On Patent Litigation Reform, Proceed with Caution

Posted February 6, 2015 at 12:46pm

Lost in the current debate in Congress about the need for “patent reform” – which is really about “patent litigation reform” – is the role of the scientist or engineer whose work on the frontiers of science and technology holds great promise for the future.

Research and development (R&D), whether it takes place at a government laboratory, a university-funded laboratory, or the laboratory of a private company, can lead to incremental discoveries or massively disruptive ones.  No one can truly claim to know in advance whether the benefits will be large or small. Here’s what we do know: R&D is the most important driver of American progress, competitiveness and value creation, and America’s patent system is the foundation of that value, both in principle and in practice.

In practice, it’s quite simple. In technology R&D, there’s an enormous time gap between fundamental discoveries and their market applications.  In wireless technology, that time gap is at least five to seven years, a lifetime in the technology market. The patent system provides the only guarantee that R&D today can be turned into value tomorrow – and without that guarantee, R&D expenses cannot be justified to shareholders.

The patent system is also the backbone of our economic system. When a market exists that promises a solid return on investment for high quality work and success, it attracts companies to compete to deliver the best solution. That competition has always been the engine for major, disruptive innovation in America, from electricity to the automobile to our pioneering efforts in flight.

These practical benefits rest on a solid foundation of principle. The rights to new inventions are secured by a system of patent protections that are guaranteed in the United States Constitution, and secured by several U.S. laws, as well as international agreements modeled on U.S. law that have the force of law.

Now those fundamental patent protections and business incentives are being questioned by members of Congress and the Obama Administration, often at the bidding of product manufacturers who would be happy to trade the long-term benefits of R&D for greater short-term profits by reducing or eliminating the very modest fees they have to pay to license core technologies. Congress and the Administration should reject the urge to politicize the value of innovation, and instead allow markets to function as they were intended.

To cite the example closest to my experience, the progress of wireless technology over the last decade is a direct result of long-term R&D commitments by many companies and by the patent system.  Many iconic companies have been able to turn core innovations into fantastic products and services, but the ability of those products to work as intended – to stream video and music, download and run complex applications, and other capabilities that make then so indispensable – is a direct result of the core wireless system. If you doubt that, look at the difference between an iPod Touch and an iPhone – roughly the same device, one of which is utterly transformed by the addition of cellular capability.

Our company focuses almost entirely on R&D, which is why we care so deeply about maintaining a patent system that protects and incentivizes innovation. We’re not alone: over the years, that same approach has been the bedrock for a number of innovation-focused companies, from Bell Labs, which invented technologies too numerous to mention, to XEROX, IBM, General Electric, and a long line of pure researchers stretching back to Edison, Tesla, and the Wright Brothers.

Today, in wireless R&D, we’re joined by companies like Nokia, Ericsson, Samsung, Qualcomm, and Alcatel Lucent, among others. We may not be the name brand on your device, but there’s precious little it could do without our work. Reckless changes to our patent system would be devastating to wireless technology and many other industries that are focused on R&D, such as pharmaceuticals, biotech, and many small startup companies. Very quickly, such changes would also be harmful to consumers.

Recognizing the potential threat to American jobs and American leadership in innovation, we recently joined with more than 250 leading companies and industry associations, representing the vast majority of patent holders in the United States, to state our support for targeted measures to address bad behavior and our opposition to overly-broad legislation that would weaken the patent system.

We are concerned that the patent legislation introduced last week in the House by Rep. Bob Goodlatte goes too far and does not take into account the significant changes in the patent landscape that have occurred since his bill was first introduced two years ago.   The full effects of the America Invents Act, enacted by Congress in 2012, as well as changes to the Federal Rules of Civil Procedure, case law developments, and other administrative developments, have begun to abate the abusive practices that the Goodlatte bill originally targeted. New patent lawsuit filings have dropped dramatically – 40 percent, year over year, from September 2013 to 2014, according to LexMachina.

Strong patent protections have been a successful part of the American system since the country’s founding and have made this country a global leader. We don’t know what incredible benefits the patent system will drive in the future, but there’s no dispute we should protect the system that drives it today.