There is a fairytale about how a poor, lone inventor can come up with something fantastic, file a patent monopoly on it, and get insanely rich through that patent monopoly. Like all fairytales, it’s a beautiful story, but still a fairytale. Outside of children’s books, the patent monopoly system makes sure that no disruptive inventors or inventions can threaten the current giants in the slightest. Here’s how it works in reality.

Let’s assume you’ve invented a new and amazing wrench. It’s going to save a lot of hard labor through a new mechanical leverage, translating into real profits. Usually, to get this idea, you’ve gone through school and studied a lot of mechanical knowledge that was discovered before your time, but still, let’s go with the myth of the completely independent and alone inventor here. So you’re a lonely poor genius inventor, working in a poorly-ventilated dark basement (perhaps contributing to creative thought through its lack of oxygen but enrichment of other exciting chemicals).

So you want a patent, or patent monopoly, on this wrench. (Patents are usually referred to as exclusive rights. To put this lawyerspeak in a more graspable language, exclusive rights are a monopoly in everyday speak, and this is the term I’ll use.)

The first shock comes at the price of the lottery ticket. To just apply for a patent monopoly in Europe, the typical cost is 50,000 euros. Did you have that stashed away in your basement? If so, why are you calling yourself poor, and why were you living in a basement in the first place? This is the first barrier to make sure that only the current rich corporations can afford patent monopolies and use them against cash-strapped upstarts.

But let’s assume that you magically have 50,000 euros that you can spend on this, and get to take part in the patent monopoly lottery. Let’s even assume that the patent monopoly is approved and granted (which is quite a bit like the odds on winning on a lottery ticket, and just as scientifically predictable).

What happens then?

Nothing. Nothing much.

Except some huge SinghCorp in Bengali may all of a sudden start manufacturing your wrench in large volumes. Not that they’re paying you anything. Or even telling you about it. You’re going to need to find out what’s going on in an obscure market on another continent all through your own efforts.

So assuming you magically discover that this is going on, you contact SinghCorp and demand royalty payments and damages, only to get laughed at in the face. “And what do you plan to do about that?”, they respond.

This is where the next shock sets in as to how rigged the system is in favor of the big corporations and current kings of the hill, rigged against competitive inventions and inventors. Your only recourse is to sue SinghCorp for damages in a court of law. You may win, you may lose; it’s a flip of a coin in your favor, at best. This is where you realize that a patent monopoly lawsuit costs four million dollars on average for both parties.

And you are a poor lonesome genius working with a flashlight in a basement.

So let’s assume you get so far into fairytale land that you somehow can afford to sue SinghCorp for infringing on your patent monopoly for this wrench, that you come up with four million US dollars. (Do you still think “the poor genius inventor” sounds plausible here?)

The instant you file a lawsuit, SinghCorp will retaliate with suing you for five or ten patent monopolies from their portfolio, saying that your patent infringes on theirs. It doesn’t even have to be true – you have to prove it not to be true in a court of law. That means you are now finding yourself in the position of defending in patent monopoly lawsuits – five or ten of them – each costing, on average, four million US dollars.

Do you still believe this is something that protects the poor lonely inventor?

If you’re lucky, really lucky, you will just lose the patent monopoly on your wrench and ten years of your life that were drenched in bureaucracy, lawyers, and red tape.

Patent monopolies prevent innovation. It is a system that works against innovations, to protect the current corporations against competition from aggressive, innovative, and competitive upstarts. It allows the big corporations to crush competitive upstarts in the courtroom, rather than having to compete with their products and services.

As a last line of defense for the patent monopoly system, some people will claim that venture capitalists don’t invest in companies that don’t have a set of patent monopolies. Those who claim that use a common political process known as “lying through their teeth”, and usually have a strong vested interest in the system as such: you typically hear it from representatives of US embassies or patent lawyer trade groups.

The venture capitalists themselves, however, hate the patent system as a whole with all their guts and call it a cancer in the economy and say things like “I can’t understand why our government allows this shit to go on”.

It’s more than time to abolish this guild-era abomination and start promoting innovation again.

See also Ten Myths About Patents and An Alternative To Pharmaceutical Patents.