On the Record with Manny Schecter, Part II

On January 21, 2013, I interviewed Manny Schecter, Chief Patent Counsel for IBM. In Part I of the interview we discussed IBM’s commitment to remaining the top patenting company in the United States, their commitment to research and development and the process by which decisions are made on what patents to keep and which to let fall into the public domain.

In Part II of the interview, which is the final segment, we discuss how IBM keeps a watchful eye on the industry to learn from the mistakes of others, what the conversion to first to file will mean for IBM patents, how Watson is being deployed and David Kappos leaving the USPTO.

QUINN: Let me pick up on that for a minute.  As you know we talk about this with some frequency, and I’ve always been interested in the IBM model because it’s successful.  And I always try to tell small business, why would you ever try and pick a company that has not been successful and imitate them?  And one of the things I keep thinking about more and more lately — I wonder whether one of the tricks in life and in business is to create systems of infrastructure that in some way save you from yourself.  Realizing what you just said that even Babe Ruth is going to strike out.  So even IBM no matter how careful you guys are are going to make some mistakes.  But if you have the infrastructure in place and the processes and procedures in place to guard against that and to give you a longer horizon to let things develop, as the result of process you’re going to minimize those mistakes.

SCHECTER:   Well, obviously we try to be as methodical as we possibly can to ensure we don’t fail to take every possible consideration into account.  That goes without saying.  And having done this for such a long time and at the volume that we’re now doing it we feel like we’ve tuned the process pretty well.  But, yes, even then some mistakes will get made.

[Interviews]

QUINN: Right, right.  But you’re playing a numbers game it seems that works year after year to your advantage.  Because I also am always looking at, you know, the tech industry is littered with companies that used to be the big dominant player.  I remember when Wang was not just a name on a building.

SCHECTER: There’s a company that I’ve not thought of in some time.

QUINN: Yeah, I know, how many people think of them anymore?  And you and I are old enough to remember when their name was almost synonymous with the term “computer.”  Right?

SCHECTER: Or word processing.

QUINN: Yes.  That was where much of this all started.  And you look at that landscape and then you look at every part of that landscape from well before that even.  And IBM’s a part of that landscape.  And now you see just maybe two of the bigger, and I’m not going to ask you to comment on competitors or other people, but my thinking is and I’ll let you run with it where you may, two big huge companies right now, Microsoft and Apple.  Bill Gates has kind of stepped aside and has taken a far less significant day-to-day role.  And unfortunately Steve Jobs has passed away.  So I wonder in the next five to ten years whether we’re going to look back and see that those companies are still a part of the big relevant landscape and they’re going to wind up being more like IBM over many, many, many decades or more like Wang.  And it strikes me that so much of the IBM innovation policy allows you guys to be that top dog year in and year out, decade after decade.

SCHECTER: Well, I’d like to think that’s correct.  You are also correct that I’m not really in a position to speculate about the other companies.

QUINN: I understand, but that’s my job, I guess, right?  As a commentator, I can do that.  But I mean, do you ever sit around and try and learn and think about the lessons that you see in the industry or are you just so focused on what you guys do in executing it so properly that your reflection is more of an inward reflection?

SCHECTER: We do occasionally talk about what goes on around us and whether we think mistakes have been made by others.  Obviously, our focus is on our own business.  But at times it’s hard not to notice the mistakes of others.  You not only learn from your own mistakes – you learn from other people’s mistakes, too.

QUINN: Yeah.  I hope so, right?  Because then you don’t have to make those same mistakes.

SCHECTER: Right.

QUINN: Yeah.  So now do you suppose, and if you don’t want to or can’t answer this, that’s just fine.  But do you suppose that now that we’re really on the cusp of moving into first to file that this is going to give people the incentive to cast that wider net?  Or do you think this is going to be really just business as usual and we’re going to just go along like we’ve been going along?

SCHECTER: I think there will be some transitional effects.  You’ve probably been to meetings where people talk about what will happen on March 16th and should we take certain actions before March 16th or defer them until after March 16th.  But once we get past that, at least in terms of first to file, I think it will largely calm down and go back to status quo.  There are other changes in the American Invents Act that I think will obviously have a lasting effect on the system.  For example the opportunities for the public to challenge patent applications and patents that are somewhat expanded.  Hopefully the PTO will operate somewhat more efficiently now and in that sense promote innovation more than today.  But I think the filing behavior of applicants will not change much.

QUINN: Yeah.  I suppose that that’s probably right.  Although I don’t know that that’s the appropriate answer here.  It seems to me that when we move to first to file, people ought to be focusing on casting a much wider net.  And being the first to file.  A lot of companies, if you’ve been doing it right, you haven’t been relying on grace periods, and you haven’t been dragging your feet and so on and so forth, but I just wonder whether we really are going to see a difference.  I sense what you’re saying is that IBM is not going to change course, you’re just going to continue to do what you guys do best.

SCHECTER: Yeah, that’s generally right.  I mean, we may make a few adjustments.  But our general philosophy in the way that we manage our patent portfolio and evaluate our inventions, that’s not going to change.

QUINN: Okay, now before I let you go, I’ve got two questions I have to ask you.  One is, do you have any update on Watson?  And is Watson going to conquer any other game shows any time soon?  I say that tongue in cheek, obviously, but Watson is an extremely exciting innovation that you guys have.  And when last we spoke I think there was some discussion of moving of Watson into the medical field to try medical application.  Where does that whole technology area stand at the moment, if you know?

SCHECTER: Recognize of course that I’m the chief patent counsel, not the head of the business.

QUINN: Right.

SCHECTER: Certainly there are exciting things afoot with Watson.  We have started receiving patents related to Watson.  I think some of the press releases that we did a few weeks back  highlighted one or two of them.  As I understand it, work on Watson in the medical area in particular, you know, continues and I think it’s going to be really exciting to see the capability of Watson used in a way that can have extremely far-reaching effects.  Watson will help us harvest valuable information, maybe make diagnoses, out of vast amounts of data of that previously we didn’t have the capability to use effectively.  It looks to me like Watson’s going to be able to start doing those kind of things.  And it would seem like the effects on medical care could be profound.

QUINN: That’s what I see.  And I don’t want to trivialize Watson by just saying, well, it’s software, but a component of this has got to be software related.  And it just drives me crazy just seeing that people that the patent system as a whole is constantly under attack.  And you look at something like Watson, truly revolutionary and has all the potential in the world to unlock so many doors just by the processing power that can be brought to bear in the analysis.  And I just don’t understand how people can’t see that innovation in the patent system really do make for a better world.  Better quality of life.  And maybe in some cases nearly the ability to keep living.

SCHECTER: We certainly agree.  There’s a tremendous amount of innovation that goes into computer implemented technologies, including software, and certainly the promotion of that innovation by the patent system is not only useful, it’s absolutely critical to our economy.

QUINN: Yeah, I don’t get it.  If we tie ourselves into that knot then we’ve lot manufacturing and we’ve lost the only other economic advantage that we have as far as I can see.

SCHECTER: Look at this way, the technology industry remains one of the most flourishing industries.  Certainly as innovative as any.  And as healthy.  So I would ask those people who think that patents relating to software are somehow harming the economy how it is that the industry that seems to be at the center of what they’re complaining about is flourishing the way that it is?

QUINN: I agree.  Now the last thing before I let you go that I wanted to just ask you.  A few people know Dave Kappos as well as you all at IBM know him.  And as you know he’s down to his last—at the time this interview’s going on he’s down to his last two weeks at the patent office.  And I just wonder whether you might have some thoughts as to how the patent office has changed over time under his stewardship, or just thoughts about him generally that you might care to share or you can go in any direction that you want with that.  If you want.

SCHECTER: Well, first of all, yes, obviously I do know Dave and think very highly of him, but I still don’t have any special access to Dave. In the first couple of years after Dave left IBM he actually kept his distance from IBM to ensure against even the mere appearance of bias.  If anything we had less access to him than just about anyone else.  In the last year or so once he became embedded in the job and no longer had access to recent IBM business information, I would say he just treated us like he treated anybody else.  Obviously on a person level we might know Dave a little better than some others, but on a business level he treated us like everybody else.  Like our competition, like our customers, like everybody else.

Having said that, certainly I feel it’s a big loss for the USPTO to lose Dave.  I’m very happy that they have Terry Rea and other capable leaders there.  I only hope that the uncertainties that can sometimes surround a transition like that get behind us fairly promptly, because sometimes the uncertainty is the worst thing of all.  As for Dave, he brings to any job that I’ve come to see him in, including the USPTO, a willingness to consider all angles like no one I’ve ever seen.  He’s an innovator in himself in the way that he remains open to new ideas.  I know it seems odd to think that the patent system itself is sometimes closed to new ideas.  But we all occasionally get blinded by what we are comfortable with and we resist change.  Dave is unique in his ability not to do that.  And he has brought an openness to the PTO that I’ve not seen in a long time and I think it’s boosted the morale of the office.   In some ways he’s put more responsibility into the hands of the employees at the USPTO.  Those things have come together to enable the USPTO to perform at a level that we’ve not seen in a while.  I think that’s terrific, obviously.  And certainly good for not only the patent system but for the public since in one way or the other the patent system ultimately effects all of us.

QUINN: I feel much the same as you do about Dave and also about him leaving the USPTO in the capable hands of Terry. And with that, Manny, thank you.  I really appreciate you taking the time to talk to me.   I know you’re a busy guy but I always enjoy our conversations.

SCHECTER: No problem at all.  I enjoy speaking with you as well, Gene.