iPatent, you Pay
By: Paulius Kosmarciukas and Christina Rencis.
Technological advances have propelled the human race forward for as long as anyone can remember, from the invention of the wheel to the release of the iPhone 5. But some of the biggest contributors to software and technological innovation for the past decade are taking a different approach. For the first time ever, companies like Apple and Google are spending less money on research and development than on intellectual property right protection.
Edith Ramirez, the Federal Trade Commission officer, warns that patents halt growth and “can deter innovation by increasing cost and uncertainty for other industry participants, including other patent holders.” The innovation engine has slowed down significantly with as much as $20 billion spent on patent litigation in the smartphone industry alone over the past two years. Legal warfare is becoming the new name of the game, leaving the consumer to pick up the tab.
Patents weren’t always thought of as a weapon for legal battle, but as a way to protect one’s self from copycats. Intellectual property rights were first introduced in 17th Century Britain. The enactment of these laws are thought to be a major catalyst of the industrial revolution. Thomas Jefferson used these same principles to set up similar laws in the U.S. during his presidency.
Today the innovation landscape looks much different. Now, even if a competitor is the first to bring a physical prototype to the market, they can be taken to court by the one who was “first to file,” which slows down innovation in the legal system. For instance, if you found a way to move information faster than the speed of light through the fifth dimension you would violate patent number 6,025,810.
Clearly, there are inefficiencies in the current patent system. Industry-specific regulation for protecting intellectual property is paramount. To research and develop a life-saving drug takes years of effort and large sums of investment, while to make copies of it would cost significantly less. Long-term patents are essential to recovering invested resources during development. On the other hand, creating a “slide to unlock” feature on a cell phone requires a lot of investment but the costs can be recovered much quicker due to a different nature of the fast-moving pace of the technology industry.
Patents are the candy that the mega-corporations don’t like sharing with others. However, collaboration is often a true source of novel ideas and discoveries. Perhaps the current patent system could model itself after the Creative Commons License, offering custom intellectual property protection of anyone who is a part of the collective pool of inventors.
Intellectual property protection is meant to nurture the entrepreneurial spirit of innovation, not stifle it. Patents have the potential to act as creative catalysts in creating an environment that embraces future inventions rather than pose as litigious obstacles. The opportunities to modern prosperity are realized because of the creation and growth of companies that shape our society.
It’s important to learn from the past in building a successful future and we must restructure the current model of the patent system that is more industry-specific.
For more see:
Duhigg, Charles and Steve Lohr “The Patent, Used as a Sword.” New York Times, October 7, 2012.
Posner, Richard. “Do patent and copyright law restrict competition and creativity excessively?” The Becker-Posner Blog, September 30, 2012.
Parnell, Brid-Aine. “Are we in the middle of a PATENT BUBBLE?” The Register, November 4, 2011.
Hariharan, Venkatesh. “Is IP another bubble about to burst? A view from another civilization.” opensource.com, Dec 16, 2009.
Lohr, Steve. “Widening Scrutiny of Google’s Smartphone Patents.” The New York Times, October 9, 2012.
Discussion (1) | October 14th, 2012 Categories: Government Policy, Institutions
Overprotective Patent Grabbers
By: Andrew Smith.
Edited by: Michael Kopelman.
Technology changes rapidly and so has the application of patent laws that govern technological inventions. When Congress passed the America Invents Act in 2011, it codified the attitude that people and corporations no longer invent products, but rather ideas. In a New York Times article from earlier this week, Charles Duhigg and Steve Lohr discussed how American patent laws have shifted from protecting the designs from “First to invent” to protecting “First to file.” This shift means that patents now protect potential ideas and broad technologies instead of specific applications of those ideas or the individual inventions that use them.
However, this shift to a broader interpretation of patent law did not come from the lawmakers themselves. It is a product of many large legal battles technology companies are waging against their competitors. The most publicized and most recent instance of such a battle involved a lawsuit that Apple brought against Samsung, regarding similarities in the technology the two companies use in their respective lines of smart phone products. Apple argued that the physical design and software Samsung used in its smartphones was too similar to the same aspects of Apple’s iPhone. Apple has a history of filing these types of suits. In the early 1990s, Apple unsuccessfully sued Microsoft for using graphical user interface technology on its computers that was too similar to the Apple’s version of this same technology which they had previously “Borrowed” from Xerox.
From a business perspective, it makes perfect sense to protect your own product from unauthorized reproduction by a competitor. A company has a vested interested in out-innovating their competitors in an attempt to win against them in terms of revenue and sales. However, the government has a vested interest in preserving competition in the market as it allows the economy to function properly and gives consumers an opportunity to choose the product that best fits their wants and needs. By attempting to sue its competitor out of the smartphone market, Apple is denying consumers this opportunity.
If consumers cannot vote with their wallets when it comes to buying goods, smartphones specifically, there is no incentive for innovators to try and improve upon existing technologies. Obviously, no corporation or individual should be allowed to steal someone else’s invention or application of a specific technology. Inventors do deserve to receive credit as well as royalties for their inventions. The United States Constitution actually provides for the protection of inventions in an effort to “Promote the advancement of science and the useful arts” in article 1, section 8. However, to construe this provision as carte blanche to patent and restrict every idea or technological innovation to the first person to file a patent on it, is to follow a non-valid interpretation of this article. A company that invents a certain products or devises a particular application for a certain technological innovation only has a valid claim to that particular invention or application. And not to any and every conceivable application of the same idea.
Patent laws need to catch up with new technology. However, the law needs to strike a balance that does not stifle competition or innovation. The standard for interpreting and enforcing patent laws should involve tangible products or applications of intangible ideas. If the patent office continues to grant patents on ideas that haven’t produced a physical result, then the patent holders will be able to prevent new technologies (Which haven’t progressed from the drawing board) from ever entering the market at the hand of someone who could create, and perhaps improve, an amazing idea. Market competition and consumer choice are more important than the profit margins of a single company. Until the patent office realizes this, litigation will continue to struggle competition and innovation.
Discussion (1) | October 14th, 2012 Categories: Government Policy, Institutions
Race Against the Machine: What You Should Know!
By: Nick Tourville.
Edited by: Wenqing Zhang.
The words of John Maynard Keynes, “’we are being afflicted with a new disease…(called) technological employment,’” refer to a new phase of human society, in which less people have to produce goods and services. According to the book, Eric Brynjolfsson explains why the rapid improvements in technology displace human labor, just like John Maynard Keynes predicted. There is nothing new. The 19th and 20th centuries were marked by waves of automation that drove us from a primarily agricultural economy to an industrial economy. Machines such as the plough and steam engine displaced jobs in certain sectors, but there were plenty of new sectors that were coming into existence that gave new jobs. Today, we are at another transition in society where automation may help us discover the 3rd industrial revolution, or it will just continue to displace jobs.
Technological progress, in particular the computer age, has such a high rate improve progress; therefore our skills, institutions, policies, and schools cannot keep up. New technologies substituted normal routine tasks that were originally occupied by humans. For example, virtual assistants and self-service machines are decreasing the need for human occupancy in assistant and clerk-like jobs. Additionally, computers perform the tasks that people in sales, logistics, and analytics used to do. One electronics company called Foxconn has even purchased 1 million robots to replace much of its workforce. Routine jobs originally performed by humans at this company, such as welding, basic assembly of parts and spraying paint, are now being accomplished by these robots. Additionally, computers may still be in an infant stage as evidence suggests that this exponential increase in computing power may continue for much longer. This could pose even greater problems because a growing population and fewer jobs mean a faltering economy.
While productivity continues and wealth increases at the rate which is greater than at any point before, the average worker is not doing as well as they should. The replacement of jobs is consequently causing real median income to fall; the last decade proved the first real drop in real median income. Furthermore, Real GDP Per Capita is growing much faster than real median income. This proves that the wealth is being allocated to the richest people in the country, but not allocated in average. Historically, increased output has been correlated with increased employment, but now the two are diverging (employment is not rising with GDP), as digital technology is becoming much more prominent.
Technological improvements are causing a widening gap in inequality some reasons. First of all, many industries tend to favor only a few individuals to get the largest proportion of wealth. Athletes, entrepreneurs, CEOs, TV stars, and financial executives have been able to take advantage of digital technologies and leverage their skills across the globalizing world. In fact, the average CEO in 2005 got 300 times more than the average worker is paid, which is an increase from 1990 when a CEO only made 70 times more. In addition, as automation substitutes routine tasks, the demand for skilled labor is increasing. This is causing an even greater gap between the educated and the least educated. Now, people are forced to be educated or they will loss their opportunity to compete with others; however, the people who are in the lowest level on the totem pole are in a terrible position to pay for educating. Furthermore, technology causes a great shift from labor to capital, which rewards the capitalists. The richest capitalists capture a greater share of income. Since the laborers spend a greater proportion of their income than the capitalists (capitalists have a propensity to save more of each marginal dollar than laborers), money is not being circulated through the system and creating greater inequality.
The unemployment rate is rising and the future that people are facing is not much better with technology. The core of the problem is that the skills of institutions, organizations and people have lagged behind the increasing technological change. As a solution to these problems, humans and machines have to work together to create even better ideas. Innovation is essential right now. The author of this book, Erik Brynjolfsson, recommends creative entrepreneurship as being the viable solution for everyone. Everyone can become an entrepreneur and creates small businesses everywhere around the world. Hopefully, the ingenuity of the human race will create the 3rd industrial revolution and jobs will be created. If not, technology will continue to displace jobs, and major shocks in the economy are to come over the next few decades. There needs to be a new plan to adapt to the changes that are taking place in our world either way.
Discussion (2) | October 14th, 2012 Categories: Growth
