Microsoft calls for patent reform

WASHINGTON - Microsoft executives on Thursday stepped up their calls for reform of the U.S. patent process, saying the U.S. Patent and Trademark Office (USPTO) too often focuses on quantity instead of quality.

Microsoft also called for a patent system that is more accessible to small investors, and executives recommended that the U.S. Congress end patent filing fees for small companies, nonprofit groups, universities and individual inventors. "The system has to work for everybody," said David Kaefer, director of Microsoft’s IP Licensing Program. "It's only a system that works for the largest companies."

Microsoft and other tech companies have pushed Congress to end the diversion of patent fees from the USPTO to the U.S. government general budget, saying that the office needs more funding to evaluate the growing number of patent applications. The USPTO receives more than 350,000 patent applications per year, triple the number it received 20 years ago.

But ending patent fees for small businesses wouldn't have a major impact on the USPTO's budget because so few small businesses or individual inventors can afford the fees, Kaefer said. Patent application fees can run into the thousands of dollars. "Some people are more able to help finance the system," Kaefer said.

Many technology companies and trade groups have called for patent reform, after some Internet activists accused the USPTO of granting patents on technologies that were already widely used. One of the most publicized cases was in September 1999, when Amazon.com was granted a patent for its one-click shopping service. Amazon.com Chief Executive Officer Jeff Bezos later called for patent reform.

Microsoft, which holds about 4,500 patents worldwide and has another 10,000 pending, has been on the losing end of patent lawsuits. In July, a U.S. court in California ruled that an ergonomic keyboard patent claim against Microsoft by TypeRight Keyboard could move forward. Earlier this month, a U.S. appeals court overturned a $520.6 million patent infringement judgment against Microsoft brought by Eolas Technologies. Eolas had sued Microsoft over a Web browsing patent and won its case in lower court in August 2003.

"While patents are a really important way to reward innovation ... today we see a crisis of confidence in the U.S.," Kaefer said. "At lot of people are asking, is the system as good as it could be?"

Kaefer, echoing a speech by Microsoft General Counsel Brad Smith in Washington, D.C., Thursday, also called for Congress to look for ways to limit patent lawsuits.

"It is too easy for a litigant to manipulate the U.S. system and look to a patent lawsuit as the ultimate lottery ticket, hoping to confuse jurors with technical jargon that will yield the payment of a lifetime," Smith said in e-mailed remarks.

Smith and Kaefer also recommended the U.S. and other countries look at ways to "harmonize" patent laws. Conflicting patent laws cause problems for patent holders and technology companies, Kaefer said.

The European Union (E.U.), meanwhile, is in the middle of a political controversy over patents. The European Commission, the E.U.'s executive body, has issued a proposed law on "computer-implemented inventions", which could allow software to be patented. To date there have been no legal provisions that allow patents to be applied to software in the E.U.

The proposed law, however, has been subject to vehement debate in the legislative branches of the E.U., with critics saying that it could pave the way for a U.S.-style patent system, which, they claim, favors large businesses and dampens innovation from small companies.