OCTOBER 24, 2012
The debates of campaign 2012 are over, and the candidates never really got around to talking tech policy. It’s just as well, since they agree on most of the issues. In position statements sent to the New York Tech Meetup, Barack Obama talks more about open government data and crowd funding, while Mitt Romney repeats lines on cutting taxes and regulation and going after China. But both hit on the importance of bringing in more highly skilled immigrants, investing in research, and beefing up science education to fuel the tech economy.
And yet, the candidates have been essentially silent on the most pressing, damaging, and fixable problem the industry faces: the patent system.
The United States’ regime for protecting intellectual property, especially in the nebulous and rapidly evolving world of software development, has turned into a farce. Instead of encouraging innovation, it’s incentivizing companies to waste time and money bludgeoning each other with patent lawsuits that might otherwise be spent coming up with better products. That’s not just a problem for tech companies’ profit margins—it's also a massive disservice to consumers, who pay more for less choice. The only people who benefit from the current system are lawyers. And it’s crying out for an overhaul.
How bad off are we? The New York Times laid out most of what a president would need to know a couple weeks ago. The number of patent lawsuits filed has almost tripled over the last two decades, as big companies claim broad title to business models, algorithms, and basic attributes like the iPhone's rounded corners and pinch-to-zoom feature. They’ll even buy entire portfolios of patents they didn’t come up with themselves, purely for the purpose of beating up rivals. $20 billion has been spent over the past two years on patent purchases and litigation in the smartphone industry alone, adding about a 20 percent “innovation tax” on new products. Last year, for the first time, Google and Apple spent more buying patents and defending them in court than they did on research and development, according to their SEC filings.
And then there are the trolls, who stockpile patents solely for the purpose of winning judgements from companies that may not even have known they were infringing in the first place, because the patent office’s records are so tangled and difficult to understand. Last year, that cost the economy another $29 billion.
Obama boasts of already having signed patent reforms into law. The America Invents Act will make some important tweaks starting next year, like allowing people to challenge a patent before it’s granted. But—having been dramatically weakened by pharmaceutical industry lobbying—it won't do much to cool the nuclear arms race, or put trolls out of business, or recognize that software patents are different from drug patents and probably shouldn't enjoy the same level of protection in the first place. Now, companies are just trying to manage the cost, either with Twitter’s defensive patent license or by signing up for a service that acquires patents and promises not to use them as weapons.
There are lots of good ideas out there to solve the problem more comprehensively. A few of them would require tangling with Congress again: Capping lawsuit damages, making patents expire sooner, protecting people who came up with ideas simultaneously, making litigants pay all of their opponent's legal fees if they lose, or preventing would-be litigants from taking their case to a friendly court in East Texas can only be done through the legislative process. But some helpful steps, like making sure the patent office publicizes new applications and brings its archives into the 21st century, can be taken through executive fiat. And of course, the next president will have the chance to appoint a few federal circuit court judges, who could do a world of good just by adhering to the letter of a law passed in 1952 that’s supposed to prevent patents from being granted for an entire function, rather than the specific innovation that enables it.
That’s all assuming we need software patents at all—even appointing a commission to examine whether they could be scrapped entirely would be valuable. You’d encounter opposition from some of the big fish that own them, sure, but you’d also find some powerful friends like Google, which has said they’re “gumming up the works of innovation.”
I get it, this stuff doesn't score points in a TV debate. But a presidential candidate should definitely have a solid understanding of how he'll fix the rules, or at least recognize that we still have a problem—even if it’s just in a letter to the people who care about it most.