Tag Archives: efficient infringement

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.

 

‘Innocent’ IP theft is widely accepted and dangerously viral – Why?

So widespread is IP abuse that it no longer is regarded as a crime by many of the people committing it or authorities entrusted to preventing it. 

What has happened to change law-abiding citizens and honest businesses into serial patent, copyright and trademark infringers?

Start with geometric increases in information and speed. Putting enormous computing (and copying) power in the hands of billions of people and tens of thousands of businesses has made access seamless. What’s theirs often feels like mine, even when it is not.

26069006_sA heightened sense of entitlement is another factor. People want their Rolex or Gucci bag, or latest Adele song, and they want it now, for a fraction of the actual cost if not for free. (The same could be said of the latest mobile phone chip.)

Many businesses believe that even if they did not invent a particular product feature, they definitely could have, and why should they pay for it if no one is forcing them to. Besides, someone has to identify infringement and prove it in court. Good luck with that.

Unusual Bond

Consumers and companies have an unusual bond: they know that they can freely infringe without much fear of retribution. And you know what, they think — “everyone seems to be doing it lately.”

A third but not final reason is suspicion of IP rights and owners. Patents, copyrights, trademarks all are government-issued, lawyer-administered and business-owned rights. The average person will never own an IP right and believes that benefiting from them is for the privileged or wealthy. They are only partially right. No one – not the lawmakers, not federal agencies, not the police, the schools or businesses or community leaders – has done a very good job of explaining what’s in IP for them?

Fueling the Rise in IP Abuse

“When theft is no crime” in the March IAM magazine, the Intangible Investor looks at the rise in IP abuse and what is fueling it. IAM subscribers can go here for the full article.

Free riding comes in many shapes and sizes. It is economically a threat and constantly growing. It has become so much a part of American fabric that millions of people, businesses and community leaders are not even aware that it is taking place. IP theft may seem like a victimless crime, but data shows it is not.

The Department of Commerce’s 2016 update, Intellectual Property and the US Economyreports that IP-intensive industries supported 45.5 million jobs and contributed $6.6 trillion in value added, equivalent to free-riding-final-2-768x34638.2% of US gross domestic product. These impressive results for IP holders are far from guaranteed if IP protections can be easily ignored. On the down side counterfeits, patent infringement music file sharing are way up.

Re-writing the Rules

Whether they acknowledge it or not, some companies and individuals are attempting to rewrite the property rule-book, or, at least, ignore it as long as they can. The impact may not be that readily apparent at first, but it will eventually be widely felt: by musicians, authors, inventors, investors, small businesses, consumers and companies selling products from automobile brake parts to pharmaceuticals and luxury goods – along with their employees. 

Lack of awareness plays a role in ignoring IP rights, but there may be something deeper and more insidious going on: distrust of authority and frustration with government and laws. Some of this anger has been orchestrated by anti-patent lobbyists.

Routine acceptance of IP theft also reflects the growing antipathy towards so-called ‘elites’, which led to Brexit and the election of Donald Trump. Why IP holders don’t deserve exclusivity and land owners do is rooted in how the culture views IP rights and holders, as much as the difficulty accepting their value.

People need to be reminded that with IP rights, not every restriction is an obstacle.

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I will be announcing a non-profit organization in a few weeks dedicated to addressing the lack of IP awareness and increasing hostility to rights. Watch IP CloseUp for more information.

Image source: digitalguardian.com; theCenterforIPUnderstanding

 


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