Posts Tagged: "patent system"

The greatest long-term threat to the U.S. patent system does not come from its professional opponents – those large businesses and their political allies who stand to profit from enfeebled patent rights. A deeper harm is caused by unscrupulous patent trolls who use extortionist “demand letters” to victimize small businesses. Yet even as damage caused by demand letters spreads, most legitimate patent licensors whose businesses depend upon continued legislative and public trust stand idly by, doing little or nothing to address it. Well-insulated within the patent industry’s cozy professional bubble, we are, in effect, fiddling like a modern-day Nero while innovation’s Rome burns.

Those who claim that patents harm innovation and stifle innovation see a patent at an insurmountable hurdle, or perhaps a brick wall. There is no way around the obstacle. The only option is to infringe or simply not offer the product or service, but to them that is not an option because if they can’t sell the product that they want to sell then that has to mean that innovation is being harmed. I have always found it odd how true inventors so frequently don’t think what they have come up with is unique enough to pursue a patent, but copycats who offer little or nothing unique conclude that their product represents innovation and it would be an afront to humanity if they are not able to sell it without having to pay a licensing fee to the innovator.

As Eric Schmidt, CEO of Google, spoke about on 60 Minutes, true innovation does not come from the large corporations. Instead, it is some “graduate student” or “crazy person” that makes change, such as the obscure Wright Brothers warping the airplane wings to control flight. Without a patent system, innovators and inventors from all walks of life will be unable to safeguard their intellectual property and profit, violating a central tenet of the patent system. Penalizing the poor students and the visionaries by hindering their chance to protect their technological advances in patent litigation is not justifiable and is not right. Legislation making fundamental changes to the law to thwart innovators (and their backers) getting their say in court is highly suspect and perhaps unconstitutional. Further, in a time when Americans have lost countless manufacturing jobs and have retooled, it does not make sense to weaken something at which Americans are good: innovating and inventing.

On July 1, 2013, I spoke on the record with Ray Niro, who is one of the most well known patent litigators in the United States. Throughout his career he has been a champion for the inventor who was facing long odds due to widespread patent infringement. So loathed was Niro, he was the one who was originally referred to as the “patent troll” by the media due to his representing innovators against giant technology companies. Of course, if you are going to call Ray Niro a patent troll you might want to also point out that he is extraordinarily successful, which means he has been very good at proving that large corporations have infringed valid patents, sometimes on fundamentally important innovations.

In my opinion the best way to judge the success or failure of the patent system is by looking broadly at the type of competition it enables or disables in the marketplace. And that doesn’t mean focusing solely on patent litigation statistics – of course there are going to be fights when such a high stakes prize as mobile computing is up for grabs and of course firms competing with such different business models are going to come into conflict. But look at what that competition has done for innovation and product advances and for consumer choice and pricing. You need the option of patent protection to provide the necessary freedom of choice in market approach, (whether it is open, proprietary or a blend of both), to enable competition between firms employing different market approaches and the innovation engendered by that competition.. The correct focus for this issue is not the intrinsic merit of the concept of patent protection, but rather what the existence of patents does to promote business model diversity and what that in turn does to promote innovation. This is the important point and at least in my view it seems clear that having patents enables more business model diversity and consequently more innovation than not having them.

If you’re paying attention at all, you must have noticed that there are forces out there who just don’t like what you do. Some say you’re too focused on making money, some say you’re not focused enough (we really should introduce these folks to each other), some don’t believe it’s moral for universities to work with industry, and many have built very successful careers launching attack after attack on Bayh-Dole and the very patent system itself.

If you haven’t noticed America doesn’t make anything any more, at least nothing that is tangible. Everything we buy is made in China, or Mexico or Viet Nam or somewhere else. The U.S. economy is based on intellectual property and the foundational intellectual property we have for the 21st century innovation based economy is software. We know from history that where patent rights are strongest is where companies locate, innovate and grow. Where patent rights are weakest there is no foreign direct investment, companies do not go there and economies suffer. Once upon a time the UK dominated in biotechnology, but now the U.S. is dominant thanks to a strong and liberal patent system. If we curtail software patents we will be forfeiting not a single industry, but an enormous software industry AND any number of other industries and sub-industries in various other technology fields that rely upon the development of software. Think bio-informatics, for example.