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Patent Litigation Encourages Innovation, Not Stifles It

I fail to see how patent litigation stifles innovation, which seems to be a common theme for people who attack the patent system.

Expensive litigation is an expensive drain on the corporations who wage such wars, no doubt, but it underscores the importance of the business reasons for the litigation.

A solid patent can be a significant competitive advantage to a company. It enables one company to protect its market by protecting its invention from copying. A patent is no more a business tool than good customer service, better sales team, efficient manufacturing and distribution, or better product packaging, advertisement, and placement. Each of these business tools is yet another arrow in a CEO’s quiver.

When a CEO chooses to pursue a patent lawsuit, it is done presumably because the lawsuit has a better perceived return on investment than any other expenditure at that time. This does not “take money away” from R&D, but on the contrary is the opportunity to take advantage of the success of that R&D.

When a patent is litigated and tens of millions of dollars are spent on both sides of the suit, it underscores the value of the patent to the company from a business standpoint. Presumably, the litigation is entered into as (more or less) a calm, rational, business decision. Each side must see the value to their business to invest the cost to reap the potential rewards. If one side feels that the rewards are not worth the risk, they always have the option to settle.

Because a single patent may be worth hundreds of millions–if not billions–of dollars, CEO’s are much more likely to invest in creating more patents. In order to create patents, a company must invent something new. The huge potential value of the patents are a great incentive to create and innovate.

In the final analysis, high priced litigation only underscores the value of the patent system and forces innovation to happen at a much higher rate.

I don’t understand how someone can argue that high value patents inhibit innovation.