Technology has changed the world of patents

Apple has just suffered a major legal defeat against Samsung in its patent battle. That’s good because Apple’s claims were frivolous; his patents were questionable; and its use of litigation to retain a competitor set another bad precedent for the industry. Due to these patent wars and patent trolls, tech companies are giving away huge resources to defend themselves rather than advancing their innovations. It is the equivalent of a nuclear arms race and it is a lose-lose situation.

Apple and Samsung have been at war over patents for many years. In the final round in 2014, a jury ordered Samsung to pay Apple $119.6 million in damages for infringing on three Apple patents. These were not game-changing innovations; these were simple and common smartphone features. One patent described how to turn a phone number into a clickable link, another protected the “slide to unlock” feature, and another was a slightly different way to automatically correct spelling.

A three-judge appeal panel agreed with Samsung that there was substantial prior art for the first two patents and that these should never have been granted. They also concluded that Samsung did not infringe Apple’s autocorrect patent.

If reason prevails, this move will end the smartphone patent war. The best for innovation is a thriving ecosystem where companies build on each other’s ideas and constantly reinvent themselves, instead of trying to slow each other down in court. It’s bad enough when big, deep-pocketed companies go head-to-head, but for start-ups, lawsuits can be fatal. Newbie innovators have to live in constant fear of some big guy or patent troll pulling out a big gun and bankrupting them. For startups, that’s a bigger concern than someone stealing their ideas.

This raises a larger question: do we even need patents in an age where technology is advancing so rapidly that it renders entire computing platforms obsolete in less time than it takes to obtain a patent?

Stanford Law School professor Mark Lemley, who is my colleague, says that when used correctly, patents can be valuable because they generate real technology transfer. But patent litigation, such as that which Apple has resorted to, rarely does the world any good. Said Lemley “in this case, they spent years, countless court resources and literally over a billion dollars in attorney and expert fees to produce a net award of $158,400 – and ironically, that went to Samsung.” He notes that in an earlier case, Apple won a significant amount of money that it may or may not keep depending on Supreme Court rulings. “Other than that, not much has changed as a result of the trial,” he concludes.

In a new paper, “Patent Licensing, Technology Transfer, & Innovation,” which Lemley co-authored with Robin Feldman of the University of California, Hastings, the key finding was that patents are only useful when they provide consumers an innovation they wouldn’t otherwise get. This happens in the pharmaceutical industry when a company is allowed to exclude competitors for a specified period to recoup its considerable investment in research. Value is also created when a university transfers know-how with a patent and when an infringer copies the patent holder.

If a patent does not allow innovation to reach consumers, it does not help society.

Lemley and Feldman found that patent litigation and license applications for existing patents only occur after the defendant has developed and implemented the technology, especially when patent trolls are involved. And they cite several studies that show that patent trolls now account for the majority of patent lawsuits that are filed.

This means that apart from university technology transfer, hardly any innovation is created by technology patents. Therefore, it might be better to abolish them, especially software patents – which have long clogged up the patent office.

Universities are very defensive about patents; they argue that they need it to protect their ideas and inventions. This may be true, but it leads to another question: Should universities benefit from licensing revenues obtained through publicly funded research? Whatever the answer, for the larger cause of innovation, it is clear that patents do not serve the purpose for which they were intended. The oft-cited defense of patents, that patent rights encourage inventions that would not otherwise occur, is no longer grounded in reality.

Patents were created by the founders of the United States for one purpose: “to promote the progress of science and useful arts, by guaranteeing for limited periods of time to authors and inventors the exclusive right to their respective writings and discoveries”. Patents were very important when technology moved very slowly and required the kinds of investment and protection that medical discoveries and pharmaceuticals provide. And there may be rare cases where unique software algorithms require protection. But all of this can be achieved through copyright laws and trade secrets.

In this era of exponentially changing technologies, the only protections that really matter are speed to market and technological obsolescence. The underlying technologies evolve so rapidly that by the time a patent is filed, it loses its innovative value.

© 2016 The Washington Post


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