Posts Tagged: "Patent Reform"

This marks Part III of my four-part interview with IBM discussing the state of innovation and the U.S. patent system from the standpoint of a company that has obtained the most U.S. patents for 26 years in a row. Below, I continue the conversation with Mark Ringes, Vice President and Assistant General Counsel for IBM, and Manny Schecter, Chief Patent Counsel for IBM, picking up on the topics of prior art and patent trolls, moving on to a comparison of the U.S. patent system with the rapidly evolving systems of China and Europe and, finally, examining how companies are refining patent prosecution practices to address the Section 101 chaos.

The U.S. Supreme Court has muddied the waters about patent eligibility in a way that threatens American innovation.  Capitol Hill is beginning to discuss this as a possible legislative issue for 2019.  Some would say it is as important as the intellectual property disputes in the tariff war with China… Intellectual property legislation traditionally is nonpartisan, which may make it a little easier to find a solution.  All members of Congress will support preserving the patent system’s incentives for innovation if they understand what is at stake for the country.

Facebook is asserting a series of patents the company has acquired from other firms, making its actions similar to those of non-practicing entities (NPEs) and remarkably patent troll-like. After all, we have been told time and time again by those who have advocated for patent reform and a systematic dismantling of the patent system that a telltale sign of a truly bad actor like a patent troll is that the patents were not the subject of homegrown innovation, but were rather acquired from true innovators and then used to sue others. That, however, is precisely what Facebook is doing here. 

How ironic is it that the infringer lobby – the very people trying to weaken the patent system and who ignore the patent rights of others through a free riding scheme of efficient infringement – are the ones who are seeing their monopoly power consolidated. By ignoring the property of true innovators the infringer lobby has grown in size, power, strength and influence.  Profits are soaring in Silicon Valley, yet they claim patent trolls are killing high tech. That claim is simply not credible. Stop and think about that for even half a second in an objective way and the claims don’t stand up to any level of scrutiny. In 2017, Apple had nearly $50 billion in net income, Microsoft has over $20 billion in net income, Facebook over $15 billion, Goggle approximately $13 billion. If patent trolls are killing, or even attempting to kill the tech elite of Silicon Valley we all ought to be able to agree they are doing a very poor job.

Congressman Dana Rohrabacher (R-CA) has introduced H.R. 6557, the Inventor Protection Act, into the House of Representatives. This bill is the latest proposed piece of legislation to help undo some of the more damaging effects of recent federal government actions on patent law which have negatively impacted the ability of patent owners to enforce their patent rights against infringers.

New patent legislation would rectify some of the damage done by several court rulings and by Congress.  It would reestablish the fundamental constitutional principle that a U.S. patent secures certain rights in private property. Reps. Thomas Massie (R-KY) and Marcy Kaptur (D-OH) have introduced H.R. 6264, the Restoring America’s Leadership in Innovation Act.

However, in intellectual property circles, it would be easy question whether Google has lived up to the goal of not doing, or being, evil… Google’s efforts to devalue patent rights is foundational to the company given its long-running penchant for copying the technologies of others for its own business success. Google’s entire targeted advertising operation, which provides upwards of 90 percent of the companies revenues, relies on technologies invented by B.E. Technology in the early 2000s. After B.E. Tech filed a patent infringement suit against Google in 2012, Google filed for inter partes review (IPR) proceedings at the PTAB to challenge those patents.

Google’s efforts to decimate the U.S. patent system to protect its own interests is a fact of life that is becoming more clear day by day. The latest scathing report, published in May by the watchdog organization Campaign for Accountability, highlights Google’s unscrupulous activities in supporting the efforts of organizations like Engine Advocacy and the Electronic Frontier Foundation (EFF), organizations portraying themselves as advocates for smaller entities but instead attempt to influence the political debate on Google’s behalf in many areas, including patent reform.

What follows is a letter on the topic of PTAB reform that will be sent to USPTO Director Andrei Iancu on Monday, May 14, 2018. The letter seeks urgent action on the Patent Trial and Appeal Board in order to bring balance to a process that has tormented inventors for the last 6 years. We already have over 100 signatures from patent owners, patent attorneys, investors and inventors. If you would like to sign onto this letter please visit http://100patentowners.org.

The bill has nothing to do with drugs or drug prices, how how much Missourians desire cheaper generics. The PACED Act is discriminatory, has nothing to do with lowering drug prices, and doesn’t change the fact that to date no Indian Tribe has ever asserted sovereign immunity in a patent dispute in federal court… Ironically, if the PTAB and PTAB process were seen as fair and even-handed, there would be no incentive for any company to transfer its patents to sovereign tribes or State universities in order to escape the clutches of PTAB jurisdiction. Simply stated, the problem is IPRs, not Native American Tribes or sovereign immunity.

In a telephone interview, Rep. Stivers noted that, while the AIA was intended as legislation that would make the patent system more efficient, the resulting differences in standards between the PTAB and the district courts have led to a large number of appeals from the PTAB. “Instead of living up to its billing as being more efficient and quicker, the PTAB has become just another stop which is more complicated, more expensive and exactly the opposite of what it was intended to do,” Stivers said. Although he noted that he was not an advocate of getting rid of the IPR process entirely, Stivers felt that the PTAB had to use the same standards of evidence used by district courts. “If that happens, then the PTAB can live up to the potential that it was sold on and you can get the same ruling no matter where you go,” Stivers said.

Between 1882 and 1906, this market dominance reportedly brought Standard Oil a total of $838,783,800 in net income. On an annual basis, that would mean that Standard Oil earned nearly $35 million in net income each year, which equals approximately $969 million in 2017 dollars when adjusted for inflation… To some of the tech super giants of today, $1 billion in profits is nothing more than pocket change… If Standard Oil remains the benchmark for what it means to be a monopoly, which many believe it does, it is difficult to understand why U.S. Antitrust regulators are not at least asking very serious questions about the market dominance of the tech super giants and the associated suppression of smaller, truly innovative enterprises.

There can be no dispute that the level of business startup activity has been on the decline in the United States over the past few decades. So alarming is the downward trend that publications like the New York Times, the Wall Street Journal and others have tackled the issue in depth. Inc. Magazine has even asked whether entrepreneurship in America is dead? Still, a disturbing counter-factual narrative seems to be taking hold inside the Beltway, and on Capitol Hill. Despite all research and data to the contrary, some are actually saying that startups are on the rise, and then using carefully selected and tortured data points to claim that patent reforms are the reason for the rise in startups, and more patent reforms are needed.

Here we go again with a new villain, the bad patent. If a patent is a bad patent, there must be a negative economic effect. But what is the negative economic effect with respect to this cat exercising method? In what universe does it make sense to set patent policy for the 21st century based on a cat exercising patent? Like the myth of the patent troll, the myth of the bad patent exists only to protect huge monopolistic multinational corporations from the creative destruction of a small inventor with a big idea at the expense of our economy, our job creation engine and our national security.

HTIA’s letter argues that venture capital funding and startup activity have grown in recent years, further proof of their view that the federal government has properly pursued patent system reforms. Using data tools available through PwC MoneyTree, the HTIA cites data indicating that venture capital investments in the U.S. have increased from $32.8 billion in 2012 up to $61 billion in 2016, representing an 86 percent increase in that time. Of course, the letter easily lets go of the fact that the graph shows that venture capital funding actually dropped significantly by about $15 billion between 2015 and 2016 alone, a point the HTIA’s own data graphs prove. As for startup activity, the HTIA collected data from the Kauffman Index of Startup Activity to make its argument that startup activity has increased by 194 percent between 2012 and 2016. Again, there’s no acknowledgement of a concerning recent data point, here the absolute stagnation of new startup activity between 2015 and 2016.