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July 31, 2007 More Patent Nonsense (permalink)
Thus, Ted Clark, senior vice president and general manager of the Notebook Business Unit, Hewlett-Packard (1 page pdf) writing for the hometown Houston Chronicle Throwing his support behind the Patent Reform Act of 2007, Mr. Clark warns "If our patent system isn't updated, the consequences could be loss of innovation and jobs." Loss of innovation and jobs? According to U.S. law (35 USC 101) patents may be granted on "any new and useful process, machine, manufacture, or composition of matter, or any new and useful improvement thereof." Patents and innovation go hand in glove. As of this Tuesday past, USPTO records indicate that Hewlett-Packard has received a total of 17,804 U.S. Patents. Since 2000. Hewlett-Packard has more than doubled the number of patents it receives from the U.S. government. Hewlett-Packard, the company that attaches the word "invent" to it's Trademark - has been among the top ten orgainzations receiving U.S. patents for more the letter part of a decade. It would appear that HP is more innovatiove than ever, so it is somewhat curious that Mr. Clark argues that the "PRA would also address the need for effective and timely methods for patent review that will weed out bad patents in the system and cut down on need for immediate litigation." Would this result in fewer patents being issued to HP? Or is Mr. Clark, like his colleague Bruce Sewell at Intel, concerned about his employer's bottom line?
The cost of infringement is going up. But isn't this expected? In industries where profits are derived from intellectual capital, intellectual property rights (IPRs) play a more dominant role in the realisation of these profits. There is certainly an abundance of empirical evidence to indicate that IPRs are assets of increasing business value. Isn't it to be expected that the cost of infringing these IPRs should also go up? As a technology aggregator, HP's products contain hundreds, if not thousands of inventions, patented by dozens, scores, or even hundreds of companies. There is a fragmentation of patent rights (self-link) in complex technologies which places pressure on the traditional approach to patent law. Reform may well be needed, but it is questionable if the Reform Act of 2007 addresses this problem in the right way. What is certain is that opaque corporate advocacy does little to advance the debate. Conflating the problem of "bad" patents with the high cost of infringement, as Mr. Clark does (and previously Intel's Bruce Sewell did) is misleading. The threat to big business, like Intel, comes from legitimate patents, duly and properly issued by the USPTO (and other patent offices.) Multi-billion dollar damage awards result from the refusal of infringers to accept a license when it is offered. (self-link) What the PRA does is make it significantly less expensive to infringe legitimate, useful patents. Whether this makes sense in the Knowledge Economy is something that the U.S. Congress must soberly consider.
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