Silicon Insider: Patent Weary

It's the first dream of every new startup company and the last hope of old, dying corporations.

It's the technology patent.

A couple weeks ago I got an e-mail from an old friend from my Forbes days Josh Kruter. He's currently in the final weeks of his MBA at Columbia University and working on a group project in a course on innovation being taught by Jeff Harris of the investment firm Warburg Pincus.

One of the source documents being used by Josh and his team is an article I wrote back in 2002 about the growing crisis in the U.S. Patent and Trademark Office.

It was a fun article to write, as I got to fly back to western Pennsylvania and tour the vast underground mine that is the repository of copies of all 7-plus million patent filings of the last two centuries (and, it is rumored, where Vice President Dick Cheney was required to hide in the days after Sept. 11, 2001.)

But it was a tough article. The heart of the piece -- entitled "The Smother of Invention" -- was that the patent office was in a growing state of crisis and was beginning to lose its legendary support of U.S. competitiveness.

In writing to me, Josh asked two questions:

Did my story still hold up five years later?

What did I think of the recent (and ongoing) patent war between Alcatel-Lucent and Microsoft over patents for MP3 technology?

I must confess that I haven't been following the patent crisis much in recent years -- which in itself is telling, as apparently no one else in the media has either. As for Microsoft vs. Alcatel, I've followed the news but have yet to write about it. So, if only to help Josh raise his grade point average, I decided to look into both. We'll take them in turn:

First, the Patent Office

For 200 years, since its founding in 1802 by President Jefferson, the U.S. Patent and Trademark Office has served the United States brilliantly and with enormous competence. Decade after decade, it was generally considered the single best run operation in the federal government. Its success came from four distinct factors, each of which the patent office managed brilliantly:

Efficiency: At a couple thousand dollars, patent filing in the United States was a bargain compared to other countries, and that in turn enabled generations of poor entrepreneurs to obtain intellectual property protection for their new ideas, and sometimes create multibillion-dollar companies.

Pendency: For most of its history, the patent office has been able to keep the time between filing and award of a patent to less than three years. This proved crucial to America's ability to rapidly evolve commercially and become history's most adaptive economy.

Quality: The patent office's examiners have long been considered the best in the world, which meant that U.S. patents were more likely to be truly new and of real value.

Protection: U.S. patent law and enforcement have consistently found the right balance between giving a short-term monopoly to inventors and not crushing all potential competition.

Combined, these four factors not only made the U.S. Patent and Trademark Office the envy of the world, but also proved to be the linchpin in making the U.S. economy the most powerful and successful in the world.

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