Microsoft Pushes Patent Reform –

Last month, Microsoft, a longtime critic of the patent system, held a press conference to say that it wants to improve the system’s efficiency of approving patents and lower the cost of patent litigation. The company cautioned that a lack of reform by the U.S. Patent and Trademark Office, and other patent offices worldwide, would slow the pace of technology innovation, lead to escalating legal costs, and exclude small businesses from the patent process.

Of course, Microsoft has a lot at stake. The computer giant typically faces an average of 35 to 40 patent lawsuits at any given time, and the Redmond, Wash.-based company spends about $100 million annually to defend itself.

Microsoft, which holds about 4,500 patents worldwide and has another 10,000 pending, has tasted victory and defeat in patent litigation. Last year, a U.S. Court of Appeals in California ruled that an ergonomic keyboard patent claim against Microsoft, filed by TypeRight Keyboard, could move forward. But last month, an appeals court overturned a $520 million patent infringement judgment against Microsoft that was brought by Eolas. Eolas had sued Microsoft over a Web browsing patent and won its case in lower court in August 2003.

As part of its proposed reforms, Microsoft recommended the need for a special court to hear all patent cases at the federal district level, as an effort to help resolve patent litigation quickly and consistently. The company also suggested that patent plaintiffs should demonstrate that they or their company would face irreparable harm that could not be compensated by monetary damages before a court issues a patent injunction on a defendant, a position Microsoft often finds itself in.

While the U.S. Patent Office comes under frequent attack for having a number of patents under review for three years or longer, there is hope that the backlog will be reduced. The Patent Office is on a hiring spree to get more people to examine an expected barrage of 580,000 new applications by the end of the year.

The federal agency expects to hire about 1,800 patent examiners in the next two years, adding to its current staff of 3,800 examiners, a spokeswoman said. Unfortunately, the Patent Office is paying for the staff expansion by increasing its fees. The higher fees, which began in January, are most painful for small businesses, which have to fork out the filing and processing costs.