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The Patent Puzzle |  A Brief History | Privatize the Process? |
Open Source and Patent Collaboration |  The View from the Bench

The Patent PuzzleThe Patent Puzzle:
Harnessing the Accelerating Pace of Innovation

By Cullen Couch

For a very long time, intellectual property was mostly an arcane field about intangible claims that were hard to establish and even harder to value. Information technology changed all that. Intellectual property may be an esoteric term, but smartphones and tablets are of enormous popular and commercial interest, and the makers and consumers of information technology now know that intellectual property law matters a great deal.

What the world learned in Apple v. Samsung was not so much about the iPhone or Galaxy but instead about what Apple and Samsung claim to own. It came as a surprise to many, and an outrage to some, that simple commands such as “double tap-to-zoom” and “swipe to unlock,” and common shapes like “rounded corners” and rectangles, were patentable features of similar devices. After hearing from software engineers and marketers (and more than a few experts), an American jury determined the provenance of these claims, awarding Apple $1 billion in damages against Samsung for infringing six of Apple’s design and utility patents. By contrast, just a week later, a Japanese court found that Samsung had not infringed several Apple patents on music and video synchronization, underscoring the global nature of these disputes and the role of juries in evaluating complex technology.

In mobile technology alone, Samsung owns some 32,000 patents, Microsoft 14,000, and Apple 1,800. The U.S. Patent and Trademark Office (PTO) processed more than 500,000 patents last year and can take as long as six years to issue one. The volume of patent applications already swamps the system, but the demand for better and faster technology is relentless. That raises the question:  Can our patent system “promote the Progress of Science and useful Arts” as contemplated by Article 1 of the U.S. Constitution in today’s world?

The patent puzzle is vastly complex and contains many parts, from the creative to the technical.  To shrink it down, we take a look at the current influence of the patent process. Our interviews with alumni and faculty show a patent system that is at once an essential engine of innovation, a tangled mess, an almost limitless library of invention and discovery, and an opportunist’s dream.

For insight on these issues, we turned to retired Chief Judge of the United States Court of Appeals for the Federal Circuit, Paul Michel ’66; Netflix (and former Oracle) Chief IP Officer T.J. Angioletti ’92; Davis Polk litigation partner Chris Hockett ’85; Google senior search quality statistician and quantitative analyst Eric Tassone ’98; and Law School professors Margo Bagley, John Duffy, and Chris Sprigman.

Systematic neglect of an overwhelmed Patent Office

All patent applications must wend their way through the PTO. The PTO’s main campus in Alexandria, Virginia, occupies five buildings that house almost 9,000 employees, including engineers, scientists, attorneys, analysts, and computer specialists. Of that number, 7,630 are patent examiners, usually newly graduated engineers and scientists; another 400 are trademark examiners, all attorneys. President Obama appointed David Kappos as Director of the PTO in 2009.

U.S, Patent and Trademark Office
The main campus of the U.S. Patent and Trademark Office in Alexandria, Va.

Kappos faces serious challenges. A patent filed today will wait an average of 22.3 months before the PTO notifies the applicant that the application is under review. From that point, it will take another 10.4 months before the patent is either issued or abandoned. On average, each application receives about 20 hours of examiner review during the process. Amazingly, despite the number of applications and the generous attention they receive, the PTO has already granted over 483,000 patents this year.

Before Kappos took the helm, the PTO, funded entirely by user fees and no tax dollars, had been gradually doing more with less. In 1999, Congress began siphoning off PTO’s user fees to fund other government programs. “They decided it was a nice source of extra cash,” says Chief Judge Michel. “Instead of using those fees to hire new examiners, it went for somebody’s pet project. They have siphoned off almost a billion dollars, and it’s the principal cause of the deteriorating performance of the Patent Office.” Fortunately, the America Invents Act, a patent bill that passed in 2011 after almost seven years of hearings, largely curtailed the problem by making it difficult for Congress to continue withholding the fee money. “But we’ll see,” warns Michel. “They can also change the law.”

Chief Judge Paul Michel '66
"People talk about patent thickets and wasteful litigation and excessive damages and on and on. These become buzzwords that prevent careful thinking and can lead to poor public policy."
— Chief Judge Paul Michel '66

Further, the stakes are higher than ever in the patent arena because of two events that have transformed the American competitive landscape, says John Duffy, the Samuel H. McCoy II and Armistead M. Dobie Professor of Law. “First, knowledge and information are becoming increasingly more valuable. The modern cell phone, for example, uses inexpensive raw materials and transforms them into the modern smartphone based on an enormous amount of knowledge. And second, we have switched from heavily concentrated and regulated industries to a more competitive marketplace in which intellectual property is all the more important.”

Duffy cites the phone industry as the classic example. For most of the 20th century, a telephone monopoly was heavily regulated by the government. AT&T Bell Labs, the monopoly’s storied research facility – one of its scientists won a Nobel Prize for detecting the background radiation of the Big Bang – had no need for intellectual property rights. “If you are the telephone company, a monopoly, you don’t need a patent to protect exclusivity in telephone technology.”

The patent explosion that followed this shift started hitting the PTO in the 1970s. Used to processing fewer than 70,000 patent applications every year, it saw the number of patent applications explode. The PTO labored to keep up, a task made harder when Congress raided the PTO’s user fees.

Michel retired in 2010 after 22 years on the Federal Circuit Court, discouraged by the patent reform debate. As a judge, he was reluctant to express his concerns. “I was appalled by how incomplete the pursuit of truth was,” he says. “In all these hearings over a seven-year period [leading to the America Invents Act], only one inventor and only one investor was ever called as a witness, two of the key players in the whole system. There wasn’t anyone looking at the overall needs of the country, of industry, of the system itself. Instead, it was always someone trying to get a little more profit for his company, or his industry, or his type of technology, at the expense of everybody else.”

Thomas Edison got his patent in six weeks. Now it often takes six years. By the time a patent is issued, it may be obsolete, technologically passé, or of little commercial value. “We’re killing ourselves by failing to maintain the machinery of an efficient, well functioning Patent Office,” says Michel.

The guardedly good news is that under Kappos’s leadership, the PTO is now beginning to bulk up its capabilities. It has hired several thousand additional experienced patent examiners in the last few years, and doubled the size of the appeals board, which was backed up and slow. Michel approves. “The quality and the size of the examining core and the board is going up sharply,” he says. “We’re already seeing much higher quality patent performance.”

“I think almost everyone in our industry agrees that Kappos has done an excellent job as commissioner of the Patent Office,” says T.J. Angioletti ’92, Chief IP Officer for Netflix. “He’s instituted a number of different reforms that have really improved the Patent Office, and it is headed in the right direction. We don’t expect miracles from him, but considering the environment he’s working in, I believe that he’s doing a lot and the customers of the Patent Office are happy with the progress.”

Patent validity

Once a patent application is filed, it is up to the PTO examiners and staff to determine its validity. According to statute, “a person shall be entitled to a patent unless…” he fails to show that the invention is non-obvious, useful, and novel, the three pillars of patent validity. The PTO has stated publicly that it sees applicants as “customers” whom they will help secure a patent. If the PTO refuses to grant a patent, the applicant can submit a modified application. Ultimately, the PTO’s decision can be appealed to the Supreme Court.

It is easy to see how an over-burdened office that is inclined to grant patents, combined with the deference courts give to their validity, can cause real problems. Further, the inherent subjectivity of the elements underlying a patent seems to invite infringement and litigation.

As the New York Times reported, Apple initially applied for its “Siri” patent, the iPhone’s voice recognition search engine, in 2004, before either the iPhone or Siri existed. The PTO rejected that application, calling it “an obvious variation” on existing technology. Apple resubmitted the application ten times before the Patent Office finally approved it in December 2011. Two months later, in February 2012, Apple sued Samsung for infringement of that and other patents.

 “A dispute over infringement of a patent that the Patent Office spent 18 hours working on will receive hundreds, if not thousands, of hours of attention from experts, lawyers, and judges analyzing whether the Patent Office made a good decision,” says Davis Polk litigation partner Chris Hockett ’85. “It comes under very intense scrutiny, typically costing millions of dollars.”

“The examiners have a tough job,” says Angioletti. “They have limited resources, they look at an awful lot of applications, and you can’t expect perfection, so there are plenty of patents that shouldn’t have issued in the first place. That’s something that we all have to deal with.”

The Apple case highlights the intense debate surrounding what types of innovation can and should receive patent protection. Software applications are especially problematic, as they come close to claiming ownership of an abstract “idea,” a notion toxic to Thomas Jefferson, the nation’s first patent administrator (see Patent History sidebar).

“If nature has made any one thing less susceptible than all others to exclusive property, it is the action of the thinking power called an idea, which an individual may exclusively possess as long as he keeps it to himself,” Jefferson wrote, “but the moment it is divulged, it focuses itself into the possession of everyone, and the receiver can not dispossess himself of it. Its peculiar character, too, is that no one possesses the less because every other possesses the whole of it.He who receives an idea from me, receives instruction himself without lessening mine; as he who lights his taper at mine, receives light without darkening me.”

Significant procedural hurdles stand in the way of proving such patents invalid. Samsung attempted to prove at trial that the Apple patents were invalid on their face, but they failed because they disobeyed the court’s discovery orders and were not permitted to use the evidence they wanted at trial.

Chris Sprigman
"The record companies could have improved their business model to take advantage of the new peer-to-peer technology, but they relied only on copyright to control their fate. They refused to bend, and instead they broke."
—Chris Sprigman

“They buried it in boxes of documents in a way that the magistrate running the discovery process said was unfair to Apple,” says Chris Sprigman, Class of 1963 Research Professor in Honor of Graham C. Lilly and Peter W. Low. “He banned Samsung from introducing at trial a lot of this invalidity evidence, and the trial judge upheld the magistrate. Samsung’s case on invalidity was truncated by that ruling. That was essentially their own fault.”

In Apple v. Samsung, the jury upheld Apple’s patents on the iPhone’s basic surface and design features – touches, swipes, shapes – but are those really the kind of protections that spur innovation?

“The Patent Office never should have granted those patents,” Sprigman says. “Even if they granted them, the jury never should have found them to be infringed,” he says. “The idea that a rectangular electronic device is owned by any one company is just nuts. I don’t think a patent like that incentivizes innovation. I think a patent like that just limits competition.”

“I don’t know that this is going to be terribly good for consumers,” adds Law School Professor Margo Bagley. “One argument is this is going to encourage competitors to innovate more, but it’s almost a standard that consumers look for. If Samsung can’t offer those features it puts them at a huge competitive disadvantage that seems out of proportion to the value of the innovation that Apple has actually patented.”

Professor Duffy is not surprised by the launch of a long and bitter patent fight between Apple’s iOS and Google’s Android platforms, just like earlier patent wars over sewing machines, railroad technology, aircraft technology, cars, and even the refinement processes for making oil and gasoline for them.

“Patent fights on the cusp of industrial innovation have gone on throughout this country’s history,” he says. “The idea that there are fights about cutting-edge technology should not surprise anybody, especially as knowledge and information are becoming increasingly more valuable.”

“I don’t understand why people think the end of the world is coming because Samsung was ordered to pay Apple a lot of money,” adds Chief Judge Michel. “Lawsuits are the best way anybody’s ever invented to resolve complex commercial disputes. That’s the way the system’s supposed to work. If somebody infringed a patent that was ruled to be a valid patent, and harm was established, the infringer should pay. What’s wrong with that? That’s the way it’s supposed to work.”

Patent juries

Traditionally, patent cases were bench trials. According to Duffy, the law used to be that in a suit with a legal claim for damages and an equitable claim for injunction, the equity claim dominated, removing the right to a jury. But in the late 1950s, the Supreme Court reversed the relationship, giving the legal claim dominance. “I think the change came from a populist intuition during the mid-20th century that juries bring a more democratic view into the law.”

That change has had a big effect in the patent area, and the number of juries in patent litigation has increased dramatically in the last 40 years.

John Duffy
"In the next five or ten years, I think the Supreme Court will take a case and decide that when the Justices said validity is an issue of law in prior cases, they meant what they said, and they will remove validity issues from the jury. I think that will lead to a more rational process."
—John Duffy

A patent claim typically rests on two questions: Is the patent valid and, if so, has it been infringed? The validity question often involves complex legal analysis and, according to Duffy, the Supreme Court has held repeatedly that validity is a question of law, but the reality is that in current practice the lower courts give that question to the jury.

But whether that right has been infringed is clearly a question of fact belonging to the jury. “They can be hard questions,” Duffy acknowledges, “but it’s hard to see under our legal structure how you could eliminate the jury from that question. I think the judges are trying to get better at explaining to the jury what is prohibited so it can determine whether something within the prohibited range did or didn’t occur.”

Jury verdicts often yield controversy. The foreman in the Apple case was an inventor and led the jury to what industry observers believe was a quick decision considering the complexity of the issues. “The technology was very complicated,” says Bagley. “The jury foreman was an electrical engineer who had two patents and a third on the way. This is someone who is more likely than most to be very pro-patent and to think that the patent holder needs to be compensated. How do you control for those kinds of things on a jury?”

Margo Bagley
"We need to be circumspect about the value of broad patents. There are countervailing issues to be considered."
—Margo Bagley

Sprigman agrees. “I don’t think the jury really understood the rules,” he says. “I don’t think they applied them. I think they looked at these companies and made a decision basically on moral grounds – things like ‘Apple’s an innovator, Samsung’s a copyist’ – and then they went with their intuition.”

According to Sprigman, patent law “isn’t about being smart.” Patent law is a set of rules not readily deducible by an intelligent person. To understand it, you need some experience thinking about it. “The jury didn’t do anything wrong,” he says. “I think they did what they could be expected to do and I think that’s a problem for the system. It relies on juries to do things that juries can’t really do reliably.”

Duffy thinks the Supreme Court will step in and clarify the rules. “In the next five or ten years,” he says, “I think the Supreme Court will take a case and decide that when the Justices said validity is an issue of law in prior cases, they meant what they said, and they will remove validity issues from the jury. I think that will lead to a more rational process.”

In the meantime, for a litigator like Hockett, reducing sophisticated technology to familiar concepts that a jury can grasp is an exciting high-wire act. He once worked on a case involving optical networking technology at the electron level, a stretch for him to explain and for the jury to understand. He succeeded by using a visual metaphor.

“We likened the technology to a series of guard posts. When one of the guards detected an intrusion, he told all the other guards in the line so that they could carry out their functions. It enabled the judge who was doing the claim construction hearing to understand what we were getting at and why our story made sense.”

But the strategy has its risks. “If you come up with an analogy, it can be hazardous to you. If your opponents can turn it around to their benefit, and it came from you in the first place, it’s a powerful point in their hands. We do a lot of pressure testing of our analogies to make sure we’ve thought of everything.”

Finally, most of the facts in a case are completely remote from anyone’s experience, so it’s vitally important to bring in broader themes than just technical testimony about patent claims or expert opinions on infringement.

“If you have somebody who has copied something, somebody who is lying about something, somebody who has broken a contract, even though those issues may not be central to the issue of infringement, lay juries can relate to them. They can be very powerful,” Hockett explains.

Patent evolution and growth

As technologies advance and the focus of invention evolves, the patent system adjusts. “That’s the beauty of the system,” says Chief Judge Michel. “It’s so flexible. It works for the needs of real people. It’s not dictated by some philosophical construct.”

Witness the different pace of development of patent law in two different industries: biotechnology and computer software. The U.S. Patent Act of 1952 provided patent protection for “[w]ho[m]ever invents or discovers any new and useful process, machine, manufacture, or composition of matter, or any new and useful improvement thereof.” When in 1971 a biotech firm applied for a patent on a new oil-eating bacterium, the Patent Office turned it down, reasoning that a living organism cannot be patented. But in a 1980 decision, Diamond v. Chakrabarty, the Supreme Court disagreed, holding that the question was not whether the innovation was living or non-living, but whether it was made by man.

“They looked at the legislative history that suggested the statute covers anything under the sun made by man,” says Bagley. The Court agreed that a product of nature cannot be patented, but they found that the amount of human intervention needed to create the bacterium made it markedly different from anything that exists in nature. “That decision by itself opened the flood gates to all of the biotech patenting on genes, on animals, on plants and crops – all of that originated with that one decision. “

Patents on computer software followed a more gradual path, in part because the Patent Office was resistant to computer software-related inventions, and there was potential for protection under the copyright laws. “Software patents have been a much muddier area over time,” says Bagley, “but biotech in Chakrabarty from day one was largely wide open.”

In 1998, a federal court indicated inState Street Bank v. Signature Financial Group that business methods were patentable just like any other kind of method. That decision eventually yielded other decisions relating to other types of computer-implemented methods.

“People were patenting all kinds of questionable methods,” says Bagley. “A method of swinging on a swing, a method of making a peanut butter and jelly sandwich. The Patent Office got criticized for a lot of them,” which created a backlash that ultimately led to Bilski v. Kappos.

Chris Hockett ‘85
"You usually have a pretty good idea that if you cross a fence on someone's land, you're trespassing, but the costs of figuring that out in the world of high technology are very high. It's almost like the 'no trespassing' signs are buried under the ground and you have to dig to find them."
—Chris Hockett '85

Bilski dealt with business methods, specifically hedging risks in commodities trading, and the Supreme Court held that the petitioner’s investment approach was just an abstract idea and not eligible for protection. The Court affirmed the invalidation of the patent claim by the Federal Circuit (in an opinion written by Chief Judge Michel), but revised the test used by the lower court to evaluate such claims. In its opinion, the Supreme Court praised the work of the Federal Circuit, noting that “students of patent law would be well-advised to study these scholarly opinions.”

Patent subject matter keeps expanding, primarily because it’s hard to challenge patents. Those who have the most interest in challenging them – competitors – don’t because they want to keep the subject matter broad. And individuals oftencannotchallenge them because of the prohibitive cost of litigation and difficulty establishing standing to sue. “What we end up with is, bit-by-bit patent subject matter increases based on what people file at the Patent Office,” says Bagley. “If they push the boundaries, there’s a pretty good chance the Patent Office will grant the patent because it’s hard for them to objectively justify saying no. And even if the Patent Office rejects it, applicants can appeal all the way up to the Supreme Court.”

Finding the right balance

Intellectual property rights doctrine has always had to balance the state’s interest in promoting innovation for the public good with the individual’s “moral” or “natural” rights to the fruits of his invention. That dispute remains alive today, though ideally the two go hand in hand. A patent system protects invention by rewarding innovation.

It is a two-part concept. To get the patent, the inventor has to describe in detail the invention and how it works. That allows the next innovator to study the patent and design around it to improve it.

As a result, “the system is a repository of technological information of great practical importance,” says Michel. “If people weren’t getting patents on their inventions, then it would be very difficult to advance the technology.”

 “We’re not protecting property just because it’s property,” says Duffy. “We’re protecting property to promote innovation. Are we maximizing the promotion of innovation through the protection of property? No, of course we’re not. The world’s imperfect. What is the right amount of time to reward an innovation and then allow it to be copied? Society has been trying to figure out that answer for centuries.”

Patent portfolio chart
Overlay of Microsoft (yellow) and Samsung (Red) patent portfolios in mobile communications on a "patent thicket" cluster map (courtesy Mark Summerfield, Journal of Asset Management, Watermark Intellectual Asset Management)

Some believe that strong patent rights are the only way to promote innovation. Others believe that too much protection can dampen innovation. “We need to be circumspect about the value of broad patents. There are countervailing issues to be considered,” says Bagley.

As a policy goal, everyone wants to encourage innovation, traditionally through competition on the merits between a firm and its industry, and by financial incentives for invention. “But there needs to be a balance between the incentives to invent and the fostering of competition,” says Angioletti. “Understanding what is truly innovative is key to technological growth and job creation.”

Capitalism rewards innovations that replace inefficiencies, but if patents are used to interrupt or delay that process, society suffers. “It might be that the Android operating system is a better operating system,” says Sprigman, “but if Apple is mounting an attack on Android based on patents that never should have been granted in the first place, that isn’t a happy story about innovation. It is an unhappy story about a company trying to limit competition. That’s the paradox of the patent system. It can be both a spur to competition and innovation, and a drag on it.”

For example, the patent system doesn’t require inventors to make what’s covered by the patent, or to sell it. All they have to do is disclose what it is and how it works. After that, they can simply exclude others from practicing that invention.

Thus the rise of non-practicing (NP) entities, derisively called “patent trolls” by the IP bar, that amass portfolios of inactive patents to harvest licensing fees or patent infringement settlements. “Large companies are feeling somewhat beleaguered by lawsuits from non-practicing entities,” says Hockett. “They feel like that’s a dead-weight loss not benefiting consumers or promoting innovation.” In Silicon Valley, Hockett claims there are many more NP lawsuits than there are competitor lawsuits. “Companies take very seriously competitor lawsuits, but look at NP lawsuits as more of an expensive nuisance.”

“The mobile phone wars have gotten a lot of play,” adds Angioletti, “but we see a limited amount of competitor litigation compared to patent troll litigation. Entities that don’t invent anything acquire a patent, and then sue on it.”

Another problem is the sheer numbers of patents and “understanding whose land you might be on,” says Hockett. “It is too complicated right now. You usually have a pretty good idea that if you cross a fence on someone’s land, you’re trespassing, but the costs of figuring that out in the world of high technology are very high. It’s almost like the ‘no trespassing’ signs are buried under the ground and you have to dig to find them.”

Until a “troll” reveals itself by demanding royalties or filing suit, no one knows exactly what intellectual property it claims. “Trolling” can be a very profitable business, but one that the patent system has had trouble reconciling with its mission. “There’s a big debate underway as to whether the system should be changed to make it tougher for someone who’s not practicing the patent to assert the patent rights against someone else,” says Hockett.

In fact, the Supreme Court has hinted, and many district judges are suggesting, that if a patent owner isn’t itself practicing the patent, they should not be able to get an injunction when someone infringes. But Michel thinks this debate has been a distraction caused mainly by overheated media rhetoric, some of it a deliberate effort by some companies to fan the flames.

“Companies that often lose patent infringement suits and had to pay a lot of money would like to see a very weak or slow patent system, a patent system where you can’t get injunctions, where damages are minimal,” he says. “They’ve used PR and the media and lobbying to influence the Congress.”

“Of course, they have the right to do that and they should do that. But is it in perspective? Is it in proportion? Is it in context? Is it based on a broad understanding by these decision-makers, or just headlines and sound bites? People talk about patent thickets and wasteful litigation and excessive damages and on and on. These become buzzwords that prevent careful thinking and can lead to poor public policy. It’s filtered up and affected the thinking of the Supreme Court and Congress. I think both have been blindly lashing out, trying to solve this value-perceived problem.”

Patent documents
Illustrations in rock star Edward L. "Eddie" Van Halen's 1987 patent application for his Musical Instrument Support device, patent number 4,656,917. Heavy metal indeed.

In patent offices all over the world – Europe, Germany, the UK, China, Japan, and elsewhere – intellectual property law continues to develop. “It’s a very slow process, but you can think of the law of patents or the law of intellectual property as its own body of knowledge, its own technology,” says Duffy. “An idea can come from one country and other countries can decide whether it’s a good idea or a bad idea. Very slowly, the law changes, hopefully towards a better system.”

Certainly, as Sprigman has spelled out in his new book co-authored with UCLA law professor Kal Raustalia, The Knockoff Economy: How Imitation Sparks Innovation, not every business needs a patent system. Indeed, the act of copying in some industries likely has driven innovation better than any patent system could.

Sprigman recounts efforts by fashion designers in the 1930s who attempted unsuccessfully to use a related form of intellectual property, copyright, to protect their designs.  That effort failed – the courts held that clothing is functional and therefore not eligible for copyright protections.  The fashion industry responded by putting together a cartel to restrain department stores from selling cheap “knockoffs,” which, they claimed, would destroy their incentive to create new designs. Eventually, the cartel was ruled to violate the antitrust laws and broken up. And following the cartel’s demise, the industry tried again and, as before, failed to get protection from Congress even as they warned that their industry would implode and destroy hundreds of thousands of jobs.

“None of that happened,” says Sprigman. “Instead, the opposite happened. The fashion industry bloomed; they reaped huge profits, and we have lots of innovation, competition, and new designs every season. The industry has gotten richer and more powerful ever since the end of World War II. The theory that copying is inimical to innovation just doesn’t seem to work in the fashion industry. In fact, it seems to speed up the development cycle.”

Sprigman cites more industries – comedy, music, football, cuisine – where patent (and copyright) are at best unnecessary, if not counter-productive. While some industries need a strong patent system to incentivize investment and innovative effort, “there is also the opposite story where patents give people bargaining chips they use to suppress innovation by others,” he says. “It’s a complicated calculus where in some fields, like pharmaceuticals, it points more clearly toward the need for continued protection. In some other fields, like smartphones, the calculus is not so clear.”

Indeed, relying solely on patent and copyright protections as a business model can be hazardous, if not fatal. When the free music download website Napster started making inroads on the recording business, the music industry went into lock-down.

“The record companies could have improved their business model to take advantage of the new peer-to-peer technology, but they relied only on copyright to control their fate,” says Sprigman. “They refused to bend, and instead they broke.” But the decline of the record labels has not led to the “death of music.” Indeed, the music industry has never been more creative, offered more opportunities for artists, or provided listeners with so many choices. The record companies effectively made themselves irrelevant.

Michel acknowledges that not every business needs the patent system. “The problem is that vast numbers of businesses do need it,” he says. “Weakening the patent system won’t help the fashion industry, but it can hurt industries like biotech and pharmaceutical and high-tech machinery and electronics. Some lines of business have no dependence on a patent system. Fine. Let them prosper.”

No one knows what will be the next revolutionary product, idea, or industry. Firms are constantly working to identify promising opportunities, patenting them, and bringing them to market. “That takes enormous amounts of investment,” says Duffy, “and if you don’t have the patent system, at least in theory, there will be less of that activity. That’s particularly true in a very competitive marketplace.”

At the same time, some startling innovations may be buried in the Patent Office’s enormous inbox. A more efficient system would protect important innovation while avoiding overly broad patent protection that might hinder it.

“I’m actually quite optimistic in the long run,” says Michel. “We are a resilient country. Our scientists and engineers are creative. We’ve got the talent. We’ve got the money. We’ve got the know-how. We just need to put the pieces together, just like we have always done.”