Patent Stampede
as Firms try to lock down new
technologies, critics say the
process has become too lax
Tom Abate, Chronicle Staff Writer
sfgate.com Monday, October 18, 1999
Digital music became one of this year's biggest
Internet success stories after several firms started
selling Walkman-like devices that let people listen to
digital tunes without sitting at a PC.
So it came as quite a shock this summer when a tiny
Cupertino firm called Audiohighway.com said it had
a patent on portable digital music players -- and
promptly informed all the companies making such
devices that they'd either have to pay it royalties or
quit peddling their wares.
``That would be like Ford saying that since he
created the first car, nobody else can build cars,'
Ron Moore, general counsel for Milpitas' Diamond
Multimedia, one of the device-makers, said in July.
Actually, a patent can do just that. Patents confer a
20-year, government-sanctioned monopoly over a
given technology. Patent holders can stop anyone
else from using an invention, or grant licenses in
return for royalty fees.
The Audiohighway flap is just one example of the
brawls that are erupting in every technical field --
software, hardware, e-commerce and
biotechnology -- as firms persuade the U.S. Patent
and Trademark Office to grant them exclusive rights
to new technologies. Questionable patents can stall
the pace of innovation and competition in an
industry.
Patent disputes aren't new. But critics say the
lightning pace of innovation, the increasing
complexity of inventions and the financial stakes of
patent ownership make it tougher for the patent
office to perform its traditional role -- deciding who
invented what first. Seth Shulman, author of
``Owning the Future,' a book about the patent
process running amok, argues that the Patent Office
is granting so many questionable patents that it may
be impeding progress instead of promoting it.
``Patents are being misused to gain ownership
claims over broad conceptual terrain that used to be
freely shared,' Shulman said.
His favorite example is the eye doctor who patented
a type of cataract incision and tried to stop other
surgeons from using it. ``What's
next,' he asked rhetorically, ``a patent on the
Heimlich maneuver?'
The loudest complaints of so- called patent abuse
have involved Internet firms. Travel auction site
Priceline.com made headlines for patenting the
practice of letting people name the price they
wanted to pay for goods and services.
Critics said it never should have gotten such a
patent, but the bigger surprise was that Washington,
D.C., attorney Thomas Woolston said he got a
patent on the same idea -- 17 months earlier.
Companies that get controversial patents are
understandably defensive. ``Some people see us as
`Johnny-come-latelys' but they're wrong,' said
Audiohighway co-founder Grant Jasmin. It was
1994 when his company created the Listen-Up
Player, a device to download digital music over
phone or cable lines and play it back.
Audiohighway applied for a patent in 1995. It was
issued in June.
Audiohighway never sold many of its Listen-Up
Players, which used proprietary software to digitize
music, and ceased selling the device in 1998. That,
ironically, is roughly when the new crop of portable
digital players began to appear -- using the free,
MP3 software for digitizing sound and using the
Web as the download path.
Now it will be up to the lawyers and the courts to
decide whether Audiohighway's patent is
enforceable. Meanwhile, similar disputes seem in
the offing. Last month, for instance, DoubleClick of
New York revealed that it had a patent on
delivering ads over the Internet, which could affect
every one of its rivals.
At the center of the controversy is Todd Dickinson,
whose role as acting commissioner of patents and
trademarks makes him the middleman in a perpetual
tug of war. Patent filers like Audiohighway urge him
to expedite certifying that their ``inventions' are
novel, useful and nonobvious -- prerequisites for
obtaining a patent. But every time his office makes a
controversial call, critics charge that it is just rubber-
stamping outrageous claims.
``Are we perfect? No. Are we doing a great job at
keeping up with a tremendous increase in the
number and complexity of patent applications?
Absolutely,' Dickinson said.
Between 1997 and 1998 alone, applications soared
13 percent, as 243,062 wannabe inventors asked
the patent office to certify their claims. To keep up
with this workload, Dickinson is trying to hire 1,300
new patent examiners to augment the 2,000 already
on staff.
Filling these posts ain't cheap or easy. Michael
Kirk, executive director of the American Intellectual
Property Law Association in Alexandria, Va., said
patent examiners must be lawyers with advanced
degrees in engineering, software or biotechnology.
``I was at the patent office in the 1980s when the
first wave of biotech patents hit, and we had to hire
examiners to qualify them,' said Kirk, a former
assistant patent commissioner. ``We called in some
industry folks and asked, `How much would we
have to pay these people?' They came up with a
figure higher than the salary of the secretary of
commerce.'
No one would argue that patents have become the
ticket to riches in our high-tech economy. And
American history is replete with stories of inventors
like Thomas Edison or Alexander Graham Bell,
whose patented inventions spawned corporate
giants like General Electric and AT&T.
But it's less well known that patents fell out of favor
in the decades between the 1940s and the 1980s.
The number of patents issued each year stagnated
or grew slowly, at best.
John Lynch, a veteran patent attorney in Menlo
Park, said the reason was simple: The federal courts
basically were unfriendly to patent- infringement
cases. Trials were argued before federal judges,
who made stingy damage awards. Even worse,
appellate courts across the nation routinely reduced
awards or dismissed infringement cases -- making
patents into paper tigers.
In 1982, however, a procedural reform had
far-reaching implications for patents. The courts
ordained a single group of judges in Washington,
D.C. -- the Court of Appeals for the Federal
Circuit -- to hear all appeals in patent cases. It
became, in essence, a mini-Supreme Court for
patent law and began upholding patents.
This patent-friendly appeals court also helped
expand the definition of inventions to include things
like strands of DNA, software -- during the early
days of the PC revolution, no one dreamed of
patenting software -- even business processes like
conducting reverse auctions over the Internet.
The market got the message. Patent applications
began rising in the mid-1980s and have been
ballooning ever since. The Patent Office received
243,062 applications last year, more than twice as
many as it fielded just 15 years ago.
Kevin Rivette, chief executive of Aurigin Systems in
Mountain View, said the changes in patent
behavior, sparked by the court reforms, have made
U.S. high-tech and biotech startups the envy of the
world.
``When entrepreneurs are trying to raise venture
capital, the first question they get is how they expect
to protect their market from bigger competitors,'
Rivette said. ``A patent is the best answer.'
Rivette's firm sells software to help companies plot
their patent strategies. He also co-authored a new
book, ``Rembrandts in the Attic,' that explains how
to make the most aggressive use of patents.
Rivette said that during past eras of innovation, like
the rise of the telegraph and electrical industries in
the late 19th century and the airplane and auto era
in the early 20th century, patent filings soared and
commentators complained that they would thwart
progress.
``What happens is that the Patent Office and the
courts eventually correct these imbalances,' Rivette
said.
But Bruce Alberts, president of the National
Academy of Sciences and a former University of
California professor, wonders if the current patent
fever differs from past outbreaks.
For one thing, universities have gotten into the
patent race. They used to be ivory towers, above
the commercial fray. Nowadays, professors file
patents, raise venture capital and start companies.
Alberts fears that this may encourage secrecy and
inhibit the free exchange of ideas, which traditionally
has helped advance science and innovation.
``We have patent laws for the purpose of
stimulating technological discovery,' Alberts said.
``What we have to ask is whether our current
intellectual property policies are still appropriate
given the tremendous changes in technology.'
The National Academy of Science will convene a
meeting of 30 experts tomorrow at the University of
California at Berkeley's Boalt Hall to begin mulling a
question that will touch the central nerve of our
knowledge-based economy: Has the patent system
gone too far?
``Over the last decade, we've had a renaissance of
technology and prosperity in America driven in large
part by patented inventions,' said Yale University
President Richard Levin, an economist by training.
``At the same time, there's a concern we may have
gone too far and taken too many steps to protect
inventors.'
But even those who express such concerns are
leery of tinkering with a system that has become the
envy of the world.
``I'm somewhat concerned the pendulum may have
swung too far toward valuing patents,' said Donald
Chisum, patent law professor at Santa Clara
University. ``But we're beating the socks off Europe
and Japan in part because of our venture financing
system, which is directly tied to patents.
``I would hesitate about an overreaction the other
way,' Chisum said. |
