A Patent Is Worth Having, Right? Well, Maybe Not

[David Farber <dave () farber net>]

Begin forwarded message:

From: Monty Solomon <monty () roscom com>
Date: July 17, 2007 11:01:05 PM EDT
To: undisclosed-recipient:;
Subject: A Patent Is Worth Having, Right? Well, Maybe Not


Prototype
A Patent Is Worth Having, Right? Well, Maybe Not

By MICHAEL FITZGERALD
The New York Times
July 15, 2007

PATENTS are supposed to give inventors an incentive to create things
that spur economic growth. For some companies, especially in the
pharmaceutical business, patents do just that by allowing them to
pull in billions in profits from brand-name, blockbuster drugs. But
for most public companies, patents don't pay off, say a couple of
researchers who have crunched the numbers.

"Today, over all, patents don't work; for the information technology
industry especially, they don't work," said James Bessen, who became
a lecturer at Boston University's law school after a career in
business. In 1983, he created the first computer publishing software
with Wysiwyg (an acronym for "what you see is what you get") printing
abilities. He also founded a desktop publishing company, Bestinfo,
later acquired by Intergraph.

Neither Mr. Bessen nor his company patented anything, in part because
his lawyers told him that software couldn't be patented at the time.
He ultimately became interested in whether patents spurred
innovation, since the software industry for years innovated steadily
without using many patents. He and a colleague, Michael J. Meurer,
are readying a book on the topic, "Do Patents Work?," due in 2008. (A
synopsis and sample chapters are at
researchoninnovation.org/dopatentswork/.)

The two researchers have analyzed data from 1976 to 1999, the most
recent year with complete data. They found that starting in the late
1990s, publicly traded companies saw patent litigation costs outstrip
patent profits. Specifically, they estimate that about $8.4 billion
in global profits came directly from patents held by publicly traded
United States companies in 1997, rising to about $9.3 billion in
1999, with two-thirds of the profits going to chemical and
pharmaceutical companies. Domestic litigation costs alone, meanwhile,
soared to $16 billion in 1999 from $8 billion in 1997.

Things have probably become worse since then. For instance, patent
litigation is up: there were 2,318 patent-related suits in 1999, and
2,830 in fiscal 2006 (though that's down from the peak year, 2004,
when 3,075 were filed). Mr. Bessen said awards in patent cases also
seemed to be up, though he was less confident in that data. Worse, he
says, companies doing the most research and development are sued the
most.

...

http://www.nytimes.com/2007/07/15/business/yourmoney/15proto.html? 
ex=1342152000&en=17ab981b1b3cf1dd&ei=5090



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