By Greg Blonder
The current U.S. system is harming innovation. A simplified process
with stronger patents would encourage economic growth
For over 200 years, the U.S. patent system has catalyzed economic growth
and protected the national interest. Unfortunately, over the past few
decades, patents have become irrelevant -- even harmful -- to the innovation
I say this
as someone who grew up believing in the value of patents. As a teenager,
I sat raptly in the U.S. Supreme Court gallery listening to attorneys
argue University of Illinois Foundation v. Blonder Tongue Laboratories,
a landmark patent-infringement case involving my father's company. As
an inventor, I earned some 70 patents. And as a scientist, I managed research
labs generating hundreds of patents a year.
as a venture capitalist, I have come to the conclusion that protecting
intellectual property (IP) with today's patents is virtually worthless
-- despite the large court awards you may read about in the morning paper.
FROM VIEW. The first problem with patents is that the entire process
takes too long: three years on average, often as long as five, and getting
longer all the time. So when a venture capitalist invests in a company,
its IP "dowry" remains, at best, provisional. How much would
you pay for a company when its assets are hidden from view?
company's most valuable IP almost always results from later insights,
gleaned by developing its early products and interacting with customers,
not from the IP it originally filed. Competitors are busy inventing as
well, and since the U.S. Patent & Trademark Office often grants trivial
and overlapping patents, IP minefields may be waiting to explode. Or perhaps
the IP is all duds. Who knows?
$50,000 to $100,000 lifetime cost of patent application, protection, and
maintenance effectively limits the number of patents a young, financially
constrained company can file. Much patentable IP is left on the cutting-room
floor, at the risk of allowing trivial variations filed by competitors
to block the originator's path to market.
probably most important, few venture-capital-backed companies will ever
dare to defend their IP in court. If they do, they'll risk losing customers
and squandering anywhere from $1 million to $5 million of their precious
CONCEPTS. So what good is owning something you can't quantify or won't
defend? Very little. It's a bluff, mere saber rattling.
value in patenting IP for a young company, ironically, may lie in the
fact that it's often essential in attracting venture capitalists -- who,
I would argue, are often pursuing a misguided model of company creation.
Successful companies transform ideas into products customers want to buy.
But the existence of IP usually has little to do with that ability.
venture capital, the situation is no better. Common business practices,
obvious to anyone in the field, are enshrined in overly broad and problematical
patents that reduce competition. Patent "trolls" are buying
up dubious IP, then suing companies actually engaged in productive activities,
such as building products and serving customers. Wasteful court cases,
like the recent BlackBerry imbroglio, occur because patents are granted
for narrow, redundant concepts that courts find difficult to unravel,
and so are open to interpretation.
We need to
invent ourselves out of this mess.
The patent system was designed to encourage the free flow of ideas, in
exchange for a temporary monopoly. Not all ideas, however, are worth pursuing,
worth defending, or worth backing financially. And this gets to what,
at bottom, is wrong with the patent system: We issue patents too easily
for trivial ideas, thus diminishing protection for true breakthrough ideas.
meant to be useful. Yet most studies show that something like 95% of all
patents have never been used in any product and have created zero economic
value. Nor, as far as anyone can tell, have they ever been used as evidence
in a patent lawsuit. They are evolutionary dead ends.
government-sanctioned short-term monopolies, and not supposed to be "obvious
to those skilled in the art." Yet, anecdotally, all VCs remember
days when a half-dozen companies pitching the same idea, in the same market,
using the identical technological approach, appeared at their doorstep
seeking investment. Isn't that what is meant by "obvious"? None
of these companies should be granted IP to exclude their competitors.
They should compete instead on execution.
OR INVENTION? More quantitatively, I have observed firsthand how easy
it is for experts to generate good, but similar, ideas. While at AT&T
(T ) in the early 1990s, I sponsored two separate ideation sessions around
a potential new market, bringing in 50 experts each time to brainstorm
for applications. Both groups generated ideas with real commercial value.
however, generated more than 95% of the same ideas in common. They were
"obvious" in the fullest sense of the word and would have been
commercialized with or without the incentive of a patent. But the Patent
Office found them "novel," and issued AT&T claims by the
basketful. I would argue that none of those ideas deserved a patent.
of what the Patent Office sees as invention is merely science applied
to a new field by equation or analogy. At AT&T, we took old microwave
patents and filed identical claims on optical inventions, which are also
radio waves, only 10,000 times smaller. We were able to do this even though
it was obvious to anyone who ever picked up a physics textbook that once
you have the ability to make things smaller, the physics just translates
SIMPLIFICATION. The solution is for the Patent Office to set the bar
much higher for new patents. It should reject applications for ideas anyone
well versed in the art would automatically develop, once faced with that
problem. That includes minor changes in size, shape, or properties whose
impact is definitely predicted by science, as well as eliminating entire
classes of ideas that are "in the air."
Office should invite third-party comments and expert testimony as soon
as the patent filing is made public. These communities have much greater
knowledge than the Patent Office about what's truly new, and will help
raise the bar for everyone.
simplification would have a huge positive impact on both innovation and
- It would
encourage people to work on hard problems -- without the fear that someone
else could capture the lion's share of the benefit with a trivial variation
on their pioneering idea.
- It would
speed the patent-granting process, aligning business timescales with
- It would
give companies and their investors IP certainty they could bank on.
- It would
reduce the number of patent cases that go to court -- a huge waste of
time and money for society.
DIALOGUE. A patent is a license to exclude others from practicing
your invention, but businesses need freedom to operate. A broad patent
would repel competitors from blocking its value with trivial variations.
Instead of applying for 10 minor patents, inventors would apply for just
one of true economic value. The flow of information surrounding invention
would accelerate -- and so would innovation.
In such a
scenario, America would become the gold standard for patents. Other countries
might continue the practice of patenting the hair-splitting and trivial.
But as it became clear that a U.S. patent was the strongest in the world
-- the one that attracts capital -- the discipline would win worldwide
countries like China and India, which are just agreeing to respect intellectual
property, would be much easier to engage in dialogue if infringement were
clear and the number of issues reduced.
MORE. Patent simplification, as I have outlined it, presents some
problems. For example, the greater barriers to patents would probably
require higher upfront costs -- perhaps too much for lone inventors to
are details that stand a good chance of resolving themselves. For instance,
a group of patent lawyers might emerge who would represent such money-strapped
individuals on a contingency basis. After all, the resulting patent would
cut a clearing in the forest, where new economic growth could thrive.
and greater simplicity are the path to a better patent system -- for our
nation and for its inventors. In my case, probably no more than a dozen
of my 70 patents would reach this bar. Yet they would be more valuable
in the end. Sometimes more isn't better.
Greg Blonder is a partner at Morgenthaler
Ventures and is based in Princeton, N.J.