Years ago when the patent battles were first heating up, I spoke to a gentleman who had started and sold four companies. He was then working on a new project that sounded very promising (for all I know, he has already sold that one too). We had just heard a talk in which the speaker told people that the whole key to business success in our time is patent ownership. Without it, no business can really succeed.
So I asked this gentleman what he thought of the talk. His response was quick (I paraphrase here): “I’ve never once bothered with patents. They are expensive and pointless. They produce no revenue on their own. They sell no product or service. And they harm development by hemming in a company on a preset track. I need to be able to customize offerings and change what we do day to day. Patents bias a company toward old solutions even when they don’t work anymore.”
That’s an interesting perspective. And it raises the question: How much do patents have to do with innovation in the real world? The popular intuition is that a new idea needs to be codified in law and granted an exclusive use for a long period else research and development make no sense. The real world, however, has long had a different outlook.
Elon Musk stuck his neck out some years ago and eschewed patents completely except when absolutely necessary to stop patent trolls. His Tesla and all its workings are not under patent, and X runs on open-source software. The founder of Twitter (Jack Dorsey) has gone so far as to say that intellectual property should be abolished entirely, which I presume means patents and maybe copyrights too.
Does that sound crazy? Not once you think about it. I’ve been publishing for years using the commons as an alternative and it has worked for everyone, author and publisher alike. You can still charge and still make a profit same as always; the difference is the absence of legal tangles that keep content tackled in a legal thicket for decades.
In the realm of books, for example, there are countless books published between 1930 and the end of the century that are essentially lost, restricted by law from reprinting, forgotten by heirs, and neglected by rights-owning publishers. No one can do anything about it due to restrictive licensing.
Patents are the bane of many industries now. The old days of rewarding a great inventor are long gone. There is an active market for patent deals that looks much like legal blackmail operation, with 3,000–4,000 new lawsuits issued annually and tens of thousands in active hearings. All of this reward lawyers not creators.
This is why more and more companies are eschewing patents.
Economic historians have usually assumed a direct link between patents and innovation, basing much of their chronicle of history on records at the Patent Office. Much of what we think we know—that Eli Whitney invented the cotton gin, that the Wright Brothers were first in flight, that Thomas Edison holds the record for inventions because he has the most patents—comes from these records.
But is it true? Most patent holders assume so. They cling to them as a source of life and defend them against all encroachment. Some businesses build up their war chests with patents as purely defensive measures. The more you own, the more you can intimidate your competitors to stay out of your territory.
In other words, it’s the market, not the bureaucracy, that innovates. The authors grant that there might have been downstream versions of the same innovations that were patented. But that fact actually doesn’t change the implications of the study, namely that there is no significant relationship between the existence of the Patent Office and the direction and pace of innovation.
As you dig through their citations, you find other nuggets of information. It turns out that other researchers have found the same thing in the early part of the 20th century and even all the way back to the middle of the 19th. The results keep coming up the same way: There are patents and there are innovations, but they have little or nothing to do with each other.
These results are a classic case of the huge chasm between pop science and real science. In the pop version, people imagine that they will dream up some idea, file a patent, and then bring it into production and become a billionaire. The reality on the ground is that 90 percent of patents go completely unused. They are suitable for hanging in a frame on the wall, but not much else.
The patents that are actually in play in this world are used as weapons by big shots to hurt their competitors. They don’t cause business to succeed; it’s the reverse. The bigger the business, the more it is in the market for patents to help the big business hold its place in the market. They prompt lawsuits that go on for years and are eventually settled with an exchange of cash.
Meanwhile, rather than actually fueling the innovative process, they put progress on hold. So long as a patent is in existence, other innovations are legally bound not to do what they do best.
We need only draw attention to pharmaceutical patents, which have caused vast amounts of mischief in recent years, including the financial stakes shared with actual government agencies. During the COVID years, off-patent drugs were pushed aside in favor of newly patented products of dubious merit. The patent allowed a privileged place in the market, thanks to bureaucratic edicts that selected for the supposed innovation against the tried and true.
In agriculture, patents have led to a deprecation of regenerative farming and traditional methods of seed recycling in favor of imposed factory methods of chemical insecticides, fertilizers, and GMO foods. Obviously, traditional organic farming never deployed patents, and those old methods are precisely what many current consumers seek.
The software industry is another case in point. In the 1970s and 1980s, patents were rare to nonexistent. Companies made money by making stuff and selling it, just as free enterprise would suggest. Then, the industry grew. People like Steve Jobs, who once touted his talent for stealing the ideas of others, began threatening other companies with lawsuits. Young programmers today know for a fact that if they ever come up with anything that threatens a big player, the small company is going to be hammered.
Two parallel streams of innovative software strategies have been running over the last 20 years: 1) highly protected and 2) patentless open source. The results are in. GitHub’s 2024 Octoverse report shows over 90 million developers contributing to open-source repos, while patented software has plateaued. There is no question about how the industrial results have panned out. The rejection of IP has been the market winner hands down.
We need to rethink our assumptions about the role of patents and innovation. If they have nothing to do with each other, and if patents actually dramatically slow down the pace of development, why not get rid of them altogether? That’s exactly what many of the old liberals of the 19th century pushed.
What we call “intellectual property” is already problematic historically and theoretically. Property exists as a social, political, and moral norm to adjudicate conflicts among scarce goods for which people would otherwise make the same claim. Ideas, on the other hand, are infinitely reproducible and shareable without limiting anyone else’s right to consume.
This is a hard topic and deserves far more than a short article. For my own part, it took me probably five years of reflection to understand all the implications, so if you are upset by anything you read above, I truly do understand.
That said, consider the topic carefully if you are curious and ask yourself the fundamental question: What is it about any desirable good or service that entitles it to be called private property? That is the essential question. Whatever your answer, try to apply it consistently and see what happens. You might discover what so many innovators have also found: Patents are a distraction from and not an aid to innovation.
