[Quanticles]

Many successful companies started as university startups working with federal funds. If the university was not able to patent, then the startups could never happen. Since startups are credited with being the innovation driver in the commercial world, killing off all of these startups would have a stifling effect on innovation in the US.

A similar situation is with the small business innovative research program (SBIR). The main purpose of this program is to provide federal funds to perform research in order to help new small businesses grow, which in turn become large companies or get acquired by large companies. If all federal research dollars ended up resulting in no patents for the companies performing the research, then these startups wouldn't exist, and the purpose of the program would be destroyed.

Everyone agrees that public dollars should result in public benefit. However, there is more public benefit to be had by creating lots of startups than there is by creating a bunch of non-patent publications.

The US thrives due to it's technological advancement, which is driven by startups. Let's be careful to not destroy that benefit.

[logn]

I worked at a startup that was awarded SBIRs. We were developing e-learning software and our government client was an Air Force base. It's true that being able to retain copyright ownership was the reason the startup existed. However, no patents were ever filed.

I think we should just do away with software patents. Math formulas and rules to games are not patentable and I think software is exactly a fusion of formulas and rules--apps in pure functional languages are functions after all.

The exception could be firmware/software driving machinery where the invention is more than software (or the combination of software and commodity hardware).

[droopyEyelids]

There is a big leap between 'not being able to patent' and 'startup could never happen' that you need to explain.

Many, many people create businesses out of open source technologies.

[rayiner]

> Many, many people create businesses out of open source technologies.

Many people use open source technologies to sell some other product. That's different from being in the business of building and selling an open source product.

Say you invent a new kind of power amplifier. You open source it, and don't patent it. You start selling the chips, and some Korean company immediately copies it and undercuts you on price. So what's your business model now?

[logfromblammo]

That could happen even if you did patent it.

Say you invent a new kind of power amplifier. You spend 3 years securing a patent and bringing the product to market. You discover that some Korean company copied the reference implementation found in your patent application. You also discover that the Chinese manufacturer you licensed to produce your product has been running ghost shifts to make low-quality knockoffs. Bunnie dips the chips in fuming nitric acid and posts the photos to the web. You sue to enforce your patent and discover that the best you can do is to prevent x% of the knockoffs from entering the US as discrete parts in containerized shipping through the largest ports. Your amp design somehow shows up in dozens of low-end consumer products anyway. You silently rage into your ramen noodles, and your lawyer stops answering your phone calls the same day.

You focus on support services, quality assurance, and brand identity. You seize the center of the market by determining what the product is. Notice how well ARM does without a chip fab. Why do companies pay for ARM licenses (oops, licences--they're a UK company), when they could make OpenCores chips? Because the other chips are not ARM chips. They might not use the ARM instruction set. They aren't the same as what's in your iPad. When people lack the ability to fully comprehend what it is they are buying, they invariably rely at least partially upon brand reputation. Defending your trademark is far more important in this context than defending a patent.

[rayiner]

People don't buy ARM cores because of the trademark or support services. They do it because key implementation techniques for the ARM instruction set are patented, and the high-performance softcores are protected by copyright: http://semiaccurate.com/2013/08/07/a-long-look-at-how-arm-li.... Yes, they support it just like any company supports their products, but it's not a "free product, pay for support" play like RedHat.

[logfromblammo]

People don't buy iPads because of the ARM chips. But if the alternative is a Xiangdi Industries "10 Tablet" with a zhMIPS CPU and a not-entirely-unlike-Android OS, the lack of any familiar brand names may influence the consumer to just pay more for the sure thing (to them).

(I made those names up. Any similarity to actual brands is entirely coincidental.)

In any case, I was not trying to say that ARM cores are free to use. I was comparing their business to open hardware, and pointing out that people often prefer to pay for the ability to not delve too deeply into the details of what they are buying.

[comex]

The ARM case does seem to be working out fairly well for most involved. On the other hand, look at x86. While of course competing with Intel would be hard under any circumstances, I bet the market for x86 processors (compatible with x86 software) would be more competitive if ISA patent licenses weren't limited to a certain few grandfathered-in companies.

[rhino369]

You can also sue anyone using the power amplifier in any product sold in the USA.

I don't know why you use ARM as an example. I don't see how ARM would survive in a patent free country. In fact it's probably example 1A of why patents are useful device.

Why would Apple pay ARM if they were totally free to use it.

[logn]

Many times the product being sold is so closely related to the actual open source software that they're indistinguishable. For instance, buying RedHat (support). Other times, you're buying the software, under a commercial license. And maybe the most common is, buying the software as a hosted service. In all these cases it's hard to undercut (and offer more value) than the company who has the most expertise and generally copy rights.

However, your example is hardware and I don't know enough to comment on that.

[phkahler]

>> If the university was not able to patent, then the startups could never happen. Since startups are credited with being the innovation driver in the commercial world, killing off all of these startups would have a stifling effect on innovation in the US.

No, the research would still go on. Much of it is funded by government grants and that would still continue. The results of the research would be published and anyone could make use of it. That simplifies everything and results in more competition to commercialize things.

[Quanticles]

I tried to address this in my reply to Bjartr

[Bjartr]

>If the university was not able to patent, then the startups could never happen.

You make some interesting points. Would you mind explaining this one a bit more? It's not self-evident to me.

[Quanticles]

If you're doing a startup outside of software/web, one of the things VC's ask you about is IP protection. The development cycles are longer, the costs are higher, each prototype is precious. Once you have succeeded, the VC needs to know that a large company cannot swoop in and make the exact same product as you.

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.

[chrisbennet]

I think it is a fallacy that startups create jobs.

http://www.technologyreview.com/featuredstory/531726/technol.... "According to Chris Benner, a regional economist at the University of California, Davis, there has been no net increase in jobs in Silicon Valley since 1998; digital technologies inevitably mean you can generate billions of dollars from a low employment base."