July 19, 2012, 2:44 PM — With the number of patent-related lawsuits on the rise, and the system set up to favor deep-pocketed giants over individual inventors and smaller companies, U.S. technology innovation is in for a continued shaky ride, according to patent experts and other observers.
Yes, the U.S. Patent and Trademark Office (USPTO) is issuing more patents than ever before (see chart below). According to a recent USPTO report (PDF), around two-thirds of the two million patents that are active right now are in the technology field. But some observers say that increase has been at the expense of the overall quality of patents and what they cover. ( See slideshow.)
If the historical trend of 1960 through 1980 had been followed from 1980 to 2012, we would have two million fewer patents issued than we do today, according to Avancept.
That trend is as damaging for large companies as it is for smaller firms. Should one-click shopping be patentable? How about Internet advertising? Both currently have patent protection.
(See related story, "Why tech vendors fund patent trolls.")
Overall, the situation is more complex -- and more expensive -- for the tech field than it is for most others. "Some of these IT companies have more patents individually than do entire industries," says Erin-Michael Gill, a former USPTO examiner who served as an adviser to the Obama administration in helping to draft the new patent regulations included in the Leahy-Smith America Invents Act (AIA).
"For example, the financial services industry has about 9,000 granted patents and 3,000 applications," Gill says. By comparison, Microsoft alone has 21,000 granted patents and 10,000 applications, Gill points out.
Spotify's patent travails
When streaming-music provider Spotify entered the U.S. market last year, it got a nasty wakeup call -- American tech style.