Patents: Leveraging the power of your idea

Creating a fair balance between adequate compensation for the innovator and providing essential services at an affordable cost to the masses is a question governments and patenting regimes need to look at, says Samir Kelekar

Case No. 1: An engaging battle will now be fought in a US district court in Norfolk, Virginia. At stake is eBay’s technology. eBay, one of the few successful and profitable Internet stories—having made revenues of more than a billion US dollars a year—may have its business significantly affected, with damages running into millions, if the verdict goes against it. Thomas Woolston, an ex-CIA technologist, and founder of MercExchange, claims that he owns the patent for the technology that eBay uses for its auctioning business, and has filed a patent infringement suit against eBay. eBay, on the other hand, claims that the technology was in public use before Woolston filed his patent, and would probably try to prove that to the court.

eBay’s founder Pierre Omidyar spent the US labour day weekend of 1995 creating the first iteration of his auction website; Woolston however had beaten him at the game by filing for a US patent for the same technology less than five months before. The patent was granted in 1998, and efforts to convince eBay to license his patent were in vain. Woolston has licensed his patent to two other companies. Negotiations having failed, the case is on trial now.

CASE No. 2: When the US patent office awarded a very broad patent for instant messaging to AOL late last year, a lot of eyebrows were raised. The instant messaging patent was filed in 1997 by Mirabilis—an Israeli company known for the IM tool ICQ, and bought by AOL in 1998 for $287 million. The patent implies that AOL can bar others from using instant messaging if it so desires. Either that or when someone uses any other messenger tool from other companies such as Yahoo, or Microsoft, these companies will have to pay AOL an amount, if AOL decides to license its patent. Instant messaging along with mobile-based text messaging are two major instant communications tools in use today. AOL also has patents for secure socket layers (SSL) and for cookies, but it hasn’t enforced those patents. Of course, patents can be challenged in courts.

Valuable ideas
With businesses increasingly becoming idea-centric, patents have become important. However, historically, patent claims have been very difficult to prove in courts of law. In eBay’s case, it is said that the fact that Woolston has come this far itself is noteworthy.

Given these examples, the question arises: Should one patent one’s ideas? Can one make money on one’s patents? Is patenting worthwhile? This article will try to answer some of these questions.

What is patenting?
What then is patenting? How does it help? Patents usually are valid for 20 years from the day of filing for a patent application. Patents give one a negative right—right to exclude others from making, using, selling or importing the invention in the country where it is patented. In practical terms, patents hold good only if they find commercial use. It is said that Texas Instruments makes millions every year on patent licensing. Legend has it that Bell Labs minted millions on transistor patents. However, J Suresh, a patent attorney with Lakshmi Kumaran and Sridharan, a law firm that deals with intellectual property issues says, “Only about 0.5-2 percent of patents filed are exploited in the market.”

Different countries have different laws, but the US seems to be most liberal in its IPR (intellectual property regime). Since the US has a big market for high technology goods, a US patent is usually the most preferred one among those who file for patents.

Filing a patent is no easy task. You are better off taking the services of a qualified patent attorney. In terms of cost, filing a US patent can cost anywhere between $5,000-$10,000. Writ-ing a patent involves a deep and thorough study of previous work, known as prior art. Any matter that is in public use or is disclosed publicly anywhere in the world invalidates the patent application. There are various parts to a patent application but the key part of the patent is known as the claims section. The uniqueness of the innovation is mentioned here and this is what one gets rights for. The rest of the patent is written to give required background or to substantiate the claims. There are also issues such as the sufficient disclosure clause. Any material that is disclosed via a patent should be such that a person who is reasonably skilled in the field could replicate the invention using the matter described in the patent. Lack of sufficient disclosure can invalidate a patent even after it is granted.

Patents can of course only be filed for inventions that can be implemented; for instance, discoveries of laws of nature cannot be patented. Algorithms can also not be patented. Three criteria have to be met for a patent to be granted: novelty of the invention, non-obvious nature of the invention and industrial applications for the invention.
A US patent is not the only option available for those wishing to file a patent. 118 countries have signed a treaty known as the patent cooperation treaty (PCT). This treaty allows for the filing of a common patent application whereby a date can be reserved for patenting an application in each of the countries, which are signatories to the treaty. In any patent application, the date of the filing of the application is crucial because issues such as novelty are judged considering the date of the application—the claims of the patent applicant hold good over any other invention that is disclosed later than the filing date. The PCT website is located at . If one has plans of marketing one’s application in a number of countries, then it may be worthwhile filing a PCT application. India is a signatory to the PCT, so are most countries of the West such as US, and majority of the European countries. Patent laws in India however are just being framed and are nowhere close to giving inventions due protection right now.

Many countries have a special provision of called a provisional patent application. If an invention needs some more work to be completed, then it may be better to file a provisional application which lets you reserve a date for a patent application. The actual complete patent application can then be filed within a stipulated time period from the date the provisional application. In the case of a US provisional application, this stipulated period is 12 months.
It needs to be mentioned that there have been many instances of overly broad patents or erroneous patents being granted by patent offices. The US patent office granting a patent for turmeric and for basmati rice is a case in point. These patents were contested by the Indian government and were invalidated. Thus, granting a patent does not mean that it is the final word, if it can be proved that the patent did not meet any of the three criteria of novelty, non-obviousness or industrial application mentioned above, the award can be challenged.

No discussion on patenting and related issues of an IP (intellectual property) regime can be complete without discussing the controversy over patents in developing countries. The WTO (World Trade Organisation) regime, which the developed countries are actively pursuing, will require developing countries to enforce an IP regime in their own countries. The concern is that a large populace, which cannot afford essentials such as life saving drugs, will be worse off if they have to pay for the IP component of these goods. The third world countries are making a plea to keep essential drugs out of the patent regime. Though I believe there is a lot of sense in this argument, the solution is to take the middle ground. Patentable inventions are not born overnight; years of strenuous research by some of the best brains go into making a patentable breakthrough. It follows then that such efforts be rewarded, otherwise research might not be a viable option. The case concerning essential goods then has to be tackled either by governments subsidising goods so that the poor are benefited or a limited patent vis-à-vis essential items be granted. Ways and means of reducing pain in people’s lives by making essential inventions available to the common folk is something society has a moral obligation for; however nurturing creativity is as vital a task.

Finally, with respect to software, what would be the criterion to judge the real success for your product if you are making one? Sure, if an IP can be leveraged, there would be nothing like it. However, some others would say that there is another way of judging success—the number of people using your product. Someone like Richard Stallman of the Free Software Foundation believes that all IP should be available to society without charge, a point of view I do not agree with. Sure, today the biggies such as Microsoft, IBM are in a much better position to patent technologies than ordinary people are. However, I believe that the biggies are in an even stronger position to market technologies rather than just patent them. In that sense, I believe in patents much more than a patentless free-for-all regime as a fairer alternative.

The author is a Bangalore-based entrepreneur, with over 18 years of experience in companies like Motorola, Alcatel and IBM. He can be contacted at konkani_net@yahoo.com