Do Patents Encourage or Stifle Innovation? | Union Square Ventures
At our recent Union Square Sessions event, we discussed three primary topics relating to public policy and innovation: net neutrality, copyrights, and patents. In this post, I’ll summarize the patent discussion and highlight some of the most interesting points that were made. If you’d like to read the transcript of the entire patent discussion, it’s available on our wiki for download here.
I started out the conversation referencing recent blog posts made by Brad Feld and me where we both asked the question – are patents helping or hurting innovation?
Originally uploaded by USV.
Irwin Gross stepped up to the plate and argued forcefully that patents aren’t the problem. He believes the problem is that there isn’t a liquid marketplace for patents to be easily valued and licensed. He said:
There’s an awful lot of industry innovation and traditional IT innovation going on and being financed today, and it’s a shame that we don’t have a mechanism for enabling the trades of rights...
Irwin actually made this argument to me in a conversation late one night at the D conference, and I’ve been fascinated by it since. However, most of the participants at Sessions weren’t buying it.
Albert Wenger and Peter Semmelhack both blamed it on the patent process. Albert said:
But I don’t think that’s why the system falls down today. It’s that the process of patenting takes too freaking long...
Originally uploaded by USV.
Peter followed several minutes later with this:
Copyrights are sort of easy, because I can write a book and I can put a copyright on it...
Dave Morgan is another entrepreneur who is frustrated by the patent system. Dave argued that the lack of clarity, transparency, and good faith in the system is equally problematic:
It’s lack of clarity... the challenge for an entrepreneur...
Habib Kairouz reminded everyone that while patents may be problematic in the information technology business (Brad Feld’s point in his post), they are critical to the funding environment in the biotechnology business:
But the real question is whether patents are actually helping innovation or helping the lawyers...
My takeaway is that the patent system has value, particularly in industries where there are lengthy development cycles and high capital costs, but in the information technology industry, I see very little value to the patent process. Maybe we can get to a liquid market in patents, but only if there were some forcing mechanism. As I said at one point in the discussion:
But the reality is whether somebody — whether it’s IBM or Nielsen...
It was a great conversation. Again, if you’d like to read the entire patent conversation (it’s only 16 pages), you can download the patent discussion transcript here.