.

It is said by many economists that it is usually difficult to explain crisis only on economic terms, but that it is needed to use psychological reasonings also.

Taking advantage of that, it would be good to express that in the same way as massive pollution with fake financial instruments (subprime mortgages plus all their hundreds of derivative financial products), has been the main responsible of the initiation of this current serious economical worldwide crisis, pollution with "subprime" patents will be the responsible of to create the next crisis on innovation and so on the technological sector and economy. Exactly in the same way as happened with the fake dotcoms.

This is always the problem when creating fake assets in the economy. Soon or later, they come up to become a confidence crisis in the whole sector. In our case, the patent one.

For example, in the case of the mortgages, the amount of subprime ones is estimated to be roughly the 13% of the mortgages of just one bank market, the US one. But that tiny market portion has created a huge pyramidal crisis of confidence in the global economy and more concretely in the whole financial sector.

Today, nobody wants to buy financial products from others because they could be contaminated by subprimes. It is extremely difficult to know what is and what is not contaminated. Indeed, internally many banks do not now still how much of their assets are contaminated. Of course, nobody now believes in the rates provided by the "experts" of the risk agencies. Those very same who, just before the initiation of he crisis, blessed the financial derivatives of the subprime mortgages as non risky ones.

But what is more interesting is that if, in the previous paragraphs, the word "mortgage" is replaced by "patent", "bank sector" by "patent sector", and "financial products" by "patent portfolios", the formula remains plenty valid… and so for, the consequences and conclusions.

The whole the current economical crisis comes from the wrong resolution of a previous one, the dot com crisis. The way that national banks did to get out of it was to lower the public interest rates to levels were it was almost for free to get a loan (in many times and cases with rates indeed below the inflation). This was the situation mainly in the Greenspan's US¹, but it finally created a worldwide bubble that in Sep'07 just started to blow up. Professional estimations last its consequences for many years on still.

In many countries, many regulations (financial controls) were removed and so the market was finally flooded by what any common person would denominate "fake money". The same fake money as the one created with a fake notes machine, but just that much more complex and nicely sold.

But equally, and curiously roughly matching in dates, it has happened in the patent system during the last ten to fifteen years mainly. The regulations have been raised time ago. To get a patent has become almost for free. No innovation effort is almost needed. No innovative step almost. No disclosing of technical knowledge is needed. No invention "as such" is needed, using the patent jargon words. Artificial complexity of the system has reached levels where only the experts bureaucrats working on it understand it. The innovation of the bureaucracy reigns. Real inventors, formerly experienced and brightly engineers, have been replaced by patent technocrats and patent trolls. Those same patent technocrats who indeed decide, with little or no political implication, the patent policy of some of the biggest economical sectors of the world.

The result of this is a patent inflation. The most important patent offices of the world (mainly the namely "Trilateral") have granted surely some millions of subprime patents… that at the end mean fake assets and fake money. Many of these patents are fake because imprecise, too wide and/or non inventive, but many others are fake because are just out of the limits of the patentability. Their subject matter never should have constituted an "invention", but they were granted. "Obvious" is a word who lost it sense time ago.

In this situation, indeed the most crazy and broad patent application is a risk, because in any moment, some years later, it can become a real patent. The innovation field is filled out of patent mines many in the form of hidden patent applications that is impossible to know when deciding to make an investment in real technology. In any moment a fake invention granted as patent can kill your real product and market efforts. Market security is a no clue. Your real assets tomorrow could have no value just because a fake invention in the form of a granted patent.

Exactly this is the case of all software patents and business method patents. Their subject matters are out of the patentability (EPC Art. 52.2 in the European case). So just more subprimes to feed up the fire. Just more fake money for this crisis and for the coming ones. Just more of the, in jargon called, "computer implemented inventions" in a way to dress them nicely in the same way as the subprime mortgage derivatives.

What is worse in this case, is that every patent, good or bad, means a monopoly and huge costs of litigation to cancel its evil effects in the market. The monopoly is just one more instruments for the bad patents to block innovation. They can block the innovative market and so the advance in technology with their (fake) monopolies, litigation costs and unneeded bureaucratic overload.

But in the short time the patent system, including some offices as the EPO, will profit from the fast revenues and mainly from the extreme costs of litigation that feed up the patent establishment. Pollution will continue feeding the patent sector… until the crisis will come up some unpredictable day and destroys some 100.000 patent and "call-it-innovation" employments in a few months. Exactly what has happened in the polluted worldwide financial sector during these last months since end 2007.

So, Great Patent Sirs, just continue enjoying today the patent pollution party.

But remember that the hangover will come soon or later and the crisis will reach all the technology market but specially the patent establishment.

In Spanish we have an old saying for this: "A todo cerdo le llega su San Martín".

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Alberto Barrionuevo is President of the FFII, and Founder and President of the Andalusian FLOSS Enterprises Association AndaLibre.