Battles Over Patents a Top Concern for Tech Companies
About 150 executives and policy experts from the largest technology and telecom companies convened in Aspen this week to talk about some of the most pressing issues in the industry. In addition to the debate over the 700 megahertz spectrum auction and online privacy, patent reform was a hot topic.
Several economists pointed out the flaws in the current patent system that have led to an explosion of law suits in the past few years. Patent litigation has gotten so out of hand that it may end up limiting innovation instead of protecting it, said Michael Meurer, a law professor at Boston University. He said a lot of patent infringement happens by accident. In fact, 65 percent of firms do not search for similar patents before starting to develop their own technology, he added, and the U.S. Patent Office needs to raise the bar for issuing patents. His reasoning: If the quality of patents improves, there will be less of a chance a patent will be involved in a law suit.
Fewer patent lawsuits means big savings for tech companies that increasingly find themselves embroiled in heated battles over intellectual property. Mark Chandler, general counsel for Cisco Systems, said the company spent $45 million last year in patent litigation. Every time a case is filed against the company, it costs $3 million in legal expenses just to examine the claim, he said. If it ends up going to trial, the price goes up to $10 million.
"We've seen the rise of an industry built around leveraging litigation techniques rather than the actual technology," Chandler said during a panel discussion at the Aspen Summit, an annual event put on the the Progress and Freedom Foundation, a market-oriented think tank in Washington. "These people are purely driven by litigation rather than innovation."
Others say the threat of litigation is the only way to get companies to discuss potential solutions to infringement problems. Many intellectual property experts say the debate will heat up this fall as more cases are weighed and companies search for more ways to protect themselves against the costly suits.
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