Oracle vs. Google
Apple vs. HTC
Lodsys vs. App Developers
Microsoft vs. Barnes & Noble
Recent headlines are filled with cases of patent battles between technology and industry titans. It seems like more and more patent cases (and especially software patent cases) make the news every day. NPR recently did a fantastic piece in their This American Life program called When Patents Attack. It is definitely worth the time to listen to or read the transcript.
As a software engineer, I have to agree with many of my colleagues in the field that the patent system is broken. I have actually witnessed it firsthand to a certain extent. Several years ago I worked on a project for what my team thought at the time was a novel idea. After we had a working prototype, our company of course wanted us to look into patenting the idea. So I was tasked with doing some patent research. What I found kind of surprised me. It turns out, our idea wasn't novel. In fact, it had already been patented three times! Two of the patents were for recent years, but one of them was over a decade old. Ours wasn't a new idea, it was just one that hasn't been capitalized on yet.
Now the real question is how did the exact same idea get patented three times in the first place. Well, having read the patent applications in full (and they were quite lengthy) it was kind of easy to understand. Each application was filled with technical terms and legal mumbo-jumbo that made the applications nearly unreadable. Many of the claims in one patent used synonyms for terms in the other. When you boiled it down to layman's terms though, the patents were identical. Heck, with enough big words obfuscating what you really mean, you can patent anything (the When Patents Attack story mentions Patent 6,080,436 titled "Bread Refreshing Method", which is better known to the rest of the world as "toast").
In truth, to find the patents matching our idea it took some searching and using combinations of terms that were similar to the ones we used to describe our "novel idea." I knew which terms to use because I was familiar with the subject matter. In the case of the United States Patent and Trademark Office (USPTO), the patent applicant reviewers probably are not as familiar with the field and will be less likely to make the connection.
Something else I found while Googling for the patents were articles on the subject of our "novel idea." Some of these dated back well beyond a decade when the first patent was filed. Technically, these should have been considered as "prior art" since they described the same concept before the first patent application was filed. In all reality, none of the patents should ever have been valid. It is easy to understand how the first patent could have been granted. Back when it was issued, the USPTO probably didn't have the search capabilities to identify works of prior art (before the days of Google), but the subsequent patent applications should have turned up this prior art when they were being reviewed.
The point is, there are numerous patents that exist that are either identical or similar enough to be considered the same, and many of them probably aren't valid because they weren't novel ideas. These patents slipped through the cracks, but are now valid and are now viable weapons.
The NPR piece describes an arms race among patent holders. Apple and Google and Microsoft are amassing caches of patents to use "for defensive purposes." (updated: such as Google's announcement today to purchase Motorola and its 17,000+ patents). The NPR piece compares it to the term "Mutually Assured Destruction," which in nuclear terms means "if you nuke me then I'll nuke you and we'll both be destroyed." In patent terms it translates to "if you sue me because I infringe on your patent then I'll sue you because you infringe on mine." The idea is that if you hold enough patents that your opponent infringes on then they can't sue you because you can counter-sue them back.
That's not a healthy strategy for innovation and the patent system. One, it means that many patents are being cached not for their innovation value but instead for their litigation value. Sadly, the patents that are worth the most are really the least innovative ones: far reaching, overly vague patents that cover general concepts. Two, it means that smaller players such as small businesses and startups can't participate. Back to the nuclear analogy, it means that a country like San Marino (the startup of countries) better not try to build a weapon (product that may infringe a patent), or better pray it doesn't get noticed, because any of the bigger countries could take it off the map at any point.
There is one more problem with this patent approach: patent trolls (i.e. non-practicing entities). Patent trolls collect patents and use them for litigation or licensing, but do not build any products themselves. Which means all of their patents are offensive. Google can threaten Apple with a patent claim that Apple infringes on if Apple tries to sue Google for one of Apple's patents that Google infringes on. In the end, it could just be a stalemate. That doesn't work with the patent trolls. If a patent troll sues Google for patent infringement, there can be no counter suit since Google can't be holding any patents the troll is infringing.
Some people are calling for software patents to be abolished again (software could originally not be patented until a 1998 ruling, just in time for the original web gold rush). I think that once the software patent genie is out of the bottle, there's no turning back the clock to undo what was done. There are too many big established companies with too many lobbyists to let that happen. So the best we can do is reform the broken system and fix the problem going forward.
Part of the problem with the patent system seems to be that the USPTO is overworked and underfunded. A recent proposal called the "America Invents Act" helps to push some reform through the senate. One of the benefits is that there will be additional USPTO offices and that the USPTO will get to set its own fees and keep all of those fees (previously it did not set fees and only received a portion of them).
With that in mind, I have a few suggestions for how these fees should be set and how the patent system should be reformed.
First, raise the barrier to entry. It currently costs as low as $110 to file for a patent (non-refundable whether the patent is issued or not), and $755 if the patent is issued. Raise those values to $1,000 to file (non-refundable still) and another $1,000 if the patent is issued. This would probably cause the number of bogus or far-fetched patents to be lowered and improve the quality of the patents that are submitted. This would mean more money for the USPTO and hopefully fewer patents to review (leading to more thorough and better reviews).
Second, reduce the duration of the patents (at least for software and business process patents). Patents currently last 20 years from the date of filing. When the patent system was first formed, technology (like the cotton gin) didn't advance at nearly the rate that it does now. A 20 year monopoly in the software field is well beyond the useful lifetime of most software products. Five years, or at most seven, should be more than sufficient, if not still excessive for software patents. Can you imagine if Apple refused to license their multi-touch patents for 20 years? Only the iPhone would be able to pinch zoom for that long? That number needs to go down.
Third, raise the maintenance fees and make them annual. Currently, at 3 1/2 years it costs $490 to renew a patent. At 7 1/2 years that number goes up to $1,240, and at 11 1/2 it is $2,055. I propose that a more exponential scale be used.
Year 1: $1,000
Year 2: $10,000
Year 3: $50,000
Year 4: $100,000
Year 5: $500,000
Year 6+: $1,000,000
There would be numerous benefits to this approach. First, the smaller values initially would allow startups a few years to cement the patent and get something off the ground. Second, patents with lower value and less utility would probably not be renewed after a few years, making the technology available to other companies sooner. Companies would probably only pay the upkeep on their most valuable patents and the ones that differentiate them from their competition. Third, the patent trolls will have a hell of a time paying for the upkeep on the thousands of patents they are hoarding. Unfortunately, they would probably still pay for the broadest reaching patents they can use to sue with, but it would probably cause them to reduce their patent portfolios and their threat to small companies. Fourth...that would be one well funded USPTO! With that kind of money they could hire field experts to examine patents and have multiple reviewers for patent applications. The best possible solution would be to apply those fees starting when they change (i.e. next year if your patent is 6+ years old then there's a $1M cost to renew, only 2 years then it would be $10,000).
In addition to the pricing changes, the USPTO should provide an easy system for third parties to challenge patents. The America Invents Act actually is looking to implement this by providing a one year post-grant review period where third parties can submit prior art and challenge a patent. There are multiple benefits to this as well. One, it gives competitors a chance to defend themselves against a patent by striking it down early. Additionally, if the fees are upped as I mentioned above, then a lot fewer bogus patents will likely be filed. If an idea is not really new or radical and is likely to be shot down in the post-grant phase, the filer will be less likely to file the patent at all since they will lose out on the non-refundable application fee. This too would likely improve the overall quality of patents that are granted. The hard part on the USPTO is to make this fair for both parties, as large companies could easily file endless reviews against startup competitors and put pressure on them with already granted patents past the review period. The system will need to be affordable so that startups can defend themselves and file reviews as well.
What do you think?