Patents and Progress

http://www.futureofcapitalism.com/2011/06/patents-and-progress

The American Enterprise Institute's Nick Schulz, reviewing a book for the Wall Street Journal, writes:

Then there is the U.S. patent system, an essential function of government meant to nurture and protect business. Instead, the U.S. Patent and Trademark Office has become more a corporate inhibitor. How many patent applications were stacked up, awaiting approval, as of the first of the year? A "staggering" 1.2 million, the author reports. That's triple the number of a decade ago. To be fair, the patent office isn't entirely to blame. It is chronically underfunded by Congress, which in the past 20 years has diverted to other uses more than a billion dollars in fees collected by the office.

With patent applications languishing, weakening intellectual-property protections, companies encounter more trouble finding funding. Technological advance slows. Despite all the talk on both ends of Pennsylvania Avenue about the need for more jobs, Washington is crippling one of our most effective economic stimulants.

The assumptions seem to be that the more money Congress spends on U.S. Patent and Trademark bureaucrats and the more patent applications are approved, the more rapid the technological advance and the economic growth. But these are assumptions that are, if not entirely faulty, are at least highly questionable. The venture capitalist Fred Wilson, writing at his "A VC" blog last week in a post that attracted a lot of attention, reports that the PTO is issuing patents for ideas that aren't particularly novel, including on software, and that in essence the whole system is working to some large degree to enrich not actual innovators but rather intellectual property lawyers and "patent trolls" who buy up patents not to actually produce products, but for the purpose of suing people who eventually do so. If there's a barrier to business here, it looks to a lot of people like the barrier is not too little intellectual property protection or too few patents approved but too much intellectual property protection and too many patents approved.

by Editor  |  Jun 5, 2011 at 8:49 pm Related Topics:  Press, Regulation receive the latest by email: subscribe to the free futureofcapitalism.com mailing list