ARE HIGH-TECH PATENT WARS STIFLING INNOVATION?
Would we rather spend billions developing products or defending lawsuits?
The biggest questions facing our state—and our planet—need answers.
Hear how Golden Gate University professors like William Gallagher are taking a constitutional stance for patent laws.
Last July, Nortel closed its doors and put its patents up for auction. The bidding war ensued. Google was willing to spend $3 billion for the patents to defend itself against lawsuits. Eventually Nortel sold to Apple and Erikson for 4.5 billion dollars — five times the opening bid. That is 4.5 billion dollars that won't produce anything new — 4.5 billion dollars buying weapons in an ongoing patent war.
The biggest tech companies — Google, Apple, Microsoft, and now Yahoo and Facebook — are involved in practices described as similar to the stockpiling of nuclear weapons — amassing the biggest arsenals of patents at literally any cost and spending billions that could be spent on innovating products in order to prevent companies from infringing on these patents and defend themselves against lawsuits.
Meanwhile, small startups lack the resources to defend themselves. They're being devastated by entire office buildings full of "patent trolls" that produce no useful products but sue other companies that do.
The US Patent Office was once reluctant to issue software patents instead of copyrights, as patents traditionally protect physical machines or processes, whereas copyrights protect written and audiovisual works, like novels, music or movies. Computer programs — written works, but when executed by computers, affect the real world — straddle this boundary. After a ruling by federal courts in the 90s, the software patent floodgates opened. From 2004 to 2009, patent infringement lawsuits went up by 70% and licensing infringement went up a whopping 650%.
Patents are supposed to reward innovation, but in the software industry, they are having the opposite effect. The patent system has become a minefield that punishes innovators who accidentally infringe the patents of others. There are now so many software patents in force that it is practically impossible to avoid infringing them all.
“It’s not entirely clear that software patents are necessary,” says William Gallagher, associate professor of law at GGU. “The last two decades of litigation and empirical studies suggest that software patents are not particularly helpful to the patent owners.”
However, supporters argue that patents have historically been foundational to US innovation. Software patents may be necessary to incentivize engineers to invent more. If companies use their technology and pay their licenses, the inventors of the technology make more money.
“Patent law can protect the functional aspect of a software program as a new, useful, non-obvious process or method,” says Mick Sutliff (JD 08), Associate, Haverstock & Owens LLP. “The creative aspects of software can be protected under copyright law. Patent protection for software is necessary to protect the inventive, functional aspect of software that is not protected by copyright."
“A lot of software today is not patentable because of lack of novelty or due to obviousness. But that doesn’t mean that if in the future some brilliant inventor comes up with a revolutionary software unimaginable today after expending much time and money, that they should not be rewarded for their efforts with a limited monopoly as the Constitution requires,” says Kevin Kitcey, IP law student.
“It would be arbitrary and shortsighted, not to mention unconstitutional to exclude software simply because we today cannot fathom what some inventor might discover in the future,” continues Kitcey. “Certainly, the United States needs a patent system that rewards investments in research and development to ensure that we maintain ourselves at the forefront of the information economy,” says Joe Meckes (JD 97), partner, Squire, Sanders & Dempsey (US) LLP. “On the other hand, when the USPTO issues patents on applications that are obvious or simply embody non-patentable ideas, we run the risk of stymieing competition. If we can strike a balance, we have the best of both worlds. My experience, however, is that “junk” patents are issued too often.” “Our current patent system is a windfall for patent lawyers,” says Chester Chuang, associate professor of law at GGU. “For everyone else in high-tech, it is an unfortunate cost of doing business.”
GGU offers future and current patent lawyers excellent opportunities for research and training with an Intellectual Property Law Center that brings together students, faculty, lawyers, judges and IP law scholars to explore developments in the fast-changing world of IP law and policy. The Center is led by faculty with extensive IP law experience, assisted by a distinguished advisory board of prominent attorneys from Bay Area law firms, in-house counsel, federal judges and lawyers at the US Patent and Trademark Office.