The front page of The New York Times on Monday featured the article “The Patent, Used as a Sword.” The article recounts the story of a small company, Vlingo, that was planning to release its speech-recognition software when technology and communications powerhouse Nuance filed a lawsuit against them, claiming the company infringed on Nuance’s patent. By the time Vlingo won the lawsuit six years later, it had already lost $3 million and had no choice but to sell itself to Nuance. What was originally Vlingo’s speech-recognition software is now essentially a household name: Siri.
Vlingo’s story reveals how the United States’ broken patent system allows for big corporations to monopolize markets and beat out smaller companies. The system squelches the innovation and small business emphasis that the country — and students, as the entrepreneurs and start-up founders of the future — desperately needs to protect.
The United States’ patent system is laden with loopholes that large corporations can use to gain a competitive industry advantage, such as claiming the rights to many broad, undefined inventions. With the America Invents Act that President Barack Obama signed into law last year, the company that is “first to file” a patent claims legal ownership of an idea. This creates an inherent disadvantage for small businesses: Applying for patents entails spending thousands of dollars. Big businesses have the resources to apply for hundreds, even thousands, of patents, while smaller businesses, such as start-ups or grassroots student projects, are left in the dust.
The number of corporate-owned patents continues to surpass those held by individual inventors. In 2011, U.S. corporations accounted for 99,527 of the 108,626 patents of U.S. origin, according to the United States Patent and Trademark Office. Obtaining a patent ultimately becomes a game of semantics and legal loopholes with a hefty price tag. The policies currently in place prevent most students without the financial means from starting their own business or taking that crazy idea for a product and turning it into something tangible.
In order to reform the patent system, the patent office staff should be retrained under a new standard for approving patented ideas. This standard should include a limit on how many times an applicant can file a proposal for the same idea. More importantly, the system must establish a cap on the number of patents obtained by one company within a specified time period.
This will have multiple benefits: It will force companies to apply with discretion, limit larger companies’ legal and business power, decrease unnecessary stress on patent examiners and, most importantly, give small businesses and young entrepreneurs the chance they deserve to secure patents. Such regulations, as well as stronger leadership, should be put in place by whoever is elected come Nov. 6.
Though it might not seem so at first glance, the patent system should be an important election issue in a year dominated by discussion of the 99 and 1 percents. Big corporations’ uses of patents to expand their market power reflects the deep divide between America’s underrepresented 99 percent and the affluent 1 percent — the wealthy continues to benefit at the cost of the less fortunate. Patent system reform would be a step toward closing that gap.
Some might say that motivated small companies will eventually flourish in the long-term. But with an unequal distribution of wealth and resources, it is nearly impossible for small-scale innovators to compete without the protection of their intellectual property rights.
The corrupt patent system discourages students from entering the increasingly competitive technology market. In other situations, such as in Vlingo’s case, they will be forced to exit the market and sell off to a large corporation once they’ve lost all their money — which could have been devoted to creative innovation — to the black hole of patent lawsuits. With the decrease of innovation in small businesses, the nation will not create the new industries needed to spur much-needed productivity and employment growth.
Additionally, foreign competitors are rising in the technological world and attracting American businesses. Companies are moving abroad to Beijing and fostering cutting-edge research.
Let’s face it. America is no longer the great nation of innovation it used to be. And corporations’ abuses of patents are certainly not helping the nation nor students who believe in the existence of a business environment so innovative that a website created by a college student can eventually turn into Facebook. The flaws of the patent system impact students directly and deserve our attention, now more than ever.
Chanelle Yang is a sophomore majoring in policy, planning and development.