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Microsoft legal beagle calls for patent reform cooperation

'Fix what's broken, don't break what's working'

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Microsoft has urged government, the courts, and industry to work together to help improve the US patent system, but also cautioned against breaking those aspects of the system that do work.

"There is no question that the U.S. patent system has tremendous strengths but also significant weaknesses," Microsoft executive VP and general counsel Brad Smith said in a blog post on Thursday.

Among the chief weaknesses Smith cited were abuse of standards-essential patents, lack of transparency into who owns patents, and inadequate patent review processes at the US Patent and Trademark Office (USPTO) leading to overboard patents and frivolous litigation.

Smith said that Redmond has already taken several steps to improve how it handles its own patents. For example, in February 2012 Microsoft pledged never to seek injunctions to prevent companies from licensing Microsoft patents that are considered essential to industry standards – something Microsoft has accused Google-owned Motorola Mobility of doing in the past – and Smith urged other companies in the industry to do the same.

In December 2012 the US Federal Trade Commission (FTC) issued its own opinion criticizing Motorola's practices, and in January 2013 it announced it had reached an agreement with Google in which the search advertising giant agreed to license its subsidiary's mobile technology patents on "fair, reasonable, and non-discriminatory" (FRAND) terms. Microsoft says it already offers FRAND terms for its own standards-essential patents.

Smith also said that the practice of concealing who actually owns patents leads to "opportunistic behavior and gamesmanship," and that Microsoft plans to make information explaining exactly which patents it owns available to anyone on the web by April 1, 2013.

Furthermore, Smith called for legislators to institute a "loser pays" system for patent litigation, in which the losing party is required to foot the cost of the winner's legal fees. Although many countries have adopted such a system for civil suits, such terms are still rare in US courts.

Smith said that making the loser pick up the legal bills would "force companies to internalize the strength of their case beforehand" – a rather lawyerly way of saying it would make companies think twice before bringing frivolous patent suits.

Finally, Smith called for the lawmakers to give USPTO patent examiners better access to information about prior art and more time to evaluate patent applications, to help weed out overbroad patents. He also said patent applicants should be required to use standard language wherever possible and to clearly define nonstandard terms where they were used.

What Smith does not want, on the other hand, is for the current patent system to be dismantled, or even for any current categories of patents – such as software patents – to be rescinded.

Smith said Microsoft is even in favor of companies that hold patents but do not actually create products based on the patented inventions, a practice which he described as "an engine of innovation."

"Iconic inventors such as Thomas Edison and Nikola Tesla engaged in the sale and licensing of inventions they created but did not practice themselves, and today's individual inventors and start-ups stand in their shoes," Smith wrote.

But then, he would say that. Also on Thursday, Microsoft announced that Nikon had become the latest company to license Redmond-owned patents related to technologies found in Nikon cameras running Google's Android mobile OS. Microsoft itself markets no devices based on Android. And as for transparency, Microsoft did not disclose any details of the agreement – not even which patents Nokia actually licensed. ®

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