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Dynamic Nature Of Patent Law

Publication Date: 
December 09, 2007
San Jose Mercury News
Pete Carey

Paul Goldstein is interviewed in a Q&A in the San Jose Mercury News. Pete Carey reports:

Paul Goldstein, a Stanford law professor, has written a new book on the subject. Despite its title, "Intellectual Property" (Portfolio, Penguin Group) is an easy read and a good guide for anyone starting or operating a company involved with patent, trademark and copyright issues. And is there any other kind?

Goldstein is also a novelist. His next novel, "A Patent Lie," (Doubleday) will be published in June. It's about a patent lawyer who takes on a Silicon Valley patent infringement case involving an AIDS vaccine only to find himself swept up in case of high-stakes intrigue and possibly murder.

Goldstein sat for an interview recently with Mercury News Staff Writer Pete Carey in his office at Stanford Law School.

Q Your book, "Intellectual Property" is subtitled "The Tough New Realities That Could Make or Break Your Business." What are they?

A The realities center around the volatility of intellectual property law - not just patents, but copyrights, trademarks and trade secrets. An abrupt change in any of these areas of law can make or break your business.


An example: In the early 1970s, Kodak looked at the instant photography business that Polaroid monopolized, thanks to its patents. Kodak had expert counsel, relying on existing patent law which imposed a high standard, telling it that these patents were invalid, under existing standards.

So Kodak invested $600 million, relying on these expert opinions. Well, by the time the product came out, the Court of Appeals for the Federal Circuit had lowered the patent standard, and suddenly patents that looked invalid when Kodak made its investment were now valid. Once you count the damages levied against Kodak, their loss was over a billion dollars, just because the legal standard changed.


There are cycles of high and low protection for each form of intellectual property. In the book, I identify the dynamics that indicate where on these cycles we are today with each area of law and what companies can expect to happen.

For example, patents were on a huge upswing starting in 1980s through the end of the century. Now the pendulum is swinging in the opposite direction.


Trademark is in a long-term upswing...

Copyright, on the other hand, is in a more modest way encountering the same cutbacks as patents, most notably in the courts.

One thesis of the book is that these changes occur because of public sentiment. In 1998 Congress extended the term of copyright by 20 years. It was a move of no great prospective economic consequence. But it served as a lightning rod in this country for people who said this was a greedy move to monopolize the public domain. As a result, you'll find courts today carving out exceptions to copyright to a degree that we've never seen before.


Courts deciding intellectual property cases are extremely sensitive to public sentiment, more so, ironically, than the U.S. Congress.


Q What's the prognosis for copyrights on the Internet? Are the two even compatible?

A That is a profoundly complex issue, ultimately more complex than patent reform, particularly because of the Internet's global reach. The Internet makes it so incredibly easy to copy, yet so difficult to detect copies. Internet companies are increasingly taking copyright licenses, but that's just an intermediate solution.

Whatever kinds of licensing arrangements are reached, there are going to be pockets of the world where somebody can make a lot of money by setting up a peer-to-peer pirate network. This can be done anywhere, and could be a tremendous drain on authors' rights worldwide.

Over time, China's enforcement will rise to the level required by the major international treaties for the simple reason that it's going to be in China's best economic interest for this to happen.

Today, the comparative advantage of investing in research and development in the United States is its strong intellectual property system. But the U.S. could lose that comparative advantage.

I think Asia is going to be a huge source of intellectual assets in this century, and there could over time be a seismic shift in the balance of intellectual asset trade. The fact that the U.S. was a net importer of intellectual property in the 19th century, and only became a net exporter in the 20th century, tells you that things change.