Thursday, 14 March 2013 00:00America’s intellectual and scientific vitality is being stifled, and billions of dollars a year sucked from unwary consumers, by something that can be fixed or improved by Congress. America’s copyright and patent laws were designed for a horse-and-buggy world. Parts of the system are out of control and we’re all paying for it more and more.
Copyrights and patents are authorized in the U.S. Constitution to encourage creation and invention by ensuring a reasonable period to make a profit. They were not intended to grant a perpetual monopoly on good ideas, whether it’s an important pharmaceutical or software or a better mousetrap.
Patents were meant to protect the guy building that better mousetrap in the garage or the basement. Instead, they are too often being used as bludgeons or as blackmail. After rejecting a buyout offer from a larger voice-recognition software company in 2008, Vlingo won the first of six questionable patent suits brought in retaliation, but had to sell to the competitor anyway. The $3 million in legal fees drained development resources and dried up prospects for additional financing.
Last year, it was big news when Apple was awarded $1.05 billion against Samsung for patent violations relating to its popular iPhone. In the U.S., Apple has been portrayed as a big victor, though it’s less than pocket change to either of these companies. Meanwhile, Apple lost to Samsung in British, Australian and Japanese courts, and there was a draw in South Korea. The countersuits, appeals and retrials continue, all for small nudges in market share.
For several years, the world’s major manufacturers of smartphones have been embroiled in the epic Smartphone Patent Wars, involving hundreds of lawsuits and countersuits, most designed to slow or block a competitor’s product from reaching the market. The end result is that nobody outside of the behemoths like Apple, Google, Microsoft, Nokia, Motorola and HTC will ever invent or try to invent better smartphones. They couldn’t possibly get financing because of the inevitable perpetual litigation. Ultimately, consumers lose, productivity loses, and ingenuity and entrepreneurship lose.
Last April, Microsoft bought 925 technology patents from AOL for more than $1 billion, then immediately sold rights to 650 of them to Facebook for $550 million. Just try even tracking all of that. No individual or small company can. Unsurprisingly, the only “reform” bills that have a chance of moving through this Congress expand our government’s obligation to protect corporate copyrights and patents, and severely punish violations—even those done to protect safety or in what most of us believe is the legitimate exchange of information.
The U.S. Patent Office has dealt with the avalanche by making it very difficult and expensive to get many types of patents (usually at least $25,000 in application and legal fees for starters). Big companies have platoons of attorneys navigating and negotiating the complex patent procedure. Good luck with that if you’re an independent inventor or a small startup.
How about that vacuum cleaner company advertising right now, bragging that its vacuum is covered by 200 patents?
Corporations pile up patents by the stack so that competitors and potential rivals second-guess themselves over the possibility of stepping on a patent and getting sucked into a legal quagmire.
There’s an entire industry built around this: The Patent Trolls. These are small law firms, sometimes little more than a name on a door, that load up on vague patents, often through mergers or bankruptcy auctions, and then sue legitimate firms for violations. They are out for settlements. In 2011, 40 percent of all patent lawsuits were filed by trolls.
This isn’t what the Founders intended, or what America needs.
Michael Miller is a freelance writer, designer and strategic consultant who has worked in state and local government. Email: email@example.com