Tag Archives: USPTO

Three notable IP events coming up in NY, SF and Bangalore

IP event season is upon us and at least three conferences are worth noting. 

The first takes place this week in New York, March 21-22, the 9th annual Corporate IP Counsel Forum. The USPTO Keynote will be given by Mary Boney Denison, Commissioner for Trademarks and Mark Powell, Deputy Commissioner for International Patent Cooperation.

The featured session will be “Reconsidering Patent-Eligibility under Section 101.” Speaker faculty can be found here and the conference agenda here. I understand that there are only a few seats left.

IP CloseUp readers can save $200 by using registration code IPCNYC.

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The World IP Forum will take place this year April 26-28 at the Shangri-La Hotel in Bengaluru (Bangalore), India.  The theme for the conference is “Harnessing the Power of Intellectual Property.” The fourth edition of this three-day conference will focus on recent developments in intellectual property and its syncing with business objectives. Past participants have include Judge Randall Rader and former USPTO Commissioner Q. Todd Dickinson.

For more information about the World IP Forum, go here.

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On May 18 San Francisco’s Golden Gate Club (at the Presidio) will be the site for IAM’s IP Software Summit.  The Summit is the first event to provide a platform for professionals from the software industry to discuss open innovation, open source and proprietary systems, collaboration, the scope of patent protection, and monetization.

The list of speakers can be found here and the full agenda here.

Speakers include senior IP executives from Cisco, Qualcomm, Mozilla, SAP, Open Invention Network, Google, Uber, LinkedIn, Ericsson and IBM.

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-
china-is-receiving-the-most-invention-patent-applications-in-the-world-insideiim-rishikeshakrishnan-1024x792

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

Gov’t study of economic impact of patent infringement is needed ASAP, experts say

There are abundant statistics on the cost of counterfeit goods, copyright infringement and even the negative impact of patent “trolls,” but nothing on the estimated extent of U.S. patent infringement and the cost in lost jobs, failed businesses and unpaid taxes. 

Global trade in counterfeits or fake goods, such as fashion, automobile parts and pharmaceuticals, has reached $600 billion annually, or about 5%-7% of GDP.  

The U.S. economy alone loses $58 billion each year to copyright infringement (2011 estimate) — crimes that affect creative works. That includes $16 billion in the loss of revenue to copyright owners and $3 billion in lost tax revenue.

The Recording Industry Association of America (RIAA) reports that the U.S. economy loses $12.5 billion in total output annually as a consequence of music theft and that sound recording piracy leads to the loss of 71,060 U.S. jobs, as well as losses in tax income.

Statistics on the cost of counterfeits and copyright infringement are conducted fairly regularly. There is even biased research on the cost of non-practicing entities. (Claims of $29 billion in damage from “trolls” are wildly inflammatory, says a former USPTO commissioner, which despite having been debunked are still cited by academics and reporters.)

Surprisingly, there are no estimates of the extent of patent infringement in the U.S., and the cost in lost jobs, failed businesses, unpaid taxes and other economic impact.

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“There have been no studies that I am aware of devoted to quantifying the amount of patent infringement in the United States,” said Gene Quinn, patent attorney and publisher of IP Watchdog told IP CloseUp.

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“”It would be extremely helpful to get some kind of quantification of the amount of harm that befalls innovators through the concerted and calculated ‘efficient’ infrdataingement business practices of those who use technology and simply refuse to pay for their ongoing, and frequently willful, patent infringement.”

Tip of the Iceberg?

Patent damages paid may be the tip of the infringement iceberg. The real damage may be below the waterline.

To provide some context, 15 leading technology companies paid patent litigation damages of more than $4 billion over as 12-year period from 1996-2008.

That’s just a little over a dozen companies who had to pay damages. The figure presumably does not include settlements, licenses, and all of the times they and thousands of other businesses paid nothing for the inventions that they used.

The Impact of Undetected Infringement 

  • Today, with more issued U.S. patents, and much greater difficulty securing a license or winning a patent law suit, the amount of patent infringement that actually takes place but remains unidentified could exceed a trillion dollars.
  • There is no known government, academic or privately commissioned study of the extent of patent infringement in the U.S., and the cost in lost jobs, failed businesses and economic loss.

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“It is not enough just to be aware that there is harm caused by undetected patent infringement,” said Paul R. Michel, Chief Judge of the Court of Appeals for the Federal Circuit (ret.). “The government needs to conduct a proper empirical study ASAP to determine its scope and impact.”

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Image source: ltrdigitalgroup.com

 

 

Post-election “Patent Law & Policy” conference to be held in Washington

Many businesses are wondering what the patent terrain will look like after the U.S. elections in November.

Will further reforms will be forthcoming, or will there be a move toward stronger patents and greater certainty?

On November 15, the Tuesday following election day, at Washington DC’s Reagan Conference Center, those attending the 2016 Patent Law and Policy will be in a better position to find out.

Capitol Building in Washington DC USASpeakers assembled for this year’s IAM Patent Law and Policy conference will include senior government officials, members of the judiciary, corporate patent leaders, private practitioners and investors, who will discuss how court decisions and legislation are affecting US patent values and strategies.

The keynote speaker is US Patent and Trademark Office Director Michelle Lee. Other speakers include the chief judge of the Patent Trial and Appeal Board, David Ruschke, ex-USPTO Director David Kappos, and former Federal Circuit Chief Judge Paul Michel.

Also participating as speakers or panelists will be senior representatives from companies closely involved in the ongoing patent reform debate, including: GoogleQualcomm, Johnson & Johnson, Bristol-Myers Squibb and IBM. Lead counsel in two of the pivotal Supreme Court patent cases of the last decade, KSR v Teleflex and Cuozzo v Lee. Also present will be as several high-profile patent investors.

IP CloseUp readers are able to receive $100 off the $895 fee if they use the discount code PLAP100 (offer valid until October 7 2016).

For the complete program and speakers, go here. For registration go here.

Image source: ipo.org; ipwatchdog.com

 

 

Reporter: Patent system failed heart valve inventor

One of the biggest obstacle to inventors today may the system created to protect them. Research cardiologist Tory Norred thinks so.  

In a recent post on IP Watchdog, excerpted below, I summarize how investigative reporter Scott Eden skewers the U.S. patent system in the July-August Popular Mechanics article, “How the U.S. Patent System Got So Screwed Up.”

Eden, an award-winning reporter, whose credits include the Wall Street Journal, ESPN and TheStreet, examines the devastating impact of recent changes to the patent system by focusing on an inventor who got caught up in it.

The NPR-style article tells the story of Tory Norred, a fellow in the cardiology program at the University of Missouri cardiologist, who in 1998, came up with the idea for a collapsible prosthetic aortic valve that could be fished up through an artery with a catheter, and implanted in the hearts of patients who suffered from failing aortic valves. Unlike previous valves, Norred’s stent disperses the force needed to hold it in place against the aorta’s walls, requiring no sutures.

gallery-1466458424-pmx07116-patentoffice15In November 2002 he received U.S. Patent No. 6,482,228, “Percutaneous Aortic Valve Replacement.” Norred knew that he was onto something important, but that was not the beginning of success, it was the start of a nightmare that led to repeated frustration.

“That’s my valve!”

Norred spent the next four years talking to venture capitalists, medical products companies and even a Stanford University consultant, in an effort to finance his invention. Despite many quality meetings, no one was interested in providing capital or product development – including the product-development people he signed non-disclosure agreements with at Medtronic, Edwards Lifesciences, Johnson & Johnson, and Guidant.

“By September 2003,” writes Eden, “Norred had all but given up on his dream when he and a colleague were strolling the exhibition hall at an important cardiology congress held annually in Washington, D.C. They came upon a booth occupied by a California startup called CoreValve. With increasing alarm, Norred studied the materials at the booth. He turned to his colleague: ‘That’s my valve!'”

The rest of the story is not unfamiliar: CoreVale basically ignored him, and Norred settled into private practice. Then, in 2009, Norred saw the news online: CoreValve had sold itself to Medtronic for $775 million in cash and future payments.

In fact, collapsible prosthetic valves fished up through an artery with a catheter and implanted in the aorta are well on their way to becoming the standard method of replacing worn-out heart valves. Thee annual market has already surpassed $1.5 billion and is expected to grow.

Immediate Suspicion

The remainder of “How the U.S. Patent System Got So Screwed Up,” is devoted to the slow decline of the patents system over the past decade, and how a handful of patent “trolls” have been used as the reason to systematically dismantle much of the patent system. The same system that was the envy of the free-world and spawned many breakthrough inventions, as well as successful businesses that employ millions.

“Norred wasn’t a troll,” continues the article, “and the decision to sue did not come easily for him. His lawyer told him that the cost to litigate could exceed half a million dollars. Norred did not have half a million dollars. He considered letting it drop and moving on with his life, but in the end he couldn’t. ‘It’s gallery-1466458804-pmx07116-patentoffice17hard to give up on something you’ve worked so hard on,’ he said.”

“Whenever an independent inventor sues for infringement today, an immediate suspicion attaches to the case,” states Eden. “The anti-patent feeling is such that to assert one is to become stigmatized as a troll or, worse, a con artist or a quack. But there’s another way to look at these litigants. It could be that an inventor-plaintiff is a modern-day Bob Kearns, the Michigan engineer who spent decades fighting the global automobile manufacturing industry over the intermittent windshield wiper. They made a movie about it called Flash of Genius.

Greater Uncertainty

Inter partes reviews (IPRs) were supposed to clear up much of the uncertainty surrounding patents that are thought to be infringed, by determining which, if any, of their claims are valid in the first place. But IPRs also have had an unfortunate side effect. IPR tribunals make it easier for sophisticated defendants to kill patents held by legitimate inventors.

“The IPR isn’t an effort to figure out whether an inventor invented something,” says Ron Epstein, the former Intel attorney. “It has turned into a process where you use every i-dot and t-cross in the law to try to blow up patents… There isn’t a patent that doesn’t have some potential area of ambiguity.”

Go here to read, “How the U.S. Patent System Got So Screwed Up.”

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Popular Mechanics was first published in 1902. It is known as the monthly bible of the independent inventor. 

In 2011, two of Scott Eden’s pieces received “Best in Business” awards from the Society of American Business Editors and Writers (one for investigative reporting and one for feature writing). Eden is former staff reporter for TheStreet and Dow Jones Newswires.

Image source: popularmechanics.com

Engaging IP book for students is free via iBooks or PDF, $.99 Kindle

The US intellectual property system has been the envy of nations everywhere. Despite this, confusion reigns about what are patents and other IP rights, and whom do they serve.

A new book has been published that makes it easier for college students and non-IP professionals, including inventors, engineers and investors to understand how IP rights work in the real world and how they affect peoples’ lives.

In an increasingly digital, knowledge-driven economy, an understanding of IP rights needs to be part of a core curriculum. The Intangible Advantage: Understanding Intellectual Property in the New Economy serves that mission admirably.

Compiled by an all-star team of writers, jurists, lawyers and professors, The Intangible Advantage (TIA) explains in clear, non-technical prose how the IP system works and the many audiences (aka stakeholders) it benefits. TIA is a revealing journey through the history and practice of IP in the United States. It is the first comprehensive text book for students that explains the IP system’s strengths and weaknesses, and dispels many of the myths surrounding them.

Clear and Concise

Chief writer, David Kline, is co-author of Rembrandts in the Attic (HBS Press), the first serious book about patents for business managers and investors. Kline is a former Pulitzer-nominated war correspondent, who has contributed to many business and news publications.

Serving as the book’s executive editor was David Kappos, Under Secretary of Commerce and Director of the United States Patent and lockup-ipad-verticalTrademark Office, 2009 to 2013. Prior to that Mr. Kappos was chief IP counsel at IBM. Also integral to the project was Hon. Paul R. Michel, Chief Judge for the Court of Appeals of the Federal Circuit (CAFC) who sat for 22 years on the bench, from 1988 to 2010. CAFC is the the highest patent court.

Giving Back

The Intangible Advantage is published by the Michelson 20MM Foundation. Established by Dr. Gary K. Michelson, an inventor, a spinal surgeon who responsible for 340 issued US patents and 953 worldwide. Dr. Michelson sold his company for $1.35 billion to Medtronic in 2010 as a settlement in a patent dispute.

The Michelson 20MM Foundation supports and invests in leading edge entrepreneurs, technologies, models, and initiatives with the potential to improve post-secondary access, affordability, and efficacy.  Dr. Michelson also founded the Gary Michelson Medical Research Foundation, which since 1995 has supported forward thinking initiatives in medical science by leveraging the collaboration of engineers, scientists, and physicians to solve real world problems; rapidly moving medical advancements into our society.

Separating Truth from Myth

The Intangible Advantage is written with clarity and charm, a Kline’s trademark that can be found in the books and articles about IP that he has written under his own by-line and those he has co-authored. IP professionals as well as students will gain from the historical insights the book provides, such as that despite media and hoopla about “trolls,” patent trials have remained virtually flat at around 100 for 30 years.

Given the explosive increase in patent filing and grants — About 325,000 US patents were issued each in 2014 and 2015 alone, and there are literally millions in force — the number of disputes that go to trial is extraordinarily low — not what the media would have us believe.

static1.squarespaceWhat The Intangible Advantage does exceedingly well is explain the US patent system and how rights can be used productively. It reminds readers that the system exists to facilitate sharing information about new inventions and stimulate new business, not to keep inventions secret or deter commerce. US IP rights differ markedly from others, especially the 18th and 19th century English system, which was more closely associated with privilege and class. The book underscores that the US system strives to use IP, especially patents, to level power, not to wield it.

TIA is un-intimidating at just 287 pages (1320 KB), a good length for those who want to know more without getting into legal minutiae. The book is available at iBooks for free and on Kindle for just $.99. An inexpensive print-on-demand edition (under $10) is also available. I downloaded a copy to my Kindle in about 15 seconds and read it over several days.

Start Learning Now

For the free iBooks version, go here or to your iBooks app store.

For the 99 cent Kindle version, go here or to the Kindle store.

For the $6.68 print on demand version, go here.

For the free standard Widows PDF version, go here.

The main Michelson 20MM Foundation resource page provides additional information.

In addition to Kline, editorial credits include:

Randall E. Kahnke (Author), Robert G. Krupka (Author), Kerry L. Bundy (Author), David Kappos (Editor),Paul R. Michel (Editor), Phillip J. Kim (Editor), Mayra Lombera(Editor), Marisa S. Moosekian (Editor), Gary K. Michelson (Preface).

The book is accompanied by a series of 3-minute animated videos available on YouTube answering such common questions as “Can I Patent That?”“Is it Fair Use or Infringement?” and “What If Someone Infringes Your Trademark?

Education – the Future of IP

IP literacy is no longer an option, it is a requirement. A rudimentary understanding IP rights and the patent system is essential for individuals to excel in a knowledge-based economy.

Until recently intellectual property has been taught primarily in law schools or the occasional business school seminar. The history and use of US IP rights is an amazing success story, whose impact needs to be conveyed accurately to wider audiences, and repeatedly over time.

The Intangible Advantage – not to be confused with my 2015 book, The Intangible Investor – is the first IP text book for non-IP professionals, especially college students, that makes it easy to learn about an integral part of American history and commerce.

Image source: 20mm.org; michelsonip.com

The future of IP will be examined at the 10th IP Summit in Berlin

Uncertainty is putting pressure on patents, trademarks and copyrights. All are facing more scrutiny and a challenging future.  

Scrutinizing these fundamental issues on December 3rd and 4th in Berlin will be more than 600 IP holders, executives and investors attending the Intellectual Property Summit. Organized by Premier Cercle, it will be the tenth edition of the popular conference, held previously in Paris and Brussels.

This year’s Summit will attempt to deconstruct global IP trends and explore the future of IP rights – patents, trademarks, copyrights and trade secrets – as business assets. There will be 100 speakers from Europe, North America and Asia.

Plenary topics include:

  • What is the future of IP in the 21st century?
  • Is your nation ready for open innovation?
  • More IP rights or better enforcement?
  • The future of injunctive relief in Europe?

On Friday, December 4 at 2:20 (14.20), your intrepid IP CloseUp editor, BB, will moderate a panel on Patent Quality – Always Challenging; Never Simple. Panelists will include:

>Valencia Martin Wallace  Deputy Commissioner for Patent Quality  USPTO / US

>Daniel G. Papst    Managing Director  PAPST LICENSING Gmbh & Co. KG / DEU

> Christian Vejgaard   European Patent Attorney  ERICSSON / SWD 

Chair : Bruce Berman Principal  BRODY BERMAN ASSOCIATES / US  

11A Patent Quality – Always Challenging; Never Simple
Defining patent quality
– What is a good patent?
– Distinguishing validity from invention quality and value
– Establishing more reliable patents
– The impact of poor quality

The patent quality session will be followed by a session on patent transactions on which IBM, Samsung, Chipworks and Unified Patents and are scheduled to participate.

This year’s IP summit partners include IP CloseUp and Brody Berman Associates. 

For the full agenda go here.

To register go here.

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Image source: premier cercle; i-mop.biz

Patent quality — Is a “shared responsibility”, says IBM; it does not represent invention quality or IP value

There is a great deal of agreement that patent quality is lacking, but surprisingly little about how to define and achieve it.

Patent quality is typically associated with validity. Good patents are valid upon scrutiny, bad ones invalid. However, the term also refers to the relative importance of an invention and the value of the “negative” right – the right to exclude others from practicing it.

I attended the recent Patent Quality Summit hosted by the USPTO in Alexandria, VA on March 25-26.  Among the challenging remarks were those of Manny Schecter, Chief Patent Counsel at IBM, and the Summit’s first speaker.

He reminded the audience of more than 200 that patent value is a “shared responsibility” between the applicant and the examiner.

Schecter also said that “patent quality is not invention quality of patent value.” Wise words from head of IP of the 20-year leader in obtaining U.S. patents.

Hon. Paul Michel, former Chief Judge of the Court of Appeals for the Federal Circuit (CAFC), was candid about how he believes patent quality can be improved. He wants greater onus placed on the examination and examiner. He says that the application process is the first line of offense for eliminating bad patents and facilitating more reliable ones. Better-educated and more empowered examiners who understand likely legal arguments should issued patents be disputed will help. Patents should not be issued in a vacuum.

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Search time and examiner resources are often cited as the key obstacles to issuing good patents. Those USPTO realities are unlikely to change much. What could change are the introduction of stricter parameters for patents to issue, and not wait for the courts or the PTAB to weigh in on issues like validity and enablement (Rule 112), when they could have been addressed much earlier in the application process. This would save multiple parties time and money. Currently, patents are almost always insufficiently reliable both to those who practice inventions and those who may wish enforce them. This may not be inevitable.

Issued patents need to move closer to a slam dunk than a moving target. Examinations and examiners will play a key role in that difficult process. If I hear what Judge Michel is saying, let’s give them a chance.

Information about the Summit, including it’s three pillars and six quality proposals can be found here. Public comments are requested by the USPTO until May 6. 

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An article by Christi Guerrini, an IP Fellow, IIT Chicago-Kent College of Law in the Fordham Law Review, “Defining Patent Quality,” is a nobel attempt to begin to deconstruct the meaning of superior patents, and to go beyond a simple black/white definition defined by the legal parameters of validity.

From the author’s abstract:

“Depending on whom you ask, the state of U.S. patent quality is either dismal or decent, in decline or on fordhamlrev_headerthe upswing, in need of intervention or best left alone. Absent from the ongoing debate about the quality of U.S. patents, however, is much thoughtful discussion about what constitutes a patent’s “quality” in the first place. What features of a patent make it “good” in quality, what features make it “bad” in quality, and whose opinion matters?

“Surprisingly, scholars and policymakers have shown little interest in these questions. Yet their answers are critical to the direction of the patent agenda because they dictate how to measure patent quality and, consequently, how to evaluate the extent of the so-called patent quality ‘crisis’ as well as the effectiveness of quality reforms.

“The broad aim of this Article is to draw attention to the definition of patent quality as an important subject of scholarly inquiry. Its more specific aim is to call for a return to first principles and begin the process of operationalizing the meaning of patent quality. It does so by analyzing the concept using a methodology applied in the business literature of quality management.”

Defining Patent Quality” can be found here.

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In “Toward a working definition of patent quality,” which appears in the May IAM, out next week, I consider the challenges to better reliability.

“Patent quality is important because, among other things, a lack of it can impede businesses and require some to engage in unnecessary licensing or lawsuits.

“Bad patents are unreliable and undermine the integrity of the patent system, including the institutions Quality WEB HeaderNEWand professionals that sustain it. However, given the multitude of ways that standards are applied in specific cases, coming up with a universal definition of ‘patent quality’ is no easy feat. The best patents are often in the eye of the beholder.”

For the column I asked four people — an economist and valuation expert, a patent attorney, a former chief patent counsel and a successful NPE — to provide me with a two-sentence definition of “patent quality.” Their responses – thoughtful and startlingly precise – are a good indication that more work still needs to be done on this deceptively important area.

IAM subscribers can find my Intangible Investor column here.

Image source: ipfrontline.com; uspto.gov; fordham.edu

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

Post-Grant Reviews are Shaping NPE Patent Quality & Portfolio Size

More and better patents have greater meaning for licensors now that a petitioner can seek an internal review (IPR) canceling a patent because of a single claim. Expect those with capital and experience to prevail.

IPNav announced in May that the firm’s President, Deirdre Leane, is set to succeed CEO Erich Spangenberg by the end of the year.

Leane spoke with IPBC Global’s Richard Lloyd recently in Amsterdam about the future of patent licensing and the impact that Inter Partes Reviews (IPRs) are having on patent licensing. Leane also chatted about the a more expanded role for women in IP and her increased responsibilities at IPNav.

Dierdre3

 

She says the IPR pendulum has already starting to swing back in favor of patent holders. Patent Trial and Appeal Board (PTAB) decisions have gone from “a 90% plus kill rate to 82%,” Leane notes.

Leane believes that trend is likely to continue to move towards 70%, as patent holders select better patents to assert.

For those of you who wish to go directly to Leane’s remarks about IPRs, they start a bit after 2:00 in the 13 minute interview. The entire interview can be found here.

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PwC Patent Litigation Study: More Suits and NPEs; Fewer Big Awards

What’s to be learned from PwC’s 2014 Patent Litigation Survey that we don’t already know?

Patent suits are at an all-time high, with almost 6,500 in 2013 keeping pace with the number of utility patents granted, about 300,000.

Most of the new cases (67%), have been brought by NPEs or those without significant operating revenue. Median damages are still down over years past, and significant damages awards are being appealed – and reduced or thrown out – in record numbers.

Is PwC revealing a bleaker picture or a brighter one? It depends whom you ask, and how they believe new developments are likely to play out.

The Cost of Settlement

The PwC Study does not discuss that the vast majority of cases that settle and are profitable, albeit more costly, for those who enforce quality patents. Because it is sometimes difficult to separate the nuisance suits from the legitimate ones, the study provides no data or analysis about patent quality. The sheer number of suits and uncertainty about patent quality and, in turn, damages has created an environment strangely conducive (or maybe the word should read coercive) PWC-2014-patent-report-300x167to settlement.

Reading between the lines, it appears that patent quality matters more today than in the past, and respect for patents appears to be increasing. Still, the value of the best patents is being reduced by the attitude toward great patents and big awards, which, basically, don’t matter, unless a court says they do.

We should be mindful that different patent holders use patents in diverse ways and have expectations that differ widely. More than ever, patent enforcement is for those holders who are very serious about what they own, but also are well-capitalized and patient. It may take five or more years to see a dime, if they see any money at all.

NPEs filing more suits for two primary reasons: (1) the joinder provisions in the American Invents Act makes it difficult to file against multiple defendants in a single suit, and (2) most technology defendants will not even discuss a license unless a suit is filed first.

Another reason for the increase in patent suits: NPEs are generally better at enforcing patents than operating companies. They are counter-suit remote, and have the experience, time-line and lack the customers and competitors (and, sometimes, the shareholders) that operating companies must avoid upsetting. Despite this, “between 2005 and 2013,” reports PwC (see fig. 6b), “the practicing entity overall success rate outpaced that for NPEs by more than 11%, coming close to restoring the differential observed in the late 1990s.”

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NPE v. PE Success

I could not find this in this year’s study the NPE vs. PE success rate in given industries. Last year (fig. 6f, at left) PEs dominated in software, telecom and automotive. There are good reasons for that I suppose, including the difficulty for NPEs to prevail in on some arts. It may have been suggested to PwC that it not encourage any unnecessary licensing or litigation activity.

More Appeals

The PwC study found that about 71 percent of district court patent decisions are appealed to the USPTO’s Patent Trial & Appeals Board (PTAB), usually on multiple grounds. Of these appeals, 64 percent received a reasoned opinion, 11 percent concluded with a summary affirmation and the remaining 25 percent were dismissed, settled or are pending.

Additionally, reports IP Law 360, 65 percent of the cases decided by the Federal Circuit received a mixed decision on the multiple issues typically raised, while 11 percent were reversed, vacated or remanded. Only 24 percent of lower court decisions that were appealed were affirmed in total — meaning that over three-quarters of Federal Circuit decisions modified a lower court’s ruling in some manner, according to the report.

*****

Patent trials have remained virtually flat over the past twenty years, with approximately 125 per year. Given the amount of innovation produced, products sold and disputes filed, its remarkable the number is not much higher.

Click here for the full 2014 PwC Patent Litigation Study.

Image source: PwC.com

Despite Limiting Dubious Rights and Behaviors, Patents are More Uncertain than Ever

It’s unclear whether attempts by lawmakers and the courts to rein-in invalid patents and bad patent-holder behavior have succeeded in improving the system.

Whatever the case savvy investors will be looking for a silver lining.

Recent United States Supreme Court and federal district court decisions and new laws making it harder to enforce patents have failed to provide a clearer definition of what is patentable.

Tested patents — including those that surmount USPTO examination hurdles and that the Patent Trial and Appeals Board elects not to review or that survive it — are likely to be more valuable than ever. Fewer, more thoroughly vetted patents are likely to be a more significant factor.

The increased time and cost necessary to enforce patents may actually improve the profit picture for NPEs unwilling to settle too quickly and with sufficient asset quality and capital to prevail. Many NPEs, however, will be knocked out of the box by higher hurdles, which is not necessarily bad, especially if their strategy is merely to bring nuisance suits for their early settlement value. Astute IP investors — and not always the obvious ones — will more than likely benefit from depressed IP prices, higher legal costs and a longer time horizon for resolving disputes.

Likely Scenarios

In “Turning Uncertainty Into Opportunity,” in the September IAM Magazine, published shortly, I look at what are some of the scenarios likely to play out in the IP investing space, especially for PIPCOs, or public IP (licensing) companies, most of Question Themewhom are feeling increased pressure.

“With patents affecting more businesses in new ways, an increase in tech M&A means more dollars will be spent on IP and the R&D that underlies it,” I write in the upcoming The Intangible Investor. “Learning to live in a world with even less patent certainty is difficult for both businesses and inventors. For investors, it presents an even greater challenge.

“Adversity of this nature may turn out to be a welcome surprise for some, presenting a foundation for new opportunities. Those rights (and holders) that are not destroyed by the patent system may indeed be made stronger by it. Is this not what free markets are all about?”

Still Rewarding

“Even if patents are less certain, holders with the right combination of quality, capital and patience will continue to be rewarded. New hurdles will not dissuade serious direct IP investors from continuing to play – nor will it stop strategic or defensive investors from stockpiling patents. Those with the best patents will dig in deeper for still rewarding if more delayed and less headline-worthy outcomes.”

The September IAM will be published in early August. Click here for subscriber access.

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