It’s time for tech firms to end their insane global patent wars

 
Allister Heath

IT is welcome news that a US federal court ruled last night that Google can continue to build a digital library by scanning more than 20m books. Intellectual property rules need updating for the 21st century: authors’ and owners’ property rights must be respected but what consists “fair use” needs to be reworked to account for new technologies.

Crucially, Google has no right to make whole books available for free; that would of course violate authors’ and publishers’ property rights. Rather, what was being debated was whether the US tech giant could still make available small snippets for the purposes of online searches.

The judge rightly said that the creation by Google of such a massive library has huge social advantages; the kind of browsing that is being allowed is the modern equivalent of perusing a book at a library or book store for a couple of minutes before deciding whether to borrow or read it. On balance, it will boost the sales of books – especially with the soaring popularity of ebooks – not reduce them. It will also help build a wonderful database of human knowledge.

But the big tech firms aren’t always right, and urgent reforms are needed to stop them abusing other kinds of intellectual property. Patents were originally designed to spur innovators by giving them a way of profiting from their inventions; but the current ultra-strict application of patent rules has turned into a major block to progress. Rather than trying to innovate or launch better products, some tech firms are now endlessly accusing one another of violating obscure patents. In fact, patent hoarding to stymie competitors has become a huge growth industry; the only winners are lawyers. Apple and Samsung are currently locked in a bitter war; Google bought Motorola for its patents and is now locked in legal battles with Microsoft. The energy and time wasted is proving hugely destructive; these firms could be making new products to make all of our lives better but are instead allocating far too many of their resources on trying to cripple their competitors via lawsuits. Patents are state-granted monopolies on an invention; they are only acceptable as a means of promoting innovation, not as a means of slowing it down.

In truth, the patents war phenomenon is not new: in 1906, the Wright Brothers were granted a very broad patent for a flying machine, giving them a monopoly on all techniques that used lateral control. This allowed the Wrights to sue anybody who tried to produce a rival plane; because they invested all of their time and energy trying to use the legal system to block competitors, within a few years the Wrights’ planes had fallen behind their European competitors.

By 1917, the US was in crisis: the Wrights and another company owned all of the (far too broadly defined) patents and thus had blocked all new entrants into the plane making market. The US government, which had just entered the First World War, was forced to buy French planes, as the US ones were so poor and inadequate. Eventually, intense government pressure led to the creation of an industry group centred around a patent pooling arrangement: new entrants could enter the market in return for paying a modest fee for the use of patents. It was a deeply unsatisfactory, corporatist solution but it worked.

Tech companies are meant to be buccaneering disrupters, not corporatist behemoths that use the power of the state to freeze out competitors. But companies need to do what they think is best for their shareholders, while following the law, so they can’t really be blamed for this – it is the job of politicians to change the law to make it work better. In the case of tech patents, the status quo is neither efficient nor sensible. It is time for clever people in the US and Europe to sit down together and try and work out a better system.

allister.heath@cityam.com
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