A most contentious issue in the current drive for patent reform concerns the standard for enjoining infringements. The current state of Federal Circuit doctrine is that a court should grant an injunction unless doing so would create a public health emergency.

Some tech companies object to this. Their argument is that contemporary products are so complex, and so intricately interwoven with so many technologies and existing patents, that the threat of injunction by any of dozens of players weighs down the flights of innovation. They want the standard revised so that an injunction issues only if the patentee would otherwise be irreparably harmed; for garden-variety infringement, the patentee would collect damages as determined by a court.

To some degree, this is a patent-quality argument -- that injunctions to enforce vague and/or ill-advised patents create problems. Beyond this, though, the contention that the sheer number of patents with which a new product might interact creates smothering uncertainty and high transaction costs has plausibility.

Opponents of the change, particularly small inventors, are ballistic. They see the change as a kind of compulsory licensing, and argue that it would permit big players to ignore patents, litigate to death if challenged, and then pay a pittance to the exhausted inventor if they lost.

Each argument has some theoretical merit. However, in congressional hearings, the proponents of the change have not made their case effectively. They have few stories of products unjustifiably brought to a halt. (Intel cited one situation in which someone bought a patent for $50K and sued for $5B - but Intel won on summary judgment.)

On the other side, Nathan Myhrvold of Intellectual Ventures --one of the most strenuous opponents of the revision -- has developed numbers that cast serious doubt on the major premises of the push for revision.

Here is a paranoid thought about what is going on, based on nothing except a sense of the dynamics of the situation, and puzzlement over why the proponents of change have done a mediocre job on an issue claimed to be of great importance.

Reputedly, the leading proponents of the revision are Dell and Intel. Both companies are heavily involved in the Free & Open Source Software (FOSS) movement, especially with Linux.

It is becoming increasingly clear that the FOSS movement has a problem. It needs access to technologies and industry standards that are being developed and patented by conventional for-profit companies. Within the business, conventions are arising whereby proprietors of standards are happy to license the necessary technologies, often royalty free. BUT, they do insist on certain conditions, such as reciprocity and no sub-licensing.

FOSS programs, especially if licensed under the GPL, cannot work in this system. Their business model precludes royalty payments, however modest, and even if no royalties are required they cannot accept the other conditions.

This leaves them with a problem. If a FOSS program simply ignores the patent then its writers are vulnerable to injunction. On the other hand, under a revised injunction rule, the owner of an appropriated standard would be relegated to trying to get damages from a FOSS company that was, at least in theory, not even selling its software. The result would be the equivalent of a compulsory license for the software program on whatever terms a court chose to grant.

I cannot shake a hunch that this need to force the patent and standard systems to conform to the needs of the FOSS business model is the real force behind the injunction revision proposals, especially because one rule of survival is that when powerful and competent organizations make indifferent arguments for something they care about a lot, there is usually some other argument that they do not want to acknowledge.

Is this a tad paranoid? Absolutely. But it was Andy Grove, former president of Intel, who wrote a whole book on Only the Paranoid Survive.

posted by James DeLong @ 11:29 AM | Patents

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