Grove Says Patent System May Have Same Flaws as Derivatives

"Patents have evolved to a point where they often aren’t developed into products, and instead are instruments traded by speculators looking for the highest possible profit"

My initial reaction to the headline, was that it was so much hyperbole, but Grove makes the case that patents no longer serve their original function, and patent challenges should be easier.

I'm very glad when this issue gets attention. The software patent system is severely broken.

There's something wrong when patents play a more important role as a defensive play (for most companies) than as an incentive for inventors to implement their ideas.

My own recommendation is that a company should lose its rights to a patent if there is not at least one product released by the company in x years.

The patent system is supposed to increase innovation, but there's a suprising number of adverse feedback effects from an increased rate of innovation which distort the patent mechanism:

- succeeding innovations are more likely to occur within the lifetime of a patent

- the patent office can't keep up, so it reduces the time for review

- the time to issue (3 years and counting) becomes a huge problem for small inventors, while being much less of one for trolls

- the number of patents covering an integrated product increases. At this point it is impractical to actually check whether you are infringing one

- The standard of unobviousness, the crucial criterion of whether a patent serves the public interest, is related to the state of the art. But as the state of the art changes more quickly, this becomes more difficult to define, and also more difficult for patent examiners to keep up with. (And the validity of a patent may be decided by a court which has even less chance to keep up).

It's so important for highly respected, heavy hitters like Andy Grove to weigh in on this issue. When patents become weapons and products become targets, the creation of real wealth becomes a chump's game. In this sense, the analogy to derivatives is pretty brilliant. Opportunistic, sure, but pretty damn insightful as well.

I can't help get the idea to solve this problem...

The idea is : "Move your factories, engineering teams to China, where patents issued in USA are ignored". The drawback is the company can only sell products outside U.S.

Am I joking? If the ShangZai manufacturers in China take a longer term view, they can do this. They are capable to adopt U.S. patents for their own products, except they will not be able to sell the products/services to U.S. But they can flood all markets in Europe and East Asia with their new adopted inventions.

The basic problem is one of power. A large corporate entity can muster greater legal resources than a small startup to defend patents, even those that will never be developed into products.

Perhaps a firmer "use it or lose it" deadline could shift the balance of power, and streamline the process of patent challenges.