The patent as a brake

The patent system was conceived as a bargain: the inventor discloses the solution publicly, and society grants a temporary monopoly in return. That bargain worked well for two centuries. In some fields it now produces the opposite effect.

A study by the United Kingdom Intellectual Property Office, published in 2013, measured the phenomenon known as a patent thicket: technology areas covered by dense webs of overlapping rights held by different firms. Density peaks in semiconductors, telecommunications and software. The empirical result: as the thicket grows denser, entry by new firms into those markets falls.

Three mechanisms

Defensive patenting. A firm files patents as a shield against litigation by others. The portfolio becomes a deterrent, and exploiting the solutions moves into second place. The inventions sleep, the files accumulate.

Overlap. A modern electronics product touches thousands of patents, shared among dozens of holders. A small firm willing to enter the market negotiates with each of them, with no guarantee of obtaining a licence.

Litigation as a business model. Entities with no productive activity buy portfolios and live off lawsuits. The cost of defence deters small firms even in situations with good prospects of winning.

Why we say this

An inventors’ organisation has an obvious interest in strong industrial property protection. That is precisely why it deserves saying openly: the instrument has side effects, and silence about them weakens the argument for patenting.

The individual inventor and the small enterprise bear the heaviest cost of those effects. They file few patents and they use them; the thicket stands in their way exactly when they want to build something.

What would balance the system

Fees differentiated by the size of the holder already exist, in part. Extending them to translation and representation costs would matter more than a reduction in the filing fee.

Transparency of patent ownership would let a firm find out whom it is negotiating with, before investing in development.

Fast and inexpensive dispute resolution mechanisms, for small sums, would change the balance of forces between an inventor and a portfolio bought for the purpose of litigation.

We support a strong patent system and, at the same time, periodic review of its effects on the smallest holders. An instrument conceived to protect creation deserves to be judged by what happens to creation.