The most recent episode of This American Life tackles the important question of America’s dysfunctional patent system. They focus on Nathan Myhrvold’s company, Intellectual Ventures, which exists purely to amass patents in order to threaten to sue firms with actual products and extort them for settlement money. Myhrvold is, by all accounts, a brilliant man and he seems to have taken a really poorly designed system and figured out a brilliant way to put his brilliance to work finding ways to make huge sums of money destroying the economy rather than coming up with useful products to sell to people. But TAL also delves into the increasing tendency of large firms to spend time acquiring patent portfolios as purely protective measures. They know that any good product they release will become the subject of patent litigation, so they need an arsenal of counterclaims to make in order to be able to settle the lawsuits in a reasonable even-handed way. The whole thing’s great.
Felix Salmon loved it too, but I think he’s wrong to say that “Chuck Schumer’s bill taking aim at business-method patents in the financial industry is a good start.” Schumer’s bill actually strikes me as the perfect example of America going to hell in a handbasket. Rather than the elites who are injured by the current system working to reform the system, they’re working to forge a loophole for themselves. If they succeed, the reform coalition will get even weaker.