Against Monopoly

defending the right to innovate

Monopoly corrupts. Absolute monopoly corrupts absolutely.

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Jay Walker (inventor of Priceline) on Patents

See here, and here, he says:
I'll tell you something interesting about Priceline. Because Priceline was invented in a room, it was an invention. One of the things we did is applied and got U.S. patents on the invention. How do you like that? Then, along comes this little company and you might have heard of it. It's called Microsoft. Microsoft owned this other company called Expedia, at the time. They said, This Priceline thing looks like it is going pretty well. We ought to do that too. We'll just download some of the code right from the website, right from the HTML. Just take that HTML. So, somebody came into the office and said, Well, Jay, just like you said, Microsoft's in our business. I said, Oh, that's not good. But the fact is, in the United States, the intellectual property laws are reasonably strong and although most people didn't understand what Priceline had patented, they thought we had patented some auction, stupid people, we have nothing to do with auctions at all. Some New York Times reporter called it a reverse auction and nobody every got over it. I never forgave the reporter for it. We were branded as an auction, but we weren't. We were a demand collection system and because of that we sued Microsoft and Microsoft decided maybe it wasn't the best idea to copy us. They turned off that functionality on Expedia. Since then, nobody has copied Priceline. It has been ten years. For as long as our present patents last, I don't expect anybody to copy Priceline. Since Microsoft isn't going to copy, that is probably a good sign that others probably shouldn't either, but it proves a very important point. It proves the power of intellectual property, at some level, to provide space for a startup that is truly novel, that is warranting a patent, or we had several patents in this case, to give it the breathing room to invent something new, create value. Eventually, Priceline will have to compete on its invention when the patents expire. However, there are plenty of people competing with Priceline. They're just not copying it. Somebody is offering LastMinuteFares.com and somebody else is offering JoinMyClub.com. In other words, there is a million people competing with Priceline. They just can't copy Priceline's essential idea which is name your own price, put up a credit card for a flexible set of terms and conditions where, if those terms and conditions are accepted, you basically own the product. That's the core Priceline patent. So, there's how Priceline, again, anticipated copying. Let's just say there was no intellectual property. What would that mean? That would mean Priceline would have to go quickly, right? They would have to keep innovating.
Yeah--we're from the government, and we're here to help you--to "give you space," to "give you breathing room"--while we tax and regulate the living crap out of you!

[StephanKinsella.com cross-post]


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