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Category Archive: Bullying

Bullying as a Third Millennium Business Practice

In many contexts, bullying is an unacceptable practice. However, in business a legally defined type of bullying is not only accepted, but encouraged. We are talking about patents of course. In the United States, the right of an inventor to patent their invention is established in the constitution. Thomas Jefferson, who drafted the constitution, felt that patents were so important that he served as commissioner of patents from 1790 to 1793.

Grant of a patent by the government is a license to the inventor to “draw a line in the sand”. If someone steps over the line, the inventor can “smack” them with an infringement lawsuit. As with actual schoolyard bullying, not everyone that draws a line follows through with a smack.

Sometime in June of 2018 the US Patent and Trademark Office will issue patent number ten million.  The fact that patent number ten million is being granted is not that interesting. What is interesting is that the speed with which patents are being granted is accelerating. The table below shows that both the number of years for each successive million patents, and the doubling time for granted patents are decreasing.

By graphing this data (below) we can see that the number of years to add a million granted patents is at an all time low. The doubling time of just over 27 years is lower than at any time since 1935 (when doubling meant adding only one million patents).

So what do all these numbers mean? Some would argue that the increased rater of patent grant indicates “poor quality patents”.  With respect, I have to disagree. It is widely reported that 80 to 85% of business assets are intangible. As recently as 1975, only 15 to 20%  of business assets were intangible. Intangible assets includes, among other things, patents.

As the emphasis on intangible assets has increased, the emphasis on the importance of patents has increased along with it. That is, in large part, because the best way to scare a bully is by having the appearance of a bully. While few companies actually want the incredible expense and headache of an infringement lawsuit, many companies want to give the appearance of being ready for an infringement lawsuit. Having an extensive patent portfolio provides that appearance.

If a company is making a lot of money from their technology one of two things is likely to happen:

(1)          A competitor will appear in the marketplace with similar or identical technology. In this scenario patents on the technology held by the company serve as a sword. As in actual conflict, it is often sufficient to use the sword as a threat, without actually attacking the opponent.

(2)          A competitor will appear with patents on similar or identical technology. In this scenario patents held by the company on the technology serve as a shield. Patents held by the company on the technology can be used to threaten a countersuit. This is analogous to the cold war policy of “mutual assured destruction”.  If both sides stockpile patents, neither side can really risk a lawsuit.

The sword of (1) and the shield of (2) probably explain a significant part of the acceleration in patent grants illustrated in table 1.