Who’s Upset With the Patent System?

If you read articles and opinions from various online sources, or take notice of some of the recent coverage of patent-related topics in the mainstream media, you might think that criticism of the patent system is rife in the community.  However, this is almost certainly not the case!

There is a strong selection bias in the main sources of news and commentary about patents.  In part, this is because there will always be a certain level of public curiosity about any kind of legal dispute involving household names such as Apple, Samsung, Microsoft, Google, Motorola and Nokia.  And because these are all ‘tech’ companies, much of that curiosity is served by the technology media, with contributions by individuals and groups with a particular interest in the relevant technologies.  By its very nature, much of this discourse takes place online, where it is channelled via social media and other mechanisms directly to those with similar interests.

On the Internet, it is all too easy for any of us to become so caught up in our own little microcosm of views, interests and opinions that we lose sight of the wider picture.  Nobody should be surprised that, for example, the Whirlpool forums are full of people with opinions about whether or not Apple should be awarded an injunction against Samsung’s products – or vice versa.  But if you were to go out onto the streets and start asking randomly-selected people for their views on the subject, many would not even be aware that it is an ongoing issue.  Very little of the online coverage of the ‘smartphone wars’ is making it into the print or broadcast media, where it might be encountered by people who do not have an existing particular interest.

And while there may be strident criticism of the patent system among a sector of the subset of the wider community which is interested in digital technology, you would be hard-pressed to find anyone equally excitable when the courts issue injunctions against infringement of patents relating to fish-stunning equipment or a mobile lighting apparatus!  Yet, for the people involved in these cases, they are just as significant.

When it comes to broad-based community concern about the impact of the patent system, it is not ‘software’ or ‘business method’ patents that are most likely to be raised as an issue.  There are, however, many people concerned about social and ethical issues related to the patenting of medicines, medical therapies and genetic technologies.  These topics are far more likely to be covered in print, or in the mainstream broadcast media, or discussed by politicians seeking to gain political traction.   Yet the Australian and US patent authorities have repeatedly defended their practices of granting patents in these controversial fields, while generally making life more difficult for applicants with ‘software’ and ‘business method’ inventions (see, e.g., IP Australia’s Escalating War on ‘Business Methods’).

SO WHO ARE THE CRITICS?

In our observation, the strongest critics of the patent system – those who would call for its abolition, or for wholesale changes to its operation – fall into three main categories:

1. those who are focussed unduly upon high-profile – but relatively insignificant – ‘abuses’ of the patent system;
2. those with a particular commercial agenda to promote; and
3. those who are morally or politically opposed to patents – or at least to patents in particular fields of technology, such as software.

Patent abuses

There is no question that the patent system is sometimes abused.  There really is such a thing as a ‘patent troll’ – a ‘non-practising entity’ which employs nefarious tactics to extract payments from companies which may or may not be infringing patents which may or may not be valid.

It is no coincidence (though it is a much bigger topic that will need to wait for another day) that trollism is a unique feature of the US patent system – and it is not just that the US is a big market with many available targets.  The US could eliminate patent trolls tomorrow, if it were willing to repeal its patent laws and replace them with something less troll-worthy, such as the provisions of the European Patent Convention, for example.  Of course, this is not going to happen.

These kinds of abuses are not a result of the general structure of the patent system – US and European laws are merely variations on a common theme.

In the scheme of things, however, patent abuses are rare.  In most countries, including Australia and New Zealand, they are virtually unheard of.  Even in the US, infamous cases are the exception rather than the rule.  The Court of Appeals for the Federal Circuit consistently receives around 400-450 appeal filings [statistics (PDF, 10 kB)] in patent infringement cases each year.  Data on first-instance infringement filings in the various US Federal District Courts seems hard to come by, but with over 400 decisions being appealed each year, there must be many times more than this number of patent infringement suits filed.

Of these, we hear about a handful each year which involve well-known litigants, and/or which attract criticism for some form of abuse of the system.  This is not strong evidence that the system itself is broken.  While it would be nice to stamp out all abuse, there is ultimately little that can be done about the facts that no system is perfect, and some people are abusive, selfish and greedy.

In any event, undue focus on a small number of abusive cases without looking at the performance of the entire system is not basis for significant policy-making or positive reform.

Commercial agendas

It should not need saying – though the world is full of gullible people – that any time a major company comes out with a statement critical of the patent system, or advocating change, the first questions you should be asking are: Why?  What’s in it for them?

It can almost be guaranteed that the answer is not merely that they want to make the world a better place.  If companies want to do good in the world, there are many ways they can do it – donations to charity, community volunteering programs, or environmental impact reduction, to name just three.  But the patent system is used by corporations as a business tool, and the primary justification for any patent-related statements, lobbying or activity is necessarily commercial.

So:

1. when Intel’s Assistant General Counsel calls somebody a ‘patent troll’ – thus popularising the term – what it really means is ‘the President of the company does not like the way “extortionist” is playing in the media, and has insisted that I come up with something less likely to tarnish the company’s reputation’;
2. when Google complains about ‘anti-competitive’ strategies based on ‘largely questionable’ patent claims, imposing a ‘tax’ on consumers for these ‘dubious patents’, what it really means is ‘we bid p-billion dollars for the same patents, but lost out, so now we’re going to heap blame on the winners, in the hope that this will weaken their position, at least in the court of public opinion’;
3. when Microsoft nobly promises not to seek injunctions based on standards-essential patents, while pressing the European Commission to investigate Motorola for alleged anticompetitive use of its own portfolio, what it really means is ‘we do not agree with Motorola on what is fair and reasonable, we do not want to pay the license fees they are requesting, and we are hoping to deprive them of negotiating power in our dispute’;
4. when Apple’s Tim Cook says that the system for enforcing standards-essential patents is ‘broken’ and that patent disputes with other companies are a ‘pain in the ass’ that he wishes didn't exist, what he really means is ‘we are really happy about the patent system when it stops our competitors from copying our stuff, but we do not like it so much when they bite back’; and
5. when Twitter promises to introduce an Innovator’s Patent Agreement, which it calls ‘a new way to do patent assignment that keeps control in the hands of engineers and designers’, what it really means is ‘we know that Yahoo!’s use of its patents has really upset Andy Baio who’s, like, this really influential guy who might influence really clever engineers working for us, and we know that keeping these people happy is a great way to protect our own greatest assets’.

There is nothing wrong with any of this.  Business is business, after all.  But people with principled objections to the patent system do not have allies in any of these companies, even when they make statements that seem supportive of reform.

Political and moral opposition

There is not much to be done to specifically address the category of moral and political opponents, which includes organisations such as the various emerging Pirate Parties, the more strident members of the Free and Open Source Software (FOSS) movement, and the many individuals who have aligned themselves with such viewpoints. There are numerous sources of information and opinion – this blog included – providing facts and informed commentary supporting a contrary position, and everybody is entitled to their own opinion.

The main problem with politically-motivated opposition is that vocal and persistent lobbyists can have a disproportionate influence over decision-makers, even in democratic countries. A significant present example of this is the proposed exclusion of ‘computer programs’ in the current draft New Zealand Patents Bill. As we have noted previously (see Stakeholders Say ‘No’ to NZ Computer Program Exclusion), after a decade of consultation and development, this exclusion was added at the eleventh hour by a Commerce Select Committee following intense lobbying by representatives of the FOSS movement.

Despite a complete lack of any sound evidentiary basis for exclusion of software-implemented inventions from patentability, and subsequent submissions demonstrating widespread opposition across a broad spectrum of stakeholders, the current position is that the exclusion stands, with all formal opportunities for public comment and consultation having been exhausted prior to review by the Select Committee.

It seems likely that a similarly unfounded concern about the clout of a vocal minority opposed to ‘software’ and ‘business method’ patents is behind IP Australia’s current practice of rejecting many such applications. This is an extremely unfortunate outcome for the many innovative businesses who are directly impacted by the current policy of rejection.

The Electronic Frontier Foundation has recently launched a new campaign – rather grandly captioned Defend Innovation (as though there is any evidence it needs defending) – seeking support for a seven-point plan to scuttle software patents. Actually, two of the proposals – that unsuccessful patentees should be liable for the respondent’s legal costs, and that damages should be limited – are not only perfectly reasonable, but they are the way the system operates for all types of patents outside the US and, in our view, are a major part of the reason why the rest of us are not afflicted with patent trolls! However, most of the proposals are unworkable, not least because there is, and never will be, any agreement on what exactly constitutes a ‘software patent’ which should be subject to a unique set of rules and requirements.

The EFF campaign has been running for about two days now and, despite a flurry of initial publicity, has so far attracted only about 5200 ‘signatures’. We imagine that the EFF would consider this quite a disappointing start. However, we are not at all surprised that the actual level of interest is low, by people willing to add their real names and email addresses to their opinions.

As for objections to patents in other fields, such as genetic technologies, this is an area which would benefit from greater attention by the ‘defenders’ of the patent system.  For more on this topic see Why IP Professionals Must Take ‘Gene Patent’ Opponents Seriously.

CONCLUSION

Looking at the big picture, there is little evidence to support claims that there is anything fundamentally wrong with the patent system, that it is ‘broken’, or that it should be abolished or significantly modified in relation to any particular fields of technology.

The patentability of computer-implemented inventions, in particular, has over the years become something of a political hot-potato, largely due to efforts of a small but vocal (and largely online) minority.  Yet there is absolutely no evidence in Australia of any significant lessening of competition in software markets resulting from patents.  In the US there have been a handful of high-profile cases which appear to have raised disproportionate fears that small developers are vulnerable to patent infringement suits which will suppress innovation. 

And yet there does not appear to be any lack of software innovation occurring.  There are, for example, currently nearly 700,000 apps available for download from the US Apple App Store, created by over 160,000 active publishers.  If fear of patent infringement is slowing development, it is quite frightening to contemplate how many apps there might be without patents.  Always assuming, of course, that the iPhone and the App Store still existed and held such a dominant position in that patent-free world.

None of which is to say that the patent system cannot be improved.  Like any human endeavour it is not, and never will be, perfect.  We will pick up on that idea in the next article in this mini-series.

Tags: Business processes, Computer programs, Patents and society