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

The proposed Patent Reform Act of 2007 will be coming up for a vote in the Senate in a few months. A similar version of the bill has already passed in the House.

The bill has certain relatively benign provisions, but let's ignore them since they just cloud the argument and are of little interest to either side in the debate.

United States Senate

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.

Regardless of how that sounds to you, make no mistake - this debate is between two opposing sides with their own interests at heart.

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.

US Patent and Trademark Office

Here's how I see it: Over time, U.S. technology companies actually manufacture fewer and fewer products. We are now under intense and growing competitive pressure from companies in China, India, Taiwan, etc. Our technology lead is being challenged like never before. Nobody seems to debate that.

That said, we continue to be the world's technology leader because we invent. And the U.S. courts are the first line of defense for U.S. technology companies and inventors alike against all offenders, domestic or international. That's right. When a U.S. company believes its patents are being violated, its first and best line of defense is to seek an injunction barring products that incorporate the technology in question from entering the U.S.

The proposed Patent Reform Act will therefore weaken the rights of U.S. patent holders, whoever they are, and wherever the offending company is, period. Moreover, it will have a ripple effect in international patent offices and courts, thus further weakening the patent rights of U.S. companies overseas.

So, forget all the special interests for a moment and look at the obvious. While some patent reforms might make sense, The Patent Reform Act in its present form will ultimately harm the competitiveness of the U.S. technology industry at a time when we can least afford it. And it only gets worse from here.

[mmormando]

Software shouldn't be patentable to begin with.

[billmosby]

I suppose software might be effectively and fairly patentable if the PTO could discover the prior art effectively, but it appears that they either had no mechanism for that or else didn't much care. What you have now is a situation where many, many patents were granted for programming techniques that were well-known to most programmers long before others were issued patents on those techniques. And plenty of those techniques had been published decades ago. It has been said that when software patent applications began showing up at the PTO, examiners looked at previous patents and, finding no prior art there, began granting patents. They had no way to know about the various computer science professional societies, journals, textbooks, etc, I suppose. An effective public commentary system would have helped them do their jobs in this area. And if the PTO's job is not to avoid issuing patents on prior art, what is it?

So now we have a situation where billions or trillions of dollars worth of intellectual property once in the public domain is locked up in various private hands. And the author tells us to "forget all the special interests"? When it comes to software patents, what else is there but a collection of "special interests" who have stolen much of the basics of software innovation from the public domain? How does it help U.S. innovation and competitiveness to keep these ideas locked up and unusable by all but a few?

[billmosby]

I should add that a lot of programming is still being done and used in commerce by programmers who could not possibly check their work for patent infringement even if they wanted to since it would mean looking through somewhere in the region of 700,000 patents at this point, possibly for every line of code or at least every subroutine they write. The patent holders won't generally discover the infringing code unless it achieves a high profile and if the programmers can show they were not aware they were infringing, it costs them a third as much as willful infringement would. From the few software patents I have read and compared to published prior art, I believe most of them could be shown to be invalid except at about a million dollars per claim, nobody has the financial power to do it.

[Uncle Gil]

As it stands, patentees face huge obstacles to winning patent cases. Litigation costs are huge and the bigger the defendant the harder they fight, sometimes spending millions to crush smaller patentees. Let your lawyer lose one argument or have a bad day in court and your whole case goes out the window and you get nothing.

The real fix the system needs is to prevent broad vague patents from being granted and to require early findings in court that the patent is directly applicable to the alleged infringement. This would get rid of half of the junk lawsuits and protect patentee rights.

To the poster above I would simply say- ideas need to be protected by ownership.

[CompEng]

We should try to do what's best both for the world AND the United States. I think in the long term "stronger patents are good because the U.S. business model is patents" is a weak argument. I think once some truly egregious trade issues are leveled, manufacturing ought to be less concentrated in Asia (and we should not accept any "solution" to trade that doesn't have that outcome).
Then the question becomes what's right for the world. The very existence of patents as a restriction on the rights of others to produce is a heavy burden that can only be justified if it shows a clear benefit to innovation. While you can show such benefits for many types of inventions, I don't think you can make such an argument for software patents, or at least software patents that last for more than a few years.
I truly believe the free and open source software fills a vital role in the ecosystem, to keep established companies from continually charging the public for innovation they performed several years ago. The slow slide of all software into public domain ought to be the true impetus to innovation, and strong software patents only get in the way. However, you can get a lot more money and development power behind proprietary development in certain markets, so I don't think you can argue weak software patents are a threat to the economy.

Remember, the purpose of the economy isn't to let people get rich. The purpose of the economy is to provide lots of goods and services for trade and to make sure that those willing to work for a living can partake roughly according to what they provide.

[dpvan]

Steve ? I generally agree with your post, but do have problems with one portion of it.

You say that the opponents to the Patent Reform Act are technology licensing, biotech and pharmaceutical companies. While these groups are definitely opposed, there are many others that are also opposed:

The National Venture Capital Association ? No more money for you!
The Institute of Electrical and Electronics Engineers (IEEE) ? No more engineers for you!
The Medical Device Manufacturers Association ? No more stents for you!
The National Association of Manufacturers ? No more stuff for you!
The Motor & Equipment Manufacturers Association ? No more cars for you!
The AFL-CIO ? No more American jobs for you!
The American Intellectual Property Association ? No more patent lawyers for you!
The Grocery Manufacturers Association ? No more Twinkies for you!
Numerous Research Universities ? No more new technology for you!

As you pointed out, the Patent Reform Act is backed principally by a small group of very large tech companies who are upset because they have to pay less than 1% of their revenues as patent royalties to University researchers, independent inventors and small technology companies with new ideas.

The opposition to the Patent Reform Act includes almost everyone else.

[stevewr]

yes, it really is that simple once you cut through all the lies and distortions.

[pbg3445]

So the technology industries will innovate less because they don't have the patent incentive?

Isn't global competition an incentive to innovate? As in "Innovate, or go out of business?"

And if the large technology actually decide to pack it up and resolve themselves into a dew because they don't have this legal advantage, wouldn't the innovations still reach the populace from those foreign companies?

[R. U. Sirius]

Steve, interesting thoughts. I have to wonder though how all of this will affect the open source market. It seems to that commercial software is under pressure, so do you see this reform as helping or hindering open source?

[mjyung]

You are right that US Patents laws and US Courts are the line of defense for US companies. Like by using the FDA, US companies can apply to stop foreign companies from selling their goods in US without cause or proof so that it takes so much money to fight the case that when the product is finally available in the US it cause a lot more. So while US lawyers makes a bundle and the US companies makes huge margins on products manufacture by OEM by squeezing every cents out of them the consumers get screw.

[billmosby]

To Uncle Gil- simple "Ideas" are not patentable. Useful things and processes that result in tangible, useful things that nobody else has thought of, published before, and are improvements to the prior art that are not obvious to those skilled in the field are patentable. Few software "ideas" fit those criteria, yet many have wound up protected by patent. In the area of software, people just grabbed common knowledge that was lying around and called it theirs, saying "anything that ain't nailed down is mine, and anything I can pry up ain't nailed down".

[TtfnJohn]

Your argument is not based on anything which empirical evidence can back. Put simply you're repeating a contention that is not provable by any reasonable means (or unreasonable for that matter). This reduced your argument to a classic case of FUD and nothing more.

[billmosby]

Absolutely right, TtfnJohn.

[dinnertime]

Steve-
You really get it! Many thx.

please see http://www.piausa.org/