Friedman describes an efficient rule as a rule where “total gains [are] larger than total losses, making the net effect positive.” This applies to any type of law– be it criminal, tort, or patent law. I’m sure many of you have read about the patent dispute between Apple and HTC. This article discusses the possible inefficiencies if Apple wins the case. The article mentions Apple’s “legal temper tantrum” over “HTC’s alleged infringement on up to 20 Apple patents,” with emphasis on the multi-touch-interface patent. I believe patents are crucial for innovation, because if Apple didn’t have a patent on its multi-touch, what incentives would Apple have to spend millions or billions on R&D? But what happens when patents deter competition and innovation? In that instance, I think some things must be adjusted.
Eric Von Hippel, a professor at the Sloan School of Management, said it best: “It’s a bad scene right now. The social value of patents was supposed to be to encourage innovation — that’s what society gets out of it. The net effect is that they decrease innovation, and in the end, the public loses out.”
I am a happy iPhone user, but I am pleased to know companies like HTC with Google Android are competing with the iPhone. This competition forces Apple to innovate more and charge a lower price, which is better for me! If HTC is shut down because of this, I will be a less happy iPhone user in the future.