So I don’t blame an inventor to wanting to sell the patent to a patent troll immediately after it is issued.

I wouldn’t say you are getting somewhere, I have been writing about that for several years. The presumption of validity should be tied to what is disclosed by the applicant. If you want to disclose nothing then you get no presumption of validity. If you disclose 10 patents then your patent is presumed valid with respect to those. It is silly to presume validity based on cursory review of an application and with respect to patent and references not even considered.

-Gene

Gene has in the past questioned the presumption of validity.

You are not getting somewhere.

Stop throwing the baby out with the bath water.

Not only do you believe that trolls exist, now you’re questioning the presumption of validity.

I’m finally getting somewhere!

Alan

Yes, everyone with some gray matter between their ears knew that IV would one day have to litigate some cases as part of their business. It’s hard to be sympathetic to someone who took IV’s proclamations about building a defensive portfolio too seriously.

Yes, Reexamination could probably be improved. But Reexamination is already a pretty effective tool. In my experience it is underutilized largely because too many in-house counsel would rather wait passively to see if they can slide by undetected. Poking one’s head in the sand is rarely a good legal strategy.

As to the presumption of validity, I think a cursory review of the obviousness case law after KSR makes it clear that the presumption of validity is nothing more than a procedural/evidentiary hurdle, and not a particularly big one anymore. The party challenging a patent still bears the burden of production and the burden of proof to provide evidence sufficient to demonstrate that the patent is anticipated or obvious, and I don’t think this should change. I think Dennis Crouch was keeping statistics on Federal Circuit obviousness holdings after KSR. The last time I checked the ratio was something like 8 patents invalidated for every 1 which was upheld. I haven’t been following District Court statistics, but the law will eventually trickle down to the District Courts. Dispositions on Summary Judgment will skyrocket.

If Congress is going to intervene it should intervene to reverse KSR and reestablish an objective test for obviousness which precludes the use of hindsight in obviousness determinations. As it stands now, KSR will effectively gut the patent system in a very short period of years. The last time I checked BPAI statistics the Board was affirming obviousness rejections at a rate of approximately 90%. For all practical purposes applicants are now entirely at the whim of a poorly trained examining corps, whose objections will be affirmed by the Board provided they are not completely arbitrary. The allowance rate could easily drop below 20% unless the PTO intentionally raises the allowance rate out of sheer bureaucratic self-preservation.

As far as whether it was Anakin who figured it out and told Mace… I wasn’t about to compare John White to Anakin (aka Darth Vader), and it was Mace who took the knowledge proffered and knew what it all meant. Additionally, Sam Jackson is a pretty cool guy, and I know us patent attorneys are charismatically challenged, but John is about as cool as you can get and still have a Reg. No.

I agree with you on many levels. I think the trouble IV is going to have is that they professed repeatedly that they were only building a defensive portfolio, and that obviously is not the case. Whenever you start to do business on the litigation end with Ray Niro there is no way you can claim defensive portfolio. Everyone knew it was only a matter of time before IV turned to litigation.

As far as Congressional action, I would like to see some minor tweaks to Reexamination. I would also like to see some substantive changes to pleading rules in patent cases. The way I personally distinguish a patent troll case from a legitimate case is by the complaint. When you look at a number of the clear trolls you see very weak complaints, that are very short and do nothing more than say “you are infringing Patent No. X,XXX,XXX.” No notice, no theory, no substance, just pure litigation by ambush.

I have been on record many times saying that focusing on “patent trolls” is wrong. We should focus on “patent tortfeasors,” namely infringers. Having said that, I do think we need to have an open and frank discussion about defining the nuisance type extortion that the law should recognize as such and stomp that out.

I also think we need an open and frank discussion about whether we should really presume that a patent that an examiner spent 14 hours on from start to finish really deserves the presumption of validity. There is a lot that could be done here to tie the presumption to the quality of information provided by the applicant, and that would give examiners more information, lead to better examinations and better patents that issue in a quicker time. Seems like a no-brainer to me. Would love to hear your thoughts on that though.

-Gene

I’ll provide a counterargument, if for no reason other than to spark some debate.

I’m not sure IV deserves all the vitriolic scrutiny that it has received and certainly will receive in the future. IV has been operating more or less in public for almost ten years, and has been the subject of intense scrutiny for five years. Yes, IV has used shell companies, but the tech industry has been perfectly aware of IV and its operations–this information is publicly available. The tech sector has had almost ten years to formulate and execute an active response, and they have utterly and completely failed.

IV purchased many of their patent portfolios on the open market through public auctions. These patent portfolios were equally available for purchase by the companies which are now targets–they simply declined to purchase them. Other IV patent portfolios were obtained because IV let it be known that were willing to buy patent portfolios that companies wanted to offload. IV offered a way to monetize patents that were collecting dust in a company’s portfolio. Again, the tech sector failed to provide an alternative purchaser.

Further, there are software and services which allow companies, individually or in collectives, to monitor potentially threatening patents and patent publications. Companies can challenge these patents by reexamination, or offer to license or purchase, patents they considered to be problematic. Again, by and large, they have not done so. The Kodak saga appears to be a case in point. When a patent troll is busily suing your competitors you might want to think about taking some proactive risk management steps.

In context, it’s hard to see the IV phenomenon as anything other than an epic failure in legal risk management. As in any other branch of law, companies pay a price when they fail to manage legal risk appropriately. (In fact, I think the real genius of IV is that Myhrvold and Detkin understood intuitively from their respective experiences at MS and Intel that broader tech sector would fail to mount a proactive response.)

I’m not sure that Congressional intervention is warranted, or even appropriate, in this context. Nor am I confident that Congress could craft a solution that would catch IV without destroying the revenue stream of universities and other “legitimate” research institutions.

As a final note, IV is no different in substance than the outbound licensing departments of most large tech companies. If IBM can rake in $1Billion/year from licensing, why shouldn’t IV have a shot at the prize?

–Name withheld for obvious reasons

Of course trolls exist. The problem is that tech America wants to define them as Universities and independent inventors, which is ridiculous. I personally see little trouble with most trolls though and get sick and tired of tech America complaining they are being held up. NO. THEY ARE INFRINGERS! Having said that, just like there is something terribly wrong about a company that uses its monopoly power to dominate a market and injure consumers, there is something wrong when that same thing happens at the direction of a holding company. But the intellectual dishonesty by tech America claiming that everyone that has the audacity to sue them for infringement is a troll must stop.

-Gene