To those otherwise-intelligent people who believe that the road to connectivity and cornucopias of content is to have governments at various levels provide the basic structure (whether of wireless/wireline or of content) so that it can be distributed at its marginal cost, which is about zero, I have a three-word-thought: The Patent Office.

The USPTO is a fine, hardworking institution, but it takes an average of 14 months for it to make an initial response to a patent filing, and average pendency is well over two years. (Numbers are from memory, but they are not far off.) During this time, the average application gets only two or three days of actual examination.

This is important stuff. It hobbles research, it hobbles investment, and it costs companies a lot of money. But the patent-using community is so beaten down in its expectations of bureaucratic improvement that it will be grateful if pendency gets reduced to 18 months.

Firms pay hefty fees for all this, but there is no connection between the payment and the speed of service.

In a market-based system with private examination firms, patentees would pay for speed of action if needed, and the time to first action could be cut to between one and two weeks. Why should it be longer? The price/time/resources issue is basically a problem in elementary queueing, and any operations researcher can solve it with a click of a mouse.

It is the patenting firms' inability to pay for what they need that cripples. So why do people want to make the rest of the Internet system more like the patent system?

Those who would rather beseech the government than decide what is worth paying for should go see a decade-old French flm called Ridicule, about a young nobleman who visits Versailles in 1783 in an effort to obtain royal favor to build a needed dam in his home province, and gets caught in the machinations of which abbot, noble, or courtesan can catch the ear, or whatever, of the king, and of what kind of appeal might work, since the outcome will certainly not depend on the merits.

In the end, he goes home to take direct action, a metaphor, I presume , for the coming revolution. (Too bad it didn't work, judging by recent news from France on iPods and Microsoft.)

posted by James DeLong @ 12:56 PM | Markets: Business, Investment & Innovation

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