A computer industry association Friday blasted the US$1.5 billion verdict in the Microsoft/Alcatel-Lucent case saying that current patent laws are broken and threaten innovation and the standards process.
The Computer & Communications Industry Association (CCIA) said patents are handed out with such casual regularity that the playing field is now tilted in favor of patent holders, which leaves defendants with little protection from huge judgments.
"When you can claim a patent on something that is not well defined you are given the equivalent of an intellectual property bomb," says Ed Black, president of CCIA. "And that bomb can be used to force settlements or to win cases and get mega-settlements. We are over-arming, over-empowering rights holders in a system where getting those rights is not necessarily that hard and is not necessarily an indication of having done something that is great, innovative or creative."
In addition, the CCIA says innovation especially around standardization in the software industry is stifled as huge judgments give patent holders reasons to keep their interests close to the vest and return years later to exact a toll on users of standardized technology.
At the heart of the Microsoft/Alcatel-Lucent case was MP3 technology, which became an ISO/IEC standard in 1991.
"The whole standards and open standards process for high tech is a very important process," Black says. "To have MP3, which has been around since 1991 and is viewed as open, and then have a company come and say 'now you have to pay me for it,' that is a huge problem."
Black says CCIA is supporting all measures of patent reform, but says the central issue is the quality of patents.
"The number of patents and the things they are being issued for are just polluting the whole patent world," Black says. "We agree with liability reforms, litigation reform issues, but they are dealing with the problem after the fact. They are trying to clean up the mess without trying to work so the mess does not get any worse."
The CCIA has outlined its concerns and proposed reforms in a 46-page white paper entitled "Patent Reform for a Digital Economy." The document puts forth a set of pr principles on how the patent system should work focused on innovation, efficiency and accountability.
For the long term, the paper proposed such reforms as raising thresholds to eliminate the "ordinary" from patent law, institute a peer review process, stop ambushes on openly developed patents and re-engineer patent institutions such as Patent Administration and Policy Development.
Brian Kahin, the whitepaper's author and a senior fellow at CCIA, says the problem of patent holders returning years later to seek infringement payments doesn't happen in industries where marketed products are protected by a single patent, such as chemicals and pharmaceuticals. He says products marketed to IT are highly complex and may contain thousands of patentable functions or components, including standards.
"The problem," Kahin said in a statement, "is that software is chained to a system that has been optimized for drugs."
Black, a longtime critic of Microsoft, noted the irony in the Microsoft/Alcatel-Lucent case is that company's such as Microsoft and IBM that have been pushing for changes in patent laws and policies in "ridiculous ways" are now feeling the sting.
"Now they are finding out that, gee, maybe the idea of balance that some of us have been talking about for years isn't such a bad idea after all," Black says."It drives me nuts that Microsoft has won many of those battles and they have tilted the field that screws lots of people that now have to deal with a system that is out of control."