Most of modern patent law was established in The Patent Act of 1952, which allowed for protection of inventors of a “process, machine, manufacture, or composition of matter”. Without protection, an invention could be stolen, and might not be worth the required investment. This is especially important for industries where the process of inventing is complicated and expensive (such as pharmaceuticals).
Unfortunately, this protection for inventors can have a negative effect. For the inventor to be fairly compensated, manufacturers must pay licensing fees. Even if the licensing fees are modest, some manufacturers will be drawn away by more profitable ventures. This reduces competition among potential manufacturers, which can delay – or even prevent entirely – consumers from receiving a finished product.
In the worst cases, this creates organizations called Patent Trolls. These organizations collect large numbers of patents and usually set high licensing fees. Most of their patents are never manufactured, but a few are – and they generate enough profit for the entire organization.
This negative effect is most apparent in industries where the process of invention is inexpensive. For example, the invention and wide adoption of personal computers makes it inexpensive to design and create software. As a result, the software industry has way too many patented ideas, and way too few in actual development.
What’s Being Done
In 2014, the Supreme Court decided Alice Corp. v. CLS Bank International. The decision had a major impact on the patent eligibility of abstract ideas and algorithms, which will make a big difference in the fight against Patent Trolls.
For a laugh, watch this video: Patents on HBO’s Last Week Tonight