Correcting the Tech Patent Problem

Lora Bentley

Not long ago, InformationWeek VP and editor-in-chief Rob Preston wrote a column about the brokenness of the U.S. patent system. Preston bemoaned patent trolls and noted that patent litigation often affects those far beyond the software and technology industries.

 

He explained:

Case in point is a suit filed last week by University of California spin-off Eolas Technologies related to its patent for technology, developed 15 years ago, that lets Web browsers "act as platforms for fully interactive embedded applications." ... As my colleague Paul McDougall reported, an Eolas victory "could give the company a claim on virtually every Web site that hosts interactive applications."

That, he said, is not what the patent system is supposed to be about. It's supposed to foster innovation and "stimulate job creation."

 

Preston isn't alone in his thinking, but apparently his readers were none too happy with his column because last week, he tried again. This time, he offered solutions to the patent system's problems. Many of his solutions started as suggestions from readers, and he wasn't afraid to admit it.

 

For example:

Adhere to copyright protection, which presents a higher bar for plaintiffs than does patent protection. To succeed with a software copyright action, a plaintiff must establish that the defendant copied the work in question... One online commenter on my column thinks this higher standard makes good sense: "I have spent a few decades in software development and always thought software patents are wrong... If the first person to write a program to update an account balance for a deposit or withdrawal had a patent on it, where would banking be today?"

 


When I talked to technology attorneys early this year regarding the patent system, most agreed that the system as it exists now is broken, but they all differed regarding how it should be fixed. Matthew Schantz, a partner in the Indianapolis-based law firm of Bingham McHale, told me in March that the U.S. Patent and Trademark Office is underfunded and understaffed. That's why the patent process takes so long and is often prohibitively expensive. On the other hand, Bruce Abramson sugggests neither copyright nor patent laws should apply to software, but that Congress should come up with a completely separate set of rights for intellectual property.

 

Preston also suggested a "middle ground". But the middle ground he has in mind addresses patent enforcement, not a completely separate set of rights. He cites Alan Heimlich, a patent attorney with Peloquin PLLC, for the proposition that patent holders should only be able to enforce patents on inventions they are actively using.

 

Eventually, I think we do need some kind of substantive patent reform from Congress, but in the meantime, Heimlich's suggestion seems like a good one.



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Oct 27, 2009 7:00 AM Ronald J Riley Ronald J Riley  says:

'Preston bemoaned patent trolls and noted that patent litigation often affects those far beyond the software and technology industries.' Every patent thief moans about being held accountable for their disreputable conduct.

'Case in point is a suit filed last week by University of California spin-off Eolas Technologies related to its patent for technology, developed 15 years ago, that lets Web browsers "act as platforms for fully interactive embedded applications." ... As my colleague Paul McDougall reported, an Eolas victory "could give the company a claim on virtually every Web site that hosts interactive applications."

In other words university of California professor and inventor Mike Doyle produced an incredibly important invention which has played a significant role in advancing Internet.

"It's supposed to foster innovation and "stimulate job creation." Which is exactly what it has done. 

'Many of his solutions started as suggestions from readers, and he wasn't afraid to admit it.'  Yes, he admits to not having an original thought and is probably incapable of inventing anything but feels entitled to use the fruits of other's inventions without compensating them for their contribution.

'Eventually, I think we do need some kind of substantive patent reform from Congress, but in the meantime, Heimlich's suggestion seems like a good one.'  We do not need Patent Deform from Congress.  All we need is for companies to conduct themselves in a reputable manner.  When they stop committing larceny on a grand scale inventors will stop suing them. 

Year after year for at least fifteen years proponents of weakening the patent system have made rosy predictions that they would pass Patent Deform.  Year after year America's inventors have handed them one defeat after another.  The seeds of this years failure were planted long ago.

Inventors do not mind if these companies want to use our inventions as long as they pay us our due before doing so.  All the whining does not change the fact that they are receiving attitude adjustments as a direct result of their poor conduct.  Name calling, painting inventors as trolls does not change the fact that what they call a troll is simply someone who has and enforces their property rights.

Ronald J. Riley,

I am speaking only on my own behalf.

Affiliations:

President - www.PIAUSA.org - RJR at PIAUSA.org

Executive Director - www.InventorEd.org - RJR at InvEd.org

Senior Fellow - www.PatentPolicy.org

President - Alliance for American Innovation

Caretaker of Intellectual Property Creators on behalf of deceased founder Paul Heckel

Washington, DC

Direct (810) 597-0194 / (202) 318-1595 - 9 am to 8 pm EST.

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Oct 28, 2009 10:30 AM staff1 staff1  says:

"When I talked to technology attorneys early this year regarding the patent system, most agreed that the system as it exists now is broken..."

You must only be talking with attorneys for large tech firms. Sure they think the system is broken because they keep losing patent suits. The system worked much better from their perspective when small entities hadn't a prayer to enforce their patents. Many non high tech attys feel all this talk about patent reform is nonsense.

Patent reform is a fraud on America...

Please see http://truereform.piausa.org/ for a different/opposing view on patent reform.

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Oct 28, 2009 10:43 AM Dale B. Halling Dale B. Halling  says: in response to Ronald J Riley

All excellent points Mr. Riley, I would just like to add a coupled of more.  First of all we have never had a working requirement in the US-must practice the invention to enforce it.  A working requirement is inconsistent with Adam Smiths division of labor.  Many talented inventors are put into the position of performing less important tasks because we have not accepted a division of labor between inventing, manufacturing, marketing, managing, and selling.  These inventors are forced to play the corporate game of moving up the company ladder in order to be paid for their talents.  This takes them farther away from their most important skill inventing.

Second, so called patent trolls, from an economic point of view are the beginning of a secondary market in patents.  Most of these companies got their start in the failed companies of the dot.com bust.  These patent investing companies bought the patents of failed dot.com companies.  This reduces the cost and the risk associated with R&D.  The VC's I knew were going to let these patents expire, resulting in zero return to the investors.  Patent investing companies should not be vilified, but appreciated for the valuable secondary market they are creating.  Like all new markets, the pioneers took enormous risks but also paid very little for the assets they acquired.  Their success will encourage other entrepreneurs driving up the prices for patents (excess R&D).  This will reduce the cost and risk associated with R&D, which will result in more investment in high technology start-up companies.  

Vilifying patent investment companies is like vilifying investors in the physical assets of failed enterprises.  These investors recycle assets and make them part of the productive economy again.  While it is sad to see a business fail, failure is part of the innovation process.  Putting the assets of a failed enterprise back to work as soon as possible would be considered a humanitarian effort if performed by a non-profit.  However, it is just as valuable or more valuable to the economy when done by a for-profit enterprise. 

Third the US has experience with weakening it patent system.  The patent system was severely weakened during the 1970s and the 1930s by the absurd application of antitrust law against patents.  In the 1970s the FTC and DOJ's antitrust actions directly forced the traitorous give away of US technology covered by 50,000 patents to foreign competitors.  The economic malaise of the 1970s can be traced to these actions.  For more information see http://hallingblog.com/2009/10/21/jobs-the-economy-and-patents/

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Nov 5, 2009 2:52 AM Cliff Berg Cliff Berg  says: in response to Ronald J Riley

Mr. Riley -

I think that the issue at hand is how "obvious" a software "invention" is.

There are so many cases of "inventions" in which it would be natural to expect that in the course of writing software about the subject of the invention that a large proportion of programmers would "re-invent" the invention in the natural course of the programming activity. The Amazon "one-click" patent, for example, is something that a great many programmers would think of if they were tasked with the job of programming an e-commerce website. Given a little time, it is inevitable that someone other than Amazon would have "invented" that little paradigm.

In fact, almost all software "inventions" can be found to be of this character. Software is the mere implementation in code of a process. An algorithm might constitute an invention, but it is hard to imagine that a software representation of an algorithm would be an independent invention worthy of patent. Yet, we see much of this. Is this abuse of the system? Yes, it is. What is the fix? I am not sure: change the law, reform the USPTO, or do away with software patents altogether.

The reality in software today is that patents actually discourage innovation. A small company writes software at great peril, because a large competitor will commonly fund the creation of a "patent firewall" around any given area of software technology, and so the likelihood that a small startup will cross that "firewall" is very high. This makes small startups vulnerable to patent terrorism from large established firms.

The system is very, very broken indeed.

- Cliff Berg

President, Expressway Solutions LLC

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Nov 5, 2009 3:02 AM Cliff Berg Cliff Berg  says: in response to Dale B. Halling

Mr. Halling,

"A working requirement is inconsistent with Adam Smiths division of labor."

This does not account for the fact that ideas are really quite cheap. I think of ideas every day. Many of them are patentable. But patenting all of my ideas adds no value to the economy. Given time, others will think of the same ideas.

What is hard, and of value, is creating something from an idea. There is a huge difference between thinking of the idea that "We should all have cars that can park themselves" and actually making and marketing such a vehicle successfully. To do the latter requires solving the main problems with infrastructure and production; yet if a true innovator were to solve those problems, and someone else had patented the idea of "a car that parks itself", then the true innovator would not be able to create the business without paying large sums to the person who patented the idea. In this case the idea might be patentable (if suitably designed with appropriately formed claims), but the idea would actually have little value other than to enable its "creator" to extort money from the true innovator who solved the real problems related to the production and infrastructure for self-parking cars.

Ideas are cheap. I believe that the requirement for "use or lose" a patent is legitimate and should be adopted.

- Cliff Berg

President, Expressway Solutions LLC

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