[Linux-aus] BBC report on American FTC criticism of patent system

Arjen Lentz arjen at mysql.com
Fri Jun 4 09:20:02 UTC 2004

FTC says patent system breeds misuse and "anti-competitive" behavior, Google
and eBay complain about litigation costs due to "patent trolls".  FTC calls
for reform of patent system.  This is great stuff during the ongoing EU
legislative process.

Link and full text below.


Technology industry hits out at 'patent trolls'
By Maggie Shiels 
In California  

Mad cap patents ranging from protecting a method of painting by dipping a
baby's bottom into paint or a system for keeping track of people queuing for
the bathroom may soon be a thing of the past if the Federal Trade Commission
(FTC) has its way. 
Patent wars are not so much about leaked secrets 
Such patents, while humorous, clearly show both how broken the American
patent system and how lax standards are hurting innovation when it comes to
business, the Commission says. 

"The intellectual property system was designed to create incentives for
people to innovate by giving them, for want of a better word, a monopoly on
their ideas for a certain period of time," FTC commissioner Mozelle Thompson
told BBC News Online. 

"But we have seen instances where companies use that monopoly in an
anti-competitive way, sometimes to prevent other products from getting to
market, to prevent people from sharing ideas and to prevent the kind of
innovation that the patent system is really trying to spur on." 

Industry backing 

Google executive Kulpreet Rana, who looks after intellectual property issues
at the internet search firm, backs the need for reform because he believes
the present system makes it difficult to make good business decisions. 

FTC's Thompson and Ebay's Monahan agree that reform is needed 
"The ambiguity and lack of quality that we currently have really mainly
favours those who want to use patents as a tool for harassment," he says. 

"The system, because of the way it works right now, is fairly easy to

A host of industry leaders are in unison, as is made clear by a recently
formed technology industry working group that will concentrate on making the
patent system more responsive to technical innovation. 

Top tier executives from Cisco, Intel, Ebay, Symantec, Chiron, Microsoft and
Genentech are taking part. 

Cash needed 

Part of the problem is a shortage of money. 

The National Academy of Sciences is calling for more funding for the patent
office where 3,000 examiners handle 350,000 applications a year with an
average of 17 to 25 hours to check on the validity of a patent application. 

Businesses claim a lack of due diligence at this stage often results in
patents being granted that should not see the light of day. 

Indeed, academic studies have shown that half of all issued US Patents
should not have been approved and the Patent Office ultimately greenlights
over 95% of all original applications to issue as a patent. 

This compares with 65% in Europe or Japan. 

Patent trolls 

An added problem is the growth of so called 'patent trolls' who can be
likened to modern day highway robbers cashing in on the problem. 

Google's Rana: The system is easy to abuse 
These are lawyers and investors who buy cheaply or assume control over paper
patents, mistakenly granted largely to failed companies, explains David
Simon, computer firm Intel's chief patent counsel. 

The trolls can use these patents to threaten to shut down the entire
computing industry with a court order injunction, no matter how minor the
feature that has been patented is. 

Mr Simon cites one case where a patent troll claimed a patent they had
bought for about $50,000 was infringed by all of Intel's microprocessors
from the Pentium II onwards and that they were seeking $7 billion in

In the end, the case was thrown out by the court, but it still cost Intel
$3m to fight it, Mr Simon says. 

"This has become more and more prevalent because people see it as a very,
very profitable business model." 

That is because the only thing the trolls have to lose is their patent,
which typically they have a very low investment in. 

"If you are going to trial as a big company, you are risking having a court
enjoin you from selling your products. That's a serious risk you have to
consider so it's probably cheaper to pay them a hundred thousand dollars
than to fight them," says Mr Simon. 

Patent experts put the cost of litigation at $2m per party per case. 

Ebay too has come to think of the patent trolls as "an unfortunate cost of
doing business", says Google's litigation and intellectual property
professional, deputy general Jay Monahan, 

Mr Monahan has seen the number patent problems for his company grow
steadily, including one for infringing a Virginia man's patent of selling
auctioned items at a fixed price, he says. 

"It's driven eBay's costs up and it diverts time and resources from building
the world's greatest ecommerce platform. There are dollars spent on
lawyers," he says. 

"There's also an impact on diverting in-house legal staff, engineers, people
at all levels to produce documents and sit for depositions. Our approach to
this point has been to vigorously defend ourselves against these claims and
not to pay ransom money if you will." 

The FTC's proposals to change the system have been on the drawing board for
over a year. They include a new administrative procedure to challenge a
patent's validity without having to go to law and limiting the awards of
treble damages. 

The last major changes to patent law were in 1952 and there is no
legislation before Congress which means that ideas like a patented method
for picking up a box by bending your knees may well continue for some time. 

[end of article]

Arjen Lentz, Technical Writer, Trainer
Brisbane, QLD Australia
MySQL AB, www.mysql.com

Sydney 18 Oct 2004 (4.5 days): DBMS Introduction Training
Training,Support,Licenses,T-shirts @ https://order.mysql.com/?ref=marl

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