Tag Archives: innovation
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Experts: Void from U.S. patent “train wreck” is being filled by China’s patent system

In a few short years China’s patent system has gone from an IP rights wannabe to one of the most responsive and patent-friendly systems in the world.

Leading U.S. IP experts say that underlying this rapid evolution is a desire for China to become a science and technology powerhouse, with the ability to create new and formidable industries that employ many of its 1.4 billion people.

“China wants to be an innovation leader for multiple reasons,” Irv Rappaport, former Chief Patent Counsel at Apple and National Semiconductor, who served on the Uruguay Round of GATT, told IP CloseUp recently. “It is fascinating to see how the U.S. patent system is imploding, while the Chinese system is exploding with activity and purpose.

“For more than a decade the U.S. has been emasculating its patent system, while the Chinese have been studying it and adopting the benefits of a well-coordinated and fast-moving one. The U.S. has gone from being on the global cutting edge in IP in the 1990s, to becoming a patent backwater, because of a well-heeled, anti-patent faction among technology companies that want to stifle competition.

“Train Wreck”

“China has watched the U.S. train wreck and is moving fast to fill the void,”continues Rappaport. “It wants to become the world’s ‘Eastern District of TX,’ that is, a fair and fast adjudicator of disputes that respects patent holders’ rights. China will soon be the world’s largest economy with the biggest population and a middle class the size of England, France and Germany combined. Their commitment to innovation can not be ignored.”

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Peter Holden, CEO of ipCreate and former managing director with London-based Collar Capital and a founding executive with IP Value, has worked extensively with Asian companies and patents. He has traveled to Korea, China and Japan more than 100 times over the past twenty years. “The Chinese have learned from the U.S. and are sincere about making their IP system the best — one that will encourage innovation and help their nation to become the economic leader. It is not merely a thought. It’s an idea that they are dedicated to.

“China’s attitude towards foreign patent enforcement may not always be as generous as it is currently. It knows that it needs to bend over backwards to be fair if it is to be taken seriously on a global scale. To encourage competition there needs to be a level playing field.”

Counterfeits Still Rule

But China’s record on counterfeits is poor, with everything from luxury goods to pharmaceuticals sold domestically and exported globally. According the U.S. International Trade Commission, Chinese theft of U.S. IP in 2009 alone cost almost one million U.S. jobs and caused $48 billion in U.S. economic losses.

“Counterfeit goods are still an issue for China,” says Erick Robinson, a patent attorney in Beijing and author of Defending a patent case in the brave new world of Chinese patent litigation, in the current issue of IAM magazine. “However, sales of fake goods are no longer openly accepted and the government has been on the war path trying to stop them in different ways. Authorities know that in order to be taken seriously about IP rights, they cannot ignore the problem of counterfeit goods.”

For a prior IP CloseUp post summarizing the Robinson article, go here.

“Go-To” Jurisdiction

China is just beginning to build its giant tech companies. They have succeed with Alibaba and Huawei, and acquired Lenovo from IBM, which is now a $45 billion (USD) business. Their big businesses currently have less to lose from strong patents and quick dispute resolution than those in the U.S. and Europe. To create successful businesses and attract investment, incentives need to be provided, and strong patents and a reliable legal system for adjudicating disputes are great for encouraging that.

Perhaps when China has as many big tech players as the U.S. it will start to think more defensively, but for now it is the perfect setting for encouraging new ideas with strong patents and courts that make it easy to obtain injunctions.

“It’s interesting that the Chinese are encouraging large foreign corporations to sue non-Chinese companies in China,” opines Rappaport. “This suggests that they are looking to become the patent litigation go-to jurisdiction.” As their innovation grows and becomes more complex, I believe they will have less interest in exporting cheap knock-
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offs.  Their IP path is similar to that followed by many of today’s developed economies, such as Japan and South Korea.  You start off copying others and gradually move to internal innovation.”

Despite China’s success in facilitating stronger patents and more decisive courts, a huge question is just how prominent a role will patents play in new companies in a data-driven information age.

“Given the accelerating pace of technology development and nature of discoveries, which are frequently software driven, it’s not clear whether existing patent systems can remain relevant in the longer term,” says Rappaport. ” This effect may partially explain why patents currently seem to be less relevant in the U.S.  It remains to be seen whether this is a longer term development. It is a development that needs to watched.”

“100% Win Rate”

“Trust the Chinese government to do what is best for the Chinese people,” reminds Beijing-based Robinson. “It’s less about assisting foreign patent holders than establishing a really viable IP system that encourages innovation and growth, and that attracts foreign investment. Forty-percent of the smart phones in India are currently manufactured by Chinese companies. Innovation coupled with enforcement will drive China’s new businesses and help them grow.”

As reported by Robinson in IAM, “foreign plaintiffs notched a 100% win rate [65 – 0] in civil cases heard by the Beijing IP Court last year, according to a judge who has been on its roster since it was established in 2014.”

Wake-Up Call

A decade of weakening has taken its toll on the U.S. patent system and patent holders. It will not be quick to recover unless a concerted effort can be made to take IP rights seriously. Allowing U.S. patent policy to be dictated by those with the greatest financial success and market share may be appealing to shareholders, but it is not necessarily what is needed for the nation to remain competitive in a global economy, and to generate new businesses and jobs.

Hopefully, the wake-up call comes soon for the U.S. and it can retain the title of innovation leader it has held since the 19th Century but is slipping away.

Image source: insideiim.com; chinapatentblog.com; wsj.com

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New measure of success challenges traditional brand valuations

Measures of a brand’s power can differ dramatically, depending on performance criteria.

A new success index believes that in an increasingly connected world, traditional measures of brand equity are outdated. Criteria like social media strength can be overlooked and under-rated.

The D100, a new brand index from a division of a global advertising agency, believes that some strong brands are less meaningful, while others are not receiving the recognition they deserve.

IPG Mediabrands, the media holding arm of Interpublic Group (NYSE:IPG), in partnership with Jonah Berger, Associate Professor, The Wharton School at The University of Pennsylvania and New York Times best-selling author of Contagious: Why Things Catch On, has launched the inaugural D100, ranking the 100 most dynamic companies in the world using new world metrics.

USA

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The D100 marks the first time that brand success is measured with “new world” metrics, specifically:

  • AGILITY: the degree to which brands adapt to changing market conditions.
  • RESPONSIVENESS: the degree to which a brand listens and responds to customer needs and feedback.
  • INNOVATION: the degree to which brands leverage new technology and creates innovative products and services
  • SOCIABILITY: How large and engaged a brand’s audience is on social media.

Global

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Counter-Intuitive 

There are some notable disconnects within the D100, whose ranking can be viewed nationally or globally. For example, Ben & Jerry’s ice cream, has a dynamic score of 59.89, ranking it 20 globally. Its USA score is just 94. Fitbit is 15 globally, with a 62.75 D rating, and just 62 in the USA.

BMW is ranked 7 globally, 16 in the USA and a lowly 99 in Germany.

Each one of these surprises raises questions about methodology and value.

Germany

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It is interesting to compare the D100 top 10 with InterBrand’s and Forbes’. They are somewhat similar with a few surprises. Those rankings focus more on value. When we get farther down the list we begin to see more significant disruption. Rather than focus on corporate brand, the D100 metrics places more emphasis on brand names associated with specific products.

A branded product may have greater performance value at a given point in time than say an established corporate brand, which may have a high financial valuation.

InterBrand

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To see the global D100, as well as some national rankings, go here. (Tap on the upper right of the screen to pull down the menu.)

UK-based InterBrand’s ranking valuation-oriented brand rankings can be seen here.

Forbes’ top 100 brand values can be found here.

Forbes Top 100

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1,200+ Brands Examined

To construct the D100, over 10,000 consumers were surveyed across four global regions in five major markets including the United States, United Kingdom, Germany, China, and India. Consumers were asked questions on both global brands and market specific brands; in total over 1,200 brands were examined.

Image source: various websites associated with indices

Perception-Reality

More patent holders (and buyers) are valuing perception over reality

Lack of certainty and the high cost of monetizing patents are motivating some businesses to acquire impressive looking patents, not necessarily valid or essential ones.  

A reputation for innovation or R&D prowess has become a far more valuable asset since the American Invents Act was passed a few years ago.

IBM, among others, has sold unproven patents for tens of millions of dollars to the likes of Alibaba, Twitter, Facebook and Google, attesting to the power of source brand when it comes to invention rights.

In all but a handful of instances, no one gives a hoot about what an IT patent is really worth in the marketplace or even whether it is valid. There Perception-Realityis nothing new about securing batches of patents for affect, especially if it is unlikely that they will be enforced and subject to the scrutiny of litigation.

With licensing revenue down and patent sale prices 30% or more lower, there is little motivation for an alleged infringer to take a licence or settle a dispute.  The search is on to identify alternative methods of profiting from IP. Drawing upon a portfolio or family’s implied value can have more meaning than its actual worth — which is becoming increasingly more difficult to establish.

As Good as Gold

In the current (November) IAM The Intangible Investor looks at “Perception is reality for some patent holders.”

A golden reputation for innovation is easier to establish than value for most individual rights. Thus, a patent portfolio or family in conjunction with a recognizable brand can constitute a formidable pairing. “Perceived patent value” holders, those with a
reputation for innovation, may be in a better position to profit today than business that actually hold valid and infringed patents. Proven patents need to survive the PTAB and perform in court, and require capital to monetize; a reputation for IP can be built over time and managed.

We may recall the Intel Inside® advertising campaign of a decade or more ago that touted the branded processor inside the PC. It not only encouraged product sales but provided the company with the ability to license at a premium the patents covering the component.

There was less a qualitative difference in the microprocessor (vs. say AMD’s) than an implied one based on Intel’s consciously cultivated, and largely deserved, reputation for innovation. 4If issued patents are even less reliable than in the past, then invention rights that appear to be good are the biggest winners. It is no coincidence that the most significant R&D spenders also happen to be among the world’s most valuable brands and significant patent holders. The top ones exceed or are just under $10 billion in annual R&D spend.

Reputation, whether it is deserved or not, makes buying decisions easier — a welcome relief to at least some cash-rich buyers in the market for coverage who cannot wait for patents to issue.

The full IAM piece, “Perception is reality for some patent holders,” can be found here.

Image source: askskipper.com; wparesearch.com

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Vision meets commerce is focus of the 50th LES annual meeting in NY

Big Ideas: The Intersection of Innovation & Business is the theme of  this years Licensing Executives Society annual meeting to be held in New York, October 25-28.

Speakers from  Google, GE Ventures, J&J, Columbia Technology Ventures and Samsung will participate in the plenaries at this year’s 50th anniversary meeting at the Marriott Marquis.

Plenary Session – “Big Money is Back”

A cross industry panel of experts will explore and discuss how the changing financial climate is impacting innovation. There is money out there so, what are stakeholders doing and how is investment and licensing shaping innovation?

Speakers:
Orin Herskowitz, Executive Director, Columbia Technology VenturesVice President for Intellectual Property & Technology Transfer, Adjunct Professor, Columbia Business and Engineering Schools (Moderator)
Sang Ahn, Managing Director, Global Innovation Center, Samsung Electronics
Patrick Patnode, General Counsel, GE Ventures and Healthymagination
James Sledzik, Energy Ventures US, Inc.

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IP CloseUp’s Bruce Berman will be moderating a panel on Tuesday October 27, at 3:45 focusing on patent quality.

“Defining Patent Quality – Distinguishing Between Validity, Value and Invention Quality”

Patent quality has become more than a simple black or white definition of validity. Patent quality is often in the eye of the beholder. Some believe there is an inevitable market component or need associated with patent quality, which affects its defensive, licensing and sales value. This workshop will look at the changing definition of patent quality and the role that the PTAB and recent decisions like Alice have played. The workshop also will examine the influence of market forces like demand on patent quality and in distinguishing patent quality from value.

Speakers:
Bruce Berman, Brody Berman Associates (Moderator)
Julia Elvidge, President, Chipworks
Christi Guerrini, Baylor College of Medicine; University of Houston Law Center
Sean Reilly, Askeladden. L.L.C./ the Clearing House Payments Company

Christi Guerrini is the author of a provocative paper on patent quality, “Defining Patent Quality.” She teaches ethics as Baylor College of Medicine Center for Medical Ethics and is a Fellow at the University of Houston Law Center; Julia Elvidge heads one of the leading patent analysis firms, and Sean Reilly, is General Counsel and director of IP strategy for Askeladden, LLC and The Clearing House. He is also chief strategist of the Patent Quality Initiative. TCH members are many of the largest banks in the world.

Be sure to stop by on Tuesday afternoon for what promises to be a thought-provoking panel.

For the full meeting agenda, including more than 50 workshops and special events, go here.

To register online, go here.

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Lawrence (Larry) J. Udell, inventor, lecturer and creator of more than 40 new ventures, has been named the 2015 Frank Barnes Mentor Award recipient by the Licensing Executives Society (USA & Canada), Inc. The award will be presented during the Society’s upcoming Annual Meeting in New York.

Mr. Udell has been an active member of the Licensing Executives Society since 1982 and is the founder and chairman emeritus of the Silicon Valley Chapter of LES www.les-svc.org. He also resurrected the San Francisco Chapter five years ago. He is the founder and chairman of the California Invention Center (1995) www.CaliforniaInventionCenter.org. Mr. Udell is associated with several Hall of Fame inventors, including James Ferguson (he developed the LCD or Light Crystal Display) and Forrest Bird (portable ventilator).

Image source: lesusacanada.org

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Patent quality puzzle is dissected in new WIP0 magazine article

A good patent is becoming increasingly harder to find.

In the current issue of WIPO Magazine my article, “The puzzle that is patent quality,” looks at how the importance, market value and reliability of a patent can vary with perspective, as well as its right to exist.

Patent quality may start with validity but it does not end there.

“[With patents] the discussion is typically about validity, not the quality of an invention or its market value,” I write. “When someone speaks of a ‘good’ patent they could be referring to one or more characteristics: the patent’s likelihood of being upheld if enforced (litigated), the importance of coverthe invention it excludes others from practicing; or its relative value (in terms of protecting profit margins or generating direct licensing revenue) to a particular holder at a given time.”

Defining a patent that is worthy of scrutiny, and provides a degree of certainty, is no easy feat.

More work is needed on the legal and market implications of patent quality, as is a better system for determining patent quality and value earlier and more efficiently for a broader range of technologies. The uncertainty associated with patents costs companies billions and dissuades innovation and investment.

The August issue of WIPO Magazine is available here. My piece begins on p. 16.

For the slightly shorter web version go here.

Image source: iplawleaders.com; wipo.int.

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“Men of Progress” depicts U.S. inventing’s, past, present and future

A group portrait that honors America’s rich invention history captures its greatest inventors in a moment in time that never actually occurred.  

The painting hangs in the grand, neo-classical National Portrait Gallery in Washington, once home of the United States Patent & Trademark Office. It depicts a symbolic gathering that honors America’s innovative past, while encouraging observers to speculate on its future.

Men of Progress (1862) is a study of how America saw its leading technologists in the 19th century. The romanticized gathering of great minds never took place but was a virtual product of artist Christian Schussele’s imagination, and underwriter Jordan Lawrence Mott, that took four years to piece together from individual portraits. (This was almost a century and a half before Photoshop.)

800px-Christian_Schussele_-_Men_of_Progress_-_Google_Art_Project“Men of Progress”

The National Portrait Gallery is a Greek-revival building, whose beautiful restoration was completed in 2006, which housed the United States Patent Office from at least 1867 to 1932. (The official NPG history has the USPTO moving in in 1842, before construction was completed.) Work on the building was started in 1831.

For my thoughts about why Schussele’s vision of America’s visionaries remains timely, please read “Fathers of Invention” in the September IAM Magazinehere. Both print and digital editions are available.

Necessity and Ego

“If necessity is the mother of invention,” I write in the Intangible Investor, “then ego is the likely father. The US industrial revolution spawned an innovation age prior to the Civil War that helped to transform the United States from a wannabe nation to one of greatness.

“In 1857 the inventor of a coal-burning stove, Jordan Mott, commissioned Alsace-born portraitist Christian Schussele to paint a group portrait of 19 US scientists and inventors who ‘had altered the course of contemporary civilization’”.

Those depicted in the portrait had never met as a group. The artist sketched separate studies of each subject before combing them in his final, formal composition. Photoshop would have made it easier, but that was some 140 years in the future.

Fathers of Invention

The following list identifies the inventors and their primary contributions, starting from the left side (The Father of the Fathers of Invention, Benjamin Franklin, hovers on the wall in the background):

Dr. William Thomas Green Morton: surgical anesthesia
James Bogardus: cast-iron construction
Samuel Colt: revolving pistol
Cyrus Hall McCormick: mechanical reaper
Joseph Saxton: coal-burning stove, hydrometer, ever-pointed pencil
Charles Goodyear: vulcanization of rubber
Peter Cooper: railway locomotive
Jordan Lawrence Mott: coal-burning cooking stove
Joseph Henry: electromagnet design
Eliphalet Nott: efficient heat conduction for stoves and steam engines
John Ericsson: armored turret warship
Frederick Sickels: steam-engine gear and steering device for ships
Samuel F. B. Morse: electric telegraph
Henry Burden: horseshoe manufacturing machine
Richard March: rotary press
Erastus Bigelow: power loom for carpets
Isaiah Jennings: threshing machine, repeating gun, friction match
Thomas Blanchard: irregular turning lathe
Elias Howe: sewing machine

*****

I encourage those visiting Washington, IP professionals, inventors, and anyone interested in the great innovation history of the US, to stop by the National Portrait Gallery and take in this inspiring portrait. Admission is free.

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Image source: commons.wikimedia.org; Edward Sachse & Co., chromolithograph, c. 1857.

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Patent ‘Quality Summit’ will be open to the public, March 25-26

The goal of the USPTO gathering is to promote discussion of ways to improve patent quality.

The first Patent Quality Summit will take place at United States Patent and Trademark Office headquarters in Alexandria, VA on March 25-26.

The two-day event’s opening session, “Perspectives on the Importance of Quality,” will feature corporate counsel, private practitioners, academics, economists, and jurists. Sessions will be open to the public, and those wishing to attend the Quality Summit but cannot be in Alexandria, they will be able to listen to and watch the presentations via a live stream. Participation in the Brainstorming sessions will be via WebEx during which virtual attendees will be able to participate interactively.

According to a press release the gathering is intended to “encourage robust discussions among USPTO leadership; patent prosecutors, litigators, applicants and licensees; and other members of the public interested in USPTO’s efforts to further improve patent quality through its Enhanced Patent Quality Initiative.

The conference draft agenda, three pillars to improve quality and six proposals can be found here, as well as information about virtual attendance. 

A focus of the Summit will be on improving patent operations and procedures to provide Quality SUMMIT Logo-02the best work product, to enhance the customer experience, and to improve existing quality metrics. USPTO has already set in motion several quality initiatives, including robust technical and legal training for patent examiners, as well as a Glossary Pilot, Quick Patent IDS Program, First Action Interview Pilot, and After Final Consideration Pilot.

Public Comments Solicited

Separate from the Quality Summit, the USPTO is seeking public comment on its Enhanced Patent Quality Initiative. Comments in this round will be accepted through May 6, 2015. For further information about the summit – including a draft agenda – and instructions for submitting comments, visit the Federal Register Notice.

“High quality patents permit certainty and clarity of rights, which in turn fuels innovation and reduces needless litigation,” said Deputy Under Secretary of Commerce for Intellectual Property and Deputy Director of the USPTO, Michelle K. Lee.

Image source: uspto.gov

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Leading Blogger Unloads on Patent Critics and the Real Bad Actors

Innovation is not threatened by patent “trolls,” says a Virginia IP attorney, but by half-truths about the failure of the patent system spread by businesses looking to defend their turf.

The publisher of IP Watchdog, one of the most widely read blogs in the patent field, went from watchdog to bulldog this week, taking on businesses and lawmakers who falsely deride the patent system.

Gene Quinn, a seasoned patent attorney, says that the patent system is not dysfunctional. It’s many of the most established technology companies looking to stay on top who are.

Silicon Valley’s Anti-Patent Propaganda: Success at What Cost? is required reading for everyone affected by IP, especially those who believe that patent enforcement is ruining innovation and destroying the economy. Patent holders, small and large, NPE and operating company will find the article revealing if not relevant.

Motown Comes to the Valley

Whether we wish to believe it or not Silicon Valley is knee-deep in mature businesses. It is vaguely reminiscent of Detroit’s golden age, when new ideas in the automobile industry and real competition were considered a nuisance. Don’t let the overstuffed patent portfolios of many technology companies fool you: These are not patent friendly businesses and won’t be until they figure out, as Microsoft and Philips have, how to profit from good patents. One wonders if some Silicon Valley tech companies have become too big not to fail

Gene-12-10-2013“This [rhetoric about the failing patent system and rampant litigation] has led the media, the public and members of Congress to incorrectly believe that there is a ‘patent troll problem,’ which has influenced decision-makers all the way from Capitol Hill to the United States Supreme Court, who increasingly seems to be deciding patent cases with one eye firmly on what is a completely non-existent problem…”

“So how has such a factually baseless narrative been able to dominate the discussion? This propaganda was promoted by some of the elite Silicon Valley companies over the years, with Google leading the charge. But Google is a high-tech company. Why would they want to damage the patent system by spreading half-truths and reckless misrepresentations?…”

“Despite what some have been lead to believe, Google is a company that was founded on strong patent protection, having filed two patent applications prior to even obtaining the domain name Google.com. These patents related to Google’s proprietary page rank algorithm. The Google search algorithms, protected by patents, were how Google moved from fledgling start-up to eventually dominate the likes of Yahoo! and Microsoft.

“Simply stated, like virtually every other Silicon Valley start-up Google relied on the exclusive rights provided by patents and now that they are dominant they would prefer the patent system to evaporate so that the next round of dorm-room start-ups won’t be able to challenge Google in the same way that Google supplanted Yahoo! and Microsoft.

“The truth is Google is just one groundbreaking algorithm away from becoming old news.”

Sharing the Blame

Quinn says there is plenty of blame to go around:

“To a large extent Apple, Microsoft and many other Silicon Valley innovators went along with the anti-patent rhetoric perfected by the Google machine because they were facing what they called a ‘patent troll problem.’ This caused even innovation based leaders to throw in with Google and others in an attempt to vilify innovators and a patent system run amok. Such a myopic strategy risked the innovative future of these companies by putting their own patent portfolios in grave jeopardy in order to address the problems they were having with a relatively small number of truly bad actors who were clearly abusing the litigation process.”

*****

“The quickest way to get less innovation is to destroy the patent system. This should be self-evident to everyone, but sadly there are many intellectually challenged individualspinocchio-concept-250-225 who refuse to believe this objective truth. If patents inhibit innovation then why don’t countries without a patent system have run away innovation? If patents get in the way of innovation why do countries with the strongest patent rights have the most innovation?”

*****

Whether you agree or not with Gene Quinn he is a leading IP voice, unafraid to call it as he sees it in “Silicon Valley’s Anti-Patent Propaganda: Success at What Cost?”

Quinn’s strong words remind us that we live in a still great country with an active if imperfect legal system and a free press that, like patents, sometimes must be used to be fully appreciated.

Image source: ipwatchdog.com

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First Wireless Phone is Among 18 Early Inventions Filmed by Pathé

Coming up with better ideas for communication and transportation is nothing new. British Pathe captured many of the 20th Century’s most innovative on film. 

A news film archive popular until television made it superfluous, British Pathé, recently made available for viewing on video 85,000 of its newsreels collected from 1896 to 1976. A group of eighteen focusing on new inventions is compelling for their simultaneous naiveté and vision.

They provide a useful perspective into not only what has been, but what the future might look like in retrospect.

British Pathé is one of the oldest media companies in the world. Its roots lie in 1890s Paris where founder, Charles Bless Us phonePathé, pioneered the development of the moving image. The company was established in London in 1902, and by 1910 was producing their famous bi-weekly newsreel the Pathé Gazette. By the time Pathé finally stopped producing the cinema newsreel in 1970 it had accumulated 3500 hours of filmed history amounting to over 90,000 individual items.

This newsreel clip of early attempts to improve communication and transportation illustrate how far technology has come and how far it still has to go. It’s amazing that the some of the clips are only 50 years old. One can only imagine what people will think 50 or 100 years from now when they look back on what we believe are our most advanced ideas (e.g. the driver-less car). One thing is for sure, they probably will not be as visually dramatic as attempts at early flight.

Eve's wireless phoneSome of the newsreels are humorous, others ingenious. They remind us that before there is innovation there is failure. Often, a lot of it. To dream boldly; to imagine as real what is believed impossible, is deeply ingrained. We should be mindful to nurture it.

The 18 items begin with a 1922 newsreel of the first mobile telephone here. They are consecutive, so wait for a pause between each for the next to begin.

Image source: pathe.com

 

Phone 1922

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Patent Holders can Learn from Angry Musician’s File Sharing Fight

A song writer makes a strong case against businesses that profit wildly from his and others innovators’ work.

Heavy metal band Metallica got serious about battling illegal downloading of their work in 2000 when drummer Lars Ulrich filed an unpopular copyright infringement law suit against Napster, naming 300,000 users. Everyone complained, but Napster was eventually shut down.

Recording artists and song writers remain easy prey for those who who make music files available to anyone with Internet access. Audiences including fans, businesses, software developers, and especially content providers, have portrayed victims as greedy and out of touch with the digital world, just as many tech companies depict all patent enforcers as “trolls.”

For better known artists, unpaid air time on sites like Pandora and Spotify serve as free publicity for their live performances and sales of their earlier or “private” work,  but for less wellfreeloading-cover-image21-known musicians who lack the ability to sell-out arenas, the lack of compensation for air play can mean the difference between having a decent year or taking a day job.

Phantom Royalty Stream

David Lowery, the leader of two bands, Van Beethoven and Cracker, has become a celebrity among musicians, reports The New York Times. He has been speaking out about artists shrinking paychecks and the influence of Silicon Valley over copyright, economics and public discourse.

Lowery, a San Antonio native,  is no run of the mill song writer. He is a trained mathematician and has worked as a quant trading derivatives and providing financial analysis, and is a lecturer in the University of Georgia’s music business program.

His blog, The Trichordist, has documented the income statements associated with his and other musicians work. He claims that 1.1 million plays of one of his popular song, “Low,” on Pandora has netted him just $16.89.

Song writers, recording artists, visual artists and inventors are innovators connected in spirit but bound to different innovation rights. As innovators, they share common challenges for acceptance of their ideas and for economic survival among those who have no qualms about not paying them anything if they don’t have to.

Their  problems are fueled by the speed and accessibility of the Internet, which are both a boom to artists and thinkers and a threat. Consumers and businesses crave low-cost products, or better-still free ones. Companies that need to sell new and more appealing products have a ravenous appetite for inventions. Often, they are actually incremental advancements, or “re-invention”, which their internal R&D is only partially able to provide.

Patent holders can learn from musicians’ copyright battles with content providers.  The frequency and scope of invention infringement has grown, and routine abuse of patent holders’ rights, like downloading, has been as widely accepted.

Inventors and their advisers need to educate audiences about how the patent system works and how it must be protected from bad actors. They also need to show the problem has a human face, and that unauthorized patent use affects not just “eccentric” inventors and aggressive businesses, but consumers, jobs, and the ability of the U.S. to compete with other nations. Invention theft affects the quality of innovation itself.

There are those who would prefer to turn the story line into one about patent “trolls,” when it is really about business acting in bad faith to get the best deal on inventions or improvements that are not theirs.

Lowery’s blog is subtitled “Artists for an Ethical and Sustainable Internet.” Patent holders would be wise to consider adopting a similar tag line for the ethics associated with patent filing and patent quality.

At the Roots

Audiences need to know that unauthorized use of inventions and demonizing all patent enforcement leave many talented, necessary individuals and businesses out in the cold. Moreover, it weakens the DNA of innovation, which is not easily repaired.

Illustration credit: Slashgear.com; thetrichordist.com

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Pro-Patent Momentum on the Rise?

Five recent articles challenge anti-IP myths driven by tech cos. Does the business media have the courage to follow?

For decades patent enforcement has been depicted as the province of villains and cheats. Drawing this portrait are either those who don’t understand the patent system, or who stand to lose because the system is doing its job.

Their effort to re-frame the story is more about an attempt to mitigate exposure than to fix the patent system. Myths about patent “trolls” destroying the economy and impeding innovation have been spread and patent enforcement demonized. All the while, poor patent quality and IP theft by bad actors — the real story — have grown.

Why a broad range of patent holders and their advisers have taken it on the chin for so long is a mystery.

It may have to do with licensing businesses who believe they hold quality patents and act honorably to protect their rights and those of their partners. They do not feel compelled to speak up because they are not the ones promoting the so-called frivolous suits.

Well, the ease of dumping on the patent holders who enforce their rights or others’ may be starting to wane. In recent weeks no fewer than five articles were published addressing the potential consequences of anti-enforcement legislation stoked by reluctant licensees and defendants.

Collectively, these articles suggest that more care must be exercised about who calls whom a “bad actor,” or of deploying “junk “patents.

Don’t Ignore the Evaders

In a USA Today pieces, “Don’t Weaken Intellectual Property Rights,” former Senator Jon Kyl (R-AZ) said, “There are ways to address litigation abuse without putting the strength of our intellectual property rights in peril.”

Supreme_Court_Patenting_Genes_00c92In IP Today, Berkeley Professor David Teece, an eminent authority on patent value, cautioned about the rhetoric in Stop the Grandstanding on Patent Trolls.”

“Opponents of trolls seem to assume that patents only have value if they are held by companies that make products that use the invention,” Professor Teece stated. “But the real problem is frivolous litigation [and poor patent quality], regardless of a company’s business model.”

In a really first-rate piece by InterDigital CEO, William Merritt, “Address the Patent Trolls but Don’Ignore the Patent Evaders,” he points out that invention theft is a more heinous crime than the number of questionable suits that are filed annually.

Also recently, the ever reliable Gene Quinn at IP Watchdog published, “Patent Haters Take Notice! University Innovation Fuels Robust Economic Activity. In it, Quinn enumerates the tangible financial benefits of university technology licensing, including the reported $2.6 billion in licensing income generated from university patents in 2012. 

Quinn, a patent attorney, is familiar with the patent stonewall facilitated by some Silicon Valley companies whose franchises may be threatened by disruptive ideas. They would prefer audiences believe only they (successful tech businesses) are in the position to define what is innovative. (Detroit. This sound familiar?)

“At present patents and innovators are under attack by some Silicon Valley tech giants, the White House and members of Congress who are more interested in grandstanding than seeking meaningful legislative proposals that are likely to address litigation abuse,” he writes.

“Indeed, some Silicon Valley tech giants are not particularly fond of innovating and only begrudgingly use the patent system. Of course, these same companies will erroneously claim they are innovators, but by definition innovation means doing something new, not copying what others have done and ignoring their patent rights. These folks who think innovation is making a product rather than introducing something NEW, see patents as a necessary evil.

“This is extraordinarily short-sighted, but they have deep pockets for lobbying and getting their point of view in front of decision-makers.”

Separating Fact from Fiction

Finally, Steve Moore, an IP attorney with Kelley Drye in Stamford wrote in the fifth of a five-part series debunking the myth of patent trolls, A Fractured Fairy Tale: Separating Fact & Fiction on Patent Trolls, that vested interests are promoting and inaccurate picture of patent enforcement that could potentially undermine U.S. leadership in innovation.

“Our study suggests there is a critical need for a very through, unbiased, look at the so-called ‘troll problem’ before new legislative and administrative fixes are enacted.  In particular, a careful analysis of any ‘fix’ must be made to determine the effect of any proposed change on the majority of companies in this country, that is the small company.”

To read more about the debunking of patent troll myths see Moore’s Probing 10 Patent Troll Myths.

A Glut of Legislation

Five articles do not make a movement. Still, if you looked around a year ago there was practically no one writing about the need to reign in so-called patent reform, or expose the finger-pointers for doing little more than protecting their own interests. With seven patent bills in Congress in various stages of evolution, most associated with heavy lobbying by the anti-enforcement proponents, the atmosphere is beginning to resemble something of a witch hunt for which the broomstick has yet to materialize.

The focus of the patent discussion needs to be on the real issues: patent quality and bad actors.

Image source: postplanner.com; washingtonpost.com

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When NPR Attacks Patents: Stories are Long on Drama, Short on Truth

“When Patents Attack… Part II!” revisits old ground about bad IP actors by relying on half-truths and high drama.

“This American Life,” an entertaining weekly NPR news feature, cannot resist using ill-defined “trolls” as a basis to attack the patent system. A more accurate title might be “This American Knife: When Public Radio Attacks Patents!”

Back in July of 2011 “This American Life” (TAL) spent an hour vilifying patent holders who do not practice their inventions, and attempting to convince listeners that they had uncovered a third-party IP monetization scheme that is destroying innovation. The story was largely focused on Intellectual Ventures, the largest patent buyer. “When Patents Attack!” relies on half-truths, questionable sources and a lot theatrics, which makes for good radio, but shoddy journalism.

On May 31 TAL broadcasted When Patents Attack…, Part Two! This time around, the host, Ira Glass, said, TAL’s reporters were urged on by the logo-v5challenge to complete the difficult investigation they had begun two years earlier. Sadly, this piece is should be required listening, like the previous one, especially for those who want to better understand how patent misinformation gets spread around.

The dramatic conclusion to Laura and Alex’s search for information about Intellectual Ventures, and the inventor they claimed they were helping, Chris Crawford. The story turns out to be different from the one Intellectual Ventures originally told.

Separating the Real Story from the Drama

I would rather not go toe-to-toe refuting each claim in the story. However, I will say that presenting facts and partial-facts with insufficient context is extremely damaging to establishing the truth about the real story: patent theft in the U.S.

If you cannot listen to the entire broadcast, please at least catch to the last five minutes. At approximately 50:30 (you can use the play bar to go right there) there is a statement delivered at the Electronic Frontier Foundation meeting in San Francisco by a young medical device inventor who is moved to tears, literally, because he believes that the big bad trolls are inevitably going to destroy his hard work establishing a potentially life-saving invention.

The young inventor explains how he looked up some patents in the heart device area he was working in, saw how many inventions there are and how broadly they are defined and precisely their claims are worded, and determined that he was doomed from the start. Since he believed that he had no chance he refused to develop his brilliant idea and allowed his hard work to be taken away [presumably by trolls, as opposed to medical device manufacturers].

“When Patent Attack…, Part Two!” may be more scurrilous and insulting than Part One. The U.S. Patent and Trademark Office, while far from perfect, has done a generally good job of identifying and codifying inventions. Due to the USPTO’s lack of resources, in relatively rare instances given the millions of issued patents, it is sometimes necessary for the courts to decide what is novel and unobvious, who is an infringer, and how much must be paid in damages. This system may be inefficient, and benefit some businesses more than others, but it is generally fair, even if the enforcer is not practicing an invention or selling products.

Occasionally, it is necessary for the courts to determine what is valid or infringed, but typically it is left to posterity to determine what is “truly” innovative. This TAL story implies that innovation can be readily identified and classified, belittling those inventions that do not fit its definition.

“Too Many” Patents

The patent attorney introduced in Part Two who claims that there are “too many patents” confuses the issue. (Are there too many parcels or real estate? Perhaps he means that they are too easily granted?) Who is in the position to judge that the owner of an invention that meets the appropriate tests of patentability should not receive one because it lacks sufficient meaning? “When Patents Attack, Parts I and II” plays directly into the hands of businesses that would benefit from a weaker patent system with fewer patents that can potentially be used to undermine their leadership. The exclusivity afforded to patents can provide inventors, SMEs, and in some cases investors, the leverage to challenge traditions and provide the kind of positive destruction that stimulates competition and creates jobs. Heck, Apple, Microsoft, Disney, Google, H-P, Xerox and Amazon all were founded in garages or dorm rooms. America needs to encourage other companies to follow in their footsteps.

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“When Patents Attack, Parts I and II” does little to enlighten listeners about how the patent system really works. It does, however, make it easier for companies to justify practicing others’ inventions, while laughing all the way to the bank. God bless (this) American life.

Image source: thisamericanlife.org

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