Patent Reform Advocates Challenge Andy Grove

PRESS RELEASE: May 19, 2009 – American Innovators for Patent Reform (AIPR), a non-profit association of inventors, patent owners, small businesses, universities, and intellectual property professionals, is calling the controversial comments that Intel founder and former CEO Andrew Grove delivered recently about the U.S. patent system at a Silicon Valley awards ceremony “absurd and irresponsible.”

Dr. Alexander Poltorak

“Likening patents to financial derivatives like credit swaps that brought about the financial meltdown and global recession is at best irresponsible and at worst self-serving,” said Dr. Alexander Poltorak, Chairman of AIPR and CEO of General Patent Corporation, a company that helps inventors to license and enforce their patents. “It’s like yelling ‘fire’ in a crowded auditorium. It gets people’s attention by inciting fear and panic. Intel is one of a handful of companies that advocate weaker patents and are pushing for significant changes in our patent law.”

“The U.S. patent system suffers from the same kind of flaws that brought about the global financial crisis,” Grove told a crowd at the 37th annual Inventors Hall of Fame awards dinner in Mountain View, CA, where he accepted the Lifetime Achievement Award.

Patents have evolved to a point where they often aren’t developed into products and instead are instruments traded by speculators looking for the highest possible profit, commented Grove in a Bloomberg Business News article. Similar to financial derivatives, the link between patents and the products they protect is getting more tenuous.

“If the government awards a patent granting a limited monopoly,” Grove, 72, author of business best-seller Only the Paranoid Survive, told Bloomberg reporters, “the onus should be on the owner to develop a product. You should not grant a monopoly to people who don’t produce.”

“To require inventors to make their product is nothing short of absurd,” responded Dr. Poltorak, who has co-authored two books on intellectual property licensing and strategy. “It betrays a fundamental lack of understanding of what patents are and the motivation for granting them. A patent is a bargain between an inventor and the public whereby the inventor discloses his invention in exchange for limited exclusivity. A patent is a quid-pro-quo for disclosure of an invention, not for the practice of one.”

Irv Rappaport

“Andy Grove’s comments are highly misleading,” said Irv Rappaport, a Palo Alto, CA patent attorney, inventor and former patent examiner, who served as chief patent counsel for Apple and four other Fortune 500 companies. “As a technology innovator he should know better. Weaker patents mean less innovation and fewer breakthroughs. The current proposal for patent reform will move the U.S. backward and make us less competitive with rapidly developing nations like China and India, which are developing their own patent systems.”

A small number of US companies are working to weaken the U.S. patent system and reshape the playing field, which has leveled somewhat over the past twenty years. These efforts will weaken patent protection, significantly devalue patents and make it harder for individual inventors, small businesses and universities to enforce patents for their inventions. It also will reduce awards for patent infringement and will encourage infringement. It will stifle creativity, diminish innovation and entrepreneurship, and reduce incentive for investment in new technologies and businesses.

“There are dozens of semiconductor IP companies who design but don’t build chips,” said Dr. Poltorak, who trained as a physicist. “It’s a very capital-intensive business. Instead, they license their rights to companies like Intel, which have manufacturing facilities and expertise to make chips. It is a mutually profitable relationship.”

“Senate Bill S. 515 has been touted as a compromise on the damages issue,” continued Rappaport, an inventor with 22 patents and an entrepreneur who founded IP Checkups. “It is only a compromise between two specific industries and more particularly between about 15 high tech behemoths, the ‘Gang of 15′, on one side and the pharma/biotech industry on the other.

“For the remaining 98% of all companies in the U.S.,” added Rappaport, “the damages provision is not a compromise. By focusing on the notion of ‘apportionment’ of damages while de-emphasizing all other factors considered in determining royalties and making trial judges the gatekeepers, I believe you have effectively denied patent holders due process by essentially eliminating a true trial by jury. The 15 high tech companies simply think they have enough money and market power in their businesses that they don’t need patents anymore and clearly don’t want to pay others to use their patent rights. In addition, the legislation does nothing to provide the United States Patent and Trademark Office (USPTO) with much needed available technology and more resources for dealing with a growing workload, at a time when there is a great outcry to improve both the quality and timeliness of the patents being granted. In fact, the provisions for post-grant cancellation proceedings place even more work on an already-strained USPTO, without providing more funds and resources.”

“Inventors who are good at inventing may not be good at manufacturing or selling,” said Dr. Poltorak, also an inventor. “They may not be good at running a business. They are good at inventing, so this is what they should be doing. Specialization is a hallmark of any developed society. We don’t grow the bread that we eat, nor do we make the clothes that we wear. Why should we require inventors to manufacture their inventions? We don’t require composers to sing their songs nor do we require playwrights to perform in their plays. Should architects now be required to build houses they design? To think so is absurd.

“The U.S. Constitution grants an inventor a limited right for a limited period of time to exclude others from practicing the claimed invention, with absolutely no requirement that the inventor make, use, or sell his or her invention. The wisdom of our Founding Fathers regarding patents has made the U.S. Patent System the envy of the world by stimulating innovation and building our economy for over two hundred years. We should not destroy a system that has served us so well, particularly at a time when our economy needs strong measures to create a sustainable recovery.”

About AIPR

American Innovators for Patent Reform (AIPR) is a not-for-profit association of concerned inventors, patent holders, small companies, researchers, engineers, entrepreneurs, licensing executives, investors, patent agents and attorneys who want to protect innovation and American competitiveness by advocating for quality patents and stronger protection. Protecting the rights of inventors is critical to maintaining American innovation, entrepreneurship and prosperity. For more information on AIPR visit www.aminn.org.

For more information contact:

Narri Subrati
(212) 508-966
[email protected]

Alec Schibanoff
(845) 368-4000 x116
[email protected]