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Announcement Nears on New Patent Office Director


Written by Gene Quinn
President & Founder of IPWatchdog, Inc.
Patent Attorney, Reg. No. 44,294
Zies, Widerman & Malek
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Posted: April 15, 2009 @ 4:01 pm
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According to an article on GovernmentExecutive.com, an announcement regarding appointment of an Undersecretary of Commerce for Intellectual Property (a.k.a., Director of the USPTO) could come within the next week or two.  This news of a new leader on the horizon seems to be quite pleasing to Robert Budens, the President of the Patent Office Professional Association, which is an independent union of professional employees formed in 1964 to represent the interests of examiners, classifiers, computer scientists, and other patent professionals who work at the United States Patent and Trademark Office.  According to the GovExec article Budens says: “We need a new director just as soon as we can get one.”  I know a lot of people in the patent industry outside the Patent Office feel that same way.  But who will the new leader be?  Among the names being suggested as possibly in contention are Q. Todd Dickinson, who ran the office under former President Bill Clinton and is presently the Executive Director of the American Intellectual Property Law Association; (2) James Pooley, a partner and litigator in the Palo Alto office of Morrison Foerster; and (3) IBM Vice President David Kappos.

Whoever the new leader is there will be plenty of issues that need to be addressed.  Perhaps one of the most important issues, even ahead of the backlog, is that the Patent Office IT systems are pitifully inadequate.  According to Budens, some within the Patent Office are concerned that the USPTO computer network is “hanging on by bubble gum and bailing wire.”  How can that be possible?  We all know it to be true, but how can it be possible that the repository of all scientific information in our society has an IT system that has not been updated in a decade?  Only recently did the Patent Office become paperless in any real sense of that word.  Up until recently an application filed using the Electronic File System (EFS) would be printed and then scanned back into electronic format. This means that the USPTO idea of a paperless electronic system was to print electronic filings, scan them and then destroy the printed copy. Obviously paperless filing is not intended to save trees. But how could anyone in their right mind call this a paperless system?  The reality is that the front end EFS system was not compatible with the back end file maintenance systems.  And to think that USPTO management actually had the nerve to force rejection after rejection of real inventions.  Like they would know a real invention if they saw one!  They didn’t even know the meaning of paperless, or have the ability to create an interface that could electronically feed the back-end system. 

With the internal operations of the Patent Office being so terrible, with problems stretching from human resource issues to IT systems, one might suspect that David Kappos should be in the lead for consideration of the top job at the USPTO.  I do not know the man personally, but on behalf of IBM he has been taking some positions that are not necessarily what the majority of stakeholders would like, although he will undoubtedly make the high-tech community happy.  Given that the high-tech computer industry is probably feeling beat up on regarding changes to the Senate version of the patent reform legislation being considered, I wonder if this further elevates his candidacy.

In addition to supporting enhanced post grant review, Kappos also supported damages provisions that would have caused real and substantial injury to manufacturing, start-up technologies, pharma, independent inventors and the green innovation industry.  In testimony given by Kappos to the Senate Judiciary Committee on March 10, 2009, he explained:

Patent litigation has increased significantly for more than a decade, in part driven by low patent quality that creates uncertainty around intellectual property rights, spawning increased speculation.  This excessive litigation threatens to sap America’s innovative capacity and its ability to compete in the world if left unaddressed.

He went on to say:

This high level of patent litigation, particularly in the IT industry, shows that valuation issues are not being resolved in negotiation.  IBM believes that this indicates both that patents of uncertain scope and validity are being enforced, and reasonable royalty damages determinations are not providing the needed guidance for the IP licensing market.

This sounds good, but it is simply not true.  Yes, there has been a dramatic increase in the number of patent lawsuits filed since 1980, with an upward trend really being most noticeable since about 1992, but the number of cases that reach trial has remained the same since 1980.  So regardless of the number of patent litigations filed there are plus or minus 100 cases that reach trial every year.  That was true when there were just over 800 patent litigations commenced in 1980, and it was true last year when there were over 3,000 patent litigations commenced.  If you doubt this truth, just take a look at the following charts.

As you can see, the number of patent cases terminated during or after trial has largely remained constant.  This is even more clearly demonstrated on the chart below.

The largest growth seen is with those cases terminated with at least some court action being required, but before pretrial hearings.  Also increased is the number of cases that are terminated without any court action.  So the truth is that despite what Mr. Kappos or IBM thinks, patent litigations are settled through negotiated resolution in the overwhelming number of cases.  In fact, since 2000, more than 96% of patent litigations were terminated without requiring a single day of a trial.  See chart below.

So it is factually incorrect to say that patent disputes and valuation issues are not resolved through negotiation.  Overwhelmingly patent disputes are settled through negotiations, many after filing lawsuits and before the court has taken a single action, as evidenced by the Microsoft v. TomTom matter recently.  When parties sue it is almost always to cause the dispute to come to a head, which is exactly what will happen with AOL’s recent lawsuit against Yahoo.  The fact that litigation creates leverage and urgency does not mean that patent litigation is out of control.  It does not mean that negotiations are useless.  It means we have a robust and functioning system that allows the overwhelming majority of plaintiffs and defendants to resolve issues in an orderly manner.  What exactly is wrong with that?

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Posted in: Gene Quinn, IP News, IPWatchdog.com Articles, Patent Litigation, Patent Reform, Patents, USPTO

About the Author

is a Patent Attorney and the founder of the popular blog IPWatchdog.com, which has for three of the last four years (i.e., 2010, 2012 and 2103) been recognized as the top intellectual property blog by the American Bar Association. He is also a principal lecturer in the PLI Patent Bar Review Course. As an electrical engineer with a computer engineering focus his specialty is electronic and computer devices, Internet applications, software and business methods.

 

10 comments
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  1. So why do you think the number of cases filed has increased, Gene?
    Do you think that appellate court precedent has made it more attractive? Are people less willing to listen until they receive a Complaint?

  2. Duncan-

    The number of patent applications started to rise substantially starting right after the Federal Circuit came into being, and it takes a few years for most patents to become ripe for litigation. So I think the rise you start to see in about 1992 is attributed to both the growth in patents issued and the Federal Circuit creating some definite case law that made patents more valuable. Between the Supreme Court issuing some key decisions and the formation of the Federal Circuit I think patents became desirable, both to have and valuable to litigate. I also think you are correct when you say that companies are far less likely to want to talk until they receive a complaint and it is real. Additionally, by refusing to really go after patent trolls I think high tech companies have given incentive for trolls to sue to get a settlement. So while they complain about trolls and the increase in lawsuits I think they are responsible for that themselves, just like the auto insurance companies were responsible for the rise of PI litigation when they would settle everything.

    What do you think? Does that make sense to you?

    -Gene

  3. Thanks Gene, Yeah, I think definitely the advent of the CAFC had its impact. I think the non-practicing entity (“patent troll”) phenomenon has been driven in part by the unusual way that the US deals with attorney’s fees – which along with the possibility of contingency arrangements with law firms and greater availability of offensive insurance and private equity money to fund litigation has encouraged this type of activity. In most countries you have to pay up at least some of the other side’s legal fees if you lose, contingency arrangements are often not allowed, and there’s scant offensive insurance and with all due respect, less sophisticated private equity money around.

    Really interested to understand how you think tech companies should (or should have) ‘go after’ patent trolls.

  4. good work, gene

    i believe also the number of suits filed has been rather stable over the last 10 years or so -since the establishment of the CAFC. prior to that time there was too much uncertainty. for more stability perhaps we should be appointing special patent judges to each district or have regional courts. many judges just arent equipped to handle or don’t like the complexity of patent cases. they do not have technical backgrounds. i can imagine the bewilderment a laser or computer chip invention would cause a history or english major.

  5. all this patent troll talk is nonsensical

    for an explanation please see http://truereform.piausa.org

  6. Moe-

    Thanks for providing a link. I am not adverse to having links included in the comments as long as they are relevant, but I would appreciate if a bit more substantive comment could be provided along with the link. This will give readers more information and hopefully keep our discussions alive and will allow for them to be more easily followed.

    -Gene

  7. Gene:

    What we need is a comprehensive letter that we can each sign as independent inventors and send to our congressmen. I agree with the idea that the large companies just rob and steal the inventions, and then say sue us. I have been actually told this to my face my several large corporations.

    However, until we act in conjunction, nothing is going to get done. To join groups or organizations, that does not help. We need to have an effort that sends hundred of thousands of emails to our congressmen and to Obama to make it known that we are concerned, and these things need to be addressed. Somebody needs to take a lead in this, contact all of the inventors and groups, and get them to join in one concerted effort to send these emails and letters in masse to Washington. It could be as simple as having a form that you can pick your congressman from, sign it, and email it right then a there. And then the information has to get out to the independents and small inventors. A 100 people yelling does not make much noise, but a hundred thousand does. They do not care about which is right or correct, but what gets them the votes. We need a hero to jump up. We have a lot of prominent patentees in this country, why don’t we use them to help make the noise. If someone had access to the names and the emails addresses, maybe we could send out the letter that they would merely forward to their congressman.
    That would be the proper use for these groups and organizations. Flood them with email. Let them know that we do care, are mad as hell, and won’t take it anymore.

  8. Steven-

    I have been toying around with the idea of coming up with a letter that folks can print and sign. I will work on that tomorrow and hopefully have something ready for Monday, or at least some time this week. I am not sure I can turn it into a “click here” thing, but I will come up with something.

    Thanks.

    -Gene

  9. “The fact that litigation creates leverage and urgency does not mean that patent litigation is out of control. It does not mean that negotiations are useless. It means we have a robust and functioning system that allows the overwhelming majority of plaintiffs and defendants to resolve issues in an orderly manner.”

    You are exactly right,

  10. I am trying to contact Mr. Steven Sedlmayr. The application of restructured water on concrete seems appealing to me.

    Thanks…

    Ricardo Herrera
    rherrer1@lakeheadu.ca