Ideas

An idea is like a ghost...must be spoken to a little before it will explain itself.
-Charles Dickens (1812-1870)

The Economically Significant Patent

Nothing's Easy

On April 20th, about a week ago, USPTO issued a request for comments via the Federal Register seeking input on the latest bright idea from Congress. The short version is that Congress (and the technology lobbyists) want to explore placing a secrecy order on   "economically significant" patents to protect the economic national security of the United States.

The Federal Register contains the request,  nice background information on how secrecy orders work and the impact on the patent system int he event such a program were put in place.  Here are some of the highlights.  The request:

"Pursuant to a request from Congress, the United States Patent and Trademark Office (USPTO) is seeking comments as to whether the United States should identify and bar from publication and issuance certain patent applications as detrimental to the nation's economic security. The USPTO is also seeking comments on the desirability of changes to the existing procedures for reviewing applications that might be detrimental to national security."

Let's start with the basics.  A patent is basically a social compact where an inventor gets exclusive rights to their invention for a limited period of time in exchange for publishing information about how to make their invention and how it works.  Patent 101.  Barring publication is one thing.  Barring issuance is a REALLY BAD IDEA.

In a patent system where it's already taking an average of three years to get your patent application prosecuted and where USPTO can't find enough electrical engineers or computer scientists (or chemical and mechanical engineers) to deal with the explosion of applications we are now going to ask the examiners (or some other economic types) to screen the patents for matters pertaining to their economic significance. 

"Congress has asked whether the currently performed screening of patent applications for national security concerns should be extended to protect economically significant patents from discovery by foreign entities."

What is a foreign entity?  Is the overseas operations of a US company that operates as a division of a US company a foreign entity. (Just imagine the definition page that would go along with this set of new regulations.)

And here comes the definition of economic security:

"In this context, the Subcommittee describes "economic security'' as ensuring that the United States receives the first benefits of innovations conceived within this country, so as to promote domestic development, future innovation and continued economic expansion."

Consider Apple for a minute.  They are among the leaders in patented technology.  In the early days when they were cranking out the patents that would eventually lead to their "i" take over of the consumer electronics world - iPod, iPhone, iPad, iMac, with more to come, no one would have guessed that a touch screen invention where you swipe your finger across the screen to unlock your device would have been economically significant.  That was because we were all using Blackberries.

So now we are going to ask patent examiners, who quite frankly have enough to do and probably aren't the best ones to be in the business of determining market movements, to determine the economic value of a patent.  Or we are going to create a whole new universe of innovation police who are going to figure out what is and isn't economically significant.  USPTO hasn't been able to do this on well defined areas of the economy - consider the Green Technology Pilot Program where the Office set forth a bunch of classes that were their definition of "green technology" only to have to change the criteria when the innovators showed that there are many more ways to create clean tech that were outside of the boundaries of a certain group of classifications.

What's even more entertaining is that secrecy orders are handled by the Department of Defense (DOD).  DOD has its hands full dealing with cyber security and a couple of wars at the moment.  They barely have time to determine which patents have real national defense implications.  I doubt that the US Army would have thought that remote control toy car technology used to make improvised explosive devices was significant until, well, it was.  How would they have known which technologies would wind up in the latest IEDs?  

The secrecy order stuff has much bigger ramifications.  First, who is going to administer all this?  Second, if patents are protected by secrecy orders, they have the potential to lose their priority date when the applicant files overseas.  And then there's the really disturbing aspect - not issuing the patent.  Does the assignee and the inventor need to ask the government to issue the patent?  Will the Government decide when to issue the patent?  This whole process feels like it will do nothing but slow down the process and dramatically extend the innovate to market continuum, something the feds are trying to accelerate when they are funding Federal Research grants.  

Which has a bigger impact on our economic security - protecting an application based on some arbitrary determination at the time of the filing of the application that a patent is economically significant; or losing the priority date when the US inventor (this is also something hard to define) goes to file a foreign patent application.

Also consider the metrics.  About two thirds of the patent applications don't get granted.  The invention isn't novel or non-obvious, the inventor can't answer the examiner's questions in a timely manner, or the inventor just calls it quits and abandons the application.  So we're going to add a process to make an "economic security" decision about a patent application - when?  

Based on the language in the request, it seems that the decision would be made by a third party because the inventor/assignee has the right to request that an application isn't published already.  Imaging that can of worms.  Inventor sends an application to USPTO and some agency, government bureaucrat, or overloaded patent examiner decides a patent economic secrecy order is required.  Inventor doesn't want it, government does, all hell breaks lose.  The only guys making any money at this point are the patent lawyers.  (oops...sounds like an opportunity.)

The soapbox is out.  I'm about to opine as the patent lawyers like to say...

This is once again an over reach by the Feds seeking to protect us from a boogie man that doesn't exist.  If the INVENTOR or his/her firm think that their invention has significant economic value they have two choices - maintain it as a trade secret; or request that the application not be published.  Check the box - fill out the forms - it's not that hard.

Do we really need the US Government picking winners and losers.  Frankly their track record isn't really that good.

Change is in Order

 Edvard Munch's just sold for $119+ Million!!

The patentsphere is a strange and scary place sometimes.  I thought I'd share some highlights on my various outings  if only to reassure myself that this stuff actually happens.

It all started simply enough.  An inventor told me that, "Apple is infringing my patent."

"Wow, really.  What patent is it?"

"It's my amazing turn your iPhone into a flying car patent  (an example since I don't want the inventor to be further enflamed.)

"Wow, you can turn your iPhone into a flying car.  Very beneficial here in the land of the Beltway and HOT Lane construction. Sounds novel but I've never seen any people flying over on (in?) their iPhones.  So what's the deal with Apple infringing?  How did you figure out that they are infringing your stuff?"

...Brace yourself for this one.

"My patent number is lower than theirs"

Poker face, poker face, poker face...no hysterical laughing...poker face.

"Ok, what claims are they infringing."

"The whole thing.  All of them."

"Well, what's their priority date vs. yours.  Like the basics, who had the earlier filing date."

"Apple did but I have  lower patent number so my patent came first."

And so it began.  Mind you this is an inventor who spent over $30K on patent attorneys to get this patent.  (geez didn't they do anything other than cash his checks?)  The rest of the conversation didn't go well after that.

Next enter the Potentate of Patents.

The Potentate stopped by on his way to visit the Gold Coast.

His Patentness has been investing in patent applications.  (IV are you listening?)  $500K here, $300K there.  Real money.  Structured deals where he "invests" in the application.  When the patent is issued he invests some more with the plan being to "get" his royalties after the issuance.  It's kind of a sharing of the patent equity arrangement between him and the inventor.  No I don't know how this works but some inventors are getting some really big advances on future license fees and aren't feeling compelled to explain how things actually work to His Patentness.

"What can we do to help you?"  He needed help "getting" his royalties.  Could I help him figure out who he needs to talk to at USPTO to make arrangements on collecting the royalties.

USPTO?  Really.

"Your Patentness, USPTO examines (prosecutes was a scary word for this guy) the patent application and makes a decision on whether the invention is novel and non-obvious (another word that was hard to get through - we really need an antonym.)  If it meets their criteria, you get a patent.  Once you have the patent then you have to enforce it yourself."

"Me enforce it?  How am I supposed to do that?"

Well...and brace yourself for this one... "You will probably need to hire a good patent attorney, have the patent reexamined for good measure, and then hire someone to figure out who is infringing your patents so you know who to call up to get the money.  The gun slingers we've worked with figure out who the biggest infringer is, as in the one with the most money, and then they file a patent infringement law suit against them.  While that's going on their team of trusty wingmen call the little guys on the list to share their one time special offer to settle at a lower royalty rate before the suit goes to court after which the license fees are going to go sky high."

"How long does that take?"

"A long time."

"What do you do?"

"Support the lawyers and the wingmen.  Explain in technical terms why these guys are infringing your patent"

"You mean I have to pay for this?"  (Not just us - the lawyers, the wingmen, the reexamination.)

"Yes."

"So when will I get my money?"

"Not soon."

"That's ridiculous.  What good are those examiners anyway?"

The Potentate of Patents was not pleased.

Note to self - The Potentate -  retainer, cash in advance only.

Next enter the patent expert.

"The US patent system just sucks and needs to be completely overhauled.  And, these trolls are terrible.  They are sucking the life out of innovators and taking their hard earned profits."

Now I'm seeing stars.  Ok, here we go.

"The average age of a patent being asserted, that means the one the trolls are trying to enforce and get money with, is eight years.  If it was published it's been out in public for a while, maybe 10-12 years.  Your innovators must not know how to use the internet because these patents have been around for a long time and there are plenty of tools to do a basic search and plenty of guys who can do a deep dive for you (including us).  Frankly I think the problem is that the trolls have better researchers and understand the marketplace better."

What ensued was a conversation not unlike those between Nilay Patel and Joshua Topolsky of the Verge.  Suffice it to say, it didn't end well.

And finally more wisdom from our pals on the hill.  The latest is that they want to stop publication of patent applications.  They seek to keep "economically significant" patents secret.  Aside from the obvious social contract between an inventor and the public - we'll give you exclusive rights to your invention in exchange for disclosure - who will be the arbiter of what constitutes an economically significant patent?

Did anyone think that a patent that automatically figure out whether your digital device was connected to a PC or a Mac was significant before digital cameras were a consumer product was economically significant?

Did anyone think placing an order for things on the internet using only one click was economically significant when Bezos was selling books out of a warehouse in Seattle?

Are we going to let big companies determine which patents are in the public domain and which are not?  What next, don't publish peer reviewed articles because it might let people know what the scientists found out?

Read it for yourself.

USPTO makes a pretty reasoned argument that if an inventor doesn't want to have their application published, they don't have to.  The level of ridiculousness to this latest idea is mind numbing.

So that was my week.