What may have started out as a clever way to “turbocharge technological progress,” however, seems to have morphed into something closer to a Jersey City protection racket. When Intellectual Ventures came knocking on the door of tech companies offering to license its patents, companies began to get the sense that it was an offer they couldn’t refuse — and if they did, they might find themselves at the receiving end of a patent suit filed by Intellectual Ventures itself.
Indeed, by the end of 2009, Intellectual Ventures began suing companies for violating its patents. The first targets included Symantic, Dell, Hewlett Packard, Kodak and even Intel, reportedly one of its original investors. Also included were a number of those small entrepreneurial start-ups. And, as NPR discovered, Intellectual Ventures was sometimes doing it in a sneaky, underhanded way, acting through straw companies with no employees domiciled in empty offices in East Texas, where the federal court docket and juries have proved most receptive to patent suits.
None of this would be possible, of course, if all patents were as straightforward as those for a corkscrew or car battery. But products such as smartphones are a collection of thousands of little ideas and inventions, many that probably should never have received patents in the first place because they weren’t particularly new or original, or could have been “invented easily by anyone trained in that particular art.” Given the broad manner in which many of these patents were drawn, there are often several patent holders who could claim the same innovation.
To some degree, this has always been a challenge for the patent system, particularly with new technologies. Henry Ford and the Wright Brothers were involved in prolonged patent disputes. But it has been a particular problem with software or patents covering “business methods,” or the look and feel of a product or how it can be used.
Next month, after six years of hand-to-hand combat between various industries and industry sectors, Congress is expected to complete work on a patent reform bill that should help by making it easier to challenge a patent before it is issued, or immediately thereafter. And the courts have recently tightened up the criteria for the damages that can be awarded when patents are violated.
What is missing from the bill, however, is any attempt to narrow the range of what can be patented in the areas of software and business methods to reflect the changing nature of technology and innovation. That’s hardly surprising. The big companies that complain about abuse of the patent system are big patent holders themselves, with as much to gain as to lose from a restriction on what can be patented. The final bill is as much of a disarmament treaty as the business community would accept.
All of which means that the costly patent arms race is likely to continue until federal judges step in to stop it. It’s more than a bit ironic that a conservative Supreme Court majority that has done so much to slam the courtroom door on consumers and workers has left it wide open for corporate interests running a legal protection racket. If there ever was an abuse of the judicial process, this is surely it.