Last month, Google announced plans to acquire Motorola Mobilityfor $12.5 billion. One would think this union of two legendary innovators would occasion some reflection on America’s history of technological achievement. Instead, reporters and investors honed in on a single asset that made Motorola attractive to Google: its 17,000 patents.
Google isn’t interested in Motorola’s patents to create new products, but to protect its existing products against lawsuits from other companies. Something is wrong here.
Patents are good things. They are important enablers of investment in new technologies and processes. But let’s not kid ourselves. From the calculus to the telephone, a shocking percentage of major scientific and technological innovations were created independently by two or more people at approximately the same time. In information technology, any significant product is a bundle of dozens or more ideas. Moreover, successful technology innovations are usually as much a function of timing and marketing as technical acumen.
Yet if the legislature that defines patent rights, the U.S. Patent & Trademark Office that reviews applications or the adjudicators that hear claims don’t strike the proper balance, the tax on actual innovations can grossly exceed the added incentives for new inventions. Abundant evidence exists that all of those institutions are wildly imperfect.
A patent is an incredibly powerful competitive weapon. In certain IT markets, patent litigation is becoming a preferred tactic of competitive business warfare. Take Oracle’s lawsuit against Google over Java. Multimillion dollar damage awards are becoming commonplace. Virtually every smartphone vendor is suing each other. Venture capitalists fret that patent litigation will torpedo small companies that have neither the time nor the resources to defend themselves.
What can be done to tip the balance back toward innovation?
Reduce the scope of patentability. Software isn’t patentable in Europe, and business methods aren’t patentable in many countries.
Split patents into industry categories. Trademarks are divided by industry category. Why not patents?
Limit injunctive relief. The threat that a court will shut down another business gives patent holders too much leverage and is not necessary to redress the harm of patent infringement.
Crack down on abusive practices. Let’s have much greater disclosure of patent portfolios and ownership.
Improve patent quality. Create a “gold plated” patent, with stronger protection in return for a more searching review process, coupled with better processes to re-evaluate poor patents and to leverage crowdsourcing techniques to find prior art.
Let the patent office do its job. The U.S. Patent & Trademark Office easily pays for itself through filing fees. However, Congress appropriates its budget. This political process starves it of the resources for good examiners. Have the patent office run as a nonprofit business that must get to break-even but otherwise does whatever it takes to serve its mission.
The biggest impediment to patent reform is conceptual. We need to recognize that patents are not the same as innovations, any more than a copyright is the same thing as a great story or song. If the current design of patents is failing to promote IT innovation, let’s muster the courage to change it.