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"Everything that can be invented has been invented" - Charles Duell.

In many companies on the edge of technology, a significant portion of their revenue derives from their R&D efforts. In one case two thirds came from the last 2 years of R&D efforts. In today's times innovation is the key, and innovation comes from R&D.

The odds are stacked against innovation and the little guy. Large companies have the resources to drag out patent infringement suits against them for years in court. In the case of the independent inventor of the intermittent windshield wiper - all 3 american automobile makers infringed for decades before being found guilty of wilful infringement. Some may argue that an intermittent windshield wiper is not an innovation - nothing is farther from the truth. Cars were normal household transportation for decades before the intermittent windshield wiper was invented. Prior to its invention, drivers would either manually turn on and off their wipers, or set it to the lowest setting.

In addition to the odds stacked against the small inventor, getting a patent issued can be a long road. Getting a worthwhile patent that is hard to workaround is an even longer road. Typically, to workaround a patent the rule of thumb is that a competitor only needs to differ by approximately 10%. Once they do that they can essentially duplicate your produce. This may be one of the reasons behind the fact that 95% of patent do not generate any money.

To add insult to injury, patent infringement court cases are typically decided over one word. The competitor or infringer has the advantage of combing through your finished patent document and finding the weakest link and exploiting that.

Critics of patents claim that patents hinder innovation - this line of thinking overlooks the importance of investment in business. Investors are more reluctant to put their money in harm's way - and without some protection of their investment. Valid and proper patents provide such a protection.

Big companies that are already entrenched do not need to innovate - they make their money on renewal or subscription or selling existing products. As Joel West points out about large companies:

  1. Eligibility: to only large companies

  2. Cartel: allied members to work against non-members

  3. Hypocrisy: conflict of interest, large companies launching lawsuits against others to either put them out of business or extract rents

Interesting patent reads are:

  • A Patent is Worth Having, Right? Well, Maybe Not (NYTimes) : "They found that starting in the late 1990s, publicly traded companies saw patent litigation costs outstrip patent profits. Specifically, they estimate that about $8.4 billion in global profits came directly from patents held by publicly traded United States companies in 1997, rising to about $9.3 billion in 1999, with two-thirds of the profits going to chemical and pharmaceutical companies. Domestic litigation costs alone, meanwhile, soared to $16 billion in 1999 from $8 billion in 1997."

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