The U.S. Patent System Works! Kind Of

By Stephen Key
October 1, 2020

“When it comes to patent infringement, there’s no right or wrong. There are only shades of gray, because patents are just words that are interpreted differently by patent examiners, lawyers, judges, juries, and at the PTAB.”

Not too long ago, independent inventor Josh Malone finally received a settlement for willful infringement of his patents. He won in court and at the Patent Trial and Appeal Board (PTAB), and from what I’ve read, I know it was a long, hard fight, and the cost to litigate was in the tens of millions of dollars. But, he did it, and his product Bunch O Balloons continues to be a number-one hit summer toy.

Licensing his invention to one of the fastest growing toy companies in the world (ZURU) clearly had its advantages for Malone. But what about the rest of us independent inventors? For the last decade or so, the patent system has not been in favor of the independent inventor. But has it ever been? I don’t think so.

My Journey

In 2003, as an independent inventor living in California’s Central Valley, I was able to defend my patented technology in federal court against Lego, Inc.

At the time, I believed you could protect your inventions with patents and other forms of intellectual property. Still, I knew that I was at a major disadvantage because Lego had so many more resources at its disposal to fight against me, a lone independent inventor, and winning in court requires deep pockets. In total, I spent three years defending my patent portfolio. It was truly a formative experience, from which I learned a great deal.

One obvious conclusion? The legal system is not set up in favor of the little guy. I decided to sue Lego because I felt I had been wronged. But when it comes to patent infringement, there’s no right or wrong. There are only shades of gray, because patents are just words that are interpreted differently by patent examiners, lawyers, judges, juries, and at the PTAB. There are endless ways to work around a patent by coming up with variations of an invention. Your competitors will always try to reverse-engineer your success.

After three long years, I watched as our attorneys ended up arguing over just two words. Yes, the interpretation of two words. It seemed absurd. There was nothing black or white about it.

It’s Up to Inventors

It’s these shades of gray that most inventors are very frustrated by. In his article, “Congress Must Work to Understand the Language of Inventors,” Malone touches on this.

Here’s what I think. As inventors, we must understand our invention better than anyone else, and be extremely cautious and careful when working with our patent attorneys or patent agents to file a non-provisional patent application. We must give them all the tools they need to help us with the application. That’s why inventors themselves need to come up with variations and workarounds of their invention, understand materials, and also understand how their invention will be manufactured as a product. It’s up to us, and no one else. This is how you create a patent that will truly have value in the marketplace and help if there are any infringement issues.

When I discovered that Lego had used an idea that I presented to them without compensating me, I felt violated. How could they do this to me? Now I know it was just business as usual. They had assessed the risk and made their decision accordingly.

I also realized that the legal profession is a club to which I, as an independent inventor, will never belong. Between the lawyers and the judge that they argued in front of, I was an outsider, and I always would be. Two weeks before we were to go to trial, we settled. All in all, it was an extremely time-consuming and expensive experience.

Don’t Be Discouraged

Did the patent system work for me? Yes. It wasn’t easy and it definitely wasn’t fun. It was complicated and imperfect, which is how I believe it always will be — and the reason why lawyers exist. I continued to file and obtain patents on the same technology, which ended up producing revenue for me for 20 years.

So, what about independent inventors who don’t have a company behind them or the resources to defend their patents? What can be done?

I think most of us would agree that independent inventors need stronger patent rights. For our country to thrive, inventive people must be encouraged to take action. They need a supportive environment. That’s why we must make it harder for companies to take advantage of our innovative and inventive capabilities.

The patent system shouldn’t be stacked against one particular interest group, of course. To the extent that it can be, it should be fair and balanced. But exactly what that means is always going to be up for debate.

Here’s the reality today. If you have a popular product or service, the competition won’t be far behind — and will do everything in its power to take advantage of your success.

Some of the competition will directly infringe on your patents, copyrights, and trademarks. Some of the competition will be clever enough to find variations or workarounds that are not covered in your patents. Will you be able to stop all of the copycats and infringers selling at retailers and on the Internet? Maybe, but doing so will be difficult at best.

Here’s the catch. You shouldn’t let that discourage you. It’s just the way it is right now. It’s called competition for a reason, and it will always exist in some form or fashion.

Fundamentally, I believe inventors need to start acting more like entrepreneurs. Patents are just one tool to help you commercialize your inventions. Entrepreneurs are defined by their ability to overcome obstacles. So please, don’t let a patent or the competition stop you from achieving your goals.

The Good News?

Most of time, you don’t even need a patent. If your product is likely to have a short lifespan, which is true for many industries these days, patents are just not that important. That’s what I am hearing directly from companies that are willing to work with independent inventors to develop new products.

You see, in my role as a co-founder of the coaching program inventRight, I see a huge volume of signed licensing agreements. We’re very current on what’s actually happening. And these licensing agreements? They are for products that are protected with only a provisional patent application. That’s right — no patent. I am sure some of you who are reading this are completely shocked. How can you license an invention without any intellectual property?

But it’s true. Companies are now licensing the product itself, including any variations and improvements, as well as considering the hard work the inventor has put into it and the goodwill they have established. These companies realize that in order to be competitive, they need to be innovative, and that means a steady stream of new ideas.

Nice to Have, But Not Essential

To write my new book on how to become a professional full-time inventor, I decided to dig a little deeper. I wanted to pull back the curtain on open innovation to let people know what is really required today. In total, I interviewed more than 30 experts across 17 industries about working with inventors for Become a Professional Inventor.

I asked each company I interviewed pointblank: How important are patents to you?

No two answers were the same.

Small to midsize companies are well-aware of the realities of successfully protecting anything in today’s market. With such a high volume of online sellers and the speed at which overseas factories are able to manufacture new products, it’s nearly impossible. When the lifespan of a product will be fairly short, the cost to obtain a patent and defend it won’t result in a return on their investment. These companies understood that copycats were 100% guaranteed if they had a hit on their hands. For these types of companies, patents are not required. Here are some of the comments I received:

“We will work on an item whether it has a patent or not.” — Trish Dowling, VP of Merchandising at DRTV company Allstar Innovations, the maker of hit products including the Snuggie.

“I don’t mind if it’s patented or not, because we have the opportunity to get products to market fast.”— Luke Berry, Head of Innovation at Halfords Group, leading provider of motoring and cycling products and services in the UK.

“Patents are not super important.” — Jonathan Zelinger, Owner of Ethical Products, a family owned pet company for 65 years.

“Patents are nice, but not essential.” — Nick Mowbray, Cofounder Zuru Toys

Companies that are market leaders and have deep pockets are willing to fight. Because of their size and relationships, they can make more effective use of intellectual property. Here is what they said:

“It would be in your interest to get a patent filed, so we don’t have a motive to cancel the license.” — Lawrence Cruz, Chief Patent Counsel at Conair Corporation

“Patents are massively important.” — Barron McKillip, research scientist at Multicolor Corp. and former VP of R&D at CCL Label

Ultimately, this is what I’ve learned after interviewing so many experts: patents are nice to have, but by no means necessary. Yes, intellectual property has its place. But it’s not all the time, and it’s not in every case.

Shout Your Story

The best advice I have is to file a well-written provisional patent application first. This will give you, and the company you license your invention to, options. Consider making use of other forms of intellectual property, including design patents, trademarks, and copyrights. All of these add up to perceived ownership, which is what you need to secure a licensing agreement for a simple consumer product idea.

I also believe the best way to fight against infringers and copycats is in the court of opinion, not by using the legal system. You have a voice; use it! Establish yourself as the original creator of your product using all of the resources available at your disposal, including social media. Document your story with images and video. Keep telling your story. Get louder. Create brand awareness. Build an army of passionate and raging fans. Loyal customers will come to your defense when you need them. Major retailers cannot afford a barrage of negative reviews from your customers. They’ve spent a lot of time and money on their brand, and that brand can be tarnished very quickly.

You do have power, so please, yield it wisely.

Today, success in the marketplace has little to do with protection. You’ll be much better served by focusing on selling first and selling fast. The easiest way to license an idea is through perceived ownership, which you can obtain with a well-written provisional patent application. And one of the best protection strategies, like the Bunch O Balloons saga demonstrates, is to license your invention to a market leader.

So, really, to me and to the companies that have embraced open innovation, it doesn’t matter if the patent system works or not. This is my perspective as an entrepreneur.

Patents can be useful tools for furthering your business goals, be it securing a licensing agreement or funding for your startup. Their value has nothing to do with stopping anyone.

Image Rights acquired by AdobeStock

 

The Author

Stephen Key

Stephen Key is the world’s leading expert on licensing consumer product ideas and a 2018-2019 American Association for the Advancement of Science-Lemelson Invention Ambassador. He achieved repeat success as an independent inventor, including defending his intellectual property against one of the largest toy companies in federal court. The innovative packaging solution he brought to market is protected by more than 20 patents and received 15 industry awards, including two Edisons.

inventRight, the coaching program he cofounded in 1999, has helped people from more than 60 countries license their product ideas. He explains how to take advantage of the power of open innovation on his popular YouTube channel inventRightTV and in his regular articles for Forbes, Inc., and Entrepreneur online. In 2017, he cofounded Inventors Groups of America (IGA) with the goal of educating and empowering inventors and inventing group leaders. He is also the cofounder of inventYES, a free program for high school students worldwide.

For more information or to contact Stephen, please visit Stephen Key Media.

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 as of the time of publication and should not be attributed to the author’s employer, clients or the sponsors of IPWatchdog.com. Read more.

Discuss this

There are currently 27 Comments comments. Join the discussion.

  1. Patent Princess October 1, 2020 1:12 pm

    Love the call to action – Shout Your Story. Nicely written, thank you!

  2. David Lewis October 1, 2020 2:06 pm

    Thank you for your article.

    Many, possibly most, inexperienced inventors do not appreciate the concept of including variations of their inventions in the application, and will often initially (prior to being educated) dismiss such variations as not being their invention. So expecting the inventor to figure out all the variations of their invention that should be protected, may be expecting a bit much. It would be better if the inventor could get broad protection that covered all obvious variations without needing to describe them (oh right, I think that might of been what the doctrine of equivalence was once about 🙂 ).

    I agree that our patent system should be set up so that it does work for the small inventor and so that defending their patent is not so costly.

    However, a patent system where so many say patents are not important, sounds like a broken system to me (because the inventor is at the mercy of the manufacturer of the item treating the inventor fairly despite the lack of a patent and at the end of the day, how to treat the inventor is just a cold business). decision).

  3. Josh Malone October 1, 2020 2:35 pm

    It works if you have more money and influence than the companies that steal your invention. I don’t recommend it. The risk/reward ratio is worse than the lottery or slot machines.

    Some small and medium size companies will consider a patent as a rough filter for product submissions. Most of them now realize that they cannot stop an bigger competitor from copying the idea.

  4. Pro Say October 1, 2020 2:56 pm

    Thanks for the interesting, insightful, and useful article Stephen. I’ll be buying your book.

    However, your surprising final statement: “Their value has nothing to do with stopping anyone.” misses the mark.

    Indeed, your own example of Josh demonstrates well the critical value in obtaining as many patents as the inventor can.

    For without his patents . . . his dream would have become his nightmare.

    I would have ended with something along the lines of: Their value may or may not have anything to do with stopping anyone.

  5. Stephen Key October 1, 2020 3:13 pm

    You’re welcome @Patent Princess! Thank you for reading.

  6. Bruce Berman October 2, 2020 10:16 am

    Thank you for your excellent article. I particularly found insightful your suggestions about protecting brand by establishing it in the mind of the public. It is not a cure-all against infringement or copying, but it can be extremely effective.

    Worth repeating: “Establish yourself as the original creator of your product using all of the resources available at your disposal, including social media. Document your story with images and video. Keep telling your story.”

  7. Anon October 2, 2020 1:41 pm

    Bruce, have you met Lyle?

    https://youtu.be/gVcteiTOqZo

    The Italian Job – but I was the one that really invented Napster…

  8. Stephen Key` October 2, 2020 5:00 pm

    @Josh Malone, I’m afraid that’s life.

    I think today inventors need to act more like entrepreneurs and just expect there’s going to be some form of competition. And like I said before, patents are just words that are interpreted by different people.

    That’s why the advice I’m giving is practical to survive today’s environment.

    Waiting for change is going to be difficult. And there’s a very good chance it won’t happen.

    So, inventors and entrepreneurs need to change the game. The fight is not in the court system, but on social media.

  9. Stephen Key October 2, 2020 5:07 pm

    @Pro Say. Thank you for reading and the kind words!

    I see it a little differently. It wasn’t patents that put a stop to the competition; it was litigation. And frankly, the litigation sounded like a nightmare.

    I think a different approach than suing for patent infringement is appropriate in today’s environment.

    When you sue a retailer, they won’t forget it, and that could possibly impact you selling your product later.

    If the deck is stacked against the inventor, they must take a different approach. Don’t get emotional; learn to fight back in areas where you have strength.

    Being the first, telling your story, being an original, is extremely powerful in today’s social media dominated world.

    I’ve seen this more than once. When a retailer is carrying a copycat, and the inventor calmly without suing explains to them the situation, the retailer removes the copycat and replaces it with the original product.

    For example: https://www.forbes.com/sites/stephenkey/2019/07/31/how-to-stop-retailers-from-carrying-copycat-products/

    The last thing a retailer wants is a black eye on social media by carrying a copycat product. Retailers and companies spend a great deal of money establishing goodwill in the marketplace; bad reviews damage their reputation.

    Inventors, use your voice!

  10. Stephen Key October 2, 2020 5:12 pm

    @David Lewis, thank you very much for reading and commenting.

    I think inventors need to understand how the game is being played! Being ignorant is no excuse. They need to become the expert of their invention, and that means including variations, manufacturing techniques, and materials. I think inventors are more than capable of doing this. That’s what inventors do — come up with workarounds! If you have made the decision to pay for an expensive patent, how can it not be on the inventor to make it as complete as possible? You cannot leave that up to anyone else but yourself.

    Business is business. Inventors have to stop leading with their emotions. There are many companies that have embraced open innovation that treat inventors completely fairly.

    The day of the inventor sitting back and feeling completely safe from any competition because they filed a patent has never existed.

  11. Bruce Berman October 2, 2020 6:16 pm

    You and Jerry Lemelson.

  12. Benny October 3, 2020 4:01 am

    Stephen, comment 8; our company had the same experience when we asked an importer to remove a product that infringed one of our patents. The importer agreed immediately – after all, it was just one of many products he carried, and as a small business could not afford a legal fight.
    Howeverr, our own legal fees in analyzing the infringing product and the patent to determine infringement plus the lawyers back and forth made the whole exercise unprofitable.

  13. Randy Landreneau October 3, 2020 1:12 pm

    “The legal system is not set up in favor of the little guy.” Prior to the recent corporate lobbying successes, it wasn’t easy, but it was workable for the little guy. If you had a good case, an attorney would take it on contingency and you could win.

    A friend of mine with no money won such a case 25 years ago. Try to find an attorney who’ll take a PTAB case on contingency now. I know of one such case. One of the largest, most successful firms did take it on contingency because they determined the eventual damages to be one billion dollars. The PTAB wiped them out.

    Without the ability to be represented on contingency, typical inventors have no access to justice. If the rights of inventors are not restored, it’s only a matter of time before the companies that are still willing to license an invention are as rare as the attorneys willing to represent inventors on contingency.

  14. MaxDrei October 4, 2020 5:17 am

    Randy, I suggest to you that there is a connection between the prospect of reaping one billion dollars in damages and the PTAB’s taking down of the involved patent. You say that the Little Guy used to do alright (25 years ago) with legal representation on contingency basis. I myself remember a case 25 years ago when a client of ours in Europe won big in the US courts (damages higher than USD 40m) against a corporate monster. But that was a mechanical engineering case. Is it not so, that if you put aside the claims that sit on the borderline of patent eligibility, you know, the ones with a prospect of damages in the billions, there are still reasonable prospects for the Little Guy to find contingency legal representation, and win?

    If not, what else, besides the dividing line on eligibility, has changed since 25 years ago, that denies justice to the Little Guy?

  15. Pro Say October 4, 2020 10:37 am

    Max @ 13: “If not, what else, besides the dividing line on eligibility, has changed since 25 years ago, that denies justice to the Little Guy?”

    The 3-part answer, Max, is easy as . . .

    1. eBay
    2. Alice
    3. PTAB

  16. Anon October 4, 2020 10:44 am

    Pro Say,

    As one who has witnessed MaxDrei’s shilling for years now, his question was not one asked with an open mind, willing to learn.

    Instead, it was a direct ‘spin’ that the “real” problem is merely those trying to claim patents in innovation outside of the 19th century mores.

    The idea – common to those that understand innovation – that the Kondratiev fifth wave is every bit as deserving of patent protection as any other innovation, is a bit beyond his intellect to grasp.

  17. MaxDrei October 4, 2020 12:34 pm

    GATT-TRIPS obliges all Member States to afford patent protection to all fields of technology. It hardly need be said that the “information technology” that characterizes the fifth wave of technological innovation is also patentable under GATT-TRIPS.

    But that does not open the way for patenting information as such.

    Easy to distinguish between information and information technology. Much harder to identify whether the claim in view is directed to the one or the other.

    And yes, Pro Say, I see your eBay point. It is not right, if the owner of “exclusive rights” cannot assess with any degree of confidence the likelihood of being denied injunctive relief from infringement of those rights.

  18. Josh Malone October 4, 2020 2:55 pm

    The difference now is the increased cost of litigation, decreased likelihood of success, and decreased access to legal representation. To enforce a patent costs $50M or more over a period of ten years or more. Unless there is a half a billion dollars in damages it is too risky for contingency. Plus very few firms have the depth and tolerance for a $50M gamble. Hard costs have gone up exponentially. We had to pay our “experts” almost $2M. Mediators, special masters, discovery service, adds another $1M or so. Plus almost all the law firms with the required political influence are conflicted with big tech clients. The odds of surviving the gauntlet are extremely low. The infringers have even gone as far as having retroactive laws passed to remove their liability.

    As a result, the merits of an infringement case have almost nothing to do with the outcome. It just matters who has the most money and influence.

  19. Anon October 4, 2020 7:33 pm

    MaxDrei,

    NO ONE is attempting to patent information as such.

    Again, this is nothing more than your typical spin and obfuscation.

  20. Benny October 5, 2020 12:58 am

    Josh,
    (17) , now consider the realistic situation where one small-to-medium size company challenges a similar sized comoetitor. Neither side can afford multi-million dollar legal battles, so some form of settlement will always be the most economical outcome, and probably beneficial to the patent holder. I say this from the experience of my company..

  21. Anon October 5, 2020 10:13 am

    Benny, you “and probably beneficial to the patent holder” comes across as a derogatory message.

    One would — and certainly should — hope that the patent holder obtains benefit.

    That’s rather the point.

  22. MaxDrei October 5, 2020 1:51 pm

    Benny echoes the defence some in England offer in defence of the high cost of patent litigation in England: that it forces settlements. It seems a piss poor defence to me. Better to have a system of litigation that forces legal costs to get into proportion with the amount of money at stake in the dispute.

  23. Benny October 5, 2020 2:15 pm

    Anon at 21, hope all you like, that isn’t the reality that you or I live with, is it?

  24. Stephen Key October 5, 2020 4:32 pm

    @Josh, I think you’re missing the point. Even before eBay, Alice, and PTAB, it’s never been an equal and fair fight.

    Yes, I do think we need to level the playing ground. But in the meantime, inventors need to be educated on how to navigate the current laws and current environment.

    Instead of instilling fear, why not give inventors a roadmap on how to navigate around the situation? Inventors are smart. They’re always looking for ways to get around obstacles.

    On the bright side, you won! A belated congratulations on that. Like I said, the patent system works. Kind of.

  25. Anon October 6, 2020 8:23 am

    Benny,

    Contemplate what you wrote and look at the sides of the fence that you and I oh so typically fall to.

    Thank you, but I will always take my pro-innovation side of that fence.

  26. Courtney Laschkewitsch October 11, 2020 10:17 pm

    I found this to be a very informative and clear article. How Stephen talks about this topic pans to an even more important point: “…it doesn’t matter if the patent system works or not.” Some large companies want you to have a NPP, but when it comes to open innovation, a majority of companies don’t care, and having ‘perceived ownership’ is often all you need, and that can come in many forms. Yes – it would be great to have the ‘patent system work’ for both parties on both sides. But since the main focus isn’t and shouldn’t be solely about intellectual property, a reminder that “Entrepreneurs are defined by their ability to overcome obstacles”, is pivotal. It’s who we are.

  27. Night Writer October 14, 2020 6:51 am

    Interesting article. I would characterize the state of things now of some companies have found ways to survive without patents or with the weakened patent system.

    Misses the point about what the patent system was 20 years ago. And misses the people that aren’t in the game anymore so they have no voice.

    Etc.

    I don’t have the time to respond to this fully but it basically is focused on what is now, which is good. And for evaluating the patent system you have to ask how is what is now compared to what it was 20 years ago. Then you see the true damage to our economy and to innovation.

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