Monday, June 07, 2004

The World of Patents

I'm no lawyer, and therefore no expert on how the patent world works. But while patents have their place in this world, I become increasingly disappointed in how companies (or individuals) seem to want to abuse them. Patents promote innovation from the standpoint that inventors and researchers can be ensured that the work they put into research somehow does have a positive return on investment. Without a positive ROI, one's life can become unsustainable pretty quickly; after all, we still are living in a world that revolves around economics. However, patents can also stifle innovation. After talking about this with Victor (a good engineer friend), it's only fitting that I see more news along these lines.

The problem that I see with the US can be summed up by Craig Barrett in this article, in answer to this question:
You travel the globe a lot. How do you think the United States ranks versus the rest of the world in terms of technology adoption?
The U.S. has a whole series of complacencies about it. It is complacent on its economic development platform. It is complacent on its infrastructure platform. It is complacent on the whole issue of promoting research and development. So you go down the list--education, infrastructure, research and development--and the U.S. is basically complacent.
It is very difficult to go to Washington, D.C., and discuss those three aspects of competitiveness (education, infrastructure, and R&D) with anybody.
In fact, we have been having this great argument in the press about offshoring, or offshore outsourcing. The press in general, the politicians in general, have not picked up the issue that you need to be competitive. The fact is that the U.S. is pulling further behind from an infrastructure standpoint and the dismal aspect of the U.S. education system. It is very difficult to go to Washington, D.C., and discuss those three aspects of competitiveness with anybody.
I see this kind of mindset over and over again in my neighbour to the south, as well as in my own country of residence... Why?

We're on top of the world, and we shouldn't have to do any work to stay there!

Perhaps this kind of mindset can be epitomized by the automotive battles that started when Japan first started exporting to the US. Gas prices shot through the roof, and all of a sudden, Americans were snapping up Japanese cars left, right, and centre for their superior fuel economy. Finally, the American and Japanese governments negotiated a voluntary import quota that limited the number of Japanese cars imported to the US over five years (this would theoretically give the American manufacturers "catch up" in terms of creating quality fuel-efficient vehicles). The Americans felt that they were too sacred to be attacked economically, and weren't willing to compete. Well, guess what. If you need rules stacked in your favour in order to win, it won't matter: any skilled competitor would be able to still adapt to your new rules and beat you at your own game. Following is an excerpt taken from a speech delivered by Milton Friedman:
Or take a more recent example. One of the few economic mistakes President Reagan made was to approve of the so-called voluntary import quota on Japanese cars, under pressure from the big three American manufacturers. Who benefited from that? The Japanese industry. We enforced the cartel for them. They were able to get higher prices than they otherwise could. They were able to accumulate capital than they otherwise would. In the long run, the automobile industry had to meet the competition from Japan. They would have been better off if they had stuck to their earlier free market guns, because when the automobile industry was predominately an export industry, it was among the strongest supporters of free trade. However, where people stand depends on where they sit. And when they became subject to import competition, they changed their position and came out in favor of protection.
Why are people scared to compete? Scared to skate? It's like using the trap in the playoffs instead of open end-to-end hockey. For corporations, perhaps it's the pressure of shareholders that demand minimal risk investments. But that's another debate altogether. Back to patents.

How this all relates to patents is my personal disdain for corporations that patent stupidly obvious or common things for the purpose of trying to gain a stranglehold on the market. Let's look at the most recent example:
The U.S. Patent and Trademark Office on April 27 granted a patent for a "time based hardware button for application launch" in which a click of a button can start different programs if it is clicked once, twice or held down for several seconds.
That's a process familiar to countless computer users who have double-clicked their way through Microsoft's Windows operating system, as well as anyone who's tried to set the time on a digital watch.
Mouse-wielding computer users need not worry, as the patent only applies to handheld computers which run Microsoft's PocketPC software--specifically the method of bringing up different features depending on how many times a button is pressed.
... Yes, that must take the cake as innovative patent of the year!
But the application highlights shortcomings in the Patent and Trademark Office, where examiners short on time and resources are hard-pressed to root out earlier examples of similar technology, said San Francisco patent consultant Gregory Aharonian.
"Unless the examiner had a patent or journal article in front of them, it's going to be hard" to reject the application, he said. "The examiners need the pieces of paper. They're like the IRS."
The Federal Trade Commission last year said the patent office should not grant patents so readily, as those granted for obvious concepts, such as one granted in 1895 for putting a gasoline engine in a car, can impede progress by preventing competitors from improving on them.
No kidding! But is Aharonian saying that the PTO still has absolutely no process for analyzing the validity of patent applications? Puleeze... Processes to challenge patents are cool, but it'd be nice if there was a way to decrease the amount of garbage getting approved in the first place. As we say in the database world, garbage in, garbage out, you know?

But the sickest part isn't when patents get granted. It's when firms use these atrocious patents to get what I would say is undeserved revenue through lawsuits. I would claim that Rambus would be one such case, though rulings would state otherwise. Whether or not the various memory manufacturers knew about the plans of Rambus doesn't in my mind justify the litigation strategy of Rambus, mainly because Rambus used this whole litigation thing as a crutch to compensate for a lack of product offerings that would actually sell. Note that Intel did well to drop Rambus technology when it did.

The current poster boy for such a strategy must be SCO. I'm sorry, but does this company actually DO anything? Seems that they're hoping for all of their income to come from licenses or lawsuits. Now, it's fine for IP companies to exist, but I would hope that any company that bases its strategy solely on intellectual property would do some actual research and innovation of its own, not buy its intellectual property from another company (which Novell says did not actually happen, as SCO is saying; this one's yet to be decided in courts). OK, fine, they seem to sell Unix solutions and some other stuff. I find it funny that if you click on the company profile link in the Investor Relations section of their site, you'll get redirected to Microsoft's website. Just found that out now as I was trying to see what SCO actually did; it's an error in their HTML. :D Maybe somebody should tell them, hehe. Or conspiracy theorists can start theorizing. ;)

Final note, Sony did the wrong thing to give in to this guy. This is stupid. Now he's considering going after Apple because their iPod would infringe on his patent (which is probably expired by now?). There are a lot of ideas that I came up with before but was never able to see through to success. However, I've watched other companies succeed with these ideas (how they were able to read my mind, I don't know!). So this one's tricky. If I had filed for patents on my ideas, should companies be required to pay me licensing fees, even if I was never able to make my own ideas successful? Hmm... please excuse me while I go patent methods for mining minerals from the core of Mars. I'm sure they'll come in handy someday, hopefully within the next twenty years or so before my patents expire. I'll need to find some engineers and geologists to help me; hey, we could all be co-authors and co-owners of the patents!

When patents, tariffs, and the like are used to gain strangleholds so that we can become lazy and let the dough roll in, I think we have a severe problem for the long-term. How are we going to be able to compete once the rules in our favour become circumvented if we can't compete on a level playing field in the first place? People who advocate for any kind of protectionist measures are used to protect the status quo in defiance of changing environments, will end up committing business suicide, as Friedman would say. Unions, politicians, and industry bodies, please take note. Changing environments in which you operate can make your policies irrelevant and self-destructive.

Let's go back up and see what Barrett had to say. Grr. It all goes back to the quality of the education system, doesn't it?

No comments:

Post a Comment