Any attempts to decrease the value of patents could be extremely harmful to the U.S. economy, Qualcomm's top legal adviser cautioned this week.
Donald Rosenberg, Qualcomm's executive vice president and general counsel, made his case for strong patent protection at the American Intellectual Property Law Association's Electronic & Computer Patent Law Summit at the University of San Diego.
He noted how Qualcomm (Nasdaq: QCOM) has been able to leverage its highly lucrative licensing business to make a number of significant development breakthroughs for the telecommunications industry.
"If courts or agencies in the United States or abroad had intervened in the 1990s to change our patent laws to artificially drive down the value of patents for reasonable royalties, then Qualcomm might not be where it is today," Rosenberg said. "Without our ability to earn royalties on 2G CDMA technology, we might not have been able to invest so heavily in 3G, and the industry and consumers would not have reaped the rich rewards."
Qualcomm's main business lines include developing state-of-the-art integrated circuits to sell to the world's device manufacturers and licensing its patent portfolio.
While the wireless chip-maker doesn't have a direct interface with consumers, the company's CDMA technology has driven the advancement of today's mobile world.
A strong patent system, complete with proper incentives and rewards, has been instrumental in the company's development.
"Our patent system provides incentives for innovation through protection of original and novel inventions, adding 'the fuel of interest to the fire of genius,' to quote President Lincoln," Rosenberg said. "Strengthening, or at least preserving, incentives to innovate should be viewed today as a national priority."
Intellectual property has become America's No. 1 export, according to Rosenberg and U.S. Patent & Trademark Office director David Kappos.
"If incentives for basic research and development are weakened, and fundamental inventions are never realized, new product development will inevitably decline and ultimately it is consumers and the American economy that will be negatively impacted," Rosenberg said.
The contentious patent reform debate in the United States was often co-opted by people more concerned with damage awards than by patent office efficiency, Rosenberg said. There also were those who saw the debate as a way to change the way patent rights are valued in order to promote their own business models.
Fortunately, Rosenberg said, the America Invents Act – the patent reform bill that was signed by President Obama last year – did not change the value of patents.
However, he cautioned, there still is a movement to lobby government regulators to make the changes themselves. This movement could undermine the incentives that drive and reward innovation during a time when access to funding is scarce.
"There's a need to ensure that risk capital is available for research, development and commercialization," Rosenberg said. "The main motivator of risk capital when looking at investment opportunities is return on investment. If there are limits or uncertainty about this return, whether through weaker IP protection, regulatory intervention or other factors, capital will not flow to markets and innovation will suffer, affecting our prosperity and our quality of life.
"As Dr. (Irwin) Jacobs once said, without such incentives, we'll measure the costs by the bells that don't ring, the cures that are not developed and the technologies that are not invented. In the long run, society will be the poorer for it," Rosenberg added.