Patents’ Presumption of Validity Routinely Ignored at PTO

In an IPWatchdog post today Neal Solomon suggests his recommendations for striking a better balance at PTAB between petitioners and patent holders. He concludes with the following;

“IPRs are a sort of blockage designed by infringers to attack the patent system on the mistaken belief that all patents are bad and weak. The illegitimate procedures embedded in IPRs at the PTAB show that the issue of patent quality driven by the big tech narrative is the source of many problems in the patent system. Ultimately, the costs increase dramatically for patent holders to defend a previously issued patent in the PTO, which provides a huge advantage for infringers to maintain their efficient infringement strategy of ignoring and infringing patents. The low barrier to attack patent validity undermines the incentive to invest in R&D, particularly for capital constrained market entrants, which is required for a healthy economy. Without major changes at the PTO on patent review that will introduce some semblance of due process, the IPR process will be illegitimate and inefficiently undermine the patent bargain.”
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Incoming – Take Cover

In 2013, The Innovation Act that passed so overwhelmingly in the House died that year on the Senate side. You will recall that it was designed to protect big tech’s efficient infringement business model further. It reappeared in 2014, passed Judiciary Committees in both bodies but died without a floor vote when the session ended. Recent developments suggest that it may rear its ugly head again. Congress is woefully undereducated on the workings of our innovation ecosystem. As demonstrated by the Senate Armed Services Committee’s unanimous support for Senator Angus King’s price-based Bayh-Dole march-in proposal, folks the Hill do not understand why adding politically-driven compulsory licensing based on an abstract and unpredictable price calculation formula will deter commercialization in of life science research grants. Would pre-investment due diligence preceding investment in an Alzheimer’s defeating therapy include an estimate of how long it would be before its successful development triggered price-based march-in? You bet it would.

Continue reading Incoming – Take Cover

The New “Reality”

Years ago, on Capitol Hill truth was reality. Twenty years ago, as press communications devolved into sound bites and headline-hunting, “perception” became the new “reality.” Keen DC observers noted then that “whatever wasn’t covered by the press didn’t happen” (even if it did happen). That sad state of affairs next morphed into the notion that if some action was mentioned to the press, it happened (even though it hadn’t happened). But we are now immersed in a new DC era of “alternative facts ” where truth is not reality, mere perception is no longer reality, and DECEPTION has become the new “reality.”

One of this new era’s congressional manifestations is the availability of hearings “witnesses” whose authenticity as a witness is acquired solely by their willingness to “testify” to whatever message a Committee Chair wants to put on the public record. Special interests seeking to deceive the public use them to widen their appearance of support. In the IPWatchdog post (linked below) Steve Brachmann looked behind the Oz-like “curtain” of testimony offered at a recent Darrell Issa hearing designed to revive the faltering patent troll narrative. His report is instructive.

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Issa’s Big Tech Boosters

Darrell Issa, big tech’s chief anti-patent tub-thumper is appropriately taken to the campaign contribution woodshed (below) this week by IPWatchdog’s Gene Quinn. Issa’s great self-esteem baffles pro-patent advocates because unlike most of his Hill colleagues he knows better. Issa is a multiple enforcement patent owner plaintiff. So why does he push so hard for big tech’s anti-patent agenda? Quinn explains.

A significant barrier to future House passage of the Coons Cotton STRONGER Patents Act, his smarmy disdain for the plight of lesser-resourced patent holders is a mystery, except that his next election will be as close as his last unless he raises enough big tech campaign funding to overcome his riled-up opposition. Until he loses instead of winning by a whisker, pro-patent advocates and their big tech oppressors will be holding their breath. The issue of patent progress or more setbacks is clearly at stake.

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AUTM and Google’s “Fake Views”

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.

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The Patent Wars

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.

Continue reading The Patent Wars

Has PTAB Gone Rogue?

PTAB now appears to have gone “rogue” – a term originally applied to domesticated elephants that suddenly would become destructive, but is now appropriately applied to PTAB. In the post excerpted below, IPW’s Steve Brachmann and Gene Quinn precisely outline the administrative tribunal’s recent rejection of some district court decisions with jury verdicts confirming  VirnetX patents’ validity. Such Article I outrage needs no further elaboration for us.The excerpts below from the IPW post are alarming. The post itself is bone-chilling.

“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.”

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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.

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”