I don't disagree with your own practical example, and it is in a nutshell the case for patents.<div><br></div><div>What is true though, is that there is great innovations and billions of dollars invested into R&D that are never patentable, nor patented. It's the market that drives the need for innovation, not the ability to patent those innovations. Innovation, creativity and development won't disappear with the lack of patent protections. I'm not arguing against copyright and trademark protections (at least not in this discussion ;-))</div>
<div><br></div><div><br></div><div>- Sondre<div><br><div class="gmail_quote">2010/5/26 Adrian Tymes <span dir="ltr"><<a href="mailto:wingcat@pacbell.net">wingcat@pacbell.net</a>></span><br><blockquote class="gmail_quote" style="margin:0 0 0 .8ex;border-left:1px #ccc solid;padding-left:1ex;">
<table cellspacing="0" cellpadding="0" border="0"><tbody><tr><td valign="top" style="font:inherit"><div class="im">--- On <b>Wed, 5/26/10, Sondre Bjellås <i><<a href="mailto:sondre-list@bjellas.com" target="_blank">sondre-list@bjellas.com</a>></i></b> wrote:<br>
<blockquote style="border-left:2px solid rgb(16, 16, 255);margin-left:5px;padding-left:5px">So then we have X and Y, who are both putting a lot of money into R&D to develop CRM products. They both spend one billion dollars, a total of two billion. To cover these costs, they would need to price their products in the market to earn money back on their investments in R&D. So the market has to pay a minimum of two billion dollars for CRM software.<div>
<div><br></div><div>If no protection was possible and Y could "copy-cat" some of the ideas and innovations from X, then we potentially could cut the R&D costs in half, one billion dollars (for the point of the argument let's make it half, though would probably be higher). This means the two companies have used only one billion dollars to create two competing CRM software products, which the market only have to pay in total one billion dollars for. This means the market spend less money on CRM licenses and the two companies probably would earn more money since software generally are cheap anyway so they wouldn't lower their prices 50%.</div>
</div></blockquote></div><div>Problem is, that's not what happens.<br><br>If Y could copy-cat, then Y would copy-cat everything it could, and only charge<br>to cover its own expenses. X has spent maybe $900 million (copying a bit of Y's<br>
progress), while Y has spent maybe $100 million (it had to
do a bit of work). The<br>market only covers that $100 million; it has no reason to buy X's relatively<br>overpriced wares to cover the $900 million.<br><br>Great deal for the market! Not bad for Y. X gets screwed royally.<br>
<br>Along comes Z, with an idea for even better product. It will take $1 billion to<br>develop. Does it do this?<br><br>No. It sees what happened to X, and knows the same will happen to it. So it<br>has no reason to proceed: innovation is not profitable. No amount of whining,<br>
pleading, or cajoling that the market will get another great deal will change the<br>fact that Z knows it will get screwed royally, and Z only cares about Z (as it<br>should be).<br><br>Maybe, 10 or 20 years later, someone else figures out how to do the same<br>
thing on much less. But that's 10 or 20 years that the market literally doesn't<br>know what it's missing. Notice that the maximum length
of patents is 20<br>years - and that's assuming their holders pay to renew it that long.<br><br>That, in a nutshell, is the case for patents.<br></div></td></tr></tbody></table><br>_______________________________________________<br>
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<br></blockquote></div><br><br clear="all"><br>-- <br> Sondre Bjellås | Senior Solutions Architect | Steria<br><a href="http://www.sondreb.com/">http://www.sondreb.com/</a><br>
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