Patents Are Eating the World and Hurting Innovation (not all, but many...)

It’s been a busy month for intellectual property. In late May, the U.S. Senate failed to pass a reform bill aimed at curbing the influence of patent trolls. In early June, Elon Musk announced that Tesla would not initiate lawsuits with any firm that used its patents “in good faith.” Last week, the U.S. Supreme Court issued a ruling limiting the scope of software patents.

The backdrop for all of it — and the reason why so many companies ought to be paying attention — is the explosion of patent litigation since the 1980s, illustrated below:



That chart is also key to understanding Tesla’s decision to share its patents in order to grow the electric vehicle industry, as I discussed today with Orly Lobel of University of San Diego and James Bessen of BU. (You can watch the recording of our conversation at the bottom of this post.)

“What Musk has said is basically these patents aren’t very valuable to us in terms of keeping other electric vehicles out of the marketplace,” Bessen explained. “But he’s hanging on to them, and what he’s talking about there is that they may be valuable in defensive terms, if other firms come after him and sue Tesla.”

In other words, the value of patents in an increasing number of cases is merely to keep from getting sued by someone else with patents.

read full article at Harvard Business Review