tags: #publish links: [[Business Strategy and Competition]], [[Law]], [[Patent search]] created: 2021-07-25 Sun --- # Patents and Competition This is an aspect of [[The legal system isn't a level playing field]]. See also [[PEST or PESTLE Analysis]]. In short, filing patents is moderately expensive, enforcing patents is *very* expensive and requires the legal system, and defending or losing when patents are enforced against you is *catastrophically* expensive. Therefore, patents are mostly a competition-suppressing tool for those with deep pockets, and tend to become an arms race. This is evidenced by the fact that the largest companies seek to acquire large warchests of patents, even to the point of making expensive acquisitions purely for the patents; and then using them to: - a) **Suppress smaller competitors**: sue them, bankrupt them, restrict market activity, drain resources, threaten them to make it easier to acquire for a good price! - b) **Mutually Assured Destruction arms race with equal competitors**: have thousands of patents with broad applicability to use as weapons, discouraging competitors from treading on their toes or suing them over other patents. - c) **Defend against larger companies**: a mid-sized company is unlikely to be able to stop deeper-pocketed competitors entirely, but it can at least make it more expensive for them to attack with patents, making it more likely they'll go after someone cheaper instead. As a medium-sized company in an IP-competitive industry, it's now non-optional to do **c)** and invest in a patent portfolio as a defense mechanism, even if you have no intention of using them as a tool of agression, because the cost of a patent infringement case has been known to get into the billions-of-dollars range. The patent system was designed to encourage innovation by allowing a period of protected profiting from it. However, all of the above - while it may support further innovation in the company that has the patent - will tend to *reduce* innovation in the market as a whole in the medium term, because it prevents good competition by drawing boundaries around patent-defended areas that can't be touched by other smaller innovators, because it drains resources that could be spent on innovation into acquiring and defending patents instead, and because it locks out or destroys smaller innovative companies that can't afford the battle or a defensive patent portfolio, favouring large monopolies that can. ![[Embed - disclaimer - my opinions, not legal advice]]