Ideas are worthless, execution is everything. This is why patents should be completely eliminated. This would rocket launch technology worldwide.
The patent system is enormously beneficial to me and and especially to other wealthy tech entrepreneurs. It is used to block out competition artificially. My business has a lot of patentable innovations that I could use to shut down competitors and raise prices to extract more profits. I am suggesting eliminating that advantage I have in order to allow scrappy entrepreneurs to use the same methods and improve on them and offer lower cost options which would benefit the economy as a whole. However, it is wrong and should be abolished.
One of the standard principles they taught us in Business school at UW was that in order to make large profits, a business needed a “moat”. A “moat” is anything that prevents competition from cutting down prices in your industry. A moat could be that to compete you have to buy a $10m machine, so most people can’t afford it. Another moat could be that the profession is licensed, so only a few competitors can enter. The biggest moat though that they emphasized most strongly was patents. A patent is better than a license or an expensive machine because it keeps out ALL competitors, not just a few.
The entire reason the drug industry has such high prices is that most drugs are protected by patents… meaning that the Epipen that costs pennies to manufacture can be sold for over a thousand dollars. Talk about epic profits! Especially when you consider that most drug patents are for drugs discovered by a government funded university lab or was a “breakthrough” that would have been reached in a few months by someone else anyways.
All of human knowledge is like a continuously expanding sphere. A great example of this is that something as complex as calculus was discovered independently at the same time by different people in different places!
A patent is almost always a small incremental gain in knowledge… 99% of the knowledge required to make a patent to work already exists… someone just takes two things and puts them together. In most cases with patents someone else in reality came up with and already was using the idea first. However, most of those people have neither the money nor motivation to fight a long patent lawsuit.
Further – let’s take the point of view that the only way for the person who comes up with an idea to get paid for it is to have a patent system. Well, what if that person who came up with the patentable idea has no idea how to run a business or build a system to actually take advantage of that patent? Or just doesn’t care to? Right now there are millions of patents unused in the marketplace that prevent anyone else from doing something with it. Ideas are very easy to come by – actually building a business and system to provide a product is enormously harder. What happens in reality here is that lots of very important or necessary ideas (lifesaving drugs, big improvements to engines, etc) have been patented and are going completely to waste! It would be better to have the injustice of having the person who invented a lifesaving drug not get paid for it, then to have the injustice of having the person who is sick and dying not be able to have access to or to afford the patented drug, right?
In response to the question that people without money could be locked out of the market even with a good idea – The larger a company gets, the slower and less efficient it seems to become. Especially companies where the founder is no longer involved. By the time a big company even recognizes you idea as a good one, much less executes on it, I think a good entrepreneur would have secured an insurmountable lead. Same thing with VCs… Most of those guys are snake oil salesmen and have no real idea what the marketplace wants. Most of the ideas they invest in fail, and most of the money is taken from VCs by next level snake oil salesmen. I am a big subscriber to lean business philosophy. Money in many ways slows down good ideas by allowing the entrepreneur to ignore the hard lessons the market is teaching him. Money forces the entrepreneur further to follow the interests of investors, not customers.
There are cases where money is necessary of course like building a utility plant. In those cases, there is tons of capital seeking a return to be used from angel investors and other sources. The entrepreneur needs more than an idea though (ideas are pretty worthless – someone else almost always has the same idea long before you and hundreds probably have thought of the same thing by now), the entrepreneur needs to show they have a plan and an ability to execute.
I have had thousands of great patentable ideas during my run in business. Should I be the exclusive owner of each even though I only use a few? Should I be able to steal cash flow from other entrepreneurs who actually put blood, sweat and tears into actually bringing a real business to the marketplace?