a research and investment incentive but it has a price. That price (what economists call “transaction costs”) is paid in a host of ways: the costs of patenting, the impediment to competition, the compliance cost of ensuring non-infringement, the cost of uncertainty, litigation costs and so on. There is, so far as we know, no really hard empirical data showing that the liberalisation of what is patentable in the USA has resulted in a greater rate of innovation or investment in the excluded categories. Innovation in computer programs, for instance, proceeded at an immense speed for years before anyone thought of granting patents for them as such. There is evidence, in the shape of the mass of US litigation about the excluded categories, that they have produced much uncertainty. If the encouragement of patenting and of patent litigation as industries in themselves were a purpose of the patent system, then the case for construing the categories narrowly (and indeed for removing them) is made out. But not otherwise.

Studies

Main article: Studies on economics and innovation

• An Empirical Look at Software Patents:^{[reference needed]}

We find evidence that software patents substitute for R&D at the firm level; they are associated with lower R&D intensity [...]

• The EuroLinux petition: 400,000 signatures against the harm of software patents to innovation and competition.

Examples

When explaining why Google was not supporting the patent-free Ogg Theora codec, Chris DiBona replied:

[...] here's the challenge: Can Theora move forward without infringing on the other video compression patents?

Most software innovation happens through leap-frogging: company A comes up with an idea, company B replicates it with extra features or improvements, company A improves it further. This process is in the interests of innovation and in the interests of the consumer. It expands the market, and very often both A and B benefit from it. Patenting can only slow this process down, to the detriment of the consumer, the market, and the companies who supply that market.^{[reference needed]}

Very often the first company with an idea doesn't get it quite right, or fails to realise its true potential. Their product fails because they execute it badly or market it badly. Another company then builds on the idea and succeeds where the first company failed. For example, the Wang object technology patents, acquired by Kodak after Wang failed, versus Sun Should the patent system reward failure?^{[reference needed]}

See also

• More than innovation
• Software progress happens without patents

External links

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• How Patent Trolls Are A Tax On Innovation, by venture capitalist Fred Wilson
• Markets Are Better Than Patents in Promoting Intellectual Discovery, Says Caltech-led Team of Economists
• Telling the Truth About Software Patents and Innovation, by Andy Updegrove
• The Most Important Software Innovations, by David Wheeler
• Intellectual Property Regime Stifles Science and Innovation, Nobel Laureates Say
• "Effects of Software Patents on Free/Open Source/User Innovation", slides / video (works with Gnash)
• Do Patents Slow Down Innovation?, by venture capitalist Brad Feld
• Yet Another Study Finds Patents Do Not Encourage Innovation, 2 Jul 2009, blog.mises.org