Tech Policy Summit: Fixing the patent system...soon

At the Tech Policy Summit in San Jose, the broken patent system was the topic of several panels. First, Congressman Howard Berman (D-CA) said that he coordinating with Senator Patrick Leahy (D-VT)and others in Congress to produce a patent reform bill in the next two to three weeks. Berman, who is chairman of the House Judiciary Subcommittee on Courts, the Internet and Intellectual Property, offered a politically optimistic aspiration that patent reform become a leadership priority on a bipartisan basis in both houses, with a goal of developer faster and less expensive ways to determine the validity of patents.

On a panel discussing patent reform, Mark Lemley, a Stanford University law professor specializing in technology and law, outlined the scale of the U.S. Patent and Trademark Office problem. Last year, 300,000 patent applications were processed, but 400,000 were submitted. The overall backlog is over a million applications. As a result the companies investing in R&D think of the patent system as an impediment to innovation.

"If think of problem as bad patents, you cannot get rid of all bad patents, no matter how many examiners," Lemley said. Bad patents, such use of a laser wand to exercise a cat, aren't going to have much impact in terms of litigation; in terms of the time lost, messing around with toothless applications doesn't help speed the legitimate patents through the process.

Nathan Myhrvold, CEO of Intellectual Ventures, a company that creates and acquires patented ideas and has a major dependency on the U.S. Patent and Trademark Office, cited a lack in number and qualification of application examiners. The practice of diverting fees from applications outside of the Patent Office has stopped, but the competition for competent examiners in various fields is intense.

Myhrvold complained that some tech companies are allergic to paying patent-related royalties. "Most tech companies play 'catch me if you can,' " Myhrvold said. AutoDesk CEO Carl Bass later countered that idea. "If companies concerned with innovation infringe on someone else's patents, can't protect your own," he said.

Myhrvold also cited a need for coming up with market rates for royalties, much like the consumer electronics industry or publishing industry. "Unfortunately, even without people colluding in some way [which could have anti-trust implications], there is not much of a market if you do patent deals without litigation and keep it secret," he added. 

He also offered the counter-intuitive view that patent litigation is out of line with expectation, saying that the relative to the number of applications, litigation hasn't exploded. Given the number of questionable patents issued and the patent holder friendly court environment, it's still not a good situation.

Lemley suggested that standards setting organizations figure out what is a reasonable royalty, and that patent infringement settlements need to be more in line with the value of the intellectual property. He noted that the U.S. Supreme Court has been taking on more patent cases. "It's a question of whether they take a hatchet to the rules or a more measured approach. We are starting to see a swing away from patent owners to the other side of the spectrum."

Berman is optimistic about the prospects of getting enough Republican votes to pass a bill in this year's new Democratic Congress. The tech industry will be thankful if some legislation makes it through soon that would get the sand out of the patent processing gears. 

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