🚀 go-pugleaf

On 19 Aug 91 02:40:43 GMT, kap1@icarus.spc.uchicago.edu (Dietrich Kappe) said:

kap1> In article <PCG.91Aug18210217@aberda.aber.ac.uk> pcg@aber.ac.uk
kap1> (Piercarlo Grandi) writes:

pcg> The royalty would be by default something like 3-5% (which is
pcg> little for a new product, where profit margins can be supposed to
pcg> be something like 30-50%, and a lot for mature products, where they
pcg> can be supposed to be around 5-10%), and the inventor could reduce
pcg> (but not increase) it at will.

kap1> One problem I see with it, though, is the cummulative effect of
kap1> multiple royalties. Suppose a programmer incorporates 10 patented
kap1> methods in his/her program. The royalties would amount to 30-50%.

Precisely. That's not a problem, at least not a legal problem; legall;y
the US Constitution only requires that inventions be rewarded by
granting exclusive economic rights to the invention.

The problem is *economic*: note that I wrote that the 3-5% would be the
default *and* the maximum, but there would be no minimum. The idea is
that paying 3-5% of your sales gives you the right to use the patented
invention without any further ado; if you think that 3-5% is too much,
you can always negotiate with the inventor for a reduction.

The idea is that 3-5% is both a reasonable default and a reasonable
maximum for a single invention, as it is a sizable but not preponderant
portion of historical profit margins.

Indeed it is easy to anticipate that inventors will realize that their
inventions would not be worth 3-5% of the sales income, and would
therefore issue the patent with a lower default royalty to encourage
adoption.

So *by default* if you use 10 inventions you end up paying royalties
amounting to 30-50% of sales income; but you can always write to the 10
patent holders saying "I want to license your and 9 other patents for my
new product, and I want a lower royalty from you and the other patent
holders otherwise the product will not be economically viable. You, and
the other 9 inventors, have a choice of either granting me a lower fee
or not collecting anything from me. Let's negotiate".

I surmise that under my proposed system not only a separation between
inventors and manufacturers would be encouraged (as inventors would have
every incentive to line up as many manufacturers as possible, instead of
setting up their own monopolistic one), but specialized patent
wholesalers/brokers would emerge (one of them could be the FSF for
example), each of them with a portfolio of patents and offering patent
packages with reduced royalty fees.
--
Piercarlo Grandi                   | ARPA: pcg%uk.ac.aber@nsfnet-relay.ac.uk
Dept of CS, UCW Aberystwyth        | UUCP: ...!mcsun!ukc!aber-cs!pcg
Penglais, Aberystwyth SY23 3BZ, UK | INET: pcg@aber.ac.uk