香蕉视频

On Monday Google bid $900 million for Nortel's 6,000 patents. Google聽feels the聽purchase will prevent costly patent litigations.聽 At $150,000 per unexamined patent the cost may be negligible.聽 Lawyers are costly and the delays in selling innovative products due to legal threats cost even more.

This raises the question about how important patents are for innovations.聽 There was a large increase in the numbers of registered patents during the last decades:聽 from 100,000 in 1980 (60% in the U.S.) to 450,000 in 2009 (50% in the U.S.).聽 But these numbers signal neither some unusual burst of creativity nor a deluge of future innovations.聽 There is something else at work.

At first sight this statement may surprise.聽 A drug company would not invest $500 million dollars to bring a drug to the market unless it could expect to recoup not only its investment, but also millions of dollars spent on other failed experiments.聽 Upon closer inspection, though, the lack of a direct link between patents and innovations is not a surprise.

Managements found that patents are a good criterion for compensating their R&D teams.聽聽 While management may have no doubt about the scientists' motivation, they still must direct their creative efforts in ways to benefit the company. They can measure these while even acknowledging distortions.

As in academia, so in the patent business, once you pay for research measured by some number, researchers find ways to increase that number. The "quality" of the patent, or the publication, is harder to judge.聽聽 Thus, it is not surprising that the link between number of registered patents and innovations is far from clear.

Why should the length of a patent life be twenty years across the board and for all industries?聽 If its life was shorter, there would be far less incentive to litigate and management could still judge an R&D team's performance as before.

Jeff Bezos, founder of Amazon, suggested years ago that the length of patents on the Internet should be shortened to five years. But, previously, when Prime Minister Tony Blair and President Clinton suggested imposing restrictions on patents in the field of genetics, publicly traded bio-tech firms experienced a predictable mini-crash.聽 The impact of their recommendation would not have been as violent if the patents had shorter lives than twenty years.

If the number twenty is arbitrary, how about changing the law both to keep it as a management tool and to diminish costly litigations?

Until 1999, patents lasted for seventeen years from time of approval. Today's twenty years refers to the time that elapses from application, since historically roughly three years elapsed between application and approval.聽聽Where is the seventeen years coming from?

John Kemp the Fleming had the earliest recorded English patent in 1331.聽 He got it to encourage him to import his weaver's skills.聽 By the 17th century the English Crown granted such monopolies not only for attracting "qualified immigrants" (thus draining brains from the Continent), but also for protecting guilds against competition and granting reward for royal favors.

The latter abuses prompted the English Parliament to enact the Statute of Monopolies in 1623, which abolished most monopolies. The exceptions related to patents granted for bringing 'new manufacture within this realm.'聽 These monopolies lasted for fourteen years to reward entrepreneurs for training two generations of apprentices on English soil.

The U.S.'s first patent act of 1790 adopted the fourteen year term, relying on the seven year trade apprenticeship number. The 1836 patent act extended the life of the patent to twenty-one years.聽 The present seventeen year term is a compromise dating back to 1861, when the House wanted to retain the fourteen plus seven option, and the Senate wanted to go back to the fourteen year limit.聽 The political compromise gave us the seventeen years until 1999.

What would happen if the life of patents was shortened?

Prices of patented goods would decline and there would be less piracy.聽 If the change was done in isolation, it would lead to a drastic decrease in share prices of pharmaceutical companies.聽 The聽 generic part of the industry, however, would rise.聽 However, if this change was accompanied by significant revisions in tort law and regulations, both of which have significantly increased their average costs, the effect could be a win-win-win for consumers, producers, and investors.

Reducing聽 the life of patents when combined with the legal and regulatory changes might not diminish the rate of innovation at all.聽 During the 19th century, Belgium attracted investments by operating the laxest corporate law in all of Europe and did not enforce patent laws.聽 Switzerland did not have a patent law until 1887, which is the reason that German chemical and aluminum companies opened plants there.

Phillips' initial success in Holland and throughout Western Europe was due to copying Edison's lamps without paying any royalties to the Edison interests.聽 And just few years ago, Israel was called the "one-diskette" country.聽 Now it is an IT powerhouse.聽 Belgium, the Netherlands, Switzerland, and Israel all attracted capital and investment and developed fast聽even though they did not enforce patent laws.

There is no proof that allowing patents to last seventeen years, rather than five or ten, does any good.聽 It may grant too much monopoly power.聽 Tort laws and regulations might not be so numerous聽 (and the legal profession so large) if society did not perceive that the deep pockets of these companies were due to having this monopoly power that derived from the arbitrarily long lives of their patents.

By not changing the law, politicians and lawyers have ventured into the "redistributing the monopoly rents business," which has costly consequences.聽 Google did not have to look into the 6,000 patents. Yet the relatively cheap price prevents Google from being bogged down in courts, allowing it instead to innovate.

Article by Professor Reuven Brenner

Read full article: , April 7, 2011