Reform is Necessary to Keep the U.S. Patent System on Top
As a former engineer with Digital Equipment Corporation (DEC), Krish Gupta has been keenly aware of the need for a strong patent system throughout his career. During his early years as an engineer at DEC, Mr. Gupta met some of the company’s patent attorneys and became intrigued with their work. So when a training program was introduced at DEC to turn engineers into patent lawyers, he jumped at the chance. After four years of working as an engineer by day and attending law school at night, Mr. Gupta first transitioned to in-house IP counsel at DEC, and then left the company in 1998 for EMC Corporation, where he has remained ever since.
An active advocate for U.S. IP policy reform, Mr. Gupta is optimistic that agreement can be reached on improving the IP litigation landscape “I think in general there is an acceptance of the fact that our system is being abused by some,” Mr. Gupta tells Innovator Insights. “I think we will eventually get there.”
Below, Mr. Gupta weighs in further on patent litigation reform efforts, explains why he thinks public perception of IP rights may not always be positive and how businesses can counteract such perceptions; and how so-called patent trolls are threatening to undermine the role of the U.S. patent system as the world’s most robust.
What do you spend most of your time on in your role with EMC?
I find myself spending most of my time on the core aspects of protecting our technology and innovations and advising the business on IP issues. First, there are the typical patent and trademark responsibilities that my team has for the company; we also advise on appropriate use of open source; counsel on participation in standards setting organizations; and lastly, defending the company when it gets sued by patent trolls, as well as in IP litigation that doesn’t necessarily relate to patent trolls, but to the misappropriation of our technology.
As a result, I have a lot of interest in IP policy. Because IP is so important to us, it’s crucial that we ensure the IP system we’ve come to rely on is one that is strong, not being abused and one that is keeping up with the times. In the last 15 months, I’ve had the honor of testifying before the House Judiciary Committee twice and once before the Senate Judiciary Committee, most recently in February and March of this year, on patent reform. We’ve also been very active in filing amicus briefs before the U.S. Court of Appeals for the Federal Circuit and the Supreme Court. So influencing policy, whether through the courts or through Congress, is also what I spend a lot of time on.
What in your view needs to be done to help improve the U.S. patent system?
In 2014 alone, just in outside counsel fees, EMC spent over $10 million in litigating against patent assertion entities (PAEs).
EMC and its majority-owned businesses hold more than 5,100 issued U.S. patents. Making sure that we protect those inventions and are able to enforce our IP rights when they’re misappropriated is very important to us. So everything we do with respect to IP or patent policy is designed to make our system stronger.
One area where EMC thinks we can do better is making sure that the U.S. Patent and Trademark Office is fully funded, has all of the resources it needs to do a robust job, and that the patents granted are of the highest quality. This has not always been the case. In the last ten to 15 years or so we’ve seen a lot of bad quality patents get granted, and many of those patents have unfortunately ended up with actors who are not necessarily interested in promoting innovation. Instead, they view this as a play to take those rights and then leverage the fact that litigation is extremely expensive in an effort to extract what I would call extortionary settlements from companies that are essentially unable to afford the representation and the expenses associated with putting up a defense. Access to justice is prohibitively expensive for many defendants, so many of them end up settling and, unfortunately, bad patents and bad actors are at the center of this.
In 2014 alone, just in outside counsel fees—and we do a lot of work in-house—EMC spent over $10 million litigating against patent assertion entities (PAEs). But the money EMC spends in connection with these suits does not begin to capture the total cost to EMC, which includes the lost time of our engineers, executives and other valued employees. For example, in a recent case one of EMC’s star engineers was required to formally set aside ten percent of his time for an extended period of time to assist with document collection efforts. This single engineer devoted over 100 hours of time tracking down documents that were demanded by the PAE in discovery. And this one engineer was only one of more than 100 employees who were asked to assist and dedicate their time to the process of locating documents. This is enormously disruptive to us as a business.
So EMC thinks that certain areas of reform are necessary to make sure those abuses can no longer continue. The issue with relying entirely on the courts to implement reform is that there is a lack of uniformity among jurisdictions in how they address abuses. The benefit of having Congress pass legislation is that it creates uniformity across the courts. Second, the courts are overburdened. They don’t have enough resources and we’ve seen litigation volumes go up. People are celebrating the fact that 2014 saw a drop in the number of new lawsuits filed, but the fact of the matter is that we still saw over 5,000 new cases filed—to me, these are enormous numbers and our courts are simply overwhelmed with patent suits. In some instances, the courts have several hundreds of cases pending, so to expect them to pay attention to whether pleadings are specific enough or whether a certain kind of discovery is reasonable or not is completely unreasonable. Judges just don’t have the bandwidth.
I know there are people who are opposed to patent litigation reform through Congress, but relying on the courts to make changes is a very slow process. It takes time for changes to play out. Even if the Supreme Court issues a ruling, it takes time for district courts to adopt and implement any of those changes.
I know there are people who are opposed to patent litigation reform through Congress, but relying on the courts to make changes is a very slow process.
Do you think it’s possible for companies with vastly different business models to ever agree on issues like this?
I think in general there is an acceptance of the fact that our system is being abused by some. Congress already has spent many years debating the problem of abusive patent litigation and the most appropriate manner in which to address it. The problem has continued despite recent court decisions. In 2014 alone, more than 5,000 new patent lawsuits were filed. Thus, 2014 saw the third highest number of new patent lawsuits filed, exceeded only by 2012 and 2013.
A significant share of this increase is tied to actors who are leveraging patents to abuse the system and extract settlements. We seem to have some common understanding that changes have to be made. Whether the changes should be made through the courts and the Judicial Conference or whether Congress has some role to play is where people have disagreement. I think we will eventually get there, whether through congressional or court action, or a combo of both, but there is general recognition that our system is currently being abused by some, and that if we don’t make some changes we’re no longer going to be the world’s premier system.
Outside of the IP world, there is a lot of negative commentary about patents and IP rights generally—why do you think this exists?
I think the primary reason there is negative press about and negative perceptions of the IP system is that when people read about IP, they’re not reading about the many incredible innovations and inventions that have been patented and have led to such enormous improvements in our life, from safety in automobiles to the technology innovations that improve our ability to work more efficiently and enjoyably and innovations in pharmaceuticals and medical care. We don’t talk about the innovations that drive benefits to society. Most of the time when people read about patents and IP rights it’s in the context of people suing each other or big headlines on litigation damages and enforcement of IP rights in courts, and I think misconceptions and negative views largely result from that.
What can be done to counter that?
We need to do a better job of talking about why patents are important. We need to explain that they ensure that life-changing inventions can be protected, so that companies who get that protection are now motivated to teach the world about what they’ve created, because that truly drives more innovation. That’s what the patent system was established for. We need to go back to the basics of explaining to people how our system aids in the promotion of innovation and how it incentivizes innovation in order to counter the constant backdrop of stories about litigation and the large damages that are awarded by juries in a lot of these lawsuits that they hear about.
How do you get that message out?
We teach kids how the government operates, and we should also teach them how our legal and patent systems operate.
A lot of IP news is targeted at lawyers and entrepreneurs, but not as much to the general population who need to understand more about the patent system and what it does. Stories done through mainstream media and popular shows that people watch could be effective. Also, we should teach kids in school at various levels as part of their curriculum about the fact that we recognize inventions and it’s important to respect those rights. We teach kids how the government operates, and we should also teach them how our legal and patent systems operate.
Also, things that the IPOEF does, such as outreach to various constituents in promoting the importance of IP rights, the Girl Scouts IP Patch and IP Video Contest, are all very important. I’ve often thought it would be great if every school decided to have an invention contest where kids submit ideas they think are innovative. You could get a law firm on a pro bono basis to select the top five ideas, and, if patentable, file patent applications. That will get the inventive juices flowing at an early age and promote awareness of patents and IP rights.
What more can businesses and IP stakeholders do?
Businesses and IP stakeholders regardless of their views should continue to actively promote the values of a strong IP system. At EMC, we take our policy role very seriously. We think that visiting with staff on the Hill and sharing our experience with the IP system, how we see the system going off track and how the system can be strengthened are all very helpful in getting the message out on IP. Another way to get the message out is by filing amicus briefs when important issues are before the Federal Circuit and the Supreme Court. Promoting the importance of innovation with customers is also an effective way to get the message out. We have patent walls in many of our facilities and when customers come in for visits we will show them our patent walls so that they leave with an appreciation for EMC as an innovator and the importance of patents generally.