Posts Tagged: "erosion of patent rights"

The Fed has been oblivious to the mechanisms of market economics and technology investment driven by the degradation of patent rights in recent years. While the Fed focuses exclusively on inflation and the labor market, they have ignored factors driving technology investment and the disintegration of the patent system that has underscored the declining business investment trend. With a degraded patent system, investors have shifted to other asset classes or markets rather than investing in technology.

Due to the death of the patent troll narrative, venue reform would never have made it through Congress, but the infringer lobby doesn’t need Congress when they have a Supreme Court. They just need to make it sound like Congress may pass it and the Supreme Court will just do it for them, as if the Court can’t help themselves but to meddle in patent politics as they continue to disrupt generations of well settled patent law with practically every decision. However, this mode of lawmaking comes with very serious consequences. A group of nine liberal art majors who have never started up a company with the sole asset of a patent need a lot of information in order to understand the effects of their decisions. It is clearly evident from eBay, Alice and virtually all of the Supreme Court’s major patent decisions in the last decade that they do not understand the consequences of their decisions.

The resulting decisions reveal the Supreme Court’s holistic outlook as a generalist court concerned with broad legal consistency rather than fidelity to patent law’s underlying specialized and unique features moored in technology research, invention, and patenting processes. Unfortunately, as shown below, the adverse effects on patent rights due to the deviant patent doctrines arising out of the Court’s decisions far exceed the benefits of assimilation and conformity of the patent law with the general law… The dearth in understanding technologies and related invention processes and the lack of prior expertise in patent law pertains to Justices across the political spectrum. Patent law raises questions that have the potential to divide conservatives and liberals alike, as it pits principles of liberty and property against one another. For example, the pillars of the recent problematic jurisprudence on patent-eligibility were authored by liberal Justice Breyer (Mayo v. Prometheus) and by conservative Justice Thomas (Alice v CLS Bank).

The American patent system represents a delicate balance. On the one hand, the patent system provides an incentive to invest in risky technical problem solving by giving an inventor an “exclusive right” for a limited time. On the other hand, from the time of the first Patent Act in 1790, patent critics have argued that patents block competition with a temporary monopoly. This tension has, nevertheless, enabled the rise of the U.S. as a major industrial economy, particularly after the Civil War. Optimally, the patent system encourages inventors to take risks to invent and disclose new and useful things by investing in ex ante costs before a later payoff. After a limited time of exclusivity rights, a patented invention falls into the public sphere, thereby providing a public interest in the long run. Economic and technological progress proceeds by building on previous inventions. Until about 2006, the U.S. patent system worked well, as evident in the development of the largest and strongest economy in the world.

In my 54 years, I’ve never protested anything. I’ve complained to my friends and family and sometimes to a few unfortunate strangers. So this has been the first time publicly protesting anything for me… Darrell Issa was a cosponsor and a major political driver of this startup killing legislation, which is why inventors are going to his events to educate him and his potential voters. Issa’s race is very close with some polls showing him down by several points. His competitor believes in strong patents. This draws a clear distinction between the candidates and inventors and startups in California’s 49th district want to be represented by someone who will preserve their rights, and their companies.

While timing a bottom is never a good investment strategy, recognizing a bottom does present real opportunity. As the 18th century British nobleman Baron Rothschild is famously quoted as saying: “The time to buy is when there’s blood in the streets.” This contrarian philosophy is based on the realization that when things hit bottom they can’t get any worse, and can only get better. In the patent/innovation sector there are some recent signs that things may have hit the bottom and be trending up. The Supreme Court did not say software is patent ineligible, and we know from previous decisions that at least some business methods are in fact patent eligible. The Federal Circuit finally found software patent claims patent eligible and Senator Dick Durbin (D-IL) seems to have no appetite for patent reform.

Not such a long time ago, owning a US patent was worth something! A patent was often the foundation for new and exciting startups, as well as a source of pride –and hopefully profits- for inventors. These assets promised competitive and strategic advantage in the market; conduits to new investment and deterrence to free riders… If the current trend is not soon reversed, others countries will become flagships for patent protection and the US might very well become the new China; an environment where innovation is no longer rewarded and where it pays more to follow than to lead. This would be a very sad and totally self inflicted demise “Made in America.”