American Ingenuity Will Lead US to Prosperity

By Gene Quinn
June 25, 2009

Senator Orrin Hatch (R-UT)

Senator Orrin Hatch (R-UT)

Senator Orrin Hatch (R-UT) has been out in front on patent and intellectual property issues for years, and he is at it once again.  Senator Hatch has recently been very active with respect to writing op-ed articles explaining what all of us in the patent community have known for a very long time.  My hope is that his profile will bring attention to what is obvious — “If we are to have a durable economic recovery, we must rely on our renowned American ingenuity to lead us into prosperity again.”  These words were written by Senator Hatch in an op-ed published by TheHill.com earlier this week.  I have been beating this drum for many months now, and with Senator Hatch beating the drum hopefully the rest of America, and in particular the Congress and White House, will pay attention.

Patents do not harm innovation, patents promote innovation.  Patents are assets that can and do lead to exclusive rights that are attractive to investors because there is some reason to believe there is a competitive advantage.  Investing is risky business, particularly in new technologies and start-up companies.  If we are ever going to get out of this economic downturn we will need investors to provide capital for start-up technology companies, for further research and development in established companies and for the expansion and job creation we need to lower unemployment and get Americans working again and growing a strong and stable economy for the future.  This is not rocket science really.  We need to unleash market forces and American ingenuity, and that must start with patent reform and reform of the Patent Office.

I really recommend anyone interested in patents, innovation and the economy take the time to read Senator Hatch’s op-ed article.  Rather than paraphrase, here are the first three paragraphs to wet your appetite:

America’s ingenuity continues to fund our economy, and we must protect new ideas and investments in innovation and creativity. Patents encourage technological advancement by providing incentives to invent, invest in and disclose new technology. Now, more than ever, it is important to ensure efficiency and increased quality in the issuance of patents. This in turn creates an environment that fosters entrepreneurship and the creation of jobs, two significant pillars in our economy.

The patent system is the bedrock of innovation. Last year alone, nearly 500,000 applications were filed at the U.S. Patent and Trademark Office, the world’s leading agency for intellectual property protection. The sheer volume of patent applications not only reflects the vibrant, innovative spirit that has made America a worldwide leader in science, engineering and technology, but also reflects countless new jobs waiting to be unleashed. When patents are developed commercially, they create jobs for the companies marketing products, and for their suppliers, distributors and retailers. One such patent has positive stimulatory effects across almost all sectors of our economy.

If there’s anything that I’ve become more certain of over these past several months, it’s this: If we are to have a durable economic recovery, we must rely on our renowned American ingenuity to lead us into prosperity again. Those of us in the IP community have long known the strong connection between a robust patent system and a healthy economy.

Senator Hatch has also been out in front of funding for the Patent Office, and also recently wrote an op-ed piece that appeared in the Mercury News explaining that Congressional pilfering of Patent Office funds amounts to nothing more than a tax on innovation, which is exactly the wrong thing to be doing or considering.  In fact, the Patent Office needs more funding from Congress in order to get back on track.  The backlog of pending patent applications is enormous, and the average time you have to wait to receive a patent is at an all time high.  Recently the Patent Office has been taking steps to address these problems, but without additional funding there is only so much the Patent Office can do.  I am not a fan of throwing money at a problem and assuming it will be fixed, but without more examiners there are many fields of technology that will continue to see waits approaching 8 or 9 years before a patent is issued.

Patent assets could be helping business grow right now, so waiting that length of time is really unacceptable, particularly when Congress can appropriate more money for the hiring of more examiners and examiner assistants right now!  Even if Congress doubled the PTO budget, that would only cost $1.8 billion, which is nothing more than a rounding error compared to the trillions of dollars Presidents Bush and Obama have thrown at the economy, and not to mention the trillions thrown at the economy by the Fed.  The irony is for a measly $1.8 billion in new money Congress could organically grow the economy by expedited creation of assets, which would bring investors off the sidelines and back into the game, which would grow the economy.  My goodness this is not difficult to understand, is it?

Unfortunately, so much of this does seem difficult for so many to understand, and the folks in the Senate that really seem to understand patents seem to be getting marginalized.  Senator Hatch seems to be one of the few who understand that inequitable conduct reform is the single most important patent reform issue, yet the Senate version of the bill doesn’t even mention inequitable conduct reform, and this is even after Senator Hatch was given assurances that it would.  Senator Jon Kyl (R-AZ) also seems marginalized, and all he was trying to do was get the Judiciary Committee to consider the enormous burden post grant review would place on the Patent Office at a time when they are overwhelmed with patent applications that have been pending without any action for years.  For more on Senators Hatch and Kyl not getting the Judiciary Committee to consider their sensible amendments see Senate Judiciary Committee Passes Patent Reform Bill.

What needs to happen is another moment like 1952.  We absolutely need our leaders in Congress to stand together and acknowledge that with all of the changes in technology that have occurred over the last 57 years, and with the Federal Circuit and Supreme Court bickering year after year regarding basic patent law principles, it is time to re-codify this enormously important area of law and embark upon a path that would lead to another 50 years of sustainable patent law.  I am afraid that nothing short of starting from scratch, and with an eye toward reforming and assisting the Patent Office, is acceptable at this point.  But since this fair tale ending has about a snow ball’s chance in that very warm place, all those interested need to support the efforts of Senator Hatch and Senator Kyl and pray that others in Congress will come around.

The Author

Gene Quinn

Gene Quinn is a Patent Attorney and Editor and President & CEO ofIPWatchdog, Inc.. Gene founded IPWatchdog.com in 1999. Gene is also a principal lecturer in the PLI Patent Bar Review Course and Of Counsel to the law firm of Berenato & White, LLC. Gene’s specialty is in the area of strategic patent consulting, patent application drafting and patent prosecution. He consults with attorneys facing peculiar procedural issues at the Patent Office, advises investors and executives on patent law changes and pending litigation matters, and works with start-up businesses throughout the United States and around the world, primarily dealing with software and computer related innovations. is admitted to practice law in New Hampshire, is a Registered Patent Attorney and is also admitted to practice before the United States Court of Appeals for the Federal Circuit. CLICK HERE to send Gene a message.

Warning & Disclaimer: The pages, articles and comments on IPWatchdog.com do not constitute legal advice, nor do they create any attorney-client relationship. The articles published express the personal opinion and views of the author and should not be attributed to the author’s employer, clients or the sponsors of IPWatchdog.com. Read more.

Discuss this

There are currently 6 Comments comments.

  1. staff June 26, 2009 9:42 am

    “I am afraid that nothing short of starting from scratch, and with an eye toward reforming and assisting the Patent Office, is acceptable at this point. ”

    geez, i really don’t think that is needed. the laws have been in place. the problem has been incompetent management at the PTO artificially holding back allowance rates. they have caused this mess by forcing applicants to fight for a patent. in my mind i blame all the problems on tech who have bribed and blustered their way to screwing up the patent system. congress needs to get their act together and show some integrity by disengaging from tech deep pockets. the problem is congress doesn’t listen to inventors or the tech neutral patent bar.

    by the way, no one has ever proven there really is a serious problem with patent quality. sure, we all welcome improved examination but there is only so much one can do. any engineer familiar with process mechanics knows there is a diminishing return on quality control. there will always be patents that issue that shouldn’t so get used to it. but rarely are they ever a problem because you cant enforce a patent without cash and you cant get cash for a bad patent. investors aren’t stupid. it’s not about the patents that are issued, it’s about the ones that aren’t. all this wrangling over bad patents has caused this application backlog. let’s get the PTO back in the business of issuing patents.

  2. Adam June 26, 2009 11:48 am

    “you cant enforce a patent without cash and you cant get cash for a bad patent”

    Unfortunately, you also can’t defend against a bad patent without cash. So, this means that large corporations and NPEs can hold bad patents that individual inventors (or small startup companies) are financially unable to challenge. Especially in fields like software, where the low cost of development means that the “lone inventor in a garage” (or basement) does exist, this imbalance can really squash innovation. There’s definitely a cost to issuing too many bad patents.

    A current example of this:
    http://thepriorart.typepad.com/the_prior_art/2009/06/fotomedia-technologies-fotki.html

  3. Gene Quinn June 26, 2009 1:09 pm

    Adam-

    As I have explained before, ex partes reexamination is granted 92% of the time, with all claims being canceled in 10% of cases and at least some claims being changed in 64% of cases. Inter partes reexamination is granted 95% of the time, with all claims being canceled in 78% of cases and at least some claims being changes in 15% of cases.

    See: http://www.ipwatchdog.com/2008/11/18/reexamination-would-stop-patent-trolls/id=300/

    While there is a cost to issuing bad patents, there is an even greater cost to society to not issuing patents. Similarly, in the software field you talk about most create their own problems. They don’t like patents and refuse to seek them for themselves. That makes them targets who can be challenged without fear. There is absolutely no mileage in dressing up like a deer in hunting season, and that is exactly what folks who do not seek patents for themselves are doing.

    Also, I am getting so tired of all this love for those who infringer. Infringers are breaking the law, and the fact that they don’t like to have to pay for breaking the law is a them problem, not a patent owner problem.

    -Gene

  4. Adam June 26, 2009 1:52 pm

    Actually Gene, I was supporting what you were saying. It would be better for everyone if legislators started over and re-codified patent law in a clear way that recognizes changes in the IP landscape over the last 50 years. If done correctly, it would result in fewer bad patents being issued and more clarity about what is patentable.

    As far as not seeking patents in software, it’s another case of the economics of patents favoring large companies. Right now it’s possible to write innovative software and publish it to millions of people with an investment of literally $0 and a weekend of work. To expect patent searches and patent applications for every piece of software written is to advocate for eliminating this environment which allows for such freedom and innovation.

    This, of course, is one of the pragmatic issues that set software patents apart from some other kinds of innovation. If you have to invest 10 years of work and millions of dollars to develop a new pharmaceutical, of course you’re not going to do it unless you can have some guarantee that you’ll be able to reap the rewards of those efforts. If you only have spend some time at a keyboard for a few weeks, it’s actually more expensive, in both time and money, to get the patent protection than to do the research and development. In this kind of environment, I fear Senator Hatch might be wrong, and more stringent patent laws may not encourage software innovation.

  5. Steve Jmontim July 6, 2009 1:18 am

    Your stance is surprising Gene, since you have been so anti-Rambus, an innovative American company that has patents for revolutionary technology that the large corporations don’t want to pay for.

    I know I know, you’ll say that Rambus did something wrong, but in all this time, the facts still remain that those same large corporations knew what Rambus technology was because Rambus taught them under NDAs. IN fact, the US Patent Office said that Rambus’ initial application contained 11 seperate inventions, and told them to pick one, and file the rest under coninuations or divisionals.

    Even with just the first patent issued, DRAM companies (from internal memos during the FTC case and the HYnix case) were able to realize that Rambus could, and probably would add additional claims that would cover SDRAM, and knew that Rambus had claims (because Rambus told Synclink members) that would cover DDR.

    Yet in all this time, you have defended the “we didn’t know” smoke and mirrors red-herring arguments by the big companies (almost all foreign) that simply want to use the AMERICAN DEVELOPED TECHNOLOGY for free.

    So the question is, do you really support patent rights, or do you only support them when it is the big companies that advertise on your website?

  6. Gene Quinn July 6, 2009 1:53 am

    Steve-

    Are you serious? Me anti-Rambus? Can we try and keep it real please. I have written pieces that are against Rambus, and which are pro-Rambus. The pieces I have written that were anti-Rambus all said that if they did what they were alleged to have done there was something seriously wrong.

    You say: “Rambus’ initial application contained 11 seperate inventions, and told them to pick one, and file the rest under coninuations or divisionals.”

    You really need to learn your patent law. This is not by any stretch of the imagination unique, and it doesn’t mean that all the inventions are patentable.

    You say: “do you really support patent rights, or do you only support them when it is the big companies that advertise on your website?”

    Can you show me a single sponsor on this website that has applied for a patent? Can you name a single “big company” that sponsors my website or has ever bought advertising on my website? Of course not, because there are none, but that doesn’t seem to stop you from making erroneous allegations. Do you realize that when you are so obviously incorrect about something so easy to verify you make everything you say seem like it is false, and that does you and your agenda no good at all.

    For the record, my major sponsor is PLI, which is a non-profit company that promotes its CLE programs and patent bar review course. My other sponsors are Lamber & Lambert, a licensing company and Inventia, a patent illustrator. I have had ads up for Professor Lichtman’s IPColloquium and Inventors Digest, which is a magazine. Please do your homework before you hurl accusations. You make yourself look silly with such nonsense.

    -Gene