The Problem With Patents (Infographic)

There’s no question that software and technology represent some of the fastest growing industries today. The internet has fundamentally changed the way we interact, do business, and spend money—without it, Frugaldad wouldn’t exist. That said, I always try and keep abreast of what’s happening in these sectors, and to be aware of how the online and tech industry makes its money.

I recently listened to an episode of This American Life called “When Patents Attack!”. Something that surprised me while listening was that while I think of patents as being mostly for gadgets and the kinds of products you see on infomercials, patents have become a huge factor in the software and online industries, to the tune of billions of dollars.

This infographic discusses some of the facts behind the patent industry and how it’s changed as software, technology, and the internet have developed at an incredible pace. I find the information to say a lot about the state of development and innovation; both how important it can be to everyday life, and the problems it can face on a larger scale.

Patent Infographic


  1. It would be great to know who designs these infographics for Frugal Dad. Pardon me if you yourself do it. Otherwise, shouldn’t the designer get a link or a minor shoutout? Have I missed something?

  2. Patent system has been more or less the same for a long time – presiding over our long growth period. The only thing that’s new is software patenting – and a massive lobbying effort by Google and Microsoft to dismantle the patent system so they don’t get sued by people who get lots of patents. There are new players in the market (non-practicing-entities or NPEs) who get lots of patents because the barriers to entry in software are low. They are able to sue folks because infringement is common as engineers can copy software with cut-and-paste. Big players want to turn off the patent system now that they have their leadership positions.

    This American Life is sponsored by whom? Bing.

    Rumor has it that these big players were paying law professors $50,000 per paper to write about the “horrible” patent system. Nobody pays for counter-point. What’s really happening is our patent system, which was a valuable tool for our great start-up system, is being dramatically changed to be more like Europe’s, where start-ups are few in number, and only established companies participate in the market.

    • Well, you’ve challenged the integrity of TAL by suggesting that because they have corporate sponsorship from Microsoft, the reporting is tainted, and you’ve dropped the claim, without evidence, that academic opinion supporting the reporting is bought and paid for. It’s a classic fear, uncertainty, and doubt campaign. I haven’t heard any player seeking to kill the patent system, which would require a constitutional amendment, but it’s pretty hard to find anybody with even a little bit of distance from the status quo making the argument that there is no need for reform. I think I’ll go with what informed consensus is saying loud and clear and recognize your unsupported FUD for what it is.

  3. While I find the infographics interesting, it seems that you have moved away from fugal insights to more of a dissertation on big business. The occasional deviation is nice, but the consistent posts are becoming a little tedious. I come here to get ideas, practices and insights on how to make more “frugal” life choices and changes, not be bombed with how terrible Amazon or Wal-Mart are. Just my opinion. Thanks.

  4. Hooo boy, there’s a lot of FUD about patents out there, but this is one of the most concentrated aggregation of FUD I’ve seen in one post. Let me attempt to tackle this…

    * There’s so much FUD simply because people don’t bother to understand how patents work. Here’s a one-liner guide: Read The Fucking Claims. The titles of patents, which you have liberally quoted, mean *absolutely nothing*. It’s not too much of an exaggeration to say that nothing in a patent legally matters except the claims. Yet nobody reads the claims before denouncing a patent and the patent system, and hence everybody spouts uninformed crap that other people read, believe and parrot, spreading more FUD.

    * That “That American Life” episode had the worst reporting on patents I’ve read in a long time, and I’ve read the crap Techdirt puts out. While their reporting about IV is hit-or-miss, the rest is complete trash. There’s no such thing as a “patent on toast”. The guy who described it as such runs a company that “estimates patent risks” for you. Hmmm!

    * There’s no study showing how many patents cover things that already existed. In fact, such a study would be very, very difficult to carry out, seeing that you’d have to study the *claims* of all 8M+ patents and compare it with all the prior art out there. That 30% figure is a completely made up number, probably by the same guy who thought he’d found a patent on toast.

    * That $500 billion / $332 billion figure is another baseless number. Here’s one post taking that number apart (note, it’s by an IP attorney):

    * 80% of software engineers don’t even *know* what patents are, let alone have an opinion on software patents. Those that do have an opinion, do not understand how patents work; they are simply parroting the uninformed FUD they read online on the same forums and blogs that you got this data from. This is eminently obvious the moment you engage them in a discussion and it turns out they have no idea what claims even are. Like just about every other number in this infographic, that 80% number is completely made up.

    Most of this FUD is completely unsubstantiated. However, people have been trying to estimate the effects of patents; there actually are studies and papers trying using economics methods to study the beneficial and harmful effects of patents, even software patents. I’ve read papers from both sides, and there’s no clear answer. Nobody else – especially the tech media – seems to have bothered to do that before spreading the FUD.

    But then, of course, the tech media is more interested in generating pageviews rather than discussing real issues, and nothing generates pageviews like outrage. Not very surprising, then, that there is so much outrage out there and almost zero comprehension of the true issues at hand.

    • @kinkfisher: “There’s no study showing how many patents cover things that already existed. In fact, such a study would be very, very difficult to carry out, seeing that you’d have to study the *claims* of all 8M+ patents and compare it with all the prior art out there. ”

      You could do a statistical analysis from a random sample.

      • The patent may only have one independent claim, but it is a method patent that was written professionally and describes a commercial heating unit that can be used to refresh bread products. Apparently the heating method (with elements at between 2500 and 4500 degrees) couldn’t be patented, so the “novel” aspect became perhaps this alternative use. It may still be enough to prevent someone from selling a competitive product, and certainly from making the sales claim of the competitive product being able to refresh bread products. I assume this isn’t what the inventor was trying to get, but what he “could” get after the patent office shot down all of his other claims. This is definitely not a patent on toast or toasting. One other point — it’s not only the claims that are important, because the other descriptive aspects of the patent work to support or in some cases unravel the claims when in a lawsuit. Theoretically the claims in this patent could be exactly the same in a different patent that described a standard toaster oven or a dual-purpose infrared / microwave oven. The descriptive text would be entirely different. I’m not a patent attorney, but I know and work with a bunch of them, and I have read a lot of patents and studied the ways to work around them for my inventions and those of my companies. When the “cease and desist” letter comes, it’s nice to know you’re in good shape.

  5. Just a thought:
    1) If everything that can be done on the web is already patented
    2) Patents run for 5 years
    3) Computer searching for patents make creating duplicated more difficult

    then all we need to do is wait and this will burn its self out. Like a nasty virus.

    • Patents run for 20 years. Keep looking at the pictures, you clearly don’t get the words or the numbers.

  6. Patents were never about “innovation”. They were introduced as a pure monopoly mechanism, full stop. The original “letters patent” were grants of exclusivity on important and lucrative businesses, like the manufacture of salt or gold leaf. Anybody who got such a patent could, of course, charge as much as they liked for the good, and nobody could complain, since anybody who tried to set up a competitor would immediately be shut down by the Government heavies.

    In return for a such a grant, the patent owner had to pay a cut to the Government. So you see, this was a way of getting Government revenue without raising taxes.

    There are lots of studies showing how economic innovation actually works better in the absence of patents and copyrights than in their presence. For example, look at how James Watt was able to hold back the development of the modern steam engine—and pretty much the entire Industrial Revolution—by 20 years. How the Wright Brothers tried to block Glenn Curtiss’ superior flight-control system and shut down the entire US aviation industry. And so on and so on.

    • @Lawrence D’Oliveiro
      “There are lots of studies showing how economic innovation actually works better in the absence of patents and copyrights than in their presence.”

      And there are lots of studies that find flaws in those studies, and lots of other studies showing that, yes, patents do help innovation. (For instance, there is a positive correlation between the chances of a startup receiving VC funding and whether the startup filed patents.) As I said above, I’ve read papers presenting both views and there is no clear consensus.

      “For example, look at how James Watt was able to hold back the development of the modern steam engine—and pretty much the entire Industrial Revolution—by 20 years.”

      This is a widespread myth that has no basis in actual history. I guess the myth has been popularized by Boldrin and Levine in their “Against Intellectual Monopoly” book, where they use the (incorrect) Watt patent story as the starting point for their arguments against IP. However, any argument that Watt held up the progress of steam is throroughly debunked in this paper (PDF):
      It’s somewhat long, but a very interesting and easy read. It’s impossible to tl;dr, but: Watt patented the contractive use of steam, but “modern steam engines” use the expansive forces of steam (and hence were unaffected by Watt’s patent). But expansive use of steam was very dangerous, and it took many years before somebody figured out how to do it safely, after which the use of steam really took off. By then Watt’s patent had long expired.

      Interestingly, this paper was brought this to the attention of Boldrin and Levine, who mostly ignored the corrections and instead changed the Watt account to include even more falsehoods. The authors wrote a paper about that too:
      I guess Boldrin and Levine didn’t feel like rewriting the entire first chapter of their book to account for little things like historical accuracy…

      “How the Wright Brothers tried to block Glenn Curtiss’ superior flight-control system and shut down the entire US aviation industry.”

      This was a problem of some parties, like Curtiss, not willing to pay the appropriate royalties. There is no doubt that the Wright brother’s invention was a breakthrough that made controlled flight possible. Of course, planes designed later were superior, but they still used the basic method of control invented by the Wrights, and if others (like Curtiss) profited from using their invention, I’d say some royalties would be owed.

      • Funny, you mention Boldrin & Levine, but don’t give a link to their book.

        Here it is, download and read the whole thing, and judge for yourself:

        It’s got chapters on Watt, on pharmaceuticals, on a whole bunch of other things, and all with references, too, so you can check for yourself whether their claims are “falsehoods” or not.

  7. As a software developer I am completely ethically and morally opposed to software patents.

    Copyright exists to protect work from being stolen in software. Patents are unneeded and dangerous. When entire corporations can exist for the sole purpose of suing others to profit because of software patents there is no further proof to the insidiousness and worthlessness of software patents.

    • Below I basically moved some words around and regurgitated what you wrote (I could have said the same thing more convincingly with perhaps half of the words, but that wouldn’t illustrate my point, would it?). Would your “copyrighted” comment prevent me from doing this? With software it’s just as easy to hide the source of things, or just learn from one’s program how to accomplish something and use a different language or programmatic structure to do the same thing. Copyrights and patents are very different. There is a need for both, and there is a need for improvement in how software and method patents are analyzed and awarded.

      (my plagiarizing and strengthening of your weak point follows, and it might even avoid detection by certain of the patented theft detection methods mentioned somewhere in these comments)

      I am a software developer, and am completely opposed to software patents, both ethically and morally.

      Software copyrights exist to protect work from being stolen. Patents are dangerous and therefore unneeded. Why can entire corporations exist for the sole purpose of suing others for profit? Software patent trolls are proof of the insidiousness and worthlessness of software patents.

  8. As someone who is the principal on about 15 patents (and yes, I am a practicing engineer for a totally legit engineering firm) I do not believe any of them has made the world a better place by enhancing human knowledge or the firm that paid for them one cent richer. Mostly they’ve killed trees and supported lawyers.

  9. Patents are a huge problem for innovation today.
    However, you do a disservice to your readers and the patent reform cause when you represent the graphics in a sloppy or incorrect way.
    I believe you are using the diameter of the circles (98%/2% for IV, e.g.) to represent the number. This wildly distorts the area by the square of the true representation. You can use a bar chart if you want to compare only length. But if you want to use spots, the AREA should represent the number, not the length.
    I believe this error is propagated throughout this otherwise very nice chart.

  10. I think the problem with patents as a system protecting inventors from being kicked off from the business by usage of its inventions. I would like to remind that when the patent system come into force most of inventors were single engineers, some kind of freelancers. They have limited amount of money, so to secure their potential profits from inventions itself governments decided to protect them by closing their ideas in publicly available register of inventions, so if the agreement with business failed, they can prevent them from using their idea and allow to go to other business.

    Today we have completely different situation, while typical engineer working on invention is just hired by big business. The only value of holding the patent is the ability to put new entry on theirs CVs. Inventors as people rarely participate in true income from the patents they invented.

    Moreover, the original idea of patent protection lost its meaning, because typical garage inventor who has invent new kind of bearing for the impact drill does not have enough money for just patent application, as it cost over 20 monthly wages if he is hired as engineer elsewhere.

    So, the patent system is broken in more than one place. The big business would not stop gaining profit from the inventions they produce in factories in China or Taiwan and spread all over the world on ships if they are not patent protection, because they first started producing their innovation.

    But patent trolling or gaining profits from patents held over dead bodies of competitors does not seem like protection of inventors – authors of patents or – better say – authors of patentable ideas. Economy these days is hardly different that hundred years ago and I think will lot of trade secrets and other kinds of protection can work and make profits without patent system as we know today. The world will take a lot of profit with rocket gain of innovative use of other’s ideas.

  11. Ther word patent, originally, comes from “patens” (lat.: open) because it referred to letters written on an open parchment or cloth, with a wax seal printed at the bottom. Their counterpart were “littera clausa” (folded or rolled letters, closed by a seal) which were addressed to one or more people on private or secret matters. Patent, in a nutshell, was originally a way to publish (i.e. inform a public audience) about a topic. From the 19th century, the word patent was used to describe a land claim, an invention or any product of intellectual property, as a way to obtain legal proof through anteriority. The web, with its obliteration of time and space into an ubiquitous, entangled continuum of both, is now shrinking the meaning of patent down to a minuscule dispute between exclusive ownership and global sharing of things. Sharing, today, is seen by a growing majority of people as a substitute to patents because it helps ideas and products to spread and gain recognition, beyond the benefit of their original inventor. This effect is also called “brandpowder” because brands that don’t protect their little feud and open up to the world are going to grow; those attached to the old environment, will end up in a cloud of dust.

  12. One of the worst offenders in this category is Bob Zeidman (Robert M. Zeidman).

    Funny enough, one of your examples of obvious patents (“Backing Up Data Online”) is an idea that Zeidman credits himself with in his book about intellectual property. That would be the same book where he calls himself a patent troll, I’m not kidding.

    Just use google patents & search for “Robert M. Zeidman”, you’ll see all sorts of wonderful innovations with titles such as “Compartment in an automobile for storing an umbrella” and “Searching The Internet For Common Elements In A Document In Order To Detect Plagiarism”.

    I wish I was joking, but I’m not.

  13. It should be illegal to own a patent and not offer the product to the world. This is why cars don’t get 100 miles to the gallon (minimum), as proven by the movie Gashole (on Netflix Watch Now). Shell Oil bought the patent and buried the technology.

    That one change in the law would transform the planet into a sustainable system within ten years.

  14. As a software engineer with two patents pending, I would support an end to business method/software patents. The patent office rarely granted business method patents before the 1990s. They changed their stance in the 1990s and allowed some patents with very broad claims to be approved. This wasn’t a problem when companies that filed the patents were primarily using them defensively to counter-sue other large companies that could sue them. However, NPEs are running almost unchecked sending out hundreds or thousands of threat letters and are taking many companies to court. In the LodSys case, even one person developers received threatening letters and a few are in court.

    Software patents are nearly useless in their current state for inventors. In the 4-6 years it takes to get a patent filed and approved, the original business would likely fail waiting on the patent. Also, the costs are way more than the $700 listed in the graphic. It’s nearly impossible for an inventor to completely write a patent application without some patent attorney assistance. Some light assistance would cost around $5,000 or full assistance would be $10,000-$20,000. The cost to prosecute infringement after receiving a patent could also cost a million or more.

    The patent office also needs to admit that many patent applications have been approved which are either obvious or prior art would invalidate. The patent office normally just checks prior patents, but prior art in products released before a patent application are normally missed and it’s also difficult to search for prior art on software patents with broad claims. The process to invalidate a bad patent currently takes far too long and is overly expensive.

  15. Overall, I think it is an interesting and well-thought out graphic. I also encourage folks to listen to the original This American Life story:

    Jason’s perspective and the concerns raised are not uncommon, nor are they unfounded. There are a lot of ways to look at the U.S. patent system and patent industry. No system of this complexity and expense is going to be without flaws and unintended consequences. I certaintly wouldn’t classify the infographic or the original program as FUD in the perjorative sense.

    I wrote a somewhat lengthier review on my blog at:

  16. Patents have always played a big part in american history, it’s a kind of a sign of freedom of entrepreneurship. So I’m not that surprised with the fact that it represents billions of dollars.

    By the way nice infographic.