Subject: Re: Examples needed against Soft Patents
From: "Stephen J. Turnbull" <>
Date: Tue, 25 Jan 2005 18:30:57 +0900

>>>>> "Taran" == Taran Rampersad <> writes:

    Taran> True. But there is increasingly little liberty of choice
    Taran> between protection of secrecy or protection of law.

You're free to jump off a 1000m cliff, but choose not to do it for
obvious reasons.  That doesn't make you any less free, nor does it
prevent you from deciding to do so anyway, perhaps because you've
acquired a hang-glider.

    Taran> But to make financial gain off of a patent which does not
    Taran> make people think of better ways to do things - I believe
    Taran> that this stifles innovation.

Why do you think that?  Of course it doesn't make the patent-holder
think of better ways to do things.  But (1) it prevents _others_ from
thinking real hard in order to come up with the same way of doing
things---presumably much of that energy will be redirected to novelty.
And (2) it gives strong incentives for _other_ people to either come
up with alternative methods for doing the same thing, or with methods
to extend the patent so that they can collect some of the profit.

Sure, there are practical problems; the question is whether the
practical problems of secrecy and duplication of effort with trade
secrets are outweighed by the practical problems of patents.

    Taran> I'm no economist, but that seems like a form of inflation
    Taran> with no real rewards for consistent innovation.

The reward for consistent innovation is consistently increasing
wealth.  That's quite real; of course many, perhaps most, people are
satisfied with a modest amount of wealth.

    Taran> Err. You agreed with me. By becoming making trade secrets
    Taran> more risky, it takes away from the capacity of having trade
    Taran> secrets.

That's what I said, but it's not what you said.  What you said was

    Taran> it takes away the capacity to have trade secrets,

    Taran> And patenting is the withholding of knowledge on public
    Taran> display. You can see it, but you can't buy it if you cannot
    Taran> afford it.

What else is new?  That's what the market is all about, keeping people
who are unwilling to pay the price from acquiring the goods.

This often results in unfair outcomes, but it is much more effective
to fix the income distribution so people can afford what they need,
rather than breaking the market, in most cases.  There's no general
reason why this wouldn't be true for markets in patents, too.

    Taran> This is bad news for SMEs.

Not at all.  It turns out that this is pretty much wholly transparent
to SME vs. large corporation (at least in theory, I'm unaware of
empirical followups).  It is simply a cost, which is more or less
offset by R&D that doesn't need to be done, and by implicit costs of
products that would be impossible if the patented technology had not
been invented.

And in fact, there are several antitrust cases where it was argued
that a group of SMEs received above-normal profit because of the
barrier to entry created by a patent that they all had to license.

The big advantage that a large corporation has is the use of its own
patent portfolio in patent pools and other cross-licensing schemes.

    Taran> A 'spite-economy'? And tell me, how is a system which
    Taran> increases the overhead of a business startup not spiteful?
    Taran> How is a system that rewards whoever holds the most patents
    Taran> instead of who creates the most patents not spiteful?

First, whatever definition of "spite" you're using is not in any
dictionary I have access to.

Second, the system doesn't reward anybody who merely holds patents.
They have to put them to productive use.  It's the same as any other
asset; people with money can buy them, and receive interest although
they do not work.  Thus, there are rentiers, but that is an
unavoidable side effect of the creation of transferable productive

A world without capital is not an unethical dream, but it would
certainly be materially much poorer than the one we live in.  Nor is
there much evidence that the smaller amount of wealth would be
sufficiently fairly distributed to make up for the shrinkage of the
pie, either.

Institute of Policy and Planning Sciences
University of Tsukuba                    Tennodai 1-1-1 Tsukuba 305-8573 JAPAN
               Ask not how you can "do" free software business;
              ask what your business can "do for" free software.