Patent marketplace has been the unsung hero of the remote work era

Anti-patent reactions to the covid-19 pandemic are strategically short-sighted, Dolby’s Andy Sherman argues in this week’s Saturday Opinion

Sophisticated, internet-enabled audiovisual technologies, once a niche reserved for gamers and videophiles, have been gaining mainstream acceptance for some time, but the outbreak of COVID-19 kicked adoption into overdrive. Now, grandparents use videoconferencing to show up for birthday, students live-stream their classes and doctors rely on smartphones to examine their patients remotely. At the end of the day, many of us relax with streaming services.

Today, Internet-enabled audiovisual tech isn’t just everywhere; it’s essential.

Without thinking much about it, most people figure we were lucky to have had such advanced technology when the pandemic broke out—just imagine the last two years without streaming content or videoconferencing. But luck has nothing to do with it. Patents and patent licensing helped these technologies meet the moment. As we (hopefully) emerge from the ravages of covid-19, policymakers should recognise how the patent marketplace helped countless people and businesses survive and even thrive in quarantine.

The argument for strong patent rights has been the same for centuries: entrepreneurs and innovators won’t invest the resources necessary to invent if their discoveries can be immediately copied. So we incentivise and reward inventors by giving them limited legal exclusivity to their inventions: the patent. Patents make it possible for inventors to earn a return on their investment, but there are no guarantees – and even a profitable invention may not make up for the many attempted inventions that did not bear fruit. Regardless, there is little question that, without patents, many of the audiovisual technologies that we have come to rely on daily would not exist.

But there is a puzzle in this story. Just a few years ago, audiovisual technology would not have been able to accommodate our pandemic needs. If inventors can use patents to stop others from using their inventions, how is it that all of these companies improved their audiovisual technology in similar ways, seemingly all at once? Given the fierce competition between companies like Disney, Netflix and Amazon in video streaming, or Zoom, BlueJeans, and Microsoft in video calls, that kind of synchrony shouldn’t be possible.

Enter the patent marketplace—a vast network of lawyers and businesspeople working behind the scenes to funnel high-tech solutions to real-world problems. Every day, the marketplace facilitates countless transactions in which licensors grant licensees the right to use their inventions, allowing patented technology to quickly find its way into the hands of everyone who would benefit from it.

Of course, the growing complexity of audiovisual technology poses a problem for potential licensees, who don’t want to get buried in a never-ending series of licence agreements. Fortunately, the patent marketplace has devised a solution here too: patent owners can join together to form a patent pool—a solution that has proven incredibly efficient, saving hundreds of millions of dollars in transaction costs. In doing so, they have helped make revolutionary audiovisual technologies easier to license and far more widespread than they would be otherwise. Ultimately, this benefits the public in the form of better entertainment and communications experiences.

All of this is well and good, but in order for the patent marketplace to continue to function, policymakers must do their part to ensure strong patent protections and confidence in the enforceability of licensing agreements. In the wake of the debate over the covid-19 vaccine, it’s increasingly common for patent licensing fees to be criticised as a ‘tax’—and many people support waiving patent rights altogether.

These views may be popular among some, but they’re strategically shortsighted. An inventor that feels uncertain about potential profitability is less likely to invest in research and development. Those who continue to develop inventions will be less likely to license their patent rights if there is doubt about enforceability. Put another way, we would end up with fewer inventions spread less widely. That is a losing scenario for everyone—for inventors, for patent licensees, and for society.

For example, without the ability to license patented technology, only streaming companies would have been motivated to improve streaming technology, eliminating the invaluable contributions that other inventors have made to the space. Similarly, without a vibrant and collaborative IP marketplace, fewer companies would have been able to offer workable videoconferencing after the outbreak of covid-19. That limited supply would have created a choke point for countless high-volume users, including schools, businesses and healthcare providers.

As countries around the world consider their economic futures, they would do well to recognise the necessity of a healthy patent marketplace—and the value it adds to all of our lives. If we want to ensure the kinds of innovations that have made the past couple of years bearable, we shouldn’t kill the golden goose that made them happen.

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