Friday, March 11, 2005

Microsoft's Brad Smith on patent issues

from pcpro, on a speech by Brad Smith in Washington DC on March 10, 2005:

Microsoft says that in 2004 it filed around 3,000 patent applications to the U.S. Patent and Trademark Office (PTO). At the same time, the company's high profile makes it an obvious target for get-rich-quick patent holder. Smith notes that the company spends close to $100 million annually to fight an average of between 35 - 40 simultaneous patent lawsuits.

At the top of his mind will be the recent Eolas case where Microsoft was sued by a company [and by UCal/Berkeley] claiming to have the patent on browser add-ins. Although the tide now seems to be turning in Microsoft's favour [the recent CAFC decision], a jury had originally awarded Eolas damages of over $500 million and threatened to cause chaos across the World Wide Web. The PTO is now looking to re-examine the Eolas patent. [the PTO initiated a director-ordered re-examination over one year ago.]

Smith feels that in the US in particular 'it is too easy for a holder of a weak patent to look to a lawsuit as the ultimate lottery ticket'. He feels that the PTO is overwhelmed and cannot do a thorough job of examining patent applications and cope with the demand.

Smith notes, 'the issue of quality of U.S. patents is linked to the issue of quantity. The PTO has witnessed a tripling of patent applications since the 1980s, with more than 350,000 applications now filed each year. This dramatic increase has strained the resources of the PTO and imposed unreasonable demands on the PTO examiners.'

Smith says 'under the current system, one needs an army of lawyers to patent an invention throughout the world. For smaller companies and individual innovators who cannot afford to comply with the complexities of dozens of disparate national systems, this can present an insurmountable problem. We urgently need to reward innovation, not stymie it.' As a start Microsoft is proposing a 'zero-filing-fee system' whereby small inventors who qualify pay less or nothing to file a patent.

Smith also thinks that the world should at least make it easier to recognise each other's inventions. He suggests that as a start the three biggest patent offices, the US PTO, the European Patent Office and the Japanese Patent Office should recognise each other's reviews. Reasonable enough, although the recent European battle will does not bode well in getting an agreement on what actually constitutes a patent.

from techworld:

Microsoft also called for a patent system that is more accessible to small investors [sic: inventors(?)], and recommended that the US Congress end patent filing fees for small companies, non-profit groups, universities and individual inventors. "The system has to work for everybody," said David Kaefer, director of Microsoft’s IP Licensing Program. "It's only a system that works for the largest companies."

Microsoft and other tech companies have pushed Congress to end the diversion of patent fees from the patent office to the US government general budget, saying that the office needs more funding to evaluate the growing number of patent applications. The USPTO receives more than 350,000 patent applications per year, triple the number it received 20 years ago.

But ending patent fees for small businesses wouldn't have a major impact on the USPTO's budget because so few small businesses or individual inventors can afford the fees, Kaefer said. Patent application fees can run into the thousands of dollars. "Some people are more able to help finance the system," Kaefer said.

Many technology companies and trade groups have called for patent reform, after some Internet activists accused the USPTO of granting patents on technologies that were already widely used. One of the most publicised cases was in September 1999, when was granted a patent for its one-click shopping service. [Yet, the one-click patent held up in a district court proceeding and remains valid.] CEO Jeff Bezos later called for patent reform.

Microsoft, which holds about 4,500 patents worldwide and has another 10,000 pending, has been on the losing end of patent lawsuits. In July, a US court in California ruled that an ergonomic keyboard patent claim against Microsoft by TypeRight Keyboard could move forward. Earlier this month, an appeals court overturned a $520.6 million patent infringement judgment against Microsoft brought by Eolas. Eolas had sued Microsoft over a Web browsing patent and won its case in lower court in August 2003.

"While patents are a really important way to reward innovation, today we see a crisis of confidence in the US," Kaefer said. "At lot of people are asking, is the system as good as it could be?"

Kaefer, echoing a speech by Microsoft general counsel Brad Smith in Washington DC on Thursday, also called for Congress to look for ways to limit patent lawsuits. "It is too easy for a litigant to manipulate the US system and look to a patent lawsuit as the ultimate lottery ticket, hoping to confuse jurors with technical jargon that will yield the payment of a lifetime," Smith said.

Smith and Kaefer also recommended the US and other countries look at ways to "harmonize" patent laws. Conflicting patent laws cause problems for patent holders and technology companies, Kaefer said.


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