This article first appeared on DNA here.
A LOT has been said about how Malaysian entrepreneurs have weak patent portfolios. Some of the complaints are about the slow approval process versus the speed at which business moves, and also the high cost of registration – particularly if one wants to enjoy international protection.
However, I would like to share my personal views on why I think that patents are a bad thing for entrepreneurship as a whole.
But first, let’s clarify what a patent is. Wikipedia (always useful) says that, “a patent is a set of exclusive rights granted by a sovereign state to an inventor or assignee for a limited period of time in exchange for detailed public disclosure of an invention.”
Simply put, a patent is a government-granted monopoly over an invention.
Now, patents were crucial to the success of the industrial revolution as it was the legal mechanism to reward people who successfully pushed the frontiers of technology, with a monopoly for them to commercially exploit their inventions.
In principle, there is nothing particularly wrong with this, as we’re rewarding the brave explorers who push forward human development.
However, the number of patents filed during the industrial age was very small compared with the thousands that are filed by individual companies today. Mimos alone files more than a thousand patents each year, while large technology companies like IBM are filing a lot more than that annually.
This presents a problem.
Let’s use an analogy to put things into perspective.
Imagine that the entire body of human knowledge is like a huge land. Let’s call this land Pengetahuan [Malay for ‘knowledge].
If you believe that human knowledge is unlimited, then just imagine that there are land reclamation or exploration works going on at the borders of Pengetahuan. When a brave explorer opens up a jungle or discovers some new land, the King of Pengetahuan grants him a leasehold on that plot, which he then fences up, staking his private claim on it.
There are no significant issues when there was unexplored land aplenty and few fenced up private plots. However, with the numbers of patents filed today, you can imagine that travelling around the land of Pengetahuan would be terribly difficult or even impossible, without hitting a fenced up private property. Entering without permission would amount to trespass and we know what happens to trespassers.
In my opinion, this is the problem with patents – it privatises human knowledge. It is nearly impossible to do anything today, whether in academic research or commercial development, without bumping against someone’s patent.
While the hurdles aren’t insurmountable, at the very least, it is a bump in the road that either forces us to climb over the fence or walk around it.
If things continue to be left unchecked, there would hardly be any land in Pengetauan that we can step on without paying rent, or walk through without paying a toll.
If this was merely land, then we could always choose to stay at home and not go on an adventure. However, patents are a fence on human knowledge. So, the analogy starts to fall apart here.
Imagine that an intrepid explorer – Kembara – manages to high jump over a fence and discovers a new land adjacent to the existing one. He can get a grant from the King on that new piece too. Then, he becomes the new lord in his own land.
Unfortunately, to get to his land, he would need to jump over the neighbour’s fence.
With real land, we can ask the government for a ‘right of way’ – to carve a small path into the new land through the neighbour’s – but this is not the case with patents. The only way that Kembara can get to his own land is by paying his neighbour a toll or rent. Otherwise, his neighbour can sue him, or shoot him.
This is where patents start to stifle inventions – particularly those from young startups. Silicon Valley would not be where it is today if the pioneers were surrounded by patent land-mines. Imagine that Kembara got shot at the moment he stepped out of his home. That would have put a severe damper on his adventures.
The present patent system also encourages some weird behaviour. There are even companies today – Patent Trolls – whose business model is built around patently suing other people for patent violations.
They don’t even need to do any research or development but simply buy up existing patents to bolster their patent portfolios.
What is sometimes missed is that a lot of the technology giants have huge patent banks, largely for defensive purposes. Some have suggested that Google’s purchase of Motorola Mobility for US$12.5 billion and subsequent sale at US$2.9 billion, was for its portfolio of mobile-related patents that it needed to defend Android.
The idea behind a patent bank is that if a company gets sued for patent violations by another, they can countersue for other patent violations because, simply put, it is a near certainty that there are some obscure patents in their portfolio that the other company has violated in return.
This business strategy is MAD – mutually assured destruction.
This is often the reason why startups are encouraged to file for patents. However, in order to make effective use of this defensive strategy, a company would need to have a rich stockpile of patents, and patents cost a lot of money to file and maintain.
The only ones to profit immediately from all of this are the agents of the patent system.
So, instead of encouraging Malaysian startups to buy into an ecosystem that will bleed them dry before they can even spread their wings to fly, I think that we can encourage them to embrace a culture of openness instead.
Knowledge does not come through divine revelation. Ideas cannot bloom in the dark. Innovation thrives when there is openness, sharing and cross-pollination of ideas.
Human progress has always been built on the shoulders of giants. Now, imagine where we would be today if said giant decided to swat us off its shoulder.