December 12, 2003

David Wessel Writes About the Patent Mess

The Wall Street Journal's David Wessel writes about the mess we are making of our patent system:

WSJ.com - Capital: ...Now the Federal Trade Commission says it is time to lean the other way. "It's easy to get a patent and hard to challenge one," says FTC Chairman Timothy Muris. This warning is worth listening to. It comes not from an antibusiness bureaucrat or a Democratic advocate of government industrial policy, but from a Reaganite Republican who prizes property rights, markets and competition as the only sure way to prosperity. "You want property rights that create profits, but you do not want them to block subsequent innovation," says Paul Romer, a Stanford University economist. "The FTC report says that turning the dial a bit further in the direction of weaker property rights will actually speed up innovation. This may surprise people who are used to thinking that stronger property rights always lead to faster innovation. It will carry more weight because it is not just ivory tower academics saying this."...

When patents are too easy to get and hold onto, they become a weapon for would-be monopolists and their well-paid lawyers to increase profits rather than a reward for innovation. People get patents who don't deserve them, and then others wield those patents in what is close to legalized extortion. In the computer business, firms that do no research and make no products buy patents to use in lawsuits against companies that do make things. In biotechnology, where each advance builds on the last one and everyone relies on patented research tools, patent holders may be stymieing progress, the FTC cautions.

A recent dispute illustrates the stakes. In November 1998, the patent office gave researchers at the University of California at Berkeley a patent for a way to embed clever programs in Web pages. The patent holders successfully sued Microsoft Corp. for patent infringement, prompting Microsoft to vow to alter its widely used Internet browser. That alarmed Internet pioneer Tim Berners-Lee. He said the original patent wasn't such an original idea in the first place and that Microsoft's response "would render millions of Web pages and many products of independent software developments incompatible." Noting the "substantial outcry," the patent office recently said it will reconsider the original patent...

As a University of California professor, I am personally upset that the Regents, the President, and the lawyers of the University of California have forgotten what the purpose of a public university. Even if the Eolas patent had not been granted upon claims of the lack of prior art that appear to be false, the University of California has no business trying to restrict the spread of knowledge and the useful arts.

Posted by DeLong at December 12, 2003 09:20 AM | TrackBack

Comments

Yes, yes, smarter capitalists are already beginning to step in. Dubya's chances to get re-elected is diminishing by the day... I think.

Posted by: Bulent Sayin on December 12, 2003 09:38 AM

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The Patent Office is entirely underfunded and understaffed for the work that it does. There isn't the time of the expertise avaible to weigh patents correctly. The best remedy for this is that universities would treat patent reviews similar to being a journal editor or referee. That way the Patent Office can tap into a pool of expertise at a fairly low cost.

Posted by: Rob on December 12, 2003 09:39 AM

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What? The regents of the Universit of California don't have a fiduciary responsibility to protect their intellectual property and derive revenue with which to pay your salery :-)?

Posted by: Jonathan Goldberg on December 12, 2003 10:37 AM

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What? The regents of the Universit of California don't have a fiduciary responsibility to protect their intellectual property and derive revenue with which to pay your salery :-)?

Posted by: Jonathan Goldberg on December 12, 2003 10:43 AM

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I think the whole structure of patent rights need to be overhauled.

A patent right should not include exclusive right to use knowledge content of the patent.

It should rather be sort of a right to "share the wealth" with whomever is generating wealth through using knowledge content of the patent.

Posted by: Bulent Sayin on December 12, 2003 12:07 PM

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Our patent system needs to be completely overhauled. The system is far too biased toward patent applicants. The search for prior art is cursory at best, and the threshold for "non-obviousness" is breathtakingly low. I can't tell you the number of patents I've seen for things that were in common practice (or at least in the technical literature) a decade before, or for things that are blindingly obvious to anyone remotely competent in the field.

Several times, as a sanity test on a patent I have seen, I have posed the problem that it solved to one of my junior engineers, and asked what they would do to solve it. Most of the time they immediately come up with the solution of the patent. Now I think I have a good engineering staff, but they are not THAT good.

A key problem is that the patent office some years ago decided it should be run "like a business" and concentrate on "customer satisfaction". The problem is that it treats only the applicants as its "customers", not the rest of us. Examiners are rated on how quickly they can process applications; invariably the quickest way to dispose of an application is simply to grant it (with minimum revisions).

(A professor I recently mentioned this to said the same thing applies to peer reviewing journal articles -- the quickest way to get through it is to make no objections.)

This is one reason I cringe every time I hear a (usually Republican) politician say that government should be run like a business. No -- if it should be run LIKE a business, it should be run BY a business. Government offices should be balancing the desires of everyone in society. Would those Republicans really want the welfare offices treating applicants like customers, or police officers treating suspects like customers?

Fortunately, there are murmurs of change, about opening up applications to challenges before the actual granting of the patents, and other things to protect against bogus patents without a full-fledged trial. I don't know how good a chance these changes hold, though.

Posted by: Curt Wilson on December 12, 2003 12:20 PM

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" Microsoft's response "would render millions of Web pages and many products of independent software developments incompatible"

Isn't this the prime MS strategy? Use marketshare to force incompatable competition out of the market? Patent or no patent, it is likely that MS would follow this path eventually.

Patents are only worth what can be enforced. Unfortunately, the legal system is especially poorly suited to adjudicate cases that require scientific knowledge.

Posted by: bakho on December 13, 2003 12:17 PM

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"Close to legalized extortion?" Have you ever heard the story about IBM and the smaller company... I think it was Sun, or maybe Oracle. Anyway, IBM sends them a letter saying they're infringing on such and such a patent, and they'll have to pay such and such a licensing fee or face a lawsuit.

So the smaller company's lawyer meets with IBM's lawyers and makes a presentation: this will never hold up in court. Your patent is worthless, there's obvious prior art on this, and even if your patent does hold up, we're not infringing on it.

IBM responds, OK, maybe you're not infringing on this one. I'll have the patent law team go through the rest of the hundreds of thousands of patents we hold, until we find one you do infringe, and we'll charge you much, much more for it. If you fight that one and win, we'll find two more and sue you for those as well. Trust me, it's cheaper to pay than it is to fight.

So, the smaller company rolls over and pays the fee. Tell me that's not extortion.

Posted by: Verbal on December 14, 2003 05:04 PM

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