Kind Words are Needed Now

Republicans in Congress are having a hard time. The White House miasma rolling down Pennsylvania Ave is paralyzing Capitol Hill Republicans facing 2018 re-election. Torn at home between Trump’s solid but vindictive base and what they know is not fake news, they duck responding to presidential utterances that seem to leave them standing atop a triggered land mine. Matters got worse this weekend as WSJ’s Peggy Noonan ordered them to march through the wave to the Oval Office and tell its occupant to stop behaving like “Democracy is his plaything.” At the same time, the WSJ editorial staff ordered them to stay in place and start piling up “significant policy wins” before it is too late. Easier said than done.

The beleaguered Ryan team knows that whatever they do they are in for criticism by former friends. They know that accusations of crime and collusion will dominate the news and Oval Office attention irrespective of their policy propositions. They will need presidential help to pass significant policy and cannot count on it. They were elected to vote simple no’s not aye’s on complex health and tax reform. Gutting health care for the poor while cutting taxes for the rich is getting riskier. Too much of the base that voted for them solidly supports “their president” in spite of the leftist “Fake News” accusations. Defending the president today is dangerous when the story can change tomorrow. Walking the plank to vote for bills they know will split their former constituency and even provoke deaths threats may make sense in establishment Republican circles but not to them. Any floor consideration of “significant policy” will prompt Sophie’s Choice Democrat anti-Trump amendments (aptly called “wedgies”) that can hoist them high enough to attract political retribution from an angry base. Even in the Senate where Leader McConnell seeks agreement “within the Republican Conference” it looks like they may have to “collude” with Democrats, which for some in the base is the worst sin of all. Meanwhile, the press is lifting every rock in sight picking through swamp crawlies underneath in search of Pulitzers and “shocked ” Democrats mask their delight with feigned horror during TV interviews made more available by Republicans who have no talking points. The paralysis is real. But while nothing moves, re-election gets closer.This landscape is unfamiliar territory to us all. That makes it dangerous. We can help ourselves by thanking them in advance for protecting our nation’s innovation ecosystem.

Continue reading Kind Words are Needed Now

Confused and frustrated, patent policy experts bemoan America’s absurd compulsory licensing patent system

The following article appeared first on ipwatchdog.com.

The English language has interesting group nouns. Groupings like a “gaggle” of geese, a “murder” of crows or a “pride” of lions come to mind. Anyone attending the IIPC’s Capitol Hill Conference earlier this week might wonder if there is a group noun for a gathering of patent policy experts. We would respectfully suggest referring to such gatherings as a “confusion” of patent experts. Many Conference attendees have been on opposite sides over the years, but the experts gathered that day were in concerted agreement that the patent landscape has been carpet-bombed with confusion caused by the Courts, the Congress, and the PTO. Despite their collective confusion regarding the roiled patent landscape, as Steve Brachmann and Gene Quinn noted in their joint summary of the proceedings, there were a number of key issues where despite confusion imposed by DC decision makers, general agreement was the order of the day.

Continue reading Confused and frustrated, patent policy experts bemoan America’s absurd compulsory licensing patent system

Catching Flies with Honey

Actions that are publicly appealing in the short term can have undesirable long-term consequences when they secure privileged access to those elected to oversee their conduct. Economists call such influential access, “regulatory capture.” Elected officials often try to block it by post-election directives, but skilled special interests know how to bypass such barriers. Because Citizens United has commoditized financial campaign support, regulatory capture now must be more nuanced to be effective. When a regulators’ front door is locked rear door access can be gained by voluntarily performing “good deeds” that favor their regulators. Our efficient infringer opposition’s ubiquitous incumbencies depend on continued congressional and White House tolerance of their digital dominance. They are skilled at regulatory capture. One means is to voluntarily deploy their vast resources by making “Godfather-like” offerings “that” cannot be refused.” There is nothing unlawful about such conduct. And as the old bromide says, “you can catch more flies with honey.” But because regulatory capture is ultimately corrosive to our rule of law, it’s inevitable capture must be carefully watched.

Readers will recall how Google rescued President Obama after ACA’s initial rollout was technically botched. Google “volunteers” quickly got ACA up-and-running. Readers also may remember that to ward off regulatory capture President Obama barred all lobbyists from joining his administration. So while anti-patent academics streamed in its front door, Google slipped in the back. That Google’s anti-patent bent fit snugly with their academic patent bashing theories was then evidenced by the president’s infamous Rose Garden press conference warning America about patent trolls. Once established, Google’s many lobbyists’ White House visits and administration Google appointments (including our present PTO Director) confirmed the government’s regulatory capture.

Efficient infringement is only one of the many informational efficiencies sought by our five largest corporations. (Apple, Alphabet (Google) Amazon, Facebook, and Microsoft). Patents are a form of commercially useful data. They want all original data. Apple and Microsoft use it to sweep users into proprietary ecosystems. Facebook and Google use it to sell advertising. Amazon uses to sell, well, everything else. None of this is unlawful. Indeed, we cannot do without much of what they do. But incumbencies maintained by data mastery of digital markets call for close congressional and administration watchfulness if only because of their overwhelming size and scalability. The purpose of patent reform is to disrupt disruptive innovation and such regulatory oversight. Patent reform’s success thus far reflects the regulatory capture of much of Congress and the White House. Now we have a new president and Congress. Big tech has no plans to release its captives. Watch for new good deeds aimed this time at President Trump and Leader McConnell.

Google’s Erik Schmidt bet on the wrong presidential horse. Facebook’s Thiel is well placed with Trump but is unpredictable. At present President Trump’s strongest poll support is the public’s perception that he is saving US jobs. Jobs are scarce in McConnell’s home state of Kentucky. US jobs have thus become a priority for both men. Trump’s principal concern at present is “this Russia thing.” Whether or not it deserves it’s coverage, at the very least it pulls focus from the Trump labor initiatives including job creation. In addition to being the spouse of Labor Secretary Chow Senator Mitch McConnell is also the gatekeeper to the Senate floor where votes on tax reform and healthcare (and indeed all else from post offices to impeachment). He will determine Trump’s success or failure. He is Trump’s most prominent DC ally. With Google on the outs, it is Apple’s turn to capture the regulators. Apple’s good deed is a “twofer” because it hits on both of big tech’s congressional and administrative sweet spots.

Continue reading Catching Flies with Honey

Restoring Sanity to the Patent Landscape

Summarizing IIPC’s recent Capitol Hill Conference IPWatchdog’s Steve Brachmann and Gene Quinn highlight a consensus assertion by its numerous panelist experts. In simple terms they repeatedly asserted that patents are property and were intended in our Constitution to be legally recognized as such. Patents are not privileges granted by sovereign whim as they were in England. That John Locke’s property ownership theory influenced the drafters of our Constitution is universally accepted by constitutional scholars and historians.The Patent Act reflected it. Yet this historic differential between patent property and privilege has been watered down by PTAB and the Federal Circuit (CAFC) in recent decisions holding that patents are simply “public rights”. As such patent holders are not entitled to the basic protections set forth in the Bill of Rights. SCOTUS has declined cert in earlier appeals from Federal Circuit public rights decisions. It is again considering a cert petition in a dispute involving the applicability of Art. III and Art. VII to PTAB’s proceedings.(Oil States Energy Services) Below are excerpts from a typically thorough Watchdog post highlighting the misleading big tech troll narrative’s pernicious influence on patent property rights.

“Although many of the industry insiders at the event held similar opinions on the current state of the U.S. patent system, bringing their message to a mainstream audience has been difficult. Much of this has to do with the “patent troll” narrative that has been forwarded by the efficient infringement lobby. As Sen. Dick Durbin (D-IL) pointed out at a recent Senate judiciary hearing on intellectual property as a driver of innovation, “whoever came up with that phrase [patent troll] should get a special bonus” because it has created a massive mischaracterization of patent owners asserting their rights.”

Continue reading Restoring Sanity to the Patent Landscape

Efficient Infringement Works

Patent reform veterans agree that its proponents’ penetration of DC policy maker “top of mind” with its misleading patent troll narrative is what led SCOTUS and Congress down the primrose path to the twin disasters of eBay and AIA and everything that has followed both. Inundated with Amicus brief and anti-patent administration input, the Courts accepted Justice Kennedy’s uninformed musings in his concurrent opinion where legislating from the bench he effectively erased patents’ presumption of validity while for certain patent holders he replaced patent exclusivity with compulsory licensing. The term’s congressional use, (which the FTC described later as “unhelpful”) enabled busy salons to say “no” to a conjured bogeyman by saying “yes” to comprehensive patent litigation reform too few had understood. The tactic switched the “burden of persuasion” from patent reform’s proponents (where passing any bill belongs) to the bills’ opponents. And when it comes to arcane patent litigation that is a massive burden. C’mon man! There is no “elevator pitch” to explain why anyone running for the next election should not say “yes “to cash-laden Silicon Valley mega techs on a complicated bill the public doesn’t care about. Better to say “no” to predatory trolls. Pro-patent advocates were back-footed long before they climbed Capitol Hill.

“Efficient infringement” is economically explained in a short essay by economist Adam Mossoff. Below are its closing paragraphs. Efficient infringement may never be as effective as the patent troll meme, but it is short, it efficiently describes an economic practice that is far more prevalent than the occasional abuses of the few patent trolls that remain, and it is readily described even on the shortened elevator rides available on the Hill. Most important it is real and succinctly explains why big tech wants patent litigation revision that adversely affects ALL patent holders and not just abusers.  Efficient infringement is economically sound even though it is unlawful and morally reprehensible. Its use is an insurance policy against lesser-resourced patent holder assertion. It is time Congress and the courts said “no” to efficient infringement!

Continue reading Efficient Infringement Works

Experts Explain Troll Narrative Impact

Below is an excellent Steve Brachmann summary of the recent IIPCC conference’s patent experts’ views on the insidious patent troll narrative infecting our nation’s Capitol. Unless this virus is effectively countered by repeated reference to “efficient infringement,” it will continue to bolster in our self-inflicted institutional beat-down of US patents. Tomorrow I will forward a scholarly article authored by economists. For now however here are the comments of the experts. Below is an excerpt.

The pressure to adhere to the patent troll rhetoric was difficult for people to grasp if they don’t live within Silicon Valley, Causevic noted. He noted a conference which he was invited to speak at which changed its title from “Have We Gone Too Far in Weakening Our Patent System?” to “Where Are We in Eradicating Weak Patents?”, a radical shift in focus. “The pressure is very personal,” Causevic said, citing a paper he had worked on which found that company directors were often pressured against telling shareholders to monetize their patents as it could hurt their chances at employment with an anti-patent tech firm later on. As Taylor would add, this pressure affects the “tens of thousands of little companies started by entrepreneurs” in that region which live under a cultural overhang created by the large Silicon Valley entities. Continue reading Experts Explain Troll Narrative Impact

Fundamental Incongruities of PTAB Operations Affect the Integrity of the Patent System

This article appeared first on ipwatchdog.com

The first 100 days of the Trump Administration have now come and gone. So far, they have not revealed much more than the obvious fact that there is a significant disconnect between President Trump’s 4-year re-election objectives and the 2-year re-election timetable of House Republicans. Retaining their seats is job one for both. The President believes that will require Republicans to enact legislation on the issues central to the President’s campaign and the party Platform; issues Republicans have been complaining about over the past eight years.

The mismatched re-election priorities of Republicans can be expected to continue roiling Capitol Hill throughout the remainder of 2017 and likely into 2018. With healthcare and tax reform likely to take up much of the summer oxygen in Washington, DC, and into the fall of 2017 when insurance premium hikes will be announced again, what, if any, signature Republican issues will be addressed remains in significant doubt.

With small ball policy left far behind by both inter-party and intra-party politics, what will the current state of Congressional legislative enactment capacity mean for patent reform? An argument could be made that so much energy will be placed elsewhere that matters of peripheral importance in the greater scheme – like patent reform – will receive no attention. But intellectual property generally and patent policy more specifically tends to be an apolitical issue where ideologues on both sides of the aisle can reach agreement. Without knowing how the cards will fall, and given that those who perpetually seek patent reform are once again working the halls of the Capitol, prudence suggests that those with a pro-patent vision remain ever vigilant.

Last week IPWatchdog.com explained why eBay, Mayo and the creation of the Patent Trial and Appeal Board to hear post-grant challenges to patents were the three most significant legal causes of today’s patent crisis.  The common thread that led to each “event” was a brilliant anti-patent strategy that converted policy maker apathy towards patents and our nation’s innovation ecosystem into a belief that simply stopping a few bad actors by passing comprehensive patent litigation reform would solve any ills.

The patent troll narrative has worked well. Indeed, at a recent hearing of the Senate Judiciary Committee Senator Dick Durbin (D-IL) quipped: “Whoever came up with that phrase should get a special bonus because they manage to mischaracterize anyone who goes to court to assert patent rights as a troll…”

The beauty of the patent troll narrative was it took little time to absorb and instantly painted a pejorative picture in the minds-eye of the listener. It became easy to repeat. Its bumper-sticker simplicity led to widespread usage, which ultimately (and quickly) became accepted as fact without much, if any, critical thought. Most important, the strategy by-passed the arcane complexity of its convoluted subject matter by shifting the burden of Congressional persuasion to its victimized and under-resourced opponents. Politically outmatched from the start – inventors and innovators had, up until this point in our history, always been held in high esteem were overwhelmed. That suddenly changed with the patent troll narrative and inventors became persona non grata, even viewed as evil and villainous. Indeed patent reform’s innate obscurity was its most important ally. Few knew more than the patent troll narrative, so as it was often repeated people unfamiliar with patents on even the most basic level became horrified by the myth the narrative painted.

Over the next 100 days, patent reform’s obscurity may become the enemy of patent reform instead of its ally. After all, if the public isn’t interested in patent reform why should President Trump spend time on the issue? Moreover its proud parent, “efficient infringement,” has now become the enemy of Trump’s conservative, property-devoted base. Patents are property rights as has been recognized by the U.S. Supreme Court for over 100 years and as stated explicitly in the Patent Act. Nevertheless, the patent troll narrative has returned to Capitol Hill. Even with more pro-property right, security-conscious, conservative allies than in previous cycles patent reform opponents, who 500 days ago rallied loudly enough to make HR 9 too controversial for pre-campaign enactment, must rise again.

Expect big tech and its leftist bed-fellows to exert more effort to “de-propertize” patents on Capitol Hill and in the courts. Expect to hear that every patent holder who protects her lawfully established exclusivity by responding to efficient infringement in courts to be called “ambulance chasers.” Expect proponents of reform to mischaracterize patent reform as a step towards tort reform, which is nearly comical given that the tortfeasor in the equation is the party that is trampling on the property rights of patent holders through infringement, which is many times purposeful and willful. Expect lobbyists for Main Street retailers to again be flattered by attention from big shot Silicon Valley lobbyists and support their latest version of the anti-patent, anti-property right patent troll narrative. Expect new academic junk science and more speculation by professorial patent policy “experts.” Expect the USPTO to praise the PTAB’s star-chambered repression of so-called “bad patents.” Expect efficient infringement to continue while the courts and Congress are asked to dither over patent trolls.

We must explain the truth to those who understandably drank the patent troll Kool-Aid and believed that Silicon Valley’s tears for Main Street retailers were real. Efficient infringement’s cheaper, faster, better economics compel its continued deployment. The patent troll narrative has distracted Congress and the courts from seeing how it protects incumbency for our nation’s most dominant big caps by diluting investability in new technology that might one day unseat them. The patent troll narrative’s flaw is that the repressive litigation it supports applies not to a few remaining patent abusers but to ALL patent holders, especially startups who produce the most jobs.

The efficient infringement narrative is no more complicated than the troll narrative. The patent troll narrative just reached the Hill first, which means the story of efficient infringers trampling patent property rights, though perfectly true, has a tougher road given it must not only gain its own traction but it has to undo the damage caused by the misleading patent troll narrative.

To be re-elected Congress may need to focus on less obscure issues this year than patent reform. But if party leaders choose to consider patent reform the bill will be driven by the patent troll narrative, not its content. Pro-patent Senator Chris Coons (D-DE) has wisely reminded us that Congress likes to learn through stories. Patent reform’s proponents will again bypass content explanations by repeating the patent troll narrative. Pro-patent opponents can respond with their own efficient infringement narrative. Let proponents then explain the contents of any bill in simple, easy to understand terms. Let us work to put a face on efficient infringement, which has ruined so many inventors who have seen Silicon Valley giants make so many millions of dollars infringing patents after taking technology originally invented by individuals and small start-up businesses who never had a chance.

 

Patent Decline’s Top Causes and US Chamber’s Plea for Increasing its Strength

In his World Property Day post, IPWatchdog’s Gene Quinn predicts continued but not permanent decline for US patents after naming its three top contributors. His typically insightful prose pulls no punches and IMHO correctly identifies the decline’s legal culprits and their consequences. But in IMHO he fails to give due credit is to the influence of the ubiquitous Patent Troll narrative created first at Intel then brilliantly injected into the minds of congressional, SCOTUS and PTO lawmakers. Propagated by unsubstantiated law journalists’ speculations, bogus economist projections, misleading falsities to a lazy, uninformed press, occasional anecdotes and the over-anxious suspension of disbelief accorded to the Silicon Valley vanguard of the Information Age, its self-serving shiny object distraction penetrated DC policy top of mind. Its “litigation crisis” theme delivered it to sympathetic Judiciary Committee salons, an under-informed Supreme Court and a politically pliable PTO. Fueled by Amici blather Justice Kennedy’s injection of trolls into eBay blessed it. PTAB was presumably established to curb trolls. Mayo’s expedient nullifications based on expanded eligibility grounds reflect the story’s so-called “bad patents” allegedly wielded by patent trolls. The patent troll narrative was conjured to protect the efficient infringement that compelled the cut-throat competitive smartphone markets. Indeed, efficient infringement inevitably helped create them. The troll story masked efficient infringement and perpetuated because it has worked so well and will be needed still. Mega-tech wars among big tech peers may someday shift to cars and IoT. But big tech’s need to push down patented component costs and infringe their patents will remain. The troll narrative was an early avatar of alternative facts and fake news. It will be hard to extinguish. But until the troll story is snuffed out by targeted legislation and thoroughly debunked by public disbelief, today’s decline in patents will continue. Yesterday offering “the other half of the story” the US Chamber of Commerce issued a statement strongly supporting our economic need for strong patents saying:

“Over the past decade, a growing number of academic and industry researchers have been exploring the relationship between patent protections and innovations, particularly as it relates to technology startups. What they continue to find is that patents and other intellectual property protections are absolutely vital to supporting innovation; in fact, many of the technologies and innovations we take for granted today would never have come to bear without patents.”

Amazon’s Groceries, Mega-Cap Convergence and IPR

C’mon man! Amazon has metastasized into groceries! Here’s what’s happening: the Mega-caps are converging.

Your Google IoT control device realizes you have just closed Windows on your Mac. After checking with your fridge, she tells your Apple watch to order-out a home-delivered meal for a pre-planned dinner with a Facebook friend you mutually calendared in Microsoft’s cloud to coincide with his visit to your area. Ranked lists of meals you each have “liked” on Facebook are separately crossed-checked in Microsoft’s cloud are sent to each other’s devices. When the excellent match is found, it orders both your meals from Amazon, prepays with Apple Pay, and schedules delivery to your door by a drone one hour after your friend arrives in his self-driving Google car. During dinner, your IoT devices are busy receiving Amazon and Apple offers for discounts on a movie to be aired during the next 5 hours. Meanwhile, Google offers your friend a self-driving automobile pick-up ten minutes after dessert. You get the idea. You can sense the future of our world is just over the horizon. The mega-caps will one day control the entire consumer landscape. Their anti-patent onslaught is a symptom.

Alphabet, Amazon, Apple, Facebook and Microsoft are now America’s five largest firms by market cap. Their market power is already overpowering. Their incumbency is threatened only by each other. Their combined profit last year was $93 bn. While they were controlling Congress during the last decade, they swallowed whole 519 smaller firms. They undoubtedly smothered countless others by efficiently infringing their patented IP or by attrition if any dared to sue. Working with SCOTUS and Congress as allies they are preserving market monopsony by crushing or absorbing disruptive technology and pushing patent reform to beef up profits by beating down product component costs. But their DC alliance is uneasy. They are swirling into the converging vortex of multiple diverse product control within the marketplace. When they meet, some cannot survive. Thus, each must soon decide when and how to kill or capture the others while today’s business-friendly administration is in power.

Meanwhile as reported in today’s WSJ “Once-Flush Startups Struggle to Stay Alive.” Venture capital for US startups has declined by 30 % in 2016. In the two preceding years, 5000 U S tech startup firms raised about $75 bn., with 294 of them obtaining at least $50 mil. But since three-fourths of those have neither been acquired nor raised and capital.

These investment facts that matter. They tell us IPR is harming early stage investment. They are neither “patent/troll” narratives conjured to stampede an under-informed Congress nor are they AMICI blather intended to mislead SCOTUS into worrying about patent trolls instead of their political and market power. What matters is the growing scarcity if capital for disruptive early stage innovation for those who need it most. Only so-called “unicorns ” can afford to risk a fight with the reigning five. Time is running out. Director Lee’s recently announced review of IPR “records” and PTO’s dialogue with IPR “users” in her misdirected search for IPR “fairness etc.” will not reveal this reality. Investment trends are real, and they are relevant to patent policy. PTAB’s contribution to our economy is not worth its cost. Congress should declare IPR’s victory over “bad patents” and repeal it.

Our Patent System Needs More Than An IPR Fix

Under Secretary of Commerce, Michelle Lee has begun an initiative to further shape and improve PTAB  Her Senior Advisor at the PTO will be “coordinating this effort.  Because her tenure is ending soon her post grant “effort’s” timing has caused some to wonder whether she plans to fix AIA’s second windows or to preserve them. Whatever her unspoken motives, if any, an official in-depth review of PTAB’s past performance is warranted. But is the PTO looking in the right places?

Continue reading Our Patent System Needs More Than An IPR Fix