Comments from Steve Perlman
[Sorry to be late to this discussion (and likely missing the train). I'm on California time. This is a long response to many comments]
This article is essentially an interview, since there are no other views, either supportive or contrary to mine. But, I'm afraid the catchy headlines inserted by the author ended up sounding like he was either making light of my views or he thought negatively of them. I emailed him today and he said that was not his intention at all.
Patents DO need reform in the States, and some aspects of the Patent Reform Act I strongly advocate (like allowing a patent holder to choose a plaintiff-favorable court). So, let me clear up a couple of things up, and then offer comments.
- Only this article has referred to me as "Mr. WebTV". I'm better known for leading the Apple team that developed QuickTime, but WebTV was one of my startups, and when Microsoft acquired WebTV I became a Microsoft Division President and got a deep perspective of a big tech’s view of patents. (And…we never sought to patent Web on TV. Indeed, we were inspired by successful interactive TV systems like Teletext in the UK.)
- Although it is correct that the two cases cited in the article (NTP v. RIM and MercExchange v. eBay) were cases that created momentum for the Patent Reform Act, while Congress was debating the Act, eBay defeated MercExchange in the Supreme Court and in doing so set a landmark precedent that took away a patent troll’s strongest weapon: the threat of injunction. Before this ruling, RIM (Blackberry maker) was forced to settle with NTP for >$600 million because of fear that an injunction would shut down Blackberry phones. After the "eBay" precedent, this threat no longer is significant, and RIM would not have paid NTP anything, because the NTP patents were subsequently invalidated.
- There have been a series of cases in the last several months (including one yesterday that limited so-called “business model” patents). Also, patent rules are changing as of Nov. 1 to limit the number of claims and continuations (extensions) to patents. While all of these decisions have done a lot to curtail abuses of the patent system such as those that prompted the Patent Reform Act, unfortunately, they also weaken legitimate uses for patents. We won’t know for a least a couple of years what the impact will be of dropping these huge rocks into the patent pond, and much of my argument is we should let the ripples settle out before dropping a boulder as big as the Patent Reform Act. There is little risk in waiting, particularly given that recent changes mitigate the worst troll behaviors. But there is a huge risk in acting quickly before we understand the consequences of these changes. The wrong decision will have repercussions globally. Bear in mind that the US is one of the largest markets for patent-protected products worldwide. If this Act passes, EU patents filed in the US will be weakened as well.
- I agree that we need to look at what should or should not be patentable in the information age, including software patents. There are no simple answers, but these are important issues and we need to take the time (and hear many voices) to find workable solutions. But, by that same token, I don’t agree that we should wholesale eliminate or weaken ALL patents. Having raised hundreds of millions of venture funding, and having developed products that have produced thousands of millions (“billions” in US English) of dollars of revenue, I know quite well the funding would not have been possible and the products would not have come into being without patents. I’ve never had to litigate a patent against anyone, but with every one of my companies, investors, partners and in some cases, acquirers, all have looked into whether we have a strong patent portfolio. And, from the other side, in senior roles at both Apple and Microsoft, I’ve seen how a large company may only consider a tiny, but innovative, startup (in a business the relies upon patents) to be credible (as an investment, as a potential acquisition, as a partner, or as a competitor to spur on innovation) because of their patents. Large companies and startups are part of a thriving ecosystem, and patents are part of the balance. Like any ecosystem, there are parasites (e.g. trolls) that need to be mitigated. But not at the cost of the entire patent ecosystem (at least until we can think up and transition to an alternative approach to patents that still creates incentives and enables funding of innovation).
- I don’t feel strongly about first-to-invent over first-to-file, but I prefer a first-to-invent system because of the nature of the work we do in startups. The example in the article of 25 approaches I gave was for a recent system we developed and all 25 approaches were indeed practical and patentable, but we narrowed them down to the ones that were the best. There are only about 200-250 “interference” cases (where there is a dispute about who invented first) out of about 300,000 patents filed each year in the US, so it’s not a big deal. I could live with first-to-file, but I’d want the change to happen gradually, with several years warning, consistent with the examination period of the patent office (2 patents I got last year took 7 years to issue. I have a patent filed 5 years ago that has not yet been examined.)
- The most important reform needed with the US patent system is much more funding for the US patent office. It is the best way to weed out weak patents, and it’s absurd to wait 7 years to wait for a patent or 5 years for a response on a patent. Notably, the Patent Reform Act had a provision for eliminating the diversion of funds from the patent office which I wholeheartedly support. That provision was deleted before the Act was voted upon.
- The “Screw the rest of the world” headline is unfortunate, and most certainly does not reflect my views. I’ve spoken throughout the US and the world, including the UK, on how states and countries can foster environments to encourage startups and innovation, which is something certain regions in the US do exceptionally well. Startups are great for an economy. They mint new industries, create jobs and stimulate new ways of looking at things (including new ideas about what intellectual property means). Ironically, almost every company against the Patent Reform Act was once a startup, and several of them, notably Intel, got to be the powerhouses they are today because of aggressively defending their patents when they were smaller. Now, the shoe is on the other foot.
Steve Perlman, President & CEO, Rearden Companies, www.rearden.com