Large Patent Holders Hate This Reform Proposal. That’s a Good Sign.
The fight over patent reform has turned into a two-front war. On one front, the technology sector is united in opposition to patent trolls. On the other front, major technology companies are fighting among themselves about a proposal to make it easier to invalidate low-quality patents.
Companies such as Microsoft, Qualcomm and IBM that have a lot of patents don’t like this latter idea, perhaps because it would make it easier to invalidate their own patents. But that’s precisely why the proposal is a good idea: There are way too many broad, low-quality patents. And while some of those patents are held by trolls, many of them are held by large incumbent companies. A reform agenda that focuses exclusively on trolls might stop trolling but it will leave larger firms free to continue abusing the system.
In the 1980s, Gary Reback was an attorney at Sun Microsystems, one of the hottest startups of its day. In a classic Forbes article, he described the day that a group of IBM patent attorneys visited Sun to demand that they license IBM’s patents. They presented a list of seven patents that Sun allegedly infringed. Sun’s lawyers inspected the patents and told the IBM lawyers that six of the seven patents were likely invalid. And Sun clearly hadn’t infringed the seventh, they said.
“OK,” an IBM lawyer responded, according to Reback. “Maybe you don’t infringe these seven patents. But we have 10,000 U.S. patents. Do you really want us to go back to Armonk [IBM’s New York headquarters] and find seven patents you do infringe?” Sun wrote IBM a check.
This is the problem of patent thickets: when a large company holds so many patents that it becomes impossible to innovate without infringing numerous patents. Acquiring patents is a slow and expensive process, so incumbent technology firms will always have a lot more patents than up-and-coming firms. Patent thickets owned by IBM, Microsoft and other incumbent technology companies act as a tax on innovation, transferring wealth from today’s innovators to the innovators of the past.