5. Economy

5.2 Patent System

As we saw in Chapter 2, our society is fundamentally based on knowledge. Ultimately, progress is nothing more than the application of more and more accumulated useful knowledge. And progress really gained momentum once sharing of existing knowledge became increasingly effective. First through the printing press, in modern times through the internet. Today's scientists know more and more about less and less, because knowledge reaches ever deeper, while only a limited amount of knowledge fits into a single mind and even scientists have only a finite amount of time to acquire it. That's why it's so important that knowledge is shared and easy to find when you need it. Because no one can know everything necessary on their own anymore, like in the times of universal geniuses like Leonardo da Vinci.

What I'm getting at with this: progress, and therefore the success of a society, depends on how well the sharing of knowledge works.

This principle has been known to states for centuries and has led to the introduction of patents. An inventor is rewarded for their efforts in inventing new things by receiving a patent on their invention. For a specific period, typically 20 years, anyone else who uses the invention must pay royalties to the inventor. In return, the patent is public, so the new knowledge is available to everyone from the start (even if you have to pay to use it). Patents were intended to stimulate invention, reward successful inventors, and promote the dissemination of knowledge.

Unfortunately, little remains of those lofty principles today.

In principle, patents are supposed to be subject to a so-called “inventive step”. Things that are obvious to a skilled person in their respective field should not be patentable. However, since it is very difficult for non-experts to recognize what is obvious and what is not, quite trivial patents are regularly granted. Furthermore, patents have by now expanded far beyond equipment. Today a large portion of patents are granted for algorithms (software patents), and even genes are patentable.

In addition, inventions today are no longer the work of lone wolves. Instead, large corporations have research departments. From those come product ideas—and a whole host of patent applications. Corporations with large portfolios of patents then enter into agreements with other corporations to cross-license their respective patents. In this way, both corporations can keep other competitors at bay. Because when those bring a new device to market, there will almost certainly be something in it one holds a patent on—at which point the competitor must either pay them or redesign the product to circumvent the patent.

The effect of actually benefiting from the knowledge shared through patents, on the other hand, is virtually non-existent. The sheer volume of patents is too great, and their quality too low. They mostly just describe ideas, without ever having been implemented. Filed to increase one's own patent count and to throw obstacles in the way of anyone who might actually build something like this.

In summary, patents today are nothing more than weapons that corporations use to wage war against each other. They reinforce the advantages large corporations already have over smaller competitors in our economy.

So, the whole thing is definitely a system with room for improvement. But how should we improve it?

I advocate for radically saying here: Let's abolish it! The solitary inventor for whom it was conceived no longer plays an economic role. As a mechanism for disseminating knowledge, it no longer functions. Thus, no positive effects remain. And the effect of hindering competition is something that harms the overall economy.

What would change for companies if there were no more patents? I think very little. Their research departments would still exist. Ultimately, corporations still want to be the first to bring new products to market. They already utilize strict confidentiality, and that will continue to be the case. Anyone who copies an existing product exactly is still guilty of trademark infringement. The protection of utility models (the appearance of a product) is maintained as well, just like copyright (protection of texts). However, it would become much easier to analyze an existing product from a competitor, improve it, and launch an improved version in your own design. Large corporations don't need to worry too much though: the effects of large production volumes and brand loyalty are too strong for that. Most importantly, new innovative products contain more and more microchips and software. Even without a patent system, this software cannot simply be copied, but must be rewritten (due to copyright). Nobody needs to worry the barrier to entry would suddenly be too low.

Aside from better competition, abolishing patents would also eliminate the category of patent trolls. These are companies that specialize in buying up patents and then suing everyone and everything. Which not only saddles companies with completely unnecessary costs, but also keeps the courts busy with completely pointless matters.

What can a state do instead to promote the legitimate goals for which the patent system was originally created? After all, it is enormously important for a state to be able to keep up when it comes to science and progress. They are things that most European states are already doing:

1. Promote research: The state invests money in universities, partly directly and partly in the form of project funding. Researchers working at universities cooperate with industry, for whom this is cheaper than completely funding research departments themselves. In this way, the state can not only promote research, but also influence the areas on which it focuses.

2. Open Data: All research findings and collected data funded by taxpayer money must be made freely available to the public (provided that this does not violate any personal rights). All software funded with public money must be released under an open-source license. The key phrase here is “transparent state”. In this way, the state, through its support of research, ensures that research findings can build upon one another. Of course it can never be prevented that companies keep certain self-funded results secret. From the state's perspective, this is perfectly fine, as it is a competitive advantage for domestic companies over foreign competition.

Regarding patents on medications: There's a rather convincing-sounding argument that medications need patent protection, as otherwise not enough money would be invested in pharmaceutical research. Furthermore, studies to test efficacy and safety are very expensive. These studies are also required for the approval of the medications. On the other hand, once a medicine has been approved, reproducing it as a generic is relatively easy. Manufacturing is far cheaper than discovering the active ingredient in the first place.[25]

The fairest and simplest solution here seems to me to use the permit itself as a protective mechanism: If a company has successfully completed the approval process for a medication and submitted the necessary studies, it then receives a protection period of 10 years from the completion of the studies for this achievement. During this time, the sale of generic versions of this drug is not permitted. With this protection, we replace the effect of patents in this field. Importantly, we do it without any additional bureaucracy: the approval process is necessary in any case. And it makes information such as manufacturing process and mechanism of action public.

The biggest problem with abolishing the patent system is probably one of foreign policy. The patent system was primarily pushed forward by the USA to protect the inventions of its domestic companies from foreign imitators (even though a large majority of patents are now filed in China). The patent system is primarily anchored in trade law (WTO). If a company infringes a US patent, it can be sued for damages in the US. If the company does not pay, it will no longer be able to sell its products in the USA.

A state withdrawing from the patent system therefore unfortunately does not mean that its companies no longer have to worry about patents. They don't face any disadvantages either though: patents can be filed regardless of the applicants country of origin. So, a company might file its patents in the US or the EU to avoid competitive disadvantages there. But in all states that have abandoned the patent system, these patents would be nothing more than useless pieces of paper.

Review of Requirements

Requirement	Features of this Futurity
low demands on people’s character	•  Patents can no longer be used as weapons
no world government	•  impact only in countries that abolish the patent system
costs considered	•  lowers overall costs
automatic adaptation to a changing world	•  enables faster use of new inventions
help citizens keep up with change	no relevant change (patents cause problems for companies, for citizens they only increase prices)
promote technological development	•  enables faster use of new inventions
resilience to withstand adversity	•  yes, through faster use of new inventions