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

World IP Day

Below are excerpts from an April 26 Forbes article noting an open letter from the Online, Property Rights Alliance to WIPO’s General Director urging that WIPO becomes more engaged by fighting worldwide economic abuse of IP protection. The letter is timely. WIPO’s annual commemoration World Intellectual Property Day is fine, but it is no longer enough. Significantly, it is signed by AUTM, signaling its wider engagement in defending the IP bedrock of TT commercialization not only here in the US, but throughout our global Info Age economy. From US patent weakening to international price caps on life science products worldwide, patent protected university TT commercialization capacity is under fire. Continue reading World IP Day

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.

Saving US Basic Research

“For decades, America lost factories and jobs to China but retained a coveted title: the world’s leader in inventing and commercializing new products.  Now, even that status has been eroded, and it’s hurting the economy. While the United States is still at the top in total investment in research and development – spending $500 billion in 2015 – a new Boston Consulting Group (BCG) study released Monday has made a startling finding: A couple of years ago, China quietly surpassed the U.S. in spending on the later stage of R&D that turns discoveries into commercial products. And at its current rate of spending, China will invest up to twice as much as the U.S., or $658 billion, by 2018 on this critical late-stage research. In other words, the U.S. Is doing the hard work of inventing new technologies, and China, among other countries, is reaping the benefits by taking those ideas and turning them into commercial products, the report says.” The quote above opens a recent article in USA Today. It refers readers to a Boston Consulting Group Study confirming China’s global leadership in later stage scientific research, our country’s penultimate scientific redoubt before surrendering our early stage research to China and with it, our remaining global economic leadership. Research university administrators sadly note that talented international students and faculty are no longer as attracted to US educational institutions as they once were. They are headed for China where government R&D support is accelerating while ours declines. Venture Capital development support is following them. Administration antipathy to foreign immigration and dwindling R&D expenditures share top billing among the reasons for this dangerous development. A similar lengthy Washington Post piece quotes a Facebook entry by Rep Mike Mulvaney in which he said about a bill dealing with Zika ” No one has written to me yet, to ask what might be the best question: do we need government-funded research at all?” Mulvaney now directs the Office of Management and Budget. R&D funding is dropping here while China’s is increasing.

In China “America First” translates into “China First.” How long will it take for our research universities to mobilize an effective response? The Study is informative. Its description of “friction” hampering tech transfer is worth mentioning. But the study fails to adequately emphasize the harm to our innovation ecosystem imposed by an under-informed SCOTUS and Congress. This is a problem research universities can solve. They must smooth their TT “friction,” and they must create budgetary conflict for the Trumps cuts to R&D. MIT’s President Reif is fighting back. Continue reading Saving US Basic Research

Time to Undo eBay

Are infringed patent holders entitled to remediation as owners of the personal property? Or do valid as violated patents protect their subject matter with ill-defined”liability” theory with “attributes” derived from their structure, owner identity, or developmental stage in the stream of commercial development.? The debate depicted by this false “choice” is economically and legally debilitating. It is undermining the centuries-old reliability of US patents. With SCOTUS benches filled again our patent system’s future now depends upon reversing the 2006 eBay detour from our patent system’s history and original purpose. SCOTUS must act soon or it will be too late to save US based innovation. The Court should return our patent law to the Lockean definition our founding fathers relied on while drafting our Constitution. It is time to recall Abe Lincoln’s famous phrases about investors’ “fuel of interest” in inventors’ “fire of genius”. The fuel of investors’ interest is running low. Our innovation ecosystem is sputtering. Investment in commercializing university basic research is shrinking. For some institutions such investment public and private investment funding it is an existential issue.
eBay and its concurring opinion by Justice Kennedy signaled SCOTUS’ surrender to the misdirection of a congressional and amicus brief “bait-and-switch” campaign by big ICT tech. Its “bait-and-switch assertions have since been proven wrong. Whatever merit they once had have been appropriately addressed.  Big techs’ strategic goal was to protect themselves from the remedial consequences of their “efficient infringement”, an economically fruitful but systemically amoral business model they feel compelled to continue. Sadly they conned the Courts into killing injunctions for everyone but themselves.  Big tech’s tactical rhetoric is what infected eBay. Ever since it has contaminated SCOTUS jurisprudence. It has also led to sanctioning PTAB’s intrusive elimination of statutory presumptive validity and its unconstitutional obliteration of trial by jury. Injunctions may be commercially disruptive, but the Blackberry injunction scare never happened and besides is ancient history.
Judicially framing patent infringement remediation theory with vague “liability” theory instead of “property “theory corrodes our patent system by degrading patent value. Our ICT patent community colleagues have been selfishly pursuing “liability theory” for more than a decade. Junk science academic accusations of a “tax on innovation”, speculative theories about patent “holdups”, “thickets” and “royalty stacking” and phony litigation and troll crises are over. Global markets moving up the value chain are signaling it’s time for the US to revalue patents as investors redirect their support to China and the EU. Talented researchers and students are headed there as well.Unless our new Court changes its direction, US innovation’s competitive advantage will follow them.

Continue reading Time to Undo eBay

The Chicken or the Egg

The old question which came first, (one of life’s most perplexing riddles) is often asked about “efficient infringement” (E I) and “patent trolls ” the conjoined twins invented by ICT bigs to degrade our patent system. Inspired by Samuel Butler’s famous species preservation observation that, ” Hens are the egg’s way of making another egg”, we think it important to explain that chronologically EI was first in line. Thematically originating with the mythic tale of “Billy Goat Gruff”, the term “patent troll” was invented at Intel by Peter Detkin (who ironically now helps Nathan Myhrvold run Intellectual Ventures.) “Patent Trolls” have long and ably served; as a device to distract the IP community from EI, as a symbolic cookie easily snarfed by academic street walkers and a lazy press, as a goad for SCOTUS patent property dilution and as “shiny object” by which to engineer enactment “bait-and-switch” AIA in an apathetic Congress. Even though EI literally created them, Patent Trolls have consistently preceded E I in whatever passes for” top of mind” awareness on Capitol Hill. Having recently been labeled “unhelpful” by the FTC, the term reappeared in a recent anti-patent op-ed in “The Hill”. So, although the troll meme has grown tired, it still is being kept alive. Its more obscure E I twin lives-on as well. Indeed, E I is now more prevalent as ICT biggies get bigger, patents become less reliable and costlier, and early stage innovation retreats to secondary market’s cheaper “bird-in-the-hand” monetization. Until courts see it for what it is, EI will continue creating market demand for assertion specialists among up-stream patent holders. Demand legislation could finish off obvious abuse by bad actors. The more pressing issue is how can EI be stopped? Continue reading The Chicken or the Egg

Personal Property? Not so much!

In a recent post at IPWatchdog’s Gene Quinn questioned PTAB’s strange allowance of serial challenges to patents even after rejecting other challenges to them. Suggesting a more efficient solution he said

“One and done challenges to patents are a fiscally conservative and responsible approach to government, and the only legitimate way to treat what the Patent Act tells us is supposed to be a property right – by at some point settling title of the patent at least insofar as challenges at the United States Patent and Trademark Office are concerned.”  Within his post, Gene says ” a patent is not a property right like any other.”

Sadly, as the saying goes, “Truer word were never spoken!”

The status of patents as personal “property” has been shrinking for a decade, a trend that must be reversed if TTO’s expect commercialization to survive the trend’s shrinkage of investment capital. The Patent Act’s Sec 261 states that:

“Subject to the provisions of this title, patents shall have the attributes of personal property.”

Really? If you own a car, somewhere in your files is a “Certificate of Title” proving that you own it. Whatever your job, driving habits, use or non-use they have no bearing on your attributes of auto ownership. Under the law, all owners are treated equally. Produce a valid Certificate and you can trade it in. If stolen, it must be returned. Continue reading Personal Property? Not so much!

Canada’s “Promise Doctrine” to Continue Weakening Patent Reliability

Canada’s pernicious ” Promise Doctrine” has been upheld by a NAFTA tribunal in which Eli Lilly claimed that Canada’s unique judicially-created “promise doctrine” by which patented subject matter is strictly held to the application predicted specifics of its patent application claim even though new uses have emerged since its development and use. In contrast to SCOTUS “over-broad” concerns underlying continuing US patent eligibility, Canada’s unique requirement that the “promise” (i.e. its described future post development use) creates and absolute limitation on its enforceability for any other use. So, if a patent claim describes a process to prevent apples from quickly turning brown when cut can be similarly used for pears, its patent protection applies only to apples.

Driven by Canadian generic drug makers seeking to narrow patent protection, the doctrine is inconsistent with AIA mandated First to File patent prosecution requirements which compel early applications to assure patent protection for early stage innovation. But often during its development and use the method to accomplish A. is later found to accomplish B as well. In virtually all other patent venues the A. Patent would provide exclusivity protection to its applicability to B. Continue reading Canada’s “Promise Doctrine” to Continue Weakening Patent Reliability

Death by a Single Cut

Yesterday at the USPTO I had the privilege of serving on the opening panel of the 12th Annual Advanced Patent Law Institute sponsored by The Texas University School of Law, Antonin Scalia Law School at George Mason University and the USPTO itself. The panel was organized and moderated by Rob Sterne and former CAFC CJ Paul Michel. It included Damon Matteo, Paul Stone, Peter Detkin and Paul Evans, all of whom are prominent, accomplished investors in innovation. Our audience of more than 200 advanced practitioners, judges, and USPTO personnel, included USPTO Director Michelle Lee. For the remainder of the two-day conference, its emphasis would be to sharpen its attendees’ legal skills. But for its first 75 minutes, patent non-investability was the panel’s sobering focus. Continue reading Death by a Single Cut

Take Back the Rights

On March 9, 2017, I will be serving on a panel moderated by former Federal Circuit Court CJ Paul Michel and Robert Sterne Esq. at the USPTO. The UT Panel on the Global Patent Landscape is a well-attended, mixed assembly where patent jurists and practitioners gather to consider patent law developments and trends from a more detached and wider vantage point than daily contention with individual cases allows. Wearing my university hat, I will be joined by representative panelists Paul Evans, Paul Stone, Peter Detkin and Damon Matteo each of whom expertly exercises keystone roles in our innovation ecosystem. Sadly, although there are many pressing issues confronting the IP community our panel preparation calls have inevitably focused on one overriding issue.

Inadvertently or not, SCOTUS, Congress, CAFC and PTAB have combined to drape an iron curtain of enforcement cost and uncertainty over patent enforcement, weakening US patents to the point of risk-adjusted irrelevance. For under-resourced patent holders, a growing cohort growing larger with expanding litigation overuse of post grant process, patents’ statutory presumption of validity has become a presumption of non-enforceability. Biopharma interests may still count on patents, but incumbent ICT operating companies whose efficient infringement business model has substantially reduced patent values see their value now only as weapons to preserve global market share and/or as clubs to beat down component product pricing, daring their suppliers to assert.  In short U.S. Patents are rapidly losing their critical investment attracting role within our national innovation ecosystem. The question now is what we can do about it?   Continue reading Take Back the Rights