Tuesday, August 25, 2009

Why intellectual property lasts too long

I think 20 year patents are entirely too long, I mean, how much does the future amount generated from a patent 20 years from now contribute to the present value of the patent compare to the present value of the money you will currently spend for R&D on the product that you have patented? It just doesn't seem like the money generated for a patent twenty years from now will give you much incentive to add a lot of R&D dollars into a product you are developing now being that those dollars are worth a lot more now than the present value of that future amount generated by the patent.

But if you're a big corporation why not lobby for the patents you apply for to last 100 years, what harm does it do to you? and there is incentive for patents that you currently do have not to expire any time soon no matter how old the patent is being that you maybe generating revenue on the patent now meaning it contributes more to your current present value (even if the patent is 100 years old, the current money you generate from it now contributes largely to the present value). This explains why corporations always try to lobby for intellectual property extensions.

Also, one has to realize that in twenty years from now many of the corporation's executives and members and employees (ie: CEO, COO, CFO, etc...) would probably be either retired or working for another corporation and many of the stock holders are going to be different people (ie: stocks are bought and sold every day). Sure some current stockholders still may have stock in the corporation in the future (but again, what's the present value of the future amount of a patent twenty years from now to an investor vs the money he could get now by simply having less money put into current R&D. Doesn't seem there is much incentive to add that much more money into R&D now based on revenue generated in twenty years from now being that the present value to an investor of that invested money is easily worth substantially more than the present value of the future amount generated by the patent twenty years from now) but the corporation may have many new stockholders and many of the old stockholders may not even be with the corporation by then. Many many things could also happen in twenty years, the invention could be rendered obsolete by newer technology even, the economic conditions or some other changes (ie: political) might make the patent twenty years from now irrelevant, meaning that some investors and executives probably aren't even really thinking twenty years down the line in terms of that patent right now, they're thinking more of how they can make a fast buck with the patents they have now. I mean how often does the average American change jobs even, how many years? Many things would change in twenty years rendering the revenue generated from the patent twenty years from now irrelevant to many of the current investors and corporate employees and executives. and this is ESPECIALLY true for copyright which lasts much longer than 20 years even.

and when I say the present value of the future amount 20 years from now I mean the future amount on the twentieth year. Meaning the money generated in that year (alone) is not going to give you much additional incentive at all to invest a lot more money into R&D presently, so there really is little reason for patents to last that long.

No comments: