Do patents promote innovation, or hold it back?
This question has been debated for 150 years.
Let’s start with the basics: What causes innovation in the first place? Historians have found that the great inventors of the American Industrial Revolution such as Matthias Baldwin, Samuel Morse, Alexander Graham Bell, and Thomas Edison were all driven primarily by the expectation of profiting from their discoveries. Those discoveries, in turn, transformed human society in the 19th century.
That was then. What about now? Over the last 50+ years, economists have repeatedly demonstrated that patents continue to foster innovation by incentivizing inventors to invent. In fact, they stimulated the formation of the biggest new industries of the last 60+ years — semiconductors, personal computers, the software business, biotech, mobile telephony, and Internet e-commerce. Patented inventions midwived all of them.
According to Hans Bishop, the head of the breakthrough cancer treatment company Juno Therapeutics, “Let us be clear, investments in the biotech industry are based entirely on patents. Without strong patents, we cannot raise money to find cures for disease.”
A curious thing about patents is that they not only stimulate innovation, they also promote knowledge-sharing afterwards. This seems to go against the fact that patents give their owners a temporary monopoly over the invention. However, it’s actually true — patents are one of the most effective tools for knowledge-sharing ever invented.
A World Without Patents
A simple thought experiment suggests why this is so. Imagine a world in which there were no patents to guarantee inventors the rights to their discoveries. In such a world, inventors would need to be very secretive, since competitors could copy their discoveries with impunity. That’s the world of trade secrets.
In a world of patents, the situation is just the opposite. Inventors now feel free to promote their discoveries as widely as possible in order to maximize the profits from commercializing them. They feel secure in the knowledge their rights are protected.
Moreover, to get a patent, the law requires that the inventor disclose the details of his or her invention. This also promotes knowledge sharing. The U.S. patent database is in fact the greatest library of technical knowledge on the planet, and it’s open to anyone who wants to study it. For example, Thomas Edison used to hang out at the U.S. Patent Office to study other inventors’ patents and hopefully spark ideas of his own. The same is true of many inventors today.
In 2006, one survey found that 88 percent of U.S. and European companies say they rely on the information disclosed in patents to keep up with technology advances in their industries. Recently, the tech behemoth Google released their model for the use of artificial intelligence/machine learning in patent searching, development and application.
Patents in the Innovation Economy
Take the smartphone industry in particular. In one amazing device, this industry brings together the combined technical advances of four major industries — mobile telephony, electronics, computing and software.
Does anyone believe such technological collaboration could happen under a trade secret regime? Impossible. Only patents let companies feel secure in licensing and cross-licensing their inventions to each other. As a result, smartphone use has grown exponentially in only one decade from zero to over 3 billion users worldwide.
Do patents stimulate innovation? It’s patently obvious.
Continue on to Part 3 of this blog series. For more in-depth information on patents, check out the free online course Intellectual Property: Inventors, Entrepreneurs, Creators.
The Michelson Institute for Intellectual Property, an initiative of the Michelson 20MM Foundation, provides access to empowering IP education for budding inventors and entrepreneurs. Michelson 20MM was founded thanks to the generous support of renowned spinal surgeon Dr. Gary K. Michelson and Alya Michelson. To learn more, visit 20mm.org.