Andrew Grove, the former chief executive officer of Intel Corp., said at a public even in Mountain View, California, that the current patent system had to be altered somehow. According to Mr. Grove, current patent instruments are akin to financial derivatives, which are believed to be a cause of the world’s financial crisis.

“The true value of an invention is its usefulness to the public. The system in place in the [Silicon] Valley today is moving further and further away from this principle. Patents themselves have become products. They’re instruments of investment traded on a separate market, often by speculators motivated by the highest financial return on their investment,” said Mr. Grove, reports Cnet News.com web-site.

The former head of Intel reminded that the most important invention of the semiconductor industry, the transistor, was licensed by AT&T for $25 000, which allowed transistor industry to become tens of billions of dollars industry nowadays.

“By the time, the integrated circuit arrived, the industry largely operated by cross-licensing between companies so it really didn't matter, if the (Robert) Noyce patent or (Jack) Kilby patent prevailed – the result was the two companies could go on do their work,” explained Andrew Grove.

However, nowadays patents resemble derivatives and do not directly lead to new products. However, many patents eventually cover actual inventions, which is why there are investors who acquire patents in expectations that at some point they will bring some kind of profit. After the patents begin to cover certain contemporary products, patent owners either rather massive sums from actual product creators, which generally slowdowns innovation since the latter have to constantly check whether the new products infringe someone else’s patents and make investments into patents that may be potentially infringed.

“The patent product brings financial derivatives to mind. Derivatives have a complex relationship with an underlying asset. While there’s nothing wrong with them in principle, their unfettered use has damaged the financial services industry and possibly the entire economy. Do these patent instruments put us on a similar road? I fear our patent system increasingly serves those who invest in the patent products. It may be time to use Jefferson's principle as a test and ask if we meet it,” said Andrew Grove.

Tags: Intel, Semiconductor, Business