Most people probably don't think much about patent-infringement issues. But millions of Blackberry users got a wake-up call earlier this year when a patent lawsuit nearly shut down their wireless communication services. Though the lawsuit was ultimately settled for big money ($612 million), patent issues remain in the headlines and on the minds of many people determined to fix the system.
Stuart Graham, an assistant professor of strategic management at Georgia Tech, has conducted research for the National Academies of Science that has helped serve as a catalyst for the patent reform movement now gaining steam. "We're at the forefront of getting this policy initiative into the policy arena," he says.
Last year, Rep. Lamar Smith (R-Texas) introduced the Patent Reform Act, which could protect end users like Blackberry customers from losing the right to use disputed technologies until patent-infringement cases have been judged. As Congress continues patent-reform hearings, the U.S. Supreme Court is also weighing in on patent issues. Recently ruling that injunctions against alleged patent infringers don't have to be mandatory and are at the discretion of lower courts, the justices will consider a case in the fall that could set new standards for when an invention is too obvious to patent.
Part of the Patent Reform Act would make it easier to challenge granted patents, which many experts feel are being awarded too easily for simple concepts like "one-click" online shopping (now the focus of an infringement suit against eBay). "It's long been a concern that the only available mechanism available to challenge patents is the high-cost court system, where you have inexpert judges and really inexpert juries deciding technical issues," Graham says.
Many questionable patents are never challenged because obtaining a license or finding a way to work around the patent is considered the path of least resistance, he adds. "Our research suggests that there are too few challenges now, resulting in patents that give monopoly rights to people who ought not to have them, creating roadblocks in the innovation system," Graham says.
A better way than the courts to test the validity of patents would be to establish a post-grant review process like that employed by Europe, says Graham, who recently conducted the study, "Can Post-Grant Reviews Improve Patent System Design?" with Dietmar Harhoff of the University of Munich. In the European system, panels of expert technical examiners review challenged patents.
European post-grant reviews, which average about $19,000 (U.S. dollars) per side, cost far less than the $4 million spent in the typical patent lawsuit in America, where many individuals and small firms don't have the resources to mount a challenge, says Graham, who published the 2004 paper, "Prospects for Improving U.S. Patent Quality via Post-grant Opposition," in the journal Innovation Policy and the Economy.
In addition to instituting post-grant reviews in America, legislative reformers want to change the U.S. process for granting patents from a first-to-invent to the first-to-file system used by the rest of the world. "The current system lowers the incentive to bring inventions to the patent office and disclose them to the public, so that we can all learn from them," Graham says. "It rewards people to stick things on a shelf and collect dust. They're not worried because they know if somebody else comes along for a similar patent, then they can drag out their dusty invention. That doesn't do anybody any good."
Some people obtain patents without the intention of ever commercializing their inventions, instead planning on extorting settlements from other companies through patent-infringement lawsuits. Graham has studied how patent applicants often game the U.S. patent system through repeated use of the continuation procedure, allowing them to postpone the issue of a patent and keep their application secret. These "submarine" patents finally resurface once their technology has been widely adopted by others who had no idea a patent was pending, explains Graham, author of a chapter on continuations in the forthcoming book Intellectual Property Rights: Innovation, Governance and the Institutional Environment.
Though part of the American Inventors Protection Act of 1999 was supposed to solve abuse of the continuation procedure by requiring publication of patent applications after eighteen months, Graham finds that many applicants continue to exploit a loophole in the legislation: They don't have to disclose their pending patent as long as they claim they're not seeking protection outside the United States. "The practice has been and continues to be used extensively in several important technology sectors in the economy, notably pharmaceuticals and semiconductors," he says.