'Patents are good!' say seven big companies

April 3, 2014: 9:00 AM ET

Apple, DuPont, Ford, GE, IBM, Microsoft, and Pfizer joined forces today to endorse the basic soundness of our patent system.


FORTUNE -- In a gesture that is most remarkable for the fact that someone thought it necessary at all, a diverse group of seven major corporations joined forces this morning to say little more than, basically: Patents are good.

The group, which calls itself the Partnership for American Innovation, hopes to stem what their members see as overblown negativity and hostility toward the patent system in the media, Congress, and the courts.

The group's charter members are Apple (AAPL), DuPont (DD), Ford (F), General Electric (GE), IBM (IBM), Microsoft (MSFT), and Pfizer (PFE), and its "senior advisor" is Dave Kappos, the former director of the U.S. Patent and Trademark Office, who is now a partner with the law firm of Cravath, Swaine & Moore. The group expects additional members to be enlisting in the days ahead, according to a spokesperson.

"We must move beyond rhetoric that 'the system is broken and trolls are bringing businesses to a complete halt,'" Kappos says in a press release, "to a discussion of calibrated improvements for what is actually the best patent system our planet has."

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The group's message is astoundingly basic, and not tied to support for, or opposition to, any particular patent reform bill now pending in Congress or to any one issue now being weighed by the U.S. Supreme Court. The group's members merely endorse three broad principles:

  • "(1) The American economy is best served by a strong patent system that protects high-quality innovation in all fields of technology;
  • (2) It is critical to our global economy that IP is respected by all participants in the system; and
  • (3) The U.S. Patent and Trademark Office must be properly funded to efficiently and effectively process patent applications and issue only high-quality patents."

Though the formation of the group is tied to no topical hook, it does arrive tellingly just three days after oral argument in Alice Corp. v. CLS Bank International, a U.S. Supreme Court case that poses the fundamental question of whether computer-implemented inventions like software are patentable at all.

In an interview with Kappos, the most specific information I could wheedle out of him was that the new group's members all apparently agree that software is certainly patentable.

"How is it cars can parallel park themselves today?" he asks, rhetorically. "Is it the sensors? Is it the cameras? No. Those existed before. It's the software."

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"In the view of the partnership," he continues, "great innovation should be protected. Full stop. Software; firmware; biotech-related; physical sciences; pharmaceuticals: Great innovation is great innovation, and needs to be strongly incentivized and protected."

In contrast, in the Alice case, a number of younger Silicon Valley companies, including LinkedIn (LNKD), Netflix (NFLX), Rackspace (RAX), Trulia (TRLA), and Twitter (TWTR), urged the Court that "software patents do not serve the Constitutional purpose of the patent system." In their brief, authored by Stanford Law School intellectual property scholar Mark Lemley, the companies argued: "We create innovative software because of our desire to delight our customers and despite, not because of the patent system ... Innovation happens despite software patents, not because of them."

Today's formation of the Partnership, then, may reflect a frustration comparable to that expressed in IBM's amicus brief in the CLS Bank case, which began with this cri de coeur: "Software is not a new technology. It has been around in various forms for well over half a century. During that time it has become one of the fundamental building blocks of innovation and technological advancement, and a critical part of our nation's economy. Software is the medium for innovation in every field, from automobile manufacturing to medicine. The fact that the Court is now -- in 2014 -- actively considering such a basic question as whether computer-implemented inventions such as software are even eligible for patent protection is deeply troubling." (IBM's attorneys were led by Paul Clement of the Bancroft law firm.)

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