US Patent Debate: "IP" Rights vs. Competition

[Seth Johnson <seth.johnson@RealMeasures.dyndns.org>]

http://www.eet.com/sys/news/OEG20020208S0079

U.S. Patent Debate to Pit IP Rights vs. Competition 

By George Leopold
February 11, 2002


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.