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Inventor behind Priceline bemoans broken patent system

Economy May 26, 2016 4:04 PM EDT

Jay Walker’s desk sits perched high atop his world-class library in Connecticut.

From there, the multimillionaire founder of Priceline — the name-your-own-price travel site — can survey his vast collection.

He calls it the “Library of the History of Human Imagination,” and it is home to some 25,000 books and countless artifacts. Among them: a 1957 backup Russian sputnik, an original anastatic facsimile of the Declaration of Independence and a 17th century atlas with the first maps to show the sun at the center of the universe.

The library is something of a shrine for innovation, and Walker, a renowned American inventor, literally had his house built around it.

Walker is named on more than 500 issued and pending patents in the U.S. and internationally. But his enforcement of that intellectual property has led some to label him a “patent troll.” He has sued tech giants like Microsoft, Google, Apple and others for infringement.

At the same time, however, Walker has publicly pushed for taking patent disagreements out of the courtroom. He launched a utility to simplify patent licensing and to easily search the patent database. But at the end of March, his firm shut down the tool, citing a “commitment to further reduce expenses and conserve cash.”

NewsHour business and economics correspondent Paul Solman spoke to Walker at his library. Here are some highlights from the interview, which has been edited for length and clarity.

Jay Walker on the American patent system:

The brilliance and genius of the original American system was, when you got patents, you were teaching everybody else what you were doing. And everybody either had to license your patent in order to then do their improvements, or they had to not do it. But then everybody competed to see who could get around everybody else’s patents with new innovations that gave them an invention. That’s sort of the history of America.

Here’s what’s happened: the patents have reached the point where, when you read a patent, you have no idea what it says. It’s not clear anymore. The borders are fuzzy. And we will get into an immediate argument if you read my invention and say, “I’m not really using your invention, it isn’t terribly clear.” And I’m going to say, “But wait a second, this is my invention. You are using it.” You’re going to say, “Well, you’re going to have to take me to court, because I’m not going to pay you.”

Everything’s a fight in a courtroom. You can’t knock on the door of any company in America and say, “You’re practicing my invention,” and expect them to enter into a license with you.

On the state of innovation in the U.S.:

We need to reinvent the system of how we innovate in the United States, because the future is really up for grabs. We are now at a speed and pace of change that is staggering for American business. We need to unlock the finding function of finding innovators, innovative ideas and innovative companies.

We live in a world where, if we don’t solve problems faster than we’ve solved them yesterday, we’re going to be buried under our problems. Now, the good news is we’ve got more smart people working on it, more educated people, we have women in our workforce where historically they were excluded from the economies. We’ve got a lot of reasons to be positive. But we have much bigger problems than we’ve ever had in the aggregate.

It’s no longer a case where one professor, one inventor, one company invents anything. Almost everybody is working with everybody else. And the smartest companies are sourcing their innovation from the outside, not trying to invent everything on the inside. But if you’re sourcing your inventions from the outside, how do you know where on the outside to go? How do you find the right people to play with? How do you find unexpected combinations? Everybody knows the expected combination. The smartest people look for the unexpected.

On his courtroom patent infringement battles:

When you’re an inventor like me and you have enough money to fight back, you don’t have to be abused by every company that uses your inventions. You can fight. Now, I lose. Sometimes I go to court, and the court says, “You know what? They didn’t use your invention.” I personally disagree, but that’s what courts are for.

You have a good faith argument in court about whether you’re an infringer or not. Now, in most cases, that argument never gets to a jury, because both sides go through a very expensive process of discovery, and then they figure out about what it’s worth, and then you make a deal, which is crazy, because you’ve spent millions and millions of dollars in lawyers just to make a deal.

On the “patent troll” label:

If you believe that I didn’t invent anything, then you don’t believe that I should take anybody to court. Now, I have hundreds and hundreds of inventions. So to not believe I’ve invented things is just not borne out by the evidence.

I’ve never bought a patent from anybody. I’ve invented everything I’ve ever done. My name is on every one of my patents. I have filed a patent on every last one. I’m an inventor. I’ve spent tens of millions of dollars. I’ve built giant companies with thousands of employees. If I’m not an inventor, who the hell is?

So if somebody is using one of my patents, and the only way for me to get paid is to take them to court, which is my last choice — why would I want to spend hundreds of thousands of dollars on lawyers? What I really want to do is to say to somebody, “Look, you’re using my patent, pay me a reasonable license, and we’re done.” But if their answer is, “You know what, if I pay you a license, then every other person whose patents I’m using is going to show up and want a license from me too, Jay. So guess what? I can’t pay you for your patent. You’re going to have to take me to court.”

On the idea of getting rid of patents altogether:

Our competitive advantage is in part due to our property. Now, I’m not against opening up property rights if people want to give something to the world. If you want to be part of the open source movement, I think it’s fantastic.

But that doesn’t mean there shouldn’t be people who can own their own intellectual property. Let’s allow both to exist side by side. But let’s fix the broken parts of the system we have, not throw out the idea of intellectual property. It served America so well for hundreds of years. Our advantage over foreign competition is no longer about resources, capital or smart people, it’s about how we organize our society. It’s about what we do better than the rest of the world in business and economic issues, so we better figure out how we’re going to strengthen our intellectual property system without strangling ourselves in court.

On attempts at patent reform in Congress:

Every time Congress has tried to improve the patent system, it’s made it worse, significantly worse. The last great “improvement,” which was the America Invents Act, has opened up the entire litigation process so that now everybody has a chance to rechallenge every other patent. And the patent office gets to decide again whether or not the patent it originally issued should be valid. That’s crazy.

You know, the only problem with Congress is, when it’s in session, it tends to do some harm. We need to figure out a new way to do this. Not how to have powerful special interests modify the current bill, because every bill that comes through Congress is a pork barrel bill. The big monied interests figure out how to not have to pay any of the small inventors anymore.

The issue is are we going to leave the country with a stronger intellectual property system, a stronger system for innovation? Or are we going to keep allowing powerful monied people to keep turning the dials so that the little guys and the small inventors have no chance and that getting a U.S. patent is a dumb idea? Because that’s what we’ve got now and that’s before Congress “helps” us again.