Posts Tagged: "patent system"

Few Chief Executives are really stewards of their corporations as if the corporate entity will live past 3 to 5 years, which is why so many in Silicon Valley, for example, have spent so many millions lobbying to destroy the American patent system at a time when virtually the entire rest of the world is doing the exact opposite. Unwilling, or perhaps unable, to devise a strategy to deal with frivolous lawsuits these shortsighted Chieftains have taken aim at the U.S. patent system, and at the same time taken aim at their own substantial patent holdings that were acquired for important business reasons — business reasons they obviously do not comprehend or they would be making very different decisions and taking a very different approach.

If you are not blinded by an agenda you must recognize that patents are linked to economic success, job growth and high wage jobs. If President Trump is serious about making America Great Again and dismantling the regulatory bureaucracy that stands in the way of those individuals and companies that will lead America to the 4 percent growth he wants, he will demand the USPTO once again become a patent friendly agency. It is particularly time for the USPTO to lift the foot off the throat of certain sectors of the biotechnology community and pretty much the entirety of the software industry. It is well past time for the USPTO to stop acting as an arms dealer by selling patents (which takes many years to achieve) and selling patent challenges. There are a great many regulations, as well as interpretations of cases from the Supreme Court and Federal Circuit, that directly and unambiguously inhibit the issuance of patents, or make them quite easy to challenge (or harass).

The problem with not having an independent invention defense, according to Lemely, is that people who invent themselves couldn’t possibly find out about what others have invented because these inventions lay in unpublished patent applications at the Patent Office. “You have people who genuinely tried not to infringe,” Lemley said… While Professor Lemley is entitled to his opinion, and he is an excellent and formidable attorney that no one should ever take for granted, he is not entitled to his own facts. Deliberate disdain for patent property is a purposeful business model driving mega-tech IT incumbents. This business model is called “efficient infringement.” Efficient infringement is a cold-hearted business calculation whereby businesses decide it will be cheaper to steal patented technology than to license it and pay a fair royalty to the innovator, which they would do if they were genuinely trying not to infringe as Professor Lemley suggests.

Individual inventors, not just corporations, should be able to benefit from the fruits of the inventive mind. The limited private right of a patent is a necessary reward to fuel innovation, something recognized in the Constitution and by both President Washington and President Lincoln. Corporations in their quest to eliminate all patent challenges by delegitimizing the entire patent system have created this crisis, all to protect their bottom line and thwart competition. In time, just as the birds in Carson’s book, inventors will be silenced and innovation will suffer.

The resulting decisions reveal the Supreme Court’s holistic outlook as a generalist court concerned with broad legal consistency rather than fidelity to patent law’s underlying specialized and unique features moored in technology research, invention, and patenting processes. Unfortunately, as shown below, the adverse effects on patent rights due to the deviant patent doctrines arising out of the Court’s decisions far exceed the benefits of assimilation and conformity of the patent law with the general law… The dearth in understanding technologies and related invention processes and the lack of prior expertise in patent law pertains to Justices across the political spectrum. Patent law raises questions that have the potential to divide conservatives and liberals alike, as it pits principles of liberty and property against one another. For example, the pillars of the recent problematic jurisprudence on patent-eligibility were authored by liberal Justice Breyer (Mayo v. Prometheus) and by conservative Justice Thomas (Alice v CLS Bank).

While we have damaged our patent system, China has strengthened theirs. Job creation is stagnant, economic growth is anemic and the America Dream is dying. Congress must act to correct this damage and fix the patent system… The PTAB must be eliminated because no matter what changes are made to the rules it is difficult to see how this Board could ever be reigned in after starting and existing for the purpose of killing patents. Just changing the rules will not fix its systemic problems nor create a fairer process for patent owners.

The impact of Alice has been just what one would expect. The decisions of the USPTO examining corps, USPTO Patent Trial & Appeal Board, and lower courts have been wildly inconsistent. Far too many worthy inventions are being lost. Perhaps worse, the predictability innovators and investors in research and development require to effectively navigate the patent system has been eliminated. Change is sorely needed and overdue.

The consequences of a weakened patent system are increased inequality, a higher competitive bar for market entrants, protection of incumbent monopoly profits, decreased competition, disincentive to invest in innovation by both small entities that have higher costs and large companies that can free ride, declining productivity growth, slower employment and wage growth and economic malaise… With less incentive to invent or invest in innovation, it should be no surprise that in a weak patent regime, productivity growth has declined precipitously and economic growth is substantially reduced.

In the piece, Lee tries her best to assure readers that positive developments have been made at the USPTO in recent years, but at multiple points she seems blind to major issues that have plagued U.S. patent system stakeholders during her tenure… Perhaps the most abrasive thing Lee stated in her editorial was this: “Our stakeholders share my belief, and that of my USPTO colleagues, that there is a cost to society when this agency issues a patent that should not issue…” No, Ms. Lee, a great many stakeholders do NOT share your belief. They don’t share your belief primarily because by making this statement you shine light on a largely fictitious problem while simultaneously ignoring the real problem facing the Office, which is that patent examiners refuse to issue any patents at all on good, high quality innovations that deserve patent protection.

Congress sent H.R. 5, the House-passed Regulatory Accountability Separation of Powers Restoration Act, to the Senate’s Homeland Security & Governmental Affairs Committee on January 12, 2017. When enacted it will overrule Chevron deference. This enactment will therefore shine the disinfecting sunlight of appellate review where it has not gone before…. Patent practitioners need to realize that the Act will eliminate stare decisis over earlier court approvals of specific Patent Office rules. First, after the Act, it will be an open question whether the Patent Office may use BRI within IPR proceedings. That is because the law will have changed over what deference a court must give Patent Office regulations. In Cuozzo, the Court cited Chevron in analyzing whether rulemaking imposing BRI on IPR proceedings constituted “a reasonable exercise of the rulemaking authority that Congress delegated to the Patent Office.” Cuozzo, 136 S. Ct. at 2144. After walking through a collection of policy rationales that made BRI seem “reasonable” to the majority, the Court concluded by explicitly noting that the “Patent Office’s regulation, selecting the broadest reasonable construction standard, is reasonable in light of the rationales described above. . . .” Id. at 2146.

Activist Supreme Court decisions in the last decade have been principally responsible for these changes, stimulated by aggressive technology company incumbent lobbying. The combination of these decisions has had a far greater effect on the patent system and the economy than the Court originally intended. The U.S. is now in a compulsory licensing regime in which large technology incumbents that control at least 80% of collective market share employ an “efficient infringement” model of ignoring patents and forcing patent holders to enforce patent rights in the courts.

I have come to the dejected realization that our patent system does little to protect anyone who does not have millions in the bank to defend their invention… So why would someone now choose to publicly disclose their invention if the likelihood of being awarded a patent is decreasing and the potential costs are increasing? In this inventor’s eyes, they won’t and I won’t, at least not without a lot of money set aside as a defense fund. That is why my decision today is difficult and why I have chosen to write about this. I have believed in our patent system, as my father did and grandfather does, but I cannot overcome the concern that given the current landscape, I am better keeping my knowledge in my head rather than sharing it with the world.

The American patent system represents a delicate balance. On the one hand, the patent system provides an incentive to invest in risky technical problem solving by giving an inventor an “exclusive right” for a limited time. On the other hand, from the time of the first Patent Act in 1790, patent critics have argued that patents block competition with a temporary monopoly. This tension has, nevertheless, enabled the rise of the U.S. as a major industrial economy, particularly after the Civil War. Optimally, the patent system encourages inventors to take risks to invent and disclose new and useful things by investing in ex ante costs before a later payoff. After a limited time of exclusivity rights, a patented invention falls into the public sphere, thereby providing a public interest in the long run. Economic and technological progress proceeds by building on previous inventions. Until about 2006, the U.S. patent system worked well, as evident in the development of the largest and strongest economy in the world.

Perhaps when the Senate Banking Committee convenes to consider the nomination of Wall Street attorney Jay Clayton as the new head of the Securities and Exchange Commission they should ask about efficient infringement and the infringe at will culture. What is your position, Mr. Clayton, on the legal obligation of a public company to shareholders? Should publicly traded companies inform shareholders that patent assets are worthless, or at least worth less, given the legal and regulatory climate in America? Should publicly traded companies systematically infringe and ignore all patent rights? Should publicly traded companies be using billions in shareholder monies to aggressively collect patent assets while they are simultaneously using millions to lobby against the viability of patents? What exactly do shareholders have a right to know?

The result of attacks on the patent system has been a concerted critique of key elements for protecting patent rights. These have included enabling the PTO to attack patent validity in a second window, attacking classes of inventions such as software and medical diagnostics, limiting access to the courts, increasing costs of enforcement by several magnitudes and restricting patent remedies. The totality of these attacks on the patent system, enabled in large part by the expenditure of vast sums to influence policy by technology incumbents in order to protect their historic monopoly profits, has been to fundamentally alter a democratized patent system to one that requires substantial capitalization. The net effect has been decline of investment in innovation particularly by small entities that require patents as a key tool for competition.