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October 24, 2007

Hockey Helmets and Patent Markets

What do patent owners have in common with hockey players?

Years ago most hockey players did not wear helmets. Yet when privately polled, most hockey players said they would prefer to wear helmets for the extra safety that helmets would provide. Why the difference?

Economist Thomas Schelling pointed out the problem: when almost no player wears helmets, the player who does puts himself at a disadvantage in terms of peripheral vision. Although each player preferred the saftey of helmets, none was willing to accept the disadvantage in exchange for the extra safety. The answer: make helmets a league requirement. When everybody wears helmets, everyone is safer and everyone at the same disadvantage.

Patent buyers and sellers are in a similar position to hockey players right now. Although plenty of comparable patents are being licensed and assigned at any given moment, and public information about the terms of these licenses and assignments would make valuations considerably easier for everyone (saving some legal and expert witness fees at least), nobody alone would dream of doing so because of the advantage this would give competitors in terms of estimating costs of development and competition.

The soluton for patent buyers and sellers is as simple as the solution for hockey players -- require ALL patent license and assignment agreements to be disclosed. Everyone benefits from more accurate valuations. Nobody is at a competitive advantage in terms of disclosure.

Lemley and Myhrvold proposed this in an op-ed earlier this year.

Posted by Michael Martin at October 24, 2007 7:56 AM | The Patent System

Comments

Dream on...

This will never happen for a simple reason: the truth might be shocking.

Do you really think those multi-nationals really want you to know all of the details about their large anti-competitive cross-licensing pools and the actual amounts paid out to smaller patent holders ?

Posted by: small inventor at October 24, 2007 8:22 AM