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Microsoft Corporation General Counsel, Brad Smith, has an article on Cnet where he cautions against sentiments to eliminate software patents some may draw from recent high-profile patent controversies, especially those concerning Microsoft. Excessive and sometimes frivolous suits might lend credence to the idea that patent litigation is getting out of hand, or even that patents should be abolished… Protection for software patents and other intellectual property is essential to maintaining the incentives that encourage and underwrite technological breakthroughs. In every industry, patents provide the legal foundation for innovation. The ensuing legal disputes may be messy, but protection is no less necessary, even so. Its interesting, the general counsel of a software firm that reportedly spent $100 million per year defending itself against patent suits still vouches for software patents. Basically, Microsoft is saying to those who have taken sympathy towards the firm yet draw vastly negative conclusions on the patent system by wanting to eliminate software patents: “yes, thanks for your support, your heart is in the right place, but your policy thinking is off.”
Yet, Smith’s position is consistent with those of scholars such as Mark Lemley, who argue that eliminating certain kinds of patents is the wrong way to improve the patent system and foster innovation. Further, his point that the quagmire of controversies may lead some to jump to conclusions regarding patents has also been put forth by others, such as Robert Merges.
Coming from the patent warzone, with several hefty damages bills, Microsoft would have good perspective on problems with the patent system. The fact that the company takes the position that software patents are still important for innovation shows that its policy reasoning has considered the long term, which includes basic R&D, licensing and product development, with patents involved in all aspects of the innovation cycle. …we are among the largest holders of intellectual-property rights. While many companies and governments have slashed funding for basic research, we continue to invest heavily in long-term R&D. As a result, we filed more than 3,000 new U.S. patent applications last year alone.
Like other companies, we also pay for rights to use others' innovations in our products. In the past three years, Microsoft has invested more than $1.5 billion to acquire such rights. Microsoft’s model of basic research and diffusing innovation through licensing is similar to that of academic research institutions and federal research centers. Now, Microsoft is fortunate to have the pocket book to fund a major R&D center, where it can underwrite technologies to be commercialized 5, 10, 15 and 20 years out. Small firms, without the resources for major R&D divisions can license Microsoft’s technologies as formal inputs into their innovation chain; a practice described as “open innovation” by Henry Chesbrough.
Smith comments further on licensing. ...being a perennial patent defendant is not much fun. Yet, it has given us some insight into how a properly functioning patent system needs to strike a balance that serves innovation, economic growth and the needs of consumers.
We believe that one of the best ways to strike that balance, and reduce unnecessary patent litigation in the process, is through widespread licensing of patented technologies. Licensing is the means for sharing intellectual property so that it can be further developed and widely adopted for the benefit of consumers and society. Patent licensing is by no means a new concept, but I believe industry and policy commentators have overlooked its significance in bridging disparate entities. Microsoft’s licensing practices can be understood as an effort to push its technologies to and exchange with the furthest reaches of the technological community. Thus, the Microsoft-Novell deal should be considered alongside how patents facilitate knowledge diffusion and transfer between different sectors and entities.
In sum, industry and policy commentators should be wary of those who use Microsoft, and other major firms that have taken patent litigation hits, as examples that justify the elimination of software patents. Their positions on the benefits of software patents are more forceful now that we’ve witnessed them face the potential costs of software patents. Such firms are in the best position to know the drawbacks of the patent system, and thus far, the existence of software patents is not one of them.
posted by Noel Le @ 6:14 PM | Academia, Patents
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