The announcement this morning that Google wants to spend $12.5 billion to acquire Motorola Mobile -- for its patent portfolio, is just the latest evidence the patent system is not working. The issue that Google is struggling with is a common one. Some complex products, like mobile phones, computers or software, involve a lot of patentable technology.
When there are hundreds or even thousands of patents in a product, there is almost no chance that anyone can make and sell the product without infringing patents from third parties. Part of the problem is the "quality" issue -- the tendency of the USPTO and other patent office to grant patents that never should have been granted in the first place, because the concepts are old, or the innovation was so predictable that it did not meet legal standards for patents. But this is not the whole problem. Even if you could get rid of all of the poor quality patents, there will be cases where one small invention can block a much larger, and socially valuable product.
Many who are appalled at the current patent wars over mobile telecommunication devices see the patent system itself as outdated and nonredeemable. They may be right. But before getting rid of patents altogether --- a very difficult and unlikely strategy for reformers -- it makes sense to look at other reforms, which challenge the exclusive rights of patents, while allowing patent owners to benefit from reasonable royalties when their inventions are used.
Most countries outside of the United States have compulsory licensing statutes that can be used to force patent owners to license patents on reasonable grounds. The United States also has laws that can be used for compulsory licensing of patents, but the laws are not designed to deal with our current problems.
In 1917, the US government forced the Wright Brothers and other holders of key aircraft patents to form the Manufacturer's Aircraft Association (MAA), a patent pool that allowed more than 60 firms to manufacture airplanes, without fear of patent litigation. This patent pool focused the attention of airplane manufacturers on the quality of their aircraft, not the skills of their patent lawyers. Later, the US pushed to force greater access to patents on radios. In the 1950s, the U.S. forced compulsory licensing of thousands of patents in a wide range of fields. The U.S. government set up a special compulsory licensing statue for nuclear energy -- so investors would not be threatened by patent litigation after sinking millions into new power plants. In the 1970s, the clean air act came with a compulsory licensing statute, so that no one would have a legal monopoly on technologies related to government mandated clean air standards.
The romantic notion of an individual inventor is not appropriate for industries like the computer, software or mobile phone markets, where collaboration and adherence to standards are key to success. What is needed is a 21st century approach to compulsory licensing of patents, that facilitates voluntary licensing, and provides reasonable and fair rewards to patent owners, without becoming a tool for anti-consumer and anti-innovation cartels and monopolies.
One simple proposal for reform would be to provide for a liability rule approach, where firms retain the freedom to operate, when they pay into a fund to reward patent owners. For example, for consumer electronics, a firm could make any product it wanted, so long as they paid 6 to 10 percent of their revenues into a patent royalty fund. The money from the patent fund could be divided among the competing patent owners, by an independent arbitrator. That would speed up product development cycles - a lot.
There are other types of reforms to be considered also. But they all go way beyond the pathetically unambitious "patent reform" legislation Congress is considering.
(For an example of a very different type of reform, for new drugs and vaccines, see this discussion of S. 1137 and S.1138).
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The US made several changes to their patent system in the late '90s that substantially weakened the inventor's rights (one of which was the disclosure of the application - no more secret if denied) in favor of corporate interests. Mandating the licensing of patents would be yet another step in the wrong direction, that of weakening the inventor's rights in favor of corporate interests.
The Congress shall have power ... To promote the Progress of Science and useful Arts, by securing for limited Times to Authors and Inventors the exclusive Right to their respective Writings and Discoveries"
The purpose of Patent and Copyright protection isn't to recognize and safeguard some sort of inherent property rights of inventors and writers. Copyright protection is just a means of promoting progress and if it no longer promotes that progress; then it is no longer desirable.
These good hard-working people have to process over a thousand new applications a day. And so, they do it in the way that drove Albert Einstein crazy: "stamp ... stamp ... stamp ... don't read it ... just stamp ... stamp ... stamp ..."
And so, we get marvelous "patented inventions, worth millions of dollars," such as:
(*) Clicking on a hyperlink which in one step adds a product to your cart and makes a purchase of that item. "Gee, what a truly original idea."
(*) A semi-transparent "twirly bird" icon superimposed over what's on the screen when the computer is doing something. ("The truly original idea, not obvious to anyone schooled in the art," is that the animated icon is semi-transparent.)
What we are doing here ... but, ALL that we're doing here ... is feeding Lawyers.
There is a need to look at the patent system critically, like any form of government regulation, and to consider a variety of reforms and alternatives that would work better than the status quo, which is a product of legal experimentation that somehow has not evolved much since the 19th Century.
The political discourse is often too abstract and too moralistic. Looking at more pragmatic approaches to revolving the legitimate interest of society in providing incentives and rewards to inventors will require, at some point,taking a step back from ideology, and asking some basic "what if" questions about proposed reforms, and apply more cost-benefit analysis to policies about patents, including the issues of patentable subject matter and the nature of rights and exceptions to those rights associated with patents.
While I do not agree with your comment I do agree that the current patent rules are antiquated and needs to be updated. As far as your proposal for compulsory licensing is concerned just who do you think should set the aggregate rate for patents? Governments? Producers? Consumers?
Italy has issued several compulsory licenses in the pharmaceutical area. In recent years, the French, Belgian and Swiss have introduced compulsory license schemes for public health introduced in response to controversy over diagnostic gene patents. The European Commission has in place fairly extensive compulsory licensing of certain Microsoft technologies, as part of a competition proceeding. The one country in Europe where compulsory licensing cases are probably most common is Germany, where a compulsory license are now a common request in infringement cases, often on refusals to license grounds. Unlike the US, the court files to these types of private litigation are not routinely made available to the public. Many of the German cases are resolved through private settlements between the parties. Roche has used such proceedings to obtain "voluntary" licenses on patents held by Chiron on diagnostic tests, for example.
Beginning in 2006, the United States Supreme Court ruled in eBay v MercExchange that requests for patent injunctions should not be granted when a compulsory license and a court ordered royalty is a better alternate. Since then, US courts have issued a large number of such compulsory licenses during infringement and injunction litigation, including two to Microsoft for software patents that it infringes.
If there is general agreement that aggregate royalties of 10 percent or in the single digits are a good outcome of a voluntary negotiation, and getting to this point can take years and cost millions in litigation costs, there would be advantages in creating the liability rule, so that product development could proceed more rapidly, and bargaining costs could be reduced.
The liability rule could be a mandatory system for patent owners, but an opt-in system for product developers. It would probably return more money to inventors than does the current system, on average, and benefit society more.
The licensing statute would need to be crafted to allow exclusive monopoly for a product if it was not part of a product containing other patents. For example, a widget that could be manufactured by one entity that had potential capacity to satisfy the market, and would be tooled up for by that entity only if it had a monopoly.
Good stuff James. Keep us up to date on how it gets screwed up :-)
Note to all: Support GNU and EFF, the best firewalls against corporate IP ownership.
[1] was owned by Moto, maybe now sold to Google, great if they use it to fight for Linux.
http://www.freshpatents.com/Digital-video-recording-and-playback-system-with-quality-of-service-playback-from-multiple-locations-via-a-home-area-network-dt20050714ptan20050155072.php
Wow.
The problem is software and business methods patents. Remove them from patent protection. give them copyright protect which is appropriate.
Your examples highlight the problems with your idea. The first two were for military reason. Nuclear power has turning into a disaster, so it should not have been made easier, right?
I worked in computers since '72, never owned anything I invented. And now they get sold, like the one I did for a little company which was bought by Motorola, and my patent maybe now belongs to Google. Which they will use to fight for Linux, Open Source and The People. Google are the good guys here.
Citizens should not lose their rights to their ideas, just for a paycheck.
I got anti shelving clauses for my patents that force them to pay me royalties or lose the patent. I did this after losing several inventions to dead end companies that nonetheless owned my ideas.
Anti shelving should probably be the model for inventors ownership rights. If a company does not use the idea, it reverts to the inventor. If they do use they idea, or want to reserve the right to later, they pay royalties.
We outlaw contracts equivalent to slavery, and these worker contracts are just that.