Do IP rights really work?

Modern arguments surrounding intellectual property (IP) rights range from keeping the way it is to reforming it to possibly banishing it all together. The question typically about what IP rights really do, how they affect innovation, and whether or not they are necessary.

The intention of IP rights is to provide incentive for proprietors by protecting them against "free riders" and unfair forces and providing a limited monopoly over inventions. The problem is that this assumes an extremely market-driven arena where these protections are vital for productivity and the protection of enterprises. Looking back on the history of invention, we actually see that a lot of invention comes out of non-market, individual entities rather than market-driven corporate entities. Beyond the invention of the printing press, information exchange and commerce became more interconnected, intention shifted towards networked entities while remaining non-market oriented, such as with open source communities and academia. The printing press and information technologies are not only game changers in the world of social worlds but are also causing paradigm shifts in invention itself. This shift, along with the ridiculously high litigation costs of defending patents, has rendered IP rights ineffective for small entrepreneurs and inventors.

In cases where patents are potentially useful, their abuse has become far too easy. The most public form of this abuse as of late is the patent war between different companies in regards to smart phones, tablets, and mobile operating systems. The mechanisms intended to allow innovation have instead become a means for attacking other competitors in the market place, regardless of their legitimacy, in order to maintain monopolies over product lines rather than technological innovations. Patent trolls are a less publicized problem that are on the rise. A patent troll is " a person or company who is a non-practicing inventor, and buys and enforces patents against one or more alleged infringers in a manner considered by the target or observers as unduly aggressive or opportunistic, often with no intention to further develop, manufacture or market the patented invention." They do not contribute to innovation in any way, but rather they exploit the system solely to make money while preventing innovation. These problems and more are some of the reasons why companies tend to keep industrial secrets. They're also why the open source community has taken off so much, bypassing much of the traditional IP system and the problems associated with it.

We recently passed the American Invents Act to reform our patent system, but unfortunately, as is often the story with government reform today, the changes are mostly superficial and don't really address the deep conflicts in the patent system. Two amendments in the bill tweak the patent filing deadline and grant the USPTO rights to the fees it collects. Earlier versions of the bill changed how infringement damage is calculated, potentially curbing patent trolling, but this part did not make it to the American Invents Act. Really the only major changes presented by this bill are a change from "first to invent" to "first to file," which is how a lot of the world already operates, and creates a "post-grant review" process to challenge bad patents. These may be good changes but are ignoring some of the biggest problems that face small developers.

With the number of software patents on the rise and with more small developers and more large companies developing technologies at a faster rate, the patent system is having difficulty adapting. It worked for a period of time, but was quickly obsolete and it has not been seriously reformed in quite some time beyond minute changes to make it appear that we're reforming it. The answer is not to abolish IP rights, but to adapt our system to what we really need today. The answer doesn't have to be extreme. It just has to be reasonable.