This video is sponsored by Dashlane.
Conveniently store your passwords and get
10% off with the link in the description.
In 1997, a guy named Jeffrey Bezos filed US
patent 5960411A,
“a method for ordering items over the internet”.
Here’s what it is: Instead of adding an
item to your shopping cart and then clicking
buy, you’d just click buy.
That’s the whole patent.
It’s so comically vague because that’s
what makes intellectual property so powerful.
The wider the description, the easier it is
to enforce.
Just listen to this one: “An apparatus for
use as a toy by an animal, for example, a
dog, to either fetch, carry, or chew.
Includes a main section with at least one
protrusion extending therefrom that resembles
a branch.”
That, my friend, is a stick.
Both of these are ridiculously broad, but,
unfortunately, that’s not uncommon.
What is unique about Amazon’s One-Click
Patent is that they actually use it.
Usually these are filed by Non-Practicing
Entities, companies that own intellectual
property, but don’t do anything with it.
Instead, they make money by suing anyone and
everyone.
These two graphs tell the story.
First, this is the amount of patent-related
litigation from normal, practicing companies.
Year after year, the number stays pretty much
the same.
And here are the trolls.
Not only are they way more common, but they’ve
rapidly increased in just a few years time.
And second, roughly 87% of troll lawsuits
settle before trial.
In other words, patent trolls are very common
and very good at what they do.
Their strategy is fairly simple: File or buy
as many and as broad of patents as possible,
and then find people to sue.
Both they and the other company know the cost
of going to trial - hundreds of thousands,
or usually, millions of dollars.
So, unless both parties are really confident,
they make a deal.
The company pays the troll just to leave them
alone, who, by the way, now has even more
resources to threaten even more lawsuits.
You don’t need much intellectual property
to see how this is a broken system.
But the problem is actually much worse than
that.
Okay, so, you’ve got the next big idea,
a zero-click, mind-reading buy now button.
Here’s what you need to know about patents.
To get one, your invention must be novel,
useful, and non-obvious,
ya know, like a buy now button which buys…
now.
Totally not obvious.
Anyway,
It also can’t be a law of nature, an abstract
idea, or a nuclear bomb.
Sorry!
I don’t write the rules.
They usually last 20 years, and unlike copyright,
patents are not automatic.
In the United States, you must apply to the
Patent and Trademark Office.
And so long as your application has a left
margin of two and a half centimeters and its
capital letters are at least 0.3175 centimeters
high, it’ll be reviewed by an examiner…
with all the speed of the DMV.
The process takes about 2 years,
but the office does provide patent-themed
Halloween and Valentines Day entertainment
while you’re waiting.
Seriously.
Once your patent is granted, it prevents anyone
else from making the same thing without a
license.
In other words, it’s a two-decade, government-protected
monopoly.
So, why do they exist?
The answer you’ve probably heard is pharmaceuticals.
Researching and developing a new drug, is,
well, gosh darn expensive.
Some say 648 million dollars, others, 2.7
billion.
Whatever the number, it’s a lot.
Without patents, they say, no company would
spend so much when they could just wait for
someone else to, and then steal their idea.
Someone could jump in and take all the profit
from the person actually doing the work.
Sound familiar, maybe?
So, patents are an incentive.
And not just to make things you and I want,
but also to explain how they work.
Because sharing knowledge is kind of the basis
for civilization.
This way, when it expires, others can make
it at a lower cost.
Or, that’s the theory.
The issue is, patents aren’t always good
explanations.
In fact, that’s by design.
Because, remember, companies keep them as
vague as possible.
Technically patents should be so specific
that a person with “ordinary skill in the
art” could reproduce it, but technically
they should also be non-obvious, soo… yeah.
The other issue is that patents aren’t the
only option.
Google’s search algorithm, WD-40, and Coca-Cola
all famously chose to just keep their mouths
shut.
Trade secrets do run the risk of being discovered,
but they don’t expire in 20 years and they’re
still legally protected.
So a smart company asks itself: Can we keep
the secret for 20 years?
If not, it should get a patent.
But otherwise, it’d be better off staying
quiet.
Because of this, patents may not disclose
anything that wouldn’t already be discovered.
What isn’t really in question is that they
can be a good incentive.
Of course companies are more likely to create
something if it grants them a monopoly.
The question is whether it’s worth it.
Because during that monopoly, we all pay a
price - the higher cost they can charge with
no competition.
When your phone costs $100 more, this is annoying.
When the World Health Organization estimates
ten million lives could’ve been saved with
existing medicines and vaccines, it’s downright
awful.
And then there’s the problem of waste.
Patents, like any economic system, are a game.
And when you add seven billion players, there
are going to be some unintended consequences.
The obvious one are the trolls.
Their defense is that those who invent something
may not be the best people to sell it.
Universities, for example.
Lots of research, but Marketing, not so much.
So, they say, Non-Practicing Entities buy
these inventions, from, say, a school, and
sell them to those who can use it.
But ask those buyers and… they shake their
heads.
In this survey, 92% of respondents said they
added new products or features from the license
zero to ten percent of the time.
And they “rarely, if ever prompted the development
of any new products”.
In other words, companies had already invented
something and bought the license only to not
get sued.
Microsoft, for example, takes or took money
from HTC, Samsung, and Apple for patents like
scheduling meetings on smartphones.
Its phone was, to put it politely, a failure,
but it still collects profit, and on a feature
that nobody hardly uses.
You might be thinking “So what?”, Who
cares that the world’s richest companies
are losing some money?
But all these billions of dollars spent on
lawsuits is money not spent developing new
products or hiring employees.
When Google bought Motorola, largely for its
patents, it spent 12 and a half billion dollars
instead of who knows what.
This is what I call Patent Theater,
In the same way that so much of airport security
is just acting out the motions for little
or no benefit,
Big companies often file and buy patents not
because they actually need them, but because
that’s the game they need to play.
It’s not about innovation, it’s about
not getting sued.
Chances are any one phone company will violate
another’s patents.
But file enough of its own, and it can threaten
a countersuit.
It’s mutually assured destruction.
It might be better if no-one had them, but
someone does, so everyone has to.
While researching this video, I came across
this article titled “The world’s 50 most
innovative companies”.
It’s just a list of who has the most patents.
Of course, number of patents doesn’t really
measure innovation, it measures the, well…
number of patents.
That probably sounds obvious.
But, it shouldn’t be.
Their purpose is precisely to increase innovation.
This should be an accurate list.
It’s not because of all the unnecessary
waste.
Worse, there isn’t really anyone to blame.
Examiners have to review half a million applications
a year and under pretty stressful circumstances.
Mistakes will be made.
And companies have to file patents or risk
being targeted.
There is a solution to all of this, but that’s
the topic of the next video.
And just as patents protect companies from
theft,
Today’s sponsor, Dashlane, protects you
from the theft of your online accounts.
The problem with passwords is that they’re…
just plain annoying.
And if they aren’t, you’re probably not
using a good, strong password.
That’s why you need Dashlane, which remembers
and generates passwords for you.
Your information is kept secure and hey, it’s
not annoying.
Just this year, Facebook, Under Armour, and
British Airways have all had major data breaches.
That’s honestly pretty scary.
Dashlane encrypts those passwords, scans the
dark web to see if they’re being sold by
hackers, and has a built-in VPN.
It syncs with all your devices, and you can
get started for free by clicking the link
in the description.
Plus, new users get 10% off Premium with promo
code “PolyMatter”
Thanks to Dashlane for sponsoring this video,
and to you for listening.
