Bad Ideas: Trying To Build Patent Marketplaces
from the a-market-in-ideas-after-the-fact? dept
The NY Times has what feels like a warmed over press release talking up the rise of patent auctions and makes some very one-sided and weakly supported assertions that this is somehow good for the market of innovation. It's not. In any way. There have been a bunch of companies trying to "trade" in patents or patent auctions, and all they've done is help make innovation harder by separating the idea from the implementation, and encouraging more lawsuits or extortionary techniques. Patents are no longer being used for innovation or to distribute knowledge. They're used to create a tax on anyone who actually innovates, and comes up with the same concept that others have come up with. Amazingly, the NY Times notes none of this. Instead, it makes the following statement:And patents, after all, are ideas. Any market mechanisms that speed up the process of figuring out what a patent is worth should hasten the flow of ideas into the economy, accelerating the pace of innovation, policy experts say.That's wrong. Flat out, bizarrely, backwards and wrong. Ideas don't need a market. You want a market for scarce goods. You don't need a market for goods that are not scarce. This is fundamental stuff and has been obvious for ages. Hell, Thomas Jefferson famously noted that very issue ages ago:
If nature has made any one thing less susceptible than all others of exclusive property, it is the action of the thinking power called an idea, which an individual may exclusively possess as long as he keeps it to himself; but the moment it is divulged, it forces itself into the possession of every one, and the receiver cannot dispossess himself of it. Its peculiar character, too, is that no one possesses the less, because every other possesses the whole of it. He who receives an idea from me, receives instruction himself without lessening mine; as he who lights his taper at mine, receives light without darkening me. That ideas should freely spread from one to another over the globe, for the moral and mutual instruction of man, and improvement of his condition, seems to have been peculiarly and benevolently designed by nature, when she made them, like fire, expansible over all space, without lessening their density in any point, and like the air in which we breathe, move, and have our physical being, incapable of confinement or exclusive appropriation. Inventions then cannot, in nature, be a subject of property."Markets are for property exchange and the more efficient allocation of property. Ideas are not property, and making a market for them and holding them back doesn't accelerate the pace of innovation, it retards it. Greatly. And, more and more studies have been showing this.
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And that is why the New York Times is financial trouble.
I think patents are anti-capitalism, They lock something away and don't let other use it and if enough people do it you have the same effect that the tragedy of the commons have in any resource but I'm sure there is another name for it as people doing this are not the commons.
Now how this could change, well I'm a fan of the open source philosophy and I see strengths in that philosophy that could help the market.
- Open source is a self healing market. You can't destroy a project that easily if there is a demand because it keep popping up if people need it. Imagine general motors open sourcing their vehicles and selling parts that can be assembled in any garage in the country changing their focus not to making cars but enabling local markets to assemble them according to their needs, they could sell services, expertise and parts and let the very labor intensive part of actually mounting the car to others, they would be enablers of micro factories too whom they would sell things and those micro factories would sell to the public and if General Motors did no longer exist others could pick up where they left without disrupting the market.
- Opensource is auto regulated, there is no cornering the market by an individual by force or coercion so there is no anti-trust issues either.
- Opnesource breed cooperation and have no barriers that need to be addressed.
- Opensource stimulates local markets with international cooperation.
- Opensource keep companies on their toes, you can't just make a patent portfolio and call it a day or use your lawyers and lobby to maintain a market that only will work in one country and in others you will be trashed by their own interests.
You actually will have to battle everyday for sales and will become sensitive to the market and not end up like some banks and auto makers that we all know off. The ones that create the technology will be the ones that people will be calling to help them when problems arrive there will always be a market for services.
And that was my 2 cents :)
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Re: And that is why the New York Times is financial trouble.
thanks for your 2 cents
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Re: Re: And that is why the New York Times is financial trouble.
/I can be offered a penny for my thoughts, or I can put in my two cents. obviously, unsolicited advice is twice as valuable.
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Missing logic
The arrival of these new business-minded players, according to patent experts and economists, could lead to a robust marketplace for patents, where value is determined not so much by court judgments but by buyers and sellers,
There is some logic missing here isn't there. The actual idea behind a patent is published and available to all. So without enforcement patents have no value. The market (if there is one) will likely boil down to the people who are best able to enforce the patent (ie have the best lawyers) bidding high. A tech company that wants to use the patent will have to outbid all the lawyer/troll organisations to get it.
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Thomas Jefferson
"To take from one because it is thought that his own industry and that of his father's has acquired too much, in order to spare to others, who, or whose fathers have not exercised equal industry and skill, is to violate arbitrarily the first principle of association--'the guarantee to every one of a free exercise of his industry and the fruits acquired by it.'" --Thomas Jefferson: Note in Destutt de Tracy's "Political Economy," 1816. ME 14:466
Jefferson recognized that inventions could be valuable to society and that there was reason to provide incentive to invent:
"Society may give an exclusive right to the profits arising from them, as an encouragement to men to pursue ideas which may produce utility, but this may or may not be done, according to the will and convenience of the society, without claim or complaint from anybody... The exclusive right to invention [is] given not of natural right, but for the benefit of society." --Thomas Jefferson to Isaac McPherson, 1813. ME 13:333
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Do not bother with a "first mover" argument. As has been shown in a number of examples and industries, and somewhat thanks to the success of generic brands, "first mover" no longer has the advantage it once did. As for "incremental improvements," there may be a slight advantage to those, but you are spending even more money to develop "incremental improvements," that may or may not be of interest to a customer who sees one price tag of $25,000 and a comparable or even identical product for $20,000.
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The Toyota Prius is not an invention but a massive collection of very small ideas only a minor fraction of which are patented...and I guarantee that a bunch of those patents are "obvious to anyone knowledge in the arts". Guaranteed.
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While the Toyota Prius may be a "massive collection of very small ideas," the fact is that the Prius is a gestalt that required the "massive collection of very small ideas," meaning that the Prius was in essence an invention that required a massive collection of very small ideas in order to be operative.
As for there being a "bunch of those patents" being "obvious to anyone knowledge [sic] in the arts," I have not seen all their patents, so I do not know. Since you are making an unsupported assertion, you statement has no value.
As for the cost of the development of the Prius, I was WRONG, WRONG, WRONG!!! You are right, it did NOT cost $100 million to develop the Prius. Chalk one up to mobiGeek's infinite knowledge.
According to Fortune magazine, the cost of developing the Prius was about $1 billion, which they describe as being about typical for a new car.
http://www.mutualfundsmag.biz/2006/02/17/news/companies/mostadmired_fortune_toyota/index.htm
I am sure that the $1 billion dollars was totally unnecessary because all the time (five years, from 1993-1997) and money they spent was already obvious. I guess the $1 billion was just wasted. They could have hired that know-it-all mobiGeek and taken a huge short cut.
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So you believe that without patents that Toyota would not have created this automobile?
How much of that $1B went towards the patents of which you discuss, versus how much actually goes towards just putting together the pieces and the marketing and the project management and the financing and the yada-yada-yada...
These "inventions" were so fantastically unique that no one else could have the knowledge? Wonder how this happened then?
Oh, and that "2000" patents is actually "...more than 2,000 patent applications filed across the world", not just in one jurisdiction.
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As I noted, the Prius is a collection of inventions that were designed to play nicely together. So, the transmission may have been an invention and the clutch may have been an invention and the engine may have been an invention and the controls that make everything play nice may have been an invention - BUT ALL THESE INVENTIONS WERE REQUIRED FOR THE OTHER INVENTIONS TO DO WHAT THEY WERE SUPPOSED TO DO. So, thank YOU for playing.
So you believe that without patents that Toyota would not have created this automobile?
Yes, I believe that. Do you believe they would have spent $1 billion otherwise?
How much of that $1B went towards the patents of which you discuss, versus how much actually goes towards just putting together the pieces and the marketing and the project management and the financing and the yada-yada-yada...
My assumption would be none. Many large companies (maybe most) separate administrative and legal costs from development costs. Regardless, what is your point asking this question? The development costs are the development costs. If there are financing costs, they are there because they needed money for the project. Advertising costs: likely none because that is a separate budget and is not part of "development." As for "project management," it seems like that would be part of development, or do you assume people will be running around without some sort of plan?
These "inventions" were so fantastically unique that no one else could have the knowledge? Wonder how this happened then?
Easy. Paice wrote relatively broad patents covering an approach to hybrid. If you read a few of Toyota's patent applications you quickly realize that Toyota narrowly protected their invention. You can think of Paice's patent being a notebook titled "an approach to a hybrid architecture." Toyota filled in a number of pages in that book. Paice's patents did not foreshadow or even make obvious any of Toyota's patent applications.
Oh, and that "2000" patents is actually "...more than 2,000 patent applications filed across the world", not just in one jurisdiction.
You are correct. I wrote too hastily. It was 2,000 patent applications. You are correct, for once.
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Development processes do not depend on patents.
And as your point about Paice shows, patents actually are what contributed to the $1B price tag because Toyota had to spend money to FIGHT patents.
Let me reword my previous question: why do you believe that Toyota would note create new/improved vehicles if there were no patent system?
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My university did a lot of research in the early 90s on hybrid cars, and won several international challenges. If you think invention is "Eureka", 9 months in a basement, and then emerging with a finished project, you are a dreaming. All invention is collaborative and leans heavily on what came before.
Oh, and by the way, patents are for PROCESSES, not ideas. Getting gasoline out of crude oil is an idea, fractionation is a process (US Patent 3320158). Again, you _can't_ patent ideas.
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As for the "Eureka," there was a quote in "Diesel Odyssey of Clessie Cummins" where Clessie had been working on a problem for months and had been unable to figure out a solution. One day he was staring out the window when the solution came to him in a "eureka" moment.
I had a similar thing happen to me one day when looking at a particular piece of hardware. Actually, I was looking at seveal pieces of hardware and in a flash (literally) I realized that there was an easier way to produce several versions of the same hardware.
What was amazing about this "obvious" invention was that it took more time to convince people it was possible than it took to come up with the invention in the first place.
Such is the nature of invention. It is often the effort of years and even decades, but there can be a moment when all the effort comes together and a human brain almost magically fits the pieces of a complex puzzle together.
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Answer: Hell yeah.
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If he spent so much money on the idea he should have no problems substantiating his costs to the people. Were there independent auditors that audited them to substantiate the costs? Does he have receipts? Otherwise how do I know how much he spent. I don't know if he's just making up the amounts that he spent. I'm not saying that he did, but I have no reasonable way of knowing. He has a conflict of interest in the matter so clearly I can't trust his statements.
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It seems like you keep using the same examples over and over. We have given many many examples of bad patents and how they harm society. I do think if patents are used correctly they can be good for society but the fact that you can only come up with MAYBE only one example of how patents might have helped is telling.
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Here is a real problem with inventors:
Nicola Tesla was brilliant; indeed, most likely a genius. Nicola was awarded somewhere in the neighborhood of 300 patents (references disagree, but there was a really cool paper that spent a fair amount of time researching his patents). Now, Tesla turned out to have invented the Radio before Marconi and he turned out to have a better method of electricity transmission (AC) than Edison, who wanted DC, among dozens of other cool things.
However, Edison took Tesla's inventions when Tesla was working for him and actively suppressed Tesla's inventions and used all his power to talk about how they were unworkable and unmarketable and valueless after Tesla stopped working for him. Since Edison was famous (and rich and powerful) and supposedly knew what he was talking about, investors and people in general began considering Tesla a crackpot.
Later, Edison allowed as how he "might" have been wrong about Tesla (note that electricity transmission today is AC; "might" have been wrong Edison?).
So, we had great inventions and a person who had terrible marketing skills and little power (Tesla). Tesla is only known to history buffs and geeks, and Edison is in the history books. Fortunately, Tesla did get patents on his inventions and was able to continuing inventing, largely using his own money, until he ran out of money.
Thank goodness for Tesla, who was ahead of his time and created the basis for many invention and innovations, even though many of his inventions were not used until decades after he created them.
So, in addition to Cummins engine brake, Cummins novel fuel injector system (the heart of which is still in use today), and most of Cummin's other patents, nearly all of which went into production, I offer up several dozen Tesla patents, along with inventions Tesla made for Edison that Edison took claim to, many of which form the basis for the infrastructure we use today.
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Punky, which "history books" do you read ?
http://en.wikipedia.org/wiki/Nikola_Tesla
Never measure a man's success by the size of his wallet, punky
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Perhaps because Edison had patents on his ideas and had a financial conflict of interest with his ideas over the ideas of his competitors and hence it was his patents that gave him incentive to waste resources into suppressing competition. Without that it may have been easier for Telsa to advance his ideas sooner without investing as much money into doing so.
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That wouldn't be a conflict of interest. A conflict of interest would exist if Edison had something to personally gain by the use of his design in opposed to a competitor and in this case a conflict of interest maybe what drove Edison to reject competing designs.
Think of a pharmaceutical corporation that has patents on specific drugs, do you really expect them to endorse competing drugs? No.
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In order for it to be worth monetary damages in infringement lawsuits the design must be worth something, in other words, the company that stole the design must be able to USE it and if he can USE it only THEN can he legally be sued and if he can be sued it presumably means he can use it which means it's useful. However, most patents that exist are not being used but they can potentially be used by some company that doesn't own them and if they does get infringed upon that means the person that owns the patent can automatically argue the patent is useful by virtue of the fact that it's being infringed upon. In other words, the argument that "worthless patents are invalid" is a worthless argument.
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Also, you are confusing the utility of the idea vs design. Even a patent with a useless design can have a good idea.
Finally, if the patent claims are broad enough, competing designs are also "infringing", which can be enough to get fat settlements.
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"However, if you can prove the design as patented is not workable, the patent becomes worthless."
But this doesn't do anyone any good. Patent trolls own patents and they don't build anything. However, if someone infringes on their ideas their idea is "workable" by virtue of the fact that it's being infringed upon. Hence, the statement that "if you can prove the design as patented is not workable, the patent becomes worthless." is moot because someone who is infringing on a patent just proved that it is workable. If the design is not workable it's not workable with or without a patent, no need to prove anything, the design simply won't be used by anyone regardless.
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"99.8% fail. Only 3,000 patents out of 1.5 million patents are commercially viable."
http://www.inventionstatistics.com/Innovation_Risk_Taking_Inventors.html
Yet those that have failed patents do keep those patents and if someone ever infringes on them (ie: makes the design/idea workable) the patent holder can sue. The statement that if you can prove a design is non workable the patent becomes worthless is moot, the person who infringes on a patent just proved it's workable.
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So basically, you're confusing patents and designs, innovations and ideas. Patents include more than a design and innovations MUST be more than an idea.
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You mean like when the patent office grants a patent on swinging sideways on a swing?
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I'm not confusing anything, I'm going by the types of patents that the patent office tends to grant (ie: patents on swinging sideways on a swing).
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Most litigation results in settlements, just ask any lawyer.
"Out-of-Court Settlement: The most likely outcome of most types of civil litigation is an out-of-court settlement. The plaintiff and defendant and their attorneys meet and hash out a settlement that everyone can live with. When you go to trial, either side can win big or lose big, and that's risky and scary. So the most likely outcome, if you and your attorney have been aggressively prosecuting your claim, is that at some point the parties will agree to meet and discuss a settlement."
http://ezinearticles.com/?Possible-Outcomes-to-Your-Patent-Suit&id=2403880
If there is a settlement that generally means that the plaintiff got something. How else do you suppose patent trolls survive?
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Where is your evidence for this?
There is plenty of documented evidence to the contrary (see Boldrin and Levine for example).
The fact is that these days the "lazy, let someone else do the work and then cash in business model" is best exemplified by the patent troll.
Compare these two models
Reverse engineerer model.
1) See a successful product. You have to wait quite a while to be sure of this - in the meantime the first mover is getting further ahead in market presence as well as technology.
2) Copy the product. This won't be quick or cheap either. Its bound to take at least 18 months - 2 years
3) Build up Market Share. Again not an instant process
Patent Troll Model
1) Create/buy a portfolio of obvious and over broad patents. (There's lots out there and if your own attempts to create them fail sometimes you can always just tweak it a bit and try again)
2)See a successful product - now work out some plausible way that it infringes one of your "patents".
3) Threaten a lawsuit. If you aren't too greedy many firms will settle out of court and you just walk away with the cash/royalties.
Notice that in the former model the time spent waiting to be sure the product is a winner is all waste/loss/risk whereas in the latter case it is just watching your prey being fattened up for the kill.
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Where is your evidence for this? There is plenty of documented evidence to the contrary (see Boldrin and Levine for example).
Some people are unable to see their own examples.
Big one: Generic pharmaceutical drugs. They typically take the market by storm once the patent expires.
The fact is that these days the "lazy, let someone else do the work and then cash in business model" is best exemplified by the patent troll.
Non-sequitur that has no relevance to the points I was making.
Compare these two models
Reverse engineerer model.
1) See a successful product. You have to wait quite a while to be sure of this - in the meantime the first mover is getting further ahead in market presence as well as technology.
2) Copy the product. This won't be quick or cheap either. Its bound to take at least 18 months - 2 years
3) Build up Market Share. Again not an instant process
Patent Troll Model
1) Create/buy a portfolio of obvious and over broad patents. (There's lots out there and if your own attempts to create them fail sometimes you can always just tweak it a bit and try again)
2)See a successful product - now work out some plausible way that it infringes one of your "patents".
3) Threaten a lawsuit. If you aren't too greedy many firms will settle out of court and you just walk away with the cash/royalties.
Notice that in the former model the time spent waiting to be sure the product is a winner is all waste/loss/risk whereas in the latter case it is just watching your prey being fattened up for the kill.
I am unsure of the reason you put these points in place.
Note that Toyota is on the third-generation Prius. But wait, I thought innovation was a "continuous process"? For some products, maybe. For a complex assembly like a Prius, improving element 327 may do nothing withing modifications to dozens of other elements. Indeed, car manufacturers build an assembly of integrated elements for which incremental changes are either not possible, or not sufficiently valuable to incorporate. So, release a vehicle, make minor changes from year-to-year, but the big changes are incorporated in the next version. The Prius has been out for nearly 12 years, and there have only been three models. Whatever happened to "continuous improvement" and "incremental improvement"? Not so good on a vehicle as complex as a car.
On the other hand, once you see how the Prius is built, much less difficulty to copy the design if you already build cars.
Question: If the sticker price on a Prius was $25,000 and the sticker price on an identical Generic Motors vehicle was $20,000, which would you buy?
Before you answer, note that Vizio is essentially a generic manufacturer that uses technology developed by others. They went from being a virtual unknown to leading the market for LCD televisions - by being a copier!!! Where is Sony? Where is Samsung? Poor them, they are first movers busily "incrementally improving" their product while Vizio eats their market share.
Hurrah for the copier.
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What I have seen is that such a move would cause the company to become less profitable, and likely make them fight to be more efficient, and possibly cut into their devious sales practices.
So what does the explosion of generic drugs prove again?
I completely do not comprehend your statement that because Prius is in its 3rd generation that it isn't "continuous improvement". First, every car manufacturer continues to modify their existing models even on a weekly or daily basis. Minor tweaks because of third-party supplier issues/changes, adjustments from feedback from their maintenance shops, etc.
Second, though there are engineering drivers behind some of the "new generation", a very large component of that process is purely marketing and aesthetics. The changes to the engineering are a "step up" from the tweaks going on in the current generation, but that's typical in ANY engineering environment (minor version vs. major version). Nothing in this ENGINEERING PROCESS proves there's a need for patenting.
As for your price comparison, it is a silly scenario. Are the cars identical? Is the quality? Do they have the exact same features and potential resale price and safety rating and financing options and ...? My neighbor bought a $50,000 SUV when an almost identically sized (same # of seats, cargo space, etc.) was available from a "big 3" for $18,000 less. What exactly are you proving?
Sony has decided not to compete (or not compete agressively) on the lower-end consumer market. So Vizio has come in and taken some share of a low-end market; does that take away from Sony, which wasn't competing for that market? How did this become a zero-sum game?
Personally, I buy the Sony. I am not about to drop $600 for a brand I don't know and possibly won't be working after the 3 year warranty runs out, but I am happy to back Sony who honored a warranty repair almost 1 year after my Trinitron was outside of its warranty period. So I drop $1100 for the same sized Sony because I know the company, trust its quality and its brand/reputation. Sorry, what is it you were proving again?
Yes, hurrah for the copier. They keep the market leaders fighting to innovate and compete to maintain their brand reputation and product quality. Without the copiers, there would be far less incentive for the leaders to do anything for 10-15 years at a shot. They'd spend a couple of years thinking up an new "innovation", come up for a patent on that, then sit back and lock up the market for another 20 years. What a glorious process!
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What I have seen is that such a move would cause the company to become less profitable, and likely make them fight to be more efficient, and possibly cut into their devious sales practices.
So what does the explosion of generic drugs prove again?
It proves that first mover does not win. Any other questions?
I completely do not comprehend your statement that because Prius is in its 3rd generation that it isn't "continuous improvement". First, every car manufacturer continues to modify their existing models even on a weekly or daily basis. Minor tweaks because of third-party supplier issues/changes, adjustments from feedback from their maintenance shops, etc.
Car manufacturer's do not "modify their existing models even on a weekly or daily basis." Period. They would create a maintenance tracking nightmare. There is a reason that changes are clustered. Some changes have to be done simultaneously. Others cause significant maintenance issues. The result is that it makes business sense to wait until either the half year or full year model to make changes.
As for "3rd generation," what are you mumbling about? Toyota is advertising the generation change.
Second, though there are engineering drivers behind some of the "new generation", a very large component of that process is purely marketing and aesthetics. The changes to the engineering are a "step up" from the tweaks going on in the current generation, but that's typical in ANY engineering environment (minor version vs. major version). Nothing in this ENGINEERING PROCESS proves there's a need for patenting.
Actually, there is never a "need" for patenting. Ever. However, there is a "value" for patenting. Regardless, the 3rd generation Prius does have significant design changes that are independent from your desire to sweep engineering under the rug and blame everything on sales and marketing.
Thank you for playing. Please deposit another dollar.
As for your price comparison, it is a silly scenario. Are the cars identical?
Exact copy. Of course.
Is the quality?
If you are already building quality vehicles and are copying another vehicle, of course.
Do they have the exact same features
Understand "copy"?
and potential resale price
Probably not. Toyota gets a lot of their name - even though others have better quality, features and value on some of the models. However, things are changing.
and safety rating
It is a COPY. They use the same materials and they get the same results.
and financing options and ...?
Maybe the copy's financing is better...They are certainly cheaper.
My neighbor bought a $50,000 SUV when an almost identically sized (same # of seats, cargo space, etc.) was available from a "big 3" for $18,000 less. What exactly are you proving?
So, which was the copy? Obviously, your neighbor has way too much money on his hands.
Sony has decided not to compete (or not compete agressively) on the lower-end consumer market. So Vizio has come in and taken some share of a low-end market; does that take away from Sony, which wasn't competing for that market? How did this become a zero-sum game?
Do you really think Vizio will stop with the low end? I assume you recall that Toyota snapped up the low end of the market, and then munched their way to the top.
However, the bigger point here is that the first movers lost their advantage to a copyist, even though they continue to be both inventors and innovators. Vizio's current goal is being cheap - and taking market share.
Personally, I buy the Sony. I am not about to drop $600 for a brand I don't know and possibly won't be working after the 3 year warranty runs out, but I am happy to back Sony who honored a warranty repair almost 1 year after my Trinitron was outside of its warranty period. So I drop $1100 for the same sized Sony because I know the company, trust its quality and its brand/reputation. Sorry, what is it you were proving again?
A bigger question: What are you proving? Vizio had quite a good reputation for honoring their warranties. Further, in some sizes you can buy two Sony's for the price of one Vizio.
Yes, hurrah for the copier. They keep the market leaders fighting to innovate and compete to maintain their brand reputation and product quality. Without the copiers, there would be far less incentive for the leaders to do anything for 10-15 years at a shot. They'd spend a couple of years thinking up an new "innovation", come up for a patent on that, then sit back and lock up the market for another 20 years. What a glorious process!
Or, they drive out the inventors, leaving only the copiers. As for your lovely scenario of letting leaders do something only once every 10-15 years, got some examples in mind? I challenge you to name a commercial company that was able to sit back and lock up a market for 10-15 years followed by another patent that locked up the market for 20 years. Give me examples.
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He's saying that there really aren't any examples because the copiers prod the innovators to keep moving, but I guess a hypothetical is completely lost on you.
Thank you for playing. Please deposit another dollar.
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You need more dollars to continue to play this game.
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The point is that the promise of a monopoly may give incentive for innovations, but it doesn't give any incentive to improve upon them--only competition in the market can do that.
Sorry, try again next time...
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Except you have proved no such thing. Any other questions?
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Any other questions?
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Oh, right. Marketing and profit margins that Big Pharma insists it must maintain.
Funny...the generic makers seem to be fine making their (smaller) profit margins.
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The mission of the Nikola Tesla Inventors' Club is to bring awareness of Nikola Tesla’s innovations to the greater public.
So, "quite a few people" must amount to less than the "greater public," which in my mind means at least "most people," and probably more likely means "the vast majority of people."
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This is what happens in a patent driven system. The first movers have a business model that revolves around patents.
While the patent lasts they spend money on marketing and lawyers rather than incremental improvements.
They don't bother to compete technically - the technical effort goes only into things that can be protected with patents.
If there were no patents they would behave differently. This happened in Italy up to the late '70s and Italy had more innovation in drugs then than it does now. This is reported in Boldrin and Levine.
"Non-sequitur that has no relevance to the points I was making"
It's actually very relevant. The implications of your argument is that without patents copying would be so cheap and easy that no one would innovate. I was pointing out that with patents trolling is so cheap and easy that people prefer to do that rather than go through the lifecycle of bringing innovative goods to market. The Toyota case illustrates this whole thing rather well. Toyota spent all the money and effort bringing the Prius to market and then were hit by a patent troll who followed the strategy that I outlined above.
Only one other major manufacturer (Honda) has followed Toyota's lead in hybrids but I don't think it is Toyota's patents that have done that. Toyota itself has had to negotiate a patent thicket to bring the Prius to market. I don't think Renault-Nissan or Ford would have found it any harder. It is Toyota's first mover advantage and the difficulty of catching up that is the problem.
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Oops. BAD example. You know why? Because the original brand name drug usually still sells in the marketplace for 2x to 10x the price of the generics.
Oh look, they can STILL get a premium.
First mover advantage still has a huge benefit.
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(1) Have sales comparable to what they had before.
(2) Have a significant share of the market.
http://money.cnn.com/2009/08/04/news/companies/generic_drugs_pharmaceutical.fortune/
h ttp://money.cnn.com/2005/08/03/news/fortune500/generic/index.htm
http://mutualfundsmag.us/2009/08 /05/news/companies/top_generic_drugs.fortune/index.htm?postversion=2009080512
You will note some important facts in these articles:
(1) Generics accounted for 54% of all prescriptions in 2006, but were expected to grow. Indeed, I believe the current number of prescriptions for generics in 2008 is now in the 60% range. I also believe I saw an article that estimated by 2013 about 70 to 80% of all prescriptions would be for generic drugs.
(2) The original manufacturer may command a "premium" for being "first," but note in the articles that some recent generics are already out-selling the original, and the situation is more dramatic for older generics. Essentially, the premium is driving the original producer out of the business, meaning the premium exists only until doctors and consumers wise up.
Why look, the premium is a great way of driving your sales away to competitors.
First move advantage is limited by the time it takes for people to wise up, and with pharmaceuticals that is happening faster than it once did. There is a future near when generics will be offered so fast that the much-vaunted "first-mover" advantage will be a minor advantage, at best.
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(2) Have a significant share of the market.
Wait... why is that a problem? Why should they get monopoly rents?
Are you upset that McDonalds, while still the leading fast food restaurant, was not able to keep the same share of the market as it did before Burger King came along? Do you even think about what you write?
(1) Generics accounted for 54% of all prescriptions in 2006, but were expected to grow. Indeed, I believe the current number of prescriptions for generics in 2008 is now in the 60% range. I also believe I saw an article that estimated by 2013 about 70 to 80% of all prescriptions would be for generic drugs.
Again, that's a problem... why exactly?
(2) The original manufacturer may command a "premium" for being "first," but note in the articles that some recent generics are already out-selling the original, and the situation is more dramatic for older generics. Essentially, the premium is driving the original producer out of the business, meaning the premium exists only until doctors and consumers wise up.
Uh, no. It means that businesses too stupid to adjust to a changing marketplace get driven out of business. Welcome to competition and capitalism.
Why is it a bad thing that the cheaper product outsells the more expensive?
First move advantage is limited by the time it takes for people to wise up, and with pharmaceuticals that is happening faster than it once did. There is a future near when generics will be offered so fast that the much-vaunted "first-mover" advantage will be a minor advantage, at best.
Again, an incredibly simplified and rather ignorant understanding of basic market economics. Yes, if pharma marketers were so stupid as to just sit there and charge more. But they're not (thank goodness you don't run pharma marketing... or else they'd be well deserved in firing you). Pharma has been working on all sorts of unique marketing promotions (copay cards?) to compete with generics, and in many cases it works quite well.
It's called competition. Look it up.
Seriously... you don't want to go down this path. You're going to make yourself look really, really bad. No wonder you want to remain anonymous...
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(2) Have a significant share of the market.
Wait... why is that a problem? Why should they get monopoly rents?
Did I say they should gain royalties from their patents? No, you did. Did I say that was a problem? No, you infered that, though I do not know why.
You were claiming that the inventor of a drug still had an advantage and were able to charge a premium - for what, I have no idea. I was merely pointing out the factual evidence that sales of drugs that go off patents go to generic manufacturers quickly, and that trend is accelerating. There are drugs that have gone off patent recently that have more generic sales than non-generic. What this means is that the premium you point out is just a way for a drug company to cut its own throat faster, which means that the original producer in fact can only continue to charge a premium if it no longer wants to produce that drug, or wants to be a minority producer of that drug. So, sure, they can charge a premium for an ever-decreasing market share. Now, how is that an advantage?
Are you upset that McDonalds, while still the leading fast food restaurant, was not able to keep the same share of the market as it did before Burger King came along? Do you even think about what you write?
Good heavens, why would I be upset at either McDonalds or Burger King and the prices they set? In fact, why would you even bring such an example up, since it is irrelevant to your point?
(1) Generics accounted for 54% of all prescriptions in 2006, but were expected to grow. Indeed, I believe the current number of prescriptions for generics in 2008 is now in the 60% range. I also believe I saw an article that estimated by 2013 about 70 to 80% of all prescriptions would be for generic drugs.
Again, that's a problem... why exactly?
Again, you are trying to make what point? Did I say this was a problem? Indeed, I did not. You were trying to claim that being first mover was such a great advantage. My rebuttal is, and remains, that with improved knowledge of the market, as evidenced by MASSIVE proof, that the first mover advantage is not only no longer an advantage, it is evaporating rapidly.
I dare say that Teva, which plans on beginning to advertise its generics for the first time, will do its best to practice the very things you mention on this web site in order to destroy the so-called "first mover" advantage as quickly as possible once they produce new drugs that go off patent.
(2) The original manufacturer may command a "premium" for being "first," but note in the articles that some recent generics are already out-selling the original, and the situation is more dramatic for older generics. Essentially, the premium is driving the original producer out of the business, meaning the premium exists only until doctors and consumers wise up.
Uh, no. It means that businesses too stupid to adjust to a changing marketplace get driven out of business. Welcome to competition and capitalism.
I am not sure what you point is, because you seem to be agreeing with me, even though you say "no." Regardless of your confused answer, consumers have better knowledge of the market, encouraged by competition, which is doing a great job of destroying any premium chargeable by the "first mover," rapidly reducing and even eliminating the so-called "first mover" advantage, a natural consequence of competition and capitalism. As for the stupidity of business, the stupidity is the belief that being "first mover" permits them to charge a premium. Sad, stupid, mistake. Welcome to capitalism and competition.
Note that I am not saying this is a bad thing, I am just pointing out that the advantage you attribute to "first movers" is not borne out by statistics. Perhaps due to mistaken beliefs or bad actions by the first movers, but that is irrelevant to my point.
Why is it a bad thing that the cheaper product outsells the more expensive?
I think it is a good thing. Don't you?
First move advantage is limited by the time it takes for people to wise up, and with pharmaceuticals that is happening faster than it once did. There is a future near when generics will be offered so fast that the much-vaunted "first-mover" advantage will be a minor advantage, at best.
Again, an incredibly simplified and rather ignorant understanding of basic market economics. Yes, if pharma marketers were so stupid as to just sit there and charge more. But they're not (thank goodness you don't run pharma marketing... or else they'd be well deserved in firing you). Pharma has been working on all sorts of unique marketing promotions (copay cards?) to compete with generics, and in many cases it works quite well.
Perhaps these techniques you describe work well, but if you were working in the analysis department of a pharmaceutical company, they would be well deserved to fire you for ignoring sales and prescription figures. Regardless of pharmaceutical company skills in sales and marketing and reading tea leaves, or, perhaps because of them, non-generic manufacturer continue to lose market share at not only a steady pace, but a MASSIVELY DRAMATIC pace, and yet, pharmaceuticals seem to be slower to respond than the music distribution companies you enjoy writing so much about. If pharmaceutical companies do not do something more than they have (selling t-shirts, co-pay cards, lottery tickets and the like are interesting experiments, but non-generic pharm companies have a long way to go to be truly competitive), the number of new drugs entering the market place will dwindle to a trickle (which is already happening - we finally hit a knee in the curve where more drugs are coming off patent than are being patented) and within a decade 80% to 90% of all drugs will be generic and the first movers will be marginalized. As you recognize, that is basic economics.
It's called competition. Look it up.
Smartass. I know it is called competition. It is what I have been talking about, and for some reason you seem to be ignoring me, or reading something into what I have written that is not there. You seem to think I think competition is a bad thing. I do not. My entire point, I think probably my only point, is that, either intentionally or accidentally, non-generic manufacturers are squandering whatever first-mover advantage they once had and are helping by their actions to hasten the destruction of the first mover advantage. The loss of the first mover advantage is due to excellent competition (which you seem to have some basic understanding of) and their own, short-sighted actions.
Seriously... you don't want to go down this path. You're going to make yourself look really, really bad. No wonder you want to remain anonymous...
I do not feel bad. I feel sad that I am trying to make a simple point, and you seem to be trying to read something into my simple point that is not there. I am pro-competition. I think it is awesome that Toyota has a Prius hybrid that is well-protected, I think it is even more awesome that Ford has developed a better and different technology hybrid, I think it is even better than that that Honda has their own hybrid technology, also well protected. Three approaches to a technology, with more coming from other competitors. Each technology aiming for similar markets. That is competition. The company that wins this market will be the one that gathers together the bundle of values that pleases their customers. That is competition, including the innovations driven by the patents of competitors. Society wins once again.
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Huh? I said no such thing.
Did I say that was a problem? No, you infered that, though I do not know why.
You were the one claiming they needed a patent to make money. You are wrong. Life moves on.
You were claiming that the inventor of a drug still had an advantage and were able to charge a premium - for what, I have no idea.
And this is fact. Proven fact. That you don't know for what, again, only shows why you are not a pharma exec.
I was merely pointing out the factual evidence that sales of drugs that go off patents go to generic manufacturers quickly, and that trend is accelerating.
Which does not change the fact that there is a first mover advantage -- one you claimed did not exist. You were wrong. Let's move on.
There are drugs that have gone off patent recently that have more generic sales than non-generic.
Again, that is meaningless. The non-generic can still sell for a premium -- which is proof of the first mover advantage, which you claimed didn't exist. The actual marketshare is not important in proving the first mover advantage. The premium in price is. Do you really not see the difference?
What this means is that the premium you point out is just a way for a drug company to cut its own throat faster, which means that the original producer in fact can only continue to charge a premium if it no longer wants to produce that drug, or wants to be a minority producer of that drug. So, sure, they can charge a premium for an ever-decreasing market share. Now, how is that an advantage?
Wow. Must we teach Marketing 101 here? If you sell a premium good, you do not need the largest marketshare. I mean... come on. Even you must know this? No? According to you, Rolex has no advantage over Timex because of the marketshare difference?
Good heavens, why would I be upset at either McDonalds or Burger King and the prices they set? In fact, why would you even bring such an example up, since it is irrelevant to your point?
Not irrelevant at all -- though the fact that you miss the point suggests again a big block in the thought process here. You were claiming that having the largest marketshare matters most. It's meaningless. That's the point. And it's very very relevant. Except, I guess, if the point goes WAY WAY over your head.
Again, you are trying to make what point? Did I say this was a problem? Indeed, I did not. You were trying to claim that being first mover was such a great advantage. My rebuttal is, and remains, that with improved knowledge of the market, as evidenced by MASSIVE proof, that the first mover advantage is not only no longer an advantage, it is evaporating rapidly.
No, your point was that there was no first mover advantage. My point was that this is false. And you are still wrong. There is a first mover advantage. You seem totally confused by basic economics and marketing. That one has a smaller share of a market on a premium product does not mean the premium product does not have an advantage.
Honestly, this is really, really basic stuff. If I can sell widget X for $1,000. And you can sell a competing product Y for $100. It won't matter if I only have 20% of the market and you have 80% of the market. I still have an advantage in that I'm able to sell my product for a premium.
Get it yet?
Regardless of your confused answer, consumers have better knowledge of the market, encouraged by competition, which is doing a great job of destroying any premium chargeable by the "first mover," rapidly reducing and even eliminating the so-called "first mover" advantage, a natural consequence of competition and capitalism. As for the stupidity of business, the stupidity is the belief that being "first mover" permits them to charge a premium. Sad, stupid, mistake. Welcome to capitalism and competition.
Except that the first mover advantage IS allowing a premium to be charged, despite your denials. Again, you are mistaking marketshare for market revenue.
Why is it a bad thing that the cheaper product outsells the more expensive?
I think it is a good thing. Don't you?
Right. So we agree... Um. So why do you want to take the cheaper product out of the market again?
Perhaps these techniques you describe work well, but if you were working in the analysis department of a pharmaceutical company, they would be well deserved to fire you for ignoring sales and prescription figures
Well, actually, I'd get promoted for focusing on total profits. You'd get fired for focusing on marketshare over profits. Details.
If pharmaceutical companies do not do something more than they have (selling t-shirts, co-pay cards, lottery tickets and the like are interesting experiments, but non-generic pharm companies have a long way to go to be truly competitive), the number of new drugs entering the market place will dwindle to a trickle (which is already happening - we finally hit a knee in the curve where more drugs are coming off patent than are being patented) and within a decade 80% to 90% of all drugs will be generic and the first movers will be marginalized. As you recognize, that is basic economics.
Ha! Way to misread what's happening in the market. There are plenty of reasons why more drugs are coming off patent than being discovered. One reason -- by the way -- is bad patent laws that make discovering new drugs so impossible. Details, friend, details.
Smartass.
Ah, insults. Look, you can just admit you were wrong. It makes things easier to move forward.
I know it is called competition. It is what I have been talking about, and for some reason you seem to be ignoring me, or reading something into what I have written that is not there. You seem to think I think competition is a bad thing. I do not.
Ok. So then why were you complaining that competition was a bad thing. And I quote: "what is the incentive to lose money to someone who can copy a product...." You were asking for competition to be stopped for the sake of "incentive."
My entire point, I think probably my only point, is that, either intentionally or accidentally, non-generic manufacturers are squandering whatever first-mover advantage they once had and are helping by their actions to hasten the destruction of the first mover advantage.
Again, you haven't proven the first mover advantage doesn't exist. You've just shown that you've confused profits with marketshare. A rookie mistake. You're forgiven. This time.
The loss of the first mover advantage is due to excellent competition (which you seem to have some basic understanding of) and their own, short-sighted actions.
Ok. So we agree. Then... um... why were you arguing that they need patents as incentives?
I am pro-competition.
But pro-patent? That does not compute.
I think it is awesome that Toyota has a Prius hybrid that is well-protected, I think it is even more awesome that Ford has developed a better and different technology hybrid,
At excessive cost to avoid Toyota's patents (though there was still an expensive legal fight). Waste.
That is competition.
Wasteful, misguided competition.
That is competition, including the innovations driven by the patents of competitors. Society wins once again.
No. That is wasteful competition, distorted by patents that has people reinventing the wheel, rather than building the next great thing.
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What are you ranting about now? Effectively, Wikipedia IS a history book, so what is your point?
As for "success," in spite of the fact that Tesla is hardly a household name, technically educated people do know who Tesla is. I would never judge Tesla; he was a far greater person than any I have ever met and am likely to meet. He is the kind of individual Jefferson had in mind when he envisioned a patent system.
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Tesla is becoming more and more of a household name
I can't afford one of those Tesla electric cars yet but I have this little GPU device called Tesla from NVidia
Amazing thing, dude
The CPU power of a computer cluster on your desktop
http://www.nvidia.com/object/tesla_computing_solutions.html
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I wonder how many people know that anything with "Tesla" in it was named after Nikola Tesla?
The, I wonder if any of them have the vaguest notion of who or what he was?
Last, how many know the scope and magnitude of his contributions to our knowledge, much of it via patents since much of Tesla's non-published works were either lost or destroyed?
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http://www.nikolateslainventorsclub.com/
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If this person were to apply for a government grant for the required costs we SHOULD require them to justify these costs (ie: via government audits). Why? Because they are applying for a free market distortion. Likewise, monopolies are bad for society and are a free market distortion. We are granting this person a tax on the ability to build something, which is basically government sanctioned money in their direction (so it's little different in effect and economically speaking than a subsidy which channels government money in their direction) so we should ensure that this person substantiates their costs to the public. They should be required to present receipts to the USPTO and the USPTO can put them online and independent auditors should be allowed to audit them. Otherwise, no monopoly. If they have nothing to hide, if they really did invest so much in these "inventions" then why not substantiate your costs. Unless you have something to hide.
Monopolies should be regulated by the people, we shouldn't grant anyone an unregulated monopoly.
Also, those in charge of the USPTO should be reelected (not appointed) by the people every two years and patents certainly shouldn't last twenty years.
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http://ideas.4brad.com/archives/000061.html
I think one good criterion is how old the problem is. New solutions to new problems shouldn't be subject to intellectual property. Patents should be rare and the people granting them should be elected not appointed (and they should run for re - election, say, every two years). But granting a patent on almost anything that people request a patent for (which is almost what the patent office does now) only serves to harm innovation.
Perhaps a system where we elect 12 patent decision makers and require a 2/3 majority vote on a patent before a patent is accepted. These elected officials should represent the people and and determine if an idea is novel enough to justify a patent and if more than 1/3 of the people believe that an idea is obvious and undeserving of a patent (ie: they believe they could come up with the same solution on their own given the same problem) then it's probably obvious enough not to deserve a patent.
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Perhaps a system where we elect 12 patent decision makers and require a 2/3 majority vote on a patent before a patent is accepted. These elected officials should represent the people and and determine if an idea is novel enough to justify a patent and if more than 1/3 of the people believe that an idea is obvious and undeserving of a patent (ie: they believe they could come up with the same solution on their own given the same problem) then it's probably obvious enough not to deserve a patent.
-----------
just a couple of thoughts on this: the patent office allowance rate is at it's lowest in decades, so to suggest the office allows everything is absurd - to the contrary, there it is more likely to see a bad rejection than it is to see a bad allowance because there are harsh penalties in place for examiners who improperly allow an application, but no repercussions for poorly rejecting an application
further "12 patent decision makers" would be a bad bad idea - there are currently 4-5 thousand examiners (not sure on the exact number) each "specializing" in a specific technology - with a backlog nearing 1 million applications, taking this approach could never work, even within a given technology
what most people fail to realize is its not an idea for an invention that gets patented, it's how the application (usually the hired attorney) words the CLAIMS - there are plenty of good ideas/inventions that will never get allowed because attorneys are too stupid or too stubborn (or both) to properly claim the entire invention, and likewise many good attorneys who can word even a crappy invention well so that it reads over the prior art
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I'd buy neither, but most of the hybrid people I know around here would absolutely buy the Prius over the GM, even if the cars were identical and the GM car was cheaper.
Price is only one factor in the buying decision, and often it is not the most important one.
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Yeah, the decision to buy Toyota (with their arrogant service people) over, e.g., as a Ford (which rules over Toyota in several vehicle quality categories and are cheaper) has always puzzled me too. Sheep to the slaughter.
As for your final statement, it was carefully written and I believe it is correct.
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I've had great dealings with Toyota in the past. I've been badly burned by Ford in the past. Oh, and I've been upset by Toyota. Oh and I've had decent times with Ford.
Seriously, you are branding a company of THOUSANDS of people here. I doubt you've had interactions with enough of them to determine that a majority of their service people are arrogant.
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Might be interesting
So without arguing the merits of patents themselves, I can see an argument for a patent market. There might even be a bubble, followed by the inevitable collapse, and that could conceivably bring some long overdue sanity and critical evaluation to bear.
For example I would love to see the market value of this one: http://appft.uspto.gov/netacgi/nph-Parser?Sect1=PTO1&Sect2=HITOFF&d=PG01&p=1&u=%2Fne tahtml%2FPTO%2Fsrchnum.html&r=1&f=G&l=50&s1=%2220090132950%22.PGNR.&OS=DN/200901 32950&RS=DN/20090132950.
We can only pray that the filing fees would be higher than the value.
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intentions
We allow patents so individuals can log their ideas so they work on implementing it and not worry about someone else steal it and beat them to the punch. Helpful? I would say yes.
Something like a patents marketing allows one to sell their ideas so they can see fruition of their ideas even when they don't have the resource to implement it, and yet still get some monetary compensation for coming up with the idea. Helpful? I would say yes.
No doubt, there are people/companies that are abusing the system that had good intentions. We're seeing how they are abusing it, can't we figure out a way to stop the abuse instead of trashing a system that is suppose to help the individual inventors? (and patent it :)
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WooHoo time to open up that CPO market and run this economy into the ground
Lets take lots of little 'patent objects' and we can collateralize them into large marketable objects (CPO's - Collateralized Patent Objects), we can then get one of the ratings agencies to slap a AAA rating on them (I mean they are patents, they have to be valuable right?) by threatening them with a patent infringement lawsuit (someone's got a patent that's close enough to their rating algorithms that we can threaten to tie them up in court for ages). Once we have the objects and the ratings, then we can start selling the worthless pieces of crap to unsuspecting 'investors' who think they actually have a chance of getting paid.....
It's sad, but right now some patent troll out there is thinking, "Why the hell didn't I come up with that idea?" and trying to figure out how they could do it (Intellectual Ventures anyone???)... Obligatory 'my tinfoil hat is a little tight today' for those who don't realize that this is intended as sarcasm... or is it now?
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One more time for Mikey
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techdirt imbeciles
Patents are not issues for ideas - they are issued for inventions which include novel, useful and unobvious methods, machines, articles of manufacture, chemical compositions etc.
there is no such thing as "colloborative" invention
Each patent lists all the true inventors who made inventive contribution
this is a legal requirement -failing this can make patent unenforcible
Quite a large percentage of patents list only one inventor
DO your homework before you speak up, punks
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On a related note
Give it back to people, Mikey !
Then maybe, just maybe, you will have the right to talk about authors and inventors giving up their patents and copyrights
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The question is can we reward innovation?
Yes we can, and do we need patents to do it? No we don't.
There are other ways maybe even better ways to do it that will not have the drawbacks that the current system have.
So really if you could invent a system that would reward innovators and keep the scumm at bay how it would look like?
For me it would be based on the open philosophy.
About first movers, they hold and advantage most of the time and some loose it, but even to loose it it take time. The fall of the American Auto Industry didn't happen overnight they were overtaken by the crappy copies the Auto Japanese industry made at the beginning and that now are forced to innovate to stay on top.
The patents system today is a barrier to innovation and ad costs to any business it cost thousands of dollars to imagine all the ways something can be produced and it doesn't even protect companies from competition and that should make the point mute for granting a monopoly. Many times the inventor don't even get the credits for doing something and he has the patents that people just wait for it to expire and than they use it. Patents granted to people who don't have the means to make a real product are not useful at all unless you want to sue someone. It slowdown the implementation of innovative ideas and are fueling bad behavior in the market place.
Most people forget that patents should be a carrot not an absolute form of protection or be used as a weapon for extortion.
So if you had absolute power to make a new system that would give just enough for people to feel enticed to innovate what would that be?
Or you people could keep fighting like child's and go nowhere LoL
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Re:
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Open Source Car doesn't cost $1 Billion to develop!
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The separation of patents from articles, such that the patent itself becomes the commodity and not the invention, does not in my view comport with the principles underlying why patent law was created in the first place. It turns them into mere pieces of paper to be tranferred willy nilly in financial markets just as other negotiable instruments.
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Commodification of Patents, Copyrights, Ideas, Thoughts...
In one recent article, it was made clear that patents are actively traded like stocks and commodities.
This is the primary resource for patent trolls.
Note that our current economic strife was caused in part by the commodification of debt, specifically, sub-prime mortgages.
What if there were no limits on what could be traded. Any contract or business arrangement/relationship could become transferable.
And, if that's the direction that everything going, despite the lesson of the current economic crisis, then...
Ah, I've repeated this rant too many times... We, will end up with DRM regulated brains where we will have micro payments for every little thought that involved some word that wasn't in the dictionary a hundred years ago--because even words will be commodities.
Again, there has to be some limit.
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Patents
Poor Toyota wasn’t able to just steal other people’s innovations. Stealing other people’s innovations does not increase innovation anymore than stealing peoples’ automakers’ cars encourages production of cars. It is both wrong morally to steal other peoples innovations and bad for the economy.
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