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 The right to obtain a patent could be waived or withdrawn by the applicant but never terminated by the PTO.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

The Truth Behind the False Patent Troll Narrative

As we approach this month’s end, please consider reading and saving a revealing and credible May post by IPWatchdog regular Steve Brachmann. Linked below, it recounts a recent Washington DC presentation by former Cisco CTO Charles Giancarlo in which as an ex-Cisco insider he presented the facts and laid bare the truth behind the false patent troll narrative still distorting the views of DC’s policy makers. Beneath his post’s headline, Brachmann summarized his presentation by quoting Giancarlo’s revelation of the truth, “Let’s call patent reform for what it is: a blatant economic power grab by tech firms to infringe on technology created by others.”

Giancarlo’s presentation persuasively supported this rare admission, opening with a quote by Sen Durbin during an early May Senate hearing on patents praising the efficient infringer lobby’s false “patent troll” narrative by saying: “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. What I came to understand was one man’s patent troll was another man’s assertion of a patent right which they fought for and worked for years which is now being infringed upon by some giant.” Combining insider knowledge with relevant data Giancarlo explained why the Senator was correct.

Giancarlo noted that the infringer lobby’s “proposed solutions don’t even address the false narrative.” His data-backed refutations of the efficient infringer lobby’s “alternative facts” were compelling.

Continue reading The Truth Behind the False Patent Troll Narrative

USPTO Fee Diversion

In a quick release, Gene Quinn explained that the USPTO got what it asked for in the Trump budget. There appears to be no fee diversion. The House will begin the process anew anyway so it may be too early to expect fee diversion to end in our lifetime. As Gene puts it:

“Under President Trump’s FY 2018 budget the USPTO will receive $3,586,193,000 from fees collected and to be available until expended. This appropriation would result in $0 being provided to the USPTO from the general fund of the United States. Any fees collected by the USPTO in excess of that amount would be deposited into the Patent and Trademark Fee Reserve Fund and remain available until expended. There does not appear to be any mention of any fee diversion anywhere, which would mean the USPTO has dodged the fee diversion hands of an often greedy federal government who over the last 30 years has frequently diverted user fees to other purposes.”

The other budgetary language quoted below is either routine or an indication where underlined that the anti-patent curtailing of frivolous lawsuits interpretation justifying PTAB has been affirmed by the administration. We will just have to wait and see.

“Requested funding for 2018 will be used for examining patent applications and granting patents. USPTO will continue its aggressive patent pendency reduction agenda to reduce overall pendency and backlog; continue to enhance patent quality; ensure optimal information technology service delivery to all users; improve the appeal and post-grant processes, and improve intellectual property protections worldwide. The Budget supports USPTO’s administrative efforts to address abusive patent litigation practices and repeats the President’s call for Congress to enact legislation that promotes greater transparency in the U.S. patent system and prevents frivolous lawsuits that stifle innovation.”

To read Gene’s timely post on the issue, please visit our always free website at ipstrategic.com

USPTO gets $3.6 billion in President’s FY 2018 budget, avoids fee diversion

AAMC Acts Collectively to Rescue NIH’s Commercialization Mission

On the day the president’s budget was released this week 300+ medically engaged entities and associations nationwide, the backbone of our nation’s biomedical research ecosystem including many universities, disease advocacy groups, and medical centers, signed a full-page ad in the WSJ and POLITICO. Sponsored by “The Ad Hoc Group For Medical Research” and paid for by the Assoc. of American Medical Collages, its purpose was to thank Congress for its recent increased support for basic medical research. Ascribing US medical and economic strength to congressional bipartisan medical research, its content was straightforward and simple.

“When it comes to the Nation’s health
There’s One thing we can all agree on
Medical research Makes America Healthier and Stronger. ”
“LET’S KEEP THE PROGRESS GOING. INCREASE FUNDING FOR NIH BY 2 BILLION IN 2018.”

IP Strategic gratefully salutes this concerted effort to come to the rescue of NIH’s critical role in our life science innovation ecosystem.

Within our national health care ecosystem, NIH is the bridge between congressional R&D public investment in otherwise uninvestable life science and private sector development of its commercially promising results through Bayh-Dole directed commercialization. The ad’s focus is the NIH’s bridge’s on-ramp of congressional R&D funding. For the ecosystem to work the commercialization bridge’s off-ramp of private sector investment and development also must provide public benefit with its therapies, jobs and economic development. Off-ramp commercialization requires private sector investment which in turn requires reliable patent protection. Support and direction of commercialization bridge traffic flow is NIH’s mission. That bridging mission is undercut at its entry point by the Trump budget and effectively undermined at its exit point by patent uncertainties created by Congress, SCOTUS, and the USPTO. Here are just a few: Continue reading AAMC Acts Collectively to Rescue NIH’s Commercialization Mission

SCOTUS Issues Heartland Decision

The defense venue rule in patent cases had been that suits must be brought in the state where the defendant resides or where they have committed regular acts of infringement and have a regular and established place of business. In Heartland, the Court focused on the “resides” portion of this test. In 1990 the Federal Circuit ruled that patent actions also could be initiated in any venue where the defendant conducts its business. Patent suit venues were thus treated differently for more than 25 years. No more. SCOTUS has ruled by a vote of 8-0 that the special rule for patents should be narrowed holding that its “resides” prong means wherever the domestic corporation is incorporated. SCOTUS thus has overruled the Federal Circuit’s broader rule regarding venue. Henceforth plaintiffs relying on the reside prong of the test will have to bring their actions in the defendant’s state of incorporation (which often is Delaware). The regular acts of infringement or permanent place of business prong were not affected. Until now “doing business” especially in the digital age had meant they could be brought virtually anywhere and had led to forum shopping.

Justice Thomas writing for the Court said concerning venue based on party home location as distinguished from their infringement activity: “we, therefore, hold that a domestic corporation ‘resides’ only in its State of incorporation for purposes of the patent venue statute.”

We consider this decision to be another setback for patent holders. The infringer lobby has long complained that the Eastern District Court in Marshall Texas of being a haven for patent trolls. That particular venue was not at issue in this case, but most consider that the Texas court’s conduct was what this case was about. The Marshall court both moved too fast in the opinion of anti-patent infringers and ruled too often in favor of plaintiff patent holders. Anti-patent infringers will characterize it as a setback for patent trolls, but of course, it applies to all patent suits. Stanford professor Mark Lemley authored a brief for 61 economists emphasizing these issues, reiterating the troll narrative that dangerously seems to have become the prism through which SCOTUS now views all patent cases. It could be considered the final troll abuse to be addressed and end the patent troll narrative’s repeated harm to early stage innovation. But do not expect big tech to relent. Because efficient infringement tactics traditionally include the imposition of attrition through stalling and delay, the decision is another significant loss for all under-resourced patent holders, the usual victims of the anti-patent troll narrative. Big tech still values that capacity. This decision will more likely be seen by them as an invitation to seek more anti-patent costs sanctions in Congress.

So here we go again. Senator Hatch has indicated earlier that he wants to introduce venue legislation, however, Heartland was decided. To be sure Senate Judiciary is busy but there is always time it seems for Chair Grassley to respond to the wants of Silicon Valley. The decision is below. Any bill introduced in the House for any purpose or that passes the Senate will be before the House Judiciary Committee anxious to revive portions of the Innovation Act. Rep Goodlatte’s supportive Statement (below) suggests that the Innovation Act’s punitive sanctions are still alive.

Continue reading SCOTUS Issues Heartland Decision

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

The Frightful Five

Economist Farhad Manjoo’s NYT column yesterday discusses public and private funding basic scientific research, a subject about which research universities and all US citizens should genuinely be concerned. Congress now funds basic research through annual R&D appropriations of $140 billion to grant agencies who distribute research grants in response to proposals for basic research. Under Bayh-Dole (B-D), promising discoveries may be patented, then commercialized through public-private partnerships that require fulfilling specific societal obligations. Research universities are appropriately concerned about the continued viability of today’s R&D funding dynamic. At a time when funding increases are needed, Trump has proposed R&D budget cuts and unfunded tax reform. And, to make matters more perilous, deficit-hawk budget concerns combine to jeopardize such funding.

Manjoo references the 60 billion annual expenditures of our five largest corporations commonly referred to as the “Frightful Five” (FF) — Alphabet, (Google) Amazon, Apple, Facebook, and Microsoft. Highlighting Google’s efforts “to inject machine intelligence into much of the global economy” he notes that total FF non-defense spending on AI and other basic science is exceeded by annual congressional spending on non-defense basic science research by a mere $9 billion! Add in other privately conducted research and the private sector is outspending the public sector on basic research. Manjoo’s article is non-judgmental. He even references to the joint op-ed by Google’s Erik Schmidt and MIT’s President Eric Lander urging more R&D spending (see my article here). But curiosity-riven basic research is non-investable but imperative to technological and biomedical progress. Corporate basic research is a very different animal.

Nevertheless, a likely take away by deficit hawks from the Manjoo article is that since funding basic science research is so prevalent in the private sector, why not move all of its there? He wonders what would happen if we eliminated our government’s investment in non-defense basic science relying exclusively on the private sector. He leaves the question unanswered but effectively asks why the government should pay for it if both are taking it in the same direction? We will surely hear this argument again. By themselves, the FF expenditures alone almost equalize it. Could our annual federal non-defense spending of $69 Billion be put to better use? The simple answer is a resounding “no.” Increased federal spending is crucial if research that does not offer an adequate return because of its nature (like antibiotics ) or doubtful patent durability (resulting from uncertainty). Research universities can not let such an elimination happen.

Read on to see what we know that Manjoo doesn’t.

Continue reading The Frightful Five

Joe Allen’s Take on Price Controls

Whether the subject is Bayh-Dole price-based march-in or other government schemes to control the final pricing of privately developed products emergent from the commercially promising discoveries made possible by federally-funded life science research, Joe Allen knows what he is talking about. NIH’s mission is to see to the commercialization of such discoveries so they can become available to the public that invested in it through congressional R&D appropriations. Such curiosity-driven basic research is otherwise uninvestable. What cannot be commercialized cannot become available. This disconnect will lead to the further diminution of R&D funding for such research. However well-intended, governmentally imposed price controls deter private sector for-profit investment. This is not a theory. It is a historical fact confirmed by CRADA pricing experiment explained by Joe in his article below. Fast forward to the present. Joe’s conclusions are being confirmed now. The private sector investment withdrawals triggered by SCOTUS’ Mayo and Myriad decisions is happening now. These Sec 101 eligibility judicial missteps have created unacceptable uncertainty, not only in the life science areas treated in the actual decisions but regarding all life science “discoveries” the examiners and Courts are declaring unpatentable. Life science commercialization has never been more needed. It has never been more perilous.

As Joe Allen explains below there are better ways to skin drug pricing’s cat than crippling life science investment in applied development that is definitionally different than the hoped for curiosity-driven discoveries that made its profit-directed development possible.”Many in Congress want to impose price controls on medicines that result from

“Many in Congress want to impose price controls on medicines that result from federally funded research. We’ve tried this before, and it nearly brought medical research and development to a halt. Lawmakers aren’t wrong to want to lower drug prices, but they should find a strategy that isn’t a proven failure. These policies would have terrible ramifications for the future of National Institutes of Health-supported research and development while harming those suffering from the ravages of disease.Responding to congressional pressure in 1989, NIH officials incorporated a form of price controls known as a “reasonable pricing” clause in its licensing agreements. In short, they didn’t want to let private firms build upon publicly funded discoveries to commercialize resulting products unless the government had a say in pricing decisions. Their actions were well-intentioned. By placing conditions on medical patent licensing agreements, they hoped to decrease drug costs for consumers. But the results were disastrous.”

Here is Joe’s Fierce Healthcare article.

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