Tag Archives: Thomas Jefferson

Patents are rights, not privileges; Jefferson story is “historical myth”

Is it any wonder why patents are widely despised and holders mistrusted?

Patents and other IP rights have been caught in the perfect storm of anger towards the government, the entitled, and ideas too complex to fathom on Instagram.

Patents are difficult to explain and uncertain in nature. To many people they represent inscrutable and insurmountable barriers to entry that are erected with government sanction and controlled by an elite class of corporations, lawyers and speculators acting on their own behalf.jefferson-300x300

Ten-Second Lesson

Many people are introduced to the world of IP by nasty anti-piracy notices: two ten-second screens on the head of DVD and Blu-Ray discs that the viewer is forced to sit through.

That may or may not be an effective piracy deterrent, but it is a hell of a way to introduce viewers, especially young people, to copyright protection. It would not make a believer out of me. Surely, the government and motion picture industry can do better.

Such warnings are accompanied by an advisory that “For more information about how digital theft harms the economy, please visit, www.iprcenter.gov.”

I doubt that anyone (other than IP CloseUp) is dumb enough to actually visit the IPR Center. Did you know that it is home of National Intellectual Property Coordination Center, which is run by  the U.S. Immigration and Customs Enforcement (ICE) and Homeland Security Investigations (HSI)? I did not know that.

Its website explains that the IPR Center “stands at the forefront of the United States Government’s response to global intellectual property (IP) theft and enforcement of its international trade laws.”

Heavy Baggage

In “The perils of privilege” in the September issue of IAM Magazine (out next week) I weigh some of the heavy baggage that accompanies IP ownership, especially patents, which to this day still are confused with royal grants of authority bestowed by English monarchs.

“In reviewing primary historical sources in the eighteenth and nineteenth centuries, it is apparent that the Jeffersonian story of patent law [as privilege] is a historical myth,” writes George Mason Law Professor Adam Mossoff in a provocative 2007 article in the Cornell Law Review, “Who Cares What Thomas Jefferson Thought About Patents?”

banner1“Judge Rich once criticized labeling patents as monopolies due to the negative ‘emotional’ baggage that the term ‘monopoly’ carries with it. He recognized that ‘talk of the patent monopoly weds patents to prejudice, which is not conducive to clear thinking.’”

Modern patents are not privileges, but natural rights and may present an opportunity for the holder, in rare circumstances, to profit for a limited period of exclusivity in exchange for disclosing information about an invention. Patents are about sharing ideas to inspire more and better ones, and facilitating new and occasionally important improvements. They are natural rights, not monopolistic grants of privilege.

Blurred Lines

In a digital world, the line between ownership and fair-use continues to blur. Walking off with other people’s IP is as reflexive as going to the tap for a drink of water. To be fair, it is not always clear who owns what.

Violating the IP rights of others is more widely regarded as acceptable than perhaps at any time in American history. It is difficult to know who or what is responsible. One thing is for sure, educators and lawmakers are ill-equipped to answer the most fundamental questions about patents: why do they exist and whom do they benefit?

 

Image source: upfromslavery.com; iprcenter.gov

 

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.”

Madison Avenue: An Emerging Center for IP Commerce

Mad Men Thrive in Mid-Town –

Once the iconic Main Street of the advertising industry, Madison Avenue has quietly evolved into a center for Manhattan’s emerging intellectual property businesses.

Don Draper, flamboyant Mad Men creative director, however, needn’t worry about the new neighbors cramping his style. They’re too busy pouring over patent claims on inventions to care.

Within a few square blocks of Madison Avenue, in mid-town Manhattan from 34th to 57th Streets, a group of notable, if somewhat secretive IP strategists, investors, lawyers and service providers work quietly. Many are leading the way in patent monetization or defense. Collectively they comprise a 21st century NY commercial center, similar to the fur, flower or meat packing districts of the past.

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Leading the pack are Altitude Capital Partners, 485 Madison, and Coller Capital, 410 Park Avenue, IP-focused investors.  ACP is one of the leading funds for IP oriented investing and UK-based Coller is one of the largest independent holders and licensers of patents.

IP law boutique Berry & Associates at 551 Madison is led by Francine Berry, former chief IP counsel of AT&T and, more recently chief negotiator for a $2 billion patent licensing program, one of the most successful in history.

Former New York Kirkland & Ellis patent litigator John Desmarais recently established IP law firm Desmarais LLP at 230 Park (home to IP research and communications firm Brody Berman Associates from 2003-2008). The law firm’s affiliate, Westchester-based Round Rock Research acquired 4,000 patents from semiconductor giant Micron Technology that his DLLP is licensing. At Kirkland, 601 Lexington Avenue, Desmarais was responsible for the $1.5 billion verdict in favor of Alcatel-Lucent against Microsoft, the largest plaintiff’s jury award in a patent infringement action.

Patent quality purveyor and prior art search firm Article One Partners is at 488 Madison (BBA HQ from 1990-1997), where former IBM and Microsoft chief IP business strategist and IP Hall of Fame member, Marshall Phelps, is director.  AOP has helped to mitigate patent disputes.

Also in mid-town is Fortress Investment Group (NYSE: FIG) at 1345 Sixth (Avenue of the Americas, for those out-of-towners). FIG is an investor in IPCom, licensing vehicle for key Bosch patents.  Brody Berman, 16 E. 34th Street, just west of Madison, and Amphion Innovations (LSE: AMP), UK-based VC and investor in IP-centric companies at 330 Madison, also hang in the hood. Amphion owns a major stake in business life science and business software companies like, DataTern, Inc., which has 29 patent licenses.

Technology transfer leaders Rockefeller University, NYU and Columbia are all in Manhattan, as is John Squires, former Associate Counsel in charge of IP at Goldman Sachs and currently the co-head of IP at Chadbourne & Parke, 30 Rockefeller Plaza. Also nearby at 1155 Sixth Avenue is Charles River Associates (NASDAQ: CRAI), the IP valuation and strategy firm.

If readers are aware of other IP businesses in the area, please convey them either in a comment or an email to me.

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Ironically, Madison Avenue’s namesake, James Madison, was The U.S. Constitution’s leading proponent of strong IP rights. He successfully argued against Thomas Jefferson in the Federalist Papers #43 for a patent system that would facilitate innovation and generate commerce. Exclusivity in exchange for sharing ideas, Madison reasoned, is a great deal for a growing nation, especially those looking to establish new ideas. Though he was a prolific inventor, Jefferson was less enthusiastic about granting patents.

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Why Mid-town Manhattan North? Possibly because IP businesses require less space and fewer people, and the recession has made office rents somewhat more affordable. Also, it is useful to be in proximity to the many investment funds and law firms that populate the area, and there is nothing like Madison Avenue for commuting convenience. (Besides, you never know who you may run into in line at Starbucks.) Like venture capital mecca Sand Hill Road in Silicon Valley, business opportunities can be found just about everywhere, including the parking lot or at the kids’ soccer practice.

Back in March of 2010 I wrote about Palo Alto as an IP center. Have Manhattan’s creative, advertising geniuses of the 1950s and 1960s like David Ogilvy evolved into smartphone-fingering IP purveyors?

Not exactly, but the innovative edge in this part of the City clearly has shifted from manipulating analog images to monetizing intangible assets.

Given the Big Apple’s track record for turning forward thinking into successful commerce, Madison Avenue’s IP businesses are poised for growth, even if they prefer not to advertise it.

Image sources: FreidmanArchives and DVDActive.com

BBA has advised some of the businesses mentioned in this post.


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