A recently published survey by The Atlantic asked a panel of 50 Silicon Valley insiders a variety of questions ranging from what is the most exciting tech start-up at the moment to which tech company is most overvalued. One question in particular was quite intriguing: What is the biggest barrier to innovation in the United States? You might be surprised by the answer.
According to this poll the biggest barriers to innovation in the United States are, in order:
- Government regulation/bureaucracy 20%
- Immigration policies 16%
- Education 14%
- Talent shortage 10%
- Lack of diversity among tech executives 10%
- The need for patent reform 8%
- Lack of investment 6%
This survey shows what those in the industry have long known — patent trolls and the need for patent reform are NOT the biggest problems facing the high tech industry in the United States. In fact, 92% of respondents feel that there are other things that are more concerning and a bigger barrier to innovation. But how can this be? The public has been consistently fed the line that patents stifle innovation. How can something that stifles innovation not be the biggest concern, particularly when so many of the tech giants from Silicon Valley have for years blamed the patent system for all their woes? The simple answer is that patents do NOT stifle innovation, but rather patents foster innovation. Those who are intimately familiar with the industry know patents promote innovation regardless of the lies promoted to advance patent reform, vilify innovators and lay the blame for everything at the feet of patent trolls. See also Promoting Innovation: The Economics of Incentives.
A lack of imagination, a lack of sophistication and a system that rewards incremental innovation over paradigm shifting innovation are the problems for innovation in the U.S. “Working on problems that don’t really matter. New York magazine recently reported that there are no fewer than a dozen venture-funded start-ups trying to make doing your laundry easier,” said Jennifer Pahlka, founder and executive director, Code for America. “That’s the problem the ‘innovators’ in our country feel is most important to solve?”
There is a reason why smart investors are backing start-ups that focus on making laundry easier and other rather inconsequential things. The more revolutionary your innovation and the more widely adopted it becomes the more likely the patents you have obtained won’t stand up. Indeed, it is a tragic irony that in the United States your patent is more likely to be defeated as being patent ineligible or obvious the more revolutionary the innovation it covers. If everyone is using your invention, if it becomes ubiquitous, rather than celebrate the type of paradigm shifting innovation that we claim to want we insult and vilify the innovator for having the audacity to have sought patent protection. See Use of Ubiquity to Determine Patent Eligibility.
On the other end of the spectrum, patents that only offer minor incremental increases are celebrated as proof that companies are highly innovative. In fact, you are better off having a crappy patent and seeking only very modest royalty payments than having a revolutionary innovation and a strong patent. Silicon Valley tech giants will pay at least nuisance value to make the crappy patent case go away, but will fight decades if necessary not to have to pay when they infringe a valid patent on an important technology advancement.
The reality for those seeking early stage funding, whether in the form of Angel investment of money from Venture Capitalists, if you cannot obtain patent protection you make getting that investment much harder if not completely impossible. That means you cannot afford to engage in the research and development, or absorb the risks associated with paradigm shifting innovation. Innovating for the future requires real expenditure of capital, it is that simple. Those who pretend that innovation just happens or that it doesn’t cost money are just living in a fantasy world.
Those who say that patents are not necessary for software are either hopelessly ignorant, or they are delusional. They myth that useful and usable software be can be programmed by any second year engineering student is a lie (sorry Justice Kennedy). Perhaps an App for your iPhone that doesn’t do anything particular special or creative can be put together relatively quickly, but even debugging things and ensuring interoperability of simple software takes time, which means it costs money. Something more complicated and useful, such as a new operating system will require hundreds of team members to dedicate 1 to 2 years worth of time. Even then we all get weekly warnings about the need for critical updates and security patches. For something that is terribly simple it takes the best and brightest minds at the most innovative companies in the world extraordinary amounts of time to really come up with something that is no better than beta software that constantly needs tweaking. If it is so easy why does software need to be constantly updated in order to ensure it works, is compatible and secure?
The truth is there is nothing easy, trivial or inherently obvious about creating a piece of software that actually works. Anyone who says otherwise is simply not being honest, or they have convinced themselves by listening to propaganda that is aimed to mislead. Sadly, as these hopelessly lost souls continue to update smartphones, tablets, computers and video game units they somehow manage to believe writing the software is easy, if not trivial. Yet they complain about the updates that negatively impact battery life or change working environments of the worse. If the patent critics would actually rub brains cells together and critically analyze what is happening even the most intellectually dishonest among them would have to come to the conclusion that they are talking out of both sides of their mouth.
Meaningful, useful, dependable software, whether for personal use or enterprise software, cannot be written in a weekend by a second year engineering student despite what the Supreme Court may think. Creating software requires a large team of individuals to spend many months, if not many years. To pretend that doesn’t cost money is almost as ridiculous as those who claim taking a drug to market and navigating the FDA process isn’t that expensive. See The High Cost of Making Pharmaceuticals. Who are these people? More importantly, why would anyone belief such lies?
Perhaps the most insightful comment came from Babak Parviz, who is a Vice President at Amazon. He explained to The Atlantic that the problem is short-sighted focus on quarterly profits. He explained that the biggest problem in his mind is that need “to show quarterly profit, every quarter, by the CEOs of major companies.” Such short term thinking leads to risk aversion, which is the enemy of innovation, which by definition requires bold initiative to try and do something new. To me, however, the short-sighted view of CEOs is due to the fact that the average life expectancy of a CEO at a Silicon Valley company isn’t very long. That has lead them to see patent infringement lawsuits as a problem, causing them to develop an untrue narrative about patent litigation out of control, which has influenced the Courts and Congress despite the fact that there is no patent litigation explosion. See Silicon Valley’s Anti-Patent Propaganda: Success at What Cost?
But facts don’t matter in the debate. When the independent Government Accountability Office says that 80% of patent litigation cases are brought by manufacturing companies against other manufacturing companies the narrative still doesn’t change. The interjection of facts should matter, but it won’t moving forward. There is already talk around Washington, DC that House and Senate Republicans, in anticipation of taking control of Congress, are working to streamline another round of patent reform that can quickly and easily pass in the House and in the Senate.
If we want to make the patent system better I am all for reform, but if we are just going to do the usual, which is vilify innovators then count me out.