Few in the tech or intellectual property worlds will have missed the blog post of Elon Musk, in which he announced that Tesla would be “opening up” all of its patents to competitors. Some have questioned whether the decision to cease enforcement of its patents is borne entirely of altruism or an espousal of open source principles, but whatever Tesla’s motivations, expect to see a lot of think pieces, as we do every few years, on how patents are the enemy of innovation, how they constrain start-ups, particularly tech start-ups, and how open source or some alternate, more egalitarian system (but as yet mythical) is the way forward.

In anticipation of this anti-patent rhetoric, I want to put in my two cents in support of the poor, beleaguered patent.

Historical Basis for Patents

To understand the societal value of patents, it’s important to understand where they came from.

The first patents, or at least what we would recognise today as a patent, were granted in Venice in the mid 1400′s. From there, other parts of Europe soon followed suit with their own patent regimes.

The rationale behind these earliest patents, and the rationale that remains to this day, was that the inventor would disclose to the public the particulars of their innovation in exchange for a limited-term but powerful monopoly in the invention. When the patent expired, the particular innovation would then be open for the use and continued benefit of the public.

Again, this remains the basis and rationale of patents today, almost 600 years later.

Of course, there was commerce and innovation in the world long before the advent of patents. Before this most valuable legal protection of novelty and inventiveness, however, inventors would keep the specific mechanics and nature of their innovations strictly confidential and, as far as possible, immune to replication, except in very limited instances by the wiliest of competitors. Even when successfully copied, in the pre-patent epoch, the public itself never gained access to the kind of new knowledge and potential for skills development, education, research, and general betterment of society inherent in innovation and the patenting process today.

Aren’t Monopolies Bad?

In general, yes, monopolies are bad. They discourage competition and innovation, but in the patent system, that is entirely the point.

When companies are innovating on a world-changing level, they need to spend hundreds of millions (or even billions) of dollars in today’s money on the R&D stage before they have a product ready for market, and sometimes after that expenditure, they end up without a saleable product. When thinking about this, it’s easiest to imagine pharmaceuticals, but it’s just as true for non-medical innovations that have changed lives, including electricity, telephony or combustion engines.

Whatever we night think about the profit motive at an ideological level, the pursuit of monetary gain is what drives commerce. Without the monopoly – and almost guaranteed financial windfall – that a patent affords, it’s questionable whether many of the leaps forward in human development we now take for granted would ever have been made. It’s unlikely that the state would have made these innovations for the public good in the absence of private R&D, but that’s a debate for another day.

So, for instance, while we wish to imagine pharmaceutical companies are developing anti-cancer drugs solely for the public good, this is contradicted by the empirical record and even the most basic understanding of market-based economics. This doesn’t mean that there is no element of public responsibility inherent in the innovation process, but it must be accompanied by financial incentives for the system to work.

What About Patent Trolling?

Patent trolling is undoubtedly an ongoing problem, and one that hits tech start-ups particularly hard. For a very balanced report on patent trolling in the USA, the country hardest hit by this phenomenon, this podcast is balanced and very edifying.

That patents are sometimes “weaponised” to ill-effect, though, is not a valid argument against patents in general. By way of analogy, the internet is sometimes used for online fraud or dissemination of child pornography, but even the most ardent of child protection advocates do not call for a ban on the internet in its entirety as a logical means to address this scourge.

Conclusion

Open source may be an appropriate ideology for software development. But then, software in and of itself was never supposed to be the subject of patent protection, despite what Amazon, Facebook or Microsoft alumnus Nathan Myhrvold would have the world believe. Section 25 of the South African Patents Act really couldn’t be much clearer on this point. It’s no coincidence, then, that most patent trolling transpires in the software realm, an already murky area where patents are concerned.

Of course, patents are probably not the reason for or initial catalyst that sparks innovation; once you know you’re onto a good idea, though, they are of inestimable importance. Even if you as inventor are not personally motivated by money, your investors and outside funders certainly are, and they are almost guaranteed not to invest if you do not seek the maximum of patent protection available to you.

It’s easy for Elon Musk to decide blithely to go open source now that his company has broken through and hit critical mass. He wasn’t doing this when first inventing (and patenting) the many Tesla hardware components he’s now opening up and/or when he was seeking investment or venture capital funding (while already extremely wealthy when he joined Tesla, the company did still obtain outside capital in a number of funding rounds).

It’s similarly easy to say patents scupper innovation by smaller businesses; well, the thing these smaller businesses wish to “draw inspiration from” might not have existed were it not for a robust patent system that ensured a financial jackpot for the best ideas. If what you’re doing is innovation in a true sense, there’s no validly patented invention or process you should need to be copying. That may be a bit of an absolutist statement, but it is true, at least in theory.

Open source is not the answer for true, groundbreaking innovation of the kind that patents are meant to safeguard. For innovation on this scale, we need an instrument that insures financial rewards for the best breakthroughs, and one premised on the way humans actually behave, rather than how we wish they would behave.

Until patent naysayers come up with a system that balances incentivisation, financial rewards and legal protection as well as patents do, patents are the best system we’ve got. If we compare quality of life today to the 1400’s, it seems patents are not doing too bad a job as the guardian of innovation.

Written by Mark Smith, founder and director of Ratiodex (Pty) Ltd. Smith is an attorney of the High Court of South Africa and a Fellow of the South African Institiute of Intellectual Property Law.