Tag Archives: competition

Costs to establish clear patent ownership are soaring – Here’s why

It has never been easy for American innovators hoping to generate a return on their inventions, but new hurdles have made it impossible to license even the best patents.

Despite increased availability of capital and access to data, IT patents today have a much more difficult time proving themselves than a decade or a century ago. The vast majority of the public, stakeholders if indirectly, are not aware of the situation or its impact.

With the enactment of the American Invents Act (AIA) in 2012 and several supreme court decisions setting an ambiguously higher bar for patent certainty, licensing began to resemble scaling a high peak, with enough challenges even the most innovative business or inventor.

Two such obstacles are the Patent Trial and Appeal Board (PTAB) and inter partes reviews, created to validate patents already issued by the United States Patent and Trademark Office. Until the AIA came along, USTPO-issued patents had enjoyed a “presumption of validity,” the standard since 1952.

Second Look

In theory, a “second look” for issued patents is not a bad idea. Examinations are not always as thorough as they could be. If it were fairly applied, these re-examinations would kill any dubious patents that should not have been issued by time-constrained examiners, and affirm those that deserve to be. This would make it easier for owners to license without resorting to costly litigation. In practice, however, is not the case.

Patents that the PTAB chooses not to review, and even those whose reviews are instituted and claims affirmed, still, are rarely seen as licenseable, and are subject to subsequent IPRs and/or protracted litigation. New and even more onerous obstacles to patent certainty have added to the time and cost of resolving disputes. How much time and cost?

 

Steep Climb

The illustration on this page, courtesy of Brody Berman Associates, IP communication specialists, is an illustration of the just how difficult patent licensing has become. That is not to say that every licensor must go through all of the steps, all of the time, but many do, especially those who believe the infringement warrants significant damages or a potential licensor believes the royalty costs outweigh the expensive legal ones. Many accused infringers have the capital and constitution to withstand a protracted dispute, which can last five years or more.

Defendants who take their time engage in what is known as “efficient” infringement. For a patent holder to prove patentability, validity, infringement and damages is frequently too costly and time-consuming a climb, so why bother? For many IT patent holders, licensing without litigation is no longer an option.

From Edison to Alexander Graham Bell to Nicola Tesla, market leaders have been reluctant to accept new ways of solving old problems if it may hurt their bottom line. An expensive challenge with many impediments along the way is one way of mitigating a threat. Patents that are held by businesses and individuals but are not used (enforced) are seen as less threatening to established businesses. To them, the best patents are seen but not heard.

An overly arduous path to patent certainty not only tilts the playing field, it dissuades competition and dims the future.

Image source: Brody Berman Associates, Inc.

 

44% of top U.S. patentees for 2017 are U.S. companies; 50% are Asian

Many companies received more U.S. patents in 2017; IBM, the perennial leader, was number one for the 25th year. However, there were some notable declines in patent grants.

Canon, Qualcomm and Google were down 10%, 9% and 13% respectively. It is difficult to determine if it is as a result of poor company performance or a shift toward higher quality. Toshiba 20%, Philips 15% and Brother Industries 24%. The grant results were provided by IFI Claims. They also were reported in Law 360. Facebook at number 50 was up 49%, but on a much lower base; Toyota was up 36%, an indication that the automobile companies may be positioning themselves in autonomous vehicles and batteries for electric cars.

(Click on image for the entire list or go to IFI Claims at the link above.)

What does it mean?

Interpreting this data is not simple. Clearly, more is not necessarily better, and some patent recipients, like IBM, up 12% in 2017, frequently do not hold their grants to term. (Samsung, the largest U.S. patent holder, is a much larger active holder than IBM.)

But being able to afford patents and obtaining them with a purpose is typically a positive among information technology companies. Only 22 of the top 50 U.S. patent recipients are U.S. companies, down from a decade or more ago. Fifteen are Japanese, five Korean and four Chinese. (One is from Taiwan.) European businesses accounted for four companies on the 2017 list – the same as the number as China without Taiwan, and one fewer than Korea.

Image source: Law360.com; IFI Claims

Short-term thinking about intellectual capital weakens the U.S.’ ability to compete

A well-known economist and entrepreneur, whose work has been cited more than 120,000 times as tracked by Google Scholar, says that businesses and managers who fail to properly acknowledge the contribution of intellectual capital, including IP rights like patents and trade secrets, are dangerously short-sighted. 

David Teece, Director of the Tusher Center for the Management of Intellectual Capital, at UC Berkeley’s Haas School of Business, says “We are at a critical junction in the evolution of our society and the economy. If we continue to protect and reward just the production of tangible goods (objects), while short-changing intangibles (ideas, inventions, creative-works, know-how, relationships, etc.), we will be out of step with technological progress and the march of civilization.

“Economies will eventually stutter if the creation of intangibles is compromised through poorly designed and weakly enforced intellectual property rules.”

Brief and Keynote

These remarks were part of a brief he wrote for the Tusher Center, which can be found here. He delivered more detailed remarks as the keynote at the first IP Awareness Summit in Chicago in November. The title of his talk was “IP Rights Erosion: A Growing Threat to U.S. Economic Leadership.” For the complete Intangible Investor column, “Short-changing intangibles – is risky business,” in the January IAM magazine, out this week, go here.

Dr. Teece believes that improving awareness of and attitudes towards intangible assets ought be part of industrial and innovation policy debates. “Nations that rely on creativity,” he says, “must be vigilante in maintaining systems that permit innovation, authorship and creativity to thrive.”

For the outline of Dr. Teece’s talk, go “IP Rights Erosion: A Growing Threat to U.S. Economic Leadership.”

Image source: berkeley.edu; understandingip.org

 

Patent Reform in the Senate

Bill Language “Little Improved”

Patent reform is back in the news and those who are watching developments say there have been few. The bill now before the U.S. Senate is still riddled with problems and, if passed, they say will weaken capital investment, innovation and U.S. competiveness.

Former Apple, National Semi and Medtronic chief IP counsel, and former USPTO examiner, Irv Rappaport weighs in on the latest developments.  

Dear Colleagues, 

Patent Reform for the Gang of 15 (and the rest of America’s companies be damned) has reared its ugly head again yesterday, March 4, 2010.  It is more important than ever that you let your Congressman and Senators know your views on this “Patent Deform” legislation as I like to refer to it.

Attached [below linked] are several items discussing the “improved” language being worked in the Senate. Below also is a highlighted summary of the major “improvements,” as they are being called.  As you can see, not much has changed other than some minor wording.  None of this deals with the problem that if passed, the USPTO will bury patents because they will be more overwhelmed with work than ever with the post-grant opposition proceedings. The ever-present apportionment of damages favorite issue of the patent infringement community persists.

Best regards,

Irv
Irving S. Rappaport, Esq., CLP

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