Intellectual Property Conference

Tuesday, February 26th, 2008

I recently attended a conference on intellectual property — you know, patents, copyrights, trademarks, and trade secrets — and I learned two things: (1) I know much more about intellectual property than I realized, and (2) you can’t skim a conference. I’ve been spoiled by the blogosphere.

On a less meta level, I did learn a few things — or at least noted a few interesting quips worth repeating.

It’s interesting to note that the U.S. doesn’t simply have fairly mature IP law; IP made its way into our Constitution. Here’s the factoid I did not know: within 13 years, the U.S., with its low patent fees, had more patents than Great Britain, the home of the Industrial Revolution — and a much older country.

Through most of the 19th century, innovation was the work of independent inventors. Bell, for instance, originally outsourced its R&D. It’s only after a number of legal rulings enforced employment agreements that transferred IP to employers that companies like Bell brought their R&D in house and formed groups like Bell Labs.

Today, there is talk about outsourcing innovation again, via markets like Eli Lily’s Innocentive.

At any rate, a lot of patents, especially software patents, are defensive. On the one hand, if you’re Microsoft, you can afford to spend $100 million per year in legal fees over alleged IP infringement. On the other hand, if you’re Microsoft, you have to spend $100 million per year in legal fees over alleged IP infringement — because you’re a big, fat target. The balance of terror depends on both your resources to bring to the legal battle and the resources other people can extract from you.

One recent issue in IP is the appearance of patent trolls — firms that pop up with a dormant patent they’ve bought off the inventor and use to blackmail a big, successful firm that thinks it has been operating in the clear. This sounds awful and evil until you realize that the original inventor didn’t stop the big, successful firm, because the original inventor wasn’t a lawyer; he was an inventor.

Patent trolls give big, successful firms a much bigger incentive to play nicely with the little guys, because the little guys can sell their IP to someone who knows how to use it — either in the marketplace or in a court of law.

Also, it’s easy for a big company to complain about patent trolls when it has brought all its own trolls in house.

Anyway, these “trolls” seem to favor the Eastern District of Texas — where all the asbestos lawyers had great success a couple legal fads ago.

For most large companies then, the focus on IP is on legalities, and IP’s largely seen as a negative right — the right to sue someone and get an injunction against their using that IP. IP assets are “owned” by lawyers, and no one argues with simply holding IP “just in case” it becomes valuable later. The rewards for successfully licensing IP are dwarfed by the painful consequences for… successfully licensing IP. “Why did we license that technology away?”

So, at this point, IP is far from liquid and far from fungible, but a number of folks would like to see IP licenses move toward some kind of standardized but parameterized form, like the better-known financial options. As one fellow pointed out, oil-derivative transaction volume dwarfs gasoline sales. The same could happen with IP. “Wall Street will set you free.”

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