How Google and Big Tech Killed the U.S. Patent System

By Michael Shore
March 21, 2018

This is the story about patents, but more importantly, it’s a story about how the United States has become a modern day version of the Banana Republic.  The term “Banana Republic” was coined by American author O. Henry in 1904 in reference to Honduras which came under extraordinary influence by multinational American fruit corporations.

Banana Republics are societies characterized by their starkly stratified social classes and a ruling-class plutocracy composed of the business, political and military elites.  The Elites rule over a servile government that abets and supports, for kickbacks and bribes, the exploitation of the rest of society. Instead of Dole and United Fruit controlling Honduras, we now have Apple, Microsoft, Amazon, Google and other tech giants controlling Congress and the Executive Branch through unlimited lobbying by groups like the Internet Association[1], High Tech Inventors Alliance[2], the Software Alliance[3], Unified Patents[4] and through direct political donations.  As demonstrated below, the only difference between Honduras in 1904 and the United States today is that the new bananas are smartphones and the software they contain.

What Are Patents?

A patent is a voluntary disclosure of new, novel and useful technical information to the world.[5] In essence, patents inform the world of something it has never seen before that can be used to solve a technical problem. For a patent to issue, the information disclosed must be sufficient to enable a person familiar with the technological field[6] to make the invention without undue additional experimentation.[7] The purpose of the patent system is to encourage the disclosure of new, innovative technology so the base of knowledge upon which other inventors work advances.[8] Technology advances faster and the world benefits from those advances when new technology is disclosed and built upon instead of hidden from other innovators in the field who, if they knew about the new technology, could further advance it.

In exchange for the technical disclosures in patents to competitors and potential competitors, the patentee has to be protected from free-riders and thieves who contributed nothing to the disclosed technical advancement, but would copy it for their own profit.  So for disclosing her invention for others to advance going forward, the original inventor/patentee is granted a patent. The patent is an exclusive right to make money off her invention for a limited period of time. A patent is essentially a right to exclude others from using your invention without compensating you. A license from the patent owner to a company that wants to use the patented technology is a compensated, or bargained waiver of that right to exclude.

A strong patent system means an inventor can rely upon the strength of his patent to actually receive the benefit of the public disclosure of his invention. This reliance on a strong patent system is called the “presumption of validity”[9].  In order to attract investments, justify research and development efforts and develop new markets for new products, a patentee must be confident that its duly-issued (and paid for) United States patent will be enforced by the issuing government and therefore respected by competitors, both existing and potential.  In other words, if the patent system is viewed as weak as to enforcement of patent rights, inventors receive nothing for disclosing their inventions. The free riders, copiers and thieves can simply take the free information without compensation to the inventor. If inventors see the patent system as weak, they will not disclose their inventions, but hide them as trade secrets. This stifles innovation because new inventions that if disclosed could be improved upon are left unavailable. Most inventions today are improvements on prior, disclosed inventions, so a weak patent systems that discourages patenting slows the advances of technology and the benefits those advances would have brought are delayed or not realized at all. Patents matter.

The beneficiaries of a weak patent system are large multinationals who already dominate their markets with financial power and market share like Google, Facebook, Apple and Amazon. The Elites do not need patents. As the gain dominance in their markets, innovation is not as important as market share, profits and maintaining their dominance. The “peasants” (read: small companies and inventors who must innovate to compete) need strong patents to compete with, and perhaps one day join the Elites. Patents enable the American Dream.

What Google Wants, Google Gets

Google is in essence a software company built upon a set of algorithms to enable the efficient search of internet content. Google did not invent the internet (nor did Al Gore). The internet was invented by the United States government and research institutions supported by your tax dollars.[10]  Google just found a really profitable way to enable the public to efficiently use the internet.

As a business, Google is very susceptible to competition. If a group of programmers in their garage could come up with a new set of algorithms that searched more accurately, faster or even in a way that uses less energy, Google could be replaced, or at least have its market dominance threatened. But such a threat only exists if the new market participant is protected by patents. Without patent protection, Google can simply copy the new methods or use its hundreds of billions in offshore cash to buy the new market entrant for less than its full value. Google understood its precarious position as to new and emerging technologies, so it did what any Banana Republic Elite would do–it set out to destroy what it perceived as the real threat: the United States patent system.

Google was one of the three largest bundlers of campaign contributions to President Obama.[11] The year after the America Invents Act (“AIA”) was passed, Google employees and their spouses’ direct contributions to Congressmen were almost $1 million, spread evenly between Republicans and Democrats.[12] Google spent $18 million on lobbyists the year the AIA was passed.[13] Google’s support of “think tanks” and lobbying organizations was even greater, and was done in cooperation with other Silicon Valley tech giants.

What did Google get for its money? A new, weaker patent system that allows challenges to patents outside of court, without a jury, without any presumption of validity and using a low standard of proof. In essence, Google and its Elite friends killed any presumption of validity, the presumption that makes patents valuable by protecting the expectations of patent owners that their rights would be enforceable in neutral, impartial courts against infringers. The patent owners who paid for the research and development of their inventions, paid attorneys to prosecute the patents according to the rules at the time, paid filing fees to the PTO, paid issuance fees to the PTO, paid maintenance fees to the PTO, then created markets for their patented products with investments in factories, distribution systems, marketing–all based on the presumption that these investments would be protected from copiers, free riders and thieves by a strong U.S. patent enforcement system now possessed patents that were not presumed to be valid under the new AIA procedures, a fact that has caused immense economic damage to inventors and small companies that depended on their patents for protection from infringing Elites.[14] The Elites paid their way to the destruction of the very things that made U.S. patents valuable–their presumption of validity and impartial courts to enforce them against infringers.

Google wanted a weak patent system because it already dominated the search and internet advertising market in 2012, the year the AIA went into effect, with a 67% market share.[15] Today with a weaker patent system firmly in place and no fear of any innovating competition protected by patents, Google’s market share has increased to almost 80%.[16]

Killing the U.S. Patent System Required the Hiring of Executioners, in This Case, Administrative Patent Judges (APJs)

Now that Google and other Elites had destroyed the presumption of validity and removed impartial judges from the decision-making process via the AIA, they needed a set of executioners.  To finish the job of killing the U.S patent system, the administrative judges appointed to hear the cases had to be insulated from meaningful legal review and understand that their job was to kill patents. Enter head banana, Michele Lee, the political appointee who headed the PTO’s implementation of the AIA under bundler recipient President Obama.[17]

Lee is a former Google patent attorney who was in charge of patent strategy for Google.[18] After passage of the AIA and $36 million in lobbying by Google the prior two years, Ms. Lee was magically promoted to Director of the PTO from her position as head of the PTO’s Silicon Valley regional office.[19] The fox was not only put in charge of the henhouse, it was a fox paid for by the wolves.

The Executioners Ms. Lee chose were a new AIA creation, Administrative Patent Judges, or APJs. They are not judges in the sense that term is understood by Americans. They are not independent:

  1. APJs work for the PTO Director, a political appointee.
  2. The PTO Director can hire and fire APJs who make decisions they do not like. There is no tenured independence for APJs.
  3. The PTO Director decides what to pay APJs and can change their pay for any reason.
  4. If an APJ panel asserts its independence and reaches a decision the PTO Director does not like, the Director may convene an expanded panel to re-decide a case until the PTO Director and his/her political boss is satisfied with a panel’s decision.[20]
  5. The PTO Director may assign the APJs for each panel, so the decision on who hears the case is a political decision.
  6. APJs are not bound by the Code of Conduct for United States Judges or any other ethics code.
  7. APJs can decide cases involving former clients.[21]
  8. APJs are allowed to decide cases then go to work for the same companies that sought to invalidate patents.
  9. APJs are exempt from job performance reviews.

Judges that are chosen by politicians who decide cases brought by political donors to the politicians are not really judges at all.  They are banana workers who pick the bananas the donors want picked.

And even if the APJs were independent, which they are not, the procedures designed by Michele Lee governing the APJs conduct were set up to kill patents. Neither the AIA nor PTO rules limit the number of times a patent can be subjected to inter partes review. Let that sink in. The Elites can keep attacking a patent they do not like, directly or through surrogates, until they find a panel that will kill it. No matter how many times a patent owner wins at the PTAB, its patents are never safe.

Since the creation of IPRs, patents have been routinely reviewed on multiple occasions, some patent families having more than 125 separate petitions filed. Because a decision of one PTAB panel does not bind another one, surviving one review provides no armor against subsequent challenges. Thus, a PTO Director (or for that matter a President of the United States) intent on invalidating a particular patent for a major donor or supporter can continue ordering more and more inter partes reviews until the desired outcome is achieved.  Pass the bananas.

The Effect of PTAB Invalidating Patents Via IPRs

On September 26, 2016, the U.S. Commerce Department released a comprehensive report, “Intellectual Property and the U.S. Economy: 2016 Update,” which found that IP-intensive industries support at least 45 million U.S. jobs and contribute more than $6 trillion dollars to, or 38.2 percent of, U.S. gross domestic product. The report, a joint product of the Commerce Department’s United States Patent and Trademark Office and Economics and Statistics Administration serves as an update to the Intellectual Property and the U.S. Economy: Industries in Focus report released March 2012.[22]  A crisis is developing in this sector of the U.S. economy, however, as new AIA procedures allowing attacks on the validity of U.S. patents have made these valuable assets far less valuable and therefore incapable of supporting the same level of investment in new industries and technologies. Jobs are being lost, millions of high paying, high tech jobs. Some economists are estimating the decline in the value of U.S. patents to be in the trillions of dollars.[23] That is a lot of bananas.

Why the drop in value? Remember, patents are only valuable if they can be enforced, so any “reform” efforts that make enforcing a patent more expensive and less certain as to outcome harms the patent owner and undermines the ability of the U.S. economy to protect inventors’ rights. The proof is in the cost of bananas. The average price per patent over the three-year period 2012 to 2014 dropped 61% from $422,286 per patent to $164,232.  In that timeframe, the number of patents sold by inventors dropped from just under 7000 to 2800, showing a decrease in liquidity in the patent market.  The overall sales dropped from $3 billion to well under one-half billion in patent sales per year, or by 84%. The trend accelerated after 2014.[24] If an inventor cannot sell his or her invention for a price that supports their time and effort, they will stop inventing. When they stop inventing, innovation stops.

Why did this precipitous drop in the value of United States patents occur? IPRs.

Federal District Court with the traditional protections to patent owners invalidates 28.76% of patents as of 2015. The PTAB invalidates 76.61% in IPRs, and because there is no limit on the number of IPRs that can be filed against a patent, the infringers and free riders can keep filing IPRs until they win. The effective kill rate is likely close to 90%, and in some industries even higher.[25]  If the IPRs were really intended to stop bad patents from being enforced at great cost, then the results in IPRs and district courts should be the same, or very similar. But the kill rate for patents in IPRs is almost three times higher. Unless you believe that the US Patent Office is wrong on its efforts to issue patents 2 of 3 times it acts, there is something else going on in IPRs. The IPR statistics prove that the system was not designed to get to the same results faster and cheaper, but to get to a different result – the destruction of the United States patent system.

Since passage of the AIA, the United States has fallen from 1st to 12th in the ranking of the strength of its intellectual property system, now tied with Italy and behind all other highly developed economies.[26] As the U.S. weakens its patent system, other countries are strengthening theirs. China in particular is beefing up its patent infringement remedies like injunctions and allowing ever higher damages awards.[27] So the center of the intellectual property universe will move to China. That can only be bad for U.S. inventors and companies. China designs its IP policies to protect Chinese entities.

The United States Congress has effectively redesigned our intellectual property policies to protect political contributors, many of which are multinational corporations that have no loyalty to the United States because a majority of their revenue is sourced (and kept beyond the reach of US taxes) overseas. Anti-patent, market dominating multinational Elites like Google are loyal to profits and their ability to dominate markets.

A Banana Republic only continues to exist as long as it can supply the bananas. Today, the Elites need the U.S. less and less. They keep trillions of dollars overseas to avoid taxes, they build their products in Asia and their largest markets are quickly becoming Asian as well. We are selling our democracy to the highest bidder while those same bidders are planting all their new banana trees elsewhere. Go ask the people of Honduras what United Fruit and Dole are doing for them now.

_______________

[1] See https://www.recode.net/2018/1/5/16854324/silicon-valley-trump-netflix-free-internet-association-fcc-net-neutrality-lawsuit

[2] See https://www.hightechinventors.com/

[3] See http://www.bsa.org/

[4] See https://www.unifiedpatents.com/

[5] See https://www.bitlaw.com/patent/requirements.html

[6] The term of art in the patent world is a “person of ordinary skill in the art” of the invention. The person of ordinary skill in the art is a hypothetical person who is presumed to have known the relevant art at the time of the invention. Factors that may be considered in determining the level of ordinary skill in the art may include: (1) “type of problems encountered in the art;” (2) “prior art solutions to those problems;” (3) “rapidity with which innovations are made;” (4) “sophistication of the technology; and” (5) “educational level of active workers in the field.” In re GPAC,57 F.3d 1573, 1579, 35 USPQ2d 1116, 1121 (Fed. Cir. 1995). “In a given case, every factor may not be present, and one or more factors may predominate.” Id. See also Custom Accessories, Inc. v. Jeffrey-Allan Indust., Inc., 807 F.2d 955, 962, 1 USPQ2d 1196, 1201 (Fed. Cir. 1986); Environmental Designs, Ltd. v. Union Oil Co., 713 F.2d 693, 696, 218 USPQ 865, 868 (Fed. Cir. 1983).

[7] This “without undue experimentation” requirement is referred to as enabling the invention. See https://www.uspto.gov/web/offices/pac/mpep/s2164.html

[8] See http://www.iusmentis.com/patents/crashcourse/whatis/ (“Also, when the patent is published with all the details of the invention, other people learned of the existence of this invention. They might then be inspired to think up enhancements or alternatives to the patented invention. This is particularly true when the inventor refuses to license his invention, or when the licensing fee is too high. Third parties could then develop alternative technologies to work around the patent. Presumably they would then patent these alternatives. And then society benefits by having two inventions rather than one.”)

[9] See 35 U.S.C. §282(a) (“A patent shall be presumed valid. Each claim of a patent (whether in independent, dependent, or multiple dependent form) shall be presumed valid independently of the validity of other claims; dependent or multiple dependent claims shall be presumed valid even though dependent upon an invalid claim. The burden of establishing invalidity of a patent or any claim thereof shall rest on the party asserting such invalidity.”).

[10] See https://blogs.scientificamerican.com/observations/yes-government-researchers-really-did-invent-the-internet/

[11] See https://www.opensecrets.org/pres12/contrib.php?id=N00009638.

[12] See https://www.opensecrets.org/pacs/pacgot.php?cycle=2012&cmte=C00428623.

[13] See https://www.opensecrets.org/lobby/top.php?showYear=2012&indexType=s.

[14] See http://www.ipwatchdog.com/2017/02/06/patent-owners-iprs-bloomberg-aipla/id=78029/

[15] See https://searchenginewatch.com/sew/news/2232359/google-takes-67-search-engine-market-share.

[16] See https://netmarketshare.com/search-engine-market-share.aspx?options=

[17] See https://www.uspto.gov/about-us/michelle-k-lee

[18] See Id.

[19] See https://www.opensecrets.org/lobby/top.php?showYear=2014&indexType=s.

[20] Nidec Motor Corp. v. Zhongshan Broad Ocean Motor Co. Matal, No. 2016-2321, 2017 WL 3597455, at *6 (Fed. Cir. Aug. 22, 2017) (“While we recognize the importance of achieving uniformity in PTO decisions, we question whether the practice of expanding panels where the PTO is dissatisfied with a panel’s earlier decision is the appropriate mechanism of achieving the desired uniformity.”).

[21] See http://www.ipwatchdog.com/2017/05/02/ptab-judge-former-clients-uspto-conflict-rules/id=82765/ and http://www.ipwatchdog.com/2017/05/03/ethical-bar-practitioners-higher-ptab-judges/id=82870/ and http://www.ipwatchdog.com/2017/05/07/more-conflicts-interest-surface-second-ptab-judge/id=83012/.

[22] See https://www.uspto.gov/learning-and-resources/ip-motion/intellectual-property-and-us-economy.

[23] See https://patentlyo.com/patent/2015/06/america-invents-trillion.html.

[24] See https://www.iam-market.com/blog-entry/2016-patent-prices-hit-low-ebb-%E2%80%93-iam-market-had-positive-impact-transactions-landscape

[25] See http://www.ipwatchdog.com/2017/06/14/90-percent-patents-challenged-ptab-defective/id=84343/

[26] See http://www.theglobalipcenter.com/wp-content/uploads/2018/02/GIPC_IP_Index_2018.pdf

[27] See https://www.wsj.com/articles/SB123419814824764201.

The Author

Michael Shore

Michael Shore is a Partner with Shore Chan DePumpo, LLP. He practices in the areas of intellectual property commercialization, business litigation, and other select litigation matters. His intellectual property practice is multifaceted, aiding clients in commercializing their patent and copyright portfolios through strategic development, licensing and litigation. Mr. Shore currently represents clients ranging from Fortune 500 companies to individuals located in the United States, Japan, Great Britain, Luxembourg, Taiwan (ROC) and the People's Republic of China. Prior to forming Shore Chan DePumpo LLP, Mr. Shore headed the Intellectual Property Licensing and Litigation Practice Group as a partner at Akin Gump Strauss Hauer & Feld, LLP.

For more information or to contact Michael, please visit his Firm Profile Page.

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 58 Comments comments. Join the discussion.

  1. Valuationguy March 21, 2018 9:30 am

    Bravo…..great synopsis of the situation!

    This article needs to be sent to EVERY Congressman’s office.

  2. Anon March 21, 2018 9:45 am

    Bananas, Apple…

    How about “Fruit Republics”…?

  3. Anon March 21, 2018 9:53 am

    I wonder if this could be put before the Justices as an addendum to the Oil States case….

  4. Night Writer March 21, 2018 10:01 am

    This is a good start. It is weak on a couple of points. First, Google’s influence over academia needs to be explained and its influence on blogs (e.g., patentlyo). Google pays law professors to write papers to a abstract that Google provides. Google also funds (at least this is my understanding) non-profits that pay people to blog to push Google’s points.

    Second, what the corporations are saying, e.g., Google, needs to be explained further. Google is saying that we don’t need patents for innovation. That their research labs are plenty of innovation and that they will take care of this innovation problem for Congress.

    Great to see a start to the narrative. I’d also add in not just the PTAB, but the fact that Google selected the judges for the CAFC and selected judges that were known to be anti-patent and most had zero science education (for the one court where a science education should be a requirement.) I also think that the judges were called prior to the appointment and asked for a “pledge” to get the patent system under control in exchange for their appointments.

    The point is that what you are talking about is just the tip of the iceberg.

  5. Anon March 21, 2018 10:12 am

    To carry the (bad) pun of post 2 one step further: the patent system has gone to seed.

  6. Night Writer March 21, 2018 11:41 am

    https://patentlyo.com/patent/2018/03/sunsetting-covered-business.html#respond

    Meanwhile back at the propaganda machine that is DC, we see a proposal to expand CBMs/IPRs and reports that CBMs are good for investment.

  7. Night Writer March 21, 2018 11:56 am

    And, you guys should be sounding the alarms. You ain’t seen nothing yet from the PTAB if they expand IPRs. We could see invalidity rates as high as 99 percent. Just imagine if 101 could be raised? Etc.

  8. Gene Quinn March 21, 2018 12:25 pm

    If Congress expands IPRs there won’t be any point to getting a patent any more.

    From what I hear on the Hill there is no real support for expanding IPRs. In fact, if there is any collective support for anything there is support for curtailing the PTAB. I am also hearing rumblings that some (perhaps many) in the USPTO and various satellite offices are fed up with the PTAB and understand that the PTAB is harming the patent system.

  9. Anon March 21, 2018 12:32 pm

    “Propaganda machine” hits the nail on the head.

  10. Night Writer March 21, 2018 1:44 pm

    @8 let’s hope you are right.

    IMHO we are one or two more blows to the patent system from seeing a general collapse of patents at big corporations. They will still file some on the “important” tech, but expect to see budgets plummet (probably 50% and then 90 %).

  11. Michael Shore March 21, 2018 1:57 pm

    I wrote the paper a few weeks ago for a speech I gave the Philadelphia Intellectual Property Law Association and updated for this publication. In my speech I talk about the influence of Google and Big Tech on academia and “think tanks” in more detail, but they do a much better job of covering their tracks in those realms. The goal of this piece was to educate members of the public and office holders who may not understand the role of patents in society and WHY companies one might think would want patents to be strong (high tech, Silicon Valley), once they gain market dominance want the opposite. Patents to the public are something abstract and understood to be removed from their daily existence. What I am trying to do here is inform them that patents matter not just to flaky inventors and nutty professors, but every American whose livelihood is tied to a start up, small company, or niche technology that only exists in the market because investors believed their investment in those high risk startups came with some protection in the form of patents.

    The presumption of validity is THE thing that makes any patent valuable. By taking it away, efficient infringement became a viable, even required as to economics, business model. Just like any sane company would want to find a way to shield its patents from an IPR, any sane infringer would want a path to easily and efficiently kill patents, the only thing that prevents them from enjoying the fruits of their PAST innovation, an economic monopoly.

    Please copy and paste the link to this article and send it to your Congressional delegation, any judges you might know and any organizations who might have an interest in the topic. I am also willing to go anywhere at my expense to preach the word of strong patents and the devilish ways of PTAB and Big Tech.

  12. Night Writer March 21, 2018 2:04 pm

    @11 Michael, I don’t have a link, but in a documentary about Google in 2012 I think both the founders said that their biggest fear was that a small start-up would figure out a better way to search the internet.

    (Also, to prop up your arguments, I believe the revenue from ad associated with their search engine still provides Google with 90 percent of their revenue.)

  13. Valuationguy March 21, 2018 3:28 pm

    Michael….when you understand that the leading ACADEMIC proponent of the “efficient infringement” meme (and leader of the movement to weaken patents overall) is Stanford professor Dr. Mark Lemley…..who is married to Rose Hagen, Google’s former Chief Trademark Counsel (from 2004 – 2010)….you might connect the dots even more. (Yes….she was there for the IPO (stock options anyone)…and helped the Company grow from $0 revenues to $20B in revenues).

    Rose LIVED through (and strategically navigated the Google past the gov’t anti-trust regulators regarding) the Android operating system ripoffs it made to set up Google’s IPO as well as its growing dominance in search driven by its ad platform.

    In the early days…Google actually paid him for his key papers promoting the weakening of the patent system….before realizing that the optics of this was bad…so they routed their funding through other non-public sources not SPECIFICALLY targeted to specific papers…to avoid further outcry.

    Surprising enough….the few references online you find connecting the two is only his thanks in many of his papers for the editing and proofreading feedback support she provided….and there is no reference to HER connect to Google or that she is his wife in such papers.

  14. Silicon Valley inventor March 21, 2018 3:31 pm

    Excellent article. It should also be noted that upwards of 250 Google employees were White House staffers in the coziest revolving door between the exec branch and big data corporate interests that we’ve ever seen. This could help explain why Google was brought in on antitrust charges in EU for three record-breaking violations, but has totally eluded serious investigation in the US. Hopefully that will change under the new DOJ.

  15. Valuationguy March 21, 2018 3:45 pm

    Last aside…since I know there are posting limits which I don’t want to trigger.

    You might also want to include Dr. Lemley’s connection to setting up the predecessor to Lex Machina (now owned by LexisNexis) which is often quoted for patent litigation statistics in a relatively misleading way to accentuate the “troll problem”, encourage infringement and patent holdout by large and small infringers, and minimize the statistics around how biased the PTAB has been since it was created.

    Since Michelle Lee was at Google from 2003-2012 as Deputy General Counsel and Head of Patents and Litigation Strategy….what are the odds that Lee was on first name basis with Rose (her peer on the Trademark side of IP) and Mark?

    You gotta admire his domination of the patent debate throughout the Obama Presidency….in multiple ways.

  16. Night Writer March 21, 2018 4:04 pm

    @13 and 15 Valuationguy

    Thanks.

  17. Anon March 21, 2018 5:46 pm

    “admire” is not the word that I would have chosen.

  18. Night Writer March 21, 2018 6:34 pm

    @17 Anon.

    I think Lemley has helped 10’s of attorneys become professors of IP. You have to wonder if there is some financial compensation from Google for the universities taking the anti-patent “scholars.”

  19. Anon March 21, 2018 8:33 pm

    I understand some examiners use google to search. That could raise interesting possibilities for creativity at google.

  20. Gene Quinn March 21, 2018 8:40 pm

    Anon @19-

    Thanks for joining the conversation. Unless our longtime friend “Anon” has started using a different e-mail it appears as if you are not the original Anon. We have Anon and Anon2, so if you could pick a slightly different moniker it would be most helpful. Cheers.

  21. Anon March 21, 2018 9:02 pm

    Sister Anon @19,

    apologies for the “dibs,” and usually I don’t mind sharing the moniker (unless a post will lead to confusion of the positions that I have taken).

    Your post DOES raise some interesting concerns though – related to the fact that examination at the Office is supposed to be done in confidence (and the fact that Google is NOT a confidential tool).

    I have to imagine that if my application has not been published (and/or I have requested a non-publication status) and I catch on to the fact that the examiner has violated confidentiality by using search terms directly related to MY application, that the internal forces that be at the Office would be hearing from me in short order.

    It may be a bit more of a grey area if my application has been published.

  22. Anon March 21, 2018 9:06 pm

    In addition to the item raised by my sister Anon @19, I am reminded of the “anti-Tr011” effort unrolled by the Office awhile back, in which internal processing had already been undertaken (at the time of the announcement to the public) that indicated that the forces of Google has already been active internally to the information at the Office – and undoubtedly, the propriety of such access would surely be implicated in the notion of confidentiality of applications prior to their publication (if they are published at all prior to grant).

    My reply immediately above has prompted the realization that Google’s extensive – and undocumented trips to the Patent Office may very well have compromised far more than anyone may have realized.

    Yet another reason why sunshine from the Office is imperative.

  23. curoius March 22, 2018 2:28 am

    Gene @ 8, what rumblings about curtailing the PTAB or frustrations from the satellite offices have you heard? Can you share more detail? Examiners? Management/directors? I’d love more insight if you can share.

    I’m an examiner, and most other examiners are blind/ignorant of anything going on at the PTAB. They won’t notice until (or if) filings drop off a cliff in a year or two and half the examining corps is out of work. I also have some friends who are judges (they’re not all bad, I promise) who say that although there is some concern amongst the judges, there are no plans to reduce the number of judges for now, and in fact, they’re still hiring. So the PTAB seems confident enough.

  24. Benny March 22, 2018 6:43 am

    Quote –
    “Some economists are estimating the decline in the value of U.S. patents to be in the trillions of dollars.[23] That is a lot of bananas.”

    This comes from a reference which includes the following statement:

    “Another way to look at the impact of the AIA starts with the count of the number of US Patents in force, about 2.1 Million according to Professor Dennis Crouch of the University of Missouri School of Law[6]. Given our 2012 IPOfferings value of $422,000 per patent, the value of patents to the US economy was $886 Billion”

    If anyone of you didn’t catch the sheer stupidity of that statement, I’ll explain. Something like 90% of all current US patents have no actual value at all. Zero times 90% of 2.1M doesn’t get near 886 Big ones.
    The writer of the referenced article isn’t an economist, by the way.

  25. Night Writer March 22, 2018 7:47 am

    >>They won’t notice until (or if) filings drop off a cliff in a year or two and half the examining corps is out of work.

    I work with big corporations and have actually had conversations with senior VPs about patents. I know how they think about them. It used to be that R&D would be spent to increase the number of patents. Billions would be invested with a goal of getting X thousand more patents.

    Now, patents have some value. They can do some things still and old habits die hard. But, you see the cracks where the patent budget is more vulnerable and there is wide skepticism that patents have much value.

    I think we are a severe downturn or one or two more blows (like Alice or the AIA) to a collapse. I am not sure how the rest of the world plays into this. There is more value to getting a patent in some other countries (and I get patents in many countries), but it is very expensive to prosecute an application around the world. But these type of applications may still originate in the USA.

    There are a lot of factors, but we are certainly at the point now that if big corporations cut their patent budges in half during the next recession, it would not surprise me.

  26. Night Writer March 22, 2018 7:49 am

    And, one thing we see too is the continuing raising of the maintenance fees comes from the same budget and puts a lot of pressure on front-end prosecution work.

  27. Bemused March 22, 2018 10:45 am

    Benny@24: Of those 210,000 patents (10% of all issued patents) that you claim are the only ones that are worth anything, what is the average value of those patents?

    Foundational patents can easily be worth tens if not hundreds of millions of dollars in licensing revenues. What is the loss in value to US patents from the devaluation of those foundational patents as a result of the AIA?

    Might it be even greater than $866 million? The author of the referenced article might not be an economist but apparently neither are you for that matter.

  28. curoius March 22, 2018 11:16 am

    Night @ 15 – thanks for chiming in. I was chatting with a patent attorney partner I know, and he is very concerned for the health of his firm because several bigger clients seem to be in the boat you describe – they are on a hair trigger just waiting to slash the patents portion of the R/D budget if they get much more bad news.

  29. curoius March 22, 2018 11:17 am

    I meant “Night @ 25”

  30. angry dude March 22, 2018 11:34 am

    Some correction is in order:

    SV tech “elites” – all those rich google punks, amazon freaks and apple lgbts contributed disproportionately to Hillary campaign in the last election.
    Trump may personally hate Bezos and the rest of those big tech freaks BUT he and his administration will never allow those “precious” stocks to fall
    Fixing US Patent System at this point in time means just THAT: the sharp drop of artificially inflated google, amazon, apple etc stocks (50 % drop easily)

    And this will never happen, unfortunately..very unfortunately

    They will sacrifice the future of this country and all small entity inventors and startups for a dozen of those “blue chip” stocks

    Lemmings, rejoice

    Buy some more of those amazon and google stocks, if you can afford them

    Patent system is no more
    amen

  31. angry dude March 22, 2018 11:43 am

    Valuationguy @13

    Stanford is married to Google in a gay marriage

    Google has a few more academic spouses to (homo)sexually and otherwise exploit though

  32. Benny March 22, 2018 12:05 pm

    Angry,
    I strongly object to your derogatory use of the terms lgbt and gay. A member of my family identifies with the lgbt community, and I see nothing negative about that. The opinions of conservatives/radical religious ideologists who think differently do not earn my respect.

  33. Benny March 22, 2018 12:11 pm

    Bemused @27,
    Valuing patents accurately is a near impossible task. Licensing a patent from a practicing entity may merely transfer wealth from one party to another rather than create value.
    Very, very few current patents are actually worth the gargantuan sums you mention. The value of many patents relies not in creating wealth, but denying the market to alternative operators. Furthermore, the vast majority of valuable patents are in fact licensed rather than litigated, and no loss of value is incurred.
    Merely citing numbers in billions doesn’t make economic sense.

  34. Night Writer March 22, 2018 12:40 pm

    @33 one thing we know from the market of selling patents is that patents are worth about 20 percent of what they were before the AIA. That is from actual sales.

  35. Anon March 22, 2018 12:41 pm

    I agree with Benny.

    Angry Dude, not only should you stop being a puppet of the Efficient Infringer lobby and spreading their message of “don’t bother,” but your needless and quite inappropriate attempted orientation denigrations have no place in a meaningful discussion.

    Use reason along with emotion, please.

    But beyond that, Benny, your views at 33 do not accord with the larger notion of value. Value is not merely “positive,” but very much may come from strategic “keep-out” zones that act as levers to other “positive” actions (both related to other item sin commerce as well as the “mother of necessity” innovation FROM being “kept out.”

  36. Bemused March 22, 2018 1:33 pm

    Benny@33: I pretty much disagree with everything in your comment.

    “Valuing patents accurately is a near impossible task. Licensing a patent from a practicing entity may merely transfer wealth from one party to another rather than create value.”

    Who said anything about “create value”? The calculus is whether the value of intellectual property has been adversely impacted. To deny that patent values haven’t significantly deteriorated post-AIA is to deny reality.

    “Very, very few current patents are actually worth the gargantuan sums you mention.”

    Really? According to the 2017 PWC Patent Litigation Study, the average median patent damages award over the past 20 years was $8.1 million. In 2015, the median was $10.2 and in 2016, the median was $6.1 million. Do the math.

    “The value of many patents relies not in creating wealth, but denying the market to alternative operators.”

    Well, thanks to e-Bay and the high kill rate at the PTAB how effective is the threat of an injunction any more? Add that to the mix when looking at patent devaluation.

    “Furthermore, the vast majority of valuable patents are in fact licensed rather than litigated, and no loss of value is incurred.”

    That statement evinces utter ignorance about licensing. If patents have been devalued, how is licensing (i.e. value of the IP to the patent owner) not adversely impacted?

  37. Bemused March 22, 2018 1:38 pm

    angry dude, once upon a time I might have told you that you were better than to engage in gay-bashing and those kinds of offensive remarks. Now, I’m not so sure that you are better than that.

  38. Michael Shore March 22, 2018 3:01 pm

    Patents and intellectual property is a major component of “good will” valuation in public companies. The value of patents has declined significantly because they are harder to enforce and the outcome of enforcement has never been so uncertain. Although the value of patents being enforced has declined, as has the number of enforcement actions, public companies have not adjusted those good will valuations to reflect the new reality. I have looked at patent portfolios on behalf of clients being offered by IBM, Intellectual Ventures, Siemens and other companies asking for tens of millions of dollars and told them I would not give them $10 because the patents likely could not pass BOTH an IPR and a 101 challenge. Those patent portfolios, some numbering in the hundreds, are being carried on the balance sheets of their owners valued at tens or hundreds of millions in good will. The day or reckoning will come when public company CPAs tell their clients they have to write off billions in good will to reflect the decline, in some cases total destruction, of the value of their patent portfolios.

  39. angry dude March 22, 2018 3:20 pm

    Michael Shore@38

    So, to put it in perspective, there are two possible scenarios:

    1) Patents are worthless as you (and I) say making those “good will” valuations of publicly traded tech companies meaningless and eventually leading to huge write offs = massive decline in stock prices

    2) Patents are suddenly strong again (impossible scenario but let’s just pretend) – then a bunch of dudes like myself come out of woods and claim their dues from biggest public tech companies in US for willfully infringed US patents:
    same result – massive stock collapse

    thank obama, congress critters on both sides and senile scotus retards for such a clever manipulation of 200-year old US patent system inevitably leading to collapse

    Après moi, le deluge

  40. Bernardo Paratore March 22, 2018 4:05 pm

    Well written and accurate description of the downfall of the US patent system.

  41. Anon March 22, 2018 4:32 pm

    public companies have not adjusted those good will valuations to reflect the new reality.

    THAT is an item that I have attempted to engage on the merits previously.

    Near as I can tell, the accounting “rules” permit a huge latitude in how to report the values of one’s patent portfolios.

    Whether this is strictly true or not, I have not confirmed.

    Whether this SHOULD be allowed, well, that too is another matter altogether.

  42. Michael Shore March 22, 2018 5:25 pm

    There is not going to be a “massive stock collapse” if patent law goes back to Pre-AIA determinations of patent validity. As I recall, the stock market was doing pretty well in 2012, and it certainly had its many heydays in the decades before the AIA. Might a strong patent system knock down some economic monopolists whose past innovations have been replaced? Yes. Would those old innovators be replaced by new innovators who obtained and enforced their patents? Yes.

    Patents do not stop competition or stifle innovation. Patents make competition using things you did not invent (aka things you stole) more expensive for the thief. Patents actually increase innovation because if Company A is dominant, then Company B innovates and makes something better that Company A cannot steal, Company A is forced to innovate itself to advance the technology and regain their former position of glory. Patents FORCE innovation. Economic monopolists stifle innovation because they can kill it in utero by making it impossible for innovators to be compensated fairly, if at all.

  43. Anon March 22, 2018 6:58 pm

    Bravo Mr. Shore @ 41 – well stated.

    Big Corp Efficient Infringers would rather compete on non-innovation factors.

  44. angry dude March 23, 2018 10:02 am

    Michael Shore@41

    “There is not going to be a “massive stock collapse” if patent law goes back to Pre-AIA determinations of patent validity”

    yes, there will a massive stock collapse if patent law goes to pre-Ebay times – the only times when patent law actually reflected what is written in US Constitution… sort of (after spending 2-3 million on district court litigation and appeal)

    Pre-AIA times were already very very bad for small patent holders, in case you don’t know

  45. staff March 23, 2018 10:13 am

    ‘Federal District Court with the traditional protections to patent owners invalidates 28.76% of patents as of 2015. ‘

    The devastation to inventors is far worse. According to the 2017 PWC patent lit study, inventors now only succeed through appeal 3% of the time.

    https://aminventorsforjustice.wordpress.com/2017/10/02/inventors-only-succeed-about-3-of-the-time/

    That explains why small entity issued and filed applications are now running only about 10% of their historical shares. Why on earth would anyone risk bankruptcy on such a lark. Truly, for inventors the patent system is all but dead -murdered by the firms you reference, but there are others. All you need to do is research who backed and promoted AIA. That will expose all the thieves who had a hand. Together they now loot and ransack their small competitors. There are no longer any disincentives to their grand theft. Inventors must take back the patent system. Then we will find an appropriate penalty for the thieves who conspired against property rights. Public hanging would fit the crime.

    We are now forming committees to draft our bill in coordination with our friends in Congress based on our proposed measures which will restore the patent system.

    For our position and the changes we advocate (the rest of the truth) to restore the patent system, or to join our effort, please visit us at https://aminventorsforjustice.wordpress.com/category/our-position/
    or, contact us at aifj@mail.com

  46. Benny March 23, 2018 10:17 am

    Michael @41,
    You say that patents do not stop competition. Here at the knurled flange bracket factory we obtain patents in order to stop competition. That probably comes as a surprise to you. ?What other motive did you have in mind ?)

  47. Michael Shore March 23, 2018 10:26 am

    Angry Dude,

    I know exactly how times were for “small patent holders” pre-AIA because I am a small patent holder and have been for 20 years. I own 30% of a small specialty semiconductor company that exists today only because in 2003-2007 it was able to defend its niche by enforcing patents against Infineon, STMicro and Fairchild. The royalties that resulted from those patent cases and the threat of injunction are what literally kept the company from being swamped by bigger players who misappropriated the technology. Today, more than 100 people on three continents have jobs because those patents were assumed valid and could be enforced in an Article III court.

    I also represent both private companies and some of the premier research institutions, public and private, in the world. My clients include Caltech, NASA, The University of Texas, .The University of Florida, Purdue University, The University of Virginia, RPI, Johns Hopkins, Boston University and many others. I have seen how from 2012 to the present infringers have taken a much more arrogant attitude about licensing from non-profits, including those supported by US taxpayers, literally telling me on occasions that they would not pay any royalties, no matter how reasonable, until they had spent some money attempting to kill patents in IPRs, as they viewed the cost of an IPR negligible in relation to paying reasonable royalties. “Why should I pay University X anything if I have a 75% chance to kill the patent in an IPR and I can get my customers and suppliers to file IPRs as well?” They used the AIA not to avoid the cost of defending against “junk patents” which cost them LESS to settle than an IPR, but to kill very strong patents that would survive a court challenge because the costs of an IPR is cheap compared to paying for the taxpayer funded R&D they would rather steal.

    So no, the stock market would not crash if we went back to the pre-AIA system. New companies with actual patent protection could compete, forcing more innovation. People like Jeff Bezos might see their fortunes fall from $130 billion to $110 billion, but I think that is a small price to pay for maintaining a non-monopolistic economy where innovation is respected, protected and valued.

  48. Michael Shore March 23, 2018 10:32 am

    Benny @44 the existence of patents allows you to compete with a new product against incumbent technology using your new technology exclusively for a limited period of time. So if your competitors want to beat you, instead of stealing your technology, they have to be innovative and improve theirs, design around yours or otherwise come up with something new of their own. Excluding others from stealing via a patent is like locking the door to your house. Those who want a flat screen TV cannot steal yours, so they have to go out and work, earn their own money and buy their own flat screen, and how they managed to buy one is what will drive them to provide a good or service to drive economic growth.

    Infringement is stealing. If everybody was free to steal, a lot fewer things would be bought (read: licensed).

  49. angry dude March 23, 2018 10:37 am

    Benny@44

    Benny, just give me couple numbers for your “patents” and I will kill them right here, in this thread (and follow up in IPR if you ever try to enforce those against any commercial entity)
    sort of like Mark Cuban-owned patent on self-balancing something was literally killed on IPWatchdog a while ago…
    You have such no respect for patents of others I can safely assume that your own patents are sh1t as well

  50. Benny March 23, 2018 10:46 am

    Michael,
    doing our utmost to make life difficult for our competitors, by planting landmines in the form of patents, is not the same as encouraging competition.
    Angry, everything you wrote is equally true for our competitor’s patents. Care to kill one or two of them for me?

  51. angry dude March 23, 2018 10:47 am

    Michael Shore @45

    “..but I think that is a small price to pay”

    yeah, right

    it remains to convince all other folks that it is a small price to pay
    not just Bezos, mind you, but all the lemmings owning amazon stock as part of their retirement portfolio
    good luck with that, dude

    Pre-AIA is not good – your company would have never made it past Ebay – that was the year (2006) when my patent was granted (and of course it was already published so there was nothing I could do)

  52. Michael Shore March 23, 2018 11:01 am

    Angry @49 we actually did receive a preliminary injunction that drove a third license deal, and the two prior licensees were supportive of it because they did not want unlicensed competition. The objective proof is that the AIA has been a disaster for all but the Big Tech economic monopolists. I am actually out there “in the trenches” for my clients and see on a day to day basis how IPRs, Alice and the lack of injunctive relief has made infringers not just bold, but arrogant and dismissive of patent assertions. The United States Chamber of Commerce agrees as well, showing the US patent system now tied for 14th with Italy instead of #1, the place it occupied pre-AIA.

    The Big Tech and economic monopolists hate patents. If you want to see what a country looks like that has a few entrenched monopolies controlling most aspects of life, go see Russia. We are now far fewer spots ahead of them now in patent system strength.

  53. angry dude March 23, 2018 11:26 am

    Michael Shore@50

    The comparison with Russia is incorrect:

    In today’s Russia former KGB “elite” controls all of the large state- and privately-owned monopolies and determines economic winners and losers – regardless of how much money they have (some of the richest people in Russia were stripped off their wealth, imprisoned, exiled or even executed by KGB quite recently)
    no need for patents indeed

    In today’s USA oligopoly rules everything including government agencies, congress and scotus, so it’s all about money and who has more money to spend on lobbying, lawyering and creating PR campaigns in mass media
    no need for patents either

  54. Michael Shore March 23, 2018 11:32 am

    Angry @51, I am sorry you have given up on the US patent system. I have not. I think if people understand what is happening and why its happening, they can affect change by voting and letting their voices be heard at Congress and the PTO. The Federal Circuit may be too compromised by anti-patent Obama appointees, but SCOTUS may have seen enough abuses by PTAB and ineffectual control by the Federal Circuit to step in and perform some error correction, either in Oil States or some other case. I may be wrong, and the cynics may be right, but I have to believe that sane, honest people still exist in government who agree more with Abraham Lincoln and Thomas Jefferson about the importance of patents as opposed to President Obama who saw patent reform as a campaign contribution piggybank that he could depend upon for cash.

  55. angry dude March 23, 2018 11:43 am

    Michael Shore @52

    I simply can’t afford to pour my money (and labor) into US patent system – already wasted tens of thousands of dollars
    let’s be realistic – what is the percentage of people in general US population who own patents ?
    less than 1 percent probably
    and 99% of lemmings don’t care about patents at all
    this is not nearly the same as first or second amendment

    Cafc is a joke, true

    scotus is senile and a joke too – until half of those justices are replaced nothing good will happen
    so far only one justice – Gorsuch shows some reasoning
    we need at least 5 of those on scotus
    obama is gone, true, but trump is all about money – his money too
    he may personally hate bezos but will never allow amazon stock to fall even 20%
    (he probably owns some 🙂

  56. Tim May 24, 2018 7:41 am

    I just finished Peter Schweizer’s book about corruption being conducted by the offspring of political leaders, as to protect those that aren’t allowed to profit from foreign entities and other corrupt individuals. The book is “Secret Empires”. I beg most of you to try to contact Peter, as he’s now working on another, and going after the “big” techies, like Google and others. This and other threads from this site would help him immensely!

    Tim

  57. Mark Montgomery May 30, 2018 6:10 pm

    Saw this when posted and shared again with my networks recently. For me personally the general direction of uncertainty has resulted in a sharp change in my own personal advice to entrepreneurs relative to risk and methods (pro bono for last decade — consulting and VC earlier). It’s also changed my personal behavior. I have several AI systems inventions that are retained due to the well articulated situation above and increased activity in nation states, cyber and reverse engineering by extremely well financed actors, including corporate, state, and state affiliated.

    I was an early advocate for Microsoft, Google and many others at pre-investment stage, later becoming a critic when they matured into predatory monopolies. Today we are experiencing an oligopoly expanding rapidly across industries with threat of global oligarchs, which could become much worse in a regionalization phase unless and until anticompetitive behavior is restrained in a meaningful manner. Our antitrust laws still apply to some degree but are out of date and, since not enforced, are irrelevant anyway. Speaks to problem above.

    The irony of Google is that without two key patents the company very likely would not exist. Funding was a challenge — almost a year after I and I suspect others recommended to the two leading VC firms. One was internal for the search algo — very simple by today’s standards — even quaint or primitive compared to AI, but effective for the time. The second as I recall was a business method patent owned by Idea Lab. I don’t recall whether funding came before the Idea Lab license was negotiated, but do recall it was reported to be intense negotiations.

    As a nearly life-long entrepreneur and patriot nothing has been more regrettable as assisting companies early in life, enjoying witnessing, observing and advocating through growth stage just to see them become monsters that attempt to prevent others from having the same opportunities they enjoyed.

    One frustration that comes close is to observe your country becoming complicit in that behavior, particularly for reasons that appear to be based on corrupt political process or partisan politics.

    Here is hoping that the U.S. finds its way out of the foggy wilderness before it’s too late.

  58. Lawrence Glaser May 31, 2018 1:15 am

    America is on to this. President Trump was told plainly, DRAIN THE SWAMP. Although he toys with its meaning, he knows what America sees. Banks and Brokerages can set traps. You fall into one, you are done. No class actions, no private right to protect your property. Just FINRA, more owned than the PTAB. That is just the tip of the ice berg. President Trump needs to stop playing The Apprentice, Grand Finale and BE THE AMERICAN HE PURPORTS TO BE. DO SOMETHING. Crooked courts, NYSE, SEC, FINRA all unbridled. Set up a committee who must follow through on ALL COMPLAINTS and make it all retroactive. DRAIN THE SWAMP. Do not say it, DO IT. Its all tied together.

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