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Tech industry leaders appeal for laxer intellectual property laws

Kenneth Corbin | Aug. 6, 2013
Citing the needs to curb frivolous litigation in the patent system and expand safe harbor and fair use protections, tech representatives get their turn before a House panel mulling a rewrite of IP law.

On the subject of patent trolls, a problem for which many leading voices in tech and other sectors have been seeking legislative remedies, Lindberg noted the spiraling costs of fending off legal challenges. Over the past three years, Rackspace has seen its expenses associated with dealing with patent litigation spike by 500 percent, he says.

With the legal bill for each case commonly running into the millions of dollars, many firms will give in and settle instead of going to court. Smaller businesses, in particular, are ill-equipped to engage in drawn-out litigation.

"Even if you're right, getting there is so expensive it can kill your business," Lindberg says. "The real problem is that there are so many of these patents out there that really aren't on fundamental things. And in fact, many of them shouldn't have been granted at all -- they were granted in error."

He suggested that lawmakers enact reforms to speed the process of litigating patent-infringement claims and to require greater disclosures about the individuals, groups or businesses behind the "shell companies" that function as patent-assertion entities. "Illuminating those relationships would be huge," he says.

Stiffer penalties for plaintiffs whose infringement charges are rejected in court could also help curb frivolous litigation, he notes.

Asked whether Rackspace maintains its own portfolio of patents, Lindberg acknowledged that it does, though he notes that the open source company offers licensing for free, and that it only took the step of patenting its technology in the first place to guard against litigation.

"The only reason that we have patents is because we are concerned about patent assertion," Lindberg says. "It's a purely defensive portfolio."

SparkFun Electronics takes a different approach. The decade-old ecommerce venture has produced more than 700 products, yet has not taken a single patent. CEO Nathan Seidle told the subcommittee that profits have risen steadily each year, despite the rampant copying of its designs by would-be competitors.

Seidle recounted one case when a Chinese firm began producing a nearly identical version of one of its electronic devices, only with some modifications that he admitted made the product better. Rather than sue, his company incorporated those iterations into the original, and managed to win out over the Chinese operation thanks to the offer of better customer support and cheaper shipping.

To Seidle, that incident offers a blueprint for innovation in today's environment, where design files and other intellectual property are easy prey for a determined hacker, and he says patents and other conventional methods of defending an innovation are becoming an anachronism.

"In the Internet age, innovation moves faster than the shield of intellectual property," he says. "Attempting to stop pirates is a waste of time. Show me an anti-piracy law or technology and I'll show you a dozen 15-year-old girls and boys who can crack it. Provide better support and better quality at the best price, that's how you sell a product. This is not a new business model. This is how business has been done for thousands of years. There is no need for us to waste time, energy and money suing infringers or pirates. Our time is better spent innovating."

 

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