In 1895, George Selden patented the "improved road engine" powered by a "liquid-hydrocarbon engine of the compression type." In other words, he patented the car.
In 2012, Apple successfully sued Samsung for creating a screen that can distinguish between one or two fingers touching it. Apple also sued Samsung (News - Alert) for copying the iPhone shapes, white and black colors, and rounded icons, among other things.
And today, Google Maps might get shut down in Germany for violating Microsoft’s patent on a "computer system for identifying local resources and method therefor."
Of the above cases, only Selden’s patent was successfully challenged in 1911, thanks to Henry Ford. The others still stand along with Amazon’s patent on a one-click purchase button, the Motorized Ice Cream Cone, the Banana Suitcase, and the Gas Grabber (don’t ask).
The absurdity of these patents is not even half as frustrating as the shameless efforts to exploit the broken system. Apple, Samsung, Microsoft, Google, Nokia (News - Alert), and HTC spend billions in the so-called smartphone wars trying to strangle each other in the courts, rather than spending hard-earned cash on R&D. Patent assertion entities, also known as patent trolls, acquire patents with no intention to ever develop the products or processes: they simply aim to collect licensing fees or blackmail companies into settlements.
If Selden could not maintain such an absurd patent in 1911, why can software companies today secure even more preposterous patents? Why can companies exploit erroneous patents to bleed out competitors, stifle innovation, and squash upstarts? Why can patent trolls so easily exploit America’s innovators?
Legislation Has Fallen Short
The U.S. patent system is not only broken – it’s being flagrantly abused to stifle innovation, penalize inventors, and lock great companies into epically pointless litigation from which only lawyers leave the better.
Government efforts to address this issue have been underwhelming and ineffective.
On Sept. 16, 2011, President Obama signed the Leahy-Smith America Invents Act, aiming to protect startup innovators from legal tricks utilized by moneyed infringers. However, the AIA did not go far enough, and has in fact backfired. Ex parte patent reexaminations have tripled since the bill came into force because patent infringers now blackmail patent-holders with the threat of reexamination. The bill was supposed to reduce legal threats.
The new First Inventor to File rules, which replaced the age-old First to Invent standard, have also reduced startup access to venture capital, since startups often do not have a sufficient conception, proof of functionality, and business plan until after they earn venture backing. Conversely, venture capitalists cannot risk backing companies until they have the patent. Both investors and high-tech startups now struggle with this Catch-22.
The problem is getting worse: Suits brought by patent trolls have actually increased from 29 percent of all infringement suits to 62 percent of all infringement suits over the last 2 years alone. The White House claims that trolls may have threatened more than 100,000 companies in the past year.
At this point, the patent system cannot be band-aided so easily, despite the White House’s best intentions. On June 4, the Obama administration announced five executive actions and seven legislative recommendations to better protect America’s innovators. They are a mixed bag.
Encouragingly, the White House wants congress to give district courts discretion to make abusive plaintiffs responsible for the defendant’s legal fees, and they want Congress to incentivize public filing of demand letters to limit abusive suits. Making plaintiffs responsible for legal fees could deter unscrupulous companies from attempting to hemorrhage competitors.
The Executive Orders demand:
1. That patent applicants and owners regularly update ownership information so that trolls cannot use shell companies to hide the full extent of their patent holdings from companies they target in abusive litigation
2. That the PTO train examiners to weed out overly broad software patent claims.
3. That the PTO creates “education and outreach materials” that “offer answers to common questions by those facing demands from a possible troll.”
4. That more research, discussion, and data production occur.
5. A review of procedures that Custom and Borders Protection and the International Trade Commission use to evaluate exclusions barring the import of infringing goods.
Despite the nice intentions, the White House has not done enough to stem abusive patent litigation. As it stands, a company could probably patent the process of embedding Google (News - Alert) Maps on a webpage – or patent the ability to purchase products and services inside a mobile app. Oh, wait, Lodsys already has that patent.
If profoundly ludicrous patents breeze through the Patent and Trademark Office, trolls prey on companies, big companies prey on little companies, and tech giants slap lawsuits to each other like leeches, clearly patent law is broken. Uncle Sam must take stronger measures to stop the bullying and set America back a path of innovation.
In line with the Electronic Frontier Foundation’s Defend Innovation Project, I recommend seven simple changes to patent law that would stem the unchecked growth of exploitive litigation:
1. Software patents should last no longer than five years from the application date.
Currently, patents last 20 years, which is an outdated timeframe given the pace of software innovation. Patent lengths should reflect the speed of innovation within individual industries.
2. If a patent is invalid or there is not infringement, the plaintiff should be responsible for the legal fees.
Trolls and predatory tech companies frequently use the threat of a protracted legal battle to blackmail alleged infringers into an out-of-court settlement, even though the defendant would probably win in court. Making the plaintiff responsible will discourage this abuse.
3. Patent applicants should be required to provide an example of running software code for each claim in the patent.
If a patent troll lacks the ability to implement a software concept, why does it deserve a patent? Do I deserve a patent for a hovering skateboard that I cannot create? Absolutely not. This requirement would prevent trolls from patenting concepts and processes that they intend to exploit rather than produce. This will let great thinkers and inventors actually bring these ideas to market.
4. Infringers should not be liable for independently arriving at a patented invention.
Software code is mathematics; therefore, it should come as no surprise that multiple people often reach the same or similar code. Making such independent innovators liable is like accusing a student of plagiarism because he or she solved a math problem but submitted the exam after another student. You should not be able to patent common sense processes and single-answer solutions.
5. Patents and licenses should be public right away.
Otherwise, how can innovators know if they are infringing on a patent? It’s wrong to let enterprising coders invest time, money, and passion into a product only to fall into a patent troll’s booby trap. Patent owners should be required to keep their public records up to date.
6. Patent law should limit damages so that a patent owner cannot collect millions of dollars if the patent represented only a tiny fraction of a defendant's product.
Should a teenager get the death penalty for stealing a candy bar? No. Then why should a startup be given the fiscal death penalty for infringing on a patent that is a miniscule component of their software? If an alleged infringer is not making millions on a patent, they should not be liable for millions.
7. Congress should commission a study and hold hearings to examine whether software patents actually benefit the economy.
According to researchers form the Technical University of Lisbon, a stunning 91 percent of all technologies that have received an R&D 100 Award from the academic journal Research & Development between 1977 and 2004 were not patented. Across the board, scholarly studies have challenged the notion that patents protect economically useful inventions. Indeed, mounting evidence shows that the opposite is true – patents stifle more innovations than they protect.
Only countries with enlightened legal institutions can sustain long-term economic growth, facilitate innovation, and benefit from the genius of resourceful creators. So long as malicious companies and opportunistic patent assertion entities can cannibalize the productivity and ingenuity of America’s tech community, advancements will stall, great ideas will crash before they ever take off, and the global community will miss out on opportunities to improve the human condition.
Edited by Stefania Viscusi