Two headlines from two publications I read every day -- EBN and The Wall Street Journal -- stand out today as examples of how interdependent the global supply chain has become. Both articles report a sea change in a practice that defines the global high-technology business: intellectual property protection. And the trend is positive.
Even though patent battles being waged by the likes of Apple Inc. (Nasdaq: AAPL) against rival (and supplier) Samsung Electronics Co. Ltd. (Korea: SEC) seem to have more at stake than IP protection -- such as shutting a competitor out of an entire market -- patents are one of the only ways to pursue a legal remedy against counterfeiting.
As Contributing Editor Bruce Rayner points out, the US government isn't shying away from discussing the dangers of counterfeit parts in military and aerospace equipment. (See: Military Hardware Security Compromised
and Why Is Counterfeiting Getting Worse?
.) Although it's a far cry from the kind of vigorous enforcement that's really needed to stop the flow of bogus goods, government and industry are finally in agreement that additional steps must be taken to prevent catastrophic failure in mission-critical equipment and aircraft. Without patents, defending charges of high-tech counterfeiting don't stand a chance.
Patents are notoriously hard to file and enforce -- a situation that the US Patent Office believes it is beginning to remedy. (See: Patent Reform at Last, but Does It Go Far Enough?.) Although I have doubts patent reform is going in the right direction, the WSJ article reports that startups, at least, are beginning to rethink the value of patents. Patent filings among startups are on the rise, according to the Journal, as companies seek to protect innovation and invention. Although startups may still face the prospect that an Apple may come after them at some point, the bigger fear is that technology can be stolen out from under them with no legal recourse.
It is still difficult to enforce patents in countries such as China, where the idea of private ownership of an idea is still a foreign concept. But without some sort of basis for a claim, such as a patent, there is very little opportunity for any legal remedy. In fact, in the report "Foreign Spies Stealing US Economic Secrets in Cyberspace" cited by Rayner, the solution to cyber-espionage is better data protection. There is very little discussion of prosecution, although that was not the original intent of the report.
The fact remains that one of the biggest problems with the US patent system is the risk of litigation from a competitor and "submarine" patents -- a practice under which an inventor hoards patents for the purpose of challenging a future invention with the hopes of a big payoff.
However, the fact that the Semiconductor Industry Association, the Department of Defense, the Department of Justice, and the US Customs and Border Patrol are focusing on the international aspect of patent protection is a step in the right direction. It is still up to the US government and the International Trade Commission to help small companies to prosecute international violations. Startups don't have deep pockets to defend against challenges from the Apples of the world. But if private industry and associations band together with government agencies, more can be done to protect the national interests of US inventors.
It is too bad that the momentum is coming on the heels of the discovery of counterfeit goods in defense equipment and aircraft. Counterfeit parts have been appearing in consumer and industrial equipment for as long as anyone can remember. Tech companies have prosecuted cases in foreign counties with some success: Analog Devices Inc. has had a number of high-profile patent infringement victories. If high-tech continues to band together to defend innovation, the net results can only be positive for the global electronics industry.