Patent Litigation and Free Enterprise: Are We Stifling Competition and Innnovation?

In today’s New York Times, there is a fascinating article about our patent system and how patent litigation has become a dominating force impacting—and in some respects, discouraging—technology innovation.  Apart from having strong feelings about “patent trolls” which are discussed only briefly in this article and will be addressed in another blog post, I do not have firmly held views on how to fix or improve the current system other than recognizing, as do most observers, that there is something wrong with any legal framework that stifles rather than encourages innovation. But I do commend this excellent article to anyone interested in thinking about these issues, albeit in context that may be just outside the normal confines of this blog.

Here is the “money quote” from the Times’ article:

In the smartphone industry alone, according to a Stanford University analysis, as much as $20 billion was spent on patent litigation and patent purchases in the last two years — an amount equal to eight Mars rover missions. Last year, for the first time, spending by Apple and Google on patent lawsuits and unusually big-dollar patent purchases exceeded spending on research and development of new products, according to public filings.

Like good referees at a sporting event, a well-functioning legal system should exist on the sidelines to settle disputes, facilitating and encouraging enterprise and innovation rather than becoming a dominant force that eclipses the game.  Those of us who are NFL fans and endured the first few weeks of replacement referees know how frustrating it is when everyone was talking about the officiating after the game rather than the players who played four quarters.  That is an appropriate metaphor for what is wrong with our legal system in general, including the patent litigation issues discussed in this article. Litigation has taken a life of its own to become an industry in itself.

UPDATE

My partner in New York, Paul Ackerman, has responded to this post on his blog, Point of Novelty, with some of his own thoughts on the topic and the New York Times article.  Paul is an accomplished IP lawyer whose knowledge of the subject far exceeds any of the tentative thoughts I might express.  I recommend Paul’s post for anyone interested in this topic.  Thanks, Paul.  And thanks for the re-post!