Wednesday, December 21, 2011

Patent system: a perfect experiment.

The question whether the US patent system helps or hurts innovation can now be resolved experimentally. So far, all decisions on patent infringement, e.g. today's Microsoft vs Motorola, involved the US Trade Commission, which rules on "importation into the United States." That is, the infringing mobile phones and tablets cannot be imported into the United States, but can be sold freely in other geographies, e.g. China, India, Japan, Russia, etc. Therefore, if patents hurt innovation, over the next 5-10 years we should see major differences in the pace of smartphone/tablet innovation between the US and the rest of the world. Right?

I very much doubt this is going to be the case.

From a system perspective, smartphone is a Tool. Though it is salient to users (just like the light bulb), the main bottleneck in system growth is Distribution (communications infrastructure.) Another critical element is the Source (cloud computing.)  Today, the real innovation  requires massive investment in 4G networks, data centers, and content provisioning. And don't forget about all the security holes in the existing mobile architecture, which prevents a large scale adoption of the technology in the enterprise market. Patent battles between smartphone manufacturers make great headlines, but they are largely irrelevant to the big picture.

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