Sunday, December 19, 2010

What might happen if a patent expires...?

Recently i have been wondering a lot about what will happen when patents expire. Particularly patents that have been generating huge revenues to companies. I was tempted to investigate on this since i came to know LabVIEW, which is National Instruments proprietary software patent is set to expire on 2011.

What would happen if a patent expires. Usually in the pharmaindustry, what happens is that, companies spend lot in R&D for developing drugs, which they patent and sell at quite high profitable margins. But once the patent expires, things change. Now other companies also start manufacturing the same drug. So the company that invented drug can no more sell the drug at high margins. There are even possibilities that it can loose the entire market to its competitors.

As far as the software industry is concern, the open source software's are now serious threats to proprietary software's. So like more people are migrating to Linux from windows, to open office from MS office, once a free software comes out then it could seriously affect the market of the proprietary software's. Some proprietary software's are protected by patents. Until then the company that holds the patent can mint money out of it. When the patent expires, then the company has to reduce the pricing, and seriously bank on the support they provide for their software as a weapon to push any free wares that have no support out of market.

So I'm curiously awaiting to watch what happens to LabVIEW, when its patent expires. Its interesting to note that National Instruments has stopped Mathworks from selling simulink, saying its a violation of the patent it holds for graphical data flow programming. LabVIEW is entirely based on this patent.

No comments:

Post a Comment