Monday, March 10, 2008

"The Patent Reform Act will harm the U.S. technology industry"

Steve Tobak posted an article about the upcoming Patent Reform Act over at C|Net. I had just mentioned intellectual property reform a couple of days ago in this previous blog entry.

Interestingly, I disagree with Steve's analysis. Steve says:

Let's instead just cut to the chase. In lay terms, the bill makes it easier to challenge issued patents and harder for patent holders to obtain compensation through the U.S. legal system.

Steve argues that because the US is shifting away from a production economy to an intellectual property and licensing economy, these "reforms" are bad for US business. Steve says:

In one corner are big technology companies such as Apple, Cisco, Dell, Google, HP, Intel, Microsoft, Oracle and SAP. These folks make a living selling products and services. They say that patent abuses in the current system are stifling innovation.

In the other corner are technology licensing companies such as 3M, Qualcomm, Rambus, Tessera, and biotech and pharmaceutical companies. They say the act will limit patent holder's rights and stifle innovation.

While each side claims the other limits innovation, the truth is that neither side cares about innovation; they are only concerned with their business model. That's not necessarily a bad thing, since a company's duty is primarily to its shareholders, but it does bear mentioning here.

Now, I have lived in the technology industry for quite some time. I have never worked at a large technology licensing company such as 3M, Qualcomm, Rambus, or in biomed or pharma. That probably biases my thinking.

On the other hand, I have about 10 patents, assigned to various companies I have worked for over the years. I have spent a reasonable amount of time dealing with the patent system.

The fact is, many patents are bogus (think Amazon's 1-Click patent). There, I said it. Many should not have been issued, either because they are so obvious to those knowledgeable in the art or because there was existing prior art. These bogus patents are a noose around the neck of the technology industry. They clog up the system and make it impossible to create almost anything without treading on somebody's patent without even knowing about it. With a patent term of 17 to 20 years, these bogus patents are in force for multiple product lifetimes. For perspective, 20 years is 10 to 13 turns of of the Moore's Law crank. Patents expiring now would have been issued back in 1990, before the explosive rise of the Internet (though the Internet was actually being used at that point, nobody outside of academic and tech circles had heard of it). If you don't think that stifles product innovation, you have never tried to innovate. I have lived with this environment all of my career. I have made decisions in the past to navigate around bogus patents, simply because the lawyers told me it was a lost cause to try to challenge them.

What's all the more infuriating about the current patent situation is that many of today's patents go against the original social contract surrounding patents. The original goal of the patent system was to get inventors to share their innovations for the common good. In return for a limited monopoly, you, Mr. Inventor, share your invention so that We, the public, can understand how you did it and can then innovate on top of it. Rather than stifling innovation, patents were supposed to drive it forward.

Unfortunately, many patents, even the ones that are legit, would have been created independently anyway. It's obviously a balance, but at least in the world I live in, I see patents getting in the way rather than helping me. I have never gone and looked at old patents to get new ideas for products. The only time an independent patent, one that I'm not working on filing myself, comes to my attention, it's because somebody is getting sued for infringing it. This tells me that we have lost the original goal that patents were supposed to foster.

Now, it's important to realize what the patent reform act doesn't do. It doesn't mean that patents are extinct. It also doesn't mean that bogus patents go away with a snap of the fingers. What it does do is allow for easier challenging of what appears to be a bogus patent. This may increase the cost of patent filings since more people could challenge the patent and you'd have to respond to it. Personally, I think this works. The costs should be weighted toward the party that has the most to gain from the granting of the patent. The downstream costs of litigating bogus patents (think not just lawyers but injunctions and product disruptions) are far higher than the cost of allowing patents to be challenged with greater frequency.

In short, I think the Patent Reform Act, while in no ways perfect (doesn't go far enough, IMO), is at least a step in the right direction. Admittedly, I don't work for a large intellectual property company or a biotech/pharma company. Perhaps I'd feel differently in that case, but from where I sit, if we really want to spur innovation, we should really overhaul the system even further than the Patent Reform Act.

3 Comments:

Blogger bfeld said...

Dave - excellent post. I've just blogged about it at in my quest to Abolish Software Patents. You should consider joining the End Software Patents coalition.

Tue Mar 11, 05:04:00 AM 2008  
Anonymous Anonymous said...

The issue about abolishing software patents seems similar to the controversy over whether you can "patent" business methods. It doesn't seem fair or encouraging of innovation if a business like Amazon can patent the idea of one-click purchasing. Is that really a technology issue, or is that simply somebody trying to prevent other businesses from being effective? The idea of a "one click" purchase isn't exactly rocket science.

Wed Mar 12, 06:39:00 PM 2008  
Anonymous Anonymous said...

This is a great post, Dave. Are you familiar with the Check 21 issue and how a company named DataTreasury is filing patent infringement suits against the banking industry? A piece by Paul Bedard (US News) covers this and a pending Amendment on Capitol Hill (unanimously passed) that seeks to remedy the issue. This is such an interesting case because it really delves into your question of bogus patents. Check out the story. It would be great to see your thoughts on it given your post above.

Here is the link:
http://www.usnews.com/blogs/news-desk/2008/03/07/gop-steps-up-moves-against-lawyers.html

Wed Mar 12, 07:39:00 PM 2008  

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