> The market was apparently not a viable one, and both parties have profited enormously in spite of not being a part of it.

That's good for them. Unfortunately nobody else can enter that market, even if they independently come up with the technology, because there are patents on the multi-touch technology.

> Using somebody else's technology is not innovating, it's copying.

So using a software library or hardware component as a tool to create innovative technology is not innovating? Technology is a tool that is built upon previously developed technology. Being restricted in this way is a hinderance, not a boon.

An example of the potential benefits is in open source software. Open source software has dramatically increased the innovation in the software field.

> It also has nothing to do with "smaller companies": Fingerworks was a very small company and somehow, in spite of your claims, they were able to innovate.

True they were able to innovate. Kudos. I disagree that they needed patents to innovate, as you have previously stated. It's not like their keyboards came with a clone technology button. Cloning takes effort and time and expertise. It is not the characteristic of a market leader, like Apple.

Think about it this way, why does any technology (specifically software) company get acquired by a larger company? Is it the technology or the expertise of the staff that is most important? Usually it's the staff, otherwise, why would it be so important for the staff to stay onboard with the acquiring company?

> And Fingerworks wouldn't have had any leverage against them except their potential value as employees.

Not true. If they wern't bought out by Apple, they would have been a licensor of the technology. They probably would have had a healthy business supplying Apple with iphone/ipad multi-touch technology and making keyboards.

However, that deal was significant for Apple because they get significant leverage because they had a shot at a monopoly over the multi-touch technology. Fortunately, this did not happen, but unfortunately there is a bunch of patent litigation waste.

> It also has nothing to do with "smaller companies"

It has everything to do with smaller companies. Who can afford the large patent warchests? Larger companies. I suppose patent trolls can count as a smaller company, though.

> When products do not differentiate (i.e. when they clone each other), innovation stagnates.

The same can be said about a monopoly. There is no differentiation because there is only one party.

However, that is all moot because electronics and software is hardly in danger of being stagnant. These areas are innovating ever more rapidly (and NOT because of patents).

> Why differentiate when you can just do what your competitors do, but cheaper?

Steve Jobs has a good answer for you, and it is not patents.

> Why innovate when you can just tack on some blue LEDs and silver trim to differentiate?

Because that is not differentiation. People see right through that.

> Software is also covered by copyright, which you seem to have ignored entirely, even though it serves effectively the same function of preventing creations from being ripped off.

First of all a Patent != a Copyright. Patents are far more broad. They prevent people from independently coming up with an innovative technology, especially if a previous patent is overly broad.

Copyrights do not. Copyrights prohibit outright copying, which I am against.

I wanted to keep the scope of this discussion on patents because the patent system is obviously very flawed. I also question the utility of patents in the first place. I do agree with copyrights, though.

> Why would they if any invention they create is immediately available to their competitors? Doesn't that reward the strategy of simply waiting for others to invent and cloning them?

No because nobody invented the magic cloning button yet.

> when the established players can simply rip those ideas off?

What's wrong with using other people's ideas? Isn't that why humanity is so advanced?

> Doesn't it eliminate one of the main reasons that a big company would ever acquire a smaller company?

No, because like I said before, bigger companies acquire for talent and licensing. There are a number of reasons why bigger companies are less innovative. Lack of ownership among employees is one of them.

> Doesn't that in turn drastically reduce the value of invention?

No, it increases it.