Hi-Tech Business Leaders: Strong, Balanced IP System Needed; Patent Trolls Not Welcome

By Edward Harris. October 23, 2014

GENEVA, Switzerland – What intellectual property trends are driving business innovation and what can unshackle further private-sector growth?

From the perspectives of three officials representing Google, Intel and Microsoft, a strong but balanced global IP system is critical for promoting global business activity while challenges are posed by differing legal and regulatory environments, as well as so-called “patent trolls.”

“Intellectual property is of course in a vastly different position now to the one in which it was perhaps even only 20 years ago,” said WIPO Director General Francis Gurry in an opening address at the “International Series 2014: Geneva” symposium. “It has moved, as you all are aware, from the periphery of the economic system to the center of the economic system.

“And that of course is a consequence of the heightened, I would say, consciousness of the value of innovation in our society and economy and the contributions of innovation and of the role of intellectual property in capturing the added value of innovation and securing the competitive advantage that arises from innovation,” said Mr. Gurry to the dozens of attendees gathered in Geneva for the two-day meeting.

The “International Series 2014: Geneva” meeting was organized by the US-based Federal Circuit Bar Association, with the support of WIPO, the World Trade Organization and the European Patent Office.

Innovation in business

Speaking at a panel discussion entitled “Challenges for Innovation in Intellectual Property,” the representatives from three of the world’s best-known U.S.-based high-tech firms said that innovation is at the core of their businesses.

“Innovation is everything,” said Tina Chappell, Intel Corp.’s director of intellectual property policy. “It is a global endeavor.”

Innovation depends on strong, but balanced, patent-filing systems that prevent vague drafting practices under which companies aver retroactively that a successful element of a product was actually covered in an earlier, unclear patent grant, said Ms. Chappell.

Strong, balanced IP system

For Andy Culbert, Associate General Counsel, Law and Corporate Affairs of Microsoft Corp., anti-trust regulators should pay attention to standards-setting practices, which he said often lead to competitor organizations acting in “collusion” to their own advantages. Companies frequently push for standards that advance their patent portfolios, then demand “exorbitant” royalties.

Mr. Culbert said fragmented legal systems around the world increase possibilities for litigation by non-practicing entities known as “patent trolls,” or firms with business models based not on invention but on asserting patent rights against others – critics say they are normally seeking settlements from defendants wishing to avoid costly legal processes. He said the practice was particularly prevalent in the United States, where it is more difficult for successful defendants to recoup litigation costs, among other factors.

“Patent trolls”

While the majority of Microsoft’s sales are outside the country, the vast majority of the 200 patent-litigation cases involving the firm between 2004 and 2013 occurred inside the United States, he said.

Catherine Lacavera, Director, Litigation, at Google Inc., said her company had been involved in 500 patent-related legal disputes over the past decade, with 200 still pending. She said patent trolls’ activity peaked in 2012, with some diminishment since then as awareness of the issue grew.

She said responding to discovery demands in trolls’ cases eats into the time of engineers who are replying to legal demands instead of inventing new products, while eating into funds that could otherwise be used for research and development. 

“Is this system incentivizing innovation the way it should?” she asked.