Patents

Patent law is a controversial subject and keeps popping up unexpectedly (for instance Ron Wilson writes about a case at Applied Materials here). I talked about it here in the context of CDMA and Qualcomm.

The basic “tradeoff” in having a patent system is that without the promise of some sort of state-sanctioned monopoly innovation would be a something that would be underprovided. Let’s not argue about that dubious point today, and just take it as a given. Another positive for the system is that requiring the inventor receiving the monopoly to disclose the details of the invention, means that once the monopoly period ends then the details are freely available for everyone to copy.

Let’s see how that seems to work in practice in the two industries I know well, EDA and semiconductors.

I knew nothing about patents until the mid-1980s. I was at VLSI Technology and we didn’t bother patenting stuff since we were small and patenting was expensive. Once VLSI reached about $100M in revenue, other semiconductor companies with large patent portfolios (IBM, Motorola, TI, AT&T, Philips, Intel and so on) came knocking on our door with a suitcase of patents, saying we probably infringed some of them and would we please pay several million dollars in licensing fees. We probably were infringing some of them, who was even going to bother to try and find out, so that first year the only negotiation was how much we would pay. VLSI started a crash program to patent everything we could, especially in EDA where we were ahead of the work going on inside other semiconductor companies. When the patent licenses came up for renewal we were in a much stronger position. They were infringing our patents and how much were they going to pay us. Well, how about we license your patents and you license ours and no money (or at least a lot less) needs to change hands? No lawyers on either side had any intention of actually reading the patents, or disturbing their own engineers to find out if they were infringed. It was patent licensing by the ton.

To me, in these industries patents seem to be entirely defensive created purely on the basis that other people have patents and therefore might seek license revenue. If there were no patent system, both EDA and semiconductor would proceed exactly as they do today. There may be the occasional patent that is so valuable that it is created to attempt to get monopoly licensing out of the rest of the industry (Rambus, Blueray) but these seem to be mainly political issues around trying to get proprietary technology into standards. Most patents are incremental improvements on existing technology that are created only for defensive reasons, with no expectation of ever truly licensing anyone or even going looking for infringement. Every company needs a portfolio of patents so that when other players in the industry come seeking license royalties, the “victim” has a rich portfolio that the licensor is probably violating and so the resolution is some sort of cross-license pact. There is some genuine licensing of patents in semiconductor, but none that I know of in EDA.

As to patents being a way of disseminating information, there are two problems. The first is that in semiconductor and EDA, waiting 20 years for a patent to expire and then implementing the protected invention using the patent as a guideline is laughable. The timescales are just too long to matter in this industry, and secondly, have you read a patent? There is no way you can really discern what it even covers, let alone use it as a blueprint for implementation. For example, Kernighan and Lin’s patent from 1969 on their well-known partitioning algorithm. My guess is that every placement tool in every EDA suite violated this patent, but was written without ever looking at the patent. It’s standard graduate level graph optimization and has probably been independently invented several times.

Patent law provides for damages in the event of patent infringement. But willful patent infringement, when you know that the patent exists, carries punitive triple damages. So the advice I’ve always been given by lawyers is to tell my engineers never to read any patents. That way, even if a patent is infringed it is not being willfully infringed since there is no way for whoever wrote the code, or whatever, to know that it was violating that particular patent.

So the situation comes down to this: companies patent inventions in order to have currency to negotiate with other companies with patent portfolios and not to disclose important techniques to the general public, and not because without the protection of a patent, innovation in semiconductor and EDA would grind to a halt. It is like mutual assured destruction in with nuclear weapons. The purpose of all that effort and investment in nuclear weapons was purely to ensure that they other guy’s weapons weren’t a threat.

Companies that purchase a few patents simply to demand licensing fees, so-called patent trolls, violate this game. They are like a terrorist with a nuclear bomb. No matter how many missiles we have to “cross-license” the terrorist isn’t interested. At least when it was just companies threatening each other and then cross-licensing the game wasn’t played with real money. The shakedown of RIM (Blackberry) a year or so ago was a complete indictment of the ridiculous situation we have got reached.

So in EDA and semiconductor, patents are largely a joke. If they didn’t exist, people would not be clamoring for them. There was plenty of innovation in software in the 1960s when software was not even patentable. Nobody cares about patents except for defense, so for our industry patents are a cost not a benefit, a distraction for engineers who could better be spending their time engineering. In fact, I’d go further. If patents were actually enforced, in the sense of requiring a license to be negotiated to every patent actually violated, then innovation would grind to a halt.