Nathan P. Myhrvold
Chief Executive Officer
PMB 502, 227 Bellevue Way
Bellevue, WA 98004-5721
"Patent Quality and Improvement" before the
Subcommittee on the Courts, the Internet and Intellectual Property,
Committee on the Judiciary, House of Representatives, Congress of the United States
28 April 2005
Mr. Chairman and members of the Subcommittee, my name is Nathan Myhrvold. I am very pleased to have been asked to share my views as a scientist and inventor on the patent system with the Subcommittee. My personal history is very relevant to my remarks today, so permit me to introduce myself.
As long as I can remember I have been fascinated with science and technology. I pursued science in school, earning a bachelor's degree in mathematics, and master's degree in geophysics and space physics, both from UCLA. I continued exploring other disciplines, getting another master's degree in mathematical economics and a PhD in mathematical physics from Princeton University. I would have finished school much earlier if I had focused on one topic, but to be honest I never met a kind of science I didn't like. This obsession with schooling might have consumed half my life, but for the fact that I started early, entering college at 14, and completing my PhD by age 23.
After Princeton I was hired by Cambridge University in England, working directly for Professor Stephen Hawking. My research area was quantum field theory in curved space time, perhaps one of the most obscure and esoteric scientific disciplines. At that point in my life I would have told you that I'd be an academic researcher. But life has a way of throwing us curve balls. I took a three month leave of absence from working with Hawking to go to the San Francisco Bay Area to help some friends from graduate school on a software project. Before I knew it I was caught up in entrepreneurial fever.
The year was 1984, and the software industry was still tiny. I became the CEO of Dynamical Systems, a software start up with less than a dozen full time employees. After two years of struggling to keep our heads above water, we were acquired by Microsoft. I spent the next 14 years as a Microsoft employee, reporting directly to Bill Gates as Microsoft's first Chief Technology Officer. I could scarcely believe that I went from esoteric theories in physics to what would become the largest software company in the world.
At Microsoft I championed the development of new technology. Microsoft had zero patents and just two patent applications at the time I joined the company. I advocated increases in R&D spending, and patent filing, greatly increasing each of these. In 1991 I convinced the Microsoft board of directors to start Microsoft Research, the first major industrial research lab to be started in more than a generation. Laboratories like Bell Laboratories, GE Research Labs, Xerox PARC, and IBM Research, have made a tremendous contribution to America's preeminence in science and technology. Unfortunately, these institutions were founded 30 to 100 years ago, and there aren't many recent examples. Very few of the new giants of technology have bothered to invest in research and create similar research organizations. Microsoft Research now employs over 700 researchers in seven laboratories, and is ranked as one of the leading research institutions in the world.
I retired from Microsoft in 2000, and founded Intellectual Ventures, a company dedicated to investing in innovation and creativity in the form of invention. The venture capital community exists to help entrepreneurs start and finance new companies – at Intellectual Ventures we help and finance inventors to invent. This includes both full time employees, as well as working with inventors who are university professors, academic researchers, small businesses that cannot afford to patent without help, as well as independent inventors. I meet frequently with inventors from all ranks, and have attached a recent speech on invention given at Princeton University. Our company provides both business expertise and financing to these inventors, and provides inventors with a healthy share of the profits in their inventions.
My business career as a corporate executive has focused on managing innovation and using patents as a business asset. However, I am also an inventor with 17 issued US patents. I'm working on increasing that number; for the last couple years I have filed over a dozen patent applications a year which are still pending in the Patent Office. So, in addition to using patents in business, I am also a customer of the Patent Office and have seen the details of the patent process up close.
Given my varied career, I have seen the patent system from the perspectives of pure academic research, a giant technology company, and finally that of a small business. Each perspective offers different views on the patent system. The Subcommittee will hear from people in many of these directly through the process of these hearings. What I can offer is the views of someone who has experienced all of them.
Patents: Protecting Inventions
The patent system is a fundamental foundation of America's innovation based economy. Like any other part of the free enterprise system, the patent system offers economic incentive by allowing private ownership. In a way, this is no different than real estate, or other private assets. Private ownership of valuable assets is the basis for the American economy.
The process of invention requires large amounts of the inventor's time, energy and money. In order to create incentive for that expenditure, the inventor gets ownership in the invention for a limited time, after which it passes into the public domain. This system has been a primary driver behind the tide of innovation that has kept America number one in the world for at least the last century. The system that encouraged and sustained great inventors like Thomas Edison, Alexander Graham Bell and the Wright brothers is a critical component of America's 21st Century goals to lead the world in computing, biotechnology, nanotechnology and dozens of other exciting fields.
Small Inventors: America's Economic Engine
The leading component of America's invention output is driven by individual inventors, academic institutions, and small and medium businesses. The Subcommittee has heard testimony from large technology companies, and their trade associations. These firms are important inventors, and they frequently lead the list in terms of sheer number of patents. However what is much less well known is the substantial role that the little guy plays.
According to US Patent Office records, 45% of American patent holders are classified as "small entities" which includes small businesses, universities and individuals.
This pattern is repeated if you look in particular technology areas. I have done empirical research to understand the nature of the invention process, and found some remarkable results. It is not surprising that the entities that hold the most patents on computer processors include corporations like Intel and IBM. However, if you add them up, universities, individuals and small businesses in aggregate have substantially more processor patents than Intel or IBM – indeed more than the two combined. The same pattern is found in every technology field where I have looked. Small inventors have more operating system patents than Microsoft, more networking patents than Cisco and more wireless patents than Qualcomm.
The typical pattern in a technology field is that the top company (or even the sum of the top five or ten companies) has only a small fraction of the patents in that field – often no more than 10% of the patents. Most invention is not done by the largest companies in the field. Invention occurs across the whole spectrum of the economy – from technology giants all the way down to the lone inventor in the garage. Those lone inventors aren't just working on low-tech areas – no matter how technical a field, a huge number of patents are held by private individuals. Critics of the patent system sometimes talk derisively about the "myth of the small inventor", ignoring their contribution. Well, I am here to tell you that small inventors are not only alive and well, but they actually contribute more inventions than the biggest corporations do.
I think that it is very important for the Subcommittee to appreciate the role that small inventors play when considering reforms to the patent system. This is because small inventors depend on the patent system far more than big companies do. The patent system is the only means for the small inventor to get a fair shake, and any semblance of a level playing field.
A large company has financial resources that a small inventor can only dream of. They also have the ability to extract value from their patents a variety of ways. Indeed many large companies use their patents only on a defensive basis – that is a polite way to say that they use their patents to maintain their dominant market positions, rather than actively use them as revenue generators in their own right.
Protecting the Small Inventor's Rights
A small inventor, on the other hand, depends almost totally on the patent system to secure his ownership rights in the invention. A small change to patent law can, as an unintended consequence, have catastrophic effects on a small inventor who depends totally on his or her patent rights to survive. A small inventor does not have huge market share and other business assets to fall back on. Worse yet, the small inventor almost invariably winds up competing with large, well funded companies that have every possible advantage. Only the patent system stands tall as the protector of the basic rights of small inventors.
Changes to patent law must be scrutinized carefully to make sure that they do not tilt the playing field in a way that further disadvantages small inventors. They do the bulk of America's inventing and they deserve our support.
Proposed Patent Reform
I applaud the Subcommittee for its interest in patent reform and I have studied the Committee Print. There are a number of needed reforms that I agree with. In the interests of being concise I will focus here on the most important areas where I think your efforts can be improved, at least from my perspective.
First, I have to be frank and say I am disappointed that there isn't more focus on what I think is the most important aspect of patent quality – namely improving the quality of the patent examination process. Most of the committee print covers rules about patent disputes, and does not address the issues with getting patents examined in the first place. Patent quality starts in the Patent Office itself.
Anybody who is a big customer of the Patent Office, as I am, can tell you that they need some help. The backlog of patents has grown larger, and the waiting time to get a patent has grown with the backlog. Longer waiting is not a recipe for success in a world where the pace of technology is going faster, not slower. Looking ahead, the Patent Office must continue to hire and train new examiners, and keep up with the pace at which invention occurs. This job isn't getting any easier. Many of the proposals in the committee print are likely to increase the burden on the Patent Office. For example, the post-issuance oppositions with discovery will add process and personnel demands.
Simply put, the Patent Office needs adequate resources to do its job. Until the Patent Office is funded adequately to meet the demand for patents, America's inventors are going to be poorly served. I know that funding is a major occupation of Congress, which cuts across many issues including this one. However, without adequate resources, the Patent Office will be stuck in a situation where patent fees continue to rise, as they did last year, without the service improving. This amounts to a hidden tax on innovation. Is that really what serves America best as we enter the 21st Century?
In fairness, I can't complain about the resources without adding that I think the Patent Office does a good job within the constraints it has. Some critics of the patent system like to point to silly sounding patents, like a recent case mentioned in the press of a patent on a peanut butter and jelly sandwich. Or, critics will claim that the patent system is "out of control" and argue that there are many bad patents. These claims are misleading.
Though some bad patents are inevitable, the vast majority of all patents are sound and valid. No serious observer of the patent system has reached any other conclusion. As one example, when patents are re-examined by the Patent Office, the majority of the patents survive all or in part. This is also true in litigation results – there is no data on patents being found invalid en masse in the courts.
It is true that there are also some pretty frivolous sounding patents – indeed there are web sites that feature them, like www.patentlysilly.com. Looking at such a site it becomes obvious that the creativity of American inventors covers the full range from the sublime to the ridiculous, but that can leave the wrong impression. Most patents are both serious and valid.
Another area where misconceptions are bandied about is the topic of patent litigation. In a perfect world, property rights would always be respected, but here on Earth disputes are an inevitable reality. Many critics of the patent system wax hyperbolically about an "explosion" or "epidemic" in patent litigation. While it is true patent litigation has risen in recent years, these critics aren't telling the whole story. For example, the number of patent lawsuits each year is actually lower than the number of trademark lawsuits. Historically, copyright lawsuits used to outnumber patent suits, but in the late 1990s patent suits pulled ahead. However, in the last five years, copyright lawsuits have grown over twice as fast as patent suits and are set to overtake patent lawsuits, probably this year. Patent lawsuits are neither more common, nor are they growing faster, than any other form of intellectual property litigation.
A more telling point is that the number of patents has also grown. It makes sense that with more patents, and more patent holders, there is more opportunity for them to get into disputes. If you divide the growth in patent lawsuits by the growth in patents you find that on a per patent basis there were fewer lawsuits in 2004 than there were in 1985. This is hardly the makings of an epidemic. Instead the growth of patent lawsuits reflects the growth of the use of patents, and the growth of technologically innovative companies that rely on patents.
Let me be clear that I agree it is a worthy goal to reduce patent litigation. Litigation saps resources that small inventors could put toward more productive pursuits, like new inventions. Reducing the likelihood of litigation, with the attendant cost, complexity and uncertainty is a worthy goal.
Injunctive Relief for Patent Infringement Should Not Be Reduced
As a result, I cannot agree with one of the most extreme features of the Committee Print, regarding changes in permanent injunctions. This feature will greatly increase the volume, cost and complexity of patent litigation. It will also harm the small inventor.
The Committee Print changes the way permanent injunctions are granted, reversing principles, practices and legal precedents that date back to the very origin of the Patent Office. Patents are designed to give ownership of inventions to the inventor for a limited period of time. They are property rights. When a court finds that those rights are infringed, and another party is determined to trespass upon those rights, the court may decide to issue an injunction.
The Committee Print weakens and threatens to eliminate the injunctive relief due to the patent holder. It introduces an untested and potentially volatile new condition of "irreparable harm" into the injunction process. To put this in perspective, the Committee Print says, in effect, that it is okay to take the property of the patent holder as long as it won't irreparably harm them. This is tantamount to saying it is okay for a squatter to camp on your lawn as long as the harm to you isn't "irreparable". This flies in the face of the most concepts of property. Furthermore, the test of harm includes the extent to which the patentee makes use of the invention.
The latter point is quite telling. This feature of the Committee Print amounts to tilting the playing field toward large product companies and away from the small business, university and independent inventor.
It is important to note that this proposal to curtail overall injunctive relief for patent owners is not confined to preliminary injunctions, which are an altogether different body of law. It makes sense to consider issues like irreparable harm when considering whether to take the extraordinary step of issuing an injunction before trial. This is already common practice in many aspects of the law, including patent law. No change needs to be made here.
The permanent injunctions remedies for patent owners that the Committee Print threatens to minimize – and, in large part, eliminate -- are an entirely different animal than a preliminary injunction. Permanent injunctions occur only after a court has fully tried the case. In practice, this usually includes multiple rounds of appeal which occur over many years, so it is not an emergency rush to judgment. Before a permanent injunction is granted, the court will have carefully and definitively answered the question of infringement. In addition, current law and surrounding case law already give the court leeway to decide whether an injunction is appropriate.
Given the protracted legal maneuvering that precedes them, it's not like these injunctions sneak up on you. A defendant typically has many years notice. That time can be used to design around the patent in question. This is commonly done in the technology industry. A design-around renders an injunction moot, because the products no longer infringe. Innovative product companies frequently have the option to avoid injunctions through engineering rather than legal proceedings.
Injunctions come down to an issue of property. The infringer will, by definition, be found to have trespassed on the patent's holder's property, and the injunction is the eviction notice. No other part of property law holds that a lawful property owner must show that he or she is "irreparably harmed" before they can evict a squatter or trespasser.
What motivates this unprecedented taking of private property rights? Proponents of this approach make several arguments, none of which hold water on closer examination.
The first argument is based on a misconception that the patent system exists to cut a special break for companies that manufacture products. The fact is that the patent system exists to protect and encourage inventions, not products.
Products are protected by ordinary commercial law, and the economic incentive to create and sell products is immediate and obvious – the profits that flow from product sales. In sharp contrast, there is no economic incentive for an inventor if others can take and use his invention without justice. The patent system exists to address this by acknowledging the constitutionally guaranteed exclusive rights that inventors have in their inventions. This "exclusive right" is meaningless if in most circumstances inventors cannot have ownership in their inventions, including the right to exclude others.
The public good served by the Patent Office is to stimulate inventors to come up with new technology that can change our world, and see it enter the public domain after a period of time. This point is so important it bears repeating – the patent system exists to protect and stimulate inventions, not products.
Discriminating against patent holders on the basis of whether or not they produce a product disenfranchises some of America's most creative and prolific inventors. This broad group includes: university professors and research scientists, who often make great breakthroughs without having the facilities or resources to manufacture the products commercially; individual inventors who are in the same situation; and, finally small businesses who may commercialize some of their inventions but frequently invent more than they are able to productize simultaneously.
There is nothing dishonorable in an inventor licensing his or her inventions to companies that are in a better position to commercialize the technology. This time honored practice has been around as long as the patent system has. Thomas Edison, Nicola Tesla and other great 19th Century inventors all licensed their inventions out to companies to build them.
The tradition continues to this day. If you use a digital cellular phone, the chances are high that Qualcomm licensed its CDMA technology to the cell phone's manufacturer. DVD players rely on video compression patent technology licensed from a consortium of inventors ranging from Sony to Columbia University, while licenses to patents on inventions from Ray Dolby and his company increase our enjoyment of music. Within the technology industry companies like IBM, Lucent, Texas Instruments, Sony, Philips, Thomson and many others derive significant revenues from patent licensing activities.
The Committee Print Increases the Number, Complexity and Expense of Lawsuits
A primary justification advanced for the injunction proposal is that successful and innovative companies need this legislation to beat back a rising tide of nuisance lawsuits originating from greedy trial lawyers and unscrupulous patent holders. I can sympathize with this because when I was Microsoft, I frequently had to deal with patent lawsuits in my role as Chief Technology Officer. Microsoft has the dubious distinction of having been named as a defendant in patent lawsuits 52 times in the last five years, making it the second most "popular" defendant in the country.
So, while I can understand the frustration that my colleagues in large technology companies have, the reality is that the impact of these lawsuits is exaggerated. Some horror stories exist, but they are rare. The magnitude of the supposed problem is not borne out by the statistics.
I was curious, so I did a study counting the total number of lawsuits filed against technology companies by entities that do not produce products. The total of all these lawsuits over the last five years was just over 2% of all patent lawsuits. Furthermore, fully half of those lawsuits are from one very litigious company. Those horror stories aren't about an epidemic, or a situation that is out of control – it is actually a very minor phenomenon. I also counted the number of patent lawsuits in which a large technology company was the plaintiff – the result is 1.6%. Large technology companies generate nearly as many lawsuits as the entities that have no products.
These numbers put some perspective on the problem. On one hand, we have the potential to harm tens of thousands of small inventors. On the other hand we have the supposed benefit – to reduce the total number of lawsuits by perhaps one percent. It seems clear that the cure is far worse than the disease.
This is particularly true because the proposal in the Committee Print won't decrease litigation at all. In fact, it will dramatically increase the number of patent lawsuits, as well as their complexity and cost. Ironically, this proposal, which is often described as being yet another much needed and important reform against the excesses of trial lawyers, is in fact the trial lawyers' full employment act.
First there is the volume of the lawsuits. Today, about 97% of the patent lawsuits that are filed settle prior to a trial. The entire viability of the court system depends on this high settlement rate. Even a small change would overwhelm the courts with vastly more trials. Yet under the proposal, large companies will have no reason to settle. Their principal motive in settling a patent suit before trial is to avoid the possibility of an injunction should the company be found to be infringing, and to avoid enhanced damages should their unauthorized use of property be found to be willful. Without these threats, companies being sued will adopt the best strategy for their shareholders: refuse to settle and use the advantage of their deep pockets to drag lawsuits out to the bitter end, secure in the knowledge that no injunction can get in their way.
The complexity of the litigation also increases substantially, because now several new issues have been added to the already complex decision making process of the courts. In addition to determining infringement, the courts must also try an entirely different set of facts. The Committee Print directs that the court "shall consider and weigh evidence that establishes or negates any equitable factor relevant to a determination of the existence of irreparable harm, including the extent to which the patentee makes use of the invention".
In simple terms, this is a second lawsuit tacked onto the original lawsuit, complicating the already difficult patent litigation with an entirely new set of issues. Provisions like "consider and weigh evidence" mean a whole new area for motions, discovery and argument in court. As it stands, patent lawsuits can take five to seven years, and in some cases even longer. This new process will add substantially to this timetable.
This isn't the only new complexity thrown at the courts. By reducing or eliminating the right to an injunction, the courts are for the first time put in the position of determining the terms and conditions under which technology is licensed on a broad scale. Instead of the marketplace, courts will now be the primary determinant of licensing terms.
This also greatly adds to the complexity of the litigation. Under current patent law, the court may determine damages for past usage, but the court explicitly does not interfere in the market for future use of the patents. Instead, the court determines whether the property of the patent holder is being used – if it is, then the court issues an injunction and the two parties must work out for themselves what to do. In many cases there is no future use, because the infringer will use the many years that it took for the case to wind its way through the courts to redesign their product. In other cases the infringer and patent holder decide to settle based on their unfettered negotiations, which take into account the full panoply of market factors and competitive alternatives available in the modern economy.
Instead, under the proposal in the Committee Print, the court would have to set future licensing terms. Economists have a name for this scheme – it is called compulsory licensing. Numerous studies have shown that it is a poor way to run a patent system. It is also out of keeping with the key principles of the American economy and Constitution of the United States.
The decision-making process inherent in this huge new responsibility will weigh heavily on the courts. Current courts already expend a lot of time and energy determining past damages. Adding the future, which might stretch for a decade or more depending on the life of the patents, greatly raises the stakes. Higher stakes generally means more arguing on yet another issue – what should the future damages be? One thing seems certain: this proposal would be a boon for expert witnesses and the trial lawyers who deploy them.
Some critics of the patent system ask "why aren't monetary damages enough? Why are injunctions needed?" There are several answers. Corporations fear injunctions, and that's what brings them to the settlement table, yielding a 97% settlement rate. Determining commercial use and setting license fees will greatly complicate the litigation process. But perhaps the most important reason is that this compulsory licensing proposal will inject court mandated control over future licensing rather than allowing the parties to work out a market-oriented solution.
The Proposed Changes Would Gut Protection for Computer-Related Inventions
The injunction proposal is the topic in the Committee Print that I feel most strongly about. However, there are several other areas that deserve some comment. The Committee Print has an innocuous-seeming amendment to Section 271(f) of title 35 in the patent code. Unfortunately, this amendment would dramatically strip the rights of patent holders and would deal a serious blow to small inventors working in what is otherwise one of the most exciting and dynamic areas of the American economy.
Section 271(f) is in plain terms a law designed to prevent patent holders from being cheated by unscrupulous exporters. Patent law holds that export of a patented invention outside the United States is a use of the invention, just as much as sale inside the country would be. Both export and domestic sale are on the same basis. Section 271(f) was intended to close a loophole and prevent a company from exporting components rather than an entire invention. It has worked well in that purpose and substantial case law has developed around it.
Incredibly, the amendment proposed in the Committee Print creates a gaping loophole for software, or any invention that includes software. It requires that any "component" under 271(f) be a tangible item – thus exempting software altogether. It additionally requires that the tangible item "is itself combined physically with other components to create the combination that is alleged to infringe".
Translating this to plain English, it means that a software company could exploit the loophole created by this provision to export software without it counting as an export. Software would not qualify as a "tangible item", particularly if it was exported by transmission over the Internet or another computer network which these days is the dominant way software is shipped and sold. Software composed of multiple software components – as virtually all software is these days – would also not count. Most software companies have the majority of their revenue come from outside the US, so this provision would at a single stroke cut the licensing revenues due a valid software patent holder by a factor of two or more.
Software is not the only beneficiary of the loophole created by this provision. Any invention that combines software and hardware could also be able to use the loophole by simply exporting the hardware physically, then downloading software to it. Literally millions of inventions, ranging from aircraft navigation systems to videogames and toys would suddenly have their exports made immune from justice.
What justification can there be to strip America's inventors of the revenue from these exports? It is hard for me to imagine how, at the onset of the 21st Century, anyone could pretend that only "tangible items" have value when the Internet has become a ubiquitous channel for commerce, and software is a multi-hundred billion dollar market.
The Proposed Changes Would Reward Willful Patent Infringers
The topic of willful infringement is clearly an area of patent law where reform is needed. The current willfulness standard should be clearly reviewed. However, I cannot support the Committee Print which goes too far in reducing the conditions under which a company can be found liable for willfulness.
Note that willfulness goes hand in hand with the injunction issue. If large corporations know that they don't have to worry either about an injunction or about an increased financial penalty due to a finding of willfulness, then they can infringe at will. At worst, a court will make them pay a license fee, but even that is not certain because the court might not make such a finding. Even if a court eventually rules against them, the infringer can delay for many years. The best strategy for a large company is simply to infringe widely, and refuse any negotiation with the patent holder.
This creates an incentive for exactly the kind of behavior the patent system is supposed to oppose. This is another example of a reform that, as an unintended consequence, would increase the volume of patent litigation by motivating companies to infringe. Small inventors would be adversely affected because their only means to bring such deliberate infringers to heel is to resort to expensive litigation they can ill afford.
Post-Grant Opposition Procedure Will Require Greater Patent Office Resources
Post-grant opposition to a patent is a concept that has been proposed in various forms for many years. The value of post-grant opposition is that it gives the marketplace the opportunity to be heard and to help the Patent Office. However, this is appropriate only if done for a limited time after issuance, with a strict time limit on the opposition proceedings, and with conditions that would prevent it from being used to manipulate the system. Otherwise this would become yet another protracted and expensive dispute mechanism which would disadvantage small inventors. It could also be yet another full employment act for lawyers. The Committee Print proposes a nine month limit from time of patent issuance. This is a reasonable compromise.
However, I would caution the Subcommittee that any post-grant opposition of this sort will greatly increase the workload for the Patent Office, and will therefore require additional resources. It does not seem reasonable to ask the Patent Office to take on additional duties knowing that they lack the necessary financial resources to do so. Frankly, the Patent Office backlog is too long as it is, and if post-grant opposition takes resources away to make the backlog worse, this would be a net negative for the patent system. Indeed, improving the patent examination process by giving the Patent Office adequate resources would do more for patent quality than post-grant oppositions would, and would reduce the need for them.
The Proposed Restrictions on Continuation Applications Should be Reconsidered
The filing of continuations to a patent application is a longstanding and valuable mechanism which has great merit in the patent system. Small inventors (and many large inventors) often use continuations because they cannot afford to put all of their ideas into their first patent on an invention. So, they describe the invention via the patent specification, and make their initial set of claims. Later, they can file a continuation which draws new claims, but only within the boundaries of the original specification. This is a well-established practice that has developed a clear body of case law around it, and has the important feature that small inventors can devote their scarce resources to protecting specific inventions first (e.g., the core invention of a start-up company) while pursuing protection for the broader concepts in a continuation application. It therefore rewards both early innovation and ongoing creative invention
The Committee Print seeks to place new conditions on the filing of continuations. However, the terminology used in the Committee Print removes an important inventor's right by requiring that patent claims in continuations cannot be "broader in scope than the broadest claim" in the original case the continuation stems from.
Limiting continuation applications in this manner would unfairly bias the patent system against the small inventor, and would result in many legitimate inventions going unprotected by the patent laws, resulting in decreased innovation due to removal of this protection.
Moreover, this odd provision seems intended to solve a problem that no longer exists, namely the former situation where a U.S. patent expired 17 years after its issue date, which encouraged certain irresponsible patentees to drag the patent procedure out for decades, obtaining a new 17-year term for each issuing patent. This scheme has been eliminated by the adoption in the U.S. of a patent term of 20 years from the filing date, which is the international standard.
In addition, the practice of reissue applications already incorporates a requirement that no broadening claims can be pursued more than two years after a patent issues. The Committee Print would create a conflict in the law by preventing a patent applicant from pursuing broader claims in a continuation application, even though he or she would be allowed to pursue a broader claim in a reissue of the parent patent, even at a later date.
This provision is thus both unnecessary and in conflict with other portions of the patent law, and would cause many properly patentable inventions to go unprotected, stifling innovation by encouraging companies to copy rather than invent.
Patent Quality: In Everyone's Best Interest
Lest it seem that I am unduly negative on the Committee Print, I hasten to add that there are many features that I think are positive moves which will strengthen the patent system. This includes reform to the concept of "best mode" implementation. I appreciate the Committee Print proposal to limit rampant assertions of inequitable conduct, the growth of which has been referred to recently as a "virtual plague." Of course, I would encourage the Subcommittee to consider carefully the actual implementation to insure that it cannot be manipulated for delay or leverage.
Another benefit is increased transparency through the publication of all patent applications is another important reform. These are important contributions which will strengthen the patent system for all participants.
An area of particular importance is the harmonization of U.S. patent law with international patent law. This is critical for promoting American exports, and aids small inventors who lack the resources to cope with inconsistent international requirements on their own.
Since the 19th Century America has been the guiding beacon of invention for the world. Thomas Edison's light bulb was a tangible symbol of that beacon, and since his day, millions of other American inventions have followed in his path. Patents are the legal construct that breathe economic life into those inventions by giving their inventors a property interest in them. The resulting economic incentive helps inventors spend their time, energy and money in the difficult task of wresting secrets from nature and harnessing them into new technology. America, with its patent system, has been unchallenged as the invention capital of the world, and we have benefited enormously from this legacy.
As we enter the 21st Century, our traditional economy is beset by many challenges. International competitors such as China have already learned how to manufacture goods at low cost, and are becoming more technologically sophisticated with each passing day. As it stands, it is becoming ever rarer for an American company that "makes" products to actually do the manufacturing. Instead they design products that are built by others, often outsourced overseas. What is the difference between that, and an inventor who licenses his patents? It seems to me to be very poor timing to disadvantage small inventors in favor of large product companies, right at the stage when the real product building is moving overseas. The future of America is more strongly tied to invention than at any time in our past. We must support our inventors, including those that are in universities and small businesses, and plucky individuals working on their own.
The barriers to entry around the world are collapsing. Tom Friedman, a columnist for the New York Times, and a close observer of globalization likes to say that the world is becoming flat. If America wants to remain competitive, we must play to our strengths and remain the world's leading innovators and inventors. The patent system is the bedrock on which this is founded. I want to thank the Subcommittee for their work to keep the patent system, and by extension America, competitive in this vital area.Appendix 1 – News Article
Princeton Alumni Weekly
April 6, 2005: Perspective
The magic of invention
Lessons on creativity from the world of aviation, Teflon, and Velcro
By Nathan P. Myhrvold *83
Nathan P. Myhrvold *83, former chief technology officer at Microsoft and founder of Intellectual Ventures, a company that nurtures invention, received the 2005 James Madison Medal on Alumni Day, Feb. 26. This essay is adapted from the lecture he gave that day in Richardson Auditorium.
Invention is the origin of all technology: Everything new started as a spark in someone's head. Without that breakthrough idea — without knowing how something can be done — you are at a fundamental disadvantage. After you know something, it often seems obvious; you say, "God, why didn't I think of that?" After you have the invention, you can apply lots of cleverness to making something work, but up front you need to have that invention. But, ironically, the world does not focus much effort on invention. In fact, invention is a sideline or a hobby for virtually everyone who practices it.
Academic research is wonderful, but academics aren't supposed to invent — they're supposed to learn new things about the world; they're supposed to expand mankind's knowledge. You can be a fantastic researcher without ever inventing something. There are great academics who invent, but they do it on the side. The same thing, ironically, is true of engineers. Most engineers are paid to build something. If you said, "Hey, you can build your product without actually doing a new invention," most engineering managers would say, "Great! There is going to be no risk. I hate when we have to solve a problem no one has solved before!" So while engineers can be great inventors, very few people are motivated to do it full time.
The world doesn't support invention very well. There is a systematic set of constraints: What is the next product version? What suits my research? What can I get my graduate student to do? Most of all: What can I get funded for? The great debate in design is whether form follows function. But in much of life, form follows funding. If you can't get funded to invent, if people won't take a chance, how are you going to get there? As a result, a huge amount of invention is done sub rosa — some of it by academics who really have a grant to do something else. Very few companies support really radical things — because if it is really radical, almost by definition it is not somebody's business to do up front.
The world is focused very much on what you do after you have the idea. If you go to a venture capitalist on Sand Hill Road in Menlo Park, Calif., and say, "You know, I am sure I am going to have a good idea!" the meeting ends right there. I like to think that if you really focus on invention we could have a whole lot more, and a whole lot better.
But what are the inspirations for invention? Where does invention come from? One of the most powerful ideas is to take inspiration from the natural world — to see something that nature has invented and use that as an inspiration directly for human invention. It is a great idea — but it rarely happens. There is one terrific example: Velcro. In 1948, Swiss biologist George de Mestral got some cockleburs stuck in his sock. Many of us have had that happen. But George was a little more curious than most of us about how these cockleburs stuck to his socks. He looked at one under a microscope, and saw lots and lots of little hooks. The hooks engage the fibers; originally, they evolved to engage fibers in an animal's hide to catch a ride. So de Mestral said, "I can make hooks!" and came up with the idea of Velcro.
The other classic example is flying. Mankind always has been fascinated with the graceful way birds soar. Early in the history of aviation, birds provided direct, natural inspiration. The primary proponent was the German inventor Otto Lilienthal, who built wonderful, birdlike gliders in Germany. But it turns out that acting like a bird isn't a good way to make a glider, and Otto flew and flew until he crashed. In 1894, a bicycle mechanic, Wilbur Wright, read about this, and he and his brother set out deliberately to invent the airplane. They took a very different approach. They weren't interested in birds at all — they built the first practical wind tunnel. It was by taking an approach that was utterly unlike a bird that they had some success.
The interesting thing is how deliberate the Wrights were. In 1899, they wrote to the Smithsonian Institution — that was back when the Smithsonian took requests — and said, "We would like all of the literature you have on human or artificial flight." Someone at the Smithsonian boxed up all these papers and sent them off. And so Orville and Wilbur Wright said, "OK, let's roll up our sleeves and learn how to fly." It wasn't based on birds, but on a systematic approach of saying, "Damn it; there has got to be a way to achieve this!" It took them four years. I think that it is really remarkable when you consider that after four years of seriously working at it — on something that people had speculated about since Leonardo da Vinci's time — these guys invented the airplane.
Most great inventions actually come out of something like the Wrights' approach. Someone gets a crazy idea and, of course, up front it is ludicrous. The more important the idea, the more ludicrous it has to be when you set out. I used to say at Microsoft Research that we wanted to hire researchers who were "narrowly insane": insane, because they believed they could solve a problem no one else in the world could solve; narrowly, because you wanted them to be pretty sensible in other ways. This kind of dedicated approach to invention is something I think the world needs to support a lot more.
There is another big theory of invention: the "happy accident" theory, in which someone can come up with an interesting observation through a bit of serendipity. Roy Plunkett, who invented Teflon, had been doing an experiment that involved putting some fluorine gas and other things into a tank. He opened the stop cap to the tank, and nothing came out. The tank was heavy, he shook it, and eventually he took a hacksaw and sawed it apart, and discovered that there was this waxy white substance in it. It is a classic example of serendipity. It is also a classic example of how not to manage invention. Immediately after this, Plunkett was transferred and was never allowed to work on Teflon again at DuPont.
Happy accidents like Teflon do occur. But very few great inventions are accidental — and even in those that are, the great thing isn't the accident itself. A whole lot of people could have made Roy Plunkett's discovery and just thrown the whole thing out. The really great inventions that come from serendipity are the accidents waiting to happen. There is a saying: Luck favors the prepared mind. First you have to notice this thing, and then you have to be prepared to develop it. And you have to have the right support.
From a technological perspective, this is the ideal time to be an inventor. We have greater connectivity than we have ever had before, greater access to information and knowledge. The world is a much smaller place now that the Internet can allow us to connect with each other. That's a terrific stimulus. And the pace of invention has never been faster.
All of these things lead me to believe that the 21st century is going to be an era of incredible and dynamic invention. It's also a time, frankly, when we have to do it. At the turn of the last century, about half of our workforce was on the farm. By the 1960s it had dwindled to about 6 percent, and today, it's less than 3 percent. American farms are the most efficient in the world, but agriculture as a major part of the workforce has come and gone. So has manufacturing: It was just getting going in 1900 and peaked at about a third of the economy in the 1950s; today it is about 10 percent. Most companies in America now do a lot of the design, but a huge amount of what they do is built overseas. If we don't learn to invent, if we don't foster invention and innovation, it is not clear what we are going to do for a living.
Invention is the source of it all, yet it is strangely neglected. Enough of it happens, and happens randomly, that it keeps us busy. But if you focus on fostering it, it can really be done deliberately. There are people who disagree with this. Maybe you can't always set out and succeed like the Wright brothers did. After all, there probably were a lot of guys in 1899 who set out to invent something — but we only celebrate the people who got there.
But you sure can kill invention. Creativity absolutely can be strangled. It can be squelched; it can be underfunded. I think it is incumbent upon us to continue to push, in education and in business, to support it. The economies of the 21st century are going to be driven by the magic of invention.
Appendix 2 – Biographical Information
NATHAN P. MYHRVOLD
Ph.D., Theoretical and Mathematical Physics, Princeton University, 1983
M.A., Mathematical Economics, Princeton University, 1981
M.S., Geophysics and Space Physics, University of California at Los Angeles, 1979
B.A., Mathematics, University of California at Los Angeles, 1979
Santa Monica College, Santa Monica, California, 1975 – 1976
Santa Monica High School, Santa Monica, California, 1974
Intellectual Ventures, LLC
2000 - Present: Co-Founder and Chief Executive Officer Microsoft Corporation
1996 – 2000 Chief Technology Officer Executive Committee
1994 – 1996 Group Vice President Applications and Content Office of the President
1993 – 1994 Senior Vice President Advanced Technology
1990 - 1993 Vice President Advanced Technology and Business Development
1988 - 1990 Director Advanced Technology and Business Development
1986 – 1988 Director Special Projects Dynamical Systems Research, Inc.
1984 – 1986 President and CEO University of Cambridge
1983 – 1984 SERC Postdoctoral Fellow Department of Applied Math and Theoretical Physics
Affiliate Research Associate of Paleontology, Museum of the Rockies Research and Collections Division American Association for the Advancement of Science (AAAS)
American Academy of Achievement
American Geophysical Union
American Museum of Natural History
American Physical Society
Americans for Alaska
Association for Computing Machinery (ACM)
Computer History Museum
Dian Fossey Gorilla Fund
Institute of Electric and Electronics Engineers (IEEE)
Microscopy Society of America
National Museum of Science and Industry, London
National Parks and Conservation Association
North American Photography Association (NANPA)
Society for Sedimentary Geology (SEPM)
Society of Vertebrate Paleontology
The New York Academy of Sciences
The Paleontological Society
The World Atlatl Association (WAA)
The United Way, Alexis de Tocqueville Society and Million Dollar Roundtable
University of Washington College of Arts and Sciences Dean's Club
Non-Profit Boards (* currently active)
Advisory Council, Department of Physics, Princeton University
Advisory Board, School of Computer Science, Carnegie Mellon University
Advisory Board, Department of Physics, University of Washington*
Advisory Board, School of Engineering, Stanford University
Board of Directors, The Large Synoptic Survey Telescope Corp., Research Corp,
University of Arizona, University of Washington*
Board of Trustees, The National Museum of Science and Industry (Science Museum), London*
Lead Founding Member, The Computer Museum History Center*
National Board of Advisors, Children's Scholarship Fund
Visiting Committee, University of Washington Advisory Council*
Offices Held and Consultantships (*currently active)
Advisory Board, Forstmann Little & Co.*
Advisory Board, Ignition LLC*
Advisory Board, Intelligent Medical Devices LLC*
Board of Directors, DreamWorks Animation SKG*
National Information Infrastructure Advisory Council, 1994-1996 (as appointed by the late Secretary of Commerce, Ron Brown)
Awards and Honors
Hertz Fellow, Fannie and John Hertz Foundation
Upside's All Star Team, 1994
Vanity Fair's Fifty Leaders of the Information Age, "The New Establishment," 1995 - 1998
Network Technology Driver, Network Computing, 1995 - 1996
Golden Plate Award, Salute to Excellence, American Academy of Achievement, 1996
Global Leader for Tomorrow (GLT), The World Economic Forum (WEF)
Upside Magazine's "Elite 100" (Executives Leading the Digital Revolution), 1997
Santa Monica High School Hall of Fame, Awarded in 1997
Time Digital Cyber Elite, 1997 and 1998
Finalist, Computerworld Smithsonian Award, Science Category, 1998
Software Forum Visionary Award, 1998
Sheffield Fellow, Yale University, Awarded 1998
James Madison Medal, Princeton University, 2005
Miscellaneous Awards and Certificates
World Championship of Barbecue, Memphis, Tennessee, First and Second Place Titles, 1991
Certificate, Grand Prix Racing School, Bertil Roos Indy Style Racing School, 1994
Certificate, Gas Dragster Class, Frank Hawley's Drag Racing School, Gainesville, FL., 1994
Grande Diplome, Ecole De La Varenne in Burgundy, Chateau du Fey, France, 1995
Certificate, Audi Safe Driving Course, Davos, Switzerland, 1998
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America 24/7, contributing photographer, DK Publishing, 2003.
Juice: The Creative Fuel that Drives World-Class Inventors, Evan Schwartz, Foreword by Nathan Myhrvold, Harvard Business School Press, 2004.