How I Discovered Strong Patents Are Critical for America

By Scott Moskowitz
October 1, 2016

Patent approved, 3d rendering, a red wax seal

Patent approved, 3d rendering, a red wax seal

When you are an inventor and entrepreneur, good news is hard to come by these days. Over the past two decades, Congress has passed a series of legislative measures weakening our patent system – the main bulwark protecting America’s independent inventors, small businesses and universities.

Our strong patent system has been the foundation for America’s transformation from an agrarian backwater to the world’s leading economy over the past two centuries. So why would anyone want to undermine a carefully conceived system for ensuring prosperity and enabling innovation?

America’s founders understood that strong patents are the foundation for a productive and prosperous nation. That’s why Article 1 of our Constitution states that Congress shall have the power “To promote the Progress of Science and useful Arts by securing for limited Times to Authors and Inventors the exclusive Right to their respective Writings and Discoveries.” The inventor’s patent disclosure is a key to sharing novel innovations and building on those innovations.

The US Patent and Trademark Office (“USPTO”) estimates patents are responsible for $5 trillion of America’s GDP and more than one-quarter of our jobs. A January 2016 study sponsored by the USPTO and the Harvard and NYU business schools found that “patent approvals help startups create jobs, grow their sales, innovate, and reward their investors.”

Patents also help small companies “level the playing field and give them a fair shot when dealing with larger, more established, and better financed companies,” according to the Innovation Alliance.

“Patents are really about the American Dream,” said Sen. Chris Coons (D-Del.), one of a very few policymakers actively interested in this issue. “They are about what it means to come to this country or be from this country and believe in the possibility that you and a team of folks that you work with can invent and develop and then protect a groundbreaking innovation,” he added.

Infringing Made Easy

Using what is known as “efficient infringement,” some big technology companies perform cost-benefit analyses to decide whether to ignore a patent holder or take them on. If patent holders fight back, they are branded as “patent trolls.”

A leading thinker on this topic, Adam Mossoff, wrote that if a patent troll is a person or company who licenses patented technology rather than manufacturing it, then America’s greatest inventors, such as Thomas Edison, John Moses Browning, and Charles Goodyear, would have been derided as trolls.

Even some of America’s leading universities could be considered patent trolls for developing technology they do not intend to commercialize. In 2015, The New York Times’ columnist Joe Nocera wrote: “Thanks to the 2011 America Invents Act (“AIA”) and those [Court] rulings, big companies can now largely ignore legitimate patent holders.”

“For the sake of real innovation, and in the name of the small inventor, who holds a special place in America’s mythology, the pendulum needs to start swinging in the other direction,” Nocera added.

Some large technology companies have chosen lobbying over R&D and are pushing reforms they claim are necessary to fight these mythical “patent trolls,” supposedly illegitimate entities harassing companies with nuisance lawsuits. Over the past decade, few of these actual entities have been uncovered.

While some entities do indeed abuse the system, the USPTO already has tools to address offenders as do the Courts tasked with resolving patent disputes as they do in other property conflicts. A growing number of experts argue that the cure has become worse than the disease, and legitimate patent-holders are suffering the consequences.

When small companies are forced to fight back in the courts, technology giants looking to take their property, try to discredit them by labeling them as “trolls.” Even when these small companies prevail, despite offshoring of jobs and R&D by their larger competitors, the costs to the innovation economy are heavy.

The success of the false and misleading “patent troll” narrative cannot undo the reality that our patent system no longer protects the planet’s most creative and innovative people – America’s inventors.

My Own Journey

As an entrepreneur and inventor with more than 110 patents, I have seen the ill effects first hand. One of my companies, Blue Spike, has licensed its technologies to more than 100 companies, but the erosion of patent protections has emboldened those who would rather steal intellectual property than pay for it.

My own journey as an inventor began because of my love for music. As a student at the Wharton School in the 1980s, I inscribed my music CDs with my initials “SM” with a pen knife so I could later locate them in the dormitory, should they go missing. It reduced the potential for conflict. Whomever had borrowed the music could hardly argue that the “SM” etched on the CD did not stand for “Scott Moskowitz.”

What I discovered was this “watermark” protected my property. At that time, the world was rapidly going digital – music, images and videos – and I surmised that finding a way to protect this content would be huge.

If there was a way to embed digital information in the file itself, a “digital watermark,” it would help artists, musicians and writers protect their work and the sellers of the content. So I immersed myself in the study of steganography – the process of concealing information in texts or data – along with signal processing, data security, and networks.

By 1995 I was filing my first patents related to digital watermarking, a process for encoding information in a digital file that does not affect its composition, but allows its owner to identify and trace it.

The New York Times wrote about this nascent technology developed by one of my earlier startups called DICE – for “Digital Information Commodities Exchange.” A few years later, the EE Times detailed our recently launched Giovanni™ suite of watermarking technologies and our partnerships with various companies engaged in a wide variety of technical innovations.

This work, along with that of some others, created a new class of US patents. Before then, there had been almost no publications on steganography. In 1998, I published a book about digital watermarking technology and the rapidly evolving media environment.

My book coincided with the start of a landmark case between the Recording Industry Association of America (“RIAA”) and Napster, effectively shutting down the free file-sharing service. During that case, I assisted the special expert A.J. Nichols and provided edits to the RIAA’s amicus brief explaining the various content protection technologies available and under development.

That Napster lives on as a paid service shows how much the landscape has changed.

Over the past 25 years, I have patented innovations relating to digital watermarking, content recognition, deep packet inspection, rights management, and related technologies. Today digital watermarking is found on billions of files moving around the Internet every day. This technology protects musicians, artists, writers, and developers from having their work illegally copied.

How ironic it is that for the past decade, I have been forced to file many legal challenges to protect my own intellectual property. With the passage of the America Invents Act of 2011, Congress sharply tilted the playing field in favor of large corporations that decide to infringe patents owned by small businesses and inventors like me.

We have reached a nadir in encouraging our nation’s finest job creators, our independent inventors. A lot is at stake. We must reverse the erosion of our patent system, because without protecting inventors’ work and vision, job creation and productivity suffer.

The Author

Scott Moskowitz

Scott Moskowitz is founder and managing director of Blue Spike LLC. The idea for Blue Spike came about while still an undergraduate & later experience at Sony Corporation in Japan, the first undergraduate honored to work in an active business strategy group within Sony Corporation. Mr. Moskowitz invented a large number of approaches to protect media content such as music, video, software & images. Several inventions are "pioneer patents" & created new industries & lucrative, high-paying jobs. Mr. Moskowitz also invented "ASLR" to increase software & device security. Work in signal analysis included robust summaries of signals - "signal abstracts" - for content recognition & monitoring as well as "packet watermarks" for identifying & securing streams of data, or packet flow, deep packet inspection, differential quality of service ("diffQoS"), intrusion detection, prevention of denial of service attacks, differential quality of experience ("diffQoE") & "trusted transactions" for enabling, at least, "dynamic authentication".

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Discuss this

There are currently 29 Comments comments.

  1. Anon October 1, 2016 10:57 am

    The focus on the myth of “Tr011s” reminds me that I wanted to see if Mr. Katznelson has considered his next step in the efforts to debunk the use of that term.

  2. step back October 1, 2016 12:24 pm

    It is not Congress alone that has turned wicked and run its gratitude-less knife into the gut of the golden goose that has laid so many innovative eggs for America and her people.

    All too many judges in our other branch of government have taken on the belief that innovation and progress are “inevitable” outcomes of a competitive marketplace.

    They are not.
    The marketplace takes as free whatever it can get its greedy, thankless little fingers on. The example given above of Napster is a clear example.

    We know that there are many smart people in countries that do not recognize inventors and inventor property rights. Essentially no innovation comes from those countries. Why? Because few people are willing to till the soil, nurture the seeds and then watch the hoard come in and grab that which is not the fruit of their labors.

    Despite that, intellectual giants like Justices Kennedy and Beyer of our Supreme Court suppose for themselves (read the Alice hearing transcript) that anyone can walk into any Silicon Valley coffee shop with nothing more than an ‘abstract idea’, relay it to a 2nd year engineering student and then, magically, over weekend’s time it will be made so with an act of simple coding on a simple “generic” computing do-hickey. These judges live in their own self-innovated fantasy bubbles.

    Rebuilding the American patent system will take a lot more than simply finding a few sympathetic Congresspersons. Our judges need a great deal of re-education about the 1% inspiration and 99% perspiration thing.

  3. Michael L. Weiner October 2, 2016 8:14 am

    This is a compelling overview of what may be a past art.

    The American public lost its ability to understand the value of the US Patent system after the Education system stopped teaching its virtues.

    This occurred in the 1970’s, after the generation raised that with strong understanding. It had been conveyed in movies about Thomas Edison and Henry Ford. Great inventors.

    America still lauds its disruptive heroes. Bill Gates, Steve Jobs, Elon Musk, Ray Kurzweil.

    But no longer its patent system.

    Patents stopped being taught in schools and in culture. The movie about Thomas Edison, starring a young Mickey Rooney, came out in 1940. Inventors fascinated America through the ’70’s.

    We don’t celebrate patents any more in this country. As an inventor with 35 patents, this is sad.

    The destruction of the American patent system did not start with today’s generation.

    Those who know patent history will recall that for many years, software waa not patententable. That created a hole in the patent prior art record in the ’90’s. The Patent Office changed this rule but the gap made it impossible to find prior art, and treated one industry inequitably. So software people felt patents were unfair, when Google was born. And it was the software industry that took down the US patent system, at least for small inventors. The US patent system was not destroyed by them, but the courts. The courts determined that manufacturing and distribution are more important than invention. So they took away the right for a small inventor to use injunctive relief to stop an infringer, and they created two classes of patent owner.

    This was a huge overreaction to the problem of an unethical firm shaking down small businesses.

    But clever PR equated these scam artists as the same as the firms, such as IPNav that fought for patent owners legally infringed, who got judgments, legally, held up on appeal, to show their mettle, and changed the balance of power for a while. As a result, over 200 years of patent law and history was undermined when the courts, backed by the Congress, created two classes of inventor. Those who manufacture and distribute, and those who do not.

    At this point it is going to be hard to put the Genie of Americam ingenuity back in the bottle.

    We should have stopped the illegal trolls, but instead we used the term to destroy the law firms finally were representing small patent owners successfully.

    It is a difficult thing for me to watch.

    Patent reform and patent normalization with Europe were successfully resisted by the successful inventors who came of age when inventors were heroes, and the US patent law was considered a unique American asset.

    It has been dismantled to a law that favors large corporations. This shift from innovation to P&L priorities is sad.

    It will not stop innovation.

    It was a vote against independence.

  4. zoobab October 2, 2016 10:02 am

    Alice should be able to kill 100% of your patent portfolio. They are all about software methods, which are not patentable, for lots of good reasons.

    And you seem to be a serious troll as well: https://www.eff.org/deeplinks/2014/09/serial-litigant-blue-spike-wins-septembers-stupid-patent-month

  5. Bemused October 2, 2016 10:02 am

    Well said, Mr. Weiner. I suppose Congress dismantling the vaunted US patent system is to be expected when that institution is made up primarily of career politicians who have no real world experience with inventing or starting and running a business.

    I wonder if we had term limits on political office – which would force politicians into the real world and off the government tit – that would have resulted in a different mindset in Washington DC about patents and innovation?

  6. angry dude October 2, 2016 7:07 pm

    Michael L. Weiner @4

    “…created two classes of inventor. Those who manufacture and distribute, and those who do not”

    This is not correct – the class divide is between “haves” and “have nots”

    I can read on the back of my old IPhone:
    “Proudly designed in California. Made in China”

    I can probably do some small scale manufacturing of some simple product embodying my patented invention and sell it online, but there is no way a small company can integrate hundreds of technologies (many of them stolen) in e.g. a smart phone and do mass scale manufacturing in China and worldwide distribution – you would need hundreds of millions just to get started…

    So it’s just “haves” and “have nots”

    Karl Marx was right after all…

  7. Alex October 2, 2016 9:46 pm

    7346472: ‘…creating an abstract of said reference signal…’ by ‘inputting the reference signal into a processor’ and ‘creating an abstract of the reference signal using perceptual qualities of the reference signal such thaf the abstract retans a percetual relationship to the reference signal…’

    The judiciary will eventually send this junk to the dumpster in Alice’s name rather than 112b as it should be.

  8. ERIC ALEXANDRAKIS October 2, 2016 11:51 pm

    You heard it form the horse’s mouth, i.e. the inventor of the digital watermark.

  9. Gene Quinn October 3, 2016 9:48 am

    Eric Alexandrakis-

    It would appear your comment is intended to be condescending. If that is the case, would you care to enlighten us as to your qualifications so we can determine if you know anything about what it is that you are commenting on here?

    -Gene

  10. Night Writer October 3, 2016 11:18 am

    The core of the problem is Mark Lemley. Congress and Presidents don’t burn down the patent system with the approval of the intellectuals –or pseudo-intellectual in this case.

    Mark Lemley intentionally misrepresents science. His cites in his papers do not hold water and are published in a vanity press with no peer review.

    If you want to win this war, go after the “intellectuals.”

  11. Anon October 3, 2016 11:59 am

    I believe that there is more than just a grain of truth to Night Writer’s comments.

    I find it beyond odd that the academics seeking to shape the law (and who can put their impressions on each new generation of lawyers) have seemingly no “ethics” constraints to pushing their ideology.

    Academics involved in law should have twice as strict of ethical codes, based on the reasoning that ethical codes exist at all for attorneys.

  12. ERIC ALEXANDRAKIS October 3, 2016 2:15 pm

    Not at all condescending…simply stating that Scott Moskowitz, the inventor of the digital watermark, said it the way it is. My qualifications? I produced the first digitally watermarked CD 21 years ago, which contained his tech. The following years I was involved in the testing of newer versions with Scott with various engineers, studios, including Hit Factory Miami, watched it blossom into the major labels and major film companies, and have the pleasure of admiring how it’s now used in every single form of digital exchange in existence today.

  13. Gene Quinn October 3, 2016 3:36 pm

    Eric-

    OK. Apologies. I misinterpreted your comment it seems. Cheers.

    -Gene

  14. Anon October 3, 2016 4:34 pm

    I wonder how Eric and Scott feel about “In re Nuitjen“….?

  15. A Rational Person October 4, 2016 1:14 am

    Night@11

    Lemley was of course cited in Mayer’s atrocious concurrence in INTELLECTUAL VENTURES I LLC v. SYMANTEC CORP.

    http://www.cafc.uscourts.gov/node/20957

    “Obviously, no patents were needed for software to become a $60
    billion/year industry by 1994.”); Mark A. Lemley, Software Patents and the Return of Functional Claiming, 2013 Wis. L. Rev. 905, 935 (2013) (“Software patents . . . have created a large number of problems for the industry, particularly for the most innovative and productive companies. . . .)

    Software patents typically do not include any actual code
    developed by the patentee, but instead describe, in intentionally
    vague and broad language, a particular goal or objective. See Dan L. Burk & Mark A. Lemley, Is Patent Law Technology-Specific?, 17 Berkeley Tech. L. J. 1155, 1164–65 (2002).

    Of course many of Mayer’s “gems” of technological ignorance did not require a citation to Lemley’s works. For example, the following statements from from his concurrence are, to quote Wolfgang Pauli, “not even wrong”:

    “Software is a form of language—in essence, a set of instructions.”

    “The central problem with affording patent protection to generically-implemented software is that standard computers have long been ceded to the public domain.”

    “Software, however, is akin to a work of literature or a piece of music, undeniably important, but too unbounded, i.e., too ‘abstract,’ to qualify as a patent-eligible invention.”

  16. Anon October 4, 2016 9:27 am

    I believe that the rest of the court owes both an apology to the public and a rebuke of Judge Mayer.

  17. A Rational Person October 4, 2016 11:09 am

    Anon@17

    I agree.

    When I see idiotic statements such as Judge Mayer’s that software is “too ‘abstract’. I keep thinking what a comfort that must be to the people who die in a car crash because the software controlling the brakes in one of their cars fails, or to the people who lose decades of records, family photos, etc., because a virus installs malicious software on their computers, or to the people who have had their identities hacked and their lives wrecked financially by identity thieves employing hacking software, etc. It’s good to know that no one will ever be hurt in such situations because software is merely “abstract” and has no role in the real world.

  18. Eric Berend October 4, 2016 2:49 pm

    And – AND, the above does not even begin to address the damage wrought against inventors of electrical-mechanical apparatus’ at the behest of software-centric entities.

    How DARE you all come in and ruin the benefits of over 200 years of cogent jurisprudence, with your greedy and ignorant motivations?

    HOW DARE YOU?

    It’s quite telling that you all (e.g. patent interest plunderers), couldn’t get to “second base” with your ABSURD, RADICAL destruction of U.S. Constitutional norms in this area, until the corrupt minions of the pharmaceutical industry somehow became convinced this was all ‘such’ a good idea; and then, went to bat for you, doing most of the influence-peddled “heavy lifting” (K Street lobbyists, etc.).

    It’s supremely ironic, and very revealing, that the self-same pharmaceutical minions then, belatedly realizing the treats THEY CREATED against their own industrial U.S. Patent interests, have been lobbying for a special exemption to this massive harm that THEY THEMSELVES perpetrated.

    Ordinarily, I would pop open a rhetoric bottle of ‘Schadenfreude’ beer and watch the self-inflicted chaos in such a situation; except that, of course, these ‘Cap’n Ahabs’, in “killing the whale” (so-called ‘patent trolls’) here; now threaten to drown the ‘ship’ (i.e., the rest of all the inventors) in the vortex of the “whale’s” sinking.

  19. Eric Berend October 4, 2016 2:51 pm

    ^^^ please read “…threats…” for “…treats…”, above (nuisance spelling auto-correction, in error).

  20. Night Writer October 4, 2016 6:29 pm

    @16 Rational person:

    I went through Lemley’s paper on functional claiming. The cites are unethical. The cited reference do not say what Lemley claims they say.

    Just unbelievable to me that a person as unethical and unprincipled as Lemley would be cited so often.

    Mayer: we can only hope that soon he heads for a retirement home.

  21. Anon October 4, 2016 7:20 pm

    Night Writer @21,

    I seriously believe that that is not enough.

    Mayer has disgraced the court with his personal views untethered to reality, and clearly a mouthpiece for the anti-software patent forces.

    He has no business being a judge, let alone a judge involved with innovation cases.

    The rest of the Court of Appeals Federal Circuit are guilty by association unless they take affirmative – and public – steps to distance themselves from this outrageous opinion.

    This concurrence is truly a reprehensible piece of schlock.

  22. Chris Chase October 4, 2016 8:24 pm

    I’m not an attorney and I have no idea if this post will be scoffed at, ridculed, or simple viewed as out of place… However, this story needs be told.

    I am a product designer and inventor. I’d just like to comment on this from that perspective. I have developed at least half a dozen incredible ideas. My ideas are mostly for tools and related to ergonomics and organization. They are easy to produce, solve multiple problems, are scalable, and durable… the last, sadly, being a bad trait these days. I patented my best idea, but the problem was not protecting my invention, it was finding someone with the vision to realize it was a great idea.
    What I found is that the mechanically inclined Do-It-Yourselfer is vanishing in America – particularly in the boardroom. I have advanced incredible, sure to win ideas to a number companies only to discover that no one on their boards had ever picked up a screwdriver in their lives. More distressing, is the vanishing spirit of entrepreneurship, and I am not talking about it from the inventor’s end. There was a time when marketers and manufacturers would give you a shot. They had the hands on acumen to recognize a great tool idea, and they would actually give you a shot..
    These Americans appear to be going extinct now. It’s all about frenetic business cycles; functional obsolescence; one-year business cycles – and I say this is a metastasizing cancer in America. No one seems to care anymore about producing great products that will become American Standards. No one no strives anymore to produce quality products, and in years of searching, I’ve found only a handful of people willing to at least give you a shot.
    We who dream, design, and build ideas are passed over for cheap, easy to produce kitchen gadgets that end up in the garage in two weeks and the dumpster in a year. I truly lament this decline, both from the patenting perspective, and as one of the last true product inventors. Most of my great ideas will never be realized, and end up on the ash heap of missed opportunities.
    I do not see America heading in a good direction anymore.
    God Bless
    CWC

  23. A Rational Person October 4, 2016 8:55 pm

    Anon@22

    Further to your point that Mayer’s concurrence was a truly reprehensible piece of schlock, we have not even discussed Mayer’s effective requirement that in order to determine if a claim is patent eligible, an Examiner must be able to determine if theclaim somehow restricts a Constitutional right unrelated to Article I, Section 8, i.e., the First Amendment!:

    “I write separately, however, to make two points: (1) patents constricting the essential channels of online communication run afoul of the First Amendment;”

    No explanation is provided in Mayer if other parts of the Constitution, other Amendments to the Constitution, other Federal Laws, other Federal Rules, etc., must be considered by Examiners if determining whether a claim is patent eligible under 35 USC 101 or why any part of Title 35 or Article I, Section 8 indicate that the First Amendment, alone among the Amendments to the Constitution, must be interpreted by Examiners in determining patent eligibility.

  24. Night Writer October 5, 2016 8:57 am

    @23 Chris: I was a product manager before becoming an attorney. I think the reason you aren’t being given a shot anymore is that the big corp knows they can just take whatever you do once it becomes successful. So, there is no need to invest on a chance. Just wait until something looks good and copy it.

    Reality.

  25. step back October 5, 2016 1:15 pm

    CWC @23

    All excellent and valid points.

    In our new, improved and great again America it is all about the quick buck.
    The quickest buck can be had with a killer smart phone app. Very low capital investment, large user population, quick entry and quick large cash out for the venture investor. You are competing against that. And as you said, hardly anyone picks up a screw driver anymore. Very sad.

  26. angry dude October 6, 2016 7:13 pm

    step back @26

    valid points, but… the killer (software) apps are hard to spot and easy to copy by competitors once they become successful (if its about pure functionality, not some household names like “angry birds”)

    I would rather put my bucks in the consumer hardware products with completely new functionality afforded by embedded software, provided that software can be protected via trade secrets and not patents (code encryption, secure boot, trust zones… all the way to ASICs)
    The functionality of the products can still be “protected” by invalid patents like the one on self-balancing board owned by Mark Cuban.
    You get the best of both worlds: reliable protection via trade secrets
    AND possibility to harass potential competitors through (invalid) patent or (even better) continually pending patent application (if you have enough money in the bank)

  27. Amit Dharia October 9, 2016 2:38 pm

    Amit Dharia October 9, 2016 2:31 pm

    First to file has embolden large entities. Patent hoarding is a major concern than patent trolling. Your rights are only valuable if you can defend them. Patent litigation is extremely costly and most small businesses and inviduals cannot afford it.

    The quality of patents is degrading every year. First anything can be patented, provided you have a hungry attroney. Patent office does not have enough resources to examine patents fully.

    I am an inventor and a patent agent. IMO, entire US patent system needs to be reexamined. 80% patents are useless…filled with claims which cannot be proven technically valid and cannot be confirmed

    Public loses due to patent laws. Look at how pharma companies are getting away… !

  28. Gene Quinn October 10, 2016 10:00 am

    Amit-

    Clearly, the public does not lose because of patent laws. That claim is complete and utter nonsense. You have absolutely no factual support to make such a claim, which is obviously why you provide no citation or support. The patent alway foster disclosure, which does benefit the public.

    As for pharma, you pick the one area where the patent laws unambiguously benefit the public. No one would ever spend the $1 billion to $12 billion to bring a drug to market without owning exclusive rights, period. Once the patent expires the drugs is free to be made by anyone without payment of any royalty and without any permissions required. It is complete nonsense to claim the patent system has caused the public to lose. Over 95% of the essential medications according to WHO were once patented, and the overwhelming majority are off patent. See:

    http://www.ipwatchdog.com/2016/09/12/essential-medicines-off-patent/id=72542/

    Furthermore, there are all kinds of drugs off patent that are no longer available on the marketplace because it is not economically viable for even generic manufacturers to produce them. So if the patent system has failed start to look at the reason so many generics are NOT producing the drugs that they could to fight and cure the diseases that are easily treatable using off patent drugs.

    -Gene