[A2k] Google/Android Patent Wars Highlight Need for Compulsory Licensing of Patents

Krista Cox krista.cox at keionline.org
Mon Aug 15 12:58:23 PDT 2011


Google/Android Patent Wars Highlight Need for Compulsory Licensing of
by James Love

The announcement this morning that Google wants to spend $12.5 billion to
acquire Motorola Mobile -- for its patent portfolio, is just the latest
evidence the patent system is not working. The issue that Google is
struggling with is a common one. Some complex products, like mobile phones,
computers or software, involve a lot of patentable technology.

When there are hundreds or even thousands of patents in a product, there is
almost no chance that anyone can make and sell the product without
infringing patents from third parties. Part of the problem is the "quality"
issue -- the tendency of the USPTO and other patent office to grant patents
that never should have been granted in the first place, because the concepts
are old, or the innovation was so predictable that it did not meet legal
standards for patents. But this is not the whole problem. Even if you could
get rid of all of the poor quality patents, there will be cases where one
small invention can block a much larger, and socially valuable product.

Many who are appalled at the current patent wars over mobile
telecommunication devices see the patent system itself as outdated and
nonredeemable. They may be right. But before getting rid of patents
altogether --- a very difficult and unlikely strategy for reformers -- it
makes sense to look at other reforms, which challenge the exclusive rights
of patents, while allowing patent owners to benefit from reasonable
royalties when their inventions are used.

Most countries outside of the United States have compulsory licensing
statutes that can be used to force patent owners to license patents on
reasonable grounds. The United States also has laws that can be used for
compulsory licensing of patents, but the laws are not designed to deal with
our current problems.

In 1917, the US government forced the Wright Brothers and other holders of
key aircraft patents to form the Manufacturer's Aircraft Association (MAA),
a patent pool that allowed more than 60 firms to manufacture airplanes,
without fear of patent litigation. This patent pool focused the attention of
airplane manufacturers on the quality of their aircraft, not the skills of
their patent lawyers. Later, the US pushed to force greater access to
patents on radios. In the 1950s, the U.S. forced compulsory licensing of
thousands of patents in a wide range of fields. The U.S. government set up a
special compulsory licensing statue for nuclear energy -- so investors would
not be threatened by patent litigation after sinking millions into new power
plants. In the 1970s, the clean air act came with a compulsory licensing
statute, so that no one would have a legal monopoly on technologies related
to government mandated clean air standards.

The romantic notion of an individual inventor is not appropriate for
industries like the computer, software or mobile phone markets, where
collaboration and adherence to standards are key to success. What is needed
is a 21st century approach to compulsory licensing of patents, that
facilitates voluntary licensing, and provides reasonable and fair rewards to
patent owners, without becoming a tool for anti-consumer and anti-innovation
cartels and monopolies.

One simple proposal for reform would be to provide for a liability rule
approach, where firms retain the freedom to operate, when they pay into a
fund to reward patent owners. For example, for consumer electronics, a firm
could make any product it wanted, so long as they paid 6 to 10 percent of
their revenues into a patent royalty fund. The money from the patent fund
could be divided among the competing patent owners, by an independent
arbitrator. That would speed up product development cycles - a lot.

There are other types of reforms to be considered also. But they all go way
beyond the pathetically unambitious "patent reform" legislation Congress is

(For an example of a very different type of reform, for new drugs and
vaccines, see this discussion of S. 1137 and S.1138).

Krista Cox
Staff Attorney
Knowledge Ecology International
(202) 332-2670

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