Judge Raymond Chen of the United States Court of Appeals for the Federal Circuit.
The AIPLA 2014 annual meeting is now several weeks ago, but there is a story that I have neglected to write thus far. I have been pondering what to say and how to say. On Friday, October 24, 2014, Judge Ray Chen of the United States Court of Appeals for the Federal Circuit delivered the luncheon address to a packed audience at the Marriott Wardman Park Hotel in Washington, DC. Those who know Judge Chen know he is an excellent speaker, funny, occasionally self deprecating, and always informed and thoughtful. His address to the AIPLA audience was no exception.
Ever since Judge Chen delivered one particular line I have been thinking about what he said, largely missing any other point he raised I’m afraid. Judge Chen said that he did not think it was particularly helpful for some in the patent community to refer to Judges on the Court as being anti-patent. I don’t know that Judge Chen was speaking about me directly, but there is no doubt that over the past several years I have become more vocal about those who hold anti-patent views. I have increasingly pointing out that the United States Supreme Court is openly hostile to patent owner rights. I have also increasingly pointed to what I refer to as anti-patent decisions from the Federal Circuit and noticing that there appears to be a clear philosophical and ideological split between the Judges, with some Judges routinely issuing or joining rulings that are adverse to the patent owner, while other Judges routinely issuing or joining rulings that favor the patent owner.
The label “anti-patent” is not meant as a criticism or insult. Instead I mean it is a purely descriptive way that recognizes a distinct and very real viewpoint; one that we have seen periodically throughout history but which is inconsistent with what the Framers believed. Therefore, I disagree with Judge Chen that it is not helpful to recognize that there are Judges on the Federal Circuit who, based on their written decisions, show a tendency to eschew a pro-patent viewpoint.
One of the real problems with the debate over patent litigation abuse is that it hasn’t focused on litigation abuse at all. Instead, the debate has focused on attempts to characterize patent owners with pejorative labels, such as calling anyone who has the audacity to seek to enforce their rights a “patent troll.” Unfortunately, the term “patent troll” has evolved to mean “anyone who sues me alleging patent infringement.” This has lead the media, the public and Members of Congress to incorrectly believe that there is a “patent troll problem,” which has influenced decision-makers all the way from Capitol Hill to the United States Supreme Court, who increasingly seems to be deciding patent cases with one eye firmly on what is a completely non-existent problem.
You have probably heard the narrative start something like this: there is an explosion of patent litigation. The objective reality, however, is that there has not been an explosion of patent litigation. The Government Accountability Office, after an exhaustive review of patent litigation, concluded that there was no patent litigation crisis. The same GAO report also found that 80% of the patent lawsuits filed are brought by operating companies suing other operating companies. Thus, those who profess there to be rampant problems associated with patent trolls and non-practicing entities suing for patent infringement are simply telling a tale that the factual data doesn’t support.
More recently Lex Machina has come forward with some eye opening statistics as well. A recent report from Lex Machina concludes: “Plaintiffs filed 329 new federal patent cases in September 2014, a 40% decrease from the 549 cases filed in September 2013.” Indeed, if you dive deeper into the 2013 and 2014 statistics you see that through the first nine months of 2013 there were 4,548 patent infringement lawsuits filed, but during the first nine months of 2014 there were only 3,887 patent infringement lawsuits filed, which represents a 15% reduction in patent litigation in 2014 compared with 2013. Furthermore, in 7 of the 9 months during 2014 there have been fewer patent infringement lawsuits filed during 2014 than during 2013. The statistics and independent GAO report just do not support a narrative that proclaims there to be a run away problem with patent litigation run amok.
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.
Professor Richard Epstein (left) and Professor Adam Mossoff (right).
Innovation and entrepreneurship are integral to America’s economic strength, and the U.S. patent system has been critical to nurturing this innovation economy. Yet, there are some who continually argue that patents are a hinderance to economic development and the march of innovation. It will come as no surprise to anyone that I don’t believe that to be true. In fact, if you actually look at he hard, cold facts objective individuals would all agree that the a patent system fosters innovation. Patents do not hinder innovation.
What may surprise many readers, however, is that there are actually several well regarded academics who actually agree that the patent system fosters innovation. Yes, that is nearly heretical. Legal academics frequently take positions that would lead to the whittling away of patent rights. Those academics simply ignore the realities that exist in countries where there are no patent systems. They also ignore the reality that innovators require a reasonable rate of return in order to pump money into research and development. In some cases it is many millions, even hundreds of millions of dollars that need to be invested. It is naive to believe that anyone would spend millions or hundreds of millions of dollars without any competitive advantage. If a free rider could just copy and sell for less the creator would lose everything. That is not a model for success. It is a recipe for failure.
On Sunday, September 30, 2012, Timothy Lee of Ars Technica wrote a terribly researched and demonstrably erroneous article attacking the Federal Circuit titled How a rogue appeals court wrecked the patent system. The article is a cheap shot, factually inaccurate and just plain embarrassing. Lee concludes the Federal Circuit is at the heart of all problems in the patent system, which is, itself, simply not true. Of course, conclusions are not evidence and if he could have backed up what he was saying with any kind of factual, true information then it would have been a matter of opinion. Instead, he was wrong about pretty much everything he wrote.
If most reporters knew anything about patents they would be embarrassed to have their names professionally associated with the drivel they try and pass off as news. But media ignorance of patents specifically and intellectual property generally is nothing new. Errors are so easy to document that it is virtually impossible to take them seriously. But then every once in a while an article crosses the line even for a know-nothing anti-patent zealot masquerading as a journalist.
Indeed, few articles have struck a nerve in me quite the way that a recent Ars Technica article did. The article is titled How a rogue appeals court wrecked the patent system. It is a cheap shot, factually inaccurate and embarrassingly incorrect “news” story that concludes the Federal Circuit is at the heart of all the problems in the patent system. A real Pinocchio tale.
How did the media get to such a low place, where sensationalism means more than truth? Once upon a time the media was viewed as a bastion of truth and integrity. They were viewed by the Founding Fathers as the virtual fourth branch of government. A free media would offer checks and balances against the three co-equal branches of the federal government, and by keeping the people informed would keep government in check. Oh how the mighty have fallen. There is hardly any such thing any more as a fair and objective media outlet. Simply put, truth doesn’t matter to the media. That which passes for news is full of errors, inaccuracies and outright lies. The public is being deceived, and in our little space the deception seems to be part of a coordinated effort to destroy the patent system as we know it.
Many inventors operate under the misunderstanding that getting a patent is like owning Boardwalk and Park Place in the popular board game “Monopoly.” Increasingly, many journalists and patent haters are operating under the same fallacious assumption. The carelessness with which the patent right is characterized by so many with only the vaguest of knowledge of the patent system leads to truly unfortunate consequences. Inventors believe that if they obtain a patent the world will back up a money truck to their front door. Patent haters think that a patent is evil and interferes with innovation. Both claims are laughably naive.
First, I am an unapologetic defender of the patent system, which is hardly news to anyone who reads IPWatchdog.com. Those who argue against a patent system and say that patents inhibit innovation are intellectually bankrupt; willing to say anything no matter how wrong to achieve what they predetermined to be the preferred outcome. There is no talking to the anti-patent community because they simply ignore facts and reality. They prefer to wrap themselves around academic thought experiments rather than real, verifiable truths. They ignore the undeniable facts that when a country adopts a patent system economic progress follows. They balk at the mind-boggling successes of initiatives such as Bayh-Dole and argue for it to be dismantled, apparently convincing themselves that 7,000+ high-tech start-ups with millions of new jobs would have been created under the previous patent licensing regime which had been an abysmal failure by any objective standard.
Earlier today on the Twitter blog the company announced that later this year it will implement what they are calling the “Innovators Patent Agreement,” which they claim will ensure that patents are only used for defensive purposes. Without any evidence Twitter claims that software patents impede innovation. Those familiar with the anti-patent software community well know that their claims that patents impede innovation are always without any evidence. All of the objective evidence points directly to the opposite conclusion, but anti-patent forces can’t be troubled with facts and reality. But that isn’t the worst part! Twitter seems to be attempting to mislead patentees into donating patent rights that can at Twitter’s discretion be used offensively if Twitter feels threatened.
Before moving forward to address the Twitter Patent Scheme, allow me to dispense with the nonsense that patents of any kind impede innovation. For those who do concern themselves with facts and reality I invite you to read:
In an interview with Tech Crunch published yesterday, Kent Walker, Google’s Senior Vice President and General Counsel, proclaimed: “A patent isn’t innovation. It’s the right to block someone else from innovating.” How someone who has achieved such a high profile position with one of the tech giants of the world could have such an erroneous, even myopic, view of patents is nearly astonishing. It is self evident to anyone who objectively looks at the patent system as it relates to innovation that patents do not block innovation, but rather they encourage innovation. That has always been the case. Obviously there is more to Walker’s statement than meets the eye.
The problem with software patents isn’t that they are granted on obvious innovations, but rather that those who spend so much time complaining about them are just about completely clueless, at least with respect to patent law. It borders on the comical to observe some of the apoplectic rants against software patents, which almost universally conclusively prove that the person writing (or ranting) has not read past the title of the software patent in question. That is, of course, assuming they have even looked at the patent and are not merely mimicking what they have read from some other equally clueless and irresponsible critic.
Frankly I am getting rather sick and tired of those who oppose intellectual property protections ignoring the overwhelming truth that patents and other forms of intellectual property are a net positive for society. These anti-patent and anti-intellectual property zealots purport to present objective facts, but if you look at their reports there is never anything other than conjecture and speculation.
For example, on January 24, 2011, an article in the Chronicle of Higher Education exclaimed: “A new study released today indicates that overly complicated and restrictive patenting practices, and scientists who do not fully share information and materials, are creating a research bottleneck at the corporate level that could soon hinder work at dozens of universities.” The trouble is when you look at the “study” you notice it really wasn’t a “study” at all. The report is devoid of a single fact or concrete observation. The report is nothing more than the opinions of a panel of supposed governmental and academics experts. In fact, it is just a “consensus statement” that makes numerous recommendations without any factual support. Those familiar with the gene patent challenges in the Courts will not be surprised that the extraordinarily intellectually dishonest Robert Cook-Deegan was a member of the supposed panel of experts.
John Roberts, Chief Justice of the United States Supreme Court
The latest edition of Fortune magazine has John Roberts, Chief Justice of the United States Supreme Court, on the cover. The Fortune cover proclaims that it will be taking “an unflinching look at the man who is presiding over the most pro-business court we have ever seen.” As I read that I couldn’t help but chuckle. Really!?!? The Roberts Court is the most pro-business court we have ever seen? I knew right away that this article couldn’t be about patents, or even mention patents, and I wondered how the article would treat the failure to get involved in the Chrysler bankruptcy, which fundamentally altered investors expectations in public companies beholden to unions. So how can it be that the Roberts Court, which has shown hostility toward innovators and contempt for patents that is unusual, is considered pro-business? On top of that, the Roberts Court seems poised to strike at the very heart of the patent right granted by the United States federal government; namely the presumption of validity. That sure doesn’t sound very pro-business to me.