Comment Re:Fine. Kill software patents. (Score 1) 373
Patents have two components, spreading risk, and creating profits. The first is necessary to foster innovation, the 2nd should be a very small priority. Here's why. If we're going to do the hypocritical hand wringing that usually benefits rich people, then we should also worry about risk minimization for small inventors. What does lowering risk for small entrepeneurs look like? Here's what stops me from starting a software company (not patents, that's for sure):
1. If I fail, I won't be able to afford health insurance, which given my health problems, isn't acceptable
2. I I fail, being a person of modest means, means I may not be able to afford basic necessities (food, shelter, etc.)
3. I I fail, unlike a corporation, I have very little bankruptcy protection. I can't discharge my personal debts (which is the majority of debt for small entrepeneurs), and as a result I could lose everything I own. Contrast that with large corporations where risk is neatly partitioned into the business, and the wealthy investor can easily live off their considerable wealth while waiting for another opportunity
4. I I succeed, I have much greater risk due to limited resources.
Given that the above applies to 99% of us, the best way to foster innovation and competition is to remove the above barriers to competition by creating a system that absorbs risks for small entrepeneurs, who need it most.
In terms of absorbing R&D risk, there a couple of things to keep in mind. First, many IP based businesses don't do much R&D. Quite a bit of drug research is paid for by government, and then given to corporations using technology transfer, so why worry about protecting leaches? Second, patents do little to protect individual risks, and do quite a bit more to ensure outsized gains for the patents that do succeed. This tends to reward (rich) people who can afford to get a bunch of patents and see which ones work. This isn't a hard problem to solve, it's just that patents aren't about fostering innovation, so they've been kept in a state that achieves their primary purpose, rewarding extremely wealthy people.
What's a good system look like?
1. Risk is spread to all companies that use a patent
2. Companies are forced to license patents at a reasonable cost to competitors. Squeezing out competition through patents shouldn't be allowed.
3. Licensees of said patent would have their total licensing fees limited to 20% of operating costs until all R&D for patents is paid for.
4. Once R&D is paid for, patents become public domain.
5. A small amount of extra profit off a patent may be allowed before letting it expire, but this should be limited to a reasonable percentage of R&D cost, not unlimited as it currently is.
6. Companies that are very small may be allowed an exemption from the patent tax, or given a break while they get set up.
7. Companies that are significantly larger than competitors may be barred from patenting items.
8. Technology transfer from public to private domain should only happen if companies that use it are willing to pay the above 20% licensing fee until costs are covered. No more free rides on publicly funded research.
How does a company make a profit? First, competitors are going to have an extra 20% overhead, so the original company can probably sell for a lower cost in the beginning. Trade secrets and greater experience would also allow them to sell goods for a lower cost. Beyond paying operating costs, how much profit does a company need? Operational costs pay the the salaries of true innovators so massive profits aren't required. Second, the patent system shouldn't concern itself with whether or not the creator can buy a yacht. This is a publicly created system, and while we should help with risk, it's not our job to make people rich.
The next, untapped area of innovation involves workplace efficiency gains. Those gains should be at minimum split between workers and companies. Regulations should be put on salary reduction in the event of efficiency gains, so that everyone benefits.