I wrote recently about What Happens in a Patent Lawsuit? Today, I want to look at patents from a higher level: why do we have them, and how well do they work in the semiconductor and EDA industries. The Patent Tradeoff 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 underprovided. This was considered sufficiently obvious and important that it is in the US constitution. Congress shall have the power: To promote the progress of science and useful arts, by securing for limited times to authors and inventors the exclusive right to their respective writings and discoveries. However, I think it is a pretty dubious point. The fashion industry doesn't seem to lack for innovation, and they have no protection on their designs. Although there were patents on software since the 1970s, they tended to be things where it was a machine that was being patented, and the machine involved a software implementation. It was generally assumed that a software algorithm itself was not patentable, as if it were a mathematical formula (which is not). When software patents started to be allowed, there was not much "prior art" for the patent examiners to search, and as a result, lots of patents were granted on ideas that were so obvious that they were invented independently many times (such as xor-ing a cursor onto a screen in the early days of bitmapped displays). Patent examiners largely consider prior art to be prior patents, which doesn't work when a new area starts to be patented, and all the obvious stuff is neither in existing patents, nor academic papers (because it is too obvious to be publishable). Another supposed 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. Well, maybe. That works for drugs (when they become generic when the patent expires), but in technology, the 20-year lifetime of a patent might as well be forever. Patents in Practice 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 anywhere else. When the patent licenses came up for renewal the following year, we were in a much stronger position. We had our own suitcase. The companies with the big suitcases 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, nor disturbing their own engineers to find out if they were infringed. It was patent licensing by the ton. Patents for Defence One similarity between patents and football is that the big news is made by the offense (when someone high profile gets sued), but it is won by the defense. To me, in the semiconductor and related 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, Blu-ray) 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 (for years Philips made a lot licensing its Locos patent to trim the bird's beak on a planar transistor), but none that I know of in EDA. Every company has to do this, Cadence included. I'm critical of everyone developing defensive patent portfolios since it is like standing up at a concert to get a better view, which forces everyone to do it, even if they would rather sit. However, it is necessary, and when I've run engineering organizations I've encouraged everyone to be aggressive about filing patents. 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. Secondly, have you read an EDA algorithm patent? Above is the abstract to one of Cadence's that I picked at random. There is no way you can really discern what most patents like this even cover (what is "an EDA" anyway?), let alone use them as a blueprint for implementation. To give you a flavor of how opaque patent language gets, here is a figure from the above Cadence patent. You might think that this would be unnecessary to describe in a patent that is about layout editors, being just a normal computer system. But the description of the figure is: Fig 2 show components of an exemplary system for designing and testing designs for logic systems, according to an exemplary embodiment. When you see a phrase like "exemplary embodiment" or "plurality of gates", you know you are reading a patent. Patent law provides for damages in the event of patent infringement. But, as I discussed in the patent lawsuit post referenced at the top, willful patent infringement, when you know you are infringing, carries punitive triple damages. So the advice I’ve always been given by lawyers is to tell my engineering teams 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 mutually assured destruction in with nuclear weapons. The purpose of all that effort and investment in nuclear weapons was purely to ensure that the other guy’s weapons weren’t a threat. Patent Trolls Some companies purchase a few patents simply to demand licensing fees. Officially they are called "non-practicing entities" or NPEs, but more colloquially they are called "patent trolls". They violate this cross-licensing 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) in 2006 (over the idea of email on a phone) was a complete indictment of the ridiculous situation we have reached. The patent would probably have been invalidated, but in the meantime (meaning a year or more), RIM would not have been able to sell Blackberries. As happens all too often in the modern legal system, the process is the punishment, and it is too expensive to play (usually in dollars, but in RIM's case in shutting up shop for a year), even if you will win. EDA and Semiconductor Patents 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. When rumors that Apple might create an Apple phone started to circulate, one of the major negatives was that it was assumed to be impossible for a new entrant to break in, due to the patents held by all the companies that had been in the business for years. If Apple had just done an ordinary phone, that might have been true. But they basically invented the modern smartphone with a big touch-screen and a virtual keyboard. Out of the gate, they had a strong position since they held a lot of patents on the smartphone that all those older companies suddenly needed. It may seem obvious now how pinching a photo or map to zoom in or out works, but remember how blown away you were the first time you saw it—it was not obvious at the time. Plus, it required a touchscreen that could sense multiple touches simultaneously, something else that wasn't obvious would be useful. But I stand by my original point, that the cellphone and the smartphone would have been invented without patents, and the money invested in building up patent portfolios and then using them to make big cross-licensing deals, is money wasted by the industry, to the benefit of the lawyers and patent agents. The one possible exception would be Qualcomm's development of CDMA, which was one of the few areas I can think of which involved both original technology and significant licensing fees (see my post The CDMA Story and Qualcomm ). Sign up for Sunday Brunch, the weekly Breakfast Bytes email.![]()
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