Privacy, Business and Law

Silicon Valley used to be cherry and apricot orchards. Today the world knows Silicon Valley as a fountain of high technology. Few of the Fortune 500 companies that symbolize Silicon Valley-Intel, Apple, Silicon Graphics and HP existed 30 years ago. These companies are just the most visible spouts in this fountain of high technology. Silicon Valley’s real strength is its thousands of high tech companies. But we in danger of turning down this fountain because of what John Trudel in Upside magazine called “The great patent sell out”.

Inventors and the patent system have been crucial to Silicon Valley. The PTO granted more patents in all of Santa Clara County in 1994 than it did in 40 states. National Inventor Hall of Fame inductees founded some of the most influential Silicon Valley companies: Shockley Semiconductor (Shockley), Fairchild and Intel (Noyce), Hewlett-Packard (Hewlett) and Alza (Djarassi). Steve Wozniak founded Apple computer based on a patented invention.

Over time, most companies lose the spirit of innovation and entrepreneurship that launched them. They wait until others pioneer innovations and then the copy and improve them. They look to Washington for help. Thus the innovative startup in the job creating segment of the economy evolves into a big company in the job losing segment of the economy. A strong patent system is vital to check this tendency by ensuring a continuous supply of infant innovative companies.

The U.S patent system differs from the rest of the world’s in that it is better at encouraging startups that challenge entrenched interests and the conventional wisdom. It lets inventors start in a garage as Hewlett and Packard did, and grow to be a huge company. Patents are a catalyst for the “creative destruction” that is Capitalism at its best.

There is a move afoot to weaken the U.S. patent system-the source of innovation, an improved standard of living, new companies, and jobs. The impetus to change the patent system comes from the entrenched interests that that are threatened by this “creative destruction”. It comes from Japan and a small, but politically active, segment of the U.S. patent bar. Japan’s culture excels at improving, refining, and cost reducing products, but it has created few fundamental innovations. Its patent system protects entrenched interests, ensuring them easy access to new technology and discouraging high technology startups like those in Silicon Valley.

In contrast, the U.S. is the most inventive country in the world. If we change our patent system to be like the rest of the world’s, will we turn down the fountain of innovation? Will we be making it easier for copiers to copy inventions. Will we be discouraging invention by making it not pay and reducing the level of U.S. inventiveness down to that of the rest of the world.

One change being pushed as part of a “salami slices” strategy would require publishing patent applications 18 months after filing when the are still trade secrets rather than when issued. If publishing trade secrets is a good idea, why not publish all trade secrets?

Another change makes the patent term 20 years from when the patent is filed, rather than 17 years from when it is issued. Many patents have taken decades to issue through no fault of the inventor. With a “from filing” term, the inventor unfairly suffers when the patent office is slow or the technology is complex.

This change actually became law a year ago. Lobbyists hid it in the GATT implementation bill although GATT did not require it. HR. 359 which has 196 cosponsors and support across a wide political spectrum will restore the 17-year-from-issue term. However, big company and Japanese lobbyists are working hard to stop this bill, and to pass the 18 month publication bill (H.R. 1733).

The U.S. inventor community is almost universally against these changes to the patent system. National Inventor Hall of Fame inductees Dr. Raymond Damadian, inventor of Magnetic Resonance Imaging, and Dr. Robert Rines, inventor of high definition radar and sonar, were invited to testify against these changes, but the Congressmen didn’t stay around to hear what they had to say.

To sell these changes the Japanese originated the catch phrase of “submarine patents”–patents whose issuance inventors intentionally delay for many years only to surface into a mature industry. No instances of subroutine patents that stand scrutiny have been produced. Commissioner Lehman testified he had identified 627 probably “submarine patents”, but, on inspection two thirds of these patents were delayed just due to government secrecy orders.

Another alleged source of “submarine patents” is Jerome Lemelson one of whose patents took 40 years to issue. The record shows that the patent office caused the delay. Does it make sense for a 30 year old inventor to delay his patents so they will issue when he is 70 years old? Who do you think is more likely to be deceptive: inventors or lawyers and lobbyists trying to pass a bill? Who do you think is more likely to push to get a patent issued: an inventor whose work it is, or the patent office bureaucracy?

The catch phrase “submarine patents” is a useful weapon in the campaign to weaken our patent system. It demonizes inventors and so make it easier to sell the changes to Congress, business, and the general public.

In the past, Japanese got Silicon Valley companies got Japanese companies sell licenses which created a few profitable quarters at the cost of Japan’s became the semiconductor powerhouse. We can’t blame Japan for doing what is in their interest, but we shouldn’t let Japan hornswaggle us again. We should blame our government officials for letting them get away with it. The two officials who negotiated these agreements with the Japanese are once and (probably) future lobbyists. Patent commissioner Bruce Lehman, who has minimal expertise in patents, negotiated the agreement for a 20-years-from-issue patent term with Wataru Asou of the Japanese Patent Office. David Friedman in the LA Times called it “a deal that may rank as one of the most lopsided agreements in U.S. history”. Commerce Secretary Brown negotiated the one-sided 18 month publication agreement with the Japan.

The latest to be hornswaggled are four of our local representatives: Zoe Lofgren, Anna Eshoo, Pete Stark and Sam Farr. They signed a “Dear Colleague” letter asking fellow house members to cosponsor HR 1733. The letter contained errors and misleading information: The fact is: GATT doesn’t require a 20 year from filing term; the U.S. The fact is the U.S. patent system gives the U.S. a competitive advantage relative to foreign countries, not a disadvantage.

Before this mistake becomes law, I would hope these members of Congress will examine the basis for this legislation. What evidence is there that the patent system is so broke that we should make such fundamental changes to it?

by Paul Heckel

Paul Heckel is president of HyperRacks, a Silicon Valley startup, and founder and president of Intellectual Property Creators a nonprofit organization of seasoned inventors interested in patent enforcement and patent public policy issues.