Chinese Researcher Points Out How Patents Can Hinder Innovation

from the surprising dept

Thu, Feb 17th 2011 1:53pm — Mike Masnick

I have no doubt that many Chinese officials understand quite clearly how the patent system is really a protectionist system and are fully intending to use it as an economic weapon against foreign competitors to Chinese companies. It's really kind of brilliant when you think about it. The US has been pressuring China on patent laws for decades, and this way China gets to say it's following exactly what the US has demanded of it, and "respecting" intellectual property, while, at the very same time and using the very same system, basically using it to harm the very American companies who for years have complained about Chinese companies infringing on patents. Live by the patent, die by the patent.

Still, it's quite surprising to see (via Glyn Moody) an opinion piece at China Daily by Mei Xinyu, a research scholar at the Chinese Academy of International Trade and Economic Cooperation, so accurately laying out the problem with patents. Here are just a few snippets, but the whole thing is worth a read:

The fundamental driving force of innovation is competition, while IPR protection in substance is a kind of monopoly. Monopoly can provide incentives for innovation, but it can also prompt former innovators to gain high return by relying on the products they have already innovated, rather than pushing them toward further innovation. Such a situation will ultimately weaken the power of technological innovation.

Moreover, a stringent IPR protection system will encourage enterprises to take moral risks. To maintain their competitive edge, some enterprises can use a strict IPR system to set up barriers for their competitors.

Some scholars describe the IPR disputes raised by developed countries against developing countries as "removing the ladder of development of developing countries". Enterprises in developed countries often erect trade barriers against their foreign competitors, especially those from developing countries, in the name of "infringement of intellectual property".

Very stringent IPR protection laws can worsen the conditions needed for innovation. They can force innovators to focus less on further innovation, and more on "infringement".

It's really one of the most accurate explanations of the problems with patents today that I've seen in a while.

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Filed Under: china, innovation, monopolies, patents

27 Comments

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Anonymous Coward, 17 Feb 2011 @ 2:32pm

This of course coming from a country that has raised itself up from feeding it's people grass to the 2nd largest economy by piggy backing on everyone else's IP.

It's a whole new world for them having to deal with the reality of being a leader rather than being a follower. Some of them just won't understand how to do it, but they will soon find out what it feels like to create great ideas and have the next up and coming country rip them off and replicate them cheaper and faster.
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weneedhelp (profile), 17 Feb 2011 @ 2:33pm

I cant wait
until there is such a patent thicket that no one can innovate and progress comes grinding to a halt.

Technology we have today is to powerful for our child like minds to use responsibly.

"The fundamental driving force of innovation is competition"
Whaaa whaaaa, that's too hard.

"it can also prompt former innovators to gain high return by relying on the products they have already innovated, rather than pushing them toward further innovation"
Aww that's so nice. He could have just said makes them lazy and stupid.

"some enterprises can use a strict IPR system to set up barriers for their competitors. "
Some? Oh yeah ones with money and lobbyist's.

"They can force innovators to focus less on further innovation, and more on "infringement""
Damn pie-rates.
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cc (profile), 17 Feb 2011 @ 2:35pm

Just wait for the rise of the Chinese patent trolls. They'll first destroy every western company and then buy out whatever's left. There's been ample warning, but still there are things like ACTA in the works. Shows how incompetent our rulers have been at crafting economic policy...

Btw, Rick Falkvinge (former Pirate Party leader) has written a series of very interesting articles on copyright history. The final part was posted today and it's very much related to the above.
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btrussell (profile), 17 Feb 2011 @ 2:37pm

Re:
I am confused as to which Country you refer to? U.S.A.?
I am thinking about how "Hollywood" ended up in California instead of New York.
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Anonymous Coward, 17 Feb 2011 @ 3:07pm

Re: I cant wait
The patent thicket is a fairly large pile of poo. Mike goes on and on about the patent thicket in cell phones and smart phones, and yet the "stale date" for phones is down to about 18 months. A full generation takes less than 18 months.

If the patent thicket was that strong, we would still be using motorola brick phones. We are not. The proof is in reality.
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cc (profile), 17 Feb 2011 @ 3:21pm

Re: Re: I cant wait
See that upstart with a fresh new idea that can't get a foot in the door? And that other one being sued out of existence? That's the reality.

Who do you think pays for all the lawsuits? The consumers, that's who.

And who gets paid for the lawsuits? The fucking lawyers, that's who. The greedy lawyers who wish the lawsuits last forever, like you do.
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Anonymous Coward, 17 Feb 2011 @ 3:28pm

Re: Re: I cant wait
>> If the patent thicket was that strong, we would still
>> be using motorola brick phones. We are not. The proof
>> is in reality.

Remember when phone service ran $35 for 75 minutes?

We are not using motorola brick phones because digital is more efficient. Under analog, a cell site could multiplex only something like 16 simultaneous calls over 1,000 square miles. With digital, capacity increased by several factors.

What's happening lately is bankruptcies of companies with a lot invested in R&D. with 4G, Most R&D is happening overseas. If you own the IP and knowhow, you can set the royalty rate.

So if the new generation of technology can increase capacity by a factor of 4, but your royalty is 2x more, it doesn't leave much wiggle room for a decrease in price for the customer, does it?
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ctromley (profile), 17 Feb 2011 @ 3:35pm

Are patents intrinsically bad?
Did anyone notice that Mei is not calling for an end to patents? Read the quotes again. There are many ideological extremists involved in this issue, giving the impression there are only two solutions: all ideas should be free, or I should have exculsive ownership of my ideas. I don't think Mei is one of those extremists.

There is value in patents. There are plenty of good ideas that never get launched because of the risk in developing them. Patent protection can INCREASE innovation. But get too heavy-handed with it and it can decrease innovation.

Sorry if that fact doesn't exude the clarity some seek on the issue of patents. Now if you want to talk about innovation, that's different. Patents can be a useful tool for innovation, if properly used. When can we have a discussion about that?
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Anonymous Coward, 17 Feb 2011 @ 4:41pm

Re: Re: Re: I cant wait
We are not using motorola brick phones because digital is more efficient

Yes, but in a patent thicket, one company would hold the patent, they wouldn't let anyone else use it, and we would still be stuck on analog.

The thicket blocks little except the sheep too stupid to think of a way around the only 8 foot section of fence on the whole field (or commons, if you like).
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Anonymous Coward, 17 Feb 2011 @ 5:01pm

Re:
Hmmm...the U.S. did the same thing to Europe, the Japanese did it to America and now the Chinese is doing it to everyone, what is the problem you don't like progress is that it?
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Anonymous Coward, 17 Feb 2011 @ 5:06pm

Re: Re: I cant wait
It is so strong that Hawei(Chinese) recently got an injunction against Motorola.

Also every American business pay taxes to the Japanese and South Koreans in that market, when not so long ago is was the Asian countries that had to pay things.

Further you get examples in electronics, farming and pharmaceutical products too.

Have you been to Asia to see what they do over there?
They have things that their U.S. counterparts can only dream of doing it.
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Anonymous Coward, 17 Feb 2011 @ 5:10pm

Re: Re: Re: Re: I cant wait
And that is what they do, they pool the patents and only they can use such a thing and stop smaller competitors from being able to enter the market.

MPEG LA just gave a good example very recently of that kind of behavior.

Also this explains why American companies are sinking to the bottom fast, Asian companies are now holding all the IP and the American companies can't compete even if they wanted to LoL

Is not that beautiful?
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cc (profile), 17 Feb 2011 @ 5:17pm

Re: Re: Re: Re: I cant wait
"Yes, but in a patent thicket, one company would hold the patent, they wouldn't let anyone else use it, and we would still be stuck on analog."

Unless someone can afford to pay the license fees, which is a perfect mechanism for keeping small competitors out of the picture: they ask for ridiculous amounts, that only rich, lawyered-up companies can pay.

"The thicket blocks little except the sheep too stupid to think of a way around the only 8 foot section of fence on the whole field (or commons, if you like)."

You really have a problem with analogies. If it were ONE patent, then it's a fence you can get around of. If it's many different patents about many different aspects of a product, it's a jungle.
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Anonymous Coward, 17 Feb 2011 @ 5:18pm

Re: Re: Re: Re: I cant wait
Here is Hawei beating the crap out of Motorola in U.S. soil no less.

Huawei wins injunction against NSN-Moto deal
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Anonymous Coward, 17 Feb 2011 @ 5:24pm

The U.S. had a physical advantage in manufacturing, had a technological advantage and still screwed up, now in a last ditch effort to stay relevant they want to create a monster to try and retain some form of control but are they competent enough to do it since they failed in every other instance and are those idiots in congress not giving other countries the tools they need to effectively exclude all American business from their respective areas?

I don't see other countries cowering and trying to stop anything, what I see is those countries gearing up to trash the U.S. in a global market and exclude them even further.
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Anonymous Coward, 17 Feb 2011 @ 5:37pm

Re: Re: Re: Re: I cant wait
The thicket blocks little except the sheep too stupid to think of a way around the only 8 foot section of fence on the whole field (or commons, if you like).

I hope you are from Asia because otherwise you are the one outside the 8 foot fence of IP BS.
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James, 17 Feb 2011 @ 7:42pm

There is a patent thicket
As somebody who works in the tech sector, let me assure you that there most certainly is a patent thicket.

Since the example of smartphones is being discussed, do a quick search for patent lawsuit and any phone company you can think of. The companies are all holding each other at gun point right now, each with claims that the other is infringing on their patents. And there's a good chance they are all correct, after all, every company patented every little thing they made, yet the phones we have today all use the same technologies inside.

Software is no better. Microsoft, Google, Oracle, SCO, Linux; everybody claims somebody else is using their patents. And the funny thing is, they are all relying on patents from Bell Labs and Xerox, who we have to thank for things like windows and the mouse.

#13 is completely right; the only players are those who can afford millions of dollars in licensing fees and herds of lawyers to scour over the paperwork.

You can't just start a new company and compete if you want to remain compatible. Want to make a smartphone? You'll have to pay 3GPP or Qualcomm if you want to build a phone that can work on current networks. Want to work with current file formats? License fees for those too. Sure, you could make new ones of both, but that's not helping anybody; compatibility is important. Innovation shouldn't mean reinventing the wheel; you should be able to start with what already exists and add something to it. With the plethora of patents out there, you'll either have to pay a large part of your profits just to enter the market or you'll have to start again from scratch. Either way, you start off at a disadvantage against those who are already well established. All of those license fees eat into what little profit margins some products already have; there are many products that never get made because, with all the license fees, there isn't enough margin left to be profitable. That's not encouraging competition; that's hindering it.

The truth is, everybody is infringing somebody else's patents, but they don't bother starting trouble unless they think they have enough money to sue the other into the ground. The recent cases have all come down to companies comparing their portfolios and deciding who is infringing more, then quietly settling behind closed doors.

What's the point of IP protection if everybody infringes anyway? The only reason our current IP system works at all is because it's so rarely enforced.
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Anonymous Coward, 17 Feb 2011 @ 8:40pm

Re: Re:
Is it really progress, or is it just letting the slow catch up to the rich? Notice how Japan's tune changed when the stopped be a country of cheap knock offs and started to become a country of skilled builders, innovative designed, and motivated researchers?

Listen closely, and you will hear the same thing coming from China. They are turning the corner away from being just knock off artists, and attempting to take charge and lead in technology and design. As that happens, there will be more and more push to respect patents and copyrights, especially internally to the country.

It's called maturing.
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SP, 17 Feb 2011 @ 10:45pm

Quick note
Since most of the juicy stuff has already been said, keep in mind that 80% of the population could be considered 'dumb'. Yes, the inventors and businessmen at the top of the aforementioned companies most certainly are not in that 80% (well, some are..), but the products they create and promote are aimed at the 80%. If all these new companies were to present their product, there would be too much choice and competition, and the mass population wouldn't know who to follow! The simpletons who barely know left from right as it is may encounter a head-popping scenario. How would capitalism (aka greed) thrive under those circumstances?
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Anonymous Coward, 18 Feb 2011 @ 4:37am

Re: Are patents intrinsically bad?
The problem is the "slippery slope". You could start with patents being "properly used", but people will gradually force it more and more and we will end up with the mess we currently have, or even worse. Look at the history of patents and you will see this expansion.
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Suzanne Lainson (profile), 18 Feb 2011 @ 5:04am

Need a big picture approach
To get laws changed, you need to address the politics. And to address the politics, you need to consider the economic underpinnings.

Seems to me that one of the results of innovation is rapid change. But we don't necessarily have a society built to accommodate rapid change. Consider home ownership, for example. By encouraging home ownership, we are suggesting there is value in remaining in one location. But responsiveness to change, particularly if companies and countries are constantly attempting to outdo each other, may require a very mobile and nimble workforce. That may require moving from city to city and even from country to country in pursuit of opportunities. And it will likely require constant educational and skill upgrades. We not really anywhere close to providing for those lifestyles.
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staff, 18 Feb 2011 @ 6:43am

lost in the translation
"Chinese Researcher Points Out How Patents Can Hinder Innovation"

Something got lost in the translation. What they meant was patents can hinder "theft of" innovation.
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Mike42 (profile), 18 Feb 2011 @ 6:50am

Re:
No, troll, this does NOT come from a country. It comes from and individual.
Dispute his claims if you can. Don't slander his country.

This is what makes everyone sick about your type.
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Anonymous Coward, 18 Feb 2011 @ 7:54am

Re: Re: Re: Re: Re: I cant wait
The only patent you face is the single 8 foot piece of fence. You look at it, you find an alternate solution that doesn't violate the patent, and you move around the fence.

Repeat as needed.

Remember that much of what is in the cell phone field is already expired, and the horrible thicket that Mike keeps referring to is ticking away as well. Soon enough, it will all be meaningless.
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vic kley, 18 Feb 2011 @ 8:37am

Chairman Mike
Chairman Mike has done it again! A culture that sees all of the West and especially the US as its enemy, and funnels misdirection and misleading babble to Masnick. He treats it as gospel!

A Chinese Patent official announced to a small group about a year ago at UC Berkeley that infringers in China will now see jail time for their misbehavior! While it is amusing to imagine Gates stuck in a cell on some mountaintop in Tibet, China's actions are meant to protect those Chinese patent holders while refusing rights to those seeking enforcement from the West. Yes indeed, soon Chinese patents on the iPad will be granted to the real manufacturer in China and Apple officers and representatives will see arrest and detention in China if they don't pay the bribes, and definite arrest and imprisonment here in the States if they do- what's a multi-billionaire to do?

Yes Chairman Mike this is an early voice in a round of state approved misappropriation which will excuse unbridled excess in enforcement against those foolish enough to try to compete in China without major payoffs to the communist party.
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btrussell (profile), 18 Feb 2011 @ 9:14am

Re: Re: Re: Re: Re: Re: I cant wait
"You look at it, you find an alternate solution that doesn't violate the patent, and you move around the fence."
That would be nice, but most just add another piece of fence for the next guy.
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vivaelamor (profile), 18 Feb 2011 @ 11:21am

Re: Re:
"No, troll, this does NOT come from a country. It comes from and individual.
Dispute his claims if you can. Don't slander his country.

This is what makes everyone sick about your type."

Hear, hear.
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