Stanford Summit: Patent Crisis

Here are my notes from the patent panel:

Moderator is: Michael Brandis (Sedgwick, Detert, Moran & Arnold)

Panelists are Chip Lutton (Apple), Michelle Lee (Google), David Kappos (IBM), and David Hayes (Fenwick & West)

Is the US Patent System really broken and, if so, how?
Chip says that our patent system is the best in the world. He cites our ability to examine and issue the most patents of any country. Our economy is heavily based on innovation. We are out of balance. There are 3 things that are currently problematic, but Chip doesn't think the system is broken:
1) huge numbers of patents issued on small innovations
2) question about quality of patents being issued
3) there's no good system to establish the value of a patent.

These three things sound like a "bubble market" to Chip. A bubble in the use of patents and the assertion of patents. The question, then, is can we manage a soft landing or is there going to be some other crisis that will ensue?

Michelle does describe the system as a crisis. She cites the RIM case where there's a $6m judgement. Causes of the problems, from Michelle's perspective are:
1) the patent office is over burdened
volume of patent apps going in is high, and quality of patents coming out is low.
bad patents on the market can be used by the owners against other companies/competitors
2) there are companies whose sole business is to monetize patents (TROLLS!)
3) there are some favorable litigation forums (e.g., ED Texas?) for patent holders.

IBM's Kappos says that an assessment of the patent system really depends on your view point. If you're an owner and in the pharma, biotech, medical products industries, you probably think the system is generally ok, and any problems that exist can easily be corrected by a minor tweak. But if you come from the IT industry, where patent speculation problem is very real, and where there's no regularized market, you view the patent system as having significant problems.

David Hayes agrees that one's perspective is important. Large established companies who've invested in their patents are happy enough w/ the system. Smaller startups are not yet worried about the trolls ("they should be so lucky as to have a troll come after them"). One major problem in the system now is the delay in the system. The backlogs of 3-5 years to even have your patent examined or issued. That's a problem when you want to protect your fundamental company technology. And VCs care about them.

Is the solution to hire more patent examiners?
Kappos says no! Hiring hundreds of new employees is not going to be the right answer. The answer needs to have the communities who interact w/ the patent system involved and work to improve it.

Chip argues that we should focus on the narrower set of patents that are really the valuable patents. If we focus on fixing the problems with those patents, we'll have fixed the greatest problems.

Michele points out some of the legislative efforts to fix some of the problems.

There was a little discussion of the offensive and defensive patents. Most agreeing that you should definitely file defensive patents. (Not surprising! These are all patent lawyers) :) Interestingly, Kappos noted that he thinks that companies should keep an eye on their competitors filings. (This is a controversial position because once a company is on 'notice' of a patent, it runs the risk of being on the hook for greater damages if found later to infringe the patent.)

Michelle discussed the need to be filing patents in China, and how important it is to seek patent protection in China.

{I started to lose interest in this panel at this point... maybe it's that I'm hungry and it's lunch time. Other than Kappos' controversial point noted above, IMHO, the panel could have been much more provocative. Perhaps discussing in detail the proposed reforms that Congress is considering right now would have been good for the audience to learn more about. How would those proposals affect various segments of the patent market - IT/biotech/pharma or big companies vs. small companies? To her credit, Michelle did bring this up, but it seemed the panel was not going to pick up that issue with any depth. I have to admit that I'm also a bit cynical when a group of 5 big-firm and large company lawyers get up and tell the audience you should file more patents and hire more lawyers. Sorry for the negative ending here.}

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