In a recent interview with The Washington Post, Jay Walker, founder of Priceline.com, has proposed a kind of neutral private-sector utility for the licensing of patents.

He argues that “We have spent trillions of dollars inventing things and 95 to 98 percent of all patents have yet to make their first dollar of licensing revenue”.

Take a small or medium-sized business as an example, let’s call it SME Corp. SME Corp. would use this so-called patent utility to create a profile of the specifications of its own products and services. The utility would contain a complete database of the over 2 million active patents in the USPTO, and would then apply “Big Data algorithms” to measure the specifications of SME Corp.’s products and services against the patent database. This method (which would presumably be patented by Mr. Walker) would identify “statistical relevance” between the products and services of SME Corp. and the claims in the patent database. From Mr. Walker’s description, SME Corp. could learn about other relevant technologies, including potential joint venture partners. A patent holder could generate licensing revenue by charging SME Corp. a “relatively small amount” under a “no-fault” license for use of those patents which overlap with SME Corp.’s products and services. This royalty amount would presumably be more than the patent is currently earning outside the utility. By paying the licensing fee, SME Corp., for its part, would incur a lower cost relative to the costs of negotiating a formal patent license agreement outside the utility, while at the same time neutralizing the patent infringement risk.

Sound complicated? 

The idea is an interesting one. Of course there are inumerable legal pitfalls, but if nothing else it illustrates the need for a more practical application of the patent system for small and medium-sized business.

Related Article:  Our System Is So Broken, Almost No Patented Discoveries Ever Get Used