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.