Rethinking Patents

Over the past few years the pressure on the patent system as a means of protecting intellectual property has been tested to the limit, and many changes are being made in an attempt to keep it viable. But in an age of globalization, coupled with the fact that for the patent system to work there has to be an infrastructure of suitable enforcement, it may be time to rethink its viability—especially in light of the rate at which technology now moves.

Twenty years of protection translates into many product generations for high-tech, where we now see products go from concept to mass adoption in a matter of a couple of years. This is more than enough time to recoup the investment made in their development, and it is quite common to see litigation take considerably more than the time necessary to develop the next generation product. This means that the technology thief no longer really cares about being barred from selling the product any more. If the company has been successful with stolen technology, then it will not care about the fines imposed as this will just be considered a cost of doing business.

The patent system and the courts are clearly getting somewhat desperate. A product can sell in so many countries, each with its own patent courts, that even if successful in one area, the product can continue to be sold elsewhere until successfully litigated in that country. In one fairly high-profile case against Marvell, Carnegie Mellon is attempting to use global market value as the basis for asserting the level of damages that should be awarded rather than just those resulting from sales in the U.S.

If we consider the EDA industry, with the exception of hardware emulation, there have been few patent litigation cases. While patents often are filed and kept for defensive purposes, proving that a competitor uses your technology is difficult, expensive and will result in retaliatory action, thus increasing the stakes until someone caves.

EDA has been better served by trade secrets, and the highest profile example of this being successfully enforced was when Cadence managed to prove that Avant! had stolen its source code and used that code to bootstrap a new startup.

EDA startups often would come from people having ideas while working for a large company—a new way to do something, a better algorithm or a product that served a different market. This may not have been appealing to the large EDA company, especially if the new ideas would have required refactoring the existing product. So the employee, and perhaps a few close friends, would leave and attempt to create a product based on the new ideas.

When done ethically, this served the large EDA companies quite well because the risk associated with the new development happened outside of the company. If successful, the startup could be re-purchased at a reasonable cost. But this cycle no longer exists. The industry has become complex, mature and in many cases slow moving. There are not many new startups.

I can’t help feeling that even the largest of patent fights only helps the lawyers. Patents make your invention public. This actually helps an organization to successfully use an invention, and if it does not intend to export the resulting product back into the country that created the technology, then it holds little risk. Perhaps this is a reasonable way of helping countries that are less developed, but somehow I don’t believe patents have ever been considered to be a humanitarian gesture to the developing world.

At Mentor Graphics, a company that I worked with for more than 12 years, there are many employees that have been there for most of the company’s existence. Twenty-five years of tenure is not that uncommon. Looking after your employees may be the best approach to protecting your assets, and allowing innovation and creativity within the company may be the necessary business policy of the future.

Does this avoid intellectual property theft? No, but the money that would have been spent on lawyers could be plowed back into new investments that renders the stolen technology inferior.