Junk patents –
Often proponents speak of a few patents such as one that describes a way of exercising cats. They cite that as proof that the Patent Office has lost its ability to examine patent applications. What they don't tell you is that such patents never matter. They might be good as conversational pieces, or maybe wallpapering the den, but have little other use. They certainly are never used in litigation. Therefore, they are never of consequence.
Invention is rough and tumble. Companies who are using your technology aren't so genteel as to stop using it merely because you politely ask them to do so. The fact is, a patent is only a right to sue someone to not make your invention without permission. Unless you have the will and money to sue them, they will turn a deaf ear. Unless you have a good patent, you will not get the money. It's sad, but it's the reality of business. All this talk about patentees gaming the system with bad patents is then a hoax designed in fact to deform our patent system, not reform it.
If anyone is gaming the system, it is large multinationals. After losing in court they coerce the Patent Office into conducting a reexamination on the patents they have been found guilty of infringing. That is pure abuse of process.
Critics also like to cite patents such as NTP's which in part cover handheld wireless devices. Yet the NTP patents were litigated for years in court and found to be valid. That case only made it to court because RIM refused to settle for an amount far less than they ended up having to pay after judgment. Those patents are now tied up in reexamination proceedings at the Patent Office.
Overall, based on court rulings over the last several years, roughly half of all litigated patents are upheld in court. That's pretty balanced and suggests there is no problem with patent quality. Still, with almost half a million patent applications filed each year a few are bound to be issued that shouldn't. However, rarely are they ever an issue because as above you can't enforce them without money and you wont get the money unless you have a good patent. Keep in mind it costs the patent holder about as much in a patent suit as it does the accused infringer. Often times it costs more because in multiple defendant cases infringers will band together to share costs. Investors are not stupid. If they don't have confidence in your patent, they will not invest. It's that simple. Bad patents do not get funded.
If there is a problem with the patent system, it is not that patents are issued too hastily, but rather that many are issued too slowly. Witness the current backlog and pendency. In some sections at the Patent Office it takes 3 years or more just to get a first office action. With this kind of pendency by the time an inventor gets their patent their technology is of no value. If small entities can't get timely patents, we cant get funded. If we cant get funded, promising new discoveries will die on the vine. That is the problem everyone should be focused on – not this imaginary issue of patent quality trumpeted by large multinationals as a way to stifle innovation and further cement their market control.
There is then no systematic abuse of the patent system by patentees which would require an overhaul of the system. To the contrary, there is a reason why the patent system works the way it does. We didn't get here by accident. That's because of past abuse of the system by large companies who used their wealth and power to give small entities the run around and make a sham of the system. Take a look at the RCA/Armstrong case of years ago on FM radio as described in Tom Lewis's “Empire of the Air”, chapter 10, p313 and p356. According to Lewis, RCA ruined Armstrong with a legion of attorneys. They so destroyed Armstrong and made a mockery of the patent system that he committed suicide. Part of RCA's conduct was to string Armstrong along making him think they were interested in his invention only to copy his work and file patent applications of their own. Later they then entered into an interference against him at the patent office – a fraudulent act. RCA committed similar abuses of the patent system against electronic television inventor Philo Farnsworth according to Paul Schatzkin's “The Boy Who Invented Television”.
Litigation –
Deform proponents argue litigation is out of control, yet each year there are less than 3,000 patent cases filed in our federal courts out of a total of more than 150,000 other civil cases. Plus at least 70% of patent cases are settled before trial. How then can it be said patent litigation has spiraled out of control?
Large companies who are promoting this bill complain of the great expense they face as a result of patent litigation. Yet, as above patentees face the same expense if not more in bringing suit. Plus frivolous patent suits never occur because patentees must obtain funding from 3rd parties to bring their suit. If you don't have a good patent you will not get the money. Holders of bad patents do not file suit so they are not of consequence. How then can it be said these defendants/supporters are overburdened?
Patent Trolls –
While a clear definition of patent trolls seems allusive, it is often stated a patent troll is an entity that licenses patents they do not themselves use. Yet many of the large firms who are most critical of the practice do it themselves. Out licensing is now an important profit center of most every firm. Often, as a result they end up licensing out patents covering technologies they themselves do not use. Rather hypocritical isn't it?
Proponents of deform decry the fact that some small entities will ally with 3rd parties to defend their patents and bitterly complain this is a new innovation. However, if one looks at the 1898 Rude et al. v. Westcott et al. SCOTUS case [130 US 152, 9 S Ct 463, 32 L Ed 888] you will see that at least since 1874 inventors have been selling and partnering with other parties in defense of their patents. Without doing so, few inventors and small companies can afford to defend their patents, meaning larger competitors can easily beat them out of the market they created and run them into bankruptcy. That's big companies idea of “patent reform”. Therefore, all this present day discussion of “trolls” is a hoax whose purpose is to cut off the small entity support system and deny them any profit from their creations. Simply put, its intent is to legalize big company theft of small company creations.
Call it what you will … patent hoarder, patent troll, non-practicing entity, patent extortionist, etc. It all means one thing: “we're using your patent and we're not going to pay”.
Stifling innovation –
Large companies like Microsoft who are the principal proponents of the Patent Reform Bill tend to primarily use their patents defensively as noted at … ecommercetimes.com — Intellectual Property Not a Game: Microsoft Marks 5,000th US Patent. “Microsoft's patent strategy is largely defensive these days,” he said. “It is designed, much like IBM's, to provide something in the nature of assured mutual destruction if another operating firm challenges Microsoft on IP.”
Therefore their use of the patent system is more to protect their market share than to advance the state of the art. They are not true innovators.
For example, earlier this year according to the PACER online federal court case tracking system, IBM's name appears in the title of 77 patent cases as a defendant and in only 21 cases as plaintiff. We believe you will find that typical of all the companies favoring this legislation. In the balance, they are more innovation users than creators.
The objective of these large firms is not to fix the patent system, but to destroy it or pervert it so only they may obtain and defend patents; to make it a sport of kings. Patents are a threat against their market dominance. They would rather use their size alone to secure their market position. Patents of others, especially small entities, jeopardize that. For example, the proposed change to eliminate the use of injunctions would only further encourage blatant infringement. Any large company would merely force you to make them take a license. They would have little to lose. Everything would be litigated to death – if a small entity can come up with the cash to pursue. That's what these large multinationals are betting against.
Harmonization –
Some of these proponents speak of the need for harmonization. Why is that necessary? If others are backward would we want to modify our system just to match theirs? When one looks at the efficacy of patent systems throughout the world the US patent system has produced far more innovation than those of other countries over the last several decades. If anything, other countries should be changing their systems to get inline with ours. Rather what's going on is these large multinationals and those they have duped are using specious arguments to get what will benefit them personally.
The Patent Reform Act is the work product of a number of high tech multinational firms. It is not about reforming the system. It is about legalizing theft.
Real Reform –
If there are changes needed to the patent system, they are not addressed in the bill. From a small entity perspective what we need is 1) shorter patent pendency, 2) patent prosecution based on law – not politics, 3) competent and qualified management of the patent office free of political appointments, and 4) restoration of the teaching, suggestion, motivation basis for determining patentability. We must also restore court ordered injunctions in support of our exclusive right to practice as mandated by the US Constitution in all cases when infringement is found as was previously the established law for over 100 years. A strong and effective patent system must be predictable and available to all innovators regardless of their size. We must always remember today's market leaders were yesterday's start-ups.
Until these measures are enacted and secured, there can be no true reform. Recent changes in patent law have skewed the scale in favor of large infringers. Without a strong patent system, small entities cannot afford to innovate. Without creative small entities there will be no one pushing the big corporations who will then rely on their sheer size to secure their market share … and the public in the end will be the big loser as they will pay higher prices for inferior products and continue to lose jobs to overseas as that is the trend for the big companies. Job growth in the US has always been fueled by small firms and start ups. Unless we restore a sound patent system they and their promising new discoveries will fail and America will fail at engineering its way out of this troubling economic morass.
