The IP Symposium is a collocated event to the Embedded Systems Conference and is taking place today and tomorrow at the Fairmont Hotel in downtown San Jose, California. It should come as no surprise that the first day of the IP Symposium was almost entirely dedicated to legal and business issues related to the industry. Of the 12 sessions offered the first day, one was in two parts, only two addressed engineering issues.
It must be said, though, that it is extremely important for engineering managers, or for anyone contemplating a startup venture, to have some knowledge and appreciation for the legal vagaries that impact the development and use of Intellectual Property.
At a time when every EDA startup must assure venture capital firms that it will not infringe existing patents and will generate its own patents portfolio in order to get funded, the keynote speeches by Peter Detkin and Michael Meurer were appropriate.
Peter Detkin is the founder and Vice-Chairman of Intellectual Ventures, a company that focuses on a variety of projects relating to intellectual property and invention. Peter drew a distinction between products and patents and stated that it is expensive to both obtain and defend a patent. He said that the mission of the patent system is to encourage and reward inventions and disclosures. Small inventors, defined as those entities that have less than 500 employees are responsible for 60% of US patents while the remaining 40% are granted to large companies. On the other hand, large companies collect over 90% of revenues derived from patents, while small companies are left with the "crumbs". He also pointed out that the average time required to go through the patent application process is now close to four years, and that, on the average, it takes just as long for a small inventor to negotiate licensing rights with a large company.
Mr. Detkin showed how the filed of patents has grown its own industry, no longer in the form of law firms specializing in patent law, but also a number of different business and investment companies dealing with various aspect of funding, licensing, and commerce in patents.
Dr. Meurer teaches courses in patents, intellectual property, and public policy toward the high-tech industry at Boston University School of Law since 1999. His talk,, entitled "Patent Failure," was an overview of material published in a book with the same title that he wrote with economist James Bessen. By drawing a parallel with land property rights, Dr. Meurer pointed out the major drawbacks of patent law.
While land property is registered, is subject to easy third party verification, and deference to fact finders, patents suffer from hidden claims, low quality opinion letters, and little deference. Real estate ownership is characterized by physical possession, while the scope of patents is often broader than their embodiments; patents and claims are relatively cheap to obtain, in Silicon Valley a patent application will cost you around $25,000, but you cannot obtain insurance against infringements, and there is a relatively high risk of invalidity since, especially in the software domain, it is impractical to perform an exhaustive prior search.
Dr Meurer suggests that we need a good system of property rights that provides information to everyone about ownership and scope of rights. The ready availability of notices of patents, not missing prior art research is the issue that deserves the most attention by patent reformers according to Dr. Meurer.