Gene Quinn at the AIPF Annual Meeting in Washington, DC, September 29, 2014.
Today I am going to talk about what I call the patent pendulum. When Todd Van Thomme and I originally started talking about what I would talk about today I said that there would undoubtedly be something that comes up at the last minute. I even joked that I might wind up talking about how the Supreme Court actually got the Alice decision right, surprising us all and saying once and for all that software is clearly patentable. We all know it didn’t turn out that way. So the title of my presentation today is this: Dark Days Ahead: The Patent Pendulum.
As you are probably all familiar, patent law never stays the same in the same spot. It is always swinging one or another, either swinging more towards stronger patent rights and the patent owner, or away from strong patent rights and away from the owner. It has been that way throughout history.
Normally what’s happened is that we’ve seen the pendulum swing over longer periods of time, like over decades, and then it’ll move away. For example the 1952 Patent Act was premised on the fact that Congress didn’t like the way the law was developing over the preceding years and wanted more things be patentable, hence the 1952 Patent Act did away with the flash of creative genius test. So things swung back toward a more patent friendly law, at least for a while. And then in the 1970s no courts ever saw a patent that actually had valid patent claims. This famously prompted Congress to create the Federal Circuit. Under the guidance of Chief Judge Markey and Judges like Giles Sutherland Rich and Pauline Newman, who is still on the court, the pendulum swings back toward the patent owner once again.
Several weeks ago I wrote about the fourth annual DRTV Summit sponsored by InventionHome. Initially the deadline for inventors to submit their inventions for consideration was September 30, 2014, but InventionHome has extended the deadline for inventors to submit until the end of this week. Submissions are now due by the close of business on Friday, October 3, 2014.
The DRTV Product Summit is a one-day event that will be held on Wednesday, October 22, 2014 at Robert Morris University in Pittsburgh, Pennsylvania. Inventors will be given the opportunity to pitch their products to representatives of the six (6) DRTV companies on one day in one location.
The event is not open to all inventors. Over the past few years the event has grown and there has been significant interest in the inventor community. In order to be considered inventors must submit their inventions to be reviewed by a panel of referees. Thanks to an extended deadline, submissions are now due no later than Friday, October 3, 2014. This submission and selection process insures that only the highest quality inventions are presented to the representatives of the DRTV companies that will be present. This maximizes the value for those DRTV companies, which means they keep coming back year after year. It also reserves pitch time for inventors with the most commercially ready products that have the greatest immediate chance for a deal.
No question exists that patent eligibility under Section 101 has been, and remains, the most active question in patent law. Watching the rapid flow of cases back and forth between the Federal Circuit and the Supreme Court exceeds the excitement generated by most TV shows in sheer entertainment value. The only question open for discussion is whether we are watching “Game of Thrones,” “Survivor”, or “Modern Family.” Actually, the best choice may be “Lost”.
To understand the Supreme Court’s decision in Alice Corp. v. CLS Bank Int’l, a page of history provides more illumination than a book of Lewis Carroll references. Here we need to pick up at the point when everyone thought the computer patentability wars were over.
By the late 1990’s, the last frontier was business methods. We had absorbed Diamond v. Diehr and moved on to Beauregard claims and propagated signals. Everyone was making, or wanted to be making, tons of money in the Dot.Con era, and little patience remained for outdated rules.
One of the frequent claims made by those in the anti-software patent community relates to Twitter and the clearly erroneous belief that patents are not important to the company. Indeed, recently when I wrote Fairy Tales and Other Irrational Beliefs About Patents the claim arose in the comments suggesting that Twitter is proof that patents are unnecessary to succeed. Quite to the contrary. If you actually concern yourself with facts, Twitter is a perfect case study to demonstrate just how important patents, particularly software patents, are to a start-up company that has aspirations of going public.
Doubt me? Perhaps you will believe Twitter themselves. In repeated filings with the Securities and Exchange Commission since October 2013, Twitter has explained over and over again just how important their patented technology is to the company. They have also repeatedly explained that unlike other companies and competitors, even with nearly 1,000 patents, their own patent portfolio is extremely small by comparison. This poses real concerns for Twitter, which is why they warn the SEC and investors of the ramifications of such a small patent portfolio with every new filing.
Let’s begin our tale about Twitter at the start. Twitter, founded on March 21, 2006, was initially believed to be of the opinion that patents didn’t matter. Behind the scenes and unknown to many, Twitter was actively filing patents very early on in the development of the company. This is hardly shocking news given that Twitter’s initial round of funding dated back to 2007 and the near universal reality that high-tech investors not only love patents, but they demand patents. Investors love patents because if the company does not succeed at least some valuable patent assets will remain, which can be sold to recoup losses.
On Friday, October 3, 2014, I will be in Toledo, Ohio at the University of Toledo College of Law. I taught years ago as a Visiting Professor at the College of Law, have many friends still at the University, and my son is currently studying to become an electrical engineer at the University of Toledo College of Engineering, so I expect over the next several years I will find a variety of excuses to visit Toledo.
My excuse this time is to attend a program titled Doing Business in China: A Legal and Commercial Review on Friday, October 3 from 8:30 a.m. to 5:15 p.m. at the University of Toledo College of Law in the McQuade Law Auditorium at 1825 W. Rocket Drive, Toledo, Ohio. Registration will begin at 8:00 a.m. The cost to attend is $35.00, which includes a lunch. Vegetarian meals are available upon request.
The University of Toledo College of Law, Regional Growth Partnership, and the Confucius Institute at The University of Toledo are the lead sponsors for Doing Business in China, which is the first part of two programs. During 2014 the Confucius Institute will spearheaded this program to educate local business people and attorneys on the realities of doing business in China by bringing together a distinguished panel of academics, attorneys in private, public, and corporate in-house practice as well as senior business people to discussed the realties, the myths, and the risks of doing business in China. Next year, in 2015, the focus will shift and will be on the concerns of Chinese attorneys, business people, and their advisors relating to doing business or investing in the United States.
Editorial Note: This month’s column from Joe Allen comes from his plenary address to the Eastern regional meeting of the Association of University Technology Managers, which took place in Baltimore, Maryland, on September 18, 2014. CLICK HERE to view his PowerPoint presentation, which includes facts and figures that support the positions taken in this article.
They say when speaking that you should repeat your message at least three times. Here’s the first: Bayh-Dole has succeeded beyond anyone’s wildest imagination. It was not created to benefit universities but the American taxpayer. You are the stewards of a public trust and have an obligation to defend and protect the law in the same way as the Founders of AUTM protected it for you.
Research universities are now recognized drivers of our economy and your discoveries improve lives around the world, but that wasn’t always the case. The reason is the Bayh-Dole Act which gives certainty and predictability to the ownership and management of publicly funded inventions so they can move from the lab into the marketplace.
Last week I was speaking in Brazil which adopted a technology transfer law to spur university-industry partnerships. Unlike Bayh-Dole theirs is full of uncertainty which is undermining its impact. I explained that having clearly stated rules is an essential ingredient for success because companies are undertaking a tremendous risk when turning university technologies into useful products. The time and expense of development is borne by the business—not the government or the university. Companies cannot justify this effort when the bureaucracy inserts itself between a university and its industry partner. That was the situation in the US before enactment of Bayh-Dole and it caused the benefits from billions of dollars of taxpayer supported research to go right down the drain.
We are at a point in time where the overwhelming sentiment is against the patent system. Rather than celebrating innovators the public, and our leaders, vilify anyone who has the audacity to seek patent protection. The simple reality is that without a strong patent system investment in innovation will cease. This truth should be self evident to anyone with half a brain, but sadly it is not. There are many truly ignorant individuals who actually believe that investment in research and development will continue even if the day an innovation reaches the market it can be copied without recourse by competitors. What a fairy tale!
As Dr. Kirstina Lybecker has explained: “Incentives are essential to innovation due to the expense of research and development activities, and the public-goods nature of the resulting knowledge.” Indeed, there is no business person in the world who would ever invest the hundreds of millions or billions of dollars necessary to bring ground-breaking innovations to market without the expectation of the competitive advantage provided by a strong patent. In the real world investors seek a reasonable return on investment given the risk, which is quite substantial in the high-tech, innovative world. To ignore this reality one must be firmly planted in fantasy and not the real world.
The Supreme Court’s Alice decision has introduced a dimension of uncertainty associated with the validity of many of the software patents held by operating companies today. There seems to be a consensus among some of the leading academic and judiciary experts supporting that conclusion, as seen in recent comments made by Stanford Law School’s Prof. Mark Lemley, as well as in recent comments by former Federal Circuit Chief Judge Michel. From a valuation and financial reporting perspective, there needs to be a serious examination of the post-Alice landscape implications on the value of patents as corporate assets. The results of such examination may lead to further action – which could range anywhere from additional disclosure requirements by regulators, all the way to actual corporate asset write-offs. This article highlights some of the key issues that need to be addressed by companies and regulators.
Korean Intellectual Property Office (KIPO) Commissioner Young-min Kim (left) and U.S. Patent and Trademark Office (USPTO) Deputy Director Michelle K. Lee (right) today signed a Memorandum of Understanding that brings KIPO fully into the Cooperative Patent Classification system developed by the USPTO and the European Patent Office (EPO).
WASHINGTON – The U.S. Department of Commerce’s United States Patent and Trademark Office (USPTO) and the Korean Intellectual Property Office (KIPO) today announced a major expansion of cooperation in classification activities between the USPTO and KIPO. The agreement,signed by the heads of the two offices during a bilateral meeting in Geneva, Switzerland, is designed to improve the patent granting process through streamlined access to patent documentation. Through this cooperation, KIPO will greatly expand the number of documents included in the Cooperative Patent Classification (CPC) system by fully classifying its patent applications and utility models.
“Today’s historic announcement further illustrates the usefulness of the Cooperative Patent Classification system and demonstrates the excellent bilateral relationship and spirit of cooperation between the USPTO and KIPO,” said Deputy Under Secretary of Commerce for Intellectual Property and Deputy Director of the USPTO Michelle K. Lee. “We hope other offices, particularly IP5 offices, will follow KIPO’s lead in increasing global intellectual property protection for innovators around the world.”
Yesterday the Partnership for American Innovation (PAI), which is comprised of Apple, DuPont, Ford, GE, IBM, Microsoft and Pfizer, submitted comments responsive to a request for public information published in the Federal Register back on July 29, 2014, titled Strategy for American Innovation. Some may recall that in February 2011, President Obama released a Strategy for American Innovation, which described the importance of innovation as a driver of U.S. economic growth and prosperity, and the critical role the government plays in supporting the innovation ecosystem. The Office of Science Technology Policy and the National Economic Council are now tasked with updating the document to create a revised Strategy for American Innovation.
One can hope that this group of venerable American innovators will be able to get through to decision makers who will be responsible for charting the new innovation and intellectual property strategy. Notably missing from the PAI, however, is Google, who will certainly have different views.
Google is known to be one of the primary advocates of watering down, if not outright destroying, the U.S. patent system. This is interesting because Google is a top 10 patenting company according to data from the United States Patent and Trademark Office for 2013. They have also spend tens of billions of dollars acquiring patent portfolios that now due to their lobbying efforts are practically worthless. Regardless of Google’s schizophrenic approach to patents, the arm of Google that seems to loathe patents and the U.S. patent system has particular influence in Washington, DC. Both current and former Google executives are known to have the ear of the White House, which is largely to blame for the substantial anti-patent sentiment flowing from the White House. Unfortunately, all of this suggests that whatever the new strategy for innovation will be it will be one that incorporates significant anti-patent positions support by Google.