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When Ideas Stifle Execution

If you’re a frequent user of Amazon, you probably enjoy the ability to buy an item with just one click. Amazon has all your credit card information stored in its servers, and you can enjoy instant gratification for any item you choose on the site with the press of a button. You’ve enjoyed the exact same thing on Apple’s iTunes and App stores, buying new apps, music, movies, podcasts all with the click of the button “Buy”.

You may not have noticed, however, that this useful convenience is not offered by many companies. The reason is that Amazon filed for and was awarded a patent for the 1-Click technology in 1999 and has the right to use and license it for 20 years (according to US law). Yes, Apple uses it too but that’s because Apple licensed the technology from Amazon in 2000. (Wikipedia on 1-Click).

Beware anyone who tries to use the 1-Click idea without paying Amazon a license fee. When Barnes & Noble tried to use the 1-Click system itself, Amazon filed a lawsuit against it. Barnes & Noble tried to get around it by having customers purchase items with 2 clicks (if that sounds ridiculous, it is!), and the two companies went back and forth until they privately settled in 2002.

Patents are very powerful both in encouraging innovation and in stifling it. They stimulate innovation because young entrepreneurs and scientists are motivated to keep working long hours for little money on an idea knowing that with a patent, they’ll have a first mover advantage in the market for 20 years in the US. In fact, every innovation index that compares countries always includes a measure of how many patents were filed in a year. The validity of a patent should depend on the uniqueness of the idea. If you have an idea for a unique alternative energy source, it makes perfect sense to patent it. But it doesn’t always make sense for software and web-based applications.

People who file patents do so because they think that their ideas are “nonobvious”, “novel” or “useful” (required by the US Department of Commerce for approving a patent). But as Harvard Law School professor Lawrence Lessig points out, “It’s nearly impossible for anyone – let alone an underpaid worker in the U.S. Department of Commerce who spends on average of eight hours evaluating the prior art in a patent and gets paid based on how many he processes – to identify what’s ‘novel.'” Patents are usually accompanied by lawsuits and legal struggles, taking precious time and resources away from further research and development, straight to the bank accounts of lawyers brokering the deals.

Here’s a great talk by Lessig on how laws can sometimes choke creativity.

Some people say that ideas are a dime a dozen, and execution is what really matters. In fact, as Steven Johnson and Kevin Kelly both point out in their recent books, there is usually a Zeitgeist of ideas: many unrelated people have the same idea at the same time. This is certainly true of Facebook. Even though the Winklevoss twin brothers are suing Facebook for having taken the idea of a social network from them, the idea was not exactly novel (Friendster and MySpace existed before). In an interview with the New York Times, the Winklevosses gave Mark Zuckerberg credit for “not screwing up” and implied that their idea could easily have ballooned into a 500 million strong social network. We beg to differ: in this case, execution very much mattered, and Zuckerberg deserves his claim to fame and Facebook’s $50 billion dollar valuation.

Coming back to the 1-Click idea and patent by Amazon: Do you think for e-commerce on the Web, the 1-Click system is non-obvious? Of course it isn’t. While Amazon is a phenomenal company, 1-Click is an idea that shouldn’t be it’s exclusive right for 20 years (equal to centuries in the fast moving world of the Internet). Good ideas should not stifle access for the masses.

Ayesha and Parag Khanna explore human-technology co-evolution and its implications for society, business and politics at The Hybrid Reality Instit


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