Tuesday, September 23, 2014

Comment Posted for Li Westerlund

Yochai Benkler, The Wealth of Networks, Chapter 12 Conclusion: The Stakes of Information Law and Policy
Yochai Benkler focuses on the tension between proprietary market-based models of innovation in the context of communications in complex societies. Noting that theories of growth and innovation assume dominance of industrial models, he connects this concept to modern societies’ mass media and industrial information economy and suggests that it separates production from consumption. He challenges the concept he attributes to policy makers and their advisers toward the end of the twentieth century; that property in information and innovation equals property in tangible objects, making such ownership a necessity for growth and productivity. The exclusionary proprietary models he refers to are those that exist based on the intellectual property system, which includes patents, trademarks, copyrights and, even though not mentioned, trade secrets.     
Based on an assertion that the arts and sciences are replete with voluntarism and actions oriented primarily toward social-psychological motivations rather than market appropriation, Benkler challenges the effectiveness the intellectual property system for driving innovation. Despite the unfortunate absence of an explicit clarification of which industry this statement refers to, the content and sentiment of the chapter indicate that his discussion centers on the software and so-called high tech industry.
The example of software patents is interesting for several reasons. This particular field is plagued with non-practicing entities (“NPEs” or “trolls”) owning patents, which they often assert against an entire industry based on clever strategies to make a business on monetary settlements before trial and judgment. The present situation in this particular industry seems to make many in-house patent counsels waking up in the middle of the night from nightmares, seeing trolls everywhere around them. Despite the common media and scholarly rhetoric, however, this so-called troll problem pertains predominantly to the software and high-tech industry. This fact sometimes even creates tension when new legislation indiscriminately affecting all industries is being proposed without regard to how other industries (and innovation) might be harmed.
Another thought-provoking aspect is that in other countries, including European countries, software inventions are formally not patentable based on an explicit exclusion from patentability in the patent law. Europe has also generally rejected what is often referred to as “business method patents,” which are not considered to have “technical character” under European patent law and, thus, are not patentable. In the patent context, much of what Benkler highlights as particularly problematic in this chapter appears to relate to the two types of subject matters. There is no obvious and clear cut solution for creating a better system to address the basic concerns, but one approach to consider that deserves analysis and discussion is to adopt the European approach. Nevertheless, politically and ideologically many influential actors will find difficulties with the idea of differentiating between industries when it comes to patent protection. Furthermore, adopting the European approach would not come easily since that would challenge the notion that the US patent system is the best in the world and, by inference, needs not be improved.


Shannon N. Foreman said...

Li, I was hoping you could say more about the "trolls." Are these people who obtained patents and copyrights with no intent to use them, for the sole purpose of later on suing other companies and people for copyright and patent infringement?

Westerlund said...
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Westerlund said...

The definition of "trolls" is not entirely clear and could actually also cover university research, which universities can never take on its own through the entire regulatory path for approval and actually make it available to patients. However, the notion of "trolls" are exactly that yes, some will invent, file patent applications and may get patents issued with no intent of actual production and sale, or otherwise make the inventions available to the market (predominately in the United States) only to sue for settlement payments. Some patents can broadly claim aspects of devices or transactions. One strategy for such patents is to first target a select group, say credit card companies based on a patent covering some part of the transaction when using a credit card. Often the settlement payment asked for is much less than litigation would cost. In the United States and the basic rule (there are exceptions) is that each party cover their attorney fees regardless of win or lose. Thus, the companies practically will have to calculate with such cost against the requested settlement payment they could pay to make the issue go away. In Europe most jurisdictions have one form or the other of looser pay so the litigation landscape differs and might therefore divert some troll activities. There are obviously much more nuances and aspects of this issue and simply because an inventor chose to out-license his or her invention, perhaps because they don't have capacity or funding to produce or create sales force for example, doesn't necessarily make them "bad actors." Nonetheless, for some industries the so called "troll activity" has become a big issue.