Manny Schecter, Chief Patent Counsel, IBM

Stop the Rhetoric to Improve Public Perception

Introduced to patents by his inventor father, Manny Schecter has worked with IBM since the 1980s—first as an engineer and then as an attorney, after attending law school through a program offered by the company. “I enjoyed engineering, but I didn’t enjoy it enough that I saw myself doing it for the rest of my life,” says Mr. Schecter. “My father was in the steel business and had a patent or two, and at one point, before he became patent-savvy, he actually had an invention of his misappropriated by a company. So the idea of working in a field that promoted innovation seemed rather compelling to me.”

Today, Mr. Schecter is Chief Patent Counsel, Associate General Counsel, and Managing IP Attorney at IBM, which made it to the top of IPO’s list of Top 300 Organizations Granted U.S. Patents once again this year, with 7,418 U.S. patents granted in 2014. The list is merely an information service and does not attempt to answer the question “are more patents better?” but for IBM, the answer to that question is yes. The company has 50,000 active patents worldwide. “Having a large portfolio enables us to work from a position of strength,” says Mr. Schecter.

Below, Mr. Schecter, who is on both the IPO and the IPO Education Foundation’s (IPOEF’s) Board of Directors, talks more with Innovator Insights about IBM’s IP strategy, how overblown rhetoric has contributed to an increasingly negative perception of patents by the public in recent years and what more companies, governments and IP associations can do to help ensure strong patent systems worldwide.

Can you explain IBM’s patent strategy? Why is having such a large portfolio important to the company?

We’ve been the U.S. patent leader [by number of granted patents] for 22 years in a row, and in many ways that’s a good thing. It’s not surprising—we consider ourselves an innovation company and we invest billions and billions of dollars a year into innovating. It’s imperative to us to protect that which we create. Once we became the leader, that leadership status itself helped to foster our innovation culture still more. It fueled our inventors and caused them to take an even greater interest in the patent process and to want to work with our IP law team even more than before. As an innovator, we continue to enjoy the income we’re able to generate from our patent portfolio, and we leverage that portfolio to protect the interests of IBM—to gain access to the IP of others and so forth. That hasn’t changed, and having a large portfolio enables us to work from a position of strength, so it fits very neatly into our culture of innovation.

Once we became the leader, that leadership status itself helped to foster our innovation culture still more.

Other types of IP relate to innovation too, so they’re all in scope for us. Copyright, for example, is important to us, particularly because it is a type of IP used to protect software, and an increasingly large portion of our business is software-oriented. Trade secrets have always been of interest to just about any company that feels they have information they want to protect, and of course as the marketplace becomes more global and we enter more emerging markets, that protection becomes ever more important. And finally, something people often miss about IBM’s IP portfolio is that we have one of the world’s most valuable brands, protected by our trademarks. We are very proud of that when you consider we have not had a major presence in the consumer marketplace for many years.

You said trade secrets are becoming more important for IBM with respect to emerging markets—is that a trend you see growing generally?

I don’t think trade secrets were ever not important; any company that’s developing manufacturing processes would have information they’d want to protect, but I would say that some of the recent developments in the IP world may be trending towards reliance on trade secrets. For instance, there have been some U.S. Supreme Court decisions and legislation proposed that some say would weaken patents, particularly in certain technologies. For those technologies in particular, trade secrets take on a greater role.

Large patent portfolios like IBM’s—and enforcement of IP rights by companies in general—are often criticized by the general public and mainstream media today. Where do you think that negative perception stems from?

IP has become much more public than it used to be. I don’t mean the IP itself, but the conversations about IP. A lot of that has to do with the discussion around patent reform in the last decade or so. As that discussion has taken on a public role, some of the folks advocating have become inclined to use unfortunate rhetoric in staking out their positions. You hear things like “the patent system is broken.” Well, I don’t think the patent system is broken. Sure, it could be improved. We should be striving to improve anything as complicated as our patent system all the time, but I don’t think some of the rhetoric used is accurate. It’s often used just to amplify a point. Unfortunately, the public doesn’t always see the connection between patents and innovation. They don’t necessarily know that the patent system is designed to promote innovation. And I think virtually all of the people within the patent system would agree that, in aggregate, the patent system actually does promote innovation. I think it all stems from the public seeing that rhetoric playing out.

It seems like, particularly in the U.S., the public would say that innovation is good and is supportive of inventors, but there is still this perception of patents as a corporate tool; where do you think that disconnect comes from?

Some of it comes from the fact that there’s a popular culture celebrating individual inventors. Today, people see large patent portfolios and associate them with corporations, but they don’t realize there is a tremendous amount of research and development and value that underlies those patents and that genuinely needs to be protected. I would argue that there would be less innovation without those portfolios.

How can IP owners help to change that perception?

One thing is to make sure that the public understands the changes being made to the IP system and their ramifications, and then to advocate for whatever those changes are in a respectful, realistic, balanced, credible way in order to avoid the rhetoric that sometimes incites the wrong impression. Something we’ve done for a very long time at IBM is to speak from the middle, not from one of the extremes. We are a very large patentee, but also a company that not only enforces our patents but has a fair number of patents enforced against us. And as a result, we tend to see the issues from all sides. So our interest is really in optimizing the system to in turn optimize the amount of innovation more than anything else.

We’ve also been a very longstanding proponent of improving patent examination and quality. Our view is that we want confidence in the patents we receive from the patent office. It’s not of particular value to IBM to receive patents only to have them be of suspect quality and perhaps be overturned at a later time. So we have long tried to help the patent office and others in the system find ways to improve patent examination so that the patents that come out and seem to concern the public won’t be granted in the future.

Do you think there has been any improvement on that front so far?

Yes, I do. I absolutely do, but again, it’s a big system, challenges remain, and we can always do more.

How do you think organizations like IPO and IPOEF can help?

We need to remember to promote the success stories in the patent system.

The answer is right in the name of IPOEF—education is inherent in the purpose of the organization and it’s precisely what is needed. The public needs to understand the value of the system; they need to understand more about the system in plain English and absent the rhetoric. We need to make sure we let the public know about the importance of innovation leadership, the importance of patents to maintaining innovation leadership, the value of patents in attracting R&D to our country, which in turn generates jobs. We need to remember to promote the success stories in the patent system and the good things the patent system does. The large and small inventors who are able to use patents to prevent others from misappropriating their inventions or the entrepreneurial endeavors financed on the back of the patent system; those are things the public needs to hear more about. We need to get messages like that out to those inside the patent system who might be working on patent reform, so they do a good job of it. And we also need to get those kinds of stories out to those outside the patent system. Some of them, particularly the younger ones, are the people who are going to be benefiting from or influencing the patent system of tomorrow.

What more do you think can be done to reach young people? Should IP become part of general curriculums?

IBM and other companies did some work some years ago and identified some of the gaps in IP knowledge within companies. We found that the difficulty many subject matter experts (SMEs) were having with IP matters was largely because they weren’t yet big enough to have IP counsel inside their businesses, and given that school curriculums didn’t include IP content and the companies didn’t yet have people specifically trained in IP, until they reached the size that they could hire IP counsel, there was an information gap. So we published a report saying that was a gap that needed to be closed.

IBM pioneered a program called P-Tech in which we work with some schools on STEM training and we have built into that a small component of IP content. At the collegiate level, we’ve long thought that IP content is appropriate for just about anyone undergoing technical or legal or business training. Obviously, some people may choose fields where IP may be less significant, but some rudimentary education for everyone in those fields should at least be offered.

What more needs to be done with respect to education and action on the part of governments worldwide?

With respect to education, the private sector can provide that to government employees who need a better understanding of IP. IBM frequently gets asked by the USPTO to provide technical education for the examining corps, for example. But the other thing that’s really important is making sure that the patent offices of the world have the funding and the tools and the staff that they need. If they don’t have the resources, it’s not surprising to us that they then don’t necessarily do as good a job as they could. On the whole, I think they’re doing a very good job, but the fact of the matter is that some patent offices have not always had available to them the most up to date information technology tools to manage their work stream and search for prior art, etc. I’ve always thought that kind of ironic because these are the people most responsible for overseeing innovation, and we’re not allowing them to use the most innovative tools to do so. I’m very happy that, in recent years in the U.S., we’ve been able to do a better job of getting the funding that the USPTO needs to enable them to start modernizing their IT tools. I think that’s an incredibly critical component that has long been neglected in this country.

It’s also critical that we have balanced views and promote balanced reforms instead of taking positions based on knee-jerk reactions to one person’s plight. We need to make sure that the scope of IP rights, and patent rights in particular, are as transparent as possible. It’s very important in order for the system and the marketplace to work efficiently that one understands when one is infringing and when one is not. So we need to make sure we do a good job of examining patent applications, with an eye to making sure that the meaning of the claims and scope of the patent is as clear as possible.

Another thing that’s really important for the benefit of the world is to continue to strive for harmonization of the various geographic systems. There are clearly efficiencies to be achieved. Costs can be reduced, the time to do things can be shortened, the quality of what the patent offices of the world do can be improved from collaboration. All of these things are important, and we should be striving for all of them in order to optimize the system in every way.