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A Conversation with Gary Michelson About Patent Reform


Written by Gene Quinn
President & Founder of IPWatchdog, Inc.
Patent Attorney, Reg. No. 44,294
Zies, Widerman & Malek
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Posted: April 1, 2010 @ 4:41 pm
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Dr. Gary K. Michelson

Recently I had the opportunity to chat with Dr. Gary Michelson, an Orthopedic Surgeon and celebrated inventor who holds over 900 patents worldwide. Dr. Michelson acquired both fame and fortune as the result of his innovations, which were infringed by Medtronic, and who later settled with Dr. Michelson for $1.35 billion. As many readers know, Dr. Michelson recently sent a letter to Congress, specifically addressed to Senator Patrick Leahy (D-VT) and Congressman John Conyers (D-MI), who chair the Senate and House Committees responsible for moving forward with patent reform efforts. Specifically, Dr. Michelson supports S. 515 and wanted to make sure that the Congress heard from an actual inventor who greatly benefited from the US patent system.

In my conversation with Dr. Michelson he explained to me that while he benefited greatly from the patent system he would have benefited even more if the system worked better. At this point Dr. Michelson “does not have a dog in the fight,” as he explained, because with the exception of a few lingering applications his patent portfolio has been fully acquired and he stands to gain no additional revenues. Nevertheless, Dr. Michelson, the quintessential successful American inventor, would like to see the US patent system improve for the benefit of all independent inventors, the American economy and to promote real job growth. He has some excellent ideas, I agree with his positions on almost every front, and it is with his approval that I put my conversation with him on the record.

I spoke with Dr. Michelson via telephone on Saturday, March 20, 2010, and again earlier today. We initially spoke for about 75 minutes, and then for close to an hour today. It is apparent that he has a unique take on the US patent system, being one of the few individuals to use each and every aspect of the patent system. In fact, Dr. Michelson has been involved in ex parte reexaminations, inter partes reexaminations, numerous federal lawsuits and appeals to the Court of Appeals for the Federal Circuit. So not only is he one of the most successful inventors of all time, but he has seen the good, the bad and the ugly in the US patent system up close and personal.

Our conversation started out with Dr. Michelson explaining that he has high regard for the US Patent and Trademark Office, but recognizing that “when the PTO fails to do its job well, the cost to society is enormous.” This immediately led to discussion of finding prior art, to which he said to me “even if the Patent Office has the best of intentions it doesn’t have the resources it needs.” In his letter to Congress Dr. Michelson specifically supported letting the Patent Office set its own fees and to be able to “reasonably budget for capital expenditures” required to sufficiently fulfill its critical role with respect to innovation. We also spent time talking about how fee diversion is nothing more than a tax on innovation. How else could you characterize taking fees paid by inventors and corporations to fund non-USPTO, general budget items?

Inadequate resources for the USPTO, innovation tax by diversion and inadequate archiving of prior art (which I have been very critical of myself) led to Dr. Michelson explaining that “any large corporation, particularly those with a global sales force can turn the world upside down and shake it until the prior art falls out.” As everyone knows, there is a difference between a patentability search, and the search that goes on during litigation when it matters and millions, or billions of dollars are on the line. As we went down this path, I explained my belief that it is fundamentally unfair that prior art that couldn’t have been found in any real or rational sense can be used many years later to invalidate patent claims. I posed the question — how is it fair to let inventors and businesses rely on granted patents, invest substantial sums of money and form businesses based on patent rights, only to have those rights pulled after a no-stone-unturned search during litigation discovers prior art that was hardly known or findable in any real sense? Dr. Michelson seemed to agree, and what he was about to tell me would blow my socks off.

It is apparent that Dr. Michelson has given a lot of thought about how to reform the patent system, and his ideas will undoubtedly be viewed as radical by some, and brilliant by others. Count me in the brilliant column, but it is fair to say that I am a bit nervous about what he proposes. My fear is that Congress would pick some of his good ideas that would be viewed as minor tweaks to patent neophytes and leave the more extreme aspects undone. That could lead to disastrous consequences. Dr. Michelson agreed that “you are either in it or you are not, because there are some chasums that can only be leaped and not crossed in three small steps,” recognizing that his view of what patent prosecution could be is an all or nothing proposition.

As we started to discuss his view of patent prosecution reform he told me that it is his view that a patent is “a contract between public good and the inventor,” and that there are four separate constituencies to be considered, namely inventors, competitors, the patent system and the public good, all of which would benefit by reform. In his words, “what we have now is severely broken and it is only going to get worse.”

Starting with the big picture first, Dr. Michelson explained that in his opinion Nathan Myhrvold, of Intellectual Ventures, is not promoting innovation. He candidly said that “trolling is not in the public good.” There will undoubtedly be some reading this that will fly into an apoplectic fit, because it is a widely held misconception that Dr. Michelson was the ultimate patent troll. Those who hold this belief are simply factually incorrect. The truth is that Dr. Michelson never once initiated any of the numerous federal lawsuits to which he was a party, each of them starting as the result of the alleged infringer bringing a Declaratory Judgment Action seeking a ruling of invalidity and/or non-infringement. So believe what you will, but truth is that Dr. Michelson is not and never was a patent troll. He was just an extremely successful inventor who had his patents infringed by those who found it more expedient to try and break him than deal with him.

In any event, building off the aforementioned trolling comment, Dr. Michelson explained that it is his view that patents should not provide the right to deprive the public good by allowing the owner of the patent to do nothing with it. In fact, he said that “anyone who does want to use an unused patent should be allowed to do so for a reasonable royalty as long as they are adequately providing benefit to the public.” So Dr. Michelson would embrace a form of compulsory licensing, which no doubt would be music to the ears of big-tech corporations everywhere. The caveat being that the patent owner must have a reasonable period of time to either provide the benefit of the invention to the public himself or license it to another to do so instead. So it seems pretty clear that Dr. Michelson’s compulsory licensing ideas would strike at the heart of true patent trolls, but not impact in any way, shape or form those who invent to exploit themselves through manufacture or licensing.

While Dr. Michelson believes “trolling is outrageous,” his view on willful infringement will certainly not earn him any friends in big-tech America. He believes that infringement “should be considered willful unless the defendant shows that it wasn’t.” In fact, Dr. Michelson recognized the crux of one of the reasons why I have been so reluctant to throw patent trolls under the bus, at least in a blanket fashion. With respect to so many patent infringement concepts, and particularly with respect to determining willfulness, the focus so frequently seems to be on the rights of and negative impact on the tortfeasor. This has always rubbed me the wrong way. There are no doubt bad actors; those that troll, holding up innovation and advancement, but in focusing on the patent troll alone there is a de-emphasis on the actions of the tortfeasor who is infringing a right granted and valid. Dr. Michelson’s approach to willfulness and compulsory licensing strikes me as the proper balance between alleged tortfeasor and alleged patent troll. It would have maximal impact on “true” patent trolls, without negatively impacting independent inventors, businesses who are forwarding innovation or Universities. It would also maximally impact those that carelessly, recklessly or wantonly disregard rights of others on which they tread.

As far as prosecution of patent applications is concerned, Dr. Michelson advocates conversion from “an ex parte process to an open and transparent process.” Under the Michelson vision of patent prosecution patent applications would be immediately published. Within the first 60 days the patent examiner would not work on the file whatsoever, and any member of the public would be allowed during this “objection period” to “weigh in why claims should not be allowed.” Those objecting could submit whatever prior art they want, but it would have to be summarized and specifically explain where in the references there is support for a valid rejection and why it should be provided. The first page, which would be a road map or index of sorts could be submitted without charge. Subsequent pages could include reasoning why the references apply and detailed explanation on what rejections would be appropriate and why. These explanation pages would have a cost associated with them, perhaps a $250 per page charge. This “fee for service” model is something that continued to come up over and over in our conversation, and is something I have advocated for a long time myself.

“Applicants should have the right to purchase from the Patent Office as much, or as little, legal service as desired with examiners credited commensurate with the work they provide.” Of course, this fee for service model would not only extend to the applicant, but to objectors as well. “Prior art could be submitted for free, but payment must be made for reading every page, and for every dollar or portion thereof the examiner should get credit.”

Dr. Michelson’s proposal would also allow for changes in the claims to be made by the applicant for no cost before the 60th day, and every time claims are changed thereafter an additional fee would be assessed. If I were to make a friendly amendment I would suggest that the applicant not be allowed to amend the claims until after the close of the objection period. Then I would provide 3 months for the applicant to amend, thereby giving time to consider the prior art submitted along with the executive summaries and explanations. In true patent attorney fashion I would make the 3 months extendable to 6 months by further payment of extension fees. Dr. Michelson agreed that allowing for extensions is appropriate because it would allow those who want fast action to work quickly and diligently, while allowing those who need more time to slow things down and proceed more deliberately.

One thing that Dr. Michelson raised, and it was an excellent point, was how do you prevent an applicant from waiting for the objection period to be over and then making wholesale changes to the claims, rendering the objection submissions irrelevant? He answered his own question, obviously having thought about my suggestion, by saying anytime there is a broadening amendment or new claims that are broader than previously submitted, a new objection period would open. I like this idea myself because it would still allow for the addition of claims supported by the specification, but still giving the Patent Office the benefit of outside submissions.

According to Dr. Michelson, one of the key benefits of an objection period would be that it would allow the Patent Office to keep initial filing fees low, perhaps extremely low.  Because the first review is done by those in industry or otherwise interested, there is no need to have more than just a processing fee at the time of filing.  Then at the end of the objection period the applicant can decide whether it makes sense to move forward, or whether they should throw in the towel, thereby conserving resources for whatever invention might be next.  Dr. Michelson credits Louis Foreman, executive producer of Everyday Edisons and the publisher of Inventors Digest magazine, for bringing this home. Foreman is a big fan of giving inventors realistic information as early as possible so they can appropriately evaluate the business realities of moving forward, which is something I think makes a lot of sense.

While I have always thought Commerce Secretary Gary Locke’s 10 month goal for a complete prosecution was unrealistic, if something like Dr. Michelson’s plan were adopted it could actually become feasible, or close to being feasible. Of course, patent examiners would have to cooperate, which would mean that there would need to be further revision of the newly created count system, and some examiners may need to be retrained and reconditioned to actually grant patents. Truthfully, I wish I had been consulted on the count system because while it is an excellent attempt, more credit should be given to the first application, absolutely no credit given for the first RCE, and some, but less credit given for subsequent RCE filings. If you make an examiner work for free for the second RCE that would really give them incentive to dispose of the case by finding the best prior art without nuisance Actions on the Merits, or allow the patent.

I like much of Dr. Michelson’s plan because it has a ring of speak now or forever hold your peace, which would tremendously benefit the patent system. It would assist competitors by giving them the opportunity to challenge what they feel they must, and it would allow for even greater certainty and settling of rights. This plan could almost obliterate the need for reexamination and for most invalidity challenges during litigation. Another friendly amendment I would offer is to not allow reexamination or invalidity to be argued based on any piece of prior art that was available and could have been found during the objection period. That would certainly settle the rights (as Director Kappos has said he wants to do) and at the very least force challengers not to sit back and then do a no-stone-unturned search after millions of dollars have been invested by the patent owner. Speak now or forever hold your peace. I like it. Of course, if we really have a speak now or forever hold your peace objection period, or even speak now or sort of hold your peace objection period (by making it even more difficult to demonstrate invalidity later), the objection period might need to be longer than 60 days to give fair warning and time for consideration and action.

With respect to patent prosecution Dr. Michelson’s views are radical, extreme and brilliant, in my opinion. They are not constrained by any sense of doing things the way they are, or modifying what is already in place. I commented to him that his approach to the problem is that of an inventor, who sees a problem and seeks a solution, not constrained by known realities. Perhaps now is the time for a reinvention of the patent process and the patent laws. According to Dr. Michelson he would happily testify before Congress, and I suspect he could be persuaded to work with a committee to develop a better process. I know I would, and I suspect there are others who would as well.

So the ball is in Congress’ court now. Patent reform is pending, and while it could lead to efficiencies down the road and more funding for the USPTO immediately, I think it would be an enormous step forward for the legislation to authorize a top to bottom study of the US patent system in search of a better way to more directly rewards innovator and the public and settle rights so competitors have more certainty. Everyone wins, because like Dr. Michelson said “why would I want a claim that is invalid? That doesn’t help me. I want the broadest valid claim.”

Editorial Note: In order to keep this article of manageable length much of my discussion with Dr. Michelson is not reflected. I will be following up in the weeks to come with more from my discussion with Dr. Michelson.

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Posted in: Gene Quinn, Interviews & Conversations, IP News, IPWatchdog.com Articles, 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.

 

25 comments
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  1. Part of his suggestion sounded like the peer-to-patent project. I liked the peer-to-patent project and think that it should be picked up and expanded to all patents. The advantage that the peer-to-patent project also had was that the contributors worked for free. Donating their time to ensure that prior-art was found, giving the community and the applicant assurance that the patent was valid before investing heavily. All this at no cost to the patent office.

    I still feel that this only address one of the problems though, it does not address the non-obvious portion. I think some sort of blind study would help address that. Give some set of skilled people the problem that the patent is attempting to solve and a time frame and see if they could quickly outline the solution that presented in the patent. Much like the peer-to-patent process the experts would probably donate their time to ensure that obvious patents weren’t accepted.

  2. “Much like the peer-to-patent process the experts would probably donate their time to ensure that obvious patents weren’t accepted.”

    A model that relies upon people donating their time for free is ultimately doomed to fail.

    Like it or not, much of what gets done in this world is based upon acquiring the coin of the realm.

  3. Just & sburch-

    I tend to agree that if you want something done there needs to be some financial motive. There just isn’t enough time to do everything you want to do, and finances what they are you need to devote a healthy chunk to what pays the bills. Not that it wouldn’t happen, but we will get much less activity if it is donated. That is why I like the “speak now or forever hold your peace” aspects of what Dr. Michelson proposes. If it matters to a company then they should step to the plate sooner rather than later. That way hundreds of thousands, millions or even billions are not invested by the patentee only to have the right torn away years later as a result of no-stone-unturned searches when something finally matters.

    It really didn’t fit into the article, at least this one, but Dr. Michelson also talked about working to set up some kind of a sponsorship system whereby researchers and academics who have an interest could at least have the submission fees covered by industry. That way if they want to donate their time, for whatever reason, they wouldn’t have to come up with the fees. That type of system could work nicely perhaps with what Article One Partners has going on and needs more discussion and development.

    -Gene

  4. Just and Gene

    Normally I would agree that people wouldn’t work for free, but I don’t think it applies in this case. Think of Wikipedia. When people really care about a subject, they tend to want to see that subject well represented. Patentable subject matter usually involves areas that people have strong attachments to. Many scientist and engineers spend their free time working on projects in their area and many scientist and engineers have strong feelings about patents. I think people would devote some of their time to ensure that patents in their field were only granted to deserving applicants. Also, it seems that the peer-to-patent process had ample participation.

    But if people wouldn’t work for free, then the patent office should pay people to do it. I agree with Mr. Michelson that the cost of bad patents is enormous. He seemed to focus on the cost to the patent owner who has his patent invalidated, but there is also the cost to the people who couldn’t invent new products because a bad patent was covering their idea. If the government is going to grant a monopoly over an idea, they need to make sure that they do it right.

    Stephen

  5. I like the idea of being able to depend more on an issued patent being valid, but parts of this sound like a huge financial burden on all research organization. Wouldn’t this require every inventor in the field to do their own litigation-quality prior art search on every patent application filed, just to protect themselves in case the patent issued? That seems like a massive duplication of effort and resources being drained away from prosecuting your own patents to doing your own complete, defensive patent examinations of everybody else’s application. I can see a whole new industry in performing pre-emptive patent application prior art searches and selling the same prior art search report to everybody, just so there will be somebody to blame (read “hold liable”) in case a patent issues which could have been invalidated if the right piece of prior art had been turned up earlier.

    Mike

  6. Gene and esteemed readers,

    I note with some irony that the topics covered here have been covered in quite some detail (and quite some misdirection) at the other blog.

    Those discussion included “the big picture first” of whether Dr. Michelson should be separated from the definition of a “troll” or not. I am not compelled to distinguish Dr. Michelson from trolls so readily, and in doing so, I mean absolutely no disparagement to the good doctor. To me, attempting such distinguishing only serves to play into the hands of those who wish to demonize certain groups whose patent practice while completely legal and fully ethical, is held in disdain.

    There are certain benefits of “trolls” that often go overlooked. “Trolls” can serve to make sure that inventors are recompensed (as when entities buy up patents that no one seems to want). “Trolls” can also serve as patent thicket busters (where large entities have amassed a “nuclear-deterrent” stockpile that they can unleash on small inventors to bully, but such Armageddon tactics will not work on an NPE).

    “Trollish” behavior has also been associated with universities and other entities that simply choose not to practice.

    Underlying all of this demonization lies an agenda to discredit a very basic concept of what the patent bargain is.

    That patent bargain has been under attack from within and from without for some time. One aspect of the attack has been the very real change in the Quid Pro Quo. This has been discussed in some depth at http://www.patentlyo.com/patent/2010/03/federal-courts-closely-scrutinizing-and-slashing-patent-damage-awards.html

    Also at that lengthy thread, a battle has been waged as to the very essence of what the patent right is (and what it is not). Losing sight that the patent right is a “negative right” is a critical mistake. The patent right is not a right to actively “do” anything. It is a “keep-out” right, an exclusionary right. It is not a right to practice anything. There is no basis in the patent right for such practicing bias, and introducing that practicing bias corrupts the Quid Pro Quo.

    Combining the actual right at hand and what the Quid Pro Quo is meant to be shines a very penetrating light on the philosophy as shared by Dr. Michelson:
    his view that patents should not provide a right to deprive the public good by allowing the owner of the patent to do nothing with it.

    First and foremost, the patent act does not distinguish the patent right based on who holds the patent right, nor what that person does with that patent right. Second, the Quid Pro Quo has ALREADY BEEN SATISFIED at the point the patent has been granted and demanding more after grant –demanding that “something” must be done during the patent term is clearly outside the scope of the law and lacks any foundation in the Constitution.

    Two other relatively minor points:

    1) concerning “how do you prevent an applicant from waiting for the objection period to be over and then make wholesale changes to the claims” Currently, within certain parameters (revised oath), the ability to make large scale and critical changes in claims is a right of the applicant and changing this would require a substantive change in law. The current reign on anything untoward with this ability is the fact that an applicant cannot introduce new matter. This is all the law requires, and is a fully functional limitation – even more powerful with the recent Ariad decision. This ability to change claims is one reason why examination requires that the entire specification and claims be examined. To raise the issue of a broadening amendment (as broadening is not the only avenue of change that can ensue) is simply a red herring.

    2) concerning “friendly amendment…to not allow reexamination or invalidity to be argued based on any piece of prior art that was available and could have been found during the objection period” is a ridiculous attempt at circumventing the extensive search paradigm. There is a reason why such extensive searches are constrained to litigation, where the impact has a real world effect. The actual rate of the hundreds of thousands of patents that actually see litigation make the timing of such costs a rather efficient outlay. To constrain such efforts to the time frame of “could have been found” would force that spending to occur at a level and time that in essence forecloses such close scrutiny. It would be more intellectually honest to simply cap the time/money allowed to be spent on such a discovery action (but we all know what issues that action would call to mind, don’t we?).

  7. “In his letter to Congress Dr. Michelson specifically supported letting the Patent Office set its own fees”

    My experience has been different from Michelson. I as well have experienced all phases of the patent system and likely more personally involved than him. I and many other inventors do not trust the PTO. It has become far too cozy with big business who have been responsible for the backlog at the PTO.

    As to trolls, they are not an issue. Call it what you will…patent hoarder, patent troll, non-practicing entity, etc. It all means one thing: “we’re using your invention and we’re not going to pay”.

    Patent reform is a fraud on America. It is patently un-American.

  8. Noise-

    All good points you raise.

    First, with respect to trolls, the trouble is there is no accepted definition. I have written about this many times. Big tech America would like the definition to be non-practicing entity, which is absurd because that includes Universities, research and development companies and independent inventors or corporations who innovate and license. I think the better troll definition is one who seeks to prevent commercialization of an invention and holds industry hostage for extortion-like payments. That would take virtually everyone but the bad actors off the troll list because most want others to use their invention. They just want to be paid for it. With respect to Myhrvold, I don’t know for sure but it seems that many fear that he is the super troll. It seems no one really believes he is building a defensive portfolio. Time will tell, of course.

    Next, I agree the patent laws do not distinguish rights based on who owns them, and some of what Dr. Michelson would like to see happen would most certainly require legislative reform. In my discussions with him I can tell you that his overriding concern is to make sure that the public derives benefit from innovation, which I do believe is what the Constitution wanted. That is where he comes by wanting something different than a troll system that holds up innovation. You can disagree with him for sure, but I think what he says makes a lot of sense and at least should be the focus of discussion and consideration. It would seem possible to come up with a set of rules that strikes at the heart of the bad actors, while not harming those who are actually engaging in commercial activity, as well as those who engage in basic research and development.

    In terms of preventing wholesale changes to the claims after an objection period, there is nothing wrong with doing that and it could still happen. The goal of the system that Dr. Michelson proposes is to come up with a process whereby those who care enough about the invention can submit information to the Patent Office, thereby reducing the need for the Patent Office to do a ton of research on their own. I think it makes a lot of sense, particularly if coupled with submission of the who, what, where, why and how explanation. Of course, it only makes sense if the examiner gets paid for considering and reading everything. If you want to dump on the USPTO then be prepared to write a very big check. Having said this, the point here is to prevent gaming of the system. I hate gaming, as you know, when it happens by the Office or by applicants or by defendants. So if you are going to make changes fine, go for it. Actually Dr. Michelson says that should definitely be allowed. Some have accused him in the past of making changes to claims, and there is nothing wrong with that as long as there is support in the specification. As we talked, I am the one who suggested no changes to claims. He didn’t like that, and upon reflection neither do I. But to prevent crappy claims that get changed only after the objection period, if you make broadening changes or claim stuff not previously claimed then a new objection period opens. In likelihood what you would do is file a continuation, broaden or add new claims and a new objection period arises.

    Sorry you think the constraints on searching seem ridiculous. I know you realize they are not ridiculous though, so I won’t hold that against you. I am sick and tired of inventors spending hundreds of thousands, which get spent even on the commercialization of a kitchen gadget, or millions or billions of dollars only to lose all that investment when the search for the holy grail uncovers prior art. Something needs to change. That is a ridiculous misapplication of resources and a change must be made, particularly as long as the Federal Circuit is going to overturn 30% or more of claim constructions. Certainty is needed in order to attract investment. If you don’t like this then come up with a proposal. The status quo isn’t working. We pretend that patents are presumed valid based on a US patent search. With KSR and so many other assaults rights that people spend crazy amounts to get and commercialize are increasingly empires built on shifting sand. That is not good for the economy, it is not good for innovation and it is not good for the patent system. Something needs to be done.

    -Gene

  9. Michael-

    I understand what you are saying, and maybe that would be the result, I don’t know. Dr. Michelson seems very interested in engaging in debate, and I don’t get the sense that he is taking the position that this is how it must be. You raise a very good point.

    Do you have any suggestions? How could the law provide more certainty without creating the need for competitors to do a litigation-quality prior art search?

    One thing I have been talking about with many, although I didn’t raise this with Dr. Michelson, is to have a sliding scale presumption if you will. After 5 years you can file for incontestible status for your federal trademark. At that point the trademark can still be challenged, but the number of possible challenges to the trademark itself are much fewer after incontestible status is reaches. When you are applying for a trademark there is an opposition proceeding, and after the trademark issues there is a cancellation proceeding. Along the way it is increasingly more difficult to challenge the trademark itself for having issued inappropriately. What if we were to do something like that with patents?

    I haven’t written much (if anything) about this because I am still in the thinking/formulation stages. I have been talking with a number of folks who seem to like the idea, so I guess now maybe it is ready for more of a release. What do you think? What does everyone think about this? Could this be a way to provide ever increasing levels of certainty? This is what I had in mind when I was writing about “sort of” a speak now or forever hold your peace approach above.

    -Gene

  10. I agree with Dr. Michelson’s proposal. Immediate publication and public review is what is needed. I think a combination of the free Peer-to-Patent approach and the fee-based approach would be possible. Those who are willing to sign up for Peer-to-Patent and be subject to voting on the “top 10″ pieces of prior art could do so. But if their favorite reference did not make it into the “top 10″ then they could pay a fee to have it considered too. For those who object to immediate publication, the provisional option already provides a solution to that concern. Lastly, I like the compulsory licensing requirement on those who choose to “sit on” a patent. That not only addresses the problem with trolls, but also with monopolists who use patent rights to retard innovation by preventing improvements to their products (by themselves to avoid the cost of the improvement or by others to avoid competitive pressure on their monopoly pricing) from seeing the light of day.

  11. Dr. Michelson would like to see happen would most certainly require legislative reform. In my discussions with him I can tell you that his overriding concern is to make sure that the public derives benefit from innovation, which I do believe is what the Constitution wanted.

    Amazing in just three short lines you have waived away a discussion on the very fundamental aspects of what a patent is (and is not) and what the Constitution outlines as the basic patent right, as well as ignore the fact that the public already has derived the benefit from innovation at the time of patent grant without requiring more. As is put on the Trainwreck, the “quo” is already grabbed early with publication prior to grant, now the aim is to amplify what that “quo” is with some type of post grant activity. I have provided examples of the derived benefits. Let’s be clear that what is being talked about is wanting more for less. Radically more.

    Sorry, but such philosophy runs counter to more than 200 years of stare decisis and understanding of what the Constitutional grant entails.

    I am not sure that even legislative reform can change the essence of the patent right from a “negative” right to a “positive” right, wherein after the quid pro quo is satisfied and the patent is granted that more is required by some affirmative action of the patent holder. This is a distinctive diconnect between the patent philosophy of the US and other foreign patent philosophies (I believe it was Ned Heller that captured well this critical distinction on the aforementioned thread), that is reflective of this position.

  12. Noise
    I disagree. The Constitution gives Congress the power to determine how to secure the rights. And it gives Congress this right to promote progress. If patent “trolls” are not promoting progress, Congress has the power to change patent law to ensure that patents are promoting progress. Not to mention that courts are not very eager to overturn Congress’ decisions. And the idea of a negative right is not new in the IP arena either, unused trademark’s must be enforced or lost.

    While I believe that there is legitimate discussion to be had as to whether or not sitting on a patent promotes innovation or not, Congress most certainly has the power to change how the patent system works. (I think they would have a harder time if they tried to apply their changes to already granted patents, however).

    Stephen

  13. Stephen,

    You jump to an unwarranted conclusion. Refresh yourself on what exactly is in the statute regarding the patent right.

    If patent “trolls” are not promoting progress” is a completely meaningless statement. It simply does not matter who owns the patent right, as once a patent has been granted, the promotion has been effected. The Quo has been had. The Quid given. Deal done. The Quid Pro Quo has already been achieved – there is no more promoting to be legally done.

    Demanding more post grant simply has no legal basis. If you think there is a legal basis, please provide it.

    It is not clear with what you are actually diagreeing with. Are you suggesting that such an action by Congress would not be a radical departure, as I have indicated?

  14. Noise,

    Gene stated that the changes would require legislative reform. to which you replied “Amazing in just three short lines you have waived away a discussion on the very fundamental aspects of what a patent is (and is not) and what the Constitution outlines as the basic patent right”

    I disagree with this statement. I outlined what the Constitution says about patents. The power lays with Congress and they have the power to demand that patents be used or discarded. Would they have a problem with the courts if they demanded that patents granted before the legislative change be used or discarded? Maybe. But if congress makes use of an idea a condition to granting the patent, there is no “quid pro quo” problem to patents granted after the change. The legal basis will be the law that Congress creates if they follow Mr. Michelson’s advise.

    “If patent “trolls” are not promoting progress” is not a meaningless statement, it is a judgment call. One that Congress can make considering that the Constitution gives them the power to grant patents for the purpose of “promoting progress”. If Congress decides a certain type of patent holder is not promoting progress, then Congress can make changes to the patenting process to ensure that future patents do promote progress.

    Stephen

  15. Stephen,

    It is a meaningless statement given the entire existence of the US patent system, the definition of the patent right and the established expectations of the patent community (Hmm, I seem to have heard that phrase bandied about with “state decises” by the courts, including the Supreme Court, who does get to decide what the Constitution means). As such, it would be indeed a radical change.

    It is also meaningless, because the quid pro quo will have been completed and there would be no basis for such post grant behavior. You are trying to graft some type of new legal instrument that has the patent right, but only if some future substantive action is taken on the part of the patent holder, after the right is obtained, and dependent on factors not material to obtaining that right in the first place. You are trying to negate the personal property transferability of the patent right, or at a minimum set some post-transfer condition to a right that is independent of such condition.

    If Congress decides a certain type of patent holder is not promoting progress” is precisely the problem you have, because promoting progress has been completed (you keep on missing this fact, relying on Congress somehow whimsically redefining promotion – note also that the Consitution did not give Congress the ability to define, or rather, to redefine “promotion” – such toying with the mandate is NOT a congressional right), and “promotion” is simply not dependent on who has the already given patent right, nor on what they do with the right once that right is in their possession. You are trying to legislate a requirement AFTER grant of a right based on some new requirement in order to receive the grant. You need to pay attention to the causality chain.

    You also need to understand the very basic essence of the Quid Pro Quo. The inventor gets the patent rights (the quid) for sharing his invention (as determined by the law saying whatqualifies as an invention) in the manner proscribed by law (in order to teach – the quo). THAT’S IT. Once that happens, the inventor can treat his property right ANY WAY HE CHOOSES, including selling it to any one he wants. You are attempting to change the very essence of the patent system, the patent right, and the CONSTITUTIONAL allocation of that right to the inventor based on some downstream qualification that has absolutely nothing to do with the Quid Pro Quo, with obtaining that right in the first place. You are conflating an ability to determine what deserves a patent with who gets to do what with the patent right after the patent is granted.

    As I discussed on the Trainwreck, such ultra vires action violates at least the Due Process Constitutional rights of the later property owners. Separate classifications cannot be arbitrarily made up that are separate from the conditions of obtaining that right. You need to note that inventors alone can obtain that right. What inventors do once they have that right is simply outside the scope of obtaining that right. Once the patent grant is given, that’s it – done deal – you cannot attach such future strings, as the quo and the quid has been exchanged and the deal complete. You are wanting more quo after quid, independent of the quid, but dependent on some new undefined permissible use level. You cannot have such “taking”. And you definitely cannot base such ‘taking” on classifications that are arbitrarily based on factors outside of the Constitutional mandate. Your cite to the Constitution fails on a legal basis of post grant requirement.

  16. Noise

    There are already post grant requirements. The patent holder must pay maintenance fees and even then the patent will expire at some point in the future. Their rights to the invention will then be terminated. That number of years is determined by Congress and could be extended (has in the past) or contracted. Why? Because Congress has the power to determine how best to promote progress in their issuing of patents and other intellectual property. As such, they can add requirements to the issuing as long as they are related to promoting progress.

    Also, as I said in the last post, other intellectual property has the some type of post granting requirements. Trademarks must be protected from dilution or they are no longer enforceable. I do believe that Congress would have to be very clear and non-arbitrary as to how they define non-use, but Congress is the branch that determines the law for patents.

    The court arguments also don’t seem to be very persuasive. Congress has express authority as to how they issue patents. I seriously doubt that the Supreme Court would rule that adding requirements to the granting of a patent exceeds that authority. Look at the deference the court gives Congress with regards to the Interstate Commerce Clause.

    Stephen

  17. Stephen,

    Maintenance payments are not “substantive” post grant requirements. They are not a requirement for obtaining a grant. HUGE difference. I will grant you partial credit for the fact that small entities do receive a discount, but that is a class distinction recognized by the law (the NPE -PE distinction on the other hand is EXPRESSLY not a distinction – I point this out on the Trainwreck)

    Expiration is a non-sequitur. “Limited times” has never been at issue.

    Adding requirements to issuing speaks to before the patent grant issues. What you alluded to above is an after grant requirement – you need better examples for what you are trying to suggest.

  18. Maybe the compulsory licensing part is not such a good idea after all. But in that case, I would argue for antitrust reform to address the potential abuses of the patent system.

  19. Both of the proposed objection period and the switch to compulsory licensing seem unconstitutional to me. But what do I know. I’m not a billionaire or an inventor.

    The objection period runs contrary to the whole intention of a patent system. It would be punishing independent inventors (“micro-entities”) for not having the resources of huge multinational corporations, who often have full-time staffed IP departments that closely examine the competition’s work. It’s a nice step toward oligarchy, which is exactly what the patent system is supposed to PREVENT. Now if a cut of that $250 per page went to the inventor and the rest to the PTO, maybe you have something there. You want to challenge someone’s application, then you pay them (at least a portion of) their application fees back. Else leave it up to PTO to do what they were created to do.

    Compulsory licensing is a bad idea because the benefit to the public is in the publication of the patent with a full, enabling disclosure. 20 years later everyone has unrestricted rights to make or use the invention, and a description of how to do so is public domain. Nothing else is owed to the public. Start tossing in compulsory licensing and you just add more incentive to move societally backwards to trade secrets.

    If I invent a better widget and have to temporarily abandon widget production for, let’s say religious reasons, such as to make the Islamic Haj, why should I be punished for “not providing the benefit of the invention to the public” during that time? Or let’s say I invent a new composition of matter, and patent it, then immediately start working on a new device that could only have been made using that composition. Why should I be required to license that composition to my competitors and allow them to beat me to the patent office for the device which was only possible as a result of my work in the first place? It discourages some inventors from seeking patents when they could just as easily keep their inventions a secret and not have to give it away (except after 20 years of exclusive, enforceable rights).

    I do quite like the concept of pay for service though. I think the examiners might be given credit for each prior art document submitted by applicants after X # of documents, or for each additional page of claims after Y pages that they have to examine on the merits – paid for as additional fees. Then the trick is setting the bar for X and Y fees.

  20. Chris-

    First, you say: “Why should I be required to license that composition to my competitors and allow them to beat me to the patent office…”

    Where exactly do you think you saw this suggestion in the article? Just curious. It is not anywhere in the article, so I am guessing you are projecting a bit or read this somewhere else and somehow are attributing them to Dr. Michelson.

    Second, how would an objection period as described punish inventors? You reach that conclusion without supporting your thought process. Are you trying to say that independent inventors wouldn’t be able to challenge applications of others the same way that a corporation could challenge the application of an independent inventor? How or why you think the inventor should be paid for submitting an application is curious. That would clearly give inventors incentive to file patent applications on crap for the purpose of deriving revenue from the challenge. That just doesn’t make a lot of sense to me. What this process is supposed to do is make it better for the independent inventor, micro-entity and all others. Why would you want to spend many thousands of dollars to get a patent when there is prior art out there that would render the claims invalid? So actually an objection period would allow independent inventors and micro-entities to preserve funds and abandon an application if there is good prior art found. If there isn’t, then they should feel emboldened and so should investors. Seems like a win-win situation to me, and good for independent inventors and all others with limited budgets.

    With respect to compulsory licensing you suggest that patents that are valid and enforceable, but not being used by anyone, should not be subject to compulsory licensing because that would force inventors not to see patents but hold on to trade secrets. I don’t see how you can come to that conclusion and would love for you to explain that a bit more. If the patent is not being used then why would the fact that it has to be licensed and thereby provide revenue to the inventor force reliance on trade secrets?

    -Gene

  21. Gene,

    Whether or not the patent “is being used” is purely secondary to the Quid Pro Quo. We should all be very clear that the Promotion sought is achieved at (actually before – in most cases of early publication) the time of patent grant. We also must clearly keep in mind that since the right of a patent grant is purely a negative right, that is, a “keep out”, there is no right to positively do anything. The nature of this right dictates that there is a parallel lack of a requirement to do anything after patent grant. We are clearly talking about additional quo being demanded here.

    But for arguments sake, I think I understand what Chris is saying and I will try to rephrase it for you. Let’s say that the invention in our little hypothetical is a material. The material has a utility associated with it, but the inventor has bigger plans (there is a bigger and better utility under development). The savvy inventor realizes that his invented material has lots of potential and that the inventor fully wishes to optimize several courses of action, but can only do so much at a given time. He also realizes that if others use his invention, subsequent inventions and market development will leave his control. The patent grant gives him the control for him to decide when, to whom, and under what conditions he may want to license his invention. If at all.

    Now with the long traditional patent Quid Pro Quo, his publication can “promote” by enabling others to try to invent around his “keep out” space. Forcing compulsory licensing destroys this aspect of promotion.

    Forcing compulsory licensing also destroys the freedom to contract. The power to walk away from a deal is an integral part of the nature of business. The so-called “ransom effect” is a cry from losers (mind you that I am distinguishing the interplay with Standards bodies – but that interplay should fall under unfair trade practices or simply better management of the Standard setting practice and is only tangentally part of the patent discussion). Remove the power to say “no”, and the power you have is an illusion. It is an open invitation for the rich to get richer. It invites those with resources to cherry pick the inventive aspects of others without the risks of development – this also retards promotion, as those with plentiful cash can sit on the sidelines, wait for others to do the risky development work and then march in with a complusory license and take the fruit, rather than forcing adaptation or separate design around activity.

    Forcing compulsory licensing also impacts the inventors other development schedules and removes from him the control of product development. If others can use his invention, without the terms that the inventor would want in place, the unfolding of the market can negatively impact the inventor. Now I am aware that market forces exist outside the inventor may impact regardless, but the incentive of exclusivity, the constitutional centerpiece of the quid is being severly weakened.

    Can you explain why anyone would want to weaken the US patent system by demanding more quo and at the same time giving less quid?

    When people close their eyes to the promotion already present, to the nature of the historical Quid Pro Quo, and demand more for less, and wrap this action in the guise of making things better, your first instinct should be to make sure that you still have your wallet.

  22. It is no accident that “closing their eyes to the promotion already present” and ignoring “the nature of the historical Quid Pro Quo” are favorite tactics of the anti-patent crowd.

  23. Gene,

    You’re taking a piece of a quotation without addressing the rest of the hypothetical situation. “You are either in it or you are not.” :) Obviously Dr. Michelson didn’t address my specific, made-up hypothetical situation.

    “Are you trying to say that independent inventors wouldn’t be able to challenge applications of others the same way that a corporation could challenge the application of an independent inventor?”

    Bingo. An inventor working in rented lab space at a university cannot compete with the resources of a Microsoft or a GE who literally spend tens of millions of dollars every year on their IP portfolios. The proverbial “little guy” has no time or money to try to challenge patents whereas the companies that literally have thousands of applications pending can (and do) devote people full-time to looking at what their potential competitors are filing. It’s pretty clearly an oligarchical shift.

    I completely understand your main point about crap applications. I would be a lot more worried about crap challenges to inventive applications. (There are plenty of crap applications now, according to the blogs). I never said that applicants should get to keep more than their PTO fees if there is a lengthy challenge. But you’re missing the key point: If the application was blatantly obvious to begin with, then why bother to file an opposition at all? Why not just let the PTO do what it was created to do? Further, if the invention was obvious, why would you need more than a few pages of arguments to explain the relevance of the documents to the invention, and bring the art to the attention of the examiner?

    Let’s make up some numbers to illustrate why I think the applicants might get some cash back. Applicant A files a crap application, knowing it’s crap, and X Corporation challenges it with 2 pages of arguments. A gets, say, $50 of their application fees back, funded by the $250/page, and no patent. How did A benefit? A just paid PTO pre-application fees to get back $50 and make X file some paperwork and spend $500.

    Applicant B has something truly innovative in his application. Y Corporation sees that B’s technology could really challenge Y if it goes to market with patent protection. Y files one thousand pages of highly technical arguments as to why B’s invention is not patentable. B gets their entire application and PTO prosecution fees back, funded by the $250/page challenge fees, and a patent issues (eventually). How does the cash back hurt Y corporation or the public? B (and the public) is hurt by a massive amount of frivolous paperwork that will take the PTO at least weeks to review properly (let’s assume they would review it properly), delaying prosecution. The money back is a partial compensation for the crap challenge brought by Y Corp that delayed B’s patent from issuing.

    “With respect to compulsory licensing you suggest that patents that are valid and enforceable, but not being used by anyone, should not be subject to compulsory licensing because that would force inventors not to see patents but hold on to trade secrets.”

    I will restate my position as simple economics, and first ask a simple economics question: When PTO raises its application fees, will that cause patent filings to increase or to decrease or to stay the same? (I’m talking about the pure influence of fees here, not overall state of the economy or other factors). It doesn’t take a rocket surgeon to figure out that fillings would decrease. Start raising the burdens of filing and/or maintaining a patent, and people will be less inclined to file them, and more inclined to keep their work secret-especially if they can later be forced to choose between licensing the patented invention to someone else or allowing patent rights to expire.

    The benefit of a patent to the public (including competitors) is an enabling disclosure with a description of how to use and make the invention, published in a document that is public domain. The benefit to the patent holder is exclusive enforceable rights that expire at a certain time. Shift the exchange toward the patent holder and more patents will be filed. Shift the exchange toward the public (including competitors) and less patents will be filed. It’s as simple as that. Less patents means more secrets – that’s one reason why we have a patent system in the first place. Take away patent holder’s rights and you’re taking away rights described in the Constitution itself – not even the Bill of rights, but right there in Article I.

    I think Dr. Michelson’s idea of paying by service in general is a winner, but the compulsory licensing and challenge period are better in theory than what the reality would be. God help us if Congress tries to understand, much less implement, an open challenge period.

    But what do I know? I enjoy your blog, Gene. Keep up the good work!

  24. I am heartened that some people “get it” when it comes to a basic understanding of the patent system and the Quid Pro Quo.

    See also Kevin Noonan at http://www.patentdocs.org/2010/04/amp-v-uspto-what-everyone-else-is-saying.html#comments where his comments echo my own.

  25. I like the idea that a patent should be published as soon as it is received by the Patent Office and that a public review period should immediately commence, with all submissions received also being public (and archived with the patent). However the 60 days suggested would in reality only be of use to patent professionals who actively monitor patent applications. So as to permit contributions from real world subject matter experts – who may only become aware of a patent through media interest in a potential court case, I would suggest that a more suitable initial public consultation period would be one year, with the option for the review period to be re-opened at any time (by the Patent Office) if significant new ‘prior art’ – from anywhere in the world is presented (this is similar to the re-opening of criminal cases).

    As you can see from the above, I do not see any real public benefit in the ‘speak now or forever hold your peace’ doctrine. That doctrine only really benefits the patent application gamblers and does nothing to ensure the quality and validity of patents. Also it has the potential to lower the costs to a patent holder, as if new prior-art is revealed by a suspected patent infringer, you haven’t had to go to court to discover it…

    I think great care also needs to be exercised in setting the obstacles to objection, specifically: time limits, level of preparation needed and cost of actual submission to the Patent Office, otherwise objectors will continue to boycott and ridicule the system. [Aside: Although there might be an opportunity here for a discussion forum which then formally submits fully prepared objections.]

    Interesting one important area wasn’t touched on, but then that might be because of the nature of Dr. Michelson’s inventions and hence experience, was evidencing a patent application to show that it was for an invention that had been built. A simple way to do this is to have a patent attorney certify that they have actually ‘touched’ the invention as part of the application process, with the patent examiner also similarly certifying when finally awarding patent. I suspect that if evidencing was enforced today, many software/computer system patent applications would be revealed as being for ideas …