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I wish I had read Andy Grove's book a little more recently (must have been 10 years ago now)... but yes, the approach Intel took obviously paid off in terms of market share + allowed them to better manage capacity. Owning a patent gives one the right to decide how much (or how little) they should charge for licensing. A lot of companies now would probably instead work with a contract manufacturer (for better or worse), like you suggest, but I wouldn't say patents are a significant reason for that (or at least not always). Many startups in my field are fab-less (cost of infrastructure is high), and significant amounts of fab is done overseas (in spite of IP risk, not because of patents). A contract manufacturer might be better able to weather spikes + lulls in demand (and if they can't well, they might go belly up, but that's what second sourcing is for). I don't entirely subscribe to that, but it is the rationale + it mostly works. the pros to overseas production are primarily cost related (at least superficially so) - there are domestic contract manufacturers which have advantages but not usually cost. Another reason some production is done in China is that in some domains (China being far from a free market in reality), to get your product sold there, it has to be produced there (at least some sizeable %)...
The pharmaceuticals industry is pretty much insane... I can't imagine being a VC in that space... the combination of risky products (technically), high R+D costs, a lengthy drug approval process, legal costs (patents aside, just liability), and the need to recoup for all that... is, well, nuts...
I should add that (as in many of our recent discussions, and lest anyone thinks this is anything other than civil banter), to a significant extent, I share your viewpoint regarding the downsides, but in reality, there is validity to the system as a means of IP protection (regardless of one's opinions re the downsides). I suppose I shouldn't have opened that can of worms, but I primarily made my original comments re patents, to note that the state does virtually nothing to help you enforce the patent (ie while a patent is a monopoly (and in a sense, "artificial"), it isn't enforced by the state - the owner has to enforce at their own cost... there are no "patent police", + it is not criminal law). Perhaps we have been largely debating semantics... but back to your comment "secrets/knowledge can't be stolen": while true literally (and indeed Renault's job to protect), the loss of IP in the form of what may have happened at Renault, is effectively a monetary loss (R+D cost) that may not be recoupeable by legal means (if the employees who signed an NDA + leaked can't pay)... effectively money has been stolen if "Copycat Inc" goes on to produce the same product + successfully compete in the market with reduced R+D costs (note Renault is not yet in the marketplace for this product either + it is not inconceivable that a well funded Copycat Inc could ramp up as fast or faster + then undercut)... If Renault had instead lost a patent to Copycat Inc, Renault could in principle go after Copycat Inc (with presumably deeper pockets than 3 people), for as much as triple damages, and recoup the loss (or at least bankrupt Copycat Inc, forcing them out of the market + negating the IP loss)... so that is the value of owning a patent. is my point clear? the more esoteric/foolish aspects of patent law we've commented on are a sideshow...
that the French government has a "CIA" for business fraud is a bit wacky imho!
apologies to everyone else (long tuned out?) for, once again, hijacking a thread... ;-)
James...
posted by 67.158.7...
, Thu, 6 Jan 2011 23:03:23
, Fri, 7 Jan 2011 15:31:58, Fri, 7 Jan 2011 16:23:21, Sun, 9 Jan 2011 03:24:46
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