Business Impact
Patent Pollution
Two Web-based startups are taking aim at bogus patent claims.
It is not a perfect world. Tankers spill oil. Innocent people land in jail. Bad calls cost the home team a championship. And as almost anyone in the intellectual-property game will tell you, the U.S. Patent and Trademark Office continues to grant patents that are, well, patently invalid. I’m talking about patents for things that have either already been invented or are so straightforward and apparent they don’t meet the patent’s law requirements for being novel and nonobvious.
For years, people have griped about these bogus patent claims. Rightfully so, since firms shell out millions in needless licensing fees as a result. And the patent office has long promised to do better. But now two Web-based ventures, IP.com and BountyQuest, are taking their own steps to rein in bad patents-either by stopping them before they are granted or by knocking them out after the fact. What makes these startups really interesting is that they are attracting support across a broad spectrum of intellectual-property players-from patent system boosters to open-source programmers. In the polarized IP field, that is no small feat.
The nub of the problem is that a U.S. patent affords the holder a 20-year monopoly on an idea, whether it’s
granted on valid grounds or not: that is, unless the patent office is convinced to reexamine its decision, or the patent is invalidated in court. Both procedures take some effort, however. And the average patent case that goes to trial now costs millions, with unpredictable verdicts. The result: even when someone wielding a blatantly invalid patent demands royalties, your lawyer will often advise you to pony up rather than fight.
Of course, it isn’t supposed to work that way. If a concept is obvious to practitioners in a given field or has previously been published in almost any fashion, that should invalidate the application. Practically speaking, however, it’s a tall order for the U.S. Patent and Trademark Office to scour the universe of publications to determine whether your software code or concept has already surfaced. So mistakes are made-eroding confidence in the system and feeding the problem by encouraging firms to apply for dubious and overly broad patents of their own.
Easing this patent pollution is where the new Web-based firms come in. IP.com, of West Henrietta, NY, offers a low-cost registration system that allows inventors to place their work in the public domain and prevent others from patenting it. A document submitted to IP.com becomes part of a database that both the U.S. and European Patent Offices have promised to search before issuing patents. And while it can only be used defensively-to protect against bogus claims and not as a means of collecting royalties-an impressive list of firms, from Abbott Laboratories to United Technologies, has begun using IP.com to guard against patent infringement lawsuits.
The standard fee for this insurance: just $109. However, IP.com also provides a similar service to open-source programmers for less than $20. Open-sourcers can thus gleefully thwart the excesses of a patent system they decry, preserving their work in a form protected from proprietary claims.
Tom Colson, CEO of IP.com, says the stew of questionable patents reminds him of his work as a young lawyer on toxic-contamination cases. Cleanup campaigns, he notes, typically involve two separate efforts: stopping pollution on the one hand, and clearing up the existing mess on the other. The environmental analogy is apt.
If IP.com targets patent pollution, Boston-based BountyQuest is out to remediate the other half of the trouble: patents of questionable validity that may already be wreaking havoc. Taking its cue from bounty hunters who track fugitive criminals for a fee, BountyQuest posts rewards of $10,000 and up that have been offered by threatened firms for “fugitive information” that can help bust invalid patents. Such bounties are a small price for threatened firms to pay for proof of prior art that will force bogus claimants to back off.
In its most highly publicized bounty to date, BountyQuest investor Tim O’Reilly, who heads computer publisher O’Reilly & Associates, posted a $10,000 reward for infor-mation that would invalidate Amazon.com’s “1-Click” online shopping patent. While the case drags on with unclear results, BountyQuest drew 25 submissions and ended up splitting the reward among three bounty hunters who provided information on various clicking patents related to making online purchases. Since its launch earlier this year, BountyQuest has paid $60,000 in rewards. At the time of this writing, it had roughly half a dozen open bounties posted on its Web site (www.bountyquest.com), looking to bust patents involving everything from prepaid cellular calls to a drug treatment for osteoporosis.
With thousands of patents issuing weekly, we can’t expect these two ventures to solve the problem of invalid patents. But by drawing their strength from the distributive power of the Web rather than counting on an infallible patent system, they offer hope.
