The OECD Science, Technology and Industry Scoreboard 2011: Innovation and Growth in Knowledge Economies is making a bit of a splash with regard to its analysis of patent quality. From the Sept.23, 2011 news item on physorg.com,
The Organization for Economic Cooperation and Development (OECD) has published its Science, Technology and Industry Scoreboard for 2011 and one section shows that patent quality over the past 20 years has declined dramatically, mainly the authors say, due to excessive litigation by so-called non-practicing entities that seek to exploit patent laws. The result they say, is a glut of minor or incremental patent applications that add little to scientific progress.
Mike Masnick at Techdirt weighed in on the matter in his Even The OECD Is Noting How Dreadful Patent Quality Is Negatively Impacting Innovation posting with an oft-repeated suggestion,
Of course, the real way to fix this problem is to make the bar to get a patent much, much higher. If you do that, you get less [sic] bogus patent apps being submitted, and it makes it easier to reject such bogus patents.
What Masnick means by bogus is clarified in this quote from the Sept. 23, 2011 news item,
The problem it appears has come about due to the rise of non-practicing entities [patent trolls]; groups that form for the sole purpose of applying for patents in the hopes of suing someone else who happens to use the same ideas, rather than as a means for building an actual product; though not all of the rise can be attributed to such entities as large corporations have apparently become much more litigious as well.
Canada’s Research in Motiion (RIM), maker of Blackberry mobile devices, was sued by a non-practicing entity, NTP, Inc. Here’s a little more about the situation (from a Wikipedia essay on NTP),
NTP has been characterized as a patent troll because it is a non-practicing entity that aggressively enforces its patent porfolio against larger, well established companies. The most notable case was against Research in Motion, makers of the BlackBerry mobile email system.
In 2000, NTP sent notice of their wireless email patents to a number of companies and offered to license the patents to them. None of the companies took a license. NTP brought a patent infringement lawsuit against one of the companies, Research in Motion, in the United States District Court for the Eastern District of Virginia. …
During the trial, RIM tried to show that a functional wireless email system was already in the public domain at the time the NTP inventions had been made. This would have invalidated the NTP patents. The prior system was called System for Automated Messages (SAM). RIM demonstrated SAM in court and it appeared to work. But the NTP attorneys discovered that RIM was not using vintage SAM software, but a more modern version that came after NTP’s inventions were made. Therefore the judge instructed the jury to disregard the demonstration as invalid.
The jury eventually found that the NTP patents were valid, that RIM had infringed them, that the infringement had been “willful”, and that the infringement had cost NTP $33 million in damages (the greater of a reasonable royalty or lost profits). The judge, James R. Spencer increased the damages to $53 million as a punitive measure because the infringement had been willful. He also instructed RIM to pay NTP’s legal fees of $4.5 million and issued an injunction ordering RIM to cease and desist infringing the patents. This would have shut down the BlackBerry systems in the US.
There was a settlement made by RIM with NTP in 2006. Simultaneously however, RIM continued to request patent reexaminations and so the patents are still being fought over.
All this makes one wonder just how much innovation and invention could have been stimulated with the funds used to fight and settle this court case.
Intriguingly, RIM was part of a consortium of six companies that during July 2011 successfully purchased former communications giant Nortel Networks’ patent portfolio. From the July 1, 2011 article by Charles Arther for the Guardian,
Apple, Microsoft, Sony and BlackBerry maker Research in Motion are part of a winning consortium of six companies which have bought a valuable tranche of patents from the bankrupt Nortel Networks patent portfolio for $4.5bn (£2.8bn), in a hotly contested auction that saw Google and Intel lose out.
Early signs had suggested that Google might be the winning bidder for the patents, which will provide valuable armoury for expected disputes in the communications – and especially smartphone – field.
The result could give Apple and Microsoft the upper hand in any forthcoming patents rows. [emphasis mine] Microsoft is already extracting payments from a number of companies that use Google’s Android mobile operating system on the basis that it owns patents that they were infringing. Oracle has big court case against Google alleging that Android infringes a number of Java patents, and claiming $6.1bn in damages.
The other two companies partnering in the consortium are EMC, a storage company, and Ericsson, a communications company.
As Arthur’s article makes clear, this deal is designed facilitate cash grabs based on Nortel’s patent portfolio and/or to constrain innovation. It’s fascinating to note that RIM is both a target vis à vis its NTP experience and a possible aggressor as part of this consortium. Again, imagine how those billions of dollars could have been used for greater innovation and invention.
Other topics were covered as well, the page hosting the OECD scorecard information boasts a couple of animations, one of particular interest to me (sadly I cannot embed it here). The item of interest is the animation featuring 30 years of R&D investments in OECD and non-OECD countries. It’s a very lively 16 seconds and you may need to view it a few times. You’ll see some countries rocket out of nowhere to make their appearance on the chart (Finland and Korea come to mind) and you’ll see some countries progress steadily while others fall back. The Canadian trajectory shows slow and steady growth until approximately 2000 when we fall back for a year or two after which we remain stagnant.
Tags: Apple, Blackberry, Canada, Charles Arthur, EMC, Ericsson, Microsoft, Mike Masnick, Nortel, NTP Inc., OECD, Organization for Economic Cooperation and Development, patent trolls, Research in Motion, RIM, Science Technology and Industry Scoreboard for 2011, Sony