I don't think patent incentives work this way. HP are not "the only people who are allowed to work on this problem." Patents don't forbid research, only use. A

I don't think patent incentives work this way. HP are not "the only people who are allowed to work on this problem." Patents don't forbid research, only use. And patents stack: if HP has a patent on the general idea of memristors (for example), and you get a patent on a particular way of making memristors, then no one including HP can make them your way without licensing your patent as well as HP's patent. (This is different from copyright, where if I write the first Harry Potter story and you write a derivative Harry Potter story, I just own your story.) The ultimate idea is when you sell something complicated like a car, a share of the money gets divvied up among a bunch of people/companies who contributed to it -- sort of like selling a movie, where royalties get divvied up among a bunch of people/companies who worked on it. So, R&D incentives: right now HP doesn't have a commercially viable way of using memristors -- they have to invent a bunch of new stuff first. If someone else invents that stuff before HP can, that person/company will share in the megacash that comes from the breakthrough. The part that is theoretically bad for R&D is that it's literally a gamble to research a particular topic, because whoever makes a particular discovery first wins all the royalties for that discovery. If you think HP's lab is way ahead of everyone else then you might not want to sink a bunch of money into memristors, because they might be about to patent whatever technique you start researching. On the other hand, this means you ought to sink your research money into a different angle than HP is investigating, rather than just duplicating what they're doing. Your incentive is to find the highest-payoff place to put down your R&D bets, which (we hope) is a net win for everyone. We talk a lot about the evils of software patents, but mostly that's because the model of "make a car and pay out royalties to people who helped" doesn't seem to translate/scale to software, so the incentive systems break. If you're coming from software you have to be careful translating your intuitions back to hardware, where the incremental-invention/royalty model is more workable.