WASHINGTON-Jim Balsillie, chairman of Research in Motion Ltd., last week urged the United States to take a leadership position in reforming its patent system and promoting protection of intellectual property rights on the world stage.
“This is the most important competitiveness and innovation issue of our time,” Balsillie told a gathering of tech executives in northern Virginia last Wednesday.
In March, the Canadian-based BlackBerry maker agreed to pay a small Virginia firm $612.5 million to settle a protracted lawsuit contesting patent claims previously rejected by the U.S. Patent and Trademark Office. As such, RIM finds itself as the poster child for patent reform.
In the past decade, patent litigation has loomed large in the wireless space and the tech industry in general.
“It [IPR] touches absolutely everything in both very positive and possibly very pernicious ways,” said Balsillie. “There are no super-easy answers on that, but you really want to get this one right. There is no question, and it’s generally agreed, that patent reform is needed.”
Despite the hefty legal settlement, Balsillie was not bitter in his call for patent reform and in his suggestion the U.S. could blaze a trail for others by fighting for IPR safeguards in trade negotiations as well as in other global forums. Rather, Balsillie said there are encouraging signs, from the Supreme Court’s patent decision earlier this month to congressional efforts to better manage disputes like the RIM-NTP debacle without compromising legitimate property rights of inventors. And Balsillie said the future is bright for the wireless industry. “This is the first inning of a nine-inning game,” said Balsillie. RIM is expanding its global reach into China, a major source of IPR piracy, even as it faces stiffer competition from Motorola Inc., Nokia Corp. and other wireless device suppliers.
Patent reform is a complex balancing act pitting the tech industry against pharmaceutical and biotech companies-all major political campaign contributors. Small inventors, another voice in the debate, are aligned closest to giant drug companies even though they do not share the same agenda as large drug companies.
The House and Senate have their eyes on patent reform, though the controversial and complicated nature of legislation makes it somewhat doubtful Congress will clear a bill this year. Nonetheless, lawmakers want to capitalize on the momentum stemming from the RIM-NTP settlement and the Supreme Court’s ruling in eBay Inc. vs. MercExchange L.L.C. The high court’s ruling reins in the relative ease companies typically have in securing injunctive relief from judges, instead directing U.S. district courts to apply a four-prong test to determine whether a company can be ordered to stop in its tracks when another company asserts patent infringement.
“An industry has developed in which firms use patents not as a basis for producing and selling goods, but instead, primarily for obtaining licensing fees,” said Justice Anthony Kennedy in a concurring opinion. “For these firms, an injunction, and the potentially serious sanctions arising from its violation, can be employed as a bargaining tool to charge exorbitant fees to companies that seek to buy licenses to practice the patent.”
Kennedy and others point out that high fees may not be appropriate or equitable in cases when a patented invention may comprise only a small component of a product sold by another company. Kennedy also put the spotlight on the evolving trend of patenting business methods in the information age. “The potential vagueness and suspect validity of these patents may affect the calculus under the four-factor test,” Kennedy observed.
Lawmakers are looking closely at improving the USPTO’s post-grant review procedures as a means to head off costly and lengthy litigation. Such a provision is included in comprehensive patent reform legislation introduced last year by Rep. Lamar Smith (R-Texas), chairman of the House Judiciary subcommittee on courts, the Internet and intellectual property. Smith plans to hold the third of his four patent reform hearings in June.
After listening to testimony covering a range of views on the post-grant review process last week, Senate Judiciary Committee Chairman Orrin Hatch (R-Utah) said he, too, sees a need for patent reform. After the hearing, Hatch, who is working closely with ranking Senate committee member Patrick Leahy (D-Vt.) on patent challenges, said he believes a bill can be introduced this year.
Leahy said a strong post-grant review procedure can go a long way in ensuring that inventors gain exclusive rights for limited times, short of massive litigation. “Invalid patents can be weeded out more efficiently and the PTO can correct its own errors. Infringement claims can be evaluated more effectively. And patent holders can be more confident in the rights secured to them,” Leahy said.
