PublishedNovember 15, 2012

The Continued Challenge Posed by Abstract Patents

What is the state of the patent system?  In 2009, scholars framed the question as whether it was failing.  In 2011, the question was whether it was in crisis.  Now, Wired Magazine’s “Patent Fix” series sees experts debating whether it is entirely broken.  Judging by titles alone, we’re losing ground.  The mounting tide of patent research provides more empirical evidence, of course, showing a marked increase in patenting, patent litigation, and litigation-related expense.

One datapoint cited in Wired Magazine’s exchange involves a review of 795 patent suits – all patent suits filed over 70 years, between 1790 and 1860.  (By comparison, our federal courts now see more than that filed each quarter.)

Citing this data culled by economist Zorina Khan, IBM’s Manny Schecter argues that the rate of litigation per patent was actually higher in that era, from which one might deduce that we’re actually less litigious today.  (All other data to the contrary…)  For his part, Techdirt’s Mike Masnick responds that this is a nonsensical metric because it overlooks the current tsunami of patenting that has inundated the USPTO.  It also overlooks the so-called “Rule of 25” — the fact that a large portion of infringement allegations settle long before suit.

The change in the amount of litigation per patent is interesting for another reason: it suggests to us that the nature of litigants has changed.  According to Khan, more than a tenth of the suits in the early nineteenth century involved “great inventions”.  In these cases, typically a relatively prominent inventor sought to prevent many infringers from appropriating one distinctive innovation.  The recognizable, recurring protagonist was the inventor plaintiff, combating a rotating cast of furtive copyists.  Today, however, the narrative is reversed.  Today’s recognizable, recurring protagonists are litigation defendants – Fortune 500 tech companies being sued by a rotating cast of unknown patent assertion entities.

Even when taking into account the smartphone wars, which generally involve prominent producers on both sides, technology markets represent a marked contrast to pharmaceuticals, which are characterized by a smaller number of blockbuster patents, and a small patent-to-product ratio.

The cause of this shift, to a world where each successful new product is subjected to numerous infringement claims from numerous sources, is abstraction.  Technology innovation lends itself to description at varying levels of specificity.  Patents may be as broad as the business model or as narrow as the code to implement a particular feature, and everything in between.  They may describe a narrow solution to a problem, or they may attempt to broadly acquire rights to all solutions, merely by describing the problem.  The result is that a single product can be patented in countless ways, leading to a world in which 1 in 6 active patents read on the smartphone.

Abstraction is one of the key challenges that confronts the patent system, one which the recent U.S. patent reform failed entirely to address.  As long as the abstraction problem persists, the patent system will remain beleaguered by strife and abuse.

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Matt Schruers

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