Your quest is finally complete. After hundreds of hours of effort, thousands of dollars, and innumerable worries of failure, you’ve finally succeeded. Your idea has become a reality, with riches and fame just around the corner. With the hard work done – envisioning, developing, and protecting your invention – you approach potential investors and buyers for capital to manufacture and sell your product. In the process, you discover one or more of the following:
the majority of people don’t understand the value of your invention or have no interest in it
some claim it is their idea
others try to steal it
those who see its potential want to pay a pittance for the product and leave you standing on the sidelines
Such is life for an inventor. From the years 2002 to 2012, more than 4.6 million patent applications were made and 2.2 million patents issued according to the U.S. Patent and Trademark Office. Yet, only a small proportion of the products covered by the issued patents become commercial successes.
In their article entitled The Private and Social Costs of Patent Trolls, James Bessen, Jennifer Ford, and Michael Meurer present a study on patent litigation involving Non Practicing Entities (NPEs), which they define as firms that do not produce goods but rather acquire patents in order to license them to others. Bessen et al.’s conclusions are startling. The loss to defendants involved in NPE patent suits during the last four years “exceeds $83 billion per year, over a quarter of U.S. industrial R&D spending per annum;” and NPE patent litigation constitutes a “very large disincentive to innovation.” Bessen et al.’s article was prominently featured on the cover of the Winter 2011-2012 issue of Regulation magazine with a cover illustration of oversized humanoids with visible malign intent, armed with clubs, holding up innocent travelers for payment at a bridge, wherein the cover is titled “Patent Trolls – How NPEs harm innovation.”
In my full article “Questionable science will misguide patent policy,” I expose fundamental flaws in the methods that Bessen et al. apply in their studies and explain why their fantastic cost estimates should be dismissed as extremely biased and unreliable, and why their conclusions should be discarded as misleading for patent policy. An abridged version follows.
Bessen et al.’s stock return event studies on patent litigation
Bessen et al.’s thesis is predicated on “event studies” of lawsuit filings—what happens to an alleged infringer’s stock price around the filing of a patent infringement lawsuit, after taking into account general market trends and random fluctuations of the individual stock. Without providing any proof, these authors argue that during these “events,” stock value declines that are otherwise unaccounted for by estimated market trends (called “Abnormal Return”), reflect “the costs of lost business, management distraction and diversion of productive resources that might result from the lawsuit, possible payments needed to settle the suit, and the reduction in expectations of profits from future opportunities that are forestalled or foreclosed because of the suit.”
Enter Professor Robin Feldman, who has become the preeminent researcher on issues of patent litigation, particularly as it refers to so-called patent monetizers. Professor Feldman has found striking new data on patent trolling and the effects of the America Invents Act, which to me suggests that the AIA has clearly been successful in its intended goal of reducing the number of defendants in a single patent infringement litigation.
Professor Feldman’s new analysis was developed by breaking down the massive data set she collected into a month-by-month analysis of patent infringement lawsuits. The data examines all patent lawsuits over four key years, which represents approximately 15,000 patent infringement lawsuits and 30,000 patents asserted. Not surprisingly to those of us who have closely followed the America Invents Act, but there was an enormous spike in litigation leading up to the implementation of the AIA in September 2011. The following graph tells the story.
EDITORIAL NOTE: The black colored text below is taken from an FTC Press Release. I also provide my thoughts and comments in the format of comments from the peanut gallery, or perhaps as a patent attorney equivalent to Mystery Science Theater 3000. In order to differentiate my thoughts/comments from the FTC statement, my comments are italicized, colored, indented and tagged with the IPWatchdog logo.
Aaron’s, Inc., a national, Atlanta-based rent-to-own retailer, has agreed to settle FTC charges that it knowingly played a direct and vital role in its franchisees’ installation and use of software on rental computers that secretly monitored consumers including by taking webcam pictures of them in their homes.
Intel Corporation of Santa Clara, CA, is the world’s largest manufacturer of semiconductor chips used for computer processing jobs. Although the semiconductor is practically ubiquitous in our world, thanks to the quick proliferation of mobile electronic devices, Intel is currently focusing more strongly on developing Internet-based and mobile technologies. Even so, the company is still a strong manufacturer of computer processors, and the company’s next-generation of computer chip, known as the Broadwell, will be set for use in personal computers in 2014.
As a major developer of computer technologies, Intel is a logical choice for IPWatchdog’s Companies We Follow series. To give our readers an idea of the future of computer technology, we’ve pulled off a number of intriguing patent applications and issued patents from the U.S. Patent and Trademark Office that have been published recently and assigned to Intel.
As you might expect, a number of recently issued patents to Intel pertain to a series of novel computer improvements, which include but are not limited to (1) more efficient energy use in computing systems using multi-core processors, and (2) a system of aiding TCP-based communications when a processor enters sleep mode. Other issued patents show the widespread nature of Intel’s semiconductor technologies. In one patent the technology is used to improve security measures for video game servers to protect against cheaters or hackers who would manipulate the game environment. Interestingly, Intel also earned the right to protect a method of coating medical devices with biocompatible substances to reduce the risk of infection in patients. Another issued patent to Intel also improves security measures for mobile devices by allowing the device to determine a user is unauthorized based on local data.
A marketer of iPhone accessories, bottle holders, lens cleaners, dog collars, leashes, and other outdoor accessories has agreed to settle Federal Trade Commission charges that it falsely claimed certain of its products were “Made in the U.S.A,” or “Truly Made in the USA” even though the products contained substantial foreign content.
The proposed settlement prohibits the company from deceiving consumers about the degree to which its products are made in the United States.Based in Logan Utah, E.K. Ekcessories, Inc. sells merchandise directly to consumers on its website, ekusa.com, and through online sellers such as Amazon and REI.
The company claimed on its website that “For 28 years E.K. Ekcessories has been producing superior quality made accessories in our 60,000 sq. ft. facility in Logan, Utah;” and “Our source of pride and satisfaction abounds from a true ‘Made in USA’ product.” In fact, the company imports many of its products and components, according to the complaint. The FTC also alleged that the company distributed deceptive promotional materials for its products to third-party retailers such as Amazon and REI.
Welcome to the latest edition of News & Notes for October 21, 2013.
Initially I thought I might make this a monthly column, but it might become bi-monthly instead, or perhaps as I accumulate enough to warrant a full post. I’m also not sure I’m thrilled with the title News & Notes, so I’m open to suggestions. Of course, if you have some interesting news to share you can always send me an e-mail message.
Without further ado, in this edition:
Soverain Software Files Certiorari Petition with Supreme Court
Acacia Research Re-Branding Launch
Survey Shows Majority Not Familiar with New gTLDs
University of South Florida Launches Revenue Incentive Patent Cost Sharing Program
Mark Cuban Cleared of Insider Trading
European Patent Convention Celebrates 40 Years
John Marshall Law School Hosts IP Symposium – November 8, 2013
ALS Goes Into Remission with Steroid Treatments?
Trade Secret Hacking Case Results in 5 Year Prison Term
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