Patent Connections – Licensors vs Implementers: Who’s Really Promoting Innovation?

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In a previous Patent Connections installment (Using Patents To Open Innovation And Open Minds), I mentioned the misconception that some people hold who think that only technology implementers should be financially rewarded, rather than technology creators. Public discussion about patent lawsuits reveals an interesting manifestation of this phenomenon.

In addition, by litigating their patents, patent owners are fulfilling part of the bargain that flows from the existence of the patent system—namely, the part about promoting progress. Infringers, meanwhile, are obtaining the benefits of the patent system, while not contributing to the advancement of the technology. This is true even when an infringer wasn’t previously aware of the existence of the patent. Federal litigation is a very public way of identifying likely infringers and notifying others that are monitoring their competitors.

Litigation is also a sign of the seriousness of a patent owner’s interest in ensuring that any use of the patent technology is compensated. Thus, separate from patent issuance itself, the value of the technology can be validated by the existence of patent lawsuits.

In the absence of patents, intellectual creations can be protected by trade secrets which have the opposite effect, encouraging firms to shield their know-how from the public. Consider every IP attorney’s favorite trade secret example, the Coca-Cola formula. This trade secret has existed for over 100 years, and the formula (other than a brief aside, and a substitution of high fructose corn syrup for sugar) has gone largely unchanged for decades. How innovative is that?

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DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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