The technology patents issue and innovation.

In the old "pre 2000" day, the objective of most technology companies when they applied for patent protection was to ensure that their products and technologies were not copied by their competitors. The idea was that thanks to the patents you enjoyed about 20 years of exclusive use of your technology, after which everyone was free to use it because by then it was considered obvious. If the technology became too commonplace for you to exploit alone you could always allow you competitors to use it against payment: that's licensing. These patents were supposed to allow companies to make back the money invested in technological innovation

What is the issue with technology patents?

Part of the problem is the length of the patents. Initially the system was devised for inventions in domains like the pharmaceutical and automotive industry where progress is quite slow compared to the computing industry. In these industries it was uncommon than any technology that was considered an innovation when the patent was applied for would be considered obvious long before the patent expired. Contrast this with the situation information technology industry: about 10 year ago innovative technologies were the internet browser, mp3 players, online radio streaming etc... We are now ten years later and these thing are already staples of our daily lives: everybody has an MP3 players, a browser etc... none of these technologies would still be considered an innovation.

This caused a major issue for technology companies because the basic building blocks of our technological lifestyles were still under patents protection. This was never the intention of the patents system, the big idea was that by the time the invention is considered a an obvious feature in any industry the patents would have expired. There should have been an adjustment of the duration of technology patents based on the rate innovation but this was never done, probably because other industries were reluctant to set such a precedent.

This meant that companies could not create innovative products anymore, because the basic technologies they would have to build upon were still protected. This created the need for patents cross licensing. the basic idea is that two companies in the technology field allow each other the access to all their patents. This allows both companies to create innovative products without fear of being sued by the other.

What is the issue with technology patents cross licensing?

There are 2 problems with patents cross licensing however. the first is that it only works for large corporations that own a vast portfolio of patents themselves. Small companies usually can't sign any of these deals because they have very little to offer in term of patents to share. The issue is that in the technology field innovation usually starts with the small companies, not the huge corporations. The second issue is patents trolls, companies that buy and own technology patents but do not produce anything. The aim of such companies is purely to license the patents for money, and they will not sign any cross licensing deals since they don't need access to any technology for their own products: they don't have a product! This means that some basic building blocks of technology are inaccessible to most corporations because the patents are owned by trolls, and this stifles innovation.

Are technology patents bad?

In their currents state, yes they are bad because they do no do what they were supposed to do anymore. Patents currently do not encourage companies to invest in research and come up with new products, but actively discourage technological innovation because of the risk of litigation. Before patents can be useful again both issues above need to be solved: the length of technology patents and the issue of patent trolls. Some sort of organization needs to be set up to allow smaller companies to have access to cross licensing deal, for example by pooling their patents. This idea is very popular in the open source culture where small companies see the creation of such patent pools as the solution to defend themselves against bigger corporations.

I recently read an article published on Ars Technica about the book of Marshal Phelps and David Kline "Burning the Ships: Intellectual Property and the Transformation of Microsoft". What the books is about is the change of heart Microsoft had about a decade ago regarding patents. I suggest that you read the article as it give a lot of insights into the way major technology corporations view patents.

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