Anti-IP Story Tells Only Part of It

Patent Suits are Declining, Not Increasing

A recent Reuters BreakingViews story that ran in The New York Times that says the United States Supreme Court should reverse the “mission creep” in patent law that is stifling innovation has misrepresented several key facts.

What ran on page two of Business Day in the November 18 print edition of The New York Times as “Making Sense of Patent Law,” also ran identically as “Patent Case Will Test Court” on the Times’ digital edition of Business Day, as “Patently Not Logical,” on BreakingViews.com, and as “U.S. Patent Law Mission Creep Needs to Be Reversed” on the Reuters website.

Why the different headlines for the same but questionably accurate story?

You could say it was to get maximum mileage out of the same amount of copy or it could be to convey in search engines the impression that the developments are being well covered. It also may be possible that the author, Reynolds Holding or his employer may have wanted to make sure their point of view was clearly understood before a key appeal was heard. (Mr. Holding and Robert Cole, an Assistant Editor for BreakingViews based in London, are both listed as authors for the items that appear in the NYT-owned media.) The Supreme Court heard oral arguments in Prometheus Laboratories v. Mayo Collaborative Services on December 7.

A “Broken” System 

Mr. Holding, a former ABC News and Time magazine legal affairs correspondent, explains that “The seven years of litigation [over a method patent involving Prometheus v. Mayo] are one cost of a broken system. The number of federal patent infringement lawsuits has soared, to more than 3,300 last year from about 800 in 1980. Legal experts say the suits have cost companies hundreds of billions of dollars a year.”

The use of these figures did not sound right to me and I did some checking. Adjusted for the 753 false patent marking suits (which have nothing to do with invention disputes), says Professor Paul M. Janicke of the University of Houston Law Center, the total number patent law suits (utility and design) filed in 2010 is 2,853, down from the peak in 2004. The number of suits filed annually since 2002 has been virtually flat at about 2,750. While suits are up more than three-fold from 1980, the number of patent filings and grants were up much more significantly. In proportion to patents granted suits also are down.

Patent suits remain a fraction of the record 244, 341 patents issued in 2010, about 1.2%. The vast majority settle. Those that do go to trial are under 100 cases annually. The median patent damages award in 2010 was just over $2 million, according to PwC, the lowest in the 1995-2010 time period. Because the stakes are higher some of the damages awards have been higher than in the past, but two largest, Centocor v. Abbott Labs, $1.7 billion and Alcatel-Lucent v. Microsoft, $1.5, billion were reversed on appeal. (More on patent litigation data in a future IP CloseUp.)

The Reuters item is described as “independent financial commentary and analysis.” According to Mr. Holding’s biography it was written by a former investigative reporter for the San Francisco Chronicle and a Pulitzer Prize finalist who practiced law at Debevoise & Plimpton.

Mr. Holding goes on: “But the greater expense may be lost innovation. The risk of getting sued discourages research investment and delays medical breakthroughs — the opposite of what those who devised the patent system intended.”

While delays do sometimes occur, few science or technology companies would agree that investment has been significantly discouraged by patents, or that it has delayed more breakthroughs than it has hastened, or that the patent system is not being used successfully. The U.S. system is one that others nations frequently model theirs on. An article in Genetic Engineering & Biotechnology News views the Prometheus case quite differently. Mr. Holding’s point of view is well taken, but not the garbled facts.

Commentary is Not Necessarily News

BreakingViews in The New York Times runs with the following caveat at the bottom edge of the column, “For more independent financial commentary and analysis, http://www.breakingviews.com.” Many of readers that scan page may not automatically see that this story is, in fact, a commentary, not a Times news item.

Reuters is owned by Thomson Reuters, which has a significant intellectual property practice. It bills itself as “The world’s leading provider of IP solutions.” Some of Thomson Reuters’ products and services are used to invalidate patents on behalf of defendants in litigation.

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When it comes to IP media coverage, please consider these suggestions:

(1) Read critically, separating news from news-worthy commentary.

(2) Don’t assume that all the facts provided are always accurate or without bias.

(3) Be aware of the source of the news or commentary.

Illustration source: Bowdoin College Museum of Art, as run in The New York Times

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Thomas Jefferson, the nation’s first patent commissioner, questioned patents because they provided limited monopolies. However, it also was Jefferson, an inventor and then Secretary of State, who was responsible for amending the Patent Act of 1793 to include a definition of a patent which persists to this day: “Any new and useful art, machine, manufacture or composition of matter and any new and useful improvement on any art, machine, manufacture or composition of matter.”

About Bruce Berman

IP trend spotter, consultant and author.

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