Tuesday, March 21, 2006

Patent Madness

I read the other day about RiM settling with NTP to the tune of $612.5 million dollars! What was really shocking was that the patent that NTP was claiming is on it's way of being made invalid. And more shocking was that if the patent is made invalid RIM is still out the cash! That's a bunch of junk. If you are watching you know that eBay is now in a patent fight over it's Buy it now feature (a feature that I use in about 90% of the auctions I bid on). eBay has lost in a lesser court and at the end of the month will go before the Supreme Court.

In this editorial from the MercuryNews.Com it is stated that patent law needs to be changed to protect companies from greedy groups that only want to make money by abusing the current system.

Millions of e-mail addicts cheered the news earlier this month that a long-running patent lawsuit would not, after all, shut down the popular BlackBerry wireless e-mail service. But amid their jubilation, something noteworthy may have been lost: Research in Motion, which makes the BlackBerry, paid an astonishing $612.5 million to settle claims that it infringed on patents which were on their way to being declared invalid.

That's just one symptom of a patent system gone insane. Unless fixed, it'll continue costing technology companies hundreds of millions of dollars to settle questionable claims. It's money that could be better spent delivering innovation, economic value and consumer benefits.

Patent laws were created to give innovators a chance to turn their ideas into money-making enterprises. But in the past two decades, an understaffed and overworked U.S. Patent and Trademark Office has granted far too many patents. Many are for ideas that are overly broad, vague and often far too obvious to deserve protection. And once granted, patents are extremely hard to invalidate.

That has sparked a cottage industry of firms whose only business is filing patent petitions and enforcing those patents. Armed with newly acquired and frequently questionable patents, they go after firms -- often technology companies -- whose real innovations, they claim, ``infringe'' on their patents.

The patent ``trolls,'' as tech firms like to call them, have gotten a huge assist from the courts, which in most cases automatically grant injunctions to stop patent infringers. That gives patent holders a sort of ``nuclear option'': They can threaten to shut down an entire product line or business service if even a tiny part of it is found to infringe their patent.

What's more, patents that are challenged and are found to be invalid by the patent office remain enforceable until the patent holder exhausts all appeals -- a process that can take years.

The patents at issue in the Research in Motion case, for example, had already been declared invalid by the patent office. Yet the company still faced the threat of a shutdown and chose to pay an exorbitant sum to avoid it. Most firms settle much earlier, and often quietly, rather than face costly litigation and uncertainty.

The U.S. Supreme Court will have a crack at restoring some sanity into this system as early as this summer in a case involving eBay. The online auctioneer is making the case that judges should not automatically grant patent holders injunctions -- and rightly so. Nothing in the law says they must, and a ruling in eBay's favor will go a long way toward leveling the playing field between innovators and patent extortionists.

Completing the job is Congress' task. Lawmakers should consider reforms to improve the quality of patents, make questionable patents easier to challenge and ensure that penalties fit the damage caused by the patent infringement.

The cost of not fixing the system is clear: a hefty and hidden tax on the innovation economy.

posted by David at 8:12 PM :: Permalink ::

Comments on "Patent Madness"


Anonymous Anonymous said ... (06 February, 2007 14:17) : 

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