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Why We Can't Kill the Patent System

Posted by Bill Merritt on January 24, 2013 at 10:21am

There’s been a great deal of discussion around the role patents currently play in the technology space. And, oddly enough, despite the enormous advances in technology and the availability to consumers of devices and services they couldn’t even have imagined a year ago, the dialogue around patents has been mostly negative and indeed almost hostile at times – almost as though technology advances and the patents that result from them aren’t related. For someone who’s spent much of my life licensing technologies, and almost a decade leading a company that has consistently invented a broad range of very advanced technologies found in mobile devices today, the dialogue has been disheartening to say the least.

The dialogue often starts on the wrong foot; often with the sound bite that companies are “paying billions of dollars in royalties to patent holders,” like this is somehow a crime against nature. Last time I checked, patents do not fall from trees but grow out of years of painstaking and oftentimes risky investment. So, rather than being the victims of some sort of extortion, the royalties these companies are paying is actually to access many years and many billions of dollars of research on a risk-free basis – in the end, they pay only when the research has struck oil. Far from some atrocity, this seems quite fair – companies make risky investments in research, and companies that use the fruits of the research pay a reasonable price to use it.

The next point that detractors roll out is that the patent system is stifling innovation and reducing consumer choice. This is an argument that is, quite simply, massively disconnected from the world we currently live in. Technological capability is rocketing forward, whether it’s in storage, device type, or our company’s focus, wireless connectivity. Data speeds continue to increase significantly, which paves the way for new and interesting device types and applications. Money is flowing into application companies and startups, consumers now have digital capabilities they couldn’t even imagine a half-decade ago, and manufacturers are rushing to ship new products as quickly as consumers can possibly afford them.

How have those advances been achieved? Simple – companies like ours have invested billions of dollars in research based on the assurance that the inventions resulting from that research will be protected. In the case of our company, a significant focus is on the development of technologies that will be standardized across an industry, i.e., finding solutions to problems that benefit every single device and user. That means our engineers compete alongside top engineers from the leading companies in the world to solve engineering issues – often incredibly complex – in areas like interference management, power control, etc. What it means for the industry is faster, better connections. And that speed and power is what enables device companies to develop new and better products.

Given the actual success in innovation, spurred by a strong patent system, one then has to wonder why all these bad things continue to be written about patents. Indeed, patents seem to have become of the Rodney Dangerfield of intellectual property. No one questions Pixar’s inventiveness, and the illegal nature of pirating and selling copies of Finding Nemo. But many people, most people, take a very different view on patents. No one in this country goes to jail for infringing upon someone’s invention, even if they do it willingly. Even worse, patent holders are coming under fire for even just trying to stop companies from using their inventions, even if that company is not paying for using the invention.

Beyond matters of correctness and legality, this anti-patent furor is completely at odds with where this country needs to go. America’s strongest asset is its ability to innovate. While we have lost our edge in many other areas, we continue to lead the world in creating new ideas, and that continues to drive jobs and our economy. Anything that could weaken America’s ability and incentive to innovate could do lasting harm.

At InterDigital [ http://www.interdigital.com/ ], we have built a business based on inventing things. We employ some of the brightest minds in the wireless industry, with labs across the United States and in Canada. Some of the technologies we’re working on now – often representing world’s firsts – will be in mobile devices and networks a decade from now, and some of the innovations we license today we developed a decade ago. We are also, proudly, among the country’s most innovative companies when measured in patents per employee.

We also consider ourselves to be a fair company, having successfully concluded dozens of agreements under which we grant companies access to our portfolio, which now includes approximately 20,000 patents and patent applications. We have only resorted to litigation when a company has refused to pay us for using our inventions, and even then we have typically settled those disputes, always on mutually acceptable terms.

Finally, we have also advocated for improvement to the patent system, encouraging Washington to ensure that the U.S. Patent Office is fully funded and staffed so that only true innovations are recognized with patents. The entire system benefits when all parties involved in a discussion do so with certainty that the patents involved have been carefully examined, and that the underlying innovations warrant patent protection.

We think more can be done to ensure the effective operation of the patent system. That said, changes should be based on fact, not fiction, and we have seen far too much of the latter in the current debate. At the end of the day, the patent system exists to preserve the health and competitiveness of industries… and the technology industry has rarely been healthier than it is today. Let’s not mess that up.

Bill Merritt is the President and CEO of InterDigital, a R&D team that develops wireless technologies that are at the core of mobile devices, networks, and services worldwide.

Wired © 2013 Condé Nast Digital

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