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I don't understand how that is even possible. Patent owners want their cut, but in the end they want the product to be made, too, because that's the only way th

I don't understand how that is even possible. Patent owners want their cut, but in the end they want the product to be made, too, because that's the only way they get money. So they will take as high a cut they can negotiate, reducing the margins of the end manufacturer to a marginal price. But that is the case with every "supplier". At work I looked into integrating e-ink into a product, and the problem seems not patent fees, but availability. Granted, that could be due to patents itself, but the answers I got why it's hard to procure e-ink display were sadly "the end customers don't want it" and "e-ink is dead".

nikanj 8y ago
A VC will not invest in a firm, if someone else has the ability to extract all future profits via patent licensing
wpietri 8y ago
It's possible because people have different theories of what will benefit themselves. In a functioning marketplace, different suppliers will explore different options. With a monopoly, which is what patents are, you're stuck with whatever notion the patent-owner has. One perfectly reasonable theory of self-interest is to keep prices very high. Yes, they could drop the price and possibly make more. But they could end up making less, and they'll certainly have to do a lot more negotiation work. As an analogy, look at Apple. They have less than 20% of the smartphone market, but make 80% of the profit. [1] They were way ahead of everybody and could have captured a much larger share of both the phone and tablet markets. They're using a different theory of self-interest than the other players. [1] https://www.investors.com/news/technology/click/apple-rakes-in-bulk-of-smartphone-profits-but-small-slice-of-unit-sales/ https://www.investors.com/news/technology/click/apple-rakes-...
- ddingus 8y ago
  I think that theory boils down to margins. The people making zillions of phones make a fraction of the margin Apple does on it's cool phones.

nikanj 8y ago

A VC will not invest in a firm, if someone else has the ability to extract all future profits via patent licensing

wpietri 8y ago

It's possible because people have different theories of what will benefit themselves. In a functioning marketplace, different suppliers will explore different options. With a monopoly, which is what patents are, you're stuck with whatever notion the patent-owner has. One perfectly reasonable theory of self-interest is to keep prices very high. Yes, they could drop the price and possibly make more. But they could end up making less, and they'll certainly have to do a lot more negotiation work. As an analogy, look at Apple. They have less than 20% of the smartphone market, but make 80% of the profit. [1] They were way ahead of everybody and could have captured a much larger share of both the phone and tablet markets. They're using a different theory of self-interest than the other players. [1] https://www.investors.com/news/technology/click/apple-rakes-in-bulk-of-smartphone-profits-but-small-slice-of-unit-sales/ https://www.investors.com/news/technology/click/apple-rakes-...

ddingus 8y ago
I think that theory boils down to margins. The people making zillions of phones make a fraction of the margin Apple does on it's cool phones.