SFGate035

Our Wacky Patent System And its perilous, toothless reform


Hal Plotkin, Special to SF Gate
Thursday, December 23, 1999

URL: http://www.sfgate.com/cgi-bin/article.cgi?file=/technology/archive/1999/12/23/patents.dtl

Back in 1912, a New York inventor named Arnold Zucker won a patent for a new device designed to prevent people from sleeping through the sound of a burglar alarm.

Zucker’s invention, described in his patent application, could be attached to any door or window “in such a manner that the opening of the door or window produces an alarm in the form of a water spray, which is above the bed occupied by the person to be awakened.”

Gee, why didn’t I think of that?

That’s just one of the gems you can find at the Wacky Patent website.

The site features an archive of patents from inventors who were hoping to corner the market on everything from sunglasses for chickens to glass caskets that “hermetically seal” the dearly departed “in a life-like condition.”

As silly as that sounds, the fact patents were issued for such devices illustrates one of the strengths of the U.S. patent system: virtually anyone, no matter how outside the mainstream, can obtain a patent for just about anything, as long as the idea isn’t “obvious” and has not been previously “known or used by others.”

The formal patent system dates back to at least 1790. It’s arguably more responsible for the spread of capitalism than any other single U.S. government entity, save perhaps the Securities and Exchange Commission.

The system’s crowning glory has long been the way it protects inventors of whatever stripe or standing. Patent owners, however humble, get twenty-year monopoly rights to whatever they invent. After that, others can legally knock-off their products.

In more recent years, though, a growing chorus of executives, mostly at large multinational firms, have been claiming the current patent system has run amok.

The critics say the patent office is doing a poor job of keeping up with the latest in technology. Patent examiners, they say, have been overrun by more applications than they can competently handle, don’t check the claims of applicants carefully enough and routinely issue inappropriate patents that lead to cumbersome, costly, and time-consuming litigation. As a result, the push is on to loosen certain patent protections.

That solution, however, could create some even bigger problems.

Weaker patents would remove a key incentive that fosters the creative impulse. If it gets easier to rip-off inventions, we may well see fewer of them. And without innovation, the economy would stagnate. If that happens, all businesses will be hurt, including the multinationals now pushing for patent reform. It’s a classic case of the cure being worse than the disease.

Those seeking to change patent law, however, claim the time has come to overhaul the system.

They point out that it took the patent office nearly eighty years to issue it’s first one million patents. The last one million patents, in contrast, were issued in one tenth that time. Overall, 161,000 patents were issued last year alone in response to the roughly 250,000 applications that were received.

Many of the most recently-awarded patents are helping to drive the push for patent law reform. Often, they’re being won by claim-stakers working the Internet’s uncharted terrain who are patenting ideas that don’t contain very much in the way of genuine, original thinking. Instead, scores of recent Internet patents are aimed primarily at cutting others off at the pass, in some cases by seeking to stop competitors from doing things online that are common, and not patentable, in the off-line world.

The result, critics say, are an increasing number of patent disputes that are inhibiting growth, progress and innovation, the exact opposite of the system’s intended goals.

Take, for example, the current Priceline.com patent dispute. The company claims to have a legitimate patent on the “name your own price” method of selling airline tickets and hotel reservations. Priceline is now engaged in litigation designed to prevent other companies, including Microsoft, from horning in on its act.

Critics say the Priceline.com patent is not just inappropriate, but absurd. Anyone who has ever visited a merchant south of the Rio Grande knows that the idea of naming your own price for something is about as new as the world’s oldest profession.

Nonetheless, Priceline.com got the patent.

The people really laughing, though, are the lawyers on both sides, who are now litigating themselves silly.

Priceline.com isn’t alone in pulling the wool over the eyes of compliant patent examiners.

I routinely see business plans from would-be entrepreneurs who claim to have patents for everything from warm milk to complicated systems for verifying identities online. More than a few unsophisticated investors have been duped into pumping hard-earned money into some of the more dubious of these operations only to find out, after all their money was gone, that the patent that attracted their attention was unenforceable.

At its worst, patents can be just another form of legal extortion. Companies sometimes pay-up to the owners of dubious patents for the same reason mom-and-pop shop owners pay off the local Mafia. It isn’t right. But it’s often the least expensive alternative.

Some of the self-described reformers say the way to fix the problem is to bring U.S. patent laws into conformity with those in other countries, principally Europe and Asia, where it’s often harder to enforce certain patent rights. If that happens, those concerned with over-reaching U.S. patents, particularly multinational firms, would have less to worry about.

In response, last month President Clinton signed a bill supported by those working to change the patent system. The bill did not contain all of the reforms currently being sought. But patent reformers see it as a step in the right direction.

The opponents, somewhat surprisingly, came mostly from arch-conservative circles, such as anti-feminist Phyllis Schlafley’s Eagle Forum, which labeled the bill’s provisions a sell-out of inventors and small businesses in service of the corporate aristocracy.

The right-wingers are particularly galled by what they see as a drift to Internationalism. They don’t like the idea of weakening U.S. patent laws in ways that are similar to how business is done in some other countries. If the world wants to sell in our market, they say, then it should play by our rules.

Conservatives, however, aren’t the only opponents. 25 Nobel Laureates have also signed a letter objecting to weaker patent laws.

The bill nonetheless sailed briskly through Congress, aided by the kind of broad bipartisan support typical of many causes backed by big business.

Champions included leading republicans, such as Clinton impeacher Henry Hyde, along with many members of the Silicon Valley-centric Bay Area congressional delegation, such as representatives Anna Eshoo, Tom Campbell, Zoe Lofgren, Tom Lantos, and Ellen Tauscher.

One key issue included in the legislation deals, at least in part, with something called “prior user rights” or “first inventor rights.” The new legislation changes the balance of power in cases where someone claims to have been doing something before someone else was awarded a patent on that activity.

Patents, of course, were always subject to challenge in court. But up until recently, patent holders usually held a trump card: the legal right to restrain others in the marketplace while the matter was being settled.

The law just signed, however, makes it easier for businesses to ignore certain patents with legal impunity, in particular those that have been awarded for “methods of doing or conducting business.”

In simple language, that means someone who claims they were using an idea before it was patented is exempt from paying royalties to the person who owns that patent. As a result, the burden to prove the legitimacy of a patent is shifted more squarely onto the owner of the patent.

Court cases can and no doubt will continue to be fought out over such issues. But the new law means that some patent holders will find it harder in the future to keep their boots on the necks of their adversaries during settlement negotiations. The patent holder still has their patent. But the document has lost some of its bite.

Another bill, still pending, would extend the provision that weakens patent protections beyond business methods to actual products and services.

While the recent patent law change is probably good news for those hoping to protect the Internet from a growing scourge of debilitating patent skirmishes, there are also likely to be some unintended consequences.

The danger, of course, is that not all patent-owners are created equal. The Hewlett Packards or Intels of the world probably won’t have too much trouble paying for the lawyers they need to protect and enforce any legitimate patents they may hold.

But most lone inventors, arguably the lifeblood of the high-tech economy, usually don’t have access to the same quality and quantity of legal talent. The technology industry, and the economy that depends on it, could suffer mightily if patent owners find it increasingly more difficult to exercise their rights.

The venture capital community, for example, would probably have little interest in pouring millions of dollars into companies that don’t have the exclusive right to do anything in particular.

Striking the right balance between these competing needs takes wisdom that might not be found in Washington.

Like our justice system, current patent law is all too prone to abuse.

But we may wake up one day to discover that, as bad as they sometimes were, wacky patents were preferable to the new toothless variety.

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