Sharing patents boosts innovation and profit

Sharing patents doesn't make necessarily make losers out of inventors, suggests a new economics study. We need more studies like this to make sense of the costs and benefits of sharing ideas.
Written by Hannah Waters, Weekend Editor

"You stole my idea!" The same chant can be heard in elementary school playgrounds and between inventors engaging in patent wars. But according to a new study, sharing ideas through patent licensing doesn't necessarily mean a loss in profit. On the contrary, sharing patents may create a larger market for your product in the first place, as well as encourage research that can lead to new innovations.

In the new paper, published online in Economics Letters, economist Gilad Sorek from the University of Buffalo developed a theoretical model of equal tech competitors, where one pays an initial startup cost to develop a new technology and then licenses that patent to the other. The model suggests that, while sharing intellectual property does introduce competitors, it actually increases the value of a product by attracting more customers overall -- and that the increase in demand outweighs the risks of rivalry.

"In the scenarios I study, further innovation happens [through free-licensing] because a firm needs more research-and-development efforts to be taken by other innovators to stimulate the development of complementary technologies, or in order to encourage consumers stepping into a new market," says Sorek in a press release from the University.

The study is certainly a step forward to try and progress the intellectual property debate -- but we need more of them.

Debates on the topic are pretty standard at this point. One side argues that we can't share our ideas because they'll get snatched up by corporations, remarketed on the cheap, and all profit will be lost. And, on the other side, sharing ideas saves time and money by not forcing inventors to reinvent fixes to problems that have been solved, and to build off one another's ideas to really encourage research, collaboration, and, ultimately, better products. (This debate is articulated quite well in a recent blog post by Frank Tobe at IEEE Spectrum about robotics.)

Each side has examples to cite of times where sharing patents has succeeded and failed. But in the end, those are stories, mere anecdotes, and the tech world needs real information.

Collecting data for specific fields and particular kinds of innovations and developing models on where patent protection fails or succeeds could help the debate progress instead of continuing to stagnate with much hand-waving around repeated points.

Photo: CNET

This post was originally published on Smartplanet.com

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