The politics of patents

…are purely on the basis that we're an outsource licensing company and the developer of that technology then comes to us for us to fulfil that function. So, we are not developing any of the newer technologies we are licensing.

Let's talk about patent reform. Your thoughts on where things stand and where they should be going?
I think the patent system has worked pretty well for 200 years and the court system works very effectively... I think what's really occurred is that whenever companies want to lobby for reforms that would be of advantage to them, they first create a crisis, or supposed crisis. I don't think these companies that are proposing these changes all woke up one morning and said, "Jeez, how can we make the world a better place and make the US patent system better?"; I don't think that was their motivation.

What's your suspicion? Is there a particular group behind the scenes that's trying to foster that impression?
The lines have been well distinguished. If you look at the eBay amicus briefs, companies such as GE and Procter & Gamble, and 3M, and the pharmaceutical industry and those people who've relied on patents that normally respect other peoples' intellectual property are on one side of the equation. There's a small number of tech companies who have formed some coalitions and ironically they're the same group that has time and time again been convicted in court of wilful patent infringement. Most small companies are intimidated to even attempt to go out and licence and assert their patents because they can get tied up in very lengthy, very expensive litigation.

But to play devil's advocate, since they're not here to defend themselves, they might say, "Look, the concept of a licensing-focused business such as yours, whose purpose is to extract fees from other growing concerns, that's not good for the technology business and simply stamps out innovation." Your response?
Precisely the opposite. It's the patent system that enabled people such as Thomas Edison who developed the new technologies, which these companies then want to use to make money without paying for. The invention process is critical to the growth of the US economy and it's the smaller companies that usually come up with the new innovations and disruptive technologies that the larger companies then want to adopt.

There's no one forcing them to add these features to their products. Obviously, they're doing it because they can make more money using the new features that were patented by someone else.

But the cost of the average court challenge is extremely high; I've seen figures quoted at around a million dollars on average. Presumably that would make it pretty tough on small companies that don't have that amount of pocket change. They'd just as soon pay somebody the fee to avoid a nasty court fight, wouldn't they?
Most of the issues, again, are quite the opposite. It's usually the small company that's developed the technology and the large company knows that they have far more money and the litigation cost can run far in excess of your estimate. They can run to $5m, $10m, $15m. So, most small companies are intimidated to even attempt to go out and licence and assert their patents because they can get tied up in very lengthy, very expensive litigation.