Tesla didn’t fix patents
Patent waivers are a great tool, not a substitute for reform.
Just over a year ago, Tesla Motors made headlines with its pledge not to enforce its patents against would-be infringers. Though the move caused some handwringing among investors, its logic and motivations were as clear then as they are now: Tesla opened its patents because it wants you to drive an electric car.
To ask whether the move was pragmatic or philanthropic is to miss the point. At least in this case, Tesla’s goal to reduce the world’s reliance on oil and its other goal to make its investors a crapload of money are perfectly in sync: both require a dramatically larger market for electric cars, and all kinds of infrastructural changes supporting that market. The less R&D costs the electric automobile industry needs to duplicate, the faster that can happen. In Tesla founder Elon Musk’s words, “Our true competition is not the small trickle of non-Tesla electric cars being produced, but rather the enormous flood of gasoline cars pouring out of the world’s factories every day.”
Tesla isn’t an isolated incident. Over the past few years, the serious problems with patents — software patents in particular — have gotten an increasing amount of attention. Patent trolls hold patents simply for the purpose of suing companies that invent products with vaguely similar functionality to what the patent describes.
And so, many companies are making promises to avoid using their patents offensively — that is, to defend themselves when someone else sues them for infringement, but not to sue others. A few are making these promises across the board; more often, they pledge not to sue companies that meet certain criteria (more on those below). There have also been several efforts to standardize patent waivers — for example, the Defensive Patent License, whereby licensees agree not to sue DPL users (there’s a great guide to various patent hacks, put together by the Electronic Frontier Foundation and Engine Advocacy).
Last week, Colleen Chien published a fascinating paper and Washington Post editorial (both of which were hugely instrumental in putting this blog post together), arguing that patent law should be restructured to support waivers, and that patent application fees should be restructured to encourage them.
It’s great to see patent waivers becoming mainstream, but it’s important to make sure that we don’t lose sight of the larger problems inherent to the current patent system. While patentees promising not to use their patents offensively is definitely a sign of a massive sea change around tech patents, it would be a big mistake to think of that as the end game. The DPL is great, but how do we get them to use it, Chief?
In praise of hacks
Commitments like Tesla’s, or standardized licensing systems like the DPL, are hacks. They address some of the problems inherent to patent law, but they solve them only within the limited frame of the people and companies using those tools. Whenever you hear someone conflate hacks with solutions, it’s worth raising your eyebrow.
For years, I worked as communications lead at Creative Commons. If you’re not familiar with CC, it’s a set of licenses that creators can use to give others legal permission to reuse and share their copyrighted works.
CC was very much born out of a broader copyright reform movement —CC founders Lawrence Lessig and Eric Eldred famously argued against the constitutionality of the 1998 copyright extension at the Supreme Court. But somewhere along the way, something funny happened. People started to think that CC had nullified the need for copyright reform. By an Escherian twist of logic, some lawmakers even cited the success of CC as an argument for stronger copyright. In 2013, CC attempted to push back on misconceptions by officially dropping its neutral stance on copyright reform.
CC’s official copyright reform statement includes the line, “CC licenses are a patch, not a fix, for the problems of the copyright system.” Really, I’m not sure if CC is a patch or a fix. I thought a better line might be, “CC is a pretty solid app, but the operating system it runs on sucks.”
Hacks are doubly important. First, they solve whatever immediate problem is at hand. Second, they create evidence for the benefits that will come with a systemic solution.
When a hack becomes useful in a widespread way, we shouldn’t just advocate for increased use of that hack; we should consider the institutional changes that could make the hack irrelevant. When you see people using works under open copyright licenses in exciting, transformative ways, ask yourself what would happen if people could use everything that way. When you hear companies pledge not to use their patents as weapons, imagine a world where all patents were demilitarized.
Let’s celebrate Tesla by making all modern companies more like Tesla.
How we got here
In the past few years, patent trolling has received a lot of attention in the form of a company called Personal Audio. If you were listening to podcasts in 2013, you’re probably already quite familiar with the story. If not, I’d suggest reading Mike Masnick’s play-by-play at TechDirt.
It’s a useful story, because it demonstrates some of the underlying, systemic problems in patent law — problems that no license or waiver can fix.
Problem #1: Patents can cover functionality that doesn’t exist yet
There’s a famous case involving a patented process for separating fats into their individual components. Richard Tilghman owned the patent, despite the fact that he hadn’t successfully made the thing work. Years later, when Proctor and Gamble perfected a similar system, Tilghman sued them and was awarded a licensing fee by the US Supreme Court.
James Logan, founder of Personal Audio, didn’t invent podcasting. What he invented was a dopey magazines-on-cassette subscription service, but he filed a patent describing what he imagined as the future of the service. Years later, after podcasting had become mainstream, his company Personal Audio began to threaten podcasters.
In both instances, when a patent can encompass functionality that doesn’t exist yet, its scope can grow in unpredictable and dangerous ways as new technologies develop. That’s particularly true for software patents, which brings us to problem #2.
Problem #2: Software patents probably don’t stimulate innovation
Fundamentally, the purpose of patents is to encourage innovation. Let’s say I develop a process for making clothes dryers more energy efficient. I could open up a shop, customers could bring in their dryers, and I’d take them into the back room to make the upgrade.
Without legal protection, there’s a clear plateau to the benefits that can come from my innovation — both to me and to the world at large. I can’t license my system to others, because in doing so, I’d give away my secret. Without my system becoming public information, no one else can build on and improve my idea.
Patents offer the inventor a temporary monopoly over a certain process, which she can use to exploit her invention much more fully. In return, society gets the recipe (disclosure).
But how useful are those recipes? It varies a lot from field to field. In a recent study, inventors were asked to estimate the amount of time they were able to save in developing their inventions by studying the existing patent literature. Averages ranged from 36 hours (organic chemicals) to a paltry one hour (digital communication technology).
That disparity in the usefulness of various patents has a rather perverse implication: it results in the software industry filing more patent applications than it otherwise would. In another study (see page 33), only 25% of software startups cited disclosure as a factor in a decision not to file a patent; compare that to 59% of biotechnology startups.
And what role did Personal Audio’s patent play in the development of podcasting? None. One of the requirements for patent protection is that your claims would not be obvious to a person with ordinary skill in the art. And in 2015, the US Patent and Trademark Office ruled that Personal Audio’s claims would be obvious to anyone with a basic understanding of how the internet works.
Even if you can imagine Personal Audio’s patent saving someone, somewhere an hour in the invention of podcasts, it cost podcasters many times more hours. Hence, problem #3.
Problem #3: Patent trolls are a big fat waste of time and money
Personal Audio sued Adam Carolla, HowStuffWorks, and Togi Entertainment. But those lawsuits are just the tip of the iceberg: it also sent threatening letters to hundreds of other podcasters, demanding exorbitant licensing fees. Some of those podcasters were very small operations that couldn’t possibly afford to fight.
No one knows how many podcasters simply buckled and paid the licensing fees, but the whole situation underscores a big problem: the people actually using a technology the most creatively are often the least prepared to fight off trolls. Most annoyingly of all, trolls can file lawsuits without explaining how they believe the defendant has infringed upon a patent.
Any system that catalyzes large amounts of cash flowing from innovators to companies that don’t actually do anything deserves at least a bit of suspicion.
Optimizing the law for frictionless sharing
Having established that patent waivers don’t directly solve the most pressing problems with the current patent system, I would like to see Colleen Chien’s recommendations appear as part of a comprehensive patent reform bill. For a number of reasons — for one, waivers might not actually be enforceable as-is. From Chien’s paper:
Only promises that lead to reasonable reliance are actionable against the promisor. […] Even in cases where a company adopts a patented technology, and can prove that the patentee’s promise not to sue factored into the decision, showing that the company otherwise would not have adopted the technology can be hard.
Got that? If I promise not to sue someone who uses my invention, you use my invention, and I sue you, you may have to prove that you would not have paid me to license the invention. Chien also notes that a waiver may become even more difficult to enforce — or even impossible — when a patent changes hands.
Chien recommends a government-run system in which patent-holders could openly license their patents to groups that meet desired criteria: “For example, if a patent holder wants to retain only rights to exclude larger competitors, or to waive all but defensive rights, enabling free use by green, humanitarian, educational, or start-up projects, for examples, it should be possible to do so. But presently, there are no easy ways to do so.”
I have to admit that that list of imagined restrictions stresses me out a bit. One of the most common questions we got at CC was, Why don’t you create a license that restricts X? In fact, inventing new rules is usually the first thing someone does when they learn about open licensing. How about a “politically progressive purposes only” license? Or a license for just small companies, but not large ones? Can I restrict use to members of a certain religion? No distribution on television? No distribution in Israel? (I heard all of these suggestions multiple times.)
Every time a new rule is introduced to an open licensing system, it creates a new pool of works that you can’t easily intermingle with openly licensed works outside of that pool. Keeping the optional rules to a minimum is a compromise that 90% of users are usually 90% okay with (a lot of people have suggested that CC further simplify its own options). I’d like to see any official patent waiver route be similarly streamlined.
Putting that qualm aside, it’s crucial that we develop an official system for patent waivers as part of a comprehensive reform package. It’s not enough to promise not to join the trolls. It’s time to take back the bridge.