Reflections on Patent Prom and the Silicon Valley-DC Divide

I just returned from five days in Silicon Valley to my Washington, DC home.  For years, I have been one of the many people who have sat at the intersection of the Silicon Valley-DC gap on key policy issues, like my colleagues at CCIA.  It is often said that DC doesn’t understand Silicon Valley and Silicon Valley doesn’t understand DC.  I fundamentally reject that thesis and have made it part of my career’s mission to explain why.

However, after returning from Silicon Valley this trip, it could not be more apparent to me that the two sides are far apart on the role of intellectual property in our innovative economy.  This was on display on Friday at Santa Clara University Law School’s High Tech Institute event, “Solutions to the Software Patent Problem.

The conference brought together leading thinkers, academics, members of the patent bar and innovative Silicon Valley companies to discuss not if we have a software problem, but ways of solving it.  Presenters included Google General Counsel Kent Walker, Union Square Ventures principal Brad Burnham, Twitter’s Ben Lee and almost every major legal academic working on patent law.

Over the next few months on this blog, we are going to go over many of these proposals in detail — to go over them all in just this one post would not do them justice.  They were all thoughtful and worthy of serious consideration.

However, a second thing was clear from the conference — there was little faith in the ability of Washington to solve this problem, despite the need to do so.  The presentations that did discuss Washington focused on a current proposal on fee shifting in Congress, introduced by Congressman DeFazio and Chaffetz, called the SHIELD Act.  The SHIELD Act is a simple proposal that would attempt to shift the costs of litigation from defendants to patent trolls in software patent suits where the defendant prevails.  It is a simple bill outside of the complications of defining a software patent.

However, the SHIELD Act has come into a bit of trouble.  Numerous sources from the conference and DC are reporting that the House Judiciary committee staff, which has jurisdiction over the bill, has told Congressman DeFazio the SHIELD Act violates the Agreement on Trade Related Aspects of Intellectual Property Rights (TRIPS).  Specifically, TRIPS has provisions that get into an arcane debate over interpretation of harmonization and differentiation provisions that I will leave to TRIPS experts.  However, there were many TRIPS experts at the conference that strongly disagreed with the interpretation of the House Judiciary committee staff.  Additionally, there are provisions in the recently passed America Invents Act related solely to financial services patents and other types of differentiations under U.S. patent law, that under the logic of the Judiciary committee staff may also be TRIPS violations.  I guess TRIPS only matters when you don’t agree with the policy goals.

Beyond the SHIELD Act, there was a clear feeling that given (1) the length of time it took to pass the America Invents Act, (2) the dysfunction in Congress and (3) a belief that Senate Judiciary Committee Chairman Patrick Leahy would oppose software patent reform, Washington does not get the magnitude nor the immediacy of the problem.  I think they are likely correct on all three.

However, all hope is not lost.  While Friday’s conference was going on in Santa Clara, the Federalist society was holding its own discussion on software patents.  At this conference, Ryan Triplette, one of the most respected voices in Washington, DC on patent policy and one of the architects of the America Invents Act (AIA) as a former Senate Judiciary committee lead patent counsel for the Senate Republicans, admitted that the current system is not working as they hoped when they passed the AIA.  According to Triplette, AIA’s attempts to reign in ambiguity in the system have not worked.

If we are going to be successful in moving forward with changing Congress’ view on the challenges in our current patent system, it is going to take time and a willingness to settle for incremental changes like the SHIELD Act, rather than sweeping legislation.  Years of lobbying and messaging from many in the high tech and intellectual property community, including the Chamber of Commerce and Business Software Alliance, that patents equal innovation need to be undone.  It has been drummed into the minds of too many people for too long — even the OECD uses patents as a measure of the health of an innovative economy.  One just need look at Patent and Trademark Office Director David Kappos’ remarks at the Center for American Progress today, to see how pervasive this view is in the DC patent establishment.  In Silicon Valley the issue is how to solve the problem; in DC there is a strong backlash that there is a problem.

Many patents are good for innovation, but as we have seen from the abusive use of them in the hands of the wrong actors, or the overly-abstract nature of many of the patents being litigated in the software patent wars, in the wrong hands they can be anti-innovative.  Silicon Valley understands this.  Now it is time for Silicon Valley to explain that to DC, not retrench into its typical place of ‘DC doesn’t understand us.’