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Patent Overhaul now on D.C. Agenda

When Democrats took control of Congress last election, the lobbyists for all the big technology and telecom companies in Washington pulled out their wish lists, ripped them up, and re-arranged their legislative priorities.

Gone was the push for sweeping telecommunications legislation, hemispheric-wide free-trade agreements and limitations on Internet taxes. Only a Republican Congress and White House could agree upon those.

A new priority has emerged: overhauling the nation’s patent system. Seemingly out of nowhere, it is suddenly all the talk of Washington’s political-corporate machinations.

For the big boys of the technology industry – Apple, Cisco, Dell, Microsoft and Intel – swatting down patent litigation has been a steadily increasingly nuisance. Just last month, Microsoft defended against an infringement claim against AT&T at the U.S. Supreme Court.

But why should so-called “patent reform” rocket to prominence with Democrats in power? Two words: Big Pharma.

Drug companies have been never been chummy with the Democrats. In the past two decades, pharmaceutical manufacturers and their employees have given more than twice as much — $29.9 million versus $14.8 million – to Republicans than to Democrats. Democrats have returned the favor by pushing for re-importation of prescription drugs, lower drug prices, and other anathema topics. Changing patent laws fits into the same category.

Computer and software companies pride themselves on their even-handedness. They dispensed $31.5 million, versus $30.2 million, for Republicans over Democrats during a similar period. And the high-tech camp cannily plays to the vanities of those who govern, whether that is bridging the digital divide or keeping stock options from being listed on balance sheets.

Now the big tech titans have a new best friend: California Democrat Howard Berman, the chairman of the Judiciary Subcommittee on Courts, the Internet and Intellectual Property. Berman has been a patent skeptic for years, having sponsored legislation to limit the validity of “business method” patents. Last month Berman called patent legislation his panel’s “highest priority.” And he blasted Big Pharma, which is content with the status quo, for using their Republican ties to kill legislation last Congress.

With Democrats in charge, the big tech players love to frame the patent issue as one of Big Pharma versus Silicon Valley. They’ve formed a Coalition for Patent Fairness, and they say that patent law must adapt to the more inter-dependent nature of innovation.

There is some truth to this argument. Tech companies use patents differently than do drug companies. A laptop may encompass 1,000 patents or more. A blockbuster drug, by contrast, could be a single precious piece of intellectual property.

That makes the patent-blocking and patent trolling problem much more acute for information technology than for biotechnology. Threats of injunction (like Verizon vs. Vonage) loom large, as the long-running legal wrangling over BlackBerry made apparent. And with many ludicrously granted patents out there – like exercising a cat – patents indeed can be more of a burden than a benefit to innovation.

Now, however, an increasing minority of tech companies are crying foul and fighting back. Led by Qualcomm in a new lobbying force called Innovation Alliance, these chip-design companies see a thinly veiled ploy by dominant tech incumbents. “Patent reform,” they say, would hobble their disruptive technologies and their business model. It is centered on licensing, not manufacturing, their intellectual property.

Innovation Alliance is particularly concerned about the way the Patent Fairness group – with the active support of Berman, and also Sens. Patrick Leahy, D-Vt., and Orrin Hatch, R-Utah – want a “second window” where questions of validity linger at the Patent and Trademark Office.

“The proposed ‘second window’ allows a patent to be challenged throughout its life, and subjects patent owners to new kinds of administrative litigation,” Irwin Jacobs, the engineer who co-founded Qualcomm, said on Thursday at the Heritage Foundation. Jacobs has become a one-man Diogenes against the “patent fairness” trend. At least he is spoiling the IT vs. Big Pharma storyline.

Nervously in the middle is the rest of the business world. In a group that lobbyists are calling “Pharma-lite,” a third group was born last week: the Coalition for 21st Century Patent Reform. Its big players are 3M, Caterpillar, Eli Lilly, General Electric, Johnson & Johnson and Proctor & Gamble. It’s unclear where they come down on the key issues in dispute. But it is clear that Qualcomm and the chip-designers want nothing to do with their lobbying efforts.

As Congress digs into the weeds, they’ll discover how patents cut both ways. Qualcomm, for example, currently faces its own infringement suit from Broadcom. This reality at least drives a universally shared impulse to improve the quality of patents when the first emerge from the PTO.

5 Responses to “Patent Overhaul now on D.C. Agenda”

  1. David Kappos speaks for a company who let the Japanese take the mainframe market from them and Microsoft take the operating system market. The only reason that IBM still exists today is their patent portfolio. IBM is a husk of its former self and a joke.

    IBM files hordes of incremental mostly insignificant patents and their conduct is one of the reasons that the patent system is burdened. They sense that their days are numbered, and that eventually they will expire with a whimper.

    They have a vision for a patent system which is a king’s sport, where only the privileged vested interests can play.

    There are two major big business camps promoting reformation of the patent system.

    One group simply wants to eviscerate the system to mitigate the consequences of their patent pirating conduct. This group was initially formed by washed up tech companies who lost their ability to produce significant inventions decades ago and a few parasitic companies who never were innovators, rather they are shrewd predators on innovators. They were then joined by the insurance and banking industries, of which one group is only innovative at denying claims and the second group’s claim to fame is inventing ever more and larger fees. This group calls themselves the Coalition for Patent Fairness, but are better known as the Coalition for Patent Piracy. Their members have a variety of deficiencies such as being caught cooking their books, putting their customers at risk of being maimed or killed with defective products, committing fraud on the court in litigations over their patent piracy, and various other sins.

    The second group are much older companies. They tend to value their patents but would very much like to reign in pesky inventors who nip at their heels. They are also hot on HARMazation of America’s patent system, a process which dumbs down the greatest patent system in the world for those company’s benefit. This group is known as the 21st Century Patent Coalition. While they are marginally better than the Coalition for Patent Piracy they are also very short term gain oriented businesses.

    Both groups prey on the real inventors of our country. Both are prone to abuse the process of law in a bid to bankrupt inventors. Both ship the fruits of American ingenuity to developing countries. Both groups routinely indenture inventors in those countries and will dispose of their empty husks just as they have done to our inventors when they find a slightly better deal elsewhere.

    Independent inventors have community ties and when they prosper so do their communities. But when the inventors have their spirits killed by disreputable and predatory large companies, the community suffers a much greater loss than the inventor.

    Beware, for these companies are throwing hundreds of millions of dollars into “reforming” our patent system to be more friendly to them and much less friendly to upstart startup companies. They know that this is a bargain if it facilitates their appropriation of billions of dollars. It is a fact that many of the companies promoting various special interest “reforms” of the patent system have been caught red handed cheating, lying, and thieving – and they are being held accountable for their poor conduct. Accountability is what drives their whining about bigger than live mythical trolls.

    Ronald J. Riley,
    President – – RJR at
    Executive Director – – RJR at
    Senior Fellow – – RRiley at
    Washington, DC
    Direct (202) 318-1595 – 9 am to 9 pm EST.

  2. Patent “reform?” Hogwash. All that’s needed is the following to clear up the application backlog and end the issuance of flimsy patents:

    1. The fed gov to stop skimming off patent fees for the general budget (anyone name a gov entity that’s actually cash-flow positive?)

    2. The immediate firing of the politically appointed leaders of the PTO; with their replacements being experienced, long-term (minimum 15 years) patent staff who know what to do and how to do it.

    3. The providing of and/or access to top-level non-patent prior art databases so the large majority of hard-working examiners can do the job we’re paying them to do.

    4. The scaling back of the ridiculous time restraints and production requirements that make it extremely difficult; and often impossible; for the examiners to do as thorough a job as they’d like to.

    5. The insistence that all applicants, including companies like IBM who know better, include a minimum of 10 independent and unrelated non-patent prior art references in each and every patent application.

    The complaints by some against software and biz-method patents is, frankly, unfair and unfounded.

    Despite the all-to-common belief of most of the public and media that only physical objects that can be touched are or should be patentable has never been the case in America.

    Processes and methods which result in new creations have always been patentable as well.

    A process/method of conducting business–if it is truly original and (legally) non-obvious–is no less entitled to patent protection than is anything else.

    Innovation is innovation is innovation.