Universities warn Congress that patent reform would harm US innovation

I do too, but the system of private corporations collecting all the profits of public investment is a twisted concept of "benefiting society". Benefiting society ought to mean that the profits of public investment get distributed among the taxpayers in an equitable manner, not just the 1%.

Not just by commercializing & marketing products, but actually paying an appropriate share of profits back to the government as you would an early stage investor. Or, conversely, making the products available at a proportionately lower cost, thus benefiting society in a manner proportionate to the risk of the taxpayer investment.

Let's say I'm working at a university and come up with a new type of GPU, it's 10x faster than NVIDIA's & AMD's. If I have a patent, I can raise VC funding and take on NVIDIA/AMD because NVIDIA/AMD cannot make the same thing and sell it in the USA (a large market). Now there is NVIDIA, AMD, and QUANTICLES selling in the market. The products are improved because QUANTICLES is 10x faster, and NVIDIA and AMD have their own selling points. EDIT: The public benefits here because improved products are on the market and jobs are created in the USA.

Let's say I'm working at a university and come up with a new GPU but cannot patent it because University Patents Are Evil. Now NVIDIA/AMD are free to pursue it, or not, if they chose. Likely they wont because there is a significant ground to cover between university project and actual product. Usually there are many issues and tradeoffs to solve, solving these issues/tradeoffs is risky, and NVIDIA/AMD cannot take on the risk or are not aware they should.

Main point: startups are a proving ground for new ideas that big companies can't afford to take on, or choose not to. The university comes up with the idea and then the startup tries to prove that it works in a commercial environment. If there is no protection for that company after it's proven then investment is a losing bet.

Software/Web companies have a different sort of protection than hardware companies: users. A user is a customer that gets entrenched in a product. For example, how often do you change email services? How often do you change online photo catalogs? Each year I do my taxes on the same site since I can import my settings from the previous year and I know how to use it.

Hardware companies do not get entrenched as easily. Many times hardware can be switched in and out with other hardware (for example, GPUs). This also creates a feast or famine environment - you either have big sales because you're best product on the market, or you have none because you don't. If a startup cannot protect itself then it may not be worth investing in.

It does benefit the funders in the case of government grants. The NSF gives a researcher a grant to scientifically study some specific thing. The researcher makes scientific discoveries about the thing.

The researcher publishes the research, and also (possibly in collaboration with people who were not involved in the research) thinks about how the new science can be applied to produce real world products. The research gets patents on some of those real world applications of the research results.

Note that the public that contributed to funding the research did benefit. The research was released, and they can use it as the basis of further research, or think up useful applications for it (and patent those if someone hasn't already).

I think people tend to confuse the research (which is often paid for by government grants, at least in part), and development of practical commercial applications for the results of the research, which is generally not paid for by government grants.

Note that if the researcher had not worked on coming up with practical applications and patented them, but instead just published the research and moved on to the next project, that doesn't mean there would not be patents. Anyone would be free to take the published research, figure out how to apply it to practical problems, and likely get a patent on that use of the research results. Their patents would not cover the underlying research--just the use of it as described in their patent.

Do you assume you are Google rather than the shareholder that you get any say in what happens with that research?

> Here's a recent paper on patents and innovation...

I would take with a jarful of salt anything Boldrin and Levine say. This is a rehash of their "Against Intellectual Monopoly" book, and they do the same mischaracterizing of other research, mis-portraying of actual events and claiming outright falsehoods.

Case in point, the myth that Watt's patents held up steam development (which you too repeated): https://news.ycombinator.com/item?id=6865980. What's really egregious is they refused to admit the truth when called out on it.

Another comment pointing more falsehoods on their part: https://news.ycombinator.com/item?id=7890441

And before anyone else mentions it, the "Wright patent held up US aircraft industry" thing is a myth too: http://papers.ssrn.com/sol3/papers.cfm?abstract_id=2355673

The startup / patents paper indeed is interesting, thanks, but the results are more nuanced than the quote you selected: patents do help startups with financing and making successful exits, but they cannot be leveraged effectively because enforcing them is more expensive. That is something that can be fixed if people focused on it rather than the "patent troll" bogeyman.

The "Cumulative Innovation" paper is new to me, but a quick glance suggests some problems with it right away:

1. They derive a model to evaluate their claims, and unless backed up by solid empirical proof, this can be made to support arbitrary hypotheses (see this exchange on an unrelated field: https://news.ycombinator.com/item?id=9082932).

2. Their final data set is very small (1200 or so patents out of millions) and highly biased, since they relate only to litigated patents, and even then, on those they deem to be the "stronger" ones. Indeed, they admit that most other patents being invalidated has no effect whatsoever on their metric for downstream innovation. Even if valid, it is impossible to generalize these results to all patents as a whole.

On the other hand, there are many, many papers that point out the benefits of patent systems that you may not have considered. Yet another comment of mine mentioning some:

https://news.ycombinator.com/item?id=8155043

The number of links to my own comments should give you a hint as to how often I debate this topic on HN :-) As usual, I'll wrap up by saying it's a complex and nuanced topic, and point to a meta-study that looks at a large number of other studies that explore both the pros and cons of current patent systems:

"Recent Research on the Economics of Patents" - Bronwyn H. Hall, Dietmar Harhoff, (Google for PDF.)