Myth 3: Independent inventors and independent inventor companies set up to license their patents have had little impact on the Troll story.
Truth: Independent inventors have a great impact on the NPE story, with independent inventors and independent inventor companies set up to license their patents filing considerably more suits under the joinder rules of the AIA on the average than non-independent inventor based NPEs. Their patents also fare significantly worse in both litigation and reexamination proceedings.
Independent Inventors have long distinguished themselves from “Patent Trolls” arguing the term would soon be used by large companies to stop independent inventor activity. See Chad Vice, Edison Nation Forums, forum post entitled The Patent Trolls’ Lie and The War on Independent Inventors, June 23, 2013. Unfortunately, so-called “experts” in the troll story have consistently been including independent inventor activity in the “troll” category for at least over a decade. In fact as our figures slow, there is no conceivable way of getting anywhere near a majority of troll suits post AIA unless one is counting all independent inventor suits, and suits by their alter ego companies, into the mix. While some may think this unfair, it is simply a fact.
To our knowledge, this is the first study that looked at the effects of independent inventor, and, in particular independent inventor company (that is, companies that we determined were just the alter ego of the individual inventors themselves) were having on the overall NPE numbers. That is, we looked behind the NPE to decide whether a company was just an alter ego of an independent inventor.
A recent Law Review article entitled Simplified Pleading, Meaningful Days in Court, and Trials on the Merits: Reflections on the Deformation of Federal Procedure, 88 NYU Law Rev. 286 (2013) (written by Arthur R. Miller who spent most of his career writing and thinking about the Federal Rules of Civil Procedure and the state of federal litigation in America) might well be mandatory reading for those who give full credit to the so-called patent reformers. Why? Because the attack on individual inventors using names like NPEs and patent trolls is nearly identical to the attacks previously waged by corporate America on personal injury lawyers, using the McDonald’s hot coffee case as an example of lawyer abuse (now it’s the Wi-Fi patent cases). Miller describes the McDonald’s case as being “grotesquely misdescribed” (p. 303), probably an understatement, just as the Wi-Fi case is misdescribed. See Setting the Record Straight on the Innovatio Patent Portfolio .
Like the corporate attacks on everything from the private enforcement of securities fraud claims to unfair business practice, civil rights and age discrimination claims, the new target is patent infringement claims brought by “boogie man” entities that don’t manufacture products. As Miller points out, these earlier attacks, like the NPE propaganda, are based upon slogans and propaganda, not empirical data and logic:
Bogus caseload statistics are propagated, while empirical data is ignored, and fears are spread by claims that there is a litigation explosion in this country and that Americans are paying a litigation tax that renders our businesses uncompetitive.
President Lincoln was an independent inventor and patent owner.
Historically, innovation by individual inventors has driven our economy by creating new jobs and companies. Consider the names of some individual inventors who ultimately formed companies to exploit their ideas, but who initially manufactured nothing: Westinghouse (air brake), Ford (car), Gillette (razor), Hewlett-Packard (oscillation generator), Otis (elevator), Harley (motorcycle shock absorber), Colt (revolving gun), Goodrich (tires), Goodyear (synthetic rubber), Carrier (air treatment), Noyce (Intel), Carlson (Xerox), Eastman (laser printer camera), Land (Polaroid), Shockley (semiconductor), Kellogg (grain harvester), DuPont (gun powder), Nobel (explosives), the Wright brothers (aircraft), Owens (glass), Steinway (pianos), Bessemer (steel), Jacuzzi (hot tub), Smith & Wesson (firearm), Burroughs (calculator), Houdry (catalytic cracker), Marconi (wireless communication), Goodard (rocket), Diesel (internal combustion engine), Fermi (neutronic reactor), Disney (animation), Sperry (Gyroscope), Williams (helicopter), even Abraham Lincoln who was granted U.S. Patent No. 6,469. These are individuals who, in most cases, worked alone, without government or corporate support, yet, created not just new inventions, but whole new industries that employ millions of people today.
It can be argued, of course, that most of these inventors ultimately created manufacturing companies and that companies who merely buy patents from individual inventors contribute nothing. That seems to be much of what you are hearing. But what about small companies that are struggling to compete against corporate giants and need a strong patent system to level the playing field? As the inventor of the MRI scanning machine, Dr. Raymond Damadian, observed, it’s the small companies (not giants that ship their jobs to India and China) who provide the economic spark for new jobs in America.
On May 31, 2013, I spoke with Glen Duff, a client of mine who is the inventor of an exceptionally easy to use wake board. In part 1 of our interview, which kicked off our Fun in the Sun Summer 2013 series, we discussed how the patented Zup™ Boardis the best selling product that Overton’s has ever seen in their 37 year history, as well as the importance of an inventor’s perseverance, bringing on industry experts to advise and engaging in a project you are passionate about.
In part 2, which is the final segment, Glen talks about how the patented Zup™ wake board is being made in America, which at a time when so many larger operations are moving offshore and outsourcing jobs is really quite refreshing. While there is a certain allure to selling products made in America, Glen explains that there is also a very real business reason as well. It is quite difficult to reliably enforce high quality standards when manufacturing is overseas.
We also discuss how Glen views himself as his competition as he continues to engage in research and development for improvements and future products, and how great it is to be able to put on a pair of shorts and jump on a boat as part of R&D efforts. I also ask him if he could go back in time to give himself advise based on what he knows now, what advise would he give? This leads us into an interesting discussion relating to the relative merits of licensing versus manufacturing and distributing yourself.
A patent is a proprietary right granted by the Federal government to an inventor who files a patent application with the United States Patent Office. There are three types of patents available in the United States: (1) a utility patent, which covers the functional aspects of products and processes; (2) a design patent, which covers the ornamental design of useful objects; and (3) a plant patent, which covers a new variety of living plant. Each type of patent confers “the right to exclude others from making, using, offering for sale, or selling” the invention in the United States or importing the invention into the United States.
It is important to note, however, that patents do not protect ideas, but rather protect inventions and methods that exhibit patentable subject matter. In other words, a patent can only protect something that is considered patent eligible. Generally speaking, in the United States the view of what is patent eligible is quite broad. Machines, compounds and processes are all patent eligible. Even living organisms that have been genetically engineered in a laboratory are patent eligible (see Diamond v. Chakrabarty). Business methods are also patent eligible in the United States (see Bilski v. Kappos; Patenting Business Methods in the U.S.; and Business Methods: Concrete and Tangible Description is a Must). Software is likewise patent eligible (see Ultramercial, LLC v.Hulu, LLCand Software Patents). Even modified DNA is patent eligible (see DNA patenting). Thus, it is typically more enlightening to discuss what is not patent eligible: laws of nature, abstract ideas, naturally occurring phenomena, so-called naked business methods (i.e., not tethered to any kind of machine or apparatus), inventions only capable of an illegal purpose and atomic weapons. Chances are that whatever you have can be characterized so that patent eligibility is not a significant impediment to receiving a patent.
Crowdfunding is a proven way to get initial funding for the commercialization of an invention. Crowdfunding involves posting a project description on the internet, asking for pledges to complete the project, and if the minimum amount of pledges is received by a certain deadline, having the funds transferred to the project. On some sites, such as Kickstarter.com, if the minimum isn’t reached, you don’t get any money. On other sites, such as Indiegogo.com, if the minimum isn’t reached, you still get what you’ve raised.
Frequently inventors will ask me if it is a good idea for them to prepare and file their own patent applications. Whenever I am asked such a question I suspect the person doing the asking already knows the answer, but is hoping against hope that they might find someone who will tell them what they really want to hear.
You have probably seen the commercial where the guy is sitting at his kitchen table and is on the phone with the surgeon who is telling him where to cut to take out his appendix while using a butter knife. The guy asks: “shouldn’t you be doing this?” Well, writing your own patent application is a little like taking out your own appendix. You won’t die if you screw a patent application, which is virtually inevitable, but you will not likely be pleased with the outcome. If you do achieve rights they will be far more narrow than necessary and you will have created an unnavigable prosecution history that will almost certainly make the claims you do have rather useless.
Having said this, it is not at all uncommon for inventors to want to attempt to draft and file patent applications on their own. The cost of hiring an attorney to draft a patent application can price some inventors out of the market, so they are left with the choice of doing nothing to pursue their invention and dreams or trying to do something on their own. Inventors who are going to attempt to draft their own patent applications need to go into the process with their eyes wide open, realize that the resulting patent application will be better if a patent attorney is involved in the drafting, and most importantly understand that there are a good number of things that you can and likely will do that will lead to a resulting right that is compromised or completely worthless.
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