Ireland has a favourable tax regime for revenues generated from patents and intellectual property, something that is sure to make it all the more attractive to companies such as Intellectual Ventures.
As there is no substantive investigation done by the Patent Office into the validity of an idea, getting a patent granted is also relatively easy, assuming the application ticks the required boxes.
While this may be beneficial to some it also means that a granted patent does not automatically mean the possessor truly owns the idea – it just shifts the burden of proof to those who might say otherwise.
“If you file the right papers and pay the right fees you could get a patent granted for the wheel if you wanted to,” says Cathal Lane. “Once you get it granted it’s somebody else’s problem. They then have to go and get the patent knocked out by proving it to be invalid, now that might be relatively easy or that might be extremely difficult. It’s not always easy to knock out a patent.”
In theory an organisation could threaten litigation against a company for a patent that they do not have any valid case for holding. It would then be up to the company on the receiving end to undertake a potentially expensive court-case to defend itself; or to take the safer option and settle out of court.
“In a lot of cases in Ireland it’s a game of chicken to see who blinks first,” says Lane.
He says to some degree it is the job of the Patent Office to protect vulnerable players by not allowing invalid patents through in the first place, though he accepts that others have a wildly different take on things.
Such a loose patent-approval process is not exclusive to Ireland – it is also a major part of the growing patent problem in the US.
This American Life identified one example, issued in 2000, which patented the process for making toast.
“If someone threatens your small business with a patent lawsuit, it doesn’t matter whether the patent is valid . . . for you to prove that it’s invalid would take far more time and money than you probably have,” said Marco Arment, the developer behind Instapaper and Tumblr, in a blog post titled “Why Software patents are not fixable”.
“The only sensible course of action, the path taken by almost everyone threatened by patent litigation, is to settle with the patent-holder as quickly as possible for whatever amount of money they demand.”
The threat of such patent-based brinkmanship or sabotage is sure to make many uneasy, especially those that may not have the experience or money to defend themselves.
However the fact remains that patents are a vital piece of the puzzle for any company that wants to take an idea to market.
“If you don’t have a couple of foundational pieces of intellectual property you’re going to find it very hard to raise venture capital funding,” says Diarmuid O’Brien of Crann. “A venture capitalist might think you have a good idea but they’re going to ask what will stop others from coming in and copying the idea. Intellectual property is critical in giving that protection.”
Investors’ insistence on a patent portfolio is based on legitimate concerns – after all if an idea is good enough there will always be someone willing and able to steal it.
Patents are more than just a part of the process, though. As big players are continually proving, a good patent can prove to be an extremely lucrative revenue stream in its own right, assuming it is used properly.
Small companies with good patents have also proven to be prime targets for big players – after all it is often cheaper or easier for them to acquire innovation than to try to do it themselves.
Part of the reason why this kind of thinking is not prevalent in Ireland is because of poor education in the area of intellectual property rights, according to both Diarmuid O’Brien and Cathal Lane.
“Intellectual property is still a thing people think about whether they need or not as opposed to being seen as something you had to have like companies in the US and Japan see it,” says Lane.
“I think a lot of Irish people think of Edison or Bell when they think about inventors, they don’t see their friend the engineer as one. People seem to think an invention is a whole new creation when in reality innovation is often really about small and gradual changes.”
A HISTORY OF PATENT LITIGATION
1854 - Singer vs Howe
Isaac Singer was taken to court for infringing upon the patent of Elias Howe in the creation of his line of sewing machines. Singer tried to show the patent was invalid but lost. However, his name is synonymous with sewing machines to this day
1876 - Gray vs Bell
The battle over the origin of the telephone focuses on whether Elisha Gray or Alexander Bell patented the invention first, or whether Bell bribed an alcoholic patent examiner to steal his rival’s idea. Bell was ultimately deemed to be the rightful owner of the patent, but doubts remain
1904 - Henry Ford vs George Selden
Selden’s “road engine” patent let him collect royalties from car manufacturers rather than build a car himself. When Ford refused to pay, Selden sued but this backfired when he failed to prove his concept by building a working car at the judge’s request
1906-1917 - The Wright Brothers’ Patent War
The famous flying brothers spent a decade fiercely defending their invention, setting back the aviation industry in the process. Government pressure ultimately forced them to pool patents so the US could build planes to fight in the first World War
1922-1934 - Edwin Armstrong vs Lee De Forest:
Armstrong was behind many of the core components that made AM and FM radio possible but got caught in, and eventually lost, a long patent battle with de Long. This was despite the fact that Armstrong had clearly patented the disputed idea first
1930 - Henry J Gaisman vs Gillette:
Threatened with litigation over safety razor patents, Gillette chose to buy Gaisman’s AutoStrop instead. It’s said that when asked why they should pay $20 million for a company with assets worth $9 million, an AutoStrop spokesman replied “but, gentlemen, I have a patent on your product!”
1936 - Park-In vs Weymouth
Richard Hollingshead secured a patent for the drive-in cinema in 1933 and set about suing the numerous copy-cats in the years that followed. His litigation against Weymouth in 1936 saw the company take control of the unauthorised drive-in’s gate until the case was settled
1960-1987 - Gordon Gould vs the US Patent Office
Widely credited as the creator of the laser, Gould spent decades trying to obtain patents that would be strong enough to defend in court. He was ultimately successful when he patented vital aspects of his creation rather than the invention in its entirety
A HISTORY OF INNOVATION LITIGATION
1994 - Apple vs Microsoft
Following the release of Windows 3.0 Apple took Microsoft to court for allegedly copying the “look and feel” of its graphical user interface (GUI). Apple lost as the court decided most of its GUI had already been licensed to Microsoft for Windows 1.0.
1997 - Integraph vs Intel
The chipmaker was taken to court for stealing features of Integraph’s “Chipper” chip. In the end it handed out $525 million, more than anyone had made in bringing the technology to market at that time and the largest set of damages ever won against Intel.
1999 - Amazon’s One Click patent
Amazon’s patent let it keep customer details on file so they could buy products with one click. They successfully sued many rivals including Barnes Noble until the filing was deemed invalid in 2007 due to the fact that a similar e-commerce patent already existed.
2002 - Lucent vs Microsoft
Relating to a now-expired patent about entering data via an on-screen keyboard, aspects of this case are still ongoing nearly a decade later. Most of it was settled in late 2008, however, with Lucent (now called Alcatel-Lucent) getting $512 million in damages.