Microsoft Advocates for Patent Reform
 Mary Jo Foley
Microsoft went public on Thursday with a number of proposals designed to overhaul the U.S. patent system and make it better suited to the software industry. Microsoft general counsel Brad Smith presented Microsoft's proposed reforms during a day-long seminar at the American Enterprise Institute for Public Policy Research in Washington, D.C. Microsoft has a vested interest in patent reform. In 2004, the company filed 3,000 new patent applications. At the same time, company officials acknowledge that Microsoft is among the largest targets of patent litigation in the country. Microsoft is spending close to $100 million annually to defend against an average of 35 to 40 simultaneous patent lawsuits, according to Microsoft's data. Microsoft is still fighting the $520 million jury verdict that was awarded to Eolas Technologies on the grounds that Microsoft had infringed its Web browser technology patents, for example. Microsoft is attempting to move the debate beyond a black-and white, for patents/against patents one, Microsoft officials said. And now that the company has put forth some initial suggestions, it plans to seek out potential allies, ranging from individual tech vendors, to the Business Software Alliance, Chamber of Commerce and National Manufacturers Association, to join forces in seeking patent reforms. Among the patent changes Microsoft proposed: "We want the system to be more predictable and efficient," said David Kaefer, Microsoft director of business development. Several of Microsoft's suggestions are far from new. "Many of these proposed reforms are positions that have been debated heavily in recent years, especially relating to the congressional diversion of patent fees from the PTO, and world harmonization by granting patents to the first person or company to file a patent application rather than the first to actually invent, as is currently the case only in the U.S. said David Ferrell, chairman of the Carr & Ferrell LLP law firm's intellectual property practice group. For More on Microsoft's Patent Propositions, Go to Page 2 ("Microsoft Seeks Patent Reform" Page 2)
"One somewhat surprising proposal by Microsoft would allow individual inventors and small companies to file patent applications without paying the current $500 in filing fees now charged small entities," said Ferrell."Large companies like Microsoft and IBM already subsidize small businesses by paying twice the fees to the patent office that small companies must pay."
Kaefer admitted that "some of these proposed changes could have negative impacts for us. But if the system doesn't work for small vendors, it won't work at all." Ferrell also found interesting the Microsoft proposal calling forthe creation of a single district court that would hear all of the patent cases filed in the U.S.
"A similar reorganization of the court system occurred in 1983, when the Federal Circuit court of appeals was created to consolidate all patent cases on appeal from the various U.S. district courts," he said. Presumably, this new patent court would not sit in Redmond, Washington, Ferrell joked. Kaefer acknowledged that Microsoft could become even more of a target if the U.S. patent process is made more transparent and if patents are allowed to be challenged earlier in the process. He noted that allowing third parties to submit prior art has been a rallying cry for a number of those in favor of open source software. But many of the proposed policies could end saving Microsoft money.
Today, 50 percent of patent cases are thrown out due to a prior-art conflict, Kaefer said. Heading off these kinds of costs earlier in the cycle could curb legal fees. "Disputes don't need to be litigated only," Kaefer said. "And we'd like to incent people to identify potential areas before they become problems" in order to avoid willful infringement and other costs. Some outside lawyers are taking a wait-and-see attitude towards Microsoft's proposals. Eben Moglen, professor of law at Columbia University and general counsel to the Free Software Foundation, had no comment on Microsoft's suggested changes. "I want things to develop a little more before I start having opinions," said Moglen. The U.S. patent system has faced challenges throughout its 200-year history, Kaefer said. "The system has been under strain before, but people have figured out how to do things the right way. We want to bring this to our own industry." |
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