Capital Ideas Blog

are patent trolls good for innovation

By Robin Mordfin

From: Blog

What kind of role do patents have to play in technology's future? Just last month, Apple and Google declared peace in their bitter four-year, multi-billion dollar battle over patent infringement. And this month, Tesla Motors founder Elon Musk wrote on the company's official blog that the wall surrounding Tesla patents is being dismantled "for the advancement of electric vehicle technology." 

Perhaps the open-source movement has finally taken hold. Or perhaps Apple and Google simply found that their litigation was time consuming and expensive while Tesla is looking to have others adopt their currently singular technology to make their products more popular. Either way, things are changing. 

This week, the IGM Economic Experts Panel considered two statementson patents, which leaves readers with much to think about in the area of intellectual property. The first: "Patent Assertion Entities—which specialize in acquiring and asserting patents and are popularly known as "patent trolls"—promote innovation in the US." In other words, does stealing other people's ideas leads to new ideas? 

To no one's surprise, nearly 70 percent of the voting economists disagreed, or strongly disagreed with this sentence. MIT's Abhijit Banerjee wrote with his disagree vote, "It creates incentives for many spurious patents that might actually block innovation." 

The rest of the voters took an uncertain stance, with the exception of Angus Deaton of Princeton who chose to leave no comments with his curious agree vote. The uncertain voters were primarily concerned with with the quality of patents. As Harvard's Oliver Hart noted, "If patents are correctly granted, trolls can encourage innovation. If patents are incorrectly granted, trolls can impede innovation." 

Next, panelists were asked if they agreed with the statement, "Within the software industry, the US patent system makes consumers better off than they would be in the absence of patents." Here, responses were far more evenly distributed, with about a third agreeing, another third disagreeing, and the final third declaring uncertainty. 

Yale economist Pinelopi Goldberg pointed out with her agree vote that "There is a lot of room for improvement of the current system, but without any patents at all, there would be no incentive to innovate." Of those on the opposite side, Chicago's Richard Thaler summed up the prevailing view: "This is the domain in which the patent system seems to be in most need of reform." 

As for those uncertain about patents on software, voters were unclear about whether they work at all. Richard Schmalensee of MIT noted, "A sensible system for software patents would clearly be better than nothing. The current system? Not so clear." 

Which leaves us readers, who are not patent attorneys or economists, to scratch our heads: The experts seem to believe a patent system is important to innovation, it just seems not to be the one we have right now.


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