Earlier this week, on Tuesday, February 16, 2010, TiVo, Inc. (NASDAQ: TIVO) was granted US Patent No. 7,665,111, titled Data storage management and scheduling system. This patent is indicative of what I suspect will become a growing problem in the years to come, which is a resurgence in so-called submarine patents. This patent matured from a patent application filed on October 20, 1999, which means it was pending at the United States Patent and Trademark Office for over 10 years. Amazingly, according to the Patent Office no patent term extension is owed. Exactly how can a patent remain pending for over 10 years and not be entitled to an extension in the term? I really don’t know to be perfectly honest, but it seems that this patent will apply to pretty much any and all DVRs currently on the market, so even if there is no patent term extension granted it could produce a choke-hold on the industry through October 20, 2019, which should create a tidy sum of royalty payments for TiVo, at least over the near term. Of course, it will also spark a rush to innovate around the TiVo patent, thereby causing innovation to march forward, much to the chagrin of anti-patent advocates who are already proclaiming this patent to be evidence that patents harm innovation. In any event, a patent that issues after 10+ years suggests problems, even if the intended march of innovation is encouraged, which will of course be the case.
The term “submarine patent” generally relates to a patent that has been pending an extremely long time and then pops up without notice, typically after the industry had long ago adopted the technology. This was famously exploited by Jerome Lemelson, widely regarded as a hero to independent inventors and entrepreneurs, and widely viewed as a villain by large corporations. According to Scientific American, Lemelson was “the unrivaled king of the submarine patent.” Submarine patents were thought to be a thing of the past since utility patent applications filed in the United States or or after November 29, 2000 are published, as a general rule, 18 months after the earliest filing date. Unfortunately for the industry, this TiVo patent was filed October 20, 1999, over 1 year before the change in US law. On top of that, it is still possible to opt out of publication if the applicant waives foreign filing rights. In the situation where protection is likely only available in the US waiving foreign filing rights can be worthwhile indeed, and does still happen.
Submarine patents are not ever likely going to be the problem that they once were prior to the publication of patent applications at 18 months and prior to the change in patent term. On June 8, 1995 the term for a US patent changed from 17 years from issuance to 20 years from filing. There is still an opportunity to obtain additional patent term, for example where the Patent Office interjects unnecessary delay into the process, but it is unrealistic to think that patents will remain pending unknown for decades, which was frequently possible and how Lemelson masterfully manipulated the system, within the rules of course. But the TiVo patent was pending for a decade, unknown and secret. That should not be able to happen and should justifiably cause an alarm to sound within the Patent Office, within Congress and within the high-tech, particularly the software, industry.
According to Public PAIR, the first time the Patent Office substantively reviewed the TiVo patent application was in June of 2004, issuing a non-final rejection on June 28, 2004, which was subsequently mailed on July 7, 2004. What this means is that for nearly 5 years the TiVo patent application remained dormant at the Patent Office, which should be unacceptable by any standards. Subsequent to this there were a string of final rejections, followed by the almost obligatory Request for Continued Examination, known simply as RCEs. Throughout the history of the pendency of the application there were numerous Information Disclosure Statements filed, which likely did nothing to speed the case up, that is for sure. Of course, if you do not have a pending patent application you don’t have to file an Information Disclosure Statement, so the longer the case goes on the more the applicant will learn, so it is hardly surprising to see multiple Information Disclosure Statements, particularly if TiVo knew, as they must have, that this patent could be revolutionary, at least in terms of industry adoption.
For a long time we have known that the US Patent Office has an almost hopeless backlog. I have been incredibly critical of previous administrations, and while the temptation will be for many outside the industry to throw stones at the Patent Office. I am, however, reminded of a time when I was a new, young, wet-behind-the-ears attorney in New Hampshire. I was sent to do a hearing in a case by a senior partner. Upon arriving and making my arguments the judge looked at me and asked “when did you get this file?” To which I responded “3pm yesterday afternoon.” The Judge then proceeded to turn to the court reporter and say “let the record reflect that what I am about to yell at Attorney Quinn is directed not at Attorney Quinn, but rather at Attorney…” In that same vein, let the record reflect that what I am about to say is not directed at the Kappos PTO Administration. The Kappos PTO Administration is doing the best they can given extremely difficult circumstances.
How can this happen? How can this be allowed to happen? This is not just a problem for the Bush era USPTO, but rather a problem for Congress who ostensibly is supposed to be watching over the government. Congress appropriates the budget and is supposed to exercise oversight, and by all accounts the USPTO is barely functional, has an IT infrastructure that is embarrassingly bad, doesn’t have the financial resources to do what they are required to do, is losing patent examiners at a rate of about 40 per month and, oh by the way, has a backlog of well over 1,000,000 patent applications. Can someone in Washington DC, preferably someone on Capitol Hill, step forward and try and fix this mess? PLEASE?!?!?!?
There is a theory I have heard by some that goes like this. Since US patent applications have been published the public is getting their end of the bargain (i.e., disclosure in a timely fashion) so there is no urgency to address in a responsible way the USPTO backlog. Those being hurt by the USPTO backlog are just independent inventors, entrepreneurs and small businesses. You know, the folks that actually innovate. But the public is not being harmed, and in fact is getting the benefit of disseminated patent applications earlier than ever, many of which will be abandoned without any exclusive rights ever attaching because the process takes so long; unnecessarily long. This is absurd!
The aforementioned theory proceeds to conclude that if and when submarine patents start to emerge that affect large businesses and consumers then perhaps Congress will start to get an earful and action will be forth coming. Of course, with early publication the thought that submarine patents would emerge seemed fanciful, or at least a long shot. Well, now we have a verifiable submarine patent, and one that seems likely to cause enormous havoc on the industry. This is good news for those who own stock in TiVo, and eventually will be good news as those in the industry scramble to innovate around the TiVo patent. So in the future look for more advances in DVR technology that make it unnecessary to pay TiVo royalties, which will cause the technology to leap forward and benefit consumers. In the meantime, however, allow me to notice that this is hardly an example of the patent system working properly.
Perhaps now those in DC will stand up and take notice, which would be a very good thing indeed. While this TiVo matter will pass, something needs to be done to help independent inventors, entrepreneurs and small businesses. You know, the ones overwhelmingly responsible for employing American workers. With extraordinary delays at the Patent Office no one wins, technologies get disclosed and never pursued; being abandoned along with the potential for new jobs and a growing economy. It is sickening how simple it would be for our leaders to spur the economy, and yet they continue to pursue failed policies after failed policies. For crying out loud, the engine that could lead us out of this mess is the US Patent Office and their own IT systems are so inferior it they are described as “embarrassing” by the Preside and by Director Kappos. Shame on everyone who has created this problem, and shame on everyone who stands in the way of the Patent Office fueling a great recovery.