We are seeing more negative press coverage of today’s digital dominance of our giant networked platforms who employ their free user-generated information to sell ads. Their natural monopolies do not trigger traditional anti-trust regulatory response because the anti-trust law is premised on concerns about consumer rent-seeking based on monopoly supported pricing power. In most circumstances, the consumer service and product pricing offered by these digital mega-techs is cheaper. But the anti-trust tide may be turning.The EU recently fined Alphabet (Google) for using its search dominance to boost sales of its other services. Newspapers are suing Facebook and Google over unlicensed use of their content. Even if these natural monopolies do not violate traditional anti-trust law, their leverage to benefit themselves in other areas even includes Congress and the US Supreme Court. One of their methods is to solicit academic support for their lobbying objectives.They have done so with arcane patent reform by academically validating their phony troll narrative. A long, well-researched Wall Street Journal article this week examined Alphabet’s (Google’s) practice of richly rewarding academic researchers whose “views” on policy just happen to support its DC lobbying agenda.
We are often asked by readers how to explain Bayh-Dole commercialization’s importance to Members of Congress when they know so little about patent law or policy. As is always essential to conducting any successful sale it helps to begin with where the customer is. Most members favor federal research and development funding known as “R&D funding” This is an approach that has worked for us. For the past ten years, federal R&D grants have been level-funded at $130 and 140 billion annually. NIH typically receives about $30 billion. Most members appreciate and value the work of NIH whose job it is to convert that funding into economic and medical progress. After setting aside approximately 10% for its research, NIH distributes specific project financing to research institutions and universities for peer-reviewed competitive research proposals. Such grants for basic scientific research may run from 2 to 5 years. Grants include creating antidotes to “super bugs,” cures for cancer, diabetes and presently incurable diseases like Alzheimer’s. Such research may have a promising hypothesis but it is not yet proven or enough advanced to attract private sector development funding. The government begins the process through federal grants, but the bulk of the risk and expense of moving it from lab bench to bedside is assumed in the private sector. Here’s how:
For the past ten years, federal R&D grants have been level-funded at $130 and 140 billion annually. NIH typically receives about $30 billion. Most members appreciate and value the work of NIH whose job it is to convert that funding into economic and medical progress. After setting aside approximately 10% for its research, NIH distributes specific project financing to research institutions and universities for peer-reviewed competitive research proposals. Such grants for basic scientific research may run from 2 to 5 years. Grants include creating antidotes to “super bugs,” cures for cancer, diabetes and presently incurable diseases like Alzheimer’s. Such research may have a promising hypothesis but it is not yet proven or enough advanced to attract private sector development funding. The government begins the process through federal grants, but the bulk of the risk and expense of moving it from lab bench to bedside is assumed in the private sector.
The public patent skirmishes between and among ICT tech titans are fought with weaponized patents stored and deployed to protect and promote market share in a fiercely competitive global consumer arena where its incumbents’ shelf-life is short. The press covers them because they involve the planet’s largest firms whose digital platforms have enslaved us all with necessary if non-understandable, dependency. Apple v. Samsung, Google v. EU, etc. are now the stuff of daily headlines. For ordinary folks, these billion-dollar battles about obscure technology describe and define today’s patent landscape. In this exponentially evolving global competition delayed market, timing compresses profits and threatens continued incumbency. Getting to consumer shelves first is more important than getting there lawfully. But this is not the only patent war raging at present. Enter efficient infringement.
These same squabbling incumbents also are at war on a second front — their decade-old version of patent reform. This war has been fought in publicly remote Capitol Hill jungles hidden beneath a canopy of public apathy. In this separate war, the battling consumer market digital platforms are allied. Their common cause is protecting their product pricing share from the power of patented component suppliers. In this war, their concerted objective is not global consumer market share. It is about how much of their final product sales price they get to keep versus how much they must share with their component suppliers. By weakening patents through congressional and SCOTUS revisions, they weaken component bargaining power while deploying their efficient infringer business model. Their common objective is to enhance their leverage. With the now public Apple-Qualcomm dispute, this formerly hidden second front has spilled into the open. And the press is covering it. Pro-patent advocates need to understand it.
Pro-patent members of Congress who were on both sides of the aisle but were few and far between used to meet each year with a few proponent advocates to plan our defense against the big tech’s anti-patent annual onslaught. In 2013, a freshman member from Kentucky named Tom Massie appeared in our midst. He has numerous patents, is an MIT graduate, and completely understands tech transfer. A strong conservative he committed himself then and there to the pro-patent cause. He has been working the House floor itself ever since carrying his whip list in his pocket. Collectively we owe a lot to Rep. Massie. He is a firm believer in direct personal telephone contact with home state delegations, especially by universities. A few weeks ago, as a keynote speaker at an Eagle Forum Memorial dinner celebrating the relentless past pro-patent advocacy of its founder Phyllis Schlafly he described pro-patent life on the Hill as a member. Gene Quinn who was also at the dinner arranged a future meeting with Tom which resulted in an IPWatchdog interview.
Tom tells it like it is on Capitol Hill and offers common sense suggestions about making our Hill contacts count.
The opening lines of the press release announcing the introduction of the Senators Coons’ and Cotton’s STRONGER Patents Act (SPA) emphasize the bill’s important economic impact. They understate the bill’s breathtaking legal impact which is set forth in two other summary documents linked in the release; a “one pager” and a “two-pager.” Both are concise and must read. They reveal a masterpiece of common sense content designed to restore our once gold standard patent landscape to its former greatness. All three important documents are linked below. Here is a preview:
Among other things, SPA’s enactment would end PTAB’s reign of terror over lesser-resourced inventors and disruptive technology by harmonizing its burden of proof and claims construction standards with those of the district courts restoring patents’ presumption of validity while confirming patents’ property rights. Its put-up-or-shut-up one-time PTAB claims nullification process, its standing requirements and its meaningful estoppel provisions will help curb routine and abusive misuse by efficient infringer defendants against under-resourced early stage innovation. There are more equally important provisions.
Below is an excerpt from an outstanding Kevin Madigan essay summarizing the problems plaguing development investment in what was once our gold-standard US patent system. Madigan explains why development investment needed to commercialize US inventions and life science discoveries is now heading overseas. Madigan’s description of the situation is spot-on. His description of this alarming situation is spot-on, and his links are reliable and helpful. Lincoln’s famed reference to the investor’s “fuel of interest” supporting the inventor’s “fire of genius” poetically describes the commercialization process. More prosaically, after Congress appropriates its R&D funding, commercialization is where that federal funding rubber meets the road. This essay is about real statistics, sound reasoning and reliable links to opinions of patent policy experts. It demonstrates the economic importance of the Oil States case pending at SCOTUS and passage of the Coons/Cotton STRONGER Patents Act.
“Venture capital investment in the United States has declined steadily for years, as investors abandon an uncertain domestic climate for more reliable opportunities in foreign countries. In a report on the current state of the entrepreneurial ecosystem, the National Venture Capital Association emphasizes the extreme decline in the US share of global venture capital in the last twenty years, highlighting a drop from 83% of global share in 1996 to just 54% in 2015. At a time of decreasing investment, the US should be working to improve its innovation ecosystem, providing stable and effective property rights to inventors so that VCs can once again feel confident that investments in startups’ R&D—secured by patent rights—won’t just be stolen by established and better-financed infringers. Unfortunately, its doing just the opposite. Over the past decade, the US has continued to gut its patent system of the protections and incentives that attracted investment and made it the world leader in cutting-edge innovation in the first place.” Continue reading Investment Moving Overseas
Despite its Alphabet’s (Google) motto “Don’t be evil”, the EU has just tagged them with a 200+ billion dollar fine for abusively using their search service to prioritize preferred listings .
Like the other four giant digital platforms whose wealth, power and data enormity are invitations to abuse their virtually users, Google will dispute the EU fine (and its additional order giving Google 90 days to present their plan to reliably clean up their act)
“So obviously the patent claims VirnetX has used to pursue infringers such as Apple and Microsoft are not the weak patents that opponents of the patent system claim are the scourge of the system. Well — not so fast! Just because an Article III federal district court confirms the validity of a patent doesn’t mean anything anymore. Indeed, federal courts have become subordinate to the PTAB, which is as ridiculous as it sounds but sadly true. A patent is not valid until an Article I executive tribunal says so, and absolutely no deference is paid to Article III judges of the United States federal courts.”
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.
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.