IBM: Patent Troll Problem is ‘Just Noise’ Post-America Invents Act

This marks Part III of my four-part interview with IBM discussing the state of innovation and the U.S. patent system from the standpoint of a company that has obtained the most U.S. patents for 26 years in a row. Below, I continue the conversation with Mark Ringes, Vice President and Assistant General Counsel for IBM, and Manny Schecter, Chief Patent Counsel for IBM, picking up on the topics of prior art and patent trolls, moving on to a comparison of the U.S. patent system with the rapidly evolving systems of China and Europe and, finally, examining how companies are refining patent prosecution practices to address the Section 101 chaos.

QUINN:  Earlier in our conversation, Manny, you said that part of the problem with Section 101 analysis at the USPTO today comes “not from whether 102, 103 and 112 can or should resolve the problem, but whether or not the prior art that is needed under some of those sections is documented and findable in a way that we have considered to be acceptable.”

Do you really think that findability of prior art is still an issue? Because I think one of the problems with this early on was there were some “bad” patents—and I’m using air quotes for “bad,” because really, what is a bad patent? A bad patent is one you don’t like, right?—but there were probably some questionable patents in the early days. You could call it the gold rush after State Street, because there wasn’t accessible prior art for the examiners to find. But that’s now 20 years ago. We’re never going to have all the prior art that could ever be found at the examination stage, and I really am worried about the fact that, if there is this never-ending ability to challenge patents until the last minute, if the patent has any kind of viability or breath, then the patent is not a property right, because it never quiets. So, at what point are we going to be certain enough? Are we there yet with the big data accessibility to the information?

RINGES:  Well, I think from the results of the [Patent Trial and Appeal Board] PTAB post-grant processes it’s clear that the prior art is able to be found. And it’s just a question of whether the patent office has the tools to do it at the examination stage. I think that’s one of the challenges we’re facing, because I don’t know that the patent office has those tools. I think the Director would love to get them and would make the investment in the technology to get those tools, but I’m not sure that the examiners have them, or that they have enough time to apply the tools they have to get to the right decisions. I think both of those problems exist.

SCHECTER:  I was speaking on a level broader than just software. I would agree that the controversy over software has been around long enough and prior art should be pretty readily available now; maybe that’s now true in business methods. I mean, obviously, with any emerging area of patentability, you have a problem not only with whether the art is available, but also whether you have examiners and justices who are trained to deal with the art. But I’ve also heard examiners in public ask questions about so-called silly inventions—the marriage proposal inventions and the like. I have no idea how frequently those get filed. I’ve not heard of them really being much of a problem in terms of their being enforced if there is some number of them that have been issued, but there is also the issue of finding the art for those. Every time you enter one of these areas, you have a bit of a practical problem in that people don’t have a set of written documents in a drawer in their desk that they can go to quickly to do the job that they may in their heart know they have to do, but don’t immediately have that killer piece of prior art right there, and that jeopardizes just how quickly and how easily they can do the job.

QUINN:  Do you remember the swing that went side to side? When I was teaching patent law, I used to have this standing policy that, if you could find prior art that pre-dated the filing date on that swing, I’d give you an A. And I never had a student that took me up on that. And I said the prior art you give me also can’t say, “for goodness sake, don’t swing side to side.” Because, these swings would always say “don’t do that, you go frontwards and backwards.”

SCHECTER:  But the fact that it said “don’t do that” indicates you could do that….

QUINN:  It does, but it would teach away from that, right?

SCHECTER:  That’s true, right.

QUINN:  But that embarrassed the patent office. I wonder how much of that caused these concerns to bloom and blossom and made people realize that there were these really overbroad patents being issued. It was shortly after that that patent trolls became a really big problem.

RINGES:  Well, there’s a long history here. I think a lot of it has to do with formation of the startups around the turn of the century and many of them going bankrupt when the economy went bad. They all had these patents that they sold off to non-practicing entities who wanted to enforce them, and some were better than others, and then came the abusive litigation behavior that we saw from a lot of entities at the time. I think a lot of that has largely been fixed. With the post-grant procedures, with the changes around shifting of attorneys’ fees and costs, a lot of the pressure in the marketplace has gone down.

Frankly, I’m indifferent to what model anyone uses to monetize patent assets, whether you’re a practicing entity or you’re a non-practicing entity. You have a right to a patent, and you should have the ability to enforce it. If your patented invention is being practiced, then you are entitled to royalties on it. That’s the way the system has worked for 200-plus years, and it has worked quite effectively. I’d love patents to be better examined through the process with better access to prior art and that sort of thing, but in lieu of that, in the current situation, we have the post-grant procedures, which seem to solve a lot of the problems around the poorer patents, so I think the troll scare is largely just noise now.

QUINN:  I think you’re right, and I wonder if we’re still dealing with these legacy problems of the troll issue in the software world with this Alice–Mayo test.

RINGES:  Well, I think there are players in the market that continue to raise those fears because they are concerned about lots of cases being brought against them, and so, we still continue to hear those assertions frequently when we discuss whether we should do something about 101.

SCHECTER:  And clearly, the statistics show that the trend in terms of the volume of litigation in the last few years is that it has been dropping.

Patent Strategy Shift: China and Europe?

QUINN:  Yes, it’s been dropping. You can’t get protection in America on a lot of software that you can protect in China and Europe today, and the exact opposite was the case 10 years ago.

RINGES:  Well for the last 200 years, really.

SCHECTER:  200 years ago, some of those countries didn’t have patent systems!

QUINN:  Right; even in China, it was just 35, 40 years ago that they didn’t have a patent system.

SCHECTER:  Yes, their patent system started in the 80s.

QUINN:  Yes, so less than two generations ago, China didn’t have a patent system.  We joke about this all the time. Ten years ago, if you would have come in and said, “10 years from now, my major prediction is that the U.S. is not going to allow patents on software and about half of the biotechnology industry is not going to be able to protect their inventions, while at the same time, Europe and China will allow protection on both,” you would have been put in a straitjacket and hauled away. Everyone would have looked at you like you’re crazy.

SCHECTER:  So that, to some extent, I think shows you how hard some people find the problem of defining the boundaries to be. I think it also shows how much the influence of public opinion or politics sometimes gets in the way; that things sway rather than just having a simple and clear test that we all want. Another issue that you just danced around is, why can’t we get to one standard that the whole world latches onto?  We should be able to harmonize here.

QUINN:  We should, and it’s funny you say that, because I interviewed the Chief Operating Officer of Mobility and Mechatronics at the European Patent Office, Roberta Romano-Götsch, and she was telling me that what they see in Europe is that a lot of SMEs are popping up and filing patent applications to protect their software in Europe because they can’t get protection in the U.S., so they can get investments. Patents and patent applications are so critically important for that group of companies in order to get the investment they need to grow and become the next group of large companies. When she was saying that, I thought to myself, that was so self-evident for us in America, yet she was saying that this is something new for Europe.

As IBM, do you experience that as well? In your dealings with China and Europe, do you feel that you have the same struggles that everybody has in this space?

SCHECTER:  Of course we do.

Getting Past the PTO

RINGES:  I think there are some issues there. Manny, correct me if I’m wrong because you’re much deeper into this than I am, but I think sophisticated businesses have largely found a way to get their patents issued in the U.S. despite the 101 issues. They understand exactly what they need to get through the patent office. The issue in the U.S. comes down to enforceability and how do you use those patents in the right way? So, enterprises like IBM can still get their patents issued in the U.S. and then decide whether to have them issued in Europe or China. But the less sophisticated entities that don’t necessarily have the budgets are finding much more trouble getting things done in the U.S. and that’s why we see investment, at least in patent assets, and probably investment in development, moving to places like China and Europe.

SCHECTER:  I tend to agree. I mean, there’s lots of things we could talk about here. One thing you reminded me of with your comment about the sophisticated entities getting their patents, and I think you know this, Gene, is that there are service providers now that sell tools specifically designed to help you clear the 101 hurdle by the language you use or don’t use in your claims or by trying to get cases steered towards a particular art unit or examiner. That those tools exist demonstrates there is a problem and somewhat advantages the larger providers, to the extent that those tools work. But, once you get the patent, there is an enforceability issue.

QUINN:  Well, before we go into enforceability, let me ask you just a quick question. Do you notice that the patents that IBM is getting granted, say, just this year and generally speaking, in the software space—since that’s what we’re talking about and this is probably where most of your stuff is anyway—are longer than the ones you would have been issued five years ago, and longer than they would have been ten years ago?

SCHECTER:  What do you mean by longer?  Longer claims or longer pendencies?

QUINN:  Longer length or specification—the patent itself is longer. If you look over not just the claim length, but at specification length, it keeps growing and growing and growing; and certainly with the response to every Supreme Court case, but even with some of the Federal Circuit cases, it’s like, “oh, okay, well now we have to put that in to address that.” To the point where you look at patents from 40 or 50 years ago and they were short—you could read them and understand them.

SCHECTER:  Well, I’m not quite sure I would go quite that far, but I generally agree with you. I mean, there was a time where most people I think in our profession were trying to say as little as possible. Particularly in the background, because it was becoming admitted art that was being used against us. So, the applications I think for a while there actually became on the terse side, but recently, because of Section 101 for sure, it’s growing because people don’t know what is going to satisfy all the teaching and technicity kinds of things that sometimes bubble out into these cases so they now tend to try to put as much technical description in as possible.

QUINN:  And context—without any context, you’ve got nothing I don’t think. I mean, you have to have at least some context.

SCHECTER:  Yes, I agree. 

Stay tuned for the final installment of my interview with IBM later this week, where we’ll touch on startups, enforceability, the courts, and predictions for 2019, among other topics.

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