The U.S. patent system is overdue for reform, but what needs fixing, and how, is a matter of some dispute.
In 2006, FAcEd with the threat of a court-ordered shutdown, Research In Motion (RIM), the Canadian manufacturer of BlackBerry phones, reached a settlement on a prolonged and vicious patent dispute with Virginia-based NTP. Although NTP’s threat of injunction was widely viewed as extortion in the IT industry (the company neither makes nor sells any products, and its primary assets are the patents of the late inventor Thomas Campana), RIM nonetheless agreed to pay $612.5 million in a “full and final settlement of all claims.”
That figure sparked both disbelief and outrage among many members of the IT industry. It also increased calls for substantial legislative reform. Patent law in the U.S. has not been substantially updated since 1952, and is frequently thought to be out of sync with modern business practices. However, exactly what needs reforming, and how, is a matter of some dispute.
photo Graph by simon hayter
Most companies and entrepreneurs agree with the principles that underlie the U.S. patent system, which fosters innovation by granting inventors an exclusive, though temporary, right to their creations in exchange for sharing their work. But what constitutes a patentable invention, and how should
it be protected? Critics complain that American patents are too easy to file— the U.S. Patent and Trademark Office (USPTO) grants tens of thousands patents each year—and too easy to defend in expensive legal suits. (The NTP patents that RIM was found to have infringed upon might never have been granted in many countries.) Companies whose livelihoods depend on revenue from patent licenses, on the
other hand, are loath to support anything that might weaken the value of their portfolio. The Patent Reform Act of 2007, a reform bill introduced by Senators Patrick Leahy (D-VT) and Orrin Hatch (R-UT) and Representatives Howard Berman (D-CA) and Lamar Smith (R-TX), stalled last April as legislators were unable to reconcile these competing interests.
It is impossible to make a piece of electronic technology without relying on dozens, if not thousands, of individually patented components. In 2003, one computer hardware firm told the U.S. Federal Trade Commis-
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