Reports are widespread that large corporations have cut back on the number of patent applications they file, and I see no reason to believe these first hand accounts are incorrect. Nevertheless, fiscal year 2009 saw the second highest number of patent applications filed at the United States Patent and Trademark Office, down only some 11,000 applications from the record year in FY 2008. Meanwhile, tech sector giants have been crying and moaning about how the patent system has run amok and needs to be scaled back, and continually beg for patent reform that would gut the patent system and weaken patent rights. This grumbling is picked up by patent abolitionists who say “see, even Microsoft thinks there should be no patents,” which only adds to the hysteria. Against this backdrop the corporations bemoaning patents received record numbers of patents during 2009. Obviously they talk a good game but when push comes to shove they will get as many patents as they can, but want to make it hard for small businesses and individuals to get patents. Quite curious if you ask me!
The popular press and many on the periphery of the industry suggest that the recession was to blame for the dip in overall number of patent applications filed during FY 2009, and acted like a 11,000 application decrease was monumental. Neither is true though, or at least an accurate representation of the full story. Certainly the recession has caused some companies to do things that make little or no sense, like cutting research and development budgets would really do anything other than lead to less innovation. The truth is that during recessions or rough economic times that may be quite isolated, large corporations do exactly the opposite of what they should do, but that is hardly news. Do you remember when “Wang” was synonymous with “computer”? Most do not know doubt, but what has always been true is that technology companies that reach the top are only passing through on their way down; to be replaced by smaller, leaner companies that pursue appropriate strategies and have solid and expandable innovations in demand.
When exactly was the last time the Microsoft or any tech giant actually supported an agenda, policy or change that benefited small businesses or start-ups? Never. The tech giants are concerned with hanging onto their market domination in the face of losing the ability to innovate. Large companies do not innovate, there are simply too many layers between inventor and decision-maker, and a lot of complacency that leads to the belief that whatever they pursue will be a winner. The technology sector is fickle; a strange “what have you done for me lately” industry that typically has highly educated consumers who not only like gadgets but covet functionality. In this sector if you build a better mousetrap the masses will follow, assuming of course you have the business acumen to reach the marketplace in a relevant time frame and at an attractive price point. This being true the technology sector has been and always will be ripe for take-over by the have-nots; the small players who innovate. The key differentiator between those start-ups that can achieve massive success and those who fall prey to the large mega-giants is a progressive and sophisticated intellectual property strategy, and the 800 pound gorilla in the intellectual property rights room is the patent.
Make no mistake about it, patents provide a competitive advantage. The patent right grants to the owner the right to “exclude others,” which means that others cannot do what your patent covers. The increasing emergency of patent litigators that will accept cases on a contingency basis is leveling the playing field and affording independent inventors, small businesses and start-ups the ability to take on the big players and win. When you have a fight on your hand you don’t hire a patent attorney that plays nice, you hire a patent litigator that isn’t afraid, won’t back down and will fight to win. Everyone loves to hate lawyers, but when you have a dispute against a big company everyone wants the lawyer who doesn’t get paid unless they win. The emergence of contingency patent litigation is what has giant tech corporations spending many millions lobbying Congress. They have their patents and they don’t want to have to respect the patent rights of others. This is extremely telling given so many tech giants received many more patents in 2009 than they did in 2008. There is obviously a disconnect somewhere, and it seems pretty obvious to me that this “do as we say, not as we do” approach to patents is self-serving. Anyone who stands down from obtaining patents based on the belief that Microsoft and other tech giants are leading some altruistic fight to make a better, fairer patent system is in for the shock of their life. Trusting is one thing, but naive to the point of ruining your business and losing everything is quite another.
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According to a press release issued by IFI Patent Intelligence, US companies received approximately 7% more utility patents in 2009 than in 2008. Here is a list of some notable technology companies and the percent increase in the number of patents they received in 2009 versus 2008:
- IBM up 17%
- Microsoft up 43%
- Boeing up 26%
- Broadcom up 11%
- Cisco up 30%
- General Electric up 7%
- GM Global up 68%
- Honeywell up nearly 6%
- Sun up 10%
- Xerox up 18%
What is clear is that these and other tech giants are stocking up on patents at a time they are moaning about how awful the US patent system is and convincing many unsuspecting patent abolitionists that they believe it should be harder to get patents and maybe patents shouldn’t exist at all in some areas. What they want, plain and simple, is it to be harder for YOU to get patents, not harder for them to get patents. They would be happy to have the patent system gutted because they already enjoy market dominance, and they don’t want to have to innovate or compete against small businesses and individuals who innovate more and create inventions that push the envelope. They urge positions that are friendly to themselves, not positions that would lead to robust competition and paradigm shifting innovation evolution.
It is clear that the tech giants have sold everyone a bill of goods, and those who bought in should feel used. The truth is that if you want to raise money you need to have patents and that is an industry truth that only the patent abolitionists ignore. The abolitionists claim that copyrights provide the same protection, which is laughably wrong although they say it with such vigor. The reason the popular press has picked up so much on patents and the dysfunction of the Patent Office is because small businesses are the ones who grow jobs in the US and when they cannot get patents they cannot move forward. Investors either cannot be found or move on when patents cannot be obtained.
As Dean Kamen, perhaps the most famous and decorated living inventor says over and over again in slightly different contexts is that the first thing investors ask is whether you have a patent. See, for example, David Kappos — Yes He Can? So while brilliant person A claims they can raise millions of dollars without patents and relying only on copyrights, and while brilliant person B claims patents are unnecessary or even evil, this is not the industry experience of, well, everyone who works with small businesses and independent inventors. Those who choose to believe that patents are not necessary and not a good idea are being conned. For what purpose I don’t know, but what I can tell you is if you listen to those, like the tech giants who say patents should be weaker but get as many as they can, and those who claim copyrights suffice and patents are not necessary, you may feel good but will ultimately come to the realization that you listened to the wrong people.
The other night on Bill O’Reilly’s show he correct Glen Beck who said “I could care less,” referring to the fact that he doesn’t care about his critics. O’Reilly said it should be “I couldn’t care less,” which is of course correct, at least with respect to the point Beck was trying to make. I bring this up to make a point. I can say unequivocally that I COULD CARE LESS about what my critics say, the trouble is I don’t care less. What they say doesn’t matter to me even a little, but I deal too often with folks who have been scammed by invention promotion companies and those who thought they were listening to good advice and only later found out that what they were told were a pack of lies. Patent abolitionists use all kinds of tricks and little or no logic, and they are everywhere on line and no doubt convincing many they are correct. So while I couldn’t care less what my critics think, I do really care about getting good information out that can be used by those who really want to succeed with their innovations. Of course, I realize all too well the wisdom of the statement about the horse and the water, you know the one I’m sure.
The truth, simply put, is this… if you have an invention that can be protected via patent then you absolutely should obtain a patent. Patent rights are exceptionally strong, investors love patents and with the growth of contingency patent litigation if others are infringing you recourse can be had. A patent is not the end all be all answer, and the Supreme Court has done their level best to make patents less valuable in recent years, but without a patent others can and will simply take your invention and make it, use it and sell it without ever paying you a dime. Without a patent you have no asset to license, and without a patent you are a target for being sued by those who do have patents. If you have a patent you have protection, depending on the scope and integrity of the claims, and those who might otherwise sue you think twice because if they do you will sue them, which typically doesn’t fit into their broader business plans for domination.
For all these reasons more and more open source companies obtain patents and participate in patent licensing pools where patents are shared among contributors. So the next time someone tells you that open source software does not rely on patents you can simply laugh and realize the person doing the talking doesn’t know what they are talking about. Google it for yourself. The patent abolitionists and free software folks hate that Red Hat and others have large and growing patent portfolios (see here, here, here, here and here, for example) but they do have them, and why would Red Hat’s supported open source patent pool purchase patents that they claim do not relate to Linux and which were not being infringed? In all likelihood the growing open-source patent pool portfolio has kept Microsoft at bay and prevented them from taking action to back up their claim that Linux violates MS patents. Why do you think TomTom joined the Open Invention Network after being sued by Microsoft? Why do you suppose abolitionists and free software advocates refuse to acknowledge the justifiable business rationale for obtaining patents and seemingly ignore the existence of patents on open source technologies and patent owned by open source companies? Whether for defensive or offensive purposes, if the major players on the proprietary side of the aisle and the major players on the open source side of the aisle have patents, why shouldn’t small businesses?
If patents are good for Microsoft and the tech giants, patents are right for Red Hat and the open source community and patents are demanded by investors, as Dean Kamen explains, when small businesses seek funds, why would they be bad for independent inventors and small businesses? When you start out in business you don’t model yourself after those who fail, but rather after those who succeed, and the one thing successful businesses with proprietary and open source business models agree on is that patents are important enough to obtain. Simply stated, those who refuse to acknowledge the power and protection afforded by patents ignore reality and must be assumed to have an agenda. They certainly don’t have your best interests at heart, and that is why I could care less, but don’t!