Economist Robert Shiller is for them.
In 1993, the American Stock Exchange (AMEX) expended considerable resources to develop and promote its new concept of an exchange-traded fund (ETF), with its first embodiment as Standard & Poor's Depository Receipts (SPDR's). The ETF was a key innovation that made it possible for investors to hold an instrument that effectively tracked the value of a specified portfolio, such as the S&P index, with low trading costs.But once the idea was proven successful, it was widely imitated by other organizations, depriving the AMEX of a big share of the returns on its innovation.
In one of his first (only?) attempts to market one of his innovations, Shiller co-founded a company that used a statistical model to replace human appraisers. In my opinion, that company illustrates why business process patents are a bad idea. I tried to deal with his company both while I was at Freddie Mac and when I was on my own with a web site. In both situations, they were impossible. Shiller's partner was arrogant and just plain ornery.
If Shiller's company had owned a business process patent, it would have made things even worse, because it would have kept competitors out of the business. Competitors eventually did a much better job of scrubbing the raw data needed for the models and of forming grown-up partnerships with other companies.
Left to their own devices, the markets will reward execution, implementation, and marketing, rather than pure creativity. I believe that is how it should be. The alternative--locking up creativity with business patents--only means that creative people who cannot execute effectively will be able to stifle innovation.
But Brad, the patent makes no value judgments about which ideas are worth executing. It only judges which ideas are "novel." That's the whole problem. Business process patents make ideas inaccessible to people who might be able to execute them, making it impossible to determine whether they are good ideas or not.
Posted by Katherine on December 9, 2003 08:01 PM | Permalink to Comment
So why not advocate shorter time periods for business patents or even some kind of compulsory licensing? Perhaps an option to license for 25% of revenues + expenses for lawyers and accountants.
My Dad used to tell me, "if it's not worth doing well, it's not worth doing." My advisor in grad school had a slightly different version: "if it's not worth doing, it's not worth doing well". Business process patents may very well tell us what is worth doing in the first place, and should save a lot of energy spent on executing bad ideas. As such, they have value that should be rewarded. It is then worthwhile to discuss how to mitigate the obvious and oft-repeated downsides.
-Brad
Posted by Brad Hutchings on December 8, 2003 02:46 PM | Permalink to Comment