net.wars: Taking the stupidity out of "Stupid Patent Tricks"

by Wendy M Grossman | posted on 16 April 2004

Wendy is in California this week, watching patent experts try to rescue the IT industry from idiocy ... such as attempts to own the hyperlink, to quote just one example.

Wendy M Grossman

Somewhere under the radar, last October the US's Federal Trade Commission published a report on the patent system

This week, it's co-sponsoring a conference where a gaggle - or is it a pride? - of intellectual property specialists are convening in Berkeley to discuss that report and its implications.

The FTC report is likely to be only the first of several considering the same issues. The National Academy of Sciences is due to release a similar one any day now, and it's clear from the list of companies that have sent representatives - Microsoft, Cisco, IBM - that the issue of how patents are awarded is gathering steam. You might think that Silicon Valley would be a hotbed of supporters of the present system, but in fact in 1984 when software patents were being proposed, the Valley's software engineers were at the forefront of protests against the idea. These companies, while they benefit from their patent portfolios, also suffer from the consequences of a system that is widely criticised. The US Patent and Trademark Office has issued some lulus in its time: remember BT's claim to own the hyperlink?

The FTC's proposals are straightforward enough: make it easier to challenge bad patents, and make it easier for patent examiners to do a good job. In the latter category go its recommendations to give the USPTO more staff and more money. In the former you'd put the proposal to create a middle ground for challenges that would be cheaper than today's top-level full-out litigation (which, according to figures from the American Intellectual Property Lawyers Association, can cost as much as $800,000 even when less than $1 million is at risk) but would also allow challengers to participate beyond the simple act of filing a complaint. Today, someone complaining to the USPTO about a patent is not involved beyond that initial complaint; the USPTO negotiates only with the applicant.

Simple mathematics explains part of the problem. The USPTO now gets 300,000 patent applications a year, and issues about 180,000 (these numbers are going up all the time). It has approximately 3,000 staff. A patent application is lucky to get 25 hours of his attention. If the starting salary at the USPTO is $40,000 a year - a figure produced by Robert Merges - Prof at Berkeley and UC Davis - you also know that the top graduates in technology and business are not likely to pick it as their first choice of employment. At one stage a few years ago, the USPTO had an annual employee turnover rate of 15 percent, though it's dropped since to about 7 percent.

The FTC has apparently met some opposition to its proposals. The first issue was the simple fact of the FTC's being interested in patents. Was this, some people wondered, the beginning of some kind of hideous new antitrust investigation? Susan Stark DiSanti, who is representing the FTC at this shindig, says no, that the FTC has no desire to return to the relatively anti-patent stance that prevailed until about 1980. But the FTC does hear many complaints from both small and large businesses about the abuse of patents to impede competition. Therefore, the FTC is interested in examining how best the balance that traditionally was the key in intellectual property legislation and practice could be restored.

"Patents and competition work well together," she concluded.

The second issue, of course, is that for some people the present system works very well. Lawyers, for example. And some bigger companies that file for huge numbers of patents and benefit from being able to use them to compel competitors to cross-license technology or block those competitors entirely.

It seems like good news, though, that a roomful of people from so many agencies and companies can be convened to consider the question of how to fix the patent system. Statements of support from Intel, Cisco, eBay, and Google all agree that the current system is wasteful and expensive, and that, particularly in the technology field, it can be desctructive. Intel notes that a single chip now may be covered by a thousand patents. How can anyone design a new product with any confidence it won't infringe?

This is all happening just as Europe is gearing up to bring in software patents, convinced that it can avoid the excesses of the US experience, and also as there are moves to revamp the European system to make it easier to get and administer a single EU-wide patent. (The labyrinthine structure of national patents, under which someone wishing to challenge has to do so in each country separately is obviously expensive and cumbersome.)

But the FTC proposals don't go far enough for everyone. A patent specialist from a large Silicon Valley company who was lacking a PR minder to give him authorisation to speak on the record, said that if it were up to him, he'd change the system by making it harder to get patents in the first place.

"You can tell the system isn't working," he says, "when engineers don't respect it. And they don't. They see patents being awarded to people they consider not as smart as they are for work they think is mediocre, and they think it's a game. It should be an honour to be granted a patent. We should raise the bar." Unlike a lot of people, he didn't, however, think it was necessary to get rid of software patents or even, necessarily the ultra-controversial business methods. "We need to get rid of bad patents."

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Wendy M. Grossman’s Web site has an extensive archive of her books, articles, and music, and an archive of all the earlier columns in this series. Readers are welcome to post here, at net.wars home, follow on Twitter or send email to netwars(at) skeptic.demon.co.uk (but please turn off HTML).