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FTC Investigates Submarine Patents
Schnake writes: "An article on USAToday talks about how the FTC is investigating Sun Microsystems, Unocal, and Rambus to determine whether they illegally kept patents secret while helping set industry standards! And a quote from the ZDNet article: "It noted that all three companies had filed patent infringement lawsuits against firms they say owed them royalties. But the litigation backfired when those firms countersued, charging them with concealing their patents, and complained to the FTC.""
What is being alleged here is a type of fraud/unfair competition. The crux of the claim is that it is unfair for a company to propose its technology be adopted as an industry standard without discloising that it has patents or patent applications on file. If adopted as the standard, the others in the industry will automatically infringe. Options at that point: concede the market to the patent holder, redesign the product so it deviates from the standard set by the industry, or pay a royalty to the patent holder.
To the extent that patents have already issued they are public record, as noted in another post. But currently the law is in flux. The general rule is that until a patent issues, the application and all materials submitted to the PTO is confidential. (The confidentiality allows companies who cannot get patents to still protect the way they do business under trade secret law.) There is a group of applications that fall into this category. However, since the passage of the AIPA (American Inventors Protection Act) and some other tweaks to the law, there is now a publication requirement - applications are published 18 months after filing.
So - in my humble legal opinion, it is unfair for a company participating in standards-setting not to disclose that it has patent applications pending, but as for issued patents, companies should be aware of what their competitors are doing. Especially if it is a public record.
Laws affecting technology will always be bad until enough techies become lawyers.
[stock rant on the subject]
Patents are not about who is right, or who is first; patents are about who will sue.
The US PTO is a money-making service for the government, and this fact is why it operates as it does.
There is a misconception that it is the central duty of the PTO to form a blockade against granting patents. The PTO can and will block applications where there's heavy similarity with prior art or existing patents, but that's really just a guideline to using the service, not the core function.
The PTO's purpose is to grant patents for a fee, and it's wholly suited to do so.
The application vetting process of the PTO is a cost center for the operation of the PTO. This is akin to saying that customer service is a cost center for the operation of AT&T. It is required, but they'll cut costs as much as they can get away with.
To fix the patent application vetting process, two things must happen:
As of 15 March 2001, the USPTO has changed their policies to solve that second problem. They can now publish patent applications before the patent itself is awarded to the applicant. Previously, the patent was hidden while pending, and patent seekers were not required to disclose this unless they had already signed contracts, say, as part of a standards-body. Third parties may now submit "helpful" arguments against controversial applications. The USPTO can then weigh obviousness against challenges without incurring the costs of doing all the searching themselves.
Breaking patents by finding simple prior art is not enough for most cases. Patents already granted are almost never cracked, certainly not by someone using an independent third party's prior art. In the famous Heinlein/Waterbed case, the patent was denied before it was ever granted by the Patent Office. Once a patent has been granted, the Patent Office rarely will get involved in disputes; that is a matter for the courts. (And in this case, the FTC aids the investigation for a countersuit.)
[end of stock rant]
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