The BBC is running a cluster of stories today on graphene, a material consisting of a single layer of carbon atoms. The UK angle is that graphene was invented in Britain, but Chinese and American organizations have flooded the area with patents. What are the Brits doing to catch up? How about paying for a $100m research building. One might think that the Brits would, say, file a heck of a lot more patents, or acquire some that are floating around.
There is another way to look at all this. If there are 7,300+ graphene patents now, exactly how is anyone going to have a clear path to develop any product? The situation has echoes of the carbon nanotube patent race, with every university grabbing any variation they could get on nanotube plus anything–how to make nanotubes, characterize nanotubes, bond things to nanotubes, apply nanotubes, vary nanotubes, improve nanotubes. As a result, other than some investors losing their money on startups, most of these inventions have just sat around. Not for lack of interest, but because of other organizations’ patent positions. I remember one nanotech company spending months and months trying to acquire rights to the handful of nanotech patents that it needed to develop product. Each university was out to get the best deal, distrusting the others (and for good reason, they have been pwned by certain university licensing offices, the rats!). Just the royalty stacking issues and separate accounting/reporting clauses are enough to turn most entrepreneurs off to the idea of collecting rights to the few hundred nanotech patents one might need to be able to get a business going.
A few patents may be an advantage in an emerging field. But 7300 is a disaster. In the 1910s, the US airplane industry suffered from this sort of gold rush mentality, with many companies holding key patents, each preventing the others from building aircraft with improvements. The US government had to step in and broker a cross-licensing pool that got innovation going again.
A century later, here we are again. For those who think that somehow there is a “market” for patents, where is it? We find flurries of patenting, and speculative acquisition of patents, and assert licensing programs once everyone is using inventions, but nothing that remotely looks like a marketplace for patents. Published lists of “technology available for licensing” look less like buzzing bazaars and more like watchtowers with guns sticking out through slots in the wall.
Graphene is another example of the problem of turning patenting into an industry. The result is fragmentation. Each organization justifies patents as necessary for commercialization. Then, as the patenting accumulates, organizations jump in to establish “just in case” positions, so they are not left out. Then as those organizations jump in, others file to create “defensive” positions, so they have patents to trade when the assert folks come calling. Of course, all this rationalization gets torn to bits by the patent trolls who wait until there is practice, and then hit folks up for a royalty. With 7300 patents already in play, it is a good bet that the trolls will end up with enough to ensure there’s only half the profit anyone thought there might be in graphene.
David Teece identified three sorts of organizations competing for the value of a new technology–the innovator, the imitators, and the infrastructure. We have to add a fourth, the trolls, who neither innovate, imitate, or supply resources. They just take. University licensing shops, having no policy that prohibits troll positions, become trolls. Yes, they wait until they feel slighted or rebuffed, and then they attack. But the reason for the rebuff is not that companies refuse the licenses on offer. They may well refuse. The reason is that there is no market for such patents. As far as I can tell, there has never been such a market. Patents do not have properties that lend themselves to markets. Getting a patent is like putting on armor. One doesn’t plan to go to the food co-op in full battle gear.
Each university makes a pitch for its own patent commercialization program. They publish the same sorts of diagrams, in which an invention made at their institution exists as if in isolation from 7300 other inventions, and somehow this one invention will be the lucky one, the one that makes it through the door where everyone else is jammed together over the sill, and becomes, well, lucrative. The reality is different, however. Taken together, all those university patents block development. Where one or two patents in a greater commons might focus development, 7300 create gridlock, a twenty-year standoff. No university can bring itself to contribute to a research commons only to see the rat-licensing offices clean up and pound their “isn’t our patenting glorious” drum. Even if universities were to dedicate their work to a commons, we would still face the companies more than happy to fragment the applications field, and if not the companies, then the trolls harvesting whatever inventions go unused and patents unlicensed from failing startups, from companies who shift research direction, and the like.
Where a few patents might focus investment, many patents held by many players scare investment off. The challenge now is how to disarm, so that new areas of research might benefit from networked, non-market development. It appears government action is required, but the US government, at least, has staked its metrics of research productivity, in nanotech anyway, on the number of patents that issue. No help there. It would appear that university rush to profits from patent licensing has degraded research productivity, and is slowly strangling the golden goose.
Unless patent holders find a way to let go, to refuse to enforce, new areas of practice, whether graphene or 3d printing or quantum dots will grow stale long before they enter commercial development. My take is this: a patent marketplace looks like a commons, not a bazaar. No one sells; rather, everyone chooses not to prevent. The only ones to exclude are those that won’t contribute their patents and those that let their patents go to trolls. That should be the penalty for being negligent or playing the pig.