What Happened to America’s Innovators?

When the US Patent Office came into being over 100 years ago, the ultimate intention was to help foster invention and innovation in America.  Thomas Jefferson helped institute very precise rules that defined an invention and thereby constituted protection under patent law.  The ability to patent intellectual property is extended to not only the design of tangible, physical items such as The Star Wars characters, but also the usefulness behind a technology or a creation like fiber optics or a medicine.  A patent is designed to provide rights to the owner for 20 years and protects against unauthorized use of the intellectual property.

Although the intentions of the US Patent Office were and are pure, the unintended consequences serve to stifle a free market economy.  At a basic level, offering an inventor a patent with 20 years of protection limits innovation and inhibits additional market choices for consumers.  In practice, the patent allows the holder to receive royalties, so to speak, from an entity that earns money on the sale of a product that uses the patented intellectual property.  This seems fair, but offering this for such an extended period of time is prohibitive.There are thousands upon thousands of patents on file at the US Patent Office and they offer an online tool to search through the patents to see if your idea is already patented.  Instead of wasting money on researching patents, a company may produce a product and unintentionally infringe on a patent.  In turn, a lawsuit is filed and millions of dollars are spent.  This means that time, resources, and money are poured into the litigation process.  This ties up the court system.  This drives up the price of technology.  This eats up a company’s financial resources and ultimately leads to loss of jobs.  The consequences are compounded and ultimately the consumer loses.

These unintended consequences are most prominent and highly visible in the technology industry where we see companies like Oracle and Google duking it out over computer language.  These are very large corporations with the financial means to handle long, drawn out lawsuits.  A regular small business would never be able to compete, so no one tries.  That means that these large corporations will continue to monopolize the marketplace and dictate the price of the latest and greatest technology.  We can see similar things happening in the pharmaceutical industry where large corporations own the patents on drug formulations and can charge a phenomenal rate, driving up the cost of insurance and pricing the drugs out of reach for consumers without insurance.  Frivolous lawsuits against pharmaceutical companies also play a role in the high cost in that industry.

The opportunity to bring innovation to market in America has dwindled.  Our economy has not seen the likes of a great innovation in years.  Technological innovations such as Amazon, eBay and AOL have not been seen in over a decade.  The current innovation landscape would not even support these businesses today.  We need to call for reform on patent law.