[seriously serious sirius XM radio] IP reform thread

[Drake Tungsten]

Not yet.

[Jon Miller]

One point with the patent buyout option. It would reward big corporations more than small ones, as the big ones could hold out more while the small ones not sure of success would be more likely to sell the patent.

I would guess this already happens though, just with the big corporations doing the patent buyouts.

The real thing is that this would create more competition.

JM

[KrazyHorse]

One point with the patent buyout option. It would reward big corporations more than small ones, as the big ones could hold out more while the small ones not sure of success would be more likely to sell the patent.

Errr...yes, for a fixed dollar amount smaller competitors have to be more risk averse.

But that's always true for everything.

[KrazyHorse]

Plus, there's no "holding out". You either accept the fixed multiplier M of the highest bid or you don't.

[Kuciwalker]

One point with the patent buyout option. It would reward big corporations more than small ones, as the big ones could hold out more while the small ones not sure of success would be more likely to sell the patent.

Good! There is less of a loss from a big corporation holding a patent to itself than a small one, because the big corporation likely has a much larger pool of other patents to draw on, with which it can combine the new one to create a new product. It also probably has more resources to market and sell the new product.

[KrazyHorse]

The real thing is that this would create more competition.

More competition over what?

Yes, the basic point is that it compensates idea producers without creating a sheltered producer. Other than that, don't see what you mean.

[KrazyHorse]

Good! There is less of a loss from a big corporation holding a patent to itself than a small one, because the big corporation likely has a much larger pool of other patents to draw on, with which it can combine the new one to create a new product. It also probably has more resources to market and sell the new product.

a) This isn't what Jon was talking about
b) I don't see that it's obvious from an overall efficiency point of view that we want a large company holding a patent rather than a small company, ceteris parebus. The small company might be more inclined to widely license its patent, for example
c) Most of the time we DON'T WANT people holding patents. Patents suck. That's the whole idea....

[KrazyHorse]

Jon was talking about higher risk-aversion of smaller organizations (dollar for dollar). Not the difference in risk-neutral valuations between the two organizations

[Kuciwalker]

a) This isn't what Jon was talking about

Jon was talking about higher risk-aversion of smaller organizations (dollar for dollar). Not the difference in risk-neutral valuations between the two organizations

Yes, but my point was that they also have different risk-neutral valuations.

b) I don't see that it's obvious from an overall efficiency point of view that we want a large company holding a patent rather than a small company, ceteris parebus. The small company might be more inclined to widely license its patent, for example

If the smaller company were inclined to license its patent then it would be perfectly happy to sell to the government, because its expected license revenues would be a floor on whatever bids it got for the patent.

c) Most of the time we DON'T WANT people holding patents. Patents suck. That's the whole idea....

Yes, but IF someone is going to hold a patent, we want them to be as large as possible so their patent is combinable with as many other patents as possible.

[KrazyHorse]

Yes, but my point was that they also have different risk-neutral valuations.

Yes, but the price of chicken feet in Peru is 38 cents a pound.

if the difference in risk-neutral valuations is different then so be it. Jon was stating that the higher risk aversion of the smaller company will lead to less efficient outcomes sometimes. This is true, of course. In fact, all risk aversion leads to a decreased expected outcome.

[KrazyHorse]

If the smaller company were inclined to license its patent then it would be perfectly happy to sell to the government, because its expected license revenues would be a floor on whatever bids it got for the patent.

Not necessarily. Not all producers are equal, Kuci. Some might know the potential market better than others.

By the way, I'd assume that most of the time the patent holder would be willing to sell, given the size of the multiplier being proposed (say, 2), so this is a moot point...

[Kuciwalker]

Actually, Jon was stating that the buyout would be mean to small companies. I was pointing out that being mean to them is potentially good.

xpost

[KrazyHorse]

Yes, but IF someone is going to hold a patent, we want them to be as large as possible so their patent is combinable with as many other patents as possible.

If somebody's going to hold a patent we want it to go to the person who will produce the highest social benefit with it. This may or may not be related to the privately-appropriable benefit they can derive from it and even more speculatively may or may not have anything to do with their risk-aversion...

[KrazyHorse]

Actually, Jon was stating that the buyout would be mean to small companies. I was pointing out that being mean to them is potentially good.

xpost

a) Saying that the buyout is "mean" to small companies is silly. A certain payout is better for the risk averse than for the less risk averse, so the gov't offer looks more generous to the small company ceteris parebus

b) I'm not sure Jon understood the mechanism in the first place. He seems to be under the impression that there is some sort of negotiation

c) Again, you're confusing two issues: the risk-neutral valuation and risk aversion. Just because you've proclaimed that they always work in the same direction doesn't make it so...

[Kuciwalker]

Saying that the buyout is "mean" to small companies is silly.

Yes.