Patents Have Entered the Upside Down: Looking Back on the 2019 U.S. Patent Market

By Dan Buri
December 11, 2019

In a landscape of amorphous patent rights, shifting legal precedence, toothless expert opinions, fluctuating patent values, and deafeningly silent Supreme Court justices, the U.S. patent system in 2019 has been a display of the absurd.

Patent Market Upside Down - https://depositphotos.com/29435309/stock-photo-inverted-world-and-man.htmlAsk ten professionals for their attitude on the current state of patents in 2019, and you’ll receive ten distinctly different opinions ranging anywhere from the incredibly negative patents-are-dying attitude to the overly optimistic everything-is-fine-here outlook. The consternation of it all is that each of those ten professionals would be absolutely right in their estimations, and entirely wrong as well. And that’s the patent world in which we’ve found ourselves during the entirety of 2019—everyone is wrong, and everyone is right, because no one actually knows which way is up anymore. We have officially entered the upside down.

Two Steps Forward, Two Steps Back

For every positive indication of an improving U.S. patent system in 2019, there has been an equally negative counter-signal from the market, along with multiple nonsensical signs. For every $200 million patent infringement verdict, there’s an about-face of a $500 million verdict in a decade-long disagreement. While the U.S. Patent and Trademark Office (USPTO) Director Andrei Iancu releases official guidelines for patent subject matter eligibility—presumably in an effort to reestablish certainty within the U.S. patent system—the courts simultaneously undermine any rational person’s ability to place their feet on firm patent ground. (Should you need examples of the legal quick sand I speak of, see some of this year’s hit opinions invalidating a garage door opener, an electric vehicle charger, check processing, or medical diagnostic methods.)

While it seems clear to many that there is not only rampant patent confusion, but a more fundamental problem at hand, it has taken intellectual property investment and innovation traveling outside of the U.S. before any kind of majority began to take notice. In an effort to re-strengthen patent rights for America’s innovators, a U.S. Senate Subcommittee was revived early this year. In recent hearings, Senators Chris Coons (D-Del.) and Thom Tillis (R- N.C.) provided testimony along with 43 other experts to the Subcommittee on Intellectual Property, the majority of which advocated for stronger patent rights. The Senators’ stance is clear, as is that of the majority of those who provided testimony—the patent system has been hijacked by large tech companies and needs repair. As the senators wrote, “[the patent system] is now at risk, because our patent laws have become overly complicated, riddled by uncertainty, and, frankly, hostile to innovation.”

Despite concern about how we got to this point over the last half-decade, the mere existence of the Subcommittee seems to be a positive indication that change is on the horizon. The reconstitution of a robust U.S. patent system providing clarity for everyone in the market is ostensibly nearly within our grasp. Yet here we stand at the end of 2019, seemingly on the exact same marshy patent ground we were sinking in at the beginning of the year. The Federal Circuit tries to convince us all that they’re legally impotent because of the Supreme Court, who continues to remain conspicuously silent. All the while, many of us pretend to know exactly which way is up.

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Portrait of a Perplexing Patent System

For those who still don’t understand the confusion of it all, let me illuminate you with an anecdote. An inventor of mobile phone related technology had tried to sell his patent a few years ago. After years toiling over his invention, multiple false starts trying to solve how to develop a company around his innovation, and tens of thousands of dollars of personal investment, he finally decided it was time to let go and sell his patent. He was willing to sell his valuable patented innovation for as low as five figures, but he was given the cold shoulder from every tech company from California to Massachusetts, from the UK to Japan. No one would consider his patent seriously. The inventor grew depressed. A passion in which he had invested for many years was vanishing right in front of him. Amidst dark days for him personally, he let his patent expire. Like countless inventors in the same situation right now, he had given up hope in the patent system.

But this is where the story turns on its head. This is where the current system doesn’t make sense. Early in 2019, the inventor was approached by a group that felt he was handed a raw deal. This group saw value in his patent, even as an expired asset. They agreed to help the inventor salvage whatever they could of his decades of effort. Filing a few lawsuits for past infringement to defend his rights in the U.S., the inventor soon found that a large multinational phone and electronics company wanted to sit down with him. They were offering to take a non-exclusive license to his patent, mind you, after being specifically approached to consider purchasing the patents very recently. The company offered to take a license on the patent for mid-six-figure value and the inventor accepted.

To recap, rather than purchasing and owning the patent outright, this company elected to take a non-exclusive license to the patent for 10x the price. Ethical discussions aside, are we sure the economics of efficient infringement are sound?

This inventor’s story is one of far too many like it, and it is only one small corner of what has become of the patent landscape. There has been a growing frustration from America’s innovators and inventors that appears to be finally bubbling over. How can you blame them? How can you watch inventor Paula Murgia’s emotionally heart-wrenching description of having her patents invalidated by the Patent Trial and Appeal Board after years of money, emotion, and time were invested under the presumption of validity she was offered by the USPTO?

But again, it’s not all gloom-and-doom. The inventor of the mobile phone related technology described above did find a positive outcome to his circuitous journey. Or take another example of a recent client. After over 20 years of successful operation, they became involved in a data breach that threatened their existence. Fighting a PR nightmare, they watched as enterprise customers began to pull their business one by one. They endured multiple rounds of painful layoffs, leaving only management personnel remaining, until finally the bank called in their loan. They were sunk.

They were sunk, that is, until a buyer emerged for their patent portfolio. Decades of R&D and patent innovation investment provided them with a valuable intellectual property portfolio. The sale of their patent portfolio, in turn, provided enough cash to pay back their loan and weather the PR storm until customers began to return. Their revival story is still evolving, but they appear to have beaten all odds to arise like a phoenix from the ashes. And that’s the value that the patent system should afford, isn’t it? Through years of research and investment, they created valuable technology. They should be rewarded for that, and we should all be in favor of a patent system that provides that kind of certainty and value. This client was lucky that the patent system got it right in this instance, but there are countless other companies that haven’t been so lucky.

Get Cozy

So, while all is not lost, all is also not right. Every week we see new indications of the patent market improving and decaying. Inventors are disillusioned. Startups aren’t sure if they should be investing in patents or if they should be ignoring them completely. Patent attorneys are confused, as are the courts, who are doing very little by way of extricating us all from this inanity, particularly the Federal Circuit. Large tech companies are equally perplexed, some no longer sure of the significance of their patent investment over the years, while others are entirely dismissive of patents altogether. Everyone is wrong. Everyone is right. And no one knows which is which.

Welcome to the upside down, my friends. Get cozy, because who knows when we’ll have the clarity this system needs.

The Author

Dan Buri

Dan Buri is an author and patent attorney whose works have been published in a variety of online and print sources for two decades. He is the author of two published books, including an Amazon #1 Bestselling collection of short fiction. Dan is the CEO and founding partner of Vitek IP, a patent consultancy, brokerage group, and IP software company. He has managed hundreds of patent transactions and consulted on patent valuation and analysis for the world’s largest telecommunications, software, and computer companies.

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. Join the discussion.

  1. concerned December 11, 2019 9:06 pm

    I was naive like Ms. Murgia in believing that inventing a useful solution was a worthy goal, the American pursuit.

    My discovery coming post Alice decision means I do not get the patent from the USPTO that would be invalidated later. However, the nonsense in why I do not get the patent is just as equal.

    The USPTO examiner readily admits my process solves a business problem, yet rejects the application as having no practical application. The official record shows this problem to be a problem of 63 years and beyond the reach of working professionals and experts.

    SCOTUS and other rulings state that solving a specific problem with specific steps is patentable. The latest ruling from the Federal Circuit finds such patentability reversing in Checksum generator (Nov 2019) — holding that the claims are not directed toward an abstract idea:

    Rather than being merely directed to the abstract idea of data manipulation, these claims are directed to an improved check data generating device that enables a data transmission error detection system to detect a specific type of error that prior art systems could not.

    SCOTUS: tread carefully in construing this exclusionary principle lest it swallow all of patent law. Mayo, 566 U. S., at ___ (slip op., at 2). At some level, “all inventions . . . embody, use, reflect, rest upon, or apply laws of nature, natural phenomena, or abstract ideas.” Id., at ___ (slip op., at 2). Thus, an invention is not rendered ineligible for patent simply because it involves an abstract concept. See Diamond v. Diehr, 450 U. S. 175, 187 (1981). “[A]pplication[s]” of such concepts “‘to a new and useful end,’” we have said, remain eligible for patent protection. Gottschalk v. Benson, 409 U. S. 63, 67 (1972).

    My process finds a specific type of error that experts could not overcome in their computer networks that lead to erroneous over payments and wrongful benefit adjudication. This fact is not in dispute from the examiner!

    Yet I feel my application was dead on arrival, regardless of what the law or the courts say, as getting a process patented at the USPTO that uses a computer seems impossible post Alice no matter what problem is solved.

    The patent world is truly upside down!

  2. Pro Say December 12, 2019 12:18 pm

    SCOTUS: Why are you crippling American innovation? Why?

    CAFC: Why are you crippling American innovation? Why?

    PTO: Why are you not enforcing the new mandatory eligibility guidelines with all examiners and all ptab judges? Why?

    Does mandatory mean mandatory, or is it just optional?

    Congress: Where are you?

    Where? Are? You?

  3. Jacek the "troll" December 12, 2019 2:18 pm

    Total Madness. One thing in America is invented the right way. This stupid, incomprehensible legal system that seems to serve only the lawyers. Nobody else. Virtual Perpetuum mobile.

  4. angry dude December 12, 2019 7:37 pm

    Fixing US Patent system in the near future ?

    Forget it, not gonna happen..

    Because it will bring large tech stocks (efficient infringers) down, probably 50% or more – complete collapse

    Trump may personally hate Bezos and the rest of SV punks and lgbts, but when it comes to money they all stand united regardless of their political and sexual orientation which makes it even more disgusting
    Money talks, money rules, money wins at the end
    It’s all about money nowadays
    Money above everything
    The Founding Fathers are rolling over in their graves…
    Disgusting, simply disgusting…

  5. Randy dela Fuente December 14, 2019 7:08 pm

    Please consider supporting our fight to Reform Section 101 of the US Patent Act:

    https://www.gofundme.com/f/reform-section-101-of-the-patent-act/

  6. angry dude December 21, 2019 1:22 pm

    Dan,

    Your story about the inventor of mobile phone related patent is absurd but is really NOTHING compared to my story

    I was approached by some IP brokerage firm (just before AIA) to sell my mobile-phone related patent to industry players for an estimated price of high six to low seven figures
    This was just before AIA kicked in and they really could sell nothing (not just my patent but no other patents as well) despite heavy advertising to the list of companies I provided to them

    Frustrated I sued one SV company on that list

    They refused to settle for very low six figures (for permanent non-exclusive license) and threatened me with Rule 11 sanctions and 5 years of litigation (trial plus appeal) until I could possibly see any money at all

    I didn’t feel like it so I pulled out (but not before I did something…)

    Then they lost over 200 MILLION dollars of stock value in just one night and were immediately sued by shareholders in class action lawsuit (that was like 2/3 of their valuation so the company was done, finished…)

    200M vs 200K

    That’s 1000x not 10x

    Human stupidity has no bounds

    P.S. I am not making this up – it really happened

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