Wednesday, December 7, 2016

Saying So Doesn’t Make It True

A Reflection on the Samsung v. Apple Supreme Court Decision 

At the end of the Second World War, the United States government took, among other concessions, the patents and the inventors of Germany to build its chemical, infrastructure, and technological industries that had been bested by the Third Reich.  From dyes to magnetic tape to rockets, the German reparations catalyzed a period of transformational growth that built the likes of Silicon Valley and metropolitan Boston and Federal labs and Beltway Bandits that speckle the I-95, I-66 and I-64 corridors. 

I’ve been deeply saddened in my experience in Australia where I’ve seen hundreds of millions of dollars poured into “research” and “innovation” which is universally redundant to technologies and initiatives the world over.  One of the most tragic comedies is the frequently lauded claim of Australia’s invention of WiFi.  Sad that CSIRO and the Australian government don’t take the time to read their own patent which states that, “…wireless LANs are known, however, hitherto they have been substantially restricted to low data transmission rates.  One wireless LAN which is commercially available is that sold by Motorola under the trade name ALTAIR.”  Australia didn’t invent WiFi, they improved upon the inventions of many others.  But that’s not the story that governments want to tell taxpayers.  Both at the State and Commonwealth level, now billions of dollars are committed to a pretense of innovation for economic development which assumes that somehow basic research will be the country’s answer to decreased commodity exports.  And rather than doing what they’ve done occasionally quite well – adapting innovations for more applicable and relevant deployment – the monotonous drumbeat of “invention” and “innovation” clamor on. 

It was particularly interesting this morning when I read the U.S. Supreme Court’s decision on the Samsung damages award sought by Apple.  In an unanimous decision, the Court overturned the $399 million jury verdict against Samsung for alleged infringement of Apple’s patents.  The patents in question were on “inventions” like a rectangle with rounded edges, an interactive screen that responds to finger movements and other life-changing smartphone features allegedly “invented” by the companies.  Ironically, the Court stipulated that neither Apple nor Samsung had adequately defined what the “relevant article of manufacture” was that was the basis for the alleged damage.

With over 88 million patents worldwide to date and with that number growing by close to a million disclosures globally each year, we’ve lost the plot.  We wouldn’t know an invention if it bit us in the face.  Public dollars are being thrown at academia and industry each year to come up with solutions which are already out there to be deployed or repurposed. 

Now there will be those who say, “But Dave, that’s just your opinion.  I’ve paid a patent attorney a lot of money to protect my invention and they’ve said I can get a patent.”  Yes, and a lap-dancer in a night club will tell you that she loves you for the right price.  Saying so doesn’t make it true.

There’s another way to go.  When Elinor Ostrom won the Nobel Prize for her work on the Commons in 2009, she could not have imagined the import of her work far beyond the notion of public goods and public rights.  Ever since the 18th century, patent disclosures have secured for their applicants certain market rights and restrictions.  But, the public – who was supposed to benefit from the advance of the Arts and Sciences – has gotten more expensive products and has subsidized industry and higher education unwittingly.  However, now with over 92% of the world’s intellectual property unprotected in most of the world (patents have to be filed in the countries where inventors want market protections, otherwise no market right is enforceable in the others), the ability for countries to research, integrate and commercialize the expensive IP of others is at hand and most of the world is still not using this innovation commons.  That’s right, what happened in the generic drug industry in the mid-20th century is now possible with every industry. 

And, for the current industrial titans rife with their stockpiles of faux invention, another opportunity has been created.  Patents serve as an indicator of corporate intent.  Maybe where you’re planning to go.  Maybe where you know you’re going to hit competition.  No matter what the rationale, these documents are a signal of market intent and that very signal drives our equity funds and our recently launched CNBC IQ100 Index powered by M·CAM.  In the last quarter of 2016, our Innovation Index has outperformed the S&P and NASDAQ by as much as 300%!  Ironically, some of our best trading data comes from seeing the fallacious claims of Apple and Samsung months and years ahead of time and investing accordingly.

It’s time to end the illusion of “creation” once and for all.  We don’t make things ex nihilo.  We’re trained and enculturated to adapt things for new contexts or efficiencies.  And as a result, it’s time that the public investment shifts from “invention” illusions to Applied Innovation.  This transition has already transformed the pharmaceutical industry and is now poised to change the face of business around the world.  President-elect Trump’s recent pronouncements regarding the termination of TPP has just accelerated that transformation and it’s time for the world to ride the wave of innovation literacy.  The Supreme Court just confirmed that that’s a good idea (does that make it true????  Nah!)



  1. I love ya Dave! Just knowing somebody out there is writing this keeps me going! Thanks for being you!!! Really


Thank you for your comment. I look forward to considering this in the expanding dialogue. Dave