Posts Tagged: "investors"

In the past decade, the patent system has been turned on its head. Inventors are now villainized as cartoon characters called patent trolls simply because they assert their hard-earned patent rights against corporations who steal their inventions. These infringing corporations have cleverly cultivated the myth that all patent owners are patent trolls by engaging high-powered lobbyists and public relations firms to loudly attack inventors. This toxic concoction of myth, media and money has gagged opposing voices effectively creating political cover for the government to make rapid and fundamental changes to patent law that skew the field toward big corporations at the expense of inventors and small innovation companies, including those high tech start-ups that are responsible for creating high paying jobs.

In what can only be characterized as a bizarre, rambling, and intellectually dishonest article, ‘The Economist’ has inexplicably taken the position that patents are not necessary for innovation. The complexity of innovation today and the required investment necessary to innovate, as well as the highly speculative nature of innovation, seems lost on the author. It is surprising, and disappointing, that a publication like The Economist would turn a blind-eye to the underlying financial realities of innovation. Truthfully, The Economist owes its readers a sincere apology for this entire article. Some could, and probably should, call into question the motivations for building an anti-patent argument upon such a rotten foundation.

Building a strong patent portfolio that meaningfully protects the innovation in question and continues to push outward into adjacent spaces, as important as it is, will only get you so far. The patent process is not the end goal, but rather a means to an end. Obtaining a strong patent or a strong patent portfolio must be viewed in the context of the greater business objective, which is to make money on the underlying innovation, which is not as easy today as it was even just a few years ago.

Starting before World War II and continuing throughout the 1950s, 60s and 70s, short sighted and now discredited government antitrust policies, coupled with judicial hostility toward patent enforcement and patent licensing, converged to reduce the enforceability of patents and to restrict the ability of patent owners to license their inventions. The result: foreign competitors began to capture entire industries that should have been dominated by U.S. companies that had pioneered the relevant technologies.

Fundamentally, patents facilitate access to VC financing, market entry and job creation. Without patents and an effective IP environment, the process stalls and, in some cases, firms may never emerge. Without adequate IP protection, innovators are unable to attract investments, business creation is slowed and jobs lost. Evidence suggests that this same story plays out, albeit with differing dynamics, across all sorts of firms and all nations. Economic prosperity relies on job growth, and it is clear that strong, effective IP rights have a role to play in creating both.

If you have any software patent that is essentially a software version of a human practice — something that was done in human practice — and you decide to write up a patent, even if you automated it in such a way and did things that the human brain could never do it will be problematic. If you can look at the patent and then make an argument that humans were doing this outside the software realm before you implemented it in software, under Alice, I think you’ve got a big problem.

David Morland, a partner with 3LP Advisors, moderated the first panel. He lead off the segment by pointing out that in the United States patents are being both applied for and issued in record numbers year after year. He also started the substance of the program today by pointing out that the people who own patents in the United States do not seem to believe that the asset class has been devalued. “Maintenance fee payment rates have raised, particularly with respect to the twelve-year payment, which suggests that those who own the assets do not think they are diminishing in value,” Morland explained.

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… 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.