WASHINGTON Is the government issuing too many patents, thereby stifling competition and innovation? Or are attempts to lock up the rights to new technologies merely a function of increased investment in research and development during a period of unprecedented innovation and economic risk?
Those questions and more will be debated over the next six weeks in hearings sponsored by the Federal Trade Commission (FTC) and the Justice Department's antitrust division.
The debate has been fueled, current and former government officials said during the first hearing Wednesday (Feb. 6), by growing tensions between intellectual-property (IP) rights holders and the antitrust enforcers seeking to promote competition in technology markets. Those markets, including electronics, computing and biotechnology, are driving the global economy as traditional manufacturing and even services begin to fade and the much-heralded "knowledge-based economy" takes root.
The number of patents issued annually by the U.S. Patent and Trademark Office has increased significantly and the number of applications filed each year is skyrocketing. "We need to understand the recent trend of patent proliferation," said FTC chairman Timothy Muris. "How does this trend affect the commercialization of new technology?"
Competition laws and IP rights law must be in balance, Charles James, head of the Justice Department's antitrust division, told the forum.
The IP hearings have prompted industry concerns that the government may be preparing to rewrite its guidelines on intellectual properties. In the past, the Justice Department has issued favorable opinions on licensing issues like patent pooling. Both James and Muris said the concerns were unfounded. "There is no hidden agenda to these hearings," Muris said.
Still, experts at the hearing said, antitrust concerns that used to trump IP rights have been reversed as the pendulum swings toward more and broader patents. "Why do we find ourselves issuing as many patents as we do?" asked Robert Pitofsky, who was FTC chairman in the Clinton administration.
Critics have long pointed to the expansion of IP rights to cover ubiquitous technologies such as software code as a recipe for disaster. Powerful corporations could seize control of the underlying ideas that gave rise to algorithms, they warned, giving them monopolies that would stifle innovation. These concerns in part helped fuel the movement toward open-source software.
But defenders of the patent system downplayed those concerns. "The entry of patent law into these areas was greeted with predictions of disaster," said James Rogan, director of the U.S. patent office. "Yet the United States is the international leader in [software] and other technological areas."
Added Rogan, "A return by competition regulators to viewing IP rights with a 1970s-era suspicion would risk interfering with these market-based incentives to innovate."
As the number of patent disputes grew and as high technology became the engine of the U.S. economy, a federal court of appeals was created here to resolve IP disputes. About one-quarter of the appeals court's docket is patent cases.
U.S. Circuit Judge Pauline Newman told the IP forum that the court has recently tightened the scope of disputed patents.
U.S. patent law requires that patented technology be "non-obvious." Once a patent is granted, the holder must disclose the innovation. Regardless of the outcome of the IP-vs.-competition debate, Judge Newman said the non-obvious standard should be maintained. Public disclosure in exchange for limited patent protection has never been more important, she said.
Muris said a Feb. 20 hearing at the FTC will examine the economic aspects of IP, competition and technological innovation.
Meanwhile, the impact of the U.S. patent system on innovation is being studied by the National Academy of Science. The academy is expected to issue a report shortly.