GQ Picks: Stuff Worth Reading Vol. 3

I am in sunny Southern California this week teaching a patent bar review course at Whittier Law School. Typically when I am on these trips it is a little more difficult to get substantive articles written. In the mornings while John White lectures I am available to answer questions for students enrolled in the course, and try and keep up with my e-mails as best I can. Then in the afternoon I lecture from about 1pm to 6pm, and then in the evenings I catch up with e-mails again and try and get some writing done, but in beautiful Southern California it is hard to stay motivated enough to work constantly. In any event, I thought I would post another list of articles that I have been reading and have had time to write about. So if you are looking to find what is going on in the world of patents and intellectual property, here is a good place to start with some, good, recent, topical articles.

Tech giants are aiming to infringe
By Rep. Marcy Kaptur (D-Ohio)
Excerpt: “Legislation to weaken patent protections for inventors is again before the Congress. The question is why, in the middle of the greatest recession since World War II? At precisely the moment when America needs to create more and better jobs from new industries, why would Congress want to weaken the incentives for inventors and the venture capitalists who invest in innovation?”
Chinese Company Sues in U.S. to Block Knockoffs
By: Susan Decker (Bloomberg)
Excerpt: “Best Buy Co. and Wal-Mart Stores Inc. are among a dozen companies sued over dashboard mounts for navigation devices in a rare case of a Chinese company seeking to enforce patent rights in a U.S. court.”
Google’s Personalized Search Challenged By Patent Lawsuit
By Thomas Claburn (Information Week)
Excerpt: “Google is being sued for patent infringement for one reason — it is using PUM’s technology and has benefited greatly from it, said Roy Twersky, an owner of PUM and one of the original inventors, in a statement.”
Will Venezuela Modify Patents?
By Latin Business Chronicle
Excerpt: “Earlier this month, Venezuela’s trade minister said the government was carrying out a review of patents, including those on pharmaceutical products, arguing patents elevate the prices of goods and fill the coffers of multinational corporations. Leaders of Venezuela’s pharmaceuticals industry say revoking patents and allowing drug makers in Venezuela to produce patented medications could discourage foreign investment in Venezuela and also cause shortages of medicine.”
DOJ Shifts Policy on Generic Drug Patent Settlements
By Brent Kendall (Wall Street Journal)
Excerpt: “The department’s antitrust division said in a court filing that drug patent settlements should be presumed unlawful when branded drug makers pay their generic counterparts to abandon patent challenges that could lead to early market entry of competing generic medicines.”
Appeals Over Patents Skyrocket in 2009
By Sheri Qualters (Law.com)
Excerpt: “The economic doldrums may be slowing patent filing work for intellectual property specialists, but the U.S. Patent and Trademark Office’s increasingly stingy patent allowance rate is boosting back-end work for lawyers at the agency’s appeals board.”

Innovation Patents: Australian Court Rules on Innovative Step
By Stephen Albainy-Jenei (Patent Baristas)
Excerpt: “A recent appeal court decision confirms that inventions that include features that are known and obvious can still sustain valid innovation patent protection in Australia.”

Gene Quinn Gene Quinn is a patent attorney and a leading commentator on patent law and innovation policy. Mr. Quinn has twice been named one of the top 50 most influential people [...see more]

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3 comments so far.

Adam
July 18, 2009 05:12 pm
I don’t think you’re right about the 90% thing. She’s trying to show that the PTO is not issuing weak patents, as the tech companies claim. If 90% stand up to reexamination, that means that the patents were solid when originally awarded. This is in line with the intention of her statistic of 58% applications being rejected – the PTO is full of sticklers that only let real innovation through. If 90% are *not* coming through reexamination unscathed (which is actually close to the facts), this means the PTO is awarding lots of frivolous patents that can’t stand up to scrutiny, and the corporations have a valid point.

“History has no examples of high tech companies becoming dominant without strong patent rights.”

I would like to know more about this. Do you know of any good research into the effects of patents on high tech companies in the last 50 years? I’d be particularly interested in stories of small software companies asserting patents against large software companies, causing the big companies to fall and the small companies to flourish.

I can interpret your particular statement in two ways, and I’m not sure you’re correct under either one.

If you mean, “History has no examples of high tech companies becoming dominant outside of an environment of strong patent rights.” I might suggest that the computer hardware companies in China and Taiwan have done just that.

If you mean, “History has no examples of high tech companies becoming dominant without leveraging strong patent rights to gain market dominance.” I am skeptical, but don’t know enough history to make a firm assessment. I can’t find any patents that VisiCorp held, though they revolutionized business computing and were the market leader for years. Likewise for spreadsheet-related patents from Lotus Software, who dominated the spreadsheet market for years with Lotus 1-2-3.

Of course, you have plenty of examples of particular software technologies achieving prolonged market dominance without any patent protection (Apache, memcached, LaTeX, Linux, etc). But since they don’t have any corporations attached to them, that says more about innovation and quality than about business, so it’s probably part of a different discussion.
Gene Quinn
July 18, 2009 01:17 pm
I think she has to mean that 90% are NOT surviving. The statistics are clear, and if you add the word “not” it fits with what the point of her op-ed piece is. Without the word “not” in front of surviving she is incorrect and is actually using a fact that supports the counter-argument.

Adam says: “Finally, she claims that it’s the small businesses that really benefit from strong patents, and large businesses benefit from weak patent law. While that may be true in general, I don’t think there’s much evidence that this is the case in the software world, which is what the article is about.”

There is plenty of evidence of that. The reason that the tech giants like Microsoft, IBM and others want to make it harder to obtain patents and weaken patent rights is because they already have market dominance and they don’t want to lose that dominance. They way that these companies themselves supplanted other companies and took dominant positions was through aggressive protection of intellectual property assets. So if you look back when the now giant companies were not the dominant players you find that they way they themselves came to dominance was through strong patent protection. So history is full of examples of companies becoming dominant with strong patent rights. History has no examples of high tech companies becoming dominant without strong patent rights. History also has plenty of examples of companies who have foregone patent protection and moved into open source losing dominance and becoming irrelevant. See Sun Microsystems, for example.

-Gene
Adam
July 18, 2009 12:16 pm
Marcy Kaptur’s Op-Ed is interesting, but I think she’s playing a little too fast and loose with the facts. She claims that “90 percent of those patents challenged by re-examination are surviving”. As Gene has written about previously, while only 10% of ex partes reexaminations result in all claims being canceled, 59% result in some claims being changed, and 78% of inter partes reexamination cases result in all claims being canceled.

Also, she says that only 96 patent cases go to trial annually, but makes no mention of how many are settled before going to trial. She makes light of the fact that infringement settlements have cost these 15 companies $4 billion dollars in the past 13 years, but makes no mention of how often the companies were found to actually be infringing.

She then tries to tie the patent lobbying to the hiring practices of some of the companies, and then to the regulation changes in the financial sector. Those points were really out of left field.

Finally, she claims that it’s the small businesses that really benefit from strong patents, and large businesses benefit from weak patent law. While that may be true in general, I don’t think there’s much evidence that this is the case in the software world, which is what the article is about.

Now it’s obvious that these large corporations are lobbying for change that would benefit them directly, as all large corporations do. The fact that they can have such a disproportionate influence on legislation, due to their size, is something to be wary about. However, nothing Representative Kaptur says indicates that what they want wouldn’t benefit the industry generally, or that it would result in more anti-competitive practices. The article would have been far better if it had addressed those issues with more evidence.