Judge Posner Questions Legitimacy of Software Patent System…Finally

Posted by · July 5, 2012 1:52 pm

English: Judge Richard Posner at Harvard Unive...Following his decision to officially throw out the entire patent case between Apple and Motorola last month, Judge Richard Posner is back in the news this week after sitting down for an interview with Reuters. Posner, who sits on the 7th U.S. Circuit Court of Appeals in Chicago and also teaches law at the University of Chicago, used the interview to make clear his position against what he called the “proliferation of [unnecessary] patents,” particularly in the software industry.

As a prolific legal scholar and a federal appeals court judge since being appointed to the bench by President Reagan in 1981, this is hardly the first time that Judge Posner has made one of his oft-controversial stances a public matter. In fact, he and Nobel laureate economist Gary Becker maintain a blog in which they debate controversial social, economic, and legal issues nearly every day. However, the prominent jurist’s words on software patents are of particular interest given the dearth of dialogue on this rather relevant matter.

“It’s a constant struggle for survival,” Posner began, discussing the seemingly endless war of patent litigation. “As in any jungle, the animals will use all the means at their disposal, all their teeth and claws that are permitted by the ecosystem.”

In this analogy, these massive technology companies are the animals. Their respective arsenals of patents and cash are the teeth and claws. And the ecosystem, of course, is the legal system that allows these companies to launch incessant legal battles as they attempt to capture and recapture market share from each other.

As illustrated by the Apple-Motorola case that Posner dismissed in its entirety, matters have only become worse—especially in terms of their toll on the judicial system. Given the breakneck speed at which the smartphone and tablet markets are growing, patents suits are being filed and injunctions being sought by companies without proof that damages have actually been done. Thankfully, Judge Posner did has part to curb that trend by issuing his decision with prejudice, which means that neither Apple nor Motorola are allowed to reopen the case and try to prove damages yet again.

Speaking to the specific matter, Posner wrote in his 38-page decision (see full decision below), “It would be ridiculous to dismiss a suit for failure to prove damages and allow the plaintiff to refile the suit so that he could have a second chance to prove damages.”

Returning to patents as a general matter, the Reuters interview unveiled the more purposive approach that the judge takes when it comes to intellectual property.

“It’s not clear that we really need patents in most industries,” he argues.

Unlike the pharmaceutical industry, which invests a significant amount of time, money and resources into developing a workable drug, Judge Posner says the cost of similar advances in software, and other industries for that matter, are comparatively little.

In other words, the purpose of a patent is to ensure the recovery of significant investment in a new product or technology before competing firms can essentially produce a similar product without the financial risk, not to ward off competition altogether. And while the pharmaceutical industry is hardly perfect in its use of patents, the software industry is a far greater abuser of the current system.

Observing the way that companies patent every single component of a new device to legally barricade themselves against potential competitors, Judge Posner noted the “problem” of “this proliferation of patents.”

While the cash toll brought on by such litigation would be “a small expense” for bigger firms like Apple, whose “deep pockets” account for some $110 billion in cash, other, smaller firms who wish to enter the market are effectively damned before they even try, thanks to what’s “currently permitted by the ecosystem.” And as companies like Google continue buying up competing firms like Motorola Mobility to amass their patent stores and shrink the number of companies vying for market share, Posner notes that it’s ultimately the consumer who loses, calling the injunction sought in the Apple-Motorola case “contrary to the public interest.”

Nonetheless, the appellate judge was sure to reiterate that it was the easily gamed patent system that was to blame for the constant patent litigation that plagues our courts. Given how affordable it is for wealthier tech companies to purchase patents and file suits against competitors, it would be foolish for these companies not to take advantage of the opportunities afforded them by the currently broken policy structure regarding patents.

And until real reform takes place, we can expect such behavior to continue generally unimpeded—and to the continued detriment of consumers and entrepreneurs that this “patent arms race”  has long incited.

Apple-Google Patent Case Decision

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For more on Judge Posner’s view of the software patent system…