Will the innovation landscape become more fluid?

One of the single most important factors determining the future of business and society is the US legislative framework for innovation. US legislators shape the global patent landscape, due to the country’s dominant global role in both innovation and commercialization,. As covered in a New York Times article titled Two Views of Innovation, Colliding in Washington, Patent Reform legislation under consideration could shift the balance between large established corporations and smaller innovators, impacting how the patent landscape functions as a motivator of innovation.

As I wrote in my book Living Networks:

In the US alone, there are over two million enforceable patents. Only around 5% of those make money. The rest sit dormant, the documents quietly gathering dust on a shelf for the 20 year duration of the exclusive patent rights, or lapse due to lack of maintenance payments. Some of those patents are not applied because they don’t have a real commercial application. Probably many more are neglected because the patent holder is not interested in exploiting them, and they haven’t managed—or perhaps even tried—to match them with a company that could profitably apply them and would be prepared to buy or license them. This is not just a problem for the company that forgoes revenue on its portfolio of patents. It also means that part of the intellectual property landscape is unavailable, potentially squelching innovation by other companies. Because of the complexity and sheer number of existing patents, information about intellectual property has tended to flow extremely poorly. The promise of the next phase of the networks is that this flow will become far more fluid, resulting in better exploitation of our existing intellectual property, and a faster pace of innovation.

Absolutely, the promise of the networks is a more fluid innovation landscape. However it depends on enabling legislation to unlock that fluidity and economic potential.

On the face of it, it is not clear precisely what the impact of the current legislation would be. As pointed out by the interesting Patent Troll Tracker blog, lower patent damages won’t necessarily be bad for smaller innovators. I have to say that penalties in line with market value (which would be lower than many current judgments) are more likely to create liquidity and flexibility in the innovation landscape. Certainly, what appears to some to be an arcane debate is in fact fundamental to our economic and social future.