Civil Debate is a Fair Request, But False Narratives are Harming U.S. Innovation

By Gene Quinn
October 25, 2019

“No matter who has erroneously concluded that patents are a monopoly, it will never change the fact that patents do not and never will convey a monopoly. Simply put, just because a patent has been granted does not mean that there will ever be a market for the patented product or service.”

https://depositphotos.com/39577125/stock-photo-unfair-fair.htmlYesterday, we published a response from Daniel Takash, the Regulatory Policy Fellow at the Niskanen Center’s Captured Economy Project, asking for a more civil IP debate. The response was itself responding to Lydia Malone’s critical view of the R Street panel on Capitol Hill that she attended, and which she felt took the position that patents are too strong. I, too, wrote an article in advance of the R Street presentation where I was highly critical of the motivations of R Street.

U.S. Patents are Too Weak—Not Too Strong

Mr. Takash suggests “[w]e should all do our best to live by Antonin Scalia’s maxim to ‘attack arguments, not people.’” That is perfectly reasonable. It is, however, also perfectly reasonable to question the motivations of those who are making claims that are unquestionably false. To be quite direct about it, the R Street supposition that patents are too strong is pure fantasy of the first order. Anyone with even fleeting familiarity with the subject matter who has at all been paying attention to the demise of the U.S. patent system over the last 12+ years knows that U.S. patents are not too strong. U.S. patents are too weak. So weak that for the first time in a decade the number of U.S. patent applications has decreased while patent applications worldwide surged forward by more than 5% during 2018. Moreover, U.S. applicants are not foregoing patent protection, they just aren’t filing as much in the United States. Indeed, U.S. applicants continue to be the hungriest for patents worldwide.

These facts—these inconvenient truths—are well known. Yet, R Street holds a panel discussion asking whether patents are too weak? And we are to take such a discussion seriously? And those of us that inquire about the motivations of those asking such outlandish questions are the problem because we are attacking the people and not their positions? No, Mr. Takash. I am attacking your position, demonstrating that everything from the premise forward is clearly wrong. Then I ask why otherwise well-educated people would make such silly statements with careless disregard for the truth and their professional credibility. This is a legitimate question, given the copious amounts of money that have been paid by certain corporations to academics and others under the guise of independent research and scholarship over the last decade.

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Patents are Not Monopolies

And, as if it isn’t enough to ignore the facts all around that the U.S. patent system is in decline and patents are extraordinarily weak, you continue to push the myth that patents are a monopoly. No matter how many times it is said, no matter who has erroneously concluded that patents are a monopoly, it will never change the fact that patents do not and never will convey a monopoly. Simply put, just because a patent has been granted does not mean that there will ever be a market for the patented product or service.

Before we get ahead of ourselves, let’s define the term monopoly. “Monopoly: exclusive control of a commodity or service in a particular market, or a control that makes possible the manipulation of prices.”

If there is no market, there can never be a monopoly.  A patent owner simply cannot be in exclusive control of a non-existent market and said patent owner cannot manipulate prices when no one is willing to buy what they are offering. Indeed, the truth is that the vast majority of patents, upwards of 90% of patents (perhaps as high as 98% of patents), will result in rights being granted to cover a product or service that will not be commercialized at all, or if commercialized will lose money because too few people are interested. That hardly sounds like a monopoly—because it simply doesn’t describe a monopoly.

It is also critical to remember that a patent only grants the patent owner the right to exclude others from making, using, selling and importing. A patent carries with it no expectation for market success, and it also grants the patent owner no authority to do anything affirmative. The right is exclusionary. Granted, if the product does have a market, a patent in theory could be a significant barrier to entry into that market, and in theory could insulate the patent owner from competition, but even with a strong patent system and a solid patent, the right does not itself guarantee business success.

The Reality of a Patent’s Lifecycle

Furthermore, in an ideal patent system, patents are both strong and simultaneously fragile. Let’s assume patents of today are strong like they were 40 years ago. If I invent the latest greatest widget that everyone wants and I can prevent anyone from encroaching upon my invention, that by specific design fosters others who are blocked to invent around and improve upon my widget. If they make incremental improvements and patent them, they can block me, creating an incentive for us to deal. If they create a paradigm shift, their Next-Gen widget might not block me, but no one will want mine moving forward. So, both from an economic standpoint and an innovation reality standpoint, it is fallacious to say a patent or even a portfolio of patents acts as a monopoly.

Of course, the world we live in today is not the world we lived in 40 years ago, and patents are not strong today. Aside from the legal realities that make patents weaker today than at any point in time over the last four decades, efficient infringement is rampant. It is practically malpractice for an attorney to recommend to an infringer or would-be infringer to take a license. What recourse does a patent owner have? Little to none. And that is the business reality. That business reality initially led to more infringement actions being filed because the only way any patent owners had any hope of getting paid was to sue, since arms-length deals evaporated. But now the number of patent infringement cases is in decline. Patent owners have given up and are moving to Europe and China.

What Survives the Market Will Die at the PTAB or Courts

For those patent owners that continue to try to exploit the U.S. marketplace, it is well known that every patent of commercial significance will be challenged at the Patent Trial and Appeal Board (PTAB). Not once, but those patents will be challenged multiple times by a multitude of defendants and groups fronting for those that should in any rational world be identified as real-parties-in-interest. And even if the patent survives the PTAB, it needs to survive an increasingly hostile Federal Circuit, which has functionally ruled that no diagnostic methods are patent eligible, continues to find increasing swaths of software patent ineligible, has even determined that wireless remote control devices are abstract and not patent eligible, and recently even determined that a method of manufacturing a drive shaft is itself unpatentable as being a natural law because it employs a natural law. If any claim that employs a natural law is itself patent ineligible as being a natural law, then there are no claims that could possibly satisfy the Federal Circuit’s newest patent ineligibility test.

Of course, if the patent owner successfully navigates the gauntlet of the PTAB, somehow miraculously draws exactly the right panel and survives the Federal Circuit, the patent owner will still need to go to federal district court and prevail at a patent infringement litigation. Then, after many years—perhaps five or more years of litigation in the federal district court—if the patent owner prevails, the winning patent owner will suddenly see their exclusive right turned into a compulsory license because, thanks to eBay v. MercExchange, the likelihood of a permanent injunction is extremely low. And rest assured, whatever damages are awarded by the district court to the patent owner will be reduced on appeal by the Federal Circuit.

A Fair Question, Not a Cheap Shot

Anyone at all familiar with the facts, the industry, and the Federal Circuit’s decisions knows the truth of everything stated here. So, I don’t know who exactly R Street and Mr. Takash are trying to fool, but it can’t be anyone who has been paying attention to the patent industry over the last 12+ years.

Patents are without question weaker in the United States today than they have been at any point since at least 1980. Why R Street is pushing a narrative that patents are too strong is a mystery. It is, however legitimate to ask why they are pushing a false narrative against the overwhelming weight of evidence to the contrary, even if it does hurt the feelings of some who feel it is a “cheap shot” to ask.

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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 12 Comments comments. Join the discussion.

  1. Concerned October 25, 2019 10:28 am

    Just the means used to reject or invalidate a patent is all I need to know the current state of patents is highly suspect.

    I am not an attorney. I was a liaison for my Department with the State Attorney General and I decided which cases were going to get legal follow through. The lack of Rule of Law, an environment were hard evidence is tossed, statements that are illogical on the surface, etc is a legal environment (patents) I am not accustomed to witnessing. One independent attorney, who has read my entire patent file wrapper, states the courts would have to flat out lie and exclude 75% of the claim language to deny my patent on appeal. My personal attorney is more generous and his harshest comments are “looking to their response with great interest.”

    I am not holding my breath that the truth will win the day on my application when a process never used on Earth to solve a long standing problem is deemed routine, conventional and well understood. Another attorney, who posts on this very website, stated it was his opinion that my application was weak even though he admittedly stated his opinion was not consistent with patent law while avoiding two direct questions! Mr. Takash does the preceding statement speak to you? Attorneys (and judges) dispensing rulings on opinions not facts or law!

    In addition, even if I get the patent, the price points have to be reasonable to gain a customer even with an (non existent) ironclad patent system. I have been advised of such pricing by major IT companies (plural) who live in this space with major contracts. With the uncertainty around my patent, to include the fact the madness may stop in time for me leaving possible infringers exposed, it has been a cat and mouse game that is not in anybody’s best interest.

    Mr. Quinn perhaps a disclaimer should be posted for upcoming contributors that your website is non-fiction only.

  2. Anon October 25, 2019 2:31 pm

    Mr. Quinn perhaps a disclaimer should be posted for upcoming contributors that your website is non-fiction only.

    This may — or may not — be needed.

    Plenty of talk of late as to why this website is so much better than “that other one**,” and this very much has to do with policies already in place vis a vis the difference between “anyone having an opinion” and “someone having an opinion for which that someone refuses to become informed.”

    Becoming informed may or may not be done in the most genteel of manners. There is certainly a variety of responses, and some responses are driven by the person providing an opinion, some by the opinions being provided and some by both.

    TYPICALLY speaking, new people are provided a certain “slack” on opinions expressed — even opinions KNOWN to the informed to be fallacious or otherwise incongruent with law or facts. But the leash is short – and pulled shorter when the proponents of those opinions operate in known fallacious manners.

    ** that other site is Patently-O, and the known fallacious manners are the typical blight that infests that site with little to no editorial controls putting that blight in check.

    And in most cases, “civility” is a fine aspiration, especially to people who are new and who recognize that their opinions may not be well-informed opinions.

    But you will see (and in my humble opinion, should see) a quick drop-off in civility when the persons offering opinions refuse to incorporate counter points or otherwise stick to opinions that are Ill-informed (or Malformed).

    This cite has all too often come under attack by those with anti-patent views who cannot even bother to ascribe by the posting rules of a NONSHARED (but real) email address. And it is not coincidence that these attacks are of the nature of being UNinformed (and refusing to BE informed) opinions.

    When counterpoints presented go unheeded (ignored), when counterpoints presented are dismissed out of hand, when opinions are not informed opinions, but instead are merely rhetoric and propaganda, “politeness” can — and often does — get in the way.

    For such people, I ascribe more to the words John Maynard Keynes who wrote, “Words ought to be a little wild, for they are the assault of thoughts on the unthinking.”

    This is NOT the same as mindless and pointless ad hominem — let’s make perfectly clear that a very real distinction exists there.

    Those who DO contribute on point (and do discuss items in law and fact) are cut a little more slack with the “rough language.” This too reflects the John Maynard Keynes view. But make no mistake, that “being rougher” tends to the object of the conversation item. A person’s background may come up — but typically THAT comes up in the context of “authority” or expected level of the object BEING an informed view or merely being a propaganda piece that has not bothered to recognize, and adjust to counterpoints previously presented.

    This site is fabulous in BOTH that it invites contributions from ALL angles (an item denied on that “other site”), as well as puts into play the anti-propaganda controls the limit the unadultered and UN (or MAL)informed opinions from being merely repeated ad nauseum without taking into account an attempt to turn the conversations to being those with informed opinions.

  3. Benny October 25, 2019 4:46 pm

    “It is well known that every patent of commercial significance will be challenged at the Patent Trial and Appeal Board”
    Seriously? Every significant patent ?
    How many wireless charging patents have been challenged, verus licensed? How may ARM processor licences have been granted, vs. IP challenges ? (Pre Softbank). Attorney fees have priced patent challenges out of the market, except in the very top percentile of significance, and of course in cases where patent grant was errornous. The difference, of course, is that IPRs are very public while licenses and settlements are private affairs. I think our company is typical in that all our IP battles ended out of court.
    And another thing – Daniel Takash may have expressed a contentious opinion in his article, but that doesn’t justify the disrespectful tone of many of the commentators who responded. You can disagree with dignity, too.

  4. Pro Say October 25, 2019 5:21 pm

    As is usual, well said Anon.

    Saying a patent is a monopoly . . . is no more accurate than saying a copyright is a monopoly.

    Indeed.

  5. BP October 25, 2019 7:04 pm

    @2 Anon, well said. Gene is a respectful practitioner that has improved the practice. Dennis had been a respectful practitioner yet is now in the ugly world of academics.

    As to Keynes, there is much to learn, from both his private and public life. It pains me to see an uninformed attack on the Wright Brothers and patents, certainly Keynes gave thought to flying machines in terms of economics, war and life lost. Those thoughts would be of interest to me, more so that R Street.

    I often return to reflect on Keynes last paragraph in the General Theory: Madmen in authority, who hear voices in the air, are distilling their frenzy from some academic scribbler of a few years back. I am sure that the power of vested interests is vastly exaggerated compared with the gradual encroachment of ideas. Not, indeed, immediately, but after a certain interval; for in the field of economic and political philosophy there are not many who are influenced by new theories after they are twenty-five or thirty years of age, so that the ideas which civil servants and politicians and even agitators apply to current events are not likely to be the newest. But, soon or late, it is ideas, not vested interests, which are dangerous for good or evil.

    How does that sit today?

  6. Gene Quinn October 25, 2019 7:30 pm

    Anon @2 —

    Thank you for your kind words. We really do try and give all sides. And while I obviously disagree with R Street, I think Mr. Takash should be applauded for stating his case– even if I think he went over the top a little saying it wasn’t appropriate to ask about motivations. That is very different than an ad hominem attack (as you state).

    For you and the other regulars here that contribute so often, I’d like to just say that I think you’d be surprised by how often we have tried to get the opposing views to share with you all. There are many with opposing philosophies that would prefer to ignore us and try and cast us as a bunch of crazies at the margins. The good news is it seems that is getting harder and harder to do. Witness our 20th Anniversary party and our events and who we have speaking at our upcoming annual meeting.

    Cheers to you all!

  7. Night Writer October 26, 2019 7:35 am

    There are a lot of big picture statistics that the anti-patent people just ignore. Like every country that has had an innovation engine has also had a good to excellent patent system. Patents have fallen in value by about 80% since the AIA and Alice. The USA has a software industry about 10 times that of Europe and Europe didn’t protect software. Etc. Just huge things that the anti-patent people just ignore.

    Also, there are historical examples that can be looked at as well. Ancient Rome surely would not have fallen had they had a patent system. What you see is stagnation. They developed some good ways of fighting in response to local battles and then really didn’t progress much for hundreds of years. And there are really good indications that a patent system would have changed that. For example, we know that there were advanced technologies that weren’t shared in such things as faucets, plumbing, air compression, etc. But these were only seen in very rarified cases and likely they were guarded secrets. We see that in port manufacture too where the secrets were actually lost. Etc. All of the signs that had they had disclosure and limited rights to exclude that they would have created an innovation engine rather than remaining stagnant.

    There are other huge things they are ignoring. The anti-patent people are (and it is interesting that they are at odds with the academics free common) telling us that large corporations can do all the innovating that is needed and that they will spend enough out of the goodness of their hearts to continue our innovation engine. But there is massive evidence that large corporations are bad at innovating.

    The biggest indication that people like Lemley have no interest in a fair debate or getting at the truth is that they ignore all these facts and push forward with psychotic tales of what innovation is and what freedom is. Just bizarre that our intellectual ecosystem supports the likes of Lemley who admits that he and his wife (former Google executive) are making many, many millions burning down the patent system.

    The others that go along with Lemley are only interested in trying to get promoted and get jobs. The large corporations are funding universities, foundations, professors to write papers to abstracts written by the corporations, etc.

    The really bad thing about all this and where the rubber hits the road is that the Scotus rather than dismissing Lemley as a corporate puppet taking in the bucks references his papers and uses his ridiculous law journal articles where there is no accountability for unethical behavior and no peer review. And the Scotus actually use his nonsense for findings of fact (Oil States for whether the privy counsel invalidated patents).

    The whole system is a giant f’ing joke run by people taking in the money and spouting out anything to please their masters for more money.

  8. Concerned October 26, 2019 9:04 am

    Perhaps the anti-patent group would get more respect if those people handed back their entire salary from the beginning, meaning they put in thousands of hours for free, plus paid tens of thousands of dollars, perhaps millions, additionally out of pocket….like inventors.

    It is hard to understand or respect the other position, when on one hand the invention is called trival, and on the other hand the infringer uses it after discovery instead of inventing around it.

    If any of the anti-patent group wants to send me their complete salary, plus thousands or even millions, then I might understand their position. First I immediately gain monetarily off their writing efforts. Then while I criticized their position before this transition, I can switch complete gears and embrace their view after the enrichment just like an infringer. And I do not even have to come up with an idea never discovered!

    I suspect I will have no takers, just like nobody on this website is buying their paid endorsements either. On a commercial the paid endorsement in disclosed and why?

    As I see it, inventors are the only ones putting THEIR money where THEIR mouth is.

  9. Anon October 27, 2019 1:33 pm

    Gene,

    (minor nit): “I’d like to just say that I think you’d be surprised by how often we have tried to get the opposing views to share with you all.

    Not surprised and rather, this was part of my point: THIS forum actively engages for a multi-point view.

    Your detractors (most notable “on that other blog”), TRY to paint this blog as a mere echo-chamber. Heck, even some of the recent contributors such as TFCFM do as much.

    It is not surprising that a fair number of these SAME people have been banned for violating your rules against blight.

    There is a reason why your site has run so long (and has achieved some serious industry recognition over the last several years): you DO provide a forum in a difficult setting (internet) that not only engages, but also provides a healthy latitude of emotion, rhetorical tools such as sarcasm, and at the same time promote informed opinion (over mere mindless repeated NON- (or MAL-) informed opinions.

    It is us that engage – and are able to continue putting the non/mal/il-informed to the healthy comparison of their viewpoints to the realities of patent law (both as written by Congress and broken by the Court(s)) and innovation protection.

    It is NOT easy “out there” especially when there are multiple (and some extremely well-financed) groups that do NOT want a strong innovation-protection patent system in place, for a variety of philosophical reasons (and here, I merely note my past references to attacks from both the Left* and Right* – * – these designations not necessarily entirely reflective of the political Left and Right).

  10. BP October 27, 2019 5:22 pm

    I appreciate how balanced the dialog is here on IPWD regarding “left” and “right”, particularly because the anti-patent players (paid and unpaid) come from all over the spectrum. Patents do not fall squarely into one extreme or the other.

    Unfortunately, the US is divided, largely at the hands of those that control social media, advertising and politics. The so-called academics and think-tank paid consultants question quality at the USPTO without adequate questioning of their own systems of peer-review and conflict disclosures. Once they fix those issues, my ears may become more open.

    Fresh words from Europe (pro-patent Left?) in Lexology: Sept. 26, 2019:
    Danish Minister for Industry, Business and Financial Affairs Simon Kollerup stated that protecting the intellectual property rights of innovative green companies is essential.

    In Denmark, approximately 13% of all jobs are generated by patent intensive industries. In the EU as a whole the salary level is 72% higher in patent intensive industries compared to other industries and 93% higher for CCMT industries.

    Europe has a tortured history of monopolies and collusion. It is refreshing to see the positions taken and stats from Denmark.

    And, from the EPO, Sept. 25, 2019:
    Industries that make intensive use of intellectual property rights (IPRs) such as patents, trademarks, industrial designs and copyright generate 45% of GDP (EUR 6.6 trillion) in the EU annually and account for 63 million jobs (29% of all jobs). A further 21 million people are employed in sectors that supply these industries with goods and services. These are among the findings of a joint report released today by the European Patent Office (EPO) and the European Union Intellectual Property Office (EUIPO) which analyses the importance of IPRs for the EU economy between 2014 and 2016.

    Europe’s approach to Internet privacy and efforts to enforce antitrust laws are worthy of discussion, as they further shed light on some of the most notorious anti-patent entities. Also worth noting that Ms. Vestager is Danish, a keen target of the illegal monopoly anti-patent entities.

  11. TFCFM October 28, 2019 9:45 am

    GQ: “Anyone with even fleeting familiarity with the subject matter who has at all been paying attention to the demise of the U.S. patent system over the last 12+ years knows that U.S. patents are not too strong. U.S. patents are too weak.

    Speaking in grossly-overbroad generalities is fraught with peril. At best, it seems to me, the most that can be said is that, even trying to set aside the manifold differences among various technologies, various patents, and their corresponding circumstances, some patents are too “strong,” some patents are too “weak,” and some patents are about “right.”

    The author of the Goldilocks tale had it about right.

  12. Anon October 28, 2019 10:56 am

    TFCFM,

    I truly doubt that the comment was intended as you are taking it (the strength of individual patents).

    Rather, I would presume that the comment was more an indicator of the general overall state of patents as innovation protection mechanisms.

    Your comment then, may well be construed to be either itself misaimed (because you did not grasp the larger intent), or malignantly obfuscatory (if you DID grasp the larger intent, but your intent was to cloud the issue).

    Either way, it appears that you missed the point here.

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