The story of the bullied patent owner, more widespread than bad acting patent trolls

By Gene Quinn
November 30, 2015

anger-bullyAll too frequently we hear about how large corporations are held up and completely helpless due to bullying at the hands of much smaller patent owners, or even individuals. On its face the narrative about how giant multinational corporations are helpless makes little sense, but that fairy tale has dominated the public debate on patent reform for years.

Those in the industry are well aware that there are a handful of bad actors on the patent owner side, but it is equally well known that there is real and substantial abuse and bullying perpetrated by large companies against smaller companies, including patent owners. The story of the bullied patent owner, which is far more widespread than any bad acting patent troll, is simply never told. The failure to tell the story of abuse perpetrated by larger corporations is for a variety of reasons, and the lack of reporting does unfortunately lend credence to the mythology that large companies only operate like Saints and patent owners only operate as Sinners. Of course, as is generally the case the truth lies somewhere in between.

One of the more egregious types of abuse suffered by small companies and individuals is the outright stealing of technology. In many circumstances smaller companies and individuals view a potential partnership or licensing opportunity with a larger entity as a blessing, when in fact it is frequently a curse. Even if you protect yourself with a Non-Disclosure Agreement (NDA), what is really stopping the larger, better funded corporation from simply taking what you lay out for inspection? Even if you do sue you will have to prove that they stole it, weren’t already working on the same thing, and they are bigger anyway so they have the resources necessary to prevail in what usually becomes a protracted legal battle. In short, innovators get bullied and no one seems to care.

Recently one innovator said enough is enough and is standing up to a larger corporation that signed an NDA and then had the audacity to take the technical information provided and use it in their own later filed patent application on the same innovation. Brazen yes, unheard of no.

On October 23, 2015, Separation Design Group IP Holdings, LLC, a wholly owned subsidiary of Separation Design Group, filed a patent infringement lawsuit against Inogen, Inc. (NASDAQ: INGN), alleging that claims of U.S. Patent No. 8,894,751 are being infringed. This is not your ordinary patent infringement lawsuit. In addition to alleging patent infringement the complaint, which was filed in the Central District of California, also alleges trade secret misappropriation and breach of contract.

This case clearly demonstrates the type of abuse faced by innovators at the hands of large corporate infringers.

First, lets dispense with what will undoubtedly be one frivolous and wholly inaccurate assertion by those who won’t want to believe that large corporations are actually capable of engaging in abusive behavior.

Separation Design Group IP Holdings is not a patent troll, period. Frankly, it isn’t even accurate to characterize them as a non-practicing entity. The patent owner here is a corporation created to hold the intellectual property of Separation Design Group, which is an independent research and product development firm located in Waynesburg, Pennsylvania. Separation Design operates a 57,000 square foot facility that houses its office and laboratories for research, development, analytics, prototyping, testing, fabrication, assembly and production. Furthermore, Separation Design Group won an SBIR Small Business Award “the critical role they play in research and development for the government and for their success in driving innovation and creating new jobs.” Therefore, what we have here is an innovator with a real, tangible business suing a much larger corporation who appears to have stolen the innovation in question despite having signed a Non-Disclosure Agreement.

The patent in question, the ‘751 patent, has a priority filing date all the way back to two provisional patent application filings, one on October 5, 2009 (Serial No. 61/248,712) and another on November 24, 2009 (Serial No. 61/264,069). The patent issued on November 25, 2014, and covers lightweight, portable oxygen concentrators that operate using an ultra rapid absorption cycle based on advanced molecular sieve materials. Inogen is a medical technology company that develops and manufactures portable oxygen concentrators for patients suffering from chronic respiratory conditions.

In August 2010, Separation Design Group approached Inogen regarding its related portable oxygen concentrator technology. On September 21, 2010, Separation Design Group and Inogen entered into a Mutual Non-Disclosure Agreement (“Mutual NDA”) to explore a possible business opportunity, with information and technical data relating to the patent applications that eventually resulted in the ’751 Patent being specifically identified as confidential. On September 30, 2010, representatives of Inogen met with Separation Design Group to allow Inogen to review confidential information relating to Separation Design Group’s portable oxygen concentrator technology.

Ultimately, no deal was struck between Separation Design Group and Inogen. Nevertheless, beginning in January 2011, less than three months after Inogen’s review of Separation Design Group’s confidential information, Inogen started development of a portable oxygen concentrator that remarkably resembled the one shown to them by Separation Design Group.

Further still, on April 22, 2011, Inogen filed U.S. Patent Application No. 13/066,716, which was published as U.S. Patent Application Publication No. 2012/0266883 on October 25, 2012. Several of inventors named on this Inogen patent application met with Separation Design Group during the previously mentioned September 30, 2010 meeting that exchanged confidential information. Particularly worrisome is that the Inogen patent application incorporates numerous features of portable oxygen concentrator technology that was part of the Confidential Information disclosed to Inogen under the Mutual NDA.

For example, the ‘751 patent, among other things, describes a user replaceable sieve module as a key feature, which eliminates the need for the manufacturer or medical supply company from having to replace the module. This replaceable feature is touted in an S-1 filing by Inogen made with the Securities and Exchange Commission (SEC) on November 27, 2013. In that S-1 filing Inogen also implies that it’s G3 Oxygen Concentrator is the only portable oxygen solution that accomplishes long term oxygen therapy for patients without supplemental use of a stationary concentrator or a replacement portable oxygen concentrator. There are certain qualifiers used, but by the time this S-1 was filed Inogen was already in possession of the Separation Design Group invention and confidential information describing the use of a replaceable module.

In the S-1 Inogen also lays claim to developing the replaceable filtration cartridges taught in the ‘751 patent and disclosed under the mutual NDA with Separation Design Group. Thus, it seems clear that Inogen will claim that they independently developed this technology on their own and without any of Separation Design Group’s confidential information being used. It will be interesting to see how the evidence shakes out, but at this point it certainly looks bad for Inogen. Why would you send inventors who are independently working on a similar device to review what is supposed to be confidential information? The optics are awful, and it looks like they leveraged what they learned for their own patent application.

Time will tell what ultimately happens here, but this is a story that has a familiar ring to it. We have all heard it. We all know it happens. Large company takes a look at what small company is working on, refuses to do a deal and then miraculously thereafter starts to infringe. In this, as in many cases, there was a confidentiality agreement, but what good is such an agreement without the means to enforce it? Even worse, it appears as if in this case the larger company had the audacity to file a patent application of their own after being granted access to what was supposed to be confidential information.

Unfortunately, Congress and the Courts seem singularly focused on protecting helpless large multinational corporations who, as the story goes, are getting bullied by patent owners. That just isn’t the reality I see.

The Author

Gene Quinn

Gene Quinn is a Patent Attorney and Editor and founder of IPWatchdog.com. Gene is also a principal lecturer in the PLI Patent Bar Review Course and an attorney with Widerman Malek. Gene’s specialty is in the area of strategic patent consulting, patent application drafting and patent prosecution. He consults with attorneys facing peculiar procedural issues at the Patent Office, advises investors and executives on patent law changes and pending litigation matters, and works with start-up businesses throughout the United States and around the world, primarily dealing with software and computer related innovations. is admitted to practice law in New Hampshire, is a Registered Patent Attorney and is also admitted to practice before the United States Court of Appeals for the Federal Circuit. CLICK HERE to send Gene a message.

Warning & Disclaimer: The pages, articles and comments on IPWatchdog.com do not constitute legal advice, nor do they create any attorney-client relationship. The articles published express the personal opinion and views of the author and should not be attributed to the author’s employer, clients or the sponsors of IPWatchdog.com. Read more.

Discuss this

There are currently 43 Comments comments.

  1. Ryan November 30, 2015 4:21 pm

    I respectfully disagree that this case is an example of the phenomenon that you seem to believe is occurring,

    If the facts are true, then SDG IP will probably win or get a settlement. They are enforcing their patent against an infringer.

    The NDA issue can probably be chalked up to the inventors’ naivete/lack of knowledge of the patent system. Why would they disclose the invention in an NDA? Their patent was set to publish in 2012.

    The 751 patent is also cited in the file wrapper of the 716 application. SDG has a great record to work off to build a great case.

    Seems like the system is working fine for patent owners.

  2. Gene Quinn November 30, 2015 5:14 pm

    Ryan-

    First, I am not working for the patent owners.

    Second, your comment makes you sound extremely naive. Why would they disclose the invention in an NDA? That is the point of an NDA. You disclose in order for the other party to decide whether they want to do business with you. It is common practice. What is not common practice is disclosing and then having the party receiving the information file a patent application.

    Third, you seem to think that all the information that could be disclosed would be published in a patent application. That is not true and pretty clearly shows you aren’t familiar with the patent process or innovation. In a situation like this, dealing with an SBIR award winning innovator, there would almost certainly be volumes of know-how not included in the patent application that could have been and would have been disclosed.

    Fifth, that you are unfamiliar with this story speaks volumes. This type of behavior happens all the time.

    Finally, your naive comment makes it seem like you work for Inogen or similarly situated alleged infringers.

    -Gene

  3. Pro Se November 30, 2015 5:19 pm

    There’s a great movie every inventor should see that gives the best example of how the American innovation goes rewarded called Flash Of Genius.

    When Apple could not stop others from copying the iPhone, that pretty much destroyed the IP game way more than eBay did..

  4. Gene Quinn November 30, 2015 8:15 pm

    Pro Se-

    You raise a very interesting point that I’ve mentioned a few times, although in speaking engagements. While the public has focused on the $1 billion damage award as being ridiculously large the real story is that Apple’s patent portfolio and all the damage done by a copying competitor was ONLY worth $1 billion, which has since been reduced.

    -Gene

  5. Dan Kablack December 1, 2015 12:08 am

    I myself have visited Separation Design Groups’ labs several time sin the last decade.
    My question is:
    By establishing that SDG is not a typical patent troll, as evidenced by the W.Pennsylvania Entrepreneur of the Year award more than a few years ago, will that have an effect on strengthening the suit ?

    By the way…
    Apparently Mr. Schneer teaches patent law:

    Ryan Schneer
    American University – Washington College of Law

    November 5, 2013

    Abstract:
    This Briefing Paper was produced in conjunction with the American University Washington College of Law Patent Policy Forum being held on Nov. 8, 2013. The Forum will explore current proposals to amend U.S. patent law to address issues surrounding non-practicing entity (PAE) litigation, software and business methods patents and standards-essential and FRAND-encumbered patents. The Briefing Paper summarizes the legislative and administrative proposals that are currently on the table in each of these areas, and is intended to be a springboard for informed policy discussion.

    Number of Pages in PDF File: 19

  6. angry dude December 1, 2015 12:12 am

    Pro Se@3

    “Flash Of Genius” had a budget of 20 mil and made less than 5 mil in movie theaters

    This is how much general american population cares about invention and inventors

    Until they run out of popcorn … which isn’t gonna happen any time soon

  7. Benny December 1, 2015 5:45 am

    Angry,
    You should replace “how much general population cares” with “how much general population understands”. Not surprising, since the legal profession doesn’t go out of it’s way to make itself accessible to the lay public (that’s about as mildly as I can put it). Please use a capital A in “America”.
    Gene, despite the headline, the article focuses solely on IP theft, not on bullying. Bullying is what trolls do, i.e, threatening non-infringers with lawsuits if they don’t settle.

  8. Bill Elkington December 1, 2015 8:21 am

    Hello Gene,

    You point out a practice that is widespread: the use of asymmetric market and financial power to extract IP rights from suppliers and potential suppliers.

    Companies are typically reluctant to file a complaint against a customer or potential customer for misappropriation, breach, or infringement because they look forward to future business with that customer.

    I say “widespread.” And I do mean that.

    I encourage you to look into this area further.

  9. step back December 1, 2015 8:39 am

    angry dude @5

    I too have seen that movie “Flash of Genius” and thought it was nicely made, especially the part where Kearns pulls out a copy of Charles Dickens, “Tale of Two Cities” and starts parsing the opening sentence (It … was … the … best of times …)

    https://ittakes10k.wordpress.com/2014/10/25/1-1358-of-10000-inspired-by-bob-kearns-in-flash-of-genius/

  10. nat scientist December 1, 2015 9:45 am

    When one considers that a top-ten multi-national patent owner, GE for this effort, spends millions of dollars every day in the mass media to declare for years that, “Ideas are the natural-born enemy of the way things are.” in the form of a cartoon to appeal to children of all ages; one can’t come away with the lesson that these important and “ugly and messy” matters could be left in the hands of individuals. The threat is clear and immediate that big brother will protect the public from such troubling power with its corporate-inversion goodness and wisdom . The media is the message in the court of public opinion. The individual is a tool and when dissolved into an institution no longer a dangerous fool. Gentlemen, turn off your engines, self-driving automobiles are coming soon.

  11. Gene Quinn December 1, 2015 10:22 am

    Benny-

    Respectfully, there is more than one kind of bullying.

    I think when the typical individual thinks of a bully they think of someone with disproportionate strength who is using that strength, and often size, against the established rules in an arbitrary and capricious manner. I think that perfectly describes what large companies that sign NDAs and then steal IP are doing.

    As Bill says above @8, this is a widespread problem that all too frequently goes unaddressed for a variety of reasons. I can only imagine that as patent rights have eroded over the last 5+ years it is happening more and more.

    -Gene

  12. Gene Quinn December 1, 2015 10:28 am

    Dan-

    Given the PR climate, if SDG were a patent troll that would significantly weaken their case I think. I say “I think” because there is no legal reason why ownership should matter in an infringement case. The question is whether the patent is infringed and whether the defendant can demonstrate the claims are invalid. Having said that, the media is so thoroughly saturated with negative news about patent owners and specifically non-practicing entities that it would almost certainly have to play some kind of a role if only subconsciously.

    I mentioned that SDG is not a patent troll specifically in order to preempt the predictable lemming-like response from those who simply hate patents. They can call SDG a patent troll if they like, but that would be a bridge too far even for patent critics. If award winning innovators are vilified as patent trolls that would be the patent equivalent of jumping the shark, so I doubt any serious critic will make such a claim.

    -Gene

  13. American Cowboy December 1, 2015 10:35 am

    Benny says: “Bullying is what trolls do, i.e, threatening non-infringers with lawsuits if they don’t settle.”

    Well, duh?

    A patent gives its owner the right to exclude, and provides filing suit as its only enforcement mechanism if the parties cannot negotiate a deal. Your so-called bullies are trying to make business deal, and understand that their ONLY negotiating leverage is to threaten to sue if a deal I not reached.

    Would you prefer they sue first? No, what you really want them to do is throw their patents in the trash and pound sand.

  14. Gene Quinn December 1, 2015 10:43 am

    AC-

    Another thought…

    Isn’t the Federal Circuit completely to blame for the rise of patent trolls? The Federal Circuit did away with the need to get a non-infringement opinion, and has seemed to be completely indifferent to requiring any kind of real investigation of infringement prior to bringing a lawsuit. By doing away with reasonable diligence of alleged infringers and not really caring about the diligence of patent owners we have the litigation mess we see now. Abuse on both sides. If you ask me it is because the Federal Circuit was asleep at the switch. Worse yet, they were on the right path and through judicial activism tinkered so much with the system that they screwed it up.

    Thoughts?

  15. Ron Hilton December 1, 2015 11:21 am

    A non-infringement opinion would be a step in the right direction, but I would still advocate a right-to-sue based upon a successful crowd-sourced reexam as a prerequisite to bringing an infringement suit. The problem in my opinion is more one of patent quality than plaintiff quality (i.e. “trolls”).

    But the patent bar likes weak patents. They take longer to prosecute and are more likely to generate litigation, hence increasing billable hours for the patent profession. That is why a common-sense proposal to address patent quality has a hard time getting any traction.

  16. American Cowboy December 1, 2015 11:35 am

    Gene, I agree that the old rule requiring a well-reasoned non-infringement opinion to be in-hand to avoid treble damages had some salutary effects. However, as with anything with a lot of money at stake and eager lawyers, that raised its own extremes and abuses.

    As to the diligence of patent owners, I recall that they strengthened Rule 11 about 20 years ago to make the filing attorney believe in his filings, and that watered down abusive filings, at least where courts were not asleep at the switch.

  17. SHAUN Smith December 1, 2015 1:50 pm

    I believe big bussiness USA are defiantly bullies and are supported by the fact they have massive funding and lawyers on hand and use attrition to dispose of an opponent.

    I also believe that the US PTO overly protects USA citizens and companies to a point where it actually unfair and dishonest in its actions when a foreigner owns a patent or trade mark that is already registered with the US PTO.

    One cannot expect other countries to respect the USA trade marks and patents when they themselves have very little disregard for these registered and patent trademarks in the USA by foreigners and foreign companies.

  18. Kansas City, Nebraska December 1, 2015 4:28 pm

    Shaun, the easy way to get favors from the US government is to send a big donation to the Clinton Foundation.

  19. Gene Quinn December 1, 2015 4:32 pm

    AC-

    Agreed that there were abuses with non-infringement opinions, but many times they were so easy to see. I remember one case where someone hired a personal injury attorney for a non-infringement opinion. I personally think a sliding scale approach to such an opinion being worth anything makes sense. If you hire a first year associate you get more deference than a PI attorney but you really should be hiring someone with real experience. Not hard to know who those people are if you care to find them.

    While Rule 11 is well written and probably well intended it is probably (and sadly) the most useless tool in a District Court’s arsenal. If Courts would get rid of the garbage lawsuits then Congress wouldn’t be seeking to destroy the patent system, and the Supreme Court wouldn’t be trying to make every patentability issue something that can be decided on a motion to dismiss without any discovery.

    -Gene

  20. Gene Quinn December 1, 2015 5:12 pm

    I don’t know that I agree that foreign applicants are treated differently. In fact, I’m certain that they are not, although I’m also certain that it must feel that way. Much of what happens at the USPTO is arbitrary and capricious any more. Some examiners never issue anything, other examiners never reject anything.

    I don’t want this to get overly political, but I did approve the above comment by Kansas City because I think it speaks to a larger feeling of helplessness. Right now in our little area patent policy is being drive by a handful of very large multinational corporations that today believe that they would be better off without a strong patent system. Long term that view is extraordinarily naive, but that is what they believe and they are particularly well connected.

  21. Dan Wood December 1, 2015 6:16 pm

    Gene @ 19 and AC.

    One need look no further than the S. Ct. decision in Global-Tech Appliances. The Court found “willful blindness,” sufficient to support an inducement count, where a small time attorney (in Memphis?) was “hired” to provide an Opinion Letter. And while certain information was withheld from the attorney, it was not wasted on the Court that retaining that particular attorney constituted less than a good faith effort to find a fair analysis.

    Also the S. Ct. is about to whack the “any time, any place, timely conceived or not, asserted or not, survived SJ or not, asserted to the jury or not,” baseless defense test for a validity challenge flowing from Seagate.

  22. Paul F. Morgan December 1, 2015 7:32 pm

    Yes, this does happen sometimes.
    Believe it or not, there is one aspect of the AIA that helps individual or small company employee original inventors, IF they have filed a patent application before disclosing their invention to others, as they should. Under the AIA it is no longer possible for a large company to subsequently file a patent application of its own and force the small company or individual into an expensive and complex interference proceeding on the same OR patentably indistinct claims. An interference that can either kill those claims or obtain a low cost license to get out of the interference. Under the AIA only the party alleging a derived invention can start a derivation proceeding. The other party cannot any longer “swear behind” the filing date of the first to file.

  23. American Cowboy December 2, 2015 9:45 am

    Gene, a thought occurred to me: For years many in the software field said “no” to patenting software, and the patent world said “yes,” since a computer with software to make it do something it did not do before makes it a new machine.

    Eventually, the latter group got the upper hand, and the software patent nay-sayers responded by saying something to the effect that, “Well if we have to live in the patent house, we are going to trash it, and vandalize it, and burn it down if we have to.”

    And they are on their way to success.

  24. staff December 2, 2015 1:08 pm

    ‘Those in the industry are well aware that there are a handful of bad actors on the patent owner side’

    Says who? Inventors will tell you even that is a distortion -certainly when it comes to small entities. They rely on contingent firms to enforce their rights. Those law firms will go through your patent with a fine toothed comb. If they don’t believe in it, they will not take your case. In the highly unlikely event they do the courts these days have a quick trigger to dismiss weak cases and will even sanction the parties at fault. It’s that simple. So this contrived argument of abuse by patentees is a ruse by large invention thieves to cover up their theft and justify what they call patent ‘reform’.

    Don’t believe the lies of Chinese and giant multinational thieves. Make them prove it.

    For more information please visit us at https://aminventorsforjustice.wordpress.com/
    or, contact us at tifj@mail.com

  25. Gene Quinn December 2, 2015 4:56 pm

    staff-

    Everyone in the industry knows that there are bad acting patent owners. To pretend that there are not abuses by some patent owners is simply a lie.

    -Gene

  26. Ryan December 3, 2015 3:55 pm

    Gene,

    With all due respect, you have contradicted yourself.

    “What is not common practice is disclosing and then having the party receiving the information file a patent application”

    vs.

    “This type of behavior happens all the time.”

    It seems like you are the ignorant (perhaps willfully so) one and are scrambling to come up with a counter-narrative.

  27. Ryan December 3, 2015 4:17 pm

    All I was trying to say is that:

    If you are going to build a case that whatever behavior you are describing is more predominant than patent trolling, you are going to need more than one story with potential holes in it.

    Your supporters on this blog may find this persuasive, but as an outsider this just sounds like spin.

    Has the DOJ come up with empirical analysis on this phenomenon? How about the CBO?

    Because they have with patent trolling.

    Have any political leaders presented legislation to combat this phenomenon?

    Because they have with trolling.

    This sounds like an insignificant problem.

  28. Gene Quinn December 3, 2015 5:10 pm

    Ryan-

    Clearly, you are an outsider. Looking to the DOJ or CBO for analysis of the patent industry would be a waste, and looking to the FTC for anything objective is equally wasteful. Of course, when you are a hammer the entire world looks like a nail I suppose. The problem with the FTC is they can’t seem to accept that for 225+ years a patent has been a grant of an exclusive right. They view that as a bad thing. Of course, the FTC also defines an innovation as a product and not the underlying R&D, so universities, federal laboratories and inventors the likes of Thomas Edison and the Wright Brothers would not be innovators under the FTC definition of innovation. But by all means, look to branches of the federal government that are not at all familiar with patents for your patent information if you want.

    As far as your criticism, you are right. It does sound self serving. What I say is perfectly true and absolutely everyone in the industry knows it to be true. Still, for those outside the industry like yourself proof would be useful. Sadly there is very little proof because patent owners so frequently (almost always) choose not to go on the record. Those that get attorneys are told not to tell their stories, and countless others just get drilled into oblivion.

    You can believe it is an insignificant problem if you like, and no one would fault you. You are, however, wrong. But unless and until patent owners stand up and tell their stories your skeptical response is to be expected.

    -Gene

  29. Ryan December 3, 2015 8:41 pm

    Gene,

    Thank you for your thoughtful reply.

    I am not doubting that patent owners have difficulty enforcing their patents against large corporations. I am also not doubting that sometimes large corporations steal IP during negotiations.

    However, your example is an argument for less filings, not for more patent protection. I make this point on my website: randompatentmusings.com. Corporations have devalued the patent grant by filing tons of patents. It is nearly impossible to discern which inventions are valuable or not.

    We are on the same side but you are aiming at the wrong target. All of these problems stem from one source: the artificially inflated demand for patents and the resulting devaluation.

  30. Anon December 3, 2015 9:11 pm

    Ryan,

    Please be aware that your view in regards to patent trolling are in fact most likely resting on pure fallacy and the very worst type of modern day propaganda.

    Are there “bad players?'” Most definitely. But these “bad players” exist and are “bad” throughout the entire spectrum, and nothing like that which you appear to believe to be a given “truth.”

    I think that any view towards “less” is a fundamental error. More to the point, the law as written by Congress with its hurdles should be – must be – objectively applied without regard to whether “the right number” of patents are granted.

  31. Ryan December 4, 2015 8:11 am

    Anon,

    I agree with your statement that there are bad actors throughout the system.

    Buy my central point still stands, the devaluation of the patent grant stems not from “anti-patent propaganda” but from an unprecedented spike in the number of filings in the past 50 years,

  32. American Cowboy December 4, 2015 10:03 am

    Ryan, do you rule out the possibility that the spike in filings has arisen from a spike in inventiveness?

  33. Ryan December 4, 2015 11:26 am

    AC,

    The rate of change of innovation has been decreasing. Innovation is still growing but at a slower pace than ever before. See http://www.nber.org/papers/w18315.

    So yes, I have ruled out the possibility.

  34. American Cowboy December 4, 2015 1:47 pm

    Ryan, if I follow your argument, unless an inventor comes up with something revolutionary, like Edison’s light bulb, the transistor, or penicillin, you figure it is not an innovation and should not be granted a patent. Is that what you mean?

  35. Ryan December 4, 2015 2:31 pm

    AC,

    You are arguing about patent grants where I am arguing about patent filings.

    The PTO has been granting patents at about the same rate it always has. Filings are what have spiked.

    It is not nearly expensive enough to file a patent to deter incremental patents from flooding the system. The PTO needs to use its fee setting structure to deter excessive filing by large corporations (those who are not small or micro entities).

    After this happens, everything will sort itself out on the front end. Let the inventors determine which applications to pursue.

  36. Anon December 5, 2015 9:44 am

    Ryan,

    Respectfully, your focus on numbers is misguided.

    It matters not the numbers.
    What matters is that the law is followed, that examination is objectively followed.

    If greater numbers of applications (and greater numbers of patents) are processed – and the objective examination is dutifully completed – then the Quid Pro Quo exchange means that there is just a greater benefit fro all concerned.

    This reduces yet again to the mistaken belief that not only that “more” is not better, but that “more” is somehow “bad.”

    It is this subtle but no less pernicious view that I soundly reject.

    Since innovation breeds more innovation, we all should be expecting ever greater numbers.

  37. Kansas City, Nebraska December 7, 2015 12:09 pm

    Ryan, I see you are a new examiner. Your mantra of wanting to have fewer patent application filings suggests that job security is not your main objective. Or are you relying on the fact that Federal Government workers never get laid off, and you simply want to collect a paycheck and not have to do anything?

  38. Eric December 8, 2015 6:03 pm

    A few observations:

    (1) Let’s accept, for sake of argument, that Gene’s portrayal of the Separation Designs case is a completely accurate tale of a wronged patent owner. The patent owner has adequate legal remedies: By Gene’s account, Separation Designs has clear evidence of a breached NDA, trade secret misappropriation, patent infringement, and monetary damages, and a strong case for injunctive relief. Nothing in Gene’s account suggests that recent patent reforms have deprived the patent owner of these rights and remedies.

    (2) Separation Designs is one case. By itself, it is not evidence of the widespread infringement of small and solo inventors’ patents that Gene alleges is in need of a political remedy. If this behavior by larger companies is as rampant as Gene asserts, then he should have little difficulty providing a statistically sound data set, rather than a single anecdote. Meanwhile, Lex Machina reports that NPEs filed over 700 patent lawsuits in November 2015 alone. Numerous studies and articles have documented that the vast majority of these cases settle for nuisance value, that many of these patents are being proven invalid in light of prior art through post-grant proceedings, and that the infringement cases presented by most of these NPEs are very thin and needlessly prolonged by dubious practices in the Eastern District of Texas. The troll problem is observable and well-documented; it is incumbent on those who assert that Gene’s “patent bully” problem is a threat of similar scope to provide evidence of that scope. Until there are hundreds of cases filed per year that fit the Separation Designs fact pattern, the assertion that the bullied patent owner problem is worse than the patent troll problem rings hollow.

    (3) The assertion that the solution is as simple as requiring alleged infringers “simply” to get noninfringement opinions for each matter is either astoundingly naïve or willfully blind to the real-world patent assertion environment, or both. A large company typically receives dozens and sometimes hundreds of patent solicitations each year. Formal opinions of counsel run high-five to six-figures each. The annual costs to the recipient of these assertion letters would therefore easily run into the millions. Moreover, the vast majority of these solicitations contain zero evidence of use and nothing more than a patent number and bald invitation to purchase or license at an absurd valuation. When a patent owner or broker does provide “evidence” of use, it seldom passes the laugh test. Given these facts, when should the alleged infringer’s obligation to incur the significant costs of opinions of counsel be triggered? This asymmetric burden on the alleged infringer was a significant problem under the old willfulness regime, where the only winners were the outside patent attorneys. If we’re going to go back down that perilous road, then let’s also impose, as a prerequisite, a reciprocal obligation on patent owners (with meaningful penalties behind it) to provide element-by-element evidence of use. Bellyaching about infringement not being easily detected is no excuse, because the lack of detectability goes directly to the heart of the valuation of any patent. The patentee’s prosecution of claims for which infringement is not detectable is a poor business decision, the consequences of which rest rightfully and solely with the patent owner.

  39. Gene Quinn December 9, 2015 1:13 am

    Eric-

    You say: “If this behavior by larger companies is as rampant as Gene asserts, then he should have little difficulty providing a statistically sound data set, rather than a single anecdote.”

    Clearly you are not familiar with the industry. What I said is true, as is well known in the industry. More stories will follow.

    You say: “NPEs are very thin and needlessly prolonged by dubious practices in the Eastern District of Texas. The troll problem is observable and well-documented.”

    You equate NPEs with trolls, which is totally and completely ignorant. Your opinions cannot be taken seriously because obviously you are unfamiliar with research and development companies. Unless, of course, you would characterize people like Thomas Edison as trolls. Would you characterize GE as a troll or IBM as a troll or Qualcomm as a troll since they engage in R&D and license the output of that R&D? What about Apple? Apple is an NPE by some definitions since they don’t make anything themselves. So whenever you cite NPE data and then pivot to claim NPEs are trolls you are engaging in fraud. I can go further and say that focusing on NPE data and pretending that shows a problem at all is a fraud.

    Frankly, I’ll do one better. You are a fraud.

  40. Eric December 9, 2015 12:40 pm

    Any person who asserts that all (or even a significant minority) of the cases in the Eastern District of Texas are brought by companies whose R&D is akin to GE, IBM, Qualcomm, or Apple is the fraud in the room.

  41. Anon December 9, 2015 7:00 pm

    Eric,

    I invite you to correspond with Ron Katznelson to educate yourself on a myth that you ardently ascribe to.

    I do hope that you are aware of the rules changes that prompted that November spike (and that you are aware that such was a spike). Further, I hope that you are aware that ANY “boogyman” tactic of criticizing enforcement numbers fails for at least two immediate reasons:

    1) the enforcement path through the courts is a designed path.

    2) the actual percentage of claims that are sought to be enforced through that path have more than likely DROPPED as a percentage of possible claims extant. To look merely at “pure numbers” would be like comparing auto fatalities to horseback fatalities and demanding that ALL automobiles be immediately banned.

  42. Eric December 9, 2015 9:15 pm

    Anon, plenty of myths abound here, most prevalent being that every solo/small inventor with a patent is a misunderstood or exploited Thomas Edison.

    I am quite aware of the FRCP changes that prompted the spike. Gene’s rude response apparently is based on his assumption that I think all NPEs are trolls. I never said that all NPEs are trolls, so I’ll leave Gene to play with his straw man. I agree that there are NPEs out there, such as research universities, with patents on inventions that may have value to others. But how many of the suits filed in November came from such institutions? Two? Three? Meanwhile, for every such NPE there are countless trolls with weak patents, flimsy infringement claims, and delusions of grandeur fueled by mercenary patent attorneys and litigators.

  43. Anon December 10, 2015 6:15 am

    Erik,

    You might want to be aware that if you put together the three different arms of a single entity, the number one November spike filer was a member of Big Pharma.

    I think that you are too quick to lay blame on someone else for the actions (strawman) that you yourself are engaging in.

    Your “countless” is just the kool-aid that the Executive branch does not (cannot) provide an answer to.