Why NPEs exist?Robert Reich did not mention NPEs in his New York Times OpEd, but he demonstrated why they exist
by Richard LIoyd, Sept 22, 2015
Whenever an article hits the mainstream US press that touches on the world of patents, we sit up and take note. On Sunday the New York Times ran an op-ed by Robert Reich under the headline “Big tech has become way too powerful”, in which IP played a prominent part. There was plenty in it to pique the interest of patent market watchers, not least the fact that it made no mention of “trolls”.
Reich was Secretary of Labor in President Clinton’s first administration before returning to academia. He is currently the Chancellor’s Professor of Public Policy at the University of California at Berkeley. Much of his writing tends to be in support of left-of-centre (certainly by American standards) policies and he regularly inveighs against the damaging effects of entrenched big business on the US and global economies.
His NYT piece, which is adapted from an upcoming book, was certainly in character. It raised a series of points about the power that large technology companies now have in the US and beyond, with their control of various forms of IP – including patents – being cited as a prime reason for this. One eye-catching paragraph noted:
“The patent system is crucial to innovation. The law gives 20 years of patent protection to inventions that are “new and useful,” as decided by the Patent and Trademark Office. But the winners are big enough to game the system. They make small improvements warranting new patents, effectively making their intellectual property semi permanent. They also lay claim to whole terrains of potential innovation including ideas barely on drawing boards and flood the system with so many applications that lone inventors have to wait years.”
Reich went on to reference Colleen Chien, a pro-reform academic and former White House IP adviser, whose research has plenty of fans in big tech and who observed back in 2012 that Google and Apple were spending more money on acquiring patents than on doing R&D.
Those numbers for two of big tech’s leaders, however, were heavily skewed by Apple’s participation in the Nortel patent auction and Google’s acquisition of Motorola Mobility, both of which happened in 2011. That was at the height of the smartphone wars when the main protagonists were focused on piling up patents to protect themselves from each other, not to directly monopolise invention. On top of which, of course, there may well be very good R&D-based reasons to purchase patents (and the know-how that can come with them).
That is one gripe with Reich’s piece, but in focusing on the accumulation of patents he may be on stronger ground. To support his point about tech’s all-consuming power, Reich points out that the top 10 websites now account for 75% of all page views in the US. He could also have very easily referenced the largest companies’ dominance of US patent ownership – as our most recent Patent 1000 revealed, just 369 companies hold more than half of all granted US rights.
In his piece, Reich opts not to dwell on the problems of the patent system to make his point about tech’s all-encompassing reach. In fact, it’s notable (even refreshing) to read something that looks at IP but doesn’t reference the ongoing debate around patent reform or the impact of “patent trolls.”
Instead, Reich’s article takes a much more macro-level view of things. However, if you follow his arguments through, they do help to explain the emergence of an NPE sector in the US. There may be examples of NPEs abusing the system, but for many lone inventors, start-ups and SMEs – the kinds of business that repeatedly approach big tech to license their discoveries – an NPE can represent the only way of actually securing a return on R&D investment.
The US legal system has long been the preserve of the richest companies and that has only become more of the case with the advent of inter partes reviews, a process which has given any company (but has beenparticularly popular with big tech) a way of challenging the validity of any patent. So as a patent owner not only now do you have to factor in the often multi-million dollar cost of securing protection and then, potentially, having to enforce through the courts, there is now the additional price of unlimited IPRs to deal with.
This all means that effective patent protection in the US is now almost exclusively a luxury only those with the deepest pockets can afford; among them are the kinds of Big Tech corporates Reich writes about. In fact, it is arguable that the only thing standing in the way of their absolute dominance are well-resourced NPEs with the capital and expertise to fight it out in court. That is not a healthy situation; but making litigation even more expensive and high-risk – which broad-based patent reform runs the risk of doing – will surely only make a bad situation worse. After all, the best way to lower the barriers to entry into the US patent system that Reich talks about is to reduce costs, not to raise them.
https://innovationalliance.net/patent-news/intellectual-asset-management-robert-reich-mention-npes-new-york-times-oped-demonstrated-exist-richard-lloyd/