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Xref: sserve comp.org.eff.talk:9717 misc.int-property:741 comp.unix.bsd:7371 Newsgroups: comp.org.eff.talk,misc.int-property,alt.suit.att-bsdi,comp.unix.bsd Path: sserve!manuel.anu.edu.au!munnari.oz.au!sgiblab!sdd.hp.com!elroy.jpl.nasa.gov!ames!decwrl!decwrl!netcomsv!netcom.com!mcgregor From: mcgregor@netcom.com (Scott Mcgregor) Subject: Re: Patents: What they are. What they aren't. Other factors. Message-ID: <1992Nov2.205608.8326@netcom.com> Organization: Netcom - Online Communication Services (408 241-9760 guest) References: <1992Oct28.153748.3758@murdoch.acc.Virginia.EDU> <1992Oct28.220811.27666@netcom.com> <6581.Nov112.31.0292@virtualnews.nyu.edu> Date: Mon, 2 Nov 1992 20:56:08 GMT Lines: 61 In article <6581.Nov112.31.0292@virtualnews.nyu.edu> brnstnd@nyu.edu (D. J. Bernstein) writes: >The same is true of any research idea. Either it's profitable to market >the idea, or it isn't. If you see a company marketing the idea, then >it's obviously profitable. Unfortunately, in my experience, the profitability of a product (not the idea) is hard to predict in advance. There is an element of risk. Part of that risk is the number and size of competitors if the product is successful. Successful products inspire imitation, they don't just get imitated because they are accidentally rediscovered by someone else as apparently happened in Bernstein's case. FSF for example is intentionally imitating programs from Unix, such as cc, lex and yacc. They are doing this because these packages are already proven to be popular. For profit companies imitate products for exactly the same reason. Sometimes the imitators win your market and your investent is lost (Lotus dominates a market pioneered by Visicalc). Naturally, when you are investor you want to reduce your risk. Unsuccessful products don't generate competitors. When you lose you lose alone. But a success might be snatched from you, and you factor in this risk as well. This risk is highest in "self-revealing" products, of which software is a good example. A patent is a risk reduction strategy that may change whether you want to invest or not--at least until someone else has proven the market and you are in the position of being the copier. Bernstein's claim that if you see a company marketing a product then you can conclude that the market is profitable. (Well he says idea, but you really sell products). Not so, the last company I worked for is six years old and still hasnt't had a profitable year, even though it is pretty much the only competitor in its market segment. There are other cases where an idea has been around for a while, but not marketed--then when someone went actively after it turned out to be quite profitable. Lastly, investors don't make investment decisions solely on the size or profitablity of the market, but on the guestimated profitability of an individual new firm in it. The auto industry may be very profitable, over all, and you might have a nice idea for a better car. But it would be hard to get money for a new car company to build it unless you could be assured of a certain market size (perhaps bolstered by a patent). >In theory, society gains from a (marketable) patent (which is novel, >unobvious, etc.) by virtue of its publication; It might get the former merely by granting a cash reward for publication or a grant. But patents further reward not merely publication but practice and commercialization--and I think that is by intent and not some kind of accident. -- Scott L. McGregor mcgregor@netcom.com President tel: 408-985-1824 Prescient Software, Inc. fax: 408-985-1936 3494 Yuba Avenue San Jose, CA 95117-2967