- - Sunday, October 1, 2017

ANALYSIS/OPINION:

More so today, than at any time in recent memory, people are talking about the exclusive rights that come along with owning a patent.

Exclusive rights means the patent owner can keep others from using the innovative technology covered by the patent without permission. Patents provide exclusive rights for a limited time to encourage and reward inventive activity. They give the patent owner an opportunity to recoup the costs of developing the new technology, either by being the only on the market who can sell the technology or by licensing the technology to others.

However, there is a recent trend in patent law to take these exclusive rights away from patent owners. This has two negative impacts. First, infringers have become increasingly bolder and more prevalent. Second, and related, innovation suffers because patent owners have fewer incentives to spend the resources necessary to develop new technology.

An important case in the International Trade Commission (ITC) is one of the latest examples of a patent owner being potentially stripped of its ability to exclude others from infringing its technology.

TiVo, through its merger with Rovi, acquired a number of patents covering technology that allows a consumer to control set top boxes remotely using a cellphone. Comcast (and many other cable providers) had been licensing these patents, but in 2016, Comcast decided it did not wish to pay licensing fees any longer. Although Comcast stopped paying, it did not stop using this technology. TiVo then filed a complaint at the ITC, seeking an exclusion order so Comcast could no longer import the set top boxes that used the patented technology. A judge at the ITC determined that Comcast was infringing TiVo’s patents and granted the exclusion order.

If this were the end of the story, it would have been a perfect illustration of patent law at work. After all, the patent owner was exercising its exclusive rights and collecting licensing fees from companies wishing to use the technology. When a company decided it wanted to keep using the technology without paying, the patent owner was able to sue that company and obtain a court order requiring the company to cease using the technology — and in particular, because the case is before the ITC, to prohibit the importation of devices found to infringe the patents.

Unfortunately, this isn’t the end of the story.

Cases before the ITC require that the Commission considers the effect on public interest before the decision becomes final. In the TiVo case, a number of parties have submitted comments urging the ITC to either lift the exclusion order to allow these infringing devices to be imported into the United States or delay the exclusion order to allow Comcast time to avoid any negative consequences for its infringement. They argue that the public interest is better served by allowing Comcast to continue violating TiVo’s exclusive rights.

Why are people submitting comments urging this action? Because stopping the importation of the devices at issue would be bad for Comcast. The technology in question, allowing consumers to control their set top boxes via cellphone, is popular among Comcast’s customer base. Requiring Comcast to either stop importing these set top boxes or remove the technology that allows cellphone control of these boxes before importation would likely make a number of Comcast customers very upset.

If Comcast wanted to import, sell, and use set top boxes that include technology developed by another company, it should have continued to pay the license fees. TiVo was not keeping other cable providers from using this technology, although a patent does permit that course of action. TiVo was allowing companies to use the property for a fee. Comcast simply chose not to pay that fee, but wanted to keep using a technology, which it didn’t develop it, for free.

Urging the ITC to allow the set top boxes to be imported, even though Comcast’s devices were found to infringe TiVo’s patent rights, is taking a short view of a long game. In the short view, Comcast can make its customers happy. TiVo might get Comcast to pay the required licensing fees again, although the ITC does not have a mechanism to require this remedy.

However, this continued erosion of the right to exclude will have a more significant effect on the long game. Taking away the right to exclude removes the patent owner’s ability to recoup the costs of developing this new technology, which in turn eliminates a substantial incentive to invest in invention and innovation.

The fundamental theory of the patent system is that the public interest is best served when the exclusive rights are, well, exclusive. If the “no exclusion” trend continues, we are bound for “no innovation.” And that’s a problem.

• Kristen Jakobsen Osenga, a professor of law at the University of Richmond, teaches and writes in the areas of intellectual property, patent law, and legislation and regulation.


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