How patents stifle innovation, Honeywell edition

Lynne Kiesling

In the comments on Mike’s post yesterday about the Honeywell patent lawsuit against Nest, Ed asks in the comments how it is that patents stifle innovation rather than promote it. The theoretical answer is that, as a government-granted monopoly, patents embed both incentives — at the margin they increase the incentive to create new patentable knowledge while also slowing or stifling the dissemination of that knowledge, and/or knowledge deemed too close to it. The fine balance of managing the tradeoff between those two effects is the objective of a “good” patent law, because to get net benefits the breadth and duration of the allowed patents has to be enough to be stimulative, but not so much that it deters other innovative activity. A good patent law allows differentiation of breadth and depth for different types of inventions in different areas/industries, and holds diligently to the “non-obvious” requirement that is written into U.S. patent law and is part of any economic theory of intellectual property.

It’s increasingly clear, particularly in technology, that the U.S. patent law is not striking that balance, and is instead doing more of what Michele Boldrin characterizes as using the political and patent process to protect monopoly rents (as per a post I wrote on the topic in 2009, with links worth pursuing). At least to me, some of Honeywell’s patents don’t pass the common sense/non-obvious test, such as their “natural language temperature range setting” patent.

In following up on their extensive reporting at Earth2Tech yesterday, which Mike linked to in his post, Katie Fehrenbacher today offers several reasons why she thinks this Honeywell lawsuit will in fact deter innovation. She agrees with me that the natural language patent does not pass the “non-obvious” test, and she also discusses the cost of a patent war, the David/Goliath nature of this lawsuit, and some other important reasons why this lawsuit may bode poorly for robust innovation in the home energy technology space.

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3 thoughts on “How patents stifle innovation, Honeywell edition

  1. Lynne,

    If I may “pick a nit”, I did not ask “how it is that patents stifle innovation rather than promote it”. Rather, I suggested that a large number of patents was an indication of innovation. An even larger number of patents would then be an indication of even greater innovation. However, I acknowledge that a patent which protects an element of innovation prevents that same element from being an innovation again. I believe that is the whole point of the exercise.

    My personal experience with USPTO is that their typical approach with any new patent application is to reject all claims in the application, requiring the filer to defend each and every claim in the application. I believe this is a very lazy approach to the issue on the part of the examiner, but it is reality nonetheless.

    There is always an effort on the part of the filer to obtain as broad a set of claims as can be negotiated with the examiner. The process is too expensive and time consuming to justify attempting to protect the difference between a “left-handed widget” and a “right-handed widget”, in most cases. I would also observe that many things appear to be obvious once you can see them. However, someone else had the “light bulb” moment. Using two separated but closely spaced wheels at the front of a wheelbarrow to make it more stable certainly appears obvious, after you see one built that way.

    I do not own a Nest thermostat, so I am unfamiliar with all of its features. I do own earlier versions of the Carrier Infinity thermostat, which are very versatile but are not internet accessible. I understand that many younger users might well be enamored with the ability to “diddle” with their thermostats from afar, using their smart phones. Since I don’t have a smart phone, I have little interest in that feature. My thermostats learned how I expect them to perform in about 15 minutes on day one, and have been doing my bidding ever since, without any interference from me. I can tell them I will be away for “x” days and they automatically set up or back until the day I have told them I will return. They monitor the outside temperature and the inside humidity and adjust the operation of the equipment they control to achieve the desired conditions without any attention from me. I am happy with that arrangement and do not feel the need to interfere. But then, I am old; and, was not very hip when I was younger either. šŸ™‚

  2. Ed,

    Your nit is well-picked, so to speak. I used your comment as inspiration to take the analysis in a different direction. Both suggest that the material question is whether or not patents do increase innovation. There’s not a lot of evidence to support that claim in most industries; chemicals and pharmaceuticals are the exception.

    I wish my thermostats were as intelligent as your Infinity!

  3. Once upon a time I was the lone full-time member of the R&D department at a small software company (a compiler vendor). During the 1980s and early 1990s everything I did was treated as a trade secret. Publication was strictly forbidden. I would invent something (for example: a new optimization, a better register allocator, etc.). We’d use it to make our products better. And then I’d ask “Can I publish a paper about this?”, because research papers are (or at least were) the currency of reputation in that field. My managers would respond “Absolutely not! That’s a trade secret that we want to hide from our competition.”

    Everything changed once my management became aware of the possibility of getting software patents. The new discussion went as follows:
    Me: Can I publish?
    Boss: No.
    Me: Are we going to apply for a patent on the invention?
    Boss: No. (They said “yes” occasionally, but that’s a different part of the story)
    Me: Then we’d better publish quickly, so none of our competitors can patent it out from under us.
    Boss: Start writing. Right now!

    Just the possibility of patents changed the equation from “hide everything” to “publish widely.”

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