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Patently Absurd: Patent Reform Legislation in Congress Amounts to Little More Than a "Get Out of Jail Free" Card for Microsoft

Status: [CLOSED]
By Robert X. Cringely

Late last month, shortly before the U.S. Congress shut down for its summer recess, the Senate Judiciary Committee's Intellectual Property subcommittee held an unusual hearing -- unusual because the only committee member attending the hearing was the chairman, Orrin Hatch, a Republican from Utah. Why would such a prestigious committee hold a hearing in Washington attended by only one member? To slam through some controversial legislation, of course. Senator Hatch was trying to pass a new law "reforming" the U.S. patent system and apparently felt it would all go much more smoothly without the presence of the other committee members. And it might have gone smoothly, except someone in the press noticed the unusual hearing and decided to attend, essentially scotching the intended markup of the bill a week later and passage just as an unwary Congress was heading home.

Lord save us from patent reform.

This is another in my occasional series of columns on "innovation," a term that -- at least when used in the computer and software industries -- generally means "creative theft of ideas by big companies."

There are several forms of intellectual property protected by U.S. law. Among these are patents, trademarks, and copyrights. The goal of all three forms of protection is to encourage hard work through the granting of some economic exclusivity, and thereby helping the nation by growing the economy and through the good works made possible by new inventions. Trademarks reduce ambiguity in marketing and promotion. Copyrights protect artistic and intellectual expression. And patents protect ideas. Of these three categories of intellectual property, the ones recently subject to reform efforts are copyrights and patents, and each of these seems to be headed in a different direction, though for generally the same reason.

Copyright law is being tightened at the behest of big publishers and especially big record and movie companies. The Digital Millennium Copyright Act, for example, makes it a crime to defeat copy protection of CDs and DVDs, thus helping to preserve the property rights of these companies. At the end of some artistic productivity chain, it is supposed to protect the rest of us, too, most notably by encouraging the record and movie companies to make more records and movies, which we will in turn be discouraged from copying illegally.

Patent reform works the other way. Where we are tightening copyrights to help big companies, we are loosening patents, also to help big companies. Certainly it isn't to help you or me.

Do you feel helped by patent reform?

The bill at hand, which will take another shot at passage after the current Congressional recess, is intended to discourage frivolous patent lawsuits, which are reportedly ruining the days of big companies all over America, thus denying the rest of us the fruits of those patents -- new stuff. That would be fine if most of our new stuff came from big companies, but it doesn't. Most patents aren't issued to big companies, but to smaller companies and to individual inventors. Patent reform for the most part won't help those groups and will, in fact, hurt them.

If patent reform will hurt most of the people who receive patents, why are we doing it?

Good question.

Patent reform appears to be based primarily on the idea that big companies invent useful stuff that needs protection while smaller companies and individual inventors use the patent system to suck revenue out of big companies through frivolous patents and frivolous lawsuits. Of course, it isn't at all clear that this assumption is correct.

The primary principles of patent reform are switching the U.S. system from "first to invent" to "first to file" by replacing legal challenges to patents with a more administrative challenge process, and by practically eliminating injunctions through which a patent holder forces an infringer to stop using his intellectual property.

Much of the rest of the world already uses "first to file" patent systems. Of course, much of the rest of the world also ignores or gleefully violates patent law. "First to file" gives the advantage to any organization that has a good administrative system in place. Absent-minded inventors lose in this system, which also encourages patenting anything and everything just in case. We can see this in recent Microsoft patents, for example, like 20050108349 -- "Business inquiries and operations using messaging service" -- which seems to cover looking up a number in the telephone directory. Does this qualify as "innovation?"

"First to file" is supposed to be good for you and me because it reduces frivolous lawsuits by people who may think they actually invented looking up numbers in the phone book before Microsoft invented it. But, hey, isn't a patent supposed to be "non-obvious," which would make looking up numbers in the phone book unpatentable?

It's just my opinion, but "first to file" looks like a good way to screw small inventors, of which I know quite a few.

Moving to an administrative challenge system within the patent office, rather than just filing a law suit in court, is supposed to both make patents better and cheaper. It is supposed to make them better because expensive lawyers are eliminated from the process, thus allowing more challenges to be filed and improving the overall quality of issued patents. There are only two problems with this theory, and those are the false ideas that lawyers will be eliminated, and that money will be saved.

Big companies with patent departments will continue to staff those departments with lawyers, whether they are called that or not. Little companies and individual inventors without patent departments tend to be represented by lawyers who work on contingency -- who accept the financial risk of pursuing the case in return for a share of any award the inventor gets in compensation for the infringement. While there are some lawyers who are the patent equivalents of ambulance chasers, most lawyers won't take patent cases they aren't pretty darned sure they can win, which would seem to not be frivolous cases at all.

So moving to an administrative challenge system eliminates lawyers, yes, but only for small inventors.

Finally there is the elimination of injunctions except under extreme circumstances. I find this part of the bill especially interesting because it seems to effectively allow infringement under almost any circumstance, reducing what is supposed to be a crime into more of a forced license -- forced on the patent holder. If a company infringes my patent and I can't get an injunction prohibiting them from using my intellectual property, that means anyone can use any patented technology, and all that's left to be worked out is the license fee.

I don't want to be too petty about this, but what if I, as the inventor, simply don't like you, the infringer? What if I fear you'll be using my very peaceful invention to make weapons of mass destruction? Can't I stop you from using my property? Under the proposed law, I can only do so if your infringement will effectively put me out of business.

Under this bill, that which doesn't kill us continues to annoy.

The point of all this reform, it seems to me, is to make it harder for small inventors to make a living. If they are all thieves, maybe that's as it should be. But what if they aren't all thieves? What if they actually invent most of the stuff we value? Then all of us are being ill-served by this legislation.

Microsoft loves it, of course. Under the proposed law it is almost impossible to get the treble damages that are at the core of the contingency lawyer-client relationship. That, alone, drops Microsoft's liability by a factor of three, from around $20 billion down to $7 billion or so from the dozens of patent infringement cases currently pending against the company.

Yes, Microsoft may well be a prime target for frivolous patent infringement suits, but Microsoft historically has also shown itself to be a consistent and willful patent infringer.

In short, the bill is bad. It reflects the worst kind of special interest law-making that hurts us all. And I mean REALLY hurts us because it will only act to discourage inventors. Record and movie companies beating-up on music and film pirates don't save or cost lives, but discouraging new medical inventions literally does cost lives.

That ought to be as obvious as looking up a number in the phone book.

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