Priceline founder talks problems, potential of patents

Tech entrepreneur Jay Walker, founder of Patent Properties, wants to reform the U.S. patent system

Jay Walker has done it all. He’s an inventor, a businessman, an entrepreneur and an activist for change. The founder of Priceline and holder of over 700 hundred patents has strong opinions on the current state of patents in the United States and a vision for the future of these valuable resources.

Walker created Patent Properties as “a natural outgrowth of a life as an inventor,” he said in a recent interview. Patent Properties, and its division, the United States Patent Utility, is an initiative designed to expand significantly the number of patents licensed in the U.S. and to help, in particular, smaller and medium-sized business to have a strategy for patents in an economic world where, in Walker’s words, “intellectual property becomes a primary driver of economic growth.”

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The IP portfolio represents the fruit of labor from his lab’s invention focus on a dozen different industries. Walker describes it as a “portfolio that is deal for other companies to use, with patents in e-commerce, telecom, gaming and more. We believe strongly that, if we could invent solutions to significant problems, we can reap the benefits of those solutions with a commercial marketplace that uses those inventions.”

 

The nature of advanced technology, as Walker points out, often combines hundreds or even thousands of patents that must be licensed to other entities to combine into innovative tech. But Walker believes that the nature of the patent licensing system has taken an “unfriendly direction” for both inventors and users of patents.

 

“Given the value of many of my inventions, I want a reasonable opportunity to derive a fair commercial return,” he says. “The system has democratized patent ownership, doing a world class job making it easy for anyone who invents to secure property rights for inventions, leveling the playing field for those who can get rights. But it’s done  an almost inversely poor job of making it possible for patents themselves to become instruments of commercial success. It’s devolved to the point where, without a lawsuit, there is little chance to license.” As an analogy, Walker imagines a situation where anyone can plant apple trees, but if they want to harvest or sell the (literal) fruits of their labor, there is no mechanism in place for that. 

Patents, of course, provide a legally prescribed right to exclude others from practicing your technology, but Walker feels that they are “arcane and nearly impossible to decipher,” meaning that often its up to a Markman hearing to determine what the words in the patent actually mean.

Once again, Walker uses an analogy to describe the problem with this system, noting that this would not work in real estate. “If you buy a house, you want to know what you are getting. Saying ‘I owe land by the river, but I’m not sure what,’ until we go to court and find out you might not own anything,” would not be a viable system.

Part of the origin of Walker’s frustration with the existing system comes from his experiences as an inventor. He realized that he could not be only inventor who felt this kind of frustration, and further realized that companies are frustrated by the system as well.

Those that wish to license technology in good faith don’t always know exactly what they are getting, and if they pay a licensing fee they may face a competitive disadvantage, paying an expense their competitors do not have. He also feels frustration with “bad actors” who often purchase patents at fire sales from someone who didn’t know what he had and then used those patents to extort money via legal uncertainty.

So Walker found himself both a frustrated inventor and a licensee who wanted to license technology but was worried about lawsuits. This, he says, is a well known dilemma for thousands of small and medium businesses. The question arises as to whether or not these companies should even get patents or if they should keep their technology secret. If a company decides to get that patent, it has to hope to get a return on that legal investment on top of its research and development costs.

As a system designer by trade, Walker sees this problem as one that is not the fault of the courts or lawyers or inventors, but is a symptom of a broken system. “The law has evolved; the patent office and lawyers have evolved. It’s a bent system. Companies have evolved, as have their tactics. Legal interpretations in the courts have evolved and change frequently,” he says.

There’s a saying that, if our enemies had designed the U.S. healthcare system, they could not have done a worse job. And, says, Walker, if our enemies who want to take out the United State’s edge in innovation, they would have created a system like the one we have now.

This, then, is the core of Patent Properties and its U.S. Patent Utility.  It looks at the world as an inventor might. It has been involved in litigation but is not about that.  But its goals are to “unfreeze” the patent system, freeing up millions of inventions and trillions of dollars of economic activity that are frozen in ice. It serves both inventors and users alike, hoping to evolve the patent system rapidly, jumpstarting the process of change.

To do that, Walker and U.S. Patent Utility will soon be launching  its  new patent licensing initiative that Walker thinks will help spur change and reform the system to the benefit of all. Details of the program will be released this week. Check back soon for an in-depth look at this system and what it will mean for the future.

Senior Editor and Community Manager

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Rich Steeves

Richard P. Steeves is Senior Editor and Community Manager of InsideCounsel magazine, where he covers the intellectual property and compliance beats. Rich earned a B.A....

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