On Patents

Posted Tuesday, July 6 2010 by jonathan

It's an inflationary simile but I've taken to saying that patents are like nuclear fission. In a corporate or startup scenario you get some very smart people working on solving a problem for a while, then you create this fascinatingly ephemeral thing, and suddenly the cat's out of the bag and your creation is valuable enough for people to fight over. You'll have no idea where it may end up or who will use it against whom.

I've got patents on the brain: I just finished authoring one for my latest startup, one I authored at Higher Function is under examination, and the US Supreme Court just issued their ruling on Bilski [PDF], probably the only case on the fundamentals of Patentability that they'll hear for a decade.

I think of a patentable invention this way: A novel means of accomplishing a specific transformation in the world. Maybe it's barbed wire -- a means of transforming steel into a hundred acres of fenced pasture. Maybe it's one-click -- a means of reducing the friction between selecting a product and finalizing a commercial transaction on a web site.

Whatever the details, you, the inventor, spend time and energy figuring out how to accomplish some new way of transforming the world. It may be obvious in hindsight, it may even have been obvious IN THEORY before you did it. But by actually doing it you have moved the world forward in some tangible and (ostensibly) beneficial way.

The US federal government recognized that once you've let the cat out of the bag it is often very easy for others to duplicate what you've done. That leaves the first mover at a huge disadvantage economically (something anyone who has worked in most any aspect of business innovation can relate to, I'm sure). So they created a system and method wherein the government may grant "ownership" over certain creative works, Copyright, and inventions, Patent. The goal of a Patent is to reward those who speculatively create improvements to the human condition by conjuring "property" from thin air -- a government-granted limited monopoly on a means of transforming the world. That's a big responsibility and certainly one that is bound to suffer the ebbs and flows of opinion on what is patentable, line we draw in thin air.

Patents give, and patents take away. For every tech startup that spends a precious 10% of their angel round patenting the heart and soul of their business there are a hundred Fortune 1000s with ranks of Intellectual Property lawyers writing up everything their engineers reduce to practice, whether they intend to commercialize it or not. For every emerging business that buys a 3 month head start on the incumbents with their IP, there is one being sued for infringing on the status quo. And, to be fair, there are big companies that spend millions of dollars in R&D only to see a small, nimble business team run with the technology and beat them in the market.

Is there a take-home message here? Be careful what you do, because a government-granted monopoly is a powerful thing. With enough money and legal footwork the courts can be made to do your bidding; but it's the kind of mutually assured destruction that more often than not puts you at an impasse. And remember that if you can prevent others from doing what you do they can surely return the compliment.

Your Thoughts?