The recent deluge of negative press has enlightened the public (users) to the darker side of today’s tech titan dominance. After reminding us that no lunch is ever free a recent NYT article “Silicon Valley Is Not Your Friend” quotes the concise observation that “If you are not paying for it you’re not the customer; you’re the product being sold.” The ubiquitous US user is being used. Their sale of users’ privacy and predilections also has heightened Hill awareness. Rana Foroohar’s FT article (circulated yesterday) adds significant heft to the pro-patent Hill position by including big tech’s anti-patent congressional crusade in its litany of misbehaviors. The article expressly cites the shallowness of tech’s overblown troll narrative and “efficient infringement.” Yesterday we urged readers to share Ms. Foroohar’s piece with their home state delegations. Today we suggest that you follow it with an expression of strong support for the STRONGER Patents Act. We believe that the newly awakened media coverage has reached Congress. Even if they were once on the other side, your congressional delegation is now ready to listen to your side of the patent reform argument. Continue reading The Dark Side of Tech Titan Dominance
Today’s Financial Times features an excellent analysis of patent reform, PTAB, and Silicon Valley aggregator efforts and motives to pas the anti-patent Innovation Act, to drive down the value of patented components and protect efficient infringement. Its author, Rana Foroohar is a highly respected and influential tech analyst whose published conclusions in FT cannot be ignored. She is known for her thoroughness and objectivity. She interviewed all sides (including the writer). Quoting many of our pro-patent colleagues, she highlights our present patent system’s dampening of investment in life science research. She also expressly flags the Innovation Act’s patent value devaluation objectives, adverse research university impacts, and efficient infringement, She punctures the overblown troll narrative balloon and referencing the Obama Administration’s complicity in the congressional efforts to degrade patent value. One early excerpt references the multiple IP community interests affected when investment is dampened.
“If companies can’t defend their intellectual property, they won’t invest,” says Ms. Knowles. “It’s that simple.” Few will have too much sympathy for Big Pharma. The industry has long been in the line of fire over drug pricing and its monopolistic power. But the large drug companies are only one voice among many that have begun to complain about how shifts in the US patent system over the past decade have weakened the ability of companies to protect their innovations. Start-up biotech firms are complaining, as are a number of semiconductor and electronics firms, clean-tech companies, data analysis groups, universities and innovators working on the “internet of things” — not to mention the venture capitalists that invest in them.
If ever there was an article worth furnishing to every patent staffer and member on the Hill this is it. The entire article is linked and reproduced below.
To maintain acceptable margin publicly traded companies competing in the global smartphone market must continually adjust their products’ production cost and sales price. It is often assumed component assembler op-co’s like Apple must increase their products’ prices to maintain their profit margins. But op-co profit margins pressured by competition can also be protected by directly or indirectly reducing the cost of their patented components. We have accused the big tech op-cos of efficient infringement and their concerted push for punitive patent reform as pieces of an indirect strategy to broadly lower component costs. We believe that when the largest op-co launches a multi-venued judicial attack on its component supplier, it is for the same broader reason. Apple’s multi-fronted war with Qualcomm is a good example.
Component supplier licensers are often over-dependent on their giant assembler customers. Such concentration makes them easy op-co targets for direct price reduction pressure. But when op-co component suppliers are well-resourced and their patented products are essential, the pricing playing field is more level. Qualcomm is such a strong component licensor. Its size and product excellence make it hard to push around. Patent reform’s objective was to force component prices down indirectly. By enacting AIA, the mega-techs partially succeeded. But they wanted more.
Qualcomm resistance has been a productive pro-patent force throughout the patent wars on the Hill. Perhaps because op-co anti-patent efforts stalled or because their troll narrative withered or even because their faithful presidential friend was ending his second term, Apple decided to directly reduce component costs by launching a barrage of antitrust suits against Qualcomm in significant world tribunals challenging the legality of Qualcomm’s licensing format.
The collateral consequence of this massive initiative to component licensing is no less dangerous to the entire patent community than congressional patent reform. Veterans of congressional patent reform will recognize the relevance of this excerpt from Michael Salzman’s recent IPW post about the courtroom confrontation. “One very fair way to look at Apple’s beef with Qualcomm is that it is just a price negotiation being conducted by other means.”
There may or may not be a winner. However the conflict is resolved, licensors may be the losers. We have reminded readers of the adage, “When elephants fight, the lesser creatures in the jungle landscape are at risk of being crushed.” Continue reading Qualcomm Apple’s Courtroom War Endangers All Patent Licensors
Neal Soloman’s excellent ongoing IPWatchdog series analyzes the public right doctrine allegedly underlying PTAB’s patent nullification authority. The pending SCOTUS Oil States case is expected to determine PTAB’s continued viability as a post-grant tribunal empowered to nullify granted patent property rights. It is scheduled for oral argument Nov. 27th. Neal’s analysis takes an impressive leap forward. He persuasively argues that even if SCOTUS were to declare that PTAB’s establishment as a public right could fit within the public right doctrine’s requirements, PTAB’s procedural execution of its powers fails to satisfy the exceptions narrow constraints. The excerpt below from his first post states his startling conclusion.
“The justification for patent validity review in an executive agency lies in Congressional power to establish an Article I tribunal to resolve matters that may involve a public right. The public rights doctrine is specified in a line of Supreme Court cases from Murray’s Lessee (1856) to Stern (2011). While a strong case can be made that patents embody private property rights, that patent disputes are between private parties and that patents are adjudicated in common law in federal courts by judges and juries, even if one grants the argument that patent validity review in an Article I tribunal may be made according to the public rights exception jurisprudence, the actual procedures employed by PTAB illustrate that IPRs are unconstitutional according to any standard of application of the public rights doctrine.”
Neal then explains that applicable precedent requires that the exercise of “public rights” adjudicative authority must fit within three constraints.
“The chief constraints of the public rights doctrine involve consent and due process by an Article I tribunal and review of tribunal determinations by an Article III court. None of these features are present in the PTAB review of issued patents.”
The third installment of the 8 part series is introduced by Gene Quinn as follows;
“The Modern Public Rights Doctrine,” by Neal Solomon.
“The modern public rights jurisprudence flows from Atlas Roofing in 1977 to Stern in 2011. Although the case law does not provide a straight line, there is a consistent pattern illustrating the clear constraints of administrative agency adjudication. These constraints include consent of the parties, due process and review by Article III courts. Without these elements, according to a continuous line of Supreme Court jurisprudence, administrative proceedings are illegitimate and unconstitutional. Stern is the governing precedence on the issue of the public rights doctrine, with the composition of the Court today substantially identical to that of the Stern Court.”
The decision is expected to clarify the property status of granted patents. Most believe that status as private property entitles patent holders to constitutionally established protections not available in PTAB proceedings. Neal’s series is thus critical reading.
Neal shared his entire article with us some time ago. Its concise abstract is fully set forth below. Continue reading PTAB Fails Even If Exercising PTO “Public Rights”
For readers following the recent Native American sovereignty squabble, Paul Morinville’s IPW recent post below adds more info. Paul is a tireless pro-patent advocate/inventor well respected on the Hill. In his post, he follows-up on the sovereignty issue after his discussions with other tribal representatives. University readers should understand that state-affiliated university sovereignty is protected by the 11th Amendment and thus occupies a different status than the sovereignty invoked in this matter. Native American sovereignty, established by treaty and federal law is however no less important. For a number of reasons Senator McCaskill’s flawed bill appears to be either a publicity stunt or she is trying to please infringement lobbyists.
Two aspects of this flare-up are especially significant.
- This creative avoidance of PTAB’s lethal jeopardy tells us more about PTAB’s problems than it does about Native American sovereignty and;
- No one can examine this issue without seeing why bypassing PTAB is both understandable and predictable given its dodgy track record.
By calling new attention to PTAB’s flaws, the Senator has shed fresh light on a failed PTAB process that its friends prefer to keep in the dark.
To see the IPWatchdog teaser linking to Paul’s post, please visit our website at ipstrategic.com. Continue reading More on McCaskill’s Manifest Destiny
Following congressional developments these days is like rubbernecking to view a highway accident. You look without wanting to look. And although the patent legislation traffic flow in Congress has temporarily slowed there still are ominous developments, especially for lesser resourced early-stage innovation. As readers know we aim to keep you current conveniently. But even that becomes more difficult when all seems quiet on the patent front. So here’s a way for those who wish to stay current easily. All you need to do is register and watch.
As our pro-patent friend Gene Quinn explains below.
“A multitude of changes to patent law and practice have altered the face of patent litigation in America. From patent venue decisions in district courts that seem to be inconsistent with TC Heartland to Indian Tribes acquiring patents and asserting sovereign immunity, the patent enforcement and defense landscape has changed dramatically over the past few months.”
By Gene Quinn on Oct 09, 2017 05:15 am
A multitude of changes to patent law and practice have altered the face of patent litigation in America. From patent venue decisions in district courts that seem to be inconsistent with TC Heartland to Indian Tribes acquiring patents and asserting sovereign immunity, the patent enforcement and defense landscape has changed dramatically over the past few months. Amidst these changing times, please join Gene Quinn for a free webinar discussion – Hot Topics in Patent Litigation – on Thursday, October 12, 2017, at 12 pm ET. Gene will be joined by former ITC Commissioner F. Scott Kieff and Keith Grady, Chair of IP and Technology Litigation at Polsinelli.
As US digital platforms ram through their global marketplace, they remind us of escaping lead cars in prevued car chase films we endure at movie theaters. Like turtles on their backs upended police cars lie smoldering. The fleeing drivers hurtle through narrow alleys smashing peddlers’ fruit carts and leveling fire hydrants into geysers. We ignore the chaos in their wake as our bewildered focus is pulled to the next explosive outrage. Nonplussed we block their ears, politely munch our popcorn and resolutely await the featured film. Horrifying as they are, these prevues are fantasy. But similar real-life destruction similarly lies in the wake of mega-techs whose only aim is winning. The injured humans are movie extras. US patent holders are real.
Like hapless movie extras, our analog Courts and Congress similarly wait and watch as US digital tech titans careen through traditional norms. Privacy, fair play and control of our personal identity are crushed as their efficient infringement continues unabated. Tech titans’ trailing detritus is ignored as its aftermath shrinks into rear-view mirror relevance. Their wreckage numbs us as we drift into tolerance of a chaotic “new normal.” But mega-tech seepage into civilization is not a movie prevue. It’s all too real. At some point democracy, itself stands in its competitive crosshairs. We cannot not allow this civil carnage to continue unabated just because we are addicted to its cheap convenience. Destruction of our innovation ecosystem is not playing in a theater near you. We are not stunned extras in an action film. For the few who understand its complexity, saving it is our responsibility.
Europe and China have awakened. They are reacting to incumbent platforms’ penchant for inflicting chaos. The EU is aggressively redefining harmful digital dominance. China is designing a digital “great wall.” But like hemmed-in mid-row theater patrons, the US Courts and Congress seem paralyzed. Traditional norms forbidding theft and unlawful bullying are arrogantly flouted by the efficient infringement of digital Goliath’s. Too many patent holders stand stunned like the cinematic fruit stand peddlers whose splattered inventory decorates the screen. Too often patented innovation is rolled over or mowed down without effective institutional response.
Will we merely wait for the next convoy of careening vehicles to crash through our innovation ecosystem? Or will we take action? Waiting for Congress and the Courts can take too long. Many count on the Halo’ decision to rescue us. Its more realistic standard of infringer willfulness invites productive familiarity with its post-decision history. Halo can help curb infringement arrogance but only if we push it on the courts. Lawyer letters and other devices deployed to hide willfulness can’t work forever. But as other countries are strengthening their patent systems time is running out. But help may be on the way. (See below)
Senator McCaskill has introduced a bill to prevent Native American sovereignty from shielding tribal patent holders from PTAB’s IPR. The good news is that someone has decided that the tribal sovereignty will work! The bad news is the infringer lobby is still prowling the Hill.
In two hard-hitting posts, Gene Quinn accuses the Senator of discrimination. (BTW having commented on his first, I am quoted in his second).
Ducking charges of discrimination her staff will likely reach into their Hill jargon grab bag and say she wants to establish “a level playing field” for all patent holders. But as Gene points out, her bill pertains only to PTAB’s IPR omitting PTAB’s other two post-grant proceedings. Now that McCaskill has put PTAB in play enter the Universities.
State-affiliated universities are free from PTAB harassment unless they waive their constitutionally-established sovereignty. So how about leveling the university playing field? Since the Senator cannot repeal the 11th Amendment the only way to level the PTAB playing field for university patent holders is to extend the same PTAB shield and waiver opt-out to all universities. Then again if she is trying to please the infringer lobby friends as Gene notes, they will not be pleased.
Let’s face it, The Senator’s bill is not only messy, but it also misses the point. Creativity deployed to avoid PTAB’s patent killing fields is both eminently predictable and understandable. We will see more creativity until the Congress curbs or abolishes PTAB. (Oil States may save them the trouble.)
Maybe it’s the term itself. “Commercialization” attracts attention. Easy enough to say, it is sometimes hard to swallow for university spokespeople to whom it sounds too mercenary and is thus beneath their academic dignity. These same researchers gladly gobble-up research funding from federal grantors for whom research’ commercialization is mission critical.
Commercialization’s enemies know it needs the nourishment of private investment. Investors lack confidence in patent exclusivity and self-control of market pricing. Both are always in the congressional cross-hairs of serial attackers who claim their absence would make commercialization’s use grow stronger. Too many grantees stay silent in its defense. But its outspoken boosters also can cause commercialization’s downfall. And with “friends” like that…..
As Bayh-Dole guru Joe Allen warns in his IPWatchdog post below, commercialization’s “friends” sometimes unwittingly place it in harm’s way. These commercialization’s boosters can contribute to its downfall by overuse. No one knows more about the subject than Joe Allen. His subtle observation is essential. Increasing its quantity without appropriate regard for quality gives dangerous aid and comfort to commercialization’s enemies. Deployment success buttresses its continued survival. Failures can leave loose threads for enemies to pull. Continue reading With Friends Like That
Pro-patent advocates have been right about patent policy but for the past twelve years have been hobbled on the Hill. Because of partisan rivalry to curry Valley favor, most members paid no attention to the complexities of patent policy. Instead, they welcomed seduction by the mega-tech’s misleading but simple troll narrative. We had to explain the unexplainable. The anti-patent blitzkrieg is temporarily delayed while Congress wrestles with other concerns. This respite has enabled sound, member-comprehensible patent policy analysis to emerge.
There may be no better example of than the recent clear analysis of Heritage Foundation’s IP policy guru Alden Abbott. His concise diagnosis of our damaged patent landscape is spot on. His recommendations are politically neutral. Despite Heritage’s political leanings, it is unbiased, non-political and non-partisan. As patent policy consideration should be it is solidly based upon a deep understanding of the relevant laws and the facts on the ground. Most important it is eminently understandable and thus member friendly and deserving of broad DC dissemination. It is must-reading for pro-patent advocates and Hill staff. Its elegant clarity is convincing enough to convert even erstwhile patent opponents into patent supporters.
He begins at the end with three “takeaways”:
- SCOTUS has weakened our patents with its judicial limitations to eligibility,
- Constitutionally dubious PTAB has cast a dangerous cloud over patents, and
- Congress and the Trump Administration must eliminate current limits on patentability and enforceability.
These are followed with clear well-reasoned prose explaining what must happen next and why… Continue reading Alden Abbott Nails it!