Defensive Patent Licensing: A way out of the Patent Quagmire?

By Swaraj Paul Barooah

[Warning: Long post that mostly reviews a paper describing a type of license which may reduce unnecessary patent litigation as well as promote an ‘open access’ approach. Actual review starts from below the dotted line. ]

Who would’ve thought patent-wars could have become a topic of discussion amongst even those with traditionally no interest in ‘lawyery stuff’! Good or bad, one side effect that the Apple-Samsung fiasco has had, has been to turn the public’s attention span towards the topic of patents. For example, the New York Times published a 7 page article online entitled “The Patent, Used as a Sword” that seems to be doing the rounds on the social network circles. Most of those 7 pages are in detailed instances of patents harming innovation. Just before that, The Atlantic even went to the extent of pulling out a ‘legal’ paper to review for their audience, in their article entitled, “The Case for Abolishing Patents“.

However, it’s not just a few general public news sources that feel that patent laws have gone out of control. Indeed, quite a few academics and practitioners have been writing on this for years. Way back in the 1950s, Fritz Machlup, who had written ‘An Economic Review of the Patent System’, asserted to the US Congress that “If we did not have a patent system, it would be irresponsible, on the basis of our present knowledge of its economic consequences, to recommend instituting one. But since we have had a patent system for a long time, it would be irresponsible, on the basis of our present knowledge, to recommend abolishing it.” Unfortunately, since then, patent rights have only grown stronger, and of course the TRIPS Agreement was thrown in to make sure they don’t go anywhere. And the various other “free trade” agreements are being signed, lobbied for, etc to harmonize these stronger rights. All this has led to several patent thickets massive litigation expenses amongst other things, in turn leading to a diversion of resources from their optimal use – actual working of technology, and further innovation.

At the same time, civil society and academics have been playing an increasingly active role in standing up for, and representing public interests. It is in this context that I will be reviewing a proposal that is discussed in Berkeley Professors Jason Shultz and Jennifer Urban’s soon to be published paper entitled “Protecting Open Innovation: A New Approach to Patent Threats, Transaction Costs, and Tactical Disarmament“. [I was lucky enough to have been part of a seminar in which an earlier version of this draft was presented and discussed]. Their proposal rides on the same spirit that the Creative Commons movement did in the Copyright arena and is certainly an interesting one, and is possibly a solution to at least the software patent issues, if not more sectors.


Their starting premise is similar to that of Machlup’s, mentioned above. However, Shultz and Urban are trying to find a solution to the problems that Open Innovation Communities face by virtue of not taking the ‘patent’ path to do their innovation. We’ll go with their term “Open Innovation Communities” (OICs), but I think they are really referring to any ‘community/company/person’ who is averse to a strongly pro-patent approach to innovation. But first – why do these communities choose to not take the patent path? Shultz and Urban identify three main reasons:

a) The enormous resources required to acquire a useful patent portfolio.

b) On principle. Many innovators, especially in the software field, view patents as unnecessary restrictions on the flow of information, and ones that help big corporates bully smaller innovators. There are also those who do not want to contribute to the mess that they feel the patent system has created already.

c) There is nothing keeping a ‘defensive’ patent portfolio from being used offensively.

This third reason, while being the basis for most of their paper, seems to be curiously phrased. Unless they are worried that their successors will use a portfolio gathered for defensive purposes, for offensive purposes later on, this doesn’t seem to be that much of an incentive to stay away from the patent system. However, if there was a way to ensure that others use patents only defensively, there may be more of an incentive for innovators to engage more with the patent system. Such a system, wherein innovators are obliged to only use patent portfolios defensibly is in fact what Schultz and Urban go on to propose.

[Defensive use of patents would mean to acquire patents only to defend themselves from lawsuits brought on them for infringement of someone else’s patent, or from patent trolls.]

Having identified these reasons, they flip them around to see the ‘values’ that might incentivise OICs. They are:

a) Collective benefit outweighs the collective costs (including fiscal, legal, information and transaction)

b) Cultural and political alignment with OIC values – ie, openness, and free-er flow of information, along with the view point that the dominant ‘incentive’ theory (exclusion rights are required to incentivise production) is not the only one present; and in fact the ‘exclusion’ approach comes in the way of their own preferred approach, be it motivation from benefit to reputation, importance of developing know-how, stimulating demand for a related product, etc. I.e., it disturbs their freedoms.

c) When the 3rd condition is flipped around, it is seen that ‘innovation conditions’ which provide reliability and reduce risk of all participants are desired. (the most important criteria in my mind)

In other words, a strategic ‘patent’ equivalent to the GNU General Public License and Creative Commons approach that exists in the ‘copyright’ field. In their words, “By conditioning79 the license terms upon the licensee’s commitment to freedom and openness, copyleft OICs argue, they can ensure that as the network of users grows, new users enhance the value of the network through ongoing commitments to the same principles and norms. This both creates reliability by creating enforceable norms and limits gamesmanship.”

After extracting principles and values important to OICs, they take a look at the 4 existing patent defense strategies and the limitations that exist with them. Of these four, the first is of most interest, primarily because it fails due to a substantial failing of the patent system – information gathering.

Defensive Publication: While publishing information about OIC technology ideally should serve as prior art so that future patents aren’t granted on this technology, in reality this doesn’t work too well. This is because Patent offices need to be able to find this information, as well as that OICs engineers are generally the ones who put out the information and not in the same way that a lawyer would read or organize it. On top of that, patent attorneys can easily ‘write around’ prior art claims so that boolean or linguistic searches do not throw up the same results.

The other three strategies include Patent Pledges, ‘Peace’ provisions and patent pools. A combination of vagueness, unreliability or insufficient incentives seem to limit these models and hence they go on to propose their own new innovative model – the Defensive Patent License.

“The DPL is a standardized open patent license designed to encourage the creation of a broad, decentralized network of OICs that both patent their innovations for committedly defensive purposes and license them on a royalty-free basis to any others who will do the same.” With the objective of fulfilling the above three mentioned value based criteria, the DPL is offered with the following four conditions:

1) Every DPL user (i.e. licensor or licensee) will forgo any offensive patent infringement actions against any other DPL user;

2) Subject to Condition 4, every DPL user will offer her entire current and future patent portfolio under the DPL;

3) Every DPL user will bind any successor-in-interest to any part of her patent portfolio to her obligations under the DPL; and

4) If a DPL user wishes to stop offering her patents under the DPL, she may do so but only with six months’ notice to existing DPL users and future parties. She must continue to grant, and may not revoke, any licenses that are in place before the end of the notice period. Once she stops offering the DPL, other DPL users are free to revoke their licenses to her at will.

If you take in the implications of these four conditions, you see that it is quite a simple, yet effective model. They go on to explain how such a model would better address the limitations that other defensive patenting techniques face while at the same time maintaining the values dear to the OICs. The basic information gathering issue is addressed by all DPL members having to register on a DPL website which would coordinate the members and their patents under the DPL. By pooling in their resources in this manner, their access to knowledge and technology increases by several factors, and their risk decreases at the same time.

While they have great points and certainly make a strong case for the initiation of such a model, I do have certain concerns regarding it.

a) It encourages patenting where patents would not otherwise be granted.

•This is described as an advantage of the system, but I’d rather frame it as an advantage to the system. More patents in the DPL pool help the DPL be more successful. But for companies to patent when they otherwise wouldn’t, seems wasteful on it’s own. Whether it would be wasteful in aggregate, would depend on the success of the DPL. And there may be a cyclic problem here, as little success = less patenting = little success.
•By encouraging patents here, it removes incentives for patent-free innovation such as prizes, which may fall more squarely within OIC values. Having said that, it seems likely that OICs are more prevalent in certain sectors of technology such as software, computer based, mobile, etc. And the only major sector where ‘prize systems’ are still one of the few alternative innovation options are in the pharmaceutical world, where the the capital investments are simply too large to share freely.

b) As noted by them, requiring an ‘all-in’ approach, would be problematic for many companies, especially the larger ones or ones that have a multi prong business approach with proprietary technology along with ‘open’ technology. They simply say that on consideration, an all in approach seems less harmful, than a partially in approach which may increase gamemanship (as companies may only put in less useful patents). However, they also leave open the possibility of allowing partial portfolios through means of specific technical standards, or some such objective criteria. The partially-in, based on objective/standardized criteria seems a much more ‘business’ friendly approach to me.

All in all, it seems to be a very well thought out ‘fightback’ to the crazy patent wars, thickets and trolls that we have happening regularly now, especially in the software patent world. I wouldn’t want to be the one in charge of maintaining the DPL website with such vasts amount of information on it, but that seems like a technicality that can be figured out along the way since the website itself does not do any ‘enforcement’. The draft license is available in the index of their paper. You can also hear Shultz and Urban speak about it here. And for those of you who want to contribute or check over the language of the DPL, it’s available for comments on their website here.

[This post originally appeared at SPICY IP]

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