As the recent BlackBerry case focused the world’s eyes on the arcane field of patents, I was reminded of the 1999 Amazon.com “one click” case, which caused so many to condemn the U.S. patent system.At that time, critics called the system “broken” and a “disincentive to innovation.” Now, the system is under attack again, merely because our BlackBerries were threatened.
The Wall Street Journal jumped onto this bandwagon blaming unscrupulous lawyers and their clients for conspiring to “hijack” the U.S. patent system. Though RIM recently settled and disruption to BlackBerry service was prevented, themes from this litigation will resonate in proposed legislation and cases currently before the Supreme Court.
Not Many Trolls
A patent is an intellectual property right granted to an inventor for a substantive contribution to the wealth of human knowledge. As the arbiter of this grant, the U.S. Patent and Trademark Office imposes considerable requirements — rejecting and limiting the vast majority of submitted applications. The invention must represent an advance in technology to be awarded a patent.
Fewer than 1 percent of patents are litigated, and fewer by far make the press. Cases against “patent trolls” — a name given to companies like NTP that hold patents but make no product — constitute only 2 percent of the handful of patent infringement lawsuits, IT pundit Nathan Myhrvold recently testified before Congress.
In many cases, these holding companies are established when inventors are unable — either due to illness, lack of funding, or for other reasons — to produce the product themselves. Some are formed merely for profit. As a result of publicity surrounding the BlackBerry case, opposition to these kinds of holding companies has grown and is fueling demands for change.
Rights Under Siege
When Americans risk losing a toy or tool that is important to many powerful individuals, a feeling of panic pervades. As a crackberry addict myself, I can well understand. Yet, should we rush to dismantle a system largely responsible for our economic strength? A system so basic to who we are as Americans that Thomas Jefferson sought to implement these rights as strongly as he fought to free us from British rule? With patent trolls responsible for a tiny fraction of all patent litigation, should this issue bring down a system that works?
We Americans crave and depend on sophisticated technology to improve our quality of life. Our economy is geared to reward innovators who “think different.” Belief in the American dream encourages better mousetraps, pharmaceuticals and wireless e-mail routing methods. We expect the rest of the world to honor our intellectual property by curtailing unauthorized use of our patented and copyrighted products: software, songs, movies, pharmaceuticals and just about anything else the U.S. produces. Intellectual property is our lifeblood in trade.
It is ironic that intellectual property rights are under siege in this new idea economy. The Internet and digitization of content have created a climate for infringement on an unprecedented scale. The entertainment industry is in a fierce struggle to protect its copyrights. While patent foes claim the Internet moves too quickly to keep patent rights in place, demanding reduction of patent powers, copyright advocates use the speed of the Internet as a reason to strengthen protections.
In the case of copyrights, it seems the Supreme Court agrees. Last year it unanimously held that file-sharing site Grokster’s infringement was not excusable.
The Heart of Patent Power
As Abraham Lincoln noted, “The patent system add[s] the fuel of interest to the fire of genius.” The hard truth is that without the spur of financial gain, these fires could dim or go out. The limited period of exclusivity of a patent — 20 years from filing the application — and the right to injunctive relief provide the requisite stimulus toward further research and innovation, resulting in the next generation of antibiotics, advances in electronics, and better Internet tools — whether made by individuals alone in their basements or collaborators in corporate labs. In this manner, the United States and other developed nations strive to benefit the public good.
With the recent Kelo case, the Supreme Court has shown a penchant for taking physical property, i.e., land, ostensibly for the greater good. In view of the internecine struggles within American industry on patent reform — for example, between the software and pharmaceutical industries — the patent bar hopes the Court, as well as Congress, will carefully consider the impact of taking away or diluting a major right of all patentees.
Injunctive relief is the heart of a patent’s power. Denying the patentee this right would make compulsory licensing a reality for U.S. inventors for the first time in history.
The System Works
Although the pace of innovation has accelerated, the patent system is far from broken. Despite the present struggles to meet the avalanche of patent applications, the Patent Office has served the U.S. well, and become the envy of the world. Nonetheless, some changes are needed in Patent Office procedures to handle the backlog of applications and assure adherence to treaty obligations with other nations.
While patent statutes must better cope with changes in technologies and business, we must always remember that a strong patent system and the preservation of patent rights are vital to the American way of life. Caution is essential when facing the reduction or elimination of any of those rights.
Our BlackBerries are out of danger — at least for the moment. It’s time for cooler heads to prevail before destroying one of the treasures of the modern world: the U.S. patent system.
Raymond Van Dyke is a patent attorney in the Washington, D.C., office of Nixon Peabody and Adjunct Professor of Law at American University.
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Thank you for your voice of reason.
Like it or not this time they will win, and the patent system will be changed. The main goal of this thrust is to increase the cost of obtaining a valuable patent.
Who exactly gains from this legislation?
Fortune-100, international high-tech companies. They benefit because they won’t have to worry so much about "borrowing" the technologies that someone else thought of. Whenever a useful technology emerges from the bleeding edge of fresh junk, they can just reexamine the associated patent to death instead of paying the inventor(s) their investment costs (let alone enough to make them as well off as they would have been had they not left their day job). The can also cut back on the research costs. Why bother putting dough into something that might pan out when you can sit back and rip off what the customer is actually buying? First to file increases the patent latency. Ideally, by the time the patent issues the technology will be obsolete.
Pharma. They benefit since they will be able to reexamine to death anything useful that comes out of government labs, universities, and small tech. startups. Congress tosses them some bird-flu dough to make them more agreeable.
The Lawyers. Post-grant opposition means anyone can reexamine the 3% patents that end up having value. The cost for such a reexamination will probably be about the cost of the filing fee, or about $1,000. The existing cost of fighting a patent is about $1M, or about 1000 times larger. That suggests companies that wish to steal the hottest technologies from the people who invented them will just reexamine a patent to death (up to 1000 times!) until all of the claims get rejected instead of messing around with court. First-to-file makes them earn top dollar each time someone comes up with a half-baked idea.
Patent examiners. First-to-file means they will be bombarded with junk. Their salaries can only go up as new hires are persuaded to help deal with the increased load.
Patent searchers. They could see easily see a 10x increase in business, since the basis for most patent reexaminations will be prior art. The new source of reexamination revenue will increase the value or prior art intelligence to the extent that it will make sense to pay these guys to look in people’s addicts and basements.
Independent inventors. These people should care, but the truth is that they have no measurable opinion. Only 3% percent of patents ever pay for themselves, and the statistics for independent inventors aren’t that much better. So most independent inventors dream of making money yet struggle to do so. This won’t change them for perhaps ten years. That is about how long it will trickle down to them that the odds of successfully going from idea to profit have dropped to only 0.3% instead of the "whopping" 3% it is now. A given independent inventor doesn’t typically know how bad the odds really are for them until years after they’ve quit their day job. They are way too busy working on the latest prototype and trying to make next month’s payments to care about some senators talking politics. There appears to be some desire for people to quit their day job that has nothing to do with the lure of future profit, so this is another reason they won’t have a measurable opinion against the reforms. Besides, the legislation will have no effect upon almost all of them (around 97%) that don’t patent something valuable. So they will still be able to show their patent certificate to kids.
Venture capitalists. They can’t really speak since they have their tongue in each honey pot.
Senators. They are making out, don’t you worry. You’d have thought by now that each congressman would have a PayPal link with a webpage. Each "donation" over $100,000 you get to state what laws you want written. Donations above $1M allow you to submit the exact bill text you want a subcommittee to approve.
The media. Well by now they are all owned by big corporations, so it doesn’t really matter if they print what is in the public’s interest. Instead they print the corporate spoon fed headlines about patent trolls shutting down Bbay and Blackberry. You know you can trust the media when the best criticism of the corporate ownership of Congress needs to be hidden in movies like "V for Vendetta". Even though about 90% of the people liked that movie, the top three US newspapers pointed their thumbs down in the hopes of not offending their true bosses. Ironically, there is now a nation television show purporting to be about inventors. But when you look more closely at it, you see its main purpose: to poke fun at inventors. In a short elevator pitch, inventors will typically spend about a fifth of the time discussing patents, since it is the key to their dream of making it. Yet the only mention of patents in the series so far was one or two lines like, "Patents mean nothing! Anyone can get a patent." Clearly this show was carefully edited to be compliant.
So everyone one wins? Almost. The loser is the average American. In a decade or so, the US will no longer be viewed as the primary source of new technologies. Instead, that label will go firmly to Asia along with our jobs. If you like Chinese food, even that isn’t so bad.
BYW, the NYT is a another puppet of a country whose first letter is I, so that is why they wrote that.
Alvin Smith