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.

The Future is Now

The future...the console, the keyboard, and the internet.

Arthur C. Clark on the future circa 1974

The Urban Legend of IV Continues

The latest estimate of Intellectual Ventures is that they now own between 30,000 and 60,000 patents.

These new IV urban legends come to us in a new paper published by the Stanford Technology Law Review.  In the paper, The Giants Among Us, Tom Ewing and Robin Feldman put on their sleuth hats and tried to figure out exactly what Intellectual Ventures owns, how they do business, and what their impact on the marketplace really is. Their paper tries to put some facts behind the legend but things still remain very opaque.  It's a very interesting read.

Personally I liked the discussion that IV uses over 1,200 shell companies to execute their business plan.  Not bad for the revenue for the States in which they organize their companies.  Nevada seemed to look good for a while.  Texas is good too for obvious reasons.  But when the patent cognoscenti are freaking out about shell companies, I feel compelled to point out that there isn't a real estate development company that doesn't use the same business model to buy and sell property assets, form ventures, separate risk on big projects.

I'm heading out to grab a latte and absorb this latest report.  It will be interesting to see what new information comes from this latest effort.

A2K Meets Prior Art

The civil society Access to Knowledge (A2K) movement has been leading a valiant fight to ensure that we all have access to information in the digital domain.  They are addressing issues large and small - making sure that the visually impaired can access digital materials through screen readers that require processing digital works to make them accessible or making sure that search engine operators can actually process works to create search indexes. Much of the patent cognoscenti I've talked to tend to look down on anything that seeks to loosen enforcement of intellectual property law.  They tend to take a very conservative view when it comes to these issues.   And most of the folks I've talked to view the access to knowledge crowd as a bunch of progressive kooks who just don't understand the rights of IP owners.

I think things are about to change.

Enter two lawsuits in which  John Wiley & Sons and American Institute of Physics are suing two leading patent prosecution law firms, McDonnell Boehnen Hulbert & Berghoff and Schwegman, Lundberg & Woessner, for making unauthorized copies of journal articles as part of their preparation and prosecution of patent applications.  The nature of action in the complaint says,

 "This is an action for copyright infringement. It arises from the
unauthorized copying and/or distribution of plaintiffs' copyrighted works by a law firm, and its professionals, in connection with their filing and prosecution of patent applications, so that defendants and their clients may reap a profit."

So what exactly was their copyright infringing behavior?

"In connection with researching, filing and prosecuting certain patent applications, Schwegman made and/or distributed to the United States Patent and Trademark Office ("PTO"), and perhaps others, unauthorized copies of copyrighted articles from plaintiffs' journals, including but not limited to those identified on Schedule A. Such unauthorized copies were used for the commercial benefit of defendants and their clients."

Basic Wiley and the American Institute of Physics are saying that when patent law firms make copy of journal articles to submit as prior art to submit with their patent applications that they are infringing the copyright.  Apparently it's not the articles that actually get sent to USPTO that they have the problem with, it's the copies of the articles that are made internally at the firms to support preparation and submission they have the problem with.  The law firms are depriving the copyright owners of their economic rights.

Wiley's lawyers aren't planning on going after USPTO because the Government has made it's position clear, submission of copies of articles as part of a patent application is fair use. Soon they will have other battles to fight with the Government as the Feds move forward on requiring that  journal articles that report on publicly funded research be made available to the public who paid for the articles free of charge.

These two law suits should be interesting to watch as the law firms who generally seek to protect their clients intellectual property rights have to form their arguments why it's ok to infringe the copyright holder's rights to support their work supporting patent applicants.

You can read one of the complaints here. (They are both essentially the same.)

Green Patent Conundrum

As a student of government policy and its impact on economics, I am always interested in seeing how government programs work and what their actual impact is.   Mike Bowman and I have been watching the USPTO Green Technology Program.   We looked at the Green Program as a way to accelerate patenting of worthy inventions despite the obvious political undertones as part of the Obama "all things green are good" agenda. Mike is interested in all matters clean and green being an environmental scientist as well as a patent geek.

What we found interesting about the program is that we worked with some folks who had technology that would have been an excellent fit for the accelerated examination process enabled by the Green Tech Program but the folks we worked with opted for the straight up provisional application followed by a non-provisional patent application a year later with the understanding it could take another 24-36 months before they got their patent.  This was fine with them.  We have patent pending status.  We have 30 months of quiet time before our competitors can figure out what we are up to (12 months for the provisional and 18 months before publication of the application.)  This made figuring out who was actually using the program even more interesting.

We also noticed that despite the benefits of accelerated examination, it seemed like USPTO was having a problem getting to the original 3,000 applications number and then added another 500 to the count bringing the total to 3,500.  So when we learned that the program was closed we were curious when the program actually closed and if they actually hit the 3,500 applications threshold.  Mike went on a mission to figure out what was up.  Here is his recap of what happened at USPTO.



Tripping Through La-La Land


The USPTO Green Tech Pilot Program has closed and is no longer accepting additional applications.

How do we know this? Because of the heading on what passes for the Program home page:

One can only assume that 3500 applications were accepted into the program, as the page does not explicitly state this, other than the ‘3500th’ highlighted in the graphic.

And what about knowing the date on which the Program closed? That information does not appear.

In an effort to track down this information, on February 25, 2012, I emailed the Office of Patent Legal Administration at the email address (PatentPractice@uspto.gov) provided at the bottom of the Program home page, asking for the closing date and total number of applications accepted into the program. One would think that would be pretty simple to answer, as someone made a decision to close it. As of today (February 28), there’s been no reply.

So, I decided to call the phone number provided (571-272-7701). I spoke with a very pleasant young man who informed me that the Office of Patent Legal Administration really had nothing to do with the Green Technology Program (to his credit he was aware that it had closed, which I found out when he launched in to a soliloquy before I had even completed my initial question to him, and he assumed that they had received a lot of applications) and I needed to contact the Office of Petitions.

I called the Office of Petitions, and was swept in to their automated voice mail system. As I did not, thank you very much, want to press a lot of buttons, but wanted to speak with a live human-type person, I didn’t press any buttons on my phone, as directed, and then had to endure the hideous noise that passes for background music (note to USPTO voice mail system administrators — get a clue. The background noise is not helpful to your clients’ state of mind). After about 6-10 cycles (it probably only seemed liked 20-30), a pleasant operator answered the phone, and, in response to my question, informed me that I would need to speak with one of the Office attorneys.

Back in to voice mail perdition.

Finally, after finishing my cup of tea, a person (attorney??) answered. After succinctly describing the two (2) pieces of information I wanted, I was informed that “We don’t know, we really don’t do anything with that Program. You’ll need to speak with the Office of Patent Legal Administration, they are the ones that handle this.” I really was very kind (really) when I thanked her for her help.

The source code for the Green Tech Program home page shows the following:

We can therefore assume (and an assumption is all it is, as apparently no one in the known universe, or least the USPTO corner of it, really has the information) that the Green Technology Pilot Program closed on or about February 15, 2012 after receiving 3500 applications. I will have considerably more to say about the Program in the near future.

Looks like the project ended in a fizzle instead of with a big bang.  We'll have to keep an eye on the inventions that come out of the program and see where they take us on our Green, Clean agenda.