A Busy Day

There is much to report today.  We will cover it as efficiently as possible.

TV talk show hosts and newscasters often appreciatively refer to their repeat guests as “friends of the show.” As it turns out Bayh-Dole has put on an impressive economic show over recent years. Now there are fresh numbers to prove it. I am sure readers would agree that the 36 yearlong B-D show’s indispensable and longest serving “friend of the show” is Joe Allen. In his IPWatchdog article today (see below), Joe lays out the recent new statistics you and your congressional delegation need to see. B-D was enacted with bi-partisan sponsorship and support. Because its public-private inventor/investor partnership commercialization dynamic is mainstream Republican in nature, its continued bi-partisan support is assured but only if R&D funding continues and otherwise uninvestable but needed basic research can be converted through private investment into jobs and economic development. His excellent article explains why congressional proposals to reduce R&D funding of basic research while weakening patent strength contradict common sense.

Three other notable links also are significant.

The excerpt below draws on a recent Techcrunch article confirming that China’s recent ascendency has made it a patent “powerhouse.”

“China is not only taking the spotlight in strong defense of global markets and free trade, filling a vacuum left by retreating Western capitalist democracies, China is quickly becoming a (if not the) global leader in intellectual property protection and enforcement. And there too, just as Western democracies (especially the United States) have grown increasingly skeptical of the value of intellectual property and have weakened protection and enforcement, China has been steadily advancing its own intellectual property system and the protected assets of its companies and citizens.”

The third significant piece is a recent Reuters article recounting the continuing conflict between SCOTUS and the CAFC which to no one’s surprise is adding increased uncertainty to patents’ predictable reliability. The fourth is another excellent IPWatchdog post that pointedly pins the efficient infringement tail driving all this court and congressional chaos on Apple’s donkey.

Continue reading A Busy Day

STRONGER PATENTS ACT -The Pro Patent Force Awakens

Legislation has been introduced today sounding the charge for a pro-patent congressional counter-attack to the patent reform carnage currently afflicting the patent landscape. This new Stronger Patents Act of 2017 will be strongly resisted by the big tech infringer oligopoly. House amendments could convert it into a new Innovation Act. Research universities must actively engage directly now by expressing their support. This effort could backfire into a Bay of Pigs-type defeat if we do not. As you will see from the summary below, this proposal addresses both AIA flaws and SCOTUS imposed harms inflicted on today’s patent landscape harming research university commercialization essential to obtaining research grants.

Here is the sponsor’s one-pager summarizing the bill. This is big bold and beautiful. Please urge your university spokespeople to act quickly.

Continue reading STRONGER PATENTS ACT -The Pro Patent Force Awakens

China’s Patent Ascendancy is Helped by House Judiciary.

Today the barons of big tech meet at the White House with President Trump whose understanding of their work and how that work bears on our present global economic leadership and security in this new digital information age is doubtful. But at least he appears to be uncontrollable. For more than a decade tech titans have been dominating our Congress, federal agencies and Supreme Court by spreading their poisonous anti-patent troll narrative among DC patent policy makers. We were reminded of this last week when the “patent troll narrative” (now lingua franca in all Capitol Hill patent discussions) surfaced in a House Judiciary Subcommittee meeting held to examine the impact of on the patent landscape of the Heartland venue decision. Rep. Issa oiled his way through various iterations of the stale troll narrative. He even sniffed about a recent patent suit against Apple. Pro-patent interests had one friendly witness in the person of Adam Mossoff, but the rest were members of the anti-patent chorus led by anti-patent apparatchik Colleen Chien.

Like certain Justices, House members Nadler, Goodlatte and Issa seem shamelessly transfixed by the troll narrative’s trope that our patent system is being destroyed from within by the abusive conduct of patent trolls, when in fact they are destroying it themselves. We hope the same narrative will not be replayed at the White House today. But it is very much alive in key congressional circles. It is equally clear from House Committee bloviating they want to keep it alive in case an opportunity arises enabling them to revive their tech-dictated Innovation Act. They are telling us that any bill that mentions patents will become a House vehicle for their Innovation Act “modular adjustments.” Big Tech’s congressional tub thumpers have waited for years to tack them on as amendments.

What is becoming scary, however, is that we are in the early stages of two tectonic world developments—the new Information Age and the rise of China as a superpower. Our patent system is being destroyed by the troll narrative and its impact on patent policy makers who are themselves destroying it. China is strengthening its patent system with the same dispatch deployed to stake its claim to the South China Sea and fill the Far East trade vacuum ceded by US PP abandonment. We are headed towards a dual superpower world in an evolving digital age. If our patent system cannot cope with the economic and defense demands needed to maintain leadership, China’s patent system will. If our Congress cannot understand what lies ahead, we have to hope our President does.

Continue reading China’s Patent Ascendancy is Helped by House Judiciary.

New PTO Director and Returning Patent Property Rights

As everyone not pinned under a rock or away on an exotic vacation knows by now, SCOTUS has agreed to decide whether PTAB has the constitutional authority to nullify patent rights in a mini-trial process (principally AIA’s IPR). The precise question before the Oil States Court is:

“Whether inter partes review – an adversarial process used by the Patent and Trademark Office (PTO) to analyze the validity of existing patents violates the Constitution by extinguishing private property rights through a non-Article III forum without a jury.”

Having rejected cert in earlier appeals raising the same issue (including MCM v HP ) experienced observers are speculating and theorizing about the SCOTUS reasons for agreeing over the objections of the Solicitor General to hear it. In a timely letter to Commerce Secretary Wilber Ross, the Licensing Executive Society ( LES) which is ably led by Brian P. O’ Shuaghnnesy advised the Secretary regarding its recommended qualifications appointment of a new PTO Director.The letter enumerated some of the many problems affecting our US patent system including a strong argument for patents as “property.” A few excerpts from the letter are below. We recommend reading it in its entirety.

LES Letter Excerpts:
“Above all, LES recommends appointing a Director dedicated to protecting intellectual property, generally, and patents in particular, as the private property right our nation’s founders envisioned.The founders saw great value in rewarding individuals who toil to bring forth from commonly accessible resources useful products and processes by granting to those individuals an enforceable property right. They recognized that such a property right would, in the fullness of time, work a substantial benefit to the public by encouraging innovation and disclosure.We must honor that philosophy.It contributed substantially to America’s rapid ascendancy from agrarian economy to industrial powerhouse and can be traced to America’s first patent act of 1792.In affording that private property right, we reward and empower the archetypal American innovator, the individual daring to risk all to bring forth the next big thing, and thereby challenge market incumbents who benefit from stasis and the status quo.”

“Commercial development of innovation, and new business formation, demands the prompt and predictable grant of durable property rights, and a reasonable expectation of the enjoyment of quiet title upon issuance. Financing of new enterprises, and the growth of existing ones demands intellectual assets that stand up to challenge, regardless how hose assets are derived or commercialized. American innovators deserve strong, predictable, enforceable intellectual property rights, and that starts at the USPTO. Regrettably, recent changes, both legislative and precedential, have chipped away at US patent rights. Meanwhile, patents issued by other countries are increasingly perceived to be more predictable and enforceable, and thus to have greater value. Investment, and ultimately innovation, will migrate to those environments.” Continue reading New PTO Director and Returning Patent Property Rights

Patent Monopoly

In its recent Impression Products v. Lexmark decision, SCOTUS (Chief Justice Roberts for the 7-1 majority) more than once referred to a patent’s “monopoly.” Patents do not confer a monopoly. They confer exclusivity rights for a limited time.This common patent monopoly misconception may be a tolerable one-time error among patent law tyros and first-year law students. It is intolerable however when routinely used by the Chief Justice of the US Supreme Court, not because it is wrong, but because it reveals in our nation’s highest judicial tribunal a fundamentally inadequate understanding of US patents’ purpose and place in our mixed economy. If the Supreme Court can routinely refer to patent rights as “monopoly” powers, it demonstrates either inadequate understanding of US commerce and our nation’s waning global economic leadership, or a dangerous susceptibility to misguidance by self-serving special interests. When a clock strikes thirteen, it is not merely an inconsequential occurrence of little importance. It means that there is a fundamental problem with its entire mechanism, making its next chime ringing unpredictable and unreliable. SCOTUS references to patent monopolies are like a clock striking thirteen!

Is it that the Court doesn’t know what it doesn’t know? Does it not care? Are patent decisions being drafted chiefly by legally sophisticated but commercially inexperienced law clerks? Is SCOTUS treating amicus brief propaganda as if it were submitted for any purpose other than to lobby the Court? Do the Court’s recent anti-patent decisions signal further patent diminution based upon a re-emergence of antitrust market power concerns? These are unanswerable questions, but their import must be soon offset. Take Lexmark. Is it merely one “domino “in a pre-orchestrated series of cases the Court is absorbing while waiting for its next opportunity to cripple our innovation ecosystem further? For example, will SCOTUS next consider the patent exhaustion issue in a case involving the license of a patented product they “find” so restrictive that it is constructively a conditional sale of underlying patent rights exhausted when the “license” was granted? These questions are not unimportant. Rather they reflect an urgent need to educate SCOTUS before it is too late. Congress theoretically could fix this problem and many others that lately have arisen but . . . Continue reading Patent Monopoly

Patent Troll Narrative proven to be “Fake Views”

Patent Reform was intended to be in full effect before anyone noticed that like AIA it was based on false assertions by anti-patent academics including: a non-existent litigation crisis; a tax on innovation; alleged patent holder valuation inflation; alleged patent holder valuation inflation and; the so-called, diversionary, “patent troll narrative” which, for a while, completely captured congressional attention but now shares the top-of-mind limelight with “efficient infringement.

Unfortunately, this story’s destructive thrall appears still to have captivated SCOTUS and captured PTO. Congressional delay, however, gave us room to convince enough members that at least there were two sides to the story. That same delay has now given responsible parties in academia time to respond to the barrage of faux studies demonstrating a “need” to address waning (and otherwise explicitly addressable) troll abuses with the comprehensive litigation reform the efficient infringer lobby sought. Each of their promulgated academic “fake views” has now been refuted.

Actual and readily available facts debunk the so-called “volume crisis” in patent litigation. The “tax on innovation” most prominently promulgated was a thoroughly discredited “study” authored by Bessen and Meurer. (It is also attacked in this article but still quoted by duped anti-patent apparatchiks who have not yet realized how foolishly gullible they sound.) This past year USC economist Jonathan Barnett has been circulating a draft law review article before its final publication in the Berkeley Law Journal scheduled later this year and entitled “Has the Academy Led Patent Law Astray.” Barnett’s thoughtful analysis will be released this Fall in final form. In it, he conclusively demonstrates that previous patent reformer academic assertions about “royalty-stacking,” “patent hold-ups” and “patent thickets” were entirely speculative when released and since have been proven by empirical data to be completely false. Nevertheless, they still are contributing to the “depropertization” of patents. Here is an advance citation to what can only be referred to as “must reading”

Now we have a new and definitive debunking of the misleading “patent troll” narrative entitled, “Patents at Issue: The Data Behind The Patent Troll Debate” by Ashtor, Mazzeo and Zyontz. Like the detailed Barnett article, it is a “must read” for pro-patent advocates. It also discusses the counterproductive remedial implications of applying “liability theory” instead of “property theory” to patent ownership. Liability theory maneuvering led to the notorious Justice Kennedy anti-injunction concurrence in eBay.

Here is a quotation from the article’s “Background” explanation:

“The core questions in the “patent troll” debate include issues of whether and to what extent patent assertion practices take a toll on innovation, whether PAEs are asserting low-quality patents and seeking quick settlement payoffs, whether startups suffer more harm through patent assertions than the benefits they gain from patent market liquidity, and whether high litigation costs are shifting the economics of patent assertion to favor PAEs. These questions implicate the underlying tension between “patent monetization” and “patent assertion.” Which types of patent monetization practices are legitimate, and which types exceed the intended scope of the patent grant? Does “after-market” patent value extracted by PAEs deserve the same status as the patent value derived by practicing entities? More generally, should PAEs be entitled to property rule protection for their patent rights – should they have the right to exclude infringers – or should liability rules apply? In this paper, we seek to inform the policy debate about “patent trolls” and modern patent assertion practices by studying some of the key questions concretely, through empirical analysis of patent infringement award data.”

“Our findings reveal a number of important facts about PAEs and their patent assertion practices, some of which are directly contrary to popular positions in the “patent troll” debate. Rather, in some respects this data paints a very different picture of PAEs, showing them in some cases to assert patents and conduct litigation in ways that are highly similar to other patent– holders enforcing their rights. From the perspective of decided cases, it is very difficult to distinguish the “trolls” from any other patent plaintiff……

“On the whole, our findings suggest that the realities of PAE assertion practices are complex, and it is difficult to identify clear signs of abuse or misuse of their patents relative to other plaintiffs. Rather, the similarities we observe between PAEs and practicing entities highlight the risk that attempts to limit PAE’s enforcement rights or restrict the remedies available to them could inadvertently impact all patent-holders and cause adverse effects on the ability of practicing entities to enforce and otherwise monetize their patents. These results counsel caution in designing policies aimed at PAEs and patent assertion practices.

“Moreover, these results further indicate that modern patent assertion practices may yield unique efficiencies and benefits relative to traditional enforcement actions by practicing firms. We need to understand the relationship between modern patent assertion, patent monetization and patent value in its variety of forms before we can identify which practices “promote progress” and which prevent it. True “patent trolls” are difficult to find, and all patent rights are at issue in the hunt to apprehend them.”

Continue reading Patent Troll Narrative proven to be “Fake Views”

Cruel of Law

An important feature of the rule of law is the economic support imparted by its predictability, a growth-supporting quality enabling the economically necessary use of contracts, deeds, debt, trusts, currency and licensing. Without it, long range planning and investment are impossible, variously timed delivery differences would cancel trades, and mutually beneficial transactions would necessarily be crammed into the immediate present. The absence of a predictable rule of law thus severely hamstrings economic progress. Patent law depends heavily on its special rule of law. It is expressly created in our Constitution to authorize Congress to provide future investment reliability for a “limited times.” What does limited mean? It doesn’t say how much time but it certainly means some. But if AIA’s IPR can nullify a patent throughout its term all the way to expiry, metaphysically there is no “limited” time. If laws and court decisions continue to nullify effective patents retroactively, the express constitutional provision for prospectively “limited times” is distorted. If patent rights are property rights instead of public privileges, Article I agency-appointed PTAB tribunals cannot be constitutionally enabled to cancel them without reference to the protections in Article III and the Bill of Rights.

A wise man once warned me that standing by themselves, arrogance or ignorance was to be pitied, not condemned but combined in positions of power, they are extremely dangerous. So it is with patents. Our nation’s patent system finds itself caught between apathetic ignorance and under-informed assertiveness. On the one hand, there is the proud apathy of congressional ignorance that resulted in AIA’s PTAB. On the other, there is the under-informed assertiveness of SCOTUS that still uses the term “patent monopoly” in Impression Products v. Lexmark while erasing decades of established patent law by retroactively altering the impact of conditional sales that conformed to existing law when made. Such retroactive conduct scorns patents’ special “limited time” rule of law, by enacting retroactive nullifications unforeseeable during past compliance by legal practitioners as well as practitioners of grant patents. Retroactive patent nullification decisions have become commonplace in the courts and Congress. From AIA’s IPR to Lexmark’s recent nullifications of then complying conditional sales, such conduct not only cancels past established economic process, but it also deters future investment of innovative time and developmental financial support in our nation’s innovation ecosystem. It harms our economic future. The on-going self-inflicted collapse of the patents’ rule of law has become a counter-productive “cruel of law.” Worse, stopping this relentless DC march to economic madness may itself be madness. Can we halt them? Continue reading Cruel of Law

Turtle on a Fence Post

A  Saturday New York Times editorial called to our mind an old saying:  “If a turtle is perched on a fence post you know it didn’t get there by itself.”

With Congress now in recess and, when it returns, still entangled in health care, tax reform and Russia-gate, how is it that a high-priced, big tech PR firm would be trying to breathe life into patent litigation reform to justify its monthly retainer? No problem, just call in a favor and get a NYT editorial praising SCOTUS for its latest weakening of US patents. The editorial praised the recent SCOTUS decisions in TC Heartland v Kraft Foods and Impression Products v Lexmark under the headline, “Protecting Consumers in Patent Cases.” It was planted, we suspect, (like the turtle) on the Editorial Board’s patent troll narrative Kool-Aid cabinet shelf.

The Court in both decisions overturned years of patent law precedent on defendant venue in Heartland while in Lexmark it effectively held that any sale whatever or wherever of a patented product, including sales in other countries where our patent laws have no effect, cancels its US patent protection. One major problem is that when applied to existing arrangements such decisions have a retroactive impact. So if drug maker XYZ has made a discounted sale to the Gates Foundation of a patented anti-pandemic therapy for use in Africa, (even with a routine boilerplate restriction on further resales or other gray market activity) the US patent protecting the product is now automatically nullified. The Impression Products decision and the Court’s reasoning are explained in an IPWatchdog twin posts last week where experts comment on its “known unknowns.” As usual, however, the problem is the decision’s “unknown unknowns.” It appears to us that new uncertainties may further adversely affect investment in university life science research. It definitely will disrupt today’s biopharma innovation ecosystem.

Continue reading Turtle on a Fence Post

Relevant Random Developments

The PTAB has issued a second ruling that a state-affiliated university (this time the University of Maryland) is entitled by the 11th Amendment to escape PTAB review by its waived sovereign immunity. The university’s participation in the proceedings did not constitute a waiver. It is not yet clear how the PTAB will act regarding a non-state and state joint patent if an IPR petition is filed regarding such a jointly-owned patent. It would seem that any PTAB patent dispute involving a qualifying state entity would be similarly exempted even if joint ownership of the patent in question constitutes the only connection between the joint holders. We are hesitant however to predict PTAB reasoning or decision-making.

As you must be aware by now, SCOTUS has just held that a patent’s sale or conditional sale anywhere in the world exhausts the patentee’s US patent rights. Conditional sales to universities for research purposes will have to be carefully and quickly converted to licenses. This SCOTUS ruling penalizes manufacturers who sell products at special prices to specific users who could not otherwise afford the product including universities for research purposes. Whether it will be applied retroactively is unknown.

In other news …

According to POLITICO here is the latest in the on and off romance between big tech and President Trump. His climate-change decision announced today may affect its temperature. We do not expect it to change White House views regarding Patent Reform whatever they are. At this point not only are these views unclear but high-tech seems to have many other serious concerns, especially regarding US H-1 B visa availability.

Big Tech and Trump are scheduled to meet on June 19th. ORACLE, CISCO TO ATTEND TRUMP MEETING – Add another name to the guest list at the White House meeting with technology executives on June 19: Cisco CEO Chuck Robbins, Steven reports. Oracle has also confirmed that CEO Safra Catz will attend the meeting. The Trump administration established the American Technology Council at the start of May to “transform and modernize” the federal government’s IT and digital services. Executives at the meeting are expected to discuss IT modernization, cybersecurity, data analytics and immigration, among other topics.

TECHIES’ LAST-DITCH CALL TO TRUMP ON CLIMATE. Valley heads including Apple CEO Tim Cook and Tesla CEO Elon Musk were among the business leaders who made 13th-hour calls to President Donald Trump to support the U.S. remaining in the Paris climate accords. These occured, after multiple news reports suggested that he is planning to drop out according to the Wall Street Journal. Musk also later tweeted that if Trump followed through with announced plans to withdraw from the deal backed by nearly almost 200 other countries, he “will have no choice but to depart councils.” Other major tech companies including Facebook, Google and Salesforce have put their names to a full-page ad running today in The New York Times and The Wall Street Journal, calling on Trump to “advance U.S. interests by remaining a full partner in this vital global effort.” Trump is preparing to announce the US withdrawal today. To read more etc.

Continue reading Relevant Random Developments

Sovereign Whim Redux

Our Constitution’s Article I reference to an inventor’s “exclusive rights” is not insignificant. It is the document’s sole reference to “rights” in its main body. It speaks to a source of property ownership that mattered deeply to our Founding Fathers. Influenced by the then-unconventional property theories of John Locke and having militarily rejected the King’s centuries-old sovereignty over all constituent property rights, the founders constitutionally rejected sovereign whim as the source of intellectual property rights. In his first State of the Union message, President Washington devoted considerable content to the economic importance of patents. Our patent system’s first Administrator was Thomas Jefferson. In our country’s earliest days patents were a top-of-mind civic issue. Today patent enthusiasm has retreated from civics’ front lines to the arcane redoubt of feuding practitioners, a smattering of abusive predators and the C-suites of digital platform mega-techs. Unless their constitutional origin and economic importance become better understood soon, US global leadership in the Information Age is doomed.

These are strong words. They are meant to be. Patents once were governmentally encouraged. For 200 plus years examiner conduct during patent prosecution more resembled midwifery than the adversarial preceding it has become. Applicants then were guided through eligibility’s statutory requirements of usefulness, novelty, and non-obviousness criteria. Later declared criteria judicially were applied during patent prosecution with predictability. The rejection was more like an invitation to try again, than the final result of judicial procedure. The right to obtain a patent could be waived or withdrawn by the applicant but never terminated by the PTO. Examiner workload, lax management, the complexities of digital and biologic technologies and pure politics have taken their toll on what was once a highly respected government service to our nation and its innovative citizenry. Today we are losing sight of patents’ substantial and significant role in the US innovation ecosystem. The new sovereignty established in our Constitution is being influenced by a self-serving segment of our IP community. Resultantly we are losing ground in the global race to maintain world innovational leadership.

The Revolutionary War’s battlefield promotion of property rights formerly bestowed by sovereign whim on the King’s cronies became constitutionally-established individual rights when the war ended. The King’s sovereignty was replaced by the more fragile but longer lasting new sovereignty of separated government split equally among its three branches and charged with preserving individual property ownership and the economic strength our founders knew it would impart. US sovereignty was created in our Constitution. Property protection was vested in the checks and balances provided by its three equal branches. Now that sovereignty is back-sliding to its pre-revolutionary war English ancestor not by restoring all property ownership to a royal monarchy but by enabling a cluster of powerful digital platforms to redefine patent property rights into something considerably less, called ” public rights.” The political battlefield’s demotion of patent property rights is occurring as US governing sovereignty is succumbing to a digital cabal of influencers whose powers of persuasion resemble the pre-revolutionary cronies of English potentates who once determined what was patentable and to whose charge they would be entrusted. Today’s crony controlled intellectual property law may be more nuanced, but it is no less effective. Digital economy titans are taking control by leveraging their overwhelming influence through their mastery of emerging technology; their overwhelming networked resources and their political power unleashed by the decision in Citizens United. They have cleverly contrived patent troll narrative they have directed the governmental sculpture of a new patent landscape where patent property has been devalued for everyone but themselves. The parlous results of their patent weakening influence on our constitutional sovereigns work are beginning to pile up.

Continue reading Sovereign Whim Redux