The Great IP Debate

Patent Trolls At Supreme Court

Intelectual property (IP) rights are the challenge for future innovation, technology and development of our society. The fundamental problem with IP today is that many larger companies are trying to patent, copyright, service mark or trademark anything they get their grubby, greedy paws on. The number of companies that buy up patents and do nothing but hold on to them for the sake of preventing competition has been growing since the 1950s. Since then we have seen patent laws change to include patents of software, software interfaces and words, terms and phrases used in common parlance. Additionally, there were efforts to patent and/or copyright the color of a book cover (i.e. Yellow Pages v. Yellow Book), databases (i.e. phone numbers and addresses in a phone book), and natural phenomenon/natural byproducts (i.e. stem cells, blood cells, etc.).

But, like the intent behind allowing businesses certain legal allowances (i.e. status as a "fictitious person", insulation against suit of personal assets of corporate owners), the intent of intellectual property is for the benefit of society.

The Congress shall have power.... To promote the progress of science and useful arts, by securing for limited times to authors and inventors the exclusive right to their respective writings and discoveries; Article I: Section 8 - US Constitution [emphasis added]

There is an implication in these words that the purpose of intellectual property is for 1) progress, 2) useful purposes and 3) for the eventual and overall benefit of our society. This clause of the Constitution is a furtherance of the stated purposes of the Constitution as set forth in the Preamble:

We the people of the United States, in order to form a more perfect union, establish justice, insure domestic tranquility, provide for the common defense, promote the general welfare, and secure the blessings of liberty to ourselves and our posterity, do ordain and establish this Constitution for the United States of America. Preamble - US Constituion [emphasis added]

The first important idea to note from the Preamble is that the Constitution is a social contract between and for all of the people... citizens of the United States of America. Corporations are allowed to exist as guests in our society only in as much as they further this fundamental contract... the benefit of our citizens. As such, no corporation is supposed to have unlimited advantages, and the ultimate benefit must be in furtherance of the welfare and prosperity of our social contract. Far too many corporations--and most of our citizens--have forgotten that purpose of our Constitution. Additionally, one of the prime functions of the Constitution--indeed our entire social contract and form of government--is promoting the general welfare of all of our citizens. While the strict capitalist interpretation of this clause is that corporations do this by providing jobs, trade and overall commerce, many scholars have argued that those functions are not focused on promoting the general welfare. A corporation must develop a standard of being effectively more committed to the overall welfare of our society, just as a guest is called upon to appreciate the hospitality of the host. Finally, the ultimate goal of our social contract that is our "supreme law of the land" is the continuation of our way of life... meaning that we must look at our present efforts in light of providing for the future of our society. Merely living for the day--which is the mindset of far too many corporate leaders: profit today at all cost--is not enough.

In terms of IP, we must consider how these rights fulfill the provisions of the Constitution. We must ask how providing copyrights, trademarks, servicemarks and patents fulfill the goals of:

• Furthering the useful functions of our arts and science to the benefit of our society


• Furthering commerce that provides jobs, technology and other benefits for all of our citizens

Provides an element of benefit and general welfare to all citizens, not just a small minority, and not only to those that own the rights to such properties

Contributes to the prosperity and continuity of our nation and its continued existence and success

Many capialists will argue that these are socialist ideas. I contend that they are not. Indeed, these ideas are derived from the writings that inspired the overall approach to developing our Constitution and our way of life. Indeed, we see these ideas coming out of the writings of John Stuart Mills, Hobbes, Rousseau, Adam Smith, and even the Bible and the teachings of Christ Jesus.

So the cases involving intellectual property are essential to preserving our way of life, providing for our future prosperity and continuation of our nation, and the general welfare. If, in the process, those that own the IP rights make a profit, so much the better. But the cases that being brought before the courts today are cases where the ownership of IP rights have become stifling of innovation, stifling of competitiveness within our commercial enterprises, and to the detriment of most benefits intended for our general welfare.

Additionally, the way we now deal with IP rights does not recognize the interaction and the cooperative endeavors--both corporate and individual--that helps to create breakthrough technologies and products. Further, far too many of these intellectual property rights are being given for products, ideas, software and other innovations that were developed in part with grants and loans coming from our tax dollars... and then not shared or marketed in such a way as we, the people, receive any benefit from the process. There is some obligation on the part of those that use tax dollars--state or federal--to develop an intellectual idea to provide some manner of consideration to those that provided the impetus for development. Also, those technologies and innovations developed entirely by governmental agencies and governmental resources (i.e. the space blanket, the Tempur foam products, etc.) should remain in the public domain for the benefit of all, not for the eclusive use of those that further the marketing of said products or ideas.

Any garage inventor will tell you that American innovation rests on the inventor's exclusive right to use or license a creation.

But a newer breed of tinkerer--one who dreams up the high-tech gizmos so crucial to American consumers and businesses--might argue that such a sweeping view of intellectual property rights could actually stifle innovation. That's because such inventions build on the ideas of others. If just one of the thousands of patented bits of technology that make up a computer chip or an iPod is held hostage by a patent holder, the whole device can be placed in jeopardy.

These clashing views of intellectual property rights were on display in the U.S. Supreme Court on Wednesday, when the justices heard arguments in eBay (nasdaq: EBAY - news - people ) vs. MercExchange. At stake is the current standard of slapping a permanent injunction on a patent infringer in all but the rarest of cases. Tech giants such as Microsoft (nasdaq: MSFT - news - people ) and Yahoo! (nasdaq: YHOO - news - people ) hope that the justices will grant the lower courts more breathing room to look at the facts of each case.

MercExchange, a Virginia-based patent-holding company, won millions of dollars in damages when it successfully sued eBay for violating one of its patents in the popular, fixed-price "Buy It Now" feature on the online auction house's Web site. But a district court stopped short of forcing eBay to shut down the service entirely, since MercExchange wouldn't be harmed if eBay continued to offer the service while it tried to design around the patents. After all, MercExchange didn't use its patents, the court wrote, and could eventually be compensated with additional monetary damages if the infringing continued.

But on appeal, the U.S. Court of Appeals, Federal Circuit, in Washington, D.C., reversed the decision, sticking to its general rule of always granting an injunction when infringement is found. On Wednesday, the Supreme Court justices seemed reluctant to depart from this standard.

"We're talking about a property-right here," Justice Antonin Scalia said bluntly. "All he's asking for is 'give me my property back.' "

The law unambiguously grants patent holders the exclusive right to their inventions. But those sympathetic to the high-tech industry argue that tech companies are churning out such complex products that they may not even know when they are infringing (though this was not the case with eBay, which brazenly infringed).

The tech industry also points out that, in the case of a company like MercExchange, which is not even using its patents, monetary damages should be sufficient recompense for infringement. "If there's a company that is licensing for a living and, therefore, money will make them whole, the court should be willing to consider that," says Steven Bauer, a patent attorney in Boston.