The Best Post on Patent Reform (Not Written By Me, I Mean)

For years now, people have been screaming for patent reform, most notably to help get rid of, or at least neuter, patent trolls.  But then as soon as that happens, we know it will be temporary because the trolls will invent “neuticals for trolls” (and patent it) and they’ll be hard at work all over again which is why I’ve never been a huge fan of letting the government fix a problem that they created to begin with.  I think the market is the best place to kick a troll’s ass and companies like Newegg are taking that to whole new levels and OMG how hard was it to write about patent reform, and an excellent blog post about it, before jumping on that bandwagon?  VERY HARD, that’s how.

whoopass IP Trolltracker

Can of Whoop Ass appearing courtesy of Newegg.

The post in question was written by one Florian Mueller and it had me hootin’ and hollerin’ and  fist pumping so hard throughout that I kid you not, my neighbor saw me through the window of my home-office and thought something was wrong, came over and rang my doorbell, set my silver labrador retriever off in a fit of barking, and cost me an hour of productivity while we all wound down.  Thanks for that, Florian.

There’s so much gold in this post I’m finding that even after sifting, my pan is full of the good stuff.  But I’ll start with this quote, because I think it’s genius:

In all those congressional hearings on patent reform that I watched, each and every politician repeated the mantra of the U.S. patent system being key to innovation and allegedly being the envy of the world, when the reality is that it’s the laughing stock of patent and industry professionals in the rest of the world.

First off, I’m not convinced that, anymore, the patent system is the key to innovation.  Why?  Because you can innovate without patents.  You can be successful, you can launch a product (with or without funding), you can win at life without a patent.  True story.

To continue the quote:

…and no one believes that U.S. juries are qualified to determine infringement and validity issues, no one has ever disagreed with me that the Federal Circuit is generally too patent-holder-friendly, and no one has ever disagreed with me that the quality of USPTO-granted patents is generally even lower than that of European patents.

Exactly.  I said the exact same thing in October of 2012 and again in December of 2013.   I’m not knocking Joey Bag-o-donuts.  I’m saying that patent law is tricky and sneaky and full of all kinds of techno-speak that finding a “jury of your peers” in that space would require visiting Stanford or Harvard or South Texas College of Law and plucking students out of the sessions in law school that deal with IP, not sending a letter in the mail to people who live within a ten mile radius of the court house in Marshall, Texas.

Courthouse_Marshall IP Trolltracker

So pretty. Too bad the shot didn’t include the ice skating rink that Samsung built. Zzzing!

Continuing, I want to put this quote on a sandwich board and wear it on Capital Hill (when it warms up, of course):

It must be said that the correlation between patents and innovation in a country is hardly a causation of patents promoting innovation, that patents increasingly serve as a substitute rather than an incentive for innovation, and that studies linking patents to innovation are often based on circular logic, considering each patent an innovation.

See statement above.  Patents NEQ Innovation.

The whole point of Mr. Mueller’s post is, after correctly identifying the problem, to point out ways to use the governmental process to fix what’s wrong.  I don’t agree with everything on his list because that would be way boring.  But I do think he’s got a couple of points that the dialogue should start addressing if we’re to solve the problem:

  1. Don’t blame it all on the trolls.  I blame a LOT on patent trolls (mostly global climate warming change because I can tell by looking that they’re the reason for all the snow this year), and I think the behavior of using patents in sneaky and underhanded ways is deplorable and I’ll keep writing about it until they’ve all gone the way of the horse and buggy.  But we can’t ignore the fact that the USPTO gave them the stick with which to beat that drum.
  2. One size does not fit all.  Different industries require different approaches to protecting intellectual property.  Realize that, and make the necessary changes to the law to account for it.
  3. Meritocracy.  So, I can’t really paraphrase what he said here because I can’t get the words to come out right.  But go read what he says in that section of his blog post, nod your head in agreement, and come back here and thank me for calling it out.  You’re welcome.

One thing I didn’t see on his list is venue reform.  As we all know, I’m not a fan of letting the government solve the problem of patent trolls per se.  To some, that’s what “patent reform” is, killing the likes of Intellectual Ventures and Uniloc, et al.  I don’t like that definition.  If we broaden it to include Florian’s list and add venue reform so that Marshall, Texas and the judges and claims construction experts and jurors who live there are taken down a notch or ten, then I’m all about that hashtag.

Creating the patents system didn’t happen overnight, and fixing it won’t happen that fast either.  Figuring out how to start the dialog that will yield the best results is half the battle, I think.

Thank you, Mr. Mueller, for articulating it so well.

JustSayin_small_New

IPTT

{Courthouse image found here.  Can of whoop-ass found on every pantry shelf in the state of Texas.}

 

 

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Who Talked About The Law Of Unintended Consequences? Oh Yeah, Me.

Last Wednesday I had the honor of speaking (via Skype) at the Nordic IPR conference in Stockholm, Sweden. The title of my presentation was “Non-Practicing Entities and You: How To Define and Defend Against The Dark Arts”, which means that at any moment now J.K. Rowling will beat down my door, copyright infringement lawsuit in hand and I will be forced to charm her into not only not suing me for the use of her cool phrase but also persuade her to give me an autograph so that my kids will love me because y’all? I am totally not above bribing my offspring.

Wait, what was I saying?

Right, the presentation.  One of the points that I made was that there are a lot of different legislative solutions floating around in the US in an attempt to curb and/or eradicate the scourge of the Patent Troll.  Lest the EU fall victim to the same idea that the government is the best way to solve this issue (it isn’t), I wanted to point out one of the main reasons why:  The Law of Unintended Consequences.

Fresh off that opportunity, I read this article over yonder at Bloomberg and was so frightened that I had to actually cover my eyes for parts of it and read through my hands, similar to the way I watched Jurassic Park all those years ago because velociraptors.  {shudder} 

Sam-Neill-encounters-velo-001 IP Troll Tracker

MY WORST NIGHTMARE. (after patent trolls, obviously)

 

This is the part I’m talking about:

Taking advantage of new rules created by Congress three years ago, hedge funds have increasingly been filing challenges to pharmaceutical patents. Some may be angling for payouts to drop their claims, while others are shorting the stock, betting that the manufacturers’ shares will plummet.

Using the new Post Grant Review and Inter Partes Review procedures in the America Invents Act, hedge funds are extorting money from pharmaceutical companies by either filing or threatening to file for re-exam.  I’m no genius (I totally am) but I’m thinking that’s not quite what Smith and Leahy had in mind.  Looks like someone else thinks so too:

“When we developed these proceedings, we never thought people would use them this way, in an effort to move stock or as an investment vehicle,” said Bernard Knight, the former general counsel for the patent office, who was there when new rules for challenging patents were written.

This is the whole problem with making changes to laws to solve a very specific market problem. People/companies/lawyers will always find ways around whatever laws you put in their way.  Clearly, we can’t have no laws, that would be like living in back woods West Virginia.  (I can say that because I lived in West Virginia at one point time. That’s how that works, people.) The point though is that when you use the law to try and prevent one or two specific bad apples from playing the game, you end up with side effects that weren’t quite what you had in mind.  I mean, it’s right there in the article, for Pete’s sake:

The legislation had an unexpected consequence: Hedge funds, which didn’t have the right to challenge patents in court, now had a venue to bring such cases.

Giddyup.

Yes, we have been through this before. With the AIA.

 

These hedge funds are going around the court system straight to the PTAB (Patent Trial and Appeals Board) and using that process to get better deals. That’s pretty sick and twisted, no?  Or, as Hans Sauer, deputy general counsel for the Biotechnology Industry Organization, put it, “illustrative of something that’s out of kilter”.

“Out of kilter”??  Oh Hans, you diplomat, you.

This is the point I’m trying to make about legislation designed solely, or so it seems, to prevent patent trolling.  One of the points that I made in my conference presentation was that trolls are shifty and will find their way around whatever crafty laws you’re crafty enough to create.  The Hedge Fund Gods are already doing it with the last round of “necessary changes to patent law”, the AIA.

For those of you drafting new legislation, I’d ask simply: do we want to go back to that well to have more water thrown in our faces?

JustSayin_small_New

IPTT

{Scary dino pic found here. Slick beer/car chart found here.}

Wherein I Attempt To Define “Patent Troll” To Paul’s Satisfaction

There’s a gentleman who I “internet know” and we’ll call him Paul Morinville, mostly on account of that’s his name.  Paul is an inventor and holds at least one patent.  I do not have permission to share the exchanges we’ve had by email, and therefore I don’t feel comfortable getting into his whole story here.  I’ll leave that to you in the comments, Paul!

I can tell you that his concerns about patent trolls, which I’m fairly certain he believes do not even exist which is why there’s no formal definition that he will accept, stem from having his inventions used by big players in the market without regard to his actually having invented them.  From his perspective, Big Companies steal from inventors on a regular basis and therefore inventors need a way to go after them without being called patent trolls.  Even though no such thing exists.  According to him.

cover-your-ears-rapgenius

I get that, wrote about it, and didn’t bother printing t-shirts because is that even a thing anymore?  No one is arguing logically that small inventors need a way in the door to larger companies, or at least no one should be.  The Backgrounder has been a link on this blog since it began over three years ago, this is not news.  But you cannot say that because there is are legitimate businesses out there set up to help the little guy that some of those business aren’t started to help, oh, I dunno, themselves.  That’s what patent trolls are, and that’s part of what I would call an “official definition”.

Let’s not confuse “official definition” with “litmus test”.  I’ve talked with Lenny Kravets via twitter and we both agree that a single test does not exist to determine who is and is not a troll.  It would be super convenient if there were, but alas life is not that simple.  But I think that we can get pretty close to a definition of a patent troll that is acceptable to everyone, even Paul.

I’m going to give it a shot here, because that’s how I roll:

Patent Troll, n

1/  A company or individual who, using patents that either never should have been issued or are broadly constructed (intentionally for the purpose of misuse, or as a result of poor USPTO patent examination practices), sends letters to various and sundry companies and/or individuals that simultaneously request license fees and threaten legal action if the recipient fails to respond correctly by paying up and who will, in the face of inaction by a demand letter recipient, actually file suit in Federal District Court, the District of East Texas being the most popular venue.

2/ A company set up to act as a cover for large corporations who try to breathe new life into older patents which they would ordinarily let expire but, as a result of greed and/or pressure from Wall Street, have decided are ripe for assertion or litigation.

3/ Intellectual Ventures

What do we think?

I believe the reason that inventors are all up in arms about patent reform is that they think it will hurt their ability to go after larger corporations that steal their stuff.  Pulling out my broken record here, I’ll say that I once again agree that any reform out of Congress is going to have it’s butt handed to it by the Law of Unintended Consequences faster than a Thanksgiving turkey disappears.  Capital Hill is not the place to solve this problem, the market is.

There’s a recent thread over on TechDirt about how the trial lawyers are the ones who got to Harry Reid and killed patent reform in the Senate last session.  If you don’t read the comments on sites like TechDirt and Huffington Post and Ars Technica, then you’re literally only getting 1/3 of the story.  That’s where I found these gems:

Ideas can be stolen?! What next, someone will steal my feelings?! I’ll never feel again! – by Bengie

and

1) Coming up with your own idea independently is not stealing. (Even if you were not the first to ever think of it.)

2) Ideas are a dime-a-dozen, as any VC will be happy to explain, and de minimis non curat lex. (The law does not concern itself with trifles.)

Implementation and execution are what have value. – by OldMugwump

Right and right.

Though I think my attempt above is rather valiant, probably the best definition of a patent troll is similar, as I’ve previously pointed out, to the definition of obscenity:

 I’ll know it when I see it.

Maybe by using the definition above or parts of it, we can come to some agreement? Because as much as Paul would like to assert that they don’t exist, covering your ears and closing your eyes doesn’t make it all go away, my friend.  Trolls are out there, most assuredly.

Even so, having said all that, the point I made in my previous post on a definition of patent troll is still my favorite:

The way you determine whether a company is a patent troll is not by a single definition, it’s by a pattern of behavior over time, by looking at the results of that behavior and ascertaining “Is this behavior that is good for American businesses or is this behavior that gets in the way of progress?”  In a lawsuit it’s the stage where you “prove up” your case.

So how do we do that with trolls?  I’ll tell you how: we enter demand letter data and over time, the question of what is a troll, never mind who is a troll, will all but answer itself.  We build a community around how these guys behave…what they ask for in settlements, what they demand in their initial leaflet drop from their G-5′s, how they handle their claims construction when things get to litigation, the list goes on.  By looking at behavior over time we will be able to tell which companies are the real villains, and which are just victims of circumstance.

JustSayin_small_New

IPTT

{Cool red-headed ear plug image found here.}

Dear Patent Reform Haters…

If the supposed mantra from the anti-patent troll camp is that “anyone who sues for patent infringement is a troll”, then the view from the other side must be “all patent reform will drive inventors into the ground and kill us all and OMG the sky is falling!!!”  That sentence is totally worthy of three exclamation points.

Why do I over-exaggerate?   Because of articles like this by Louis Foreman from The Hill.  Oh, brother.  They are highly critical of the troll haters and I think they even said that there’s no such thing as a troll, unlike leprechauns which are of course very real and probably living in my closet as I type.  The article begins with this gem, wherein they take exception with the very term “troll”:

First, there’s the name—no one wants to be associated with something that sounds like the evil cousin of a leprechaun.

leprechaun_final_a_by_giovanikososki-d5v0q46

Zoinks! Maybe they *are* cousins?

 

Opening with a funny?  Who do you people think you are, me?  Anyway, Louis moves on to say:

For one thing, the issue of so-called patent trolls isn’t as all-encompassing as one might believe to hear the talk from Congress (not to mention the barrage of advertisements addressing the issue).  In fact, an overwhelming majority of patent infringement lawsuits from 2007-2011 were brought by operating companies.

‘So-called’ patent trolls?  Dear Innovation Alliance and all of you who retweeted the link to this article, please let me introduce you to eDekka. Yeah, I’d call them trolls and you should too if you want to be taken seriously.  From the Matt Levy article at Patent Progress:

The most prolific filer was a patent troll called eDekka, which filed 87 separate patent infringement suits. In this latest flood of suits, eDekka sued companies like the NFL, Etsy, FTD.com, GameFly, and 1–800-Flowers. (eDekka had previously sued another 70 or so companies, including Apple, Lowe’s, Walgreens, and JCPenney.)

Eighty-seven separate patent infringement suits and these guys aren’t a troll?  Look y’all, I’m on record many many times stating that I don’t think this is a problem that major federal legislation will resolve, except where it relates to lawsuits/demand letters and the things that the trolls should be required to put in.  And I don’t even think it should go too far.  But requiring that a plaintiff explain at least where infringement is alleged to occur, on what patent and in what product, is not too much to ask.  Why?  Because mounting a defense costs money, and much more so if you don’t know what you’re defending yourself against.  It is not unreasonable to expect that if someone’s suing you, you should be able to decipher why.

In other words, just because eDekka is allowed to file a uselessly vague complaint, companies like B & H are going to have to waste tens of thousands of dollars on these lawsuits.

This is the problem with trolls:  once they file a lawsuit, you’ve already lost.  Even if you win, it will come at too high a price for some companies (mostly startups) to bear.  It’s insidious and it’s mean and abberation of what patent law was created for.

Heightened pleading requirements would increase eDekka’s costs substantially, because it couldn’t simply reuse one complaint 87 times.

Why would anyone complain about this?  I keep thinking to myself “Self?  If I were so convinced that someone had infringed on my patent I would be all up in that business and list out every single instance of infringement and find a way to prove it was willful if I could (and snag those treble damages).”  Why don’t the trolls like to explain what they’re suing over?  Ooh ooh, I know this one!  THEIR CLAIMS ARE BOGUS.

Patent reform haters say

We simply want to be part of the discussion and make sure that we are not the collateral damage from a rushed and not-so-well-thought-out legislative process.

If that’s the case, then quit pretending there isn’t really a troll problem.  I’m constructing my Q&A with an inventor right now, it’s not like you guys don’t have a forum.  Just be smart about how you use it, and not say things like ‘so-called’ trolls.

Some companies are ‘so-called’ because they so are.

JustSayin_small_New

IPTT

 {Creepy trollechaun image found here.}

Troll Lobbyists Go To Washington + Goodlatte Gets Cold Feet = Coincidence?

There are a couple of interrelated things going on here which may require me to use the bulletted list feature (why does WordPress insist that bulletted is not a word?) and I’m not generally predisposed to that so this should be an interesting Wednesday.  Nevertheless, here we go:

  • Senator Goodlatte introduces a bill that yours truly doesn’t quite like.
  • A whole heap of lobbyists for patent trolls, Nathan Myhrvold and the Innovation Alliance (which may or may not be redundant, you decide)  included, show up in town and start shopping their sob story to whoever will listen which is to say they took Senator Goodlatte for a round of golf, let him win, and paid the after-round bar tab.
  • Goodlatte amends his bill to take out one of the biggest things the sorry group of whiners was crying over, namely the extension to the covered business methods provision that would have allowed defendants to request re-exam over non-financial based patents in infringement cases, specifically putting software patents in the crosshairs.

Let me ask a question:  How is it a good thing to allow the USPTO to take another look at software patents when this is the agency that granted them in the first place?  And, correct me if I’m wrong, but don’t those folks take a bazillion years to get anything done now?  Putting more things on their potential “to do” list would…speed them up?  Maybe I’m not getting it but this was a suggestion in the Schumer patent reform bill as well.  I didn’t like it then and I don’t like it now.

But at the same time, to IBM/Microsoft/Apple, all you big players bellyaching about it, I say a big fat “Are you kidding me??  You realize that by not wanting to open your software patents up to re-exam you’re effectively saying ‘it’s because they’re bad’, right?  You get that, don’t you?” Ai-yi-yi-yi-yi!

RickyRicardo-big

I understand the frustration at the fact that the big players, either as individuals or as part of a lobbying group, have stormed The Hill and stamped their little troll feet and boohooed until the thing they didn’t like was removed.  It’s awful.  But it’s also allowed  by law.  Lobbyists are a scourge, but not illegal and sometimes a necessary evil.

Patent trolling is like this as well, except for the “necessary evil” part of course.  A moral scourge but not an illegal one based on current laws.  Many of the efforts to make their behavior a matter of breaking federal law will serve only to either reduce the problem temporarily while the trolls find a way to skirt said new laws (they’re already searching Teh Google for ways to undermine the Schumer law) or it will have an as-now unforeseen affect on another part of the population that uses patent litigation legitimately and those poor saps will get lost in the shuffle.  This is why, in my never-to-be-humble opinion, broad legislation to fix the patent troll problem will create more strife than it alleviates.

Of course there are some changes to the laws that would be helpful, I don’t mean to throw the baby out with the bathwater.   Holding off on discovery, a huge cost, until after any motions to dismiss are heard, would be a great thing.  Requiring full transparency as to the owner, all assignees, and all parties-in-interest to a patent would also be good.  Force these folks to be on the up and up about who they are.  Thumbs up on that!

But going too much further to bend and shape American laws to ward off the trolls seems ill-advised.  There are things in the market like Article One Partners and their prior art searching, efforts at collecting demand letter data so that victims and targets of trolls can collaborate…those are great things.

And they’re great mostly because they don’t require government intervention and new laws and votes and lobbying.

JustSayin_small_New

IPTT

{Image of Ricky going bananas over Lucy found here.  And on a t-shirt, no less!}

You Only Need A Defense If Someone’s After You

“Patent trolls” are feeling the heat in Washington — and they’re taking steps to defend themselves in D.C.

Long pilloried in Silicon Valley as a drain on innovation, such companies have seen their troubles mount with regulators and lawmakers.

First, “long pilloried”, as used in the quoted article, is one of my favorite phrases ever, right after “Behold, I have found the stash of chocolate!”

Second, Nathan Mhyrvold’s being sent to DC to “make the case that patents benefit inventors” isn’t being 100% truthful because Intellectual Venture’s isn’t known for it’s ability to tell the truth they’re a troll.  He’s being sent there because all of the bills before congress are about to put the hurt on his business model.   It looks like the Goodlatte bill is really stuck in his craw.  They’re not saying that, of course, they’re generalizing the problem in an effort to dilute their affect on it:

The current debate about patent trolls “seems to create uncertainty around patents generally,” said Russ Merbeth, chief policy counsel at Intellectual Ventures. “From our perspective, that’s going to have a long-term negative impact on American competitiveness.

What’s a “chief policy counsel”, anyway?  When I think of company policy, I think of things like deciding whether or not to put a note on the fridge that all leftovers will be tossed by Friday noon, or setting the precedent that, though it does frequently reach 500 degrees with 1000% humidity in the summer in the armpit of the US Houston, no, you cannot wear a tank top, capris, and flip flops to the office.  I suppose in this case, the chief policy officer’s job is to deflect the real issue and talk about how these bills will hurt American  competitiveness which IV is doing , what, exactly, to help?

{crickets}

Intellectual Ventures executives have taken to the company’s corporate blog to question the “myth of patent troll litigation” and have touted the company’s role in helping startups, including Nest, the “learning” thermostat maker that has access to nearly 40,000 IV patents.

Uh, guess not.  Nest came to you so they could fight off Honeywell in much the same way that Ditto went to IP Nav to fight off 1-800-Contacts.  Nice try.

Look, you don’t file paperwork and spend $165,000 to fight something you’re not worried about.  The fact that IV and others who are part of the Innovation Alliance are worried tells you you’re close to home.

As always, I’ll add my standard disclaimer that I think the market system can solve this problem quicker than the feds can (insert shameless plug for That Patent Tool here).  But I think there are some good things in the Goodlatte bill, and I know this because they’ve got IV on the run.

JustSayin_small_New

IPTT

That New Schumer Law Proposal: How Does Anyone Think This Is A Good Idea?

I know this article about Charles Schumer’s new law came out a few days ago but I have shoe shopping to do a new product coming out so I haven’t had time to comment on it.  But may I be so bold as to comment with a giant WTH?

What’s interesting is that the bill proposes a new process by which all patent cases will get vetted by the USPTO — not just the “extortion” (his word) brought by trolls.

You’re kidding, right?  You want all patent cases to be vetted by the USPTO, who evidently hires patent examiners who “[drink] scotch and whiskey with a side of crack cocaine”, if the Angry Lawyer is to believed?  You want this same entity reviewing all patent cases?

I suppose on the one hand this is good news…all those software patents people don’t want issued?  Well, they’ll languish forever now with the patent office reviewing cases for a living.  It’s kind of like when Congress gets deadlocked: that’s a good thing because if they can’t agree?  They can’t make more stupid laws.

To quote Schumer:

“This will apple to all patent cases, but if you have a legitimate case it will go forward in a month. It just eliminates all the frivolous suits. We think it’s the best solution.”

Typo of the year goes to?  The author of the article, Ingrid Lunden, for the hilariously Freudian “apple” vs. “apply”.

But to the quote, cases will go forward in a month.  Huh?  How is that even remotely possible?  The government can’t get anything done in a month.

I’m not a fan of solving these problems through litigation, one reason for which will be readily apparent soon enough.  The problem is that you can’t out-smart these trolls with mere legality.  Whatever law you put in place, they’ll find the loophole.  It’s what trolls do.

Throwing crazy-stupid legislation together so that you can tell your corporate constituents that you are trying to solve their problem?  That’s what politicians do.  Right Chuck?

schumer

Sell your crazy somewhere else, pal.
We’re all full up here.

Just sayin’,

IPTT