Are we too afraid to rethink the patent system?

PatLit is delighted to host this piece by London-based patent attorney and guest blogger Dr Suleman Ali (Holly IP).  Here Suleman takes the opportunity here to ask some big questions about our immediate legal environment:

Are we too afraid to rethink the patent system? 

How well is the patent system working -- and should it be changed?  For many companies, patent strategy is complex and expensive. In certain technical areas companies cannot be passive when it comes to patents.  They have to build up a patent portfolio for defensive purposes, i.e. to deter litigation by competitors.  In recent years we’ve seen the outbreak of patent wars as parties have been prepared to spend a huge amount of resource in litigating across the world.  Clearly patents represent a burden on companies, but there is little doubt that the benefits outweigh the losses. 

In their seminal study published in 1990 Merges and Nelson looked at the effect of claim scope on the development of technology in different sectors with the goal of examining whether claim scope could be ‘fine tuned’ to make the patent system more efficient.  They concluded that initial broad patent filings could inhibit development of technologies, particularly where there needed to be a cumulative series of innovations. However it is noteworthy that they were cautious in the way they presented possible changes, and really their work provided a deeper understanding of the impact of the patent system rather than putting forward alternatives. Some commentators, for example John Golden, have warned that sweeping changes would inevitably lead to unintended consequences, suggesting instead that making small incremental changes is the best way to change the patent system, if it is to be changed. 

When one considers how change could come about, one sees that perhaps the means for radical changes to the patent system simply do not exist.  Such changes would be subject to intense lobbying at the European Union (EU) and in the US -- which would probably sabotage the purpose of any attempted change. 

However, as we move to new types of research ecosystems, perhaps questions about rethinking the patent system are becoming more urgent.  There is an increasing acceptance that open innovation models have a place in hi-tech areas and open innovation communities already exist in the fields of software, 3D printing, synthetic biology and green technologies.  However Jason Schultz and Jennifer Urban have noted that open innovation communities often do not see a role for patents in their ecosystem.  Many people in such communities have anti-patent views and these communities will sometimes develop defensive strategies against the threat of patent litigation.  They may, for example, set up patent pools which create an environment within which all parties can contribute.  This has led to accusations of collusion and clearly there is always the risk of a patent pool being used offensively against companies outside the patent pool.  From the strategies that are emerging it seems that open innovation communities are more focused on countering the negative aspects of the patent system, rather than seeing patents as helpful economic tools. 

It is also known that many companies don’t benefit fully from their patents, with surveys showing that 30-40% of patents regarded as ‘important’ by companies might not be commercialised.  In view of this there have been suggestions that we need to provide more incentives for companies to commercialise their inventions.  One very radical proposal, from Ted Sichelman, is to introduce a new right that would protect investment in the commercialisation process.  This would be a positive right to sell a specific narrowly defined novel product.  Being a ‘positive’ right it would provide immunity from enforcement of a third party patent right if the patentee had not commercialised its invention within a specified time.  In return the patentee would be given a fixed royalty.  This commercialisation right essentially recognises that costs do not end at the invention stage, and is a way of protecting the further investment needed to develop and bring a product to market.  Clearly such a positive right would counter the need to build up a patent portfolio for defensive purposes, and would also avoid the need for expensive patent wars. 

Unfortunately present debates about the patent system seem to be between the very anti-patent and the very pro-patent, so proposals for change are unlikely to undergo complex objective analysis by all parties that participate in, or are affected by, the patent system.  Perhaps we need to start recognising that patents do not incentivise commercialisation in certain situations, and that some sort of new positive right may provide a solution.  More worryingly, perhaps, patents in their present form are slowly going to become redundant as more sectors move to open innovation models.  If that is the case we need to start to think about how to change things now so that the development of new research ecosystems is not hindered by patent rights which are becoming less and less fit for purpose.