Leveling the Patent Playing Field, by Peter Detkin

I re-read Peter Detkin's article Leveling the Patent Playing Field tonight. It explains how the US patent system doesn't treat small entities fairly when it comes time to monetize patents and why patent aggregators have an important role in this regard.

Let me highlight some points made in Mr. Detkin's article:

1. Many important inventions have come from small companies, universities, and individual inventors rather than large companies. In fact, small entities such as individuals, business with less than 500 employees, and non-profits filed 43% of the US patent applications in the 1990s.

2.  Even worthy inventions by small entities may be difficult to monetize. Beside the expense of getting a US patent, small entities face difficulties in  finding a manufacturer and/or investors. Further, they face difficulties in licensing inventions even when they offer major advantages. For example, Dr. James Cunningham, a chemical engineer and an electrical engineer, had 46 patents as an employee of six semiconductor companies including Texas Instruments (TI). Some of Dr. Cunningham's inventions allowed microprocessor companies to switch from aluminum circuitry to copper which greatly improved performance of the microprocessors. He had fundamental inventions and decades in the fields yet he did not know who to approach about licensing the inventions.

3. Corporate licensing professionals are trained to avoid paying "crackpot" inventors or trolls. Their job is to limit payment to such "crackpots" not pay them! So they play interminable rounds of phone tag for months and reschedule the meeting at the last minute. Then after a few months pass they discuss and argue whether the invention has any merit for 6-18 months more even if they are currently infringing the patents!

4. Licensing negotiation rarely lead anywhere, leaving litigation as the only viable option. Large companies can out-resource even a veteran such as Dr. Cunningham at all stages so after a long dragged out process the big company ultimately says no we don't want to license your patent. And such was the case for five of the seven major companies Dr. Cunningham sought to license. With this result is it a wonder that some choose to sue for patent infringement? No, but little guys rarely win these cases.

5. Small entities cannot participate in the successful vast patent portfolio licensing of an IBM and the well capitalized patent licensing of Qualcomm, Rambus, or TI or the corporate patent pools in support of industry standard technology such as MPEG or DVDs. Unlike most small entities, major tech companies typically have huge numbers of patents, lots of money and lawyers to enforce them, as well thought out licensing programs.

Mr. Detkin notes models of patent monetization that will help the patent system regain balance. He suggests consultants, e.g., Thinkfire and ipValue will help large companies evaluate and exploit their patents. Ocean Tomo can run patent auctions, develop a stock index to track patent strength in companies, and create a centralized IP exchange. Companies like Acacia Research and Mosaid can purchase and assert the patents individually rather than as a broad portfolio. And his own firm Intellectual Ventures can purchase small entity patents such as those from Dr. Cunningham as well as seek patents on its own inventions resulting in portfolios that permit rational licensing for multiple technology products. Mr. Detkin notes Intellectual Ventures presents pre-screened patents and expertise in licensing and patent defense that allow it to reach an efficient agreement like that of a veteran real estate broker who negotiates with individual condo and apartment owners standing in the way of a skyscraper to be built.

Mr. Detkin states the above business models can match patent owners with patent users, ensure fair and efficient compensation for inventions, improve the public's access to new products and services, ensure bad patents do not receive unreasonable compensation, and restore balance to the patent playing field so more can play the patent game enriching our society.

In the end a great article, but Intellectual Ventures' daily actions will determine if they achieve these goals.

Copyright © 2012 Robert Moll. All rights reserved.

Importance of U.S. Patents: Evolving Views?

The Commerce Department released an economic report:  Intellectual Property and the US Economy: Industries in Focus in March 2012. A related USPTO news release says the report indicates that industries with intensive intellectual property (IP) contributed 40 Million Jobs and $5 trillion to the US Economy. Patent scholar Harold Wegner states it shows the importance of patents in creating jobs in the USA.

Harold Wegner states it is interesting to see the evolution of PTO Chief Economist Stuart Graham's thinking from the recent report to what he wrote in 2010: The Commerce Department White Paper (Patent Reform) and the High Technology Entrepreneurs and the Patent System: Results of the 2008 Berkeley Survey (Berkeley Patent Study).

More than an evolution Professor Rai's views influenced Mr. Graham in Patent Reform. Professor Rai is an eloquent writer who tends to influence others views. If you read Patent Reform it is classic Professor Rai setting forth these are our problems with the US patent system (e..g, application backlog), and here's how patent reform will fix them (e.g., grant PTO fee making authority).

UC Berkeley law professors Merges and Samuelson also influenced Mr. Graham in the Berkeley Patent Study. While Professor Merges does have an above the fray approach, Professor Samuelson has written negatively about software patents over the years. A large tech executive survey that indicated software patents are not that important would tend to influence all of the author's views.

As a patent attorney working with software and tech companies, the Berkeley Patent Study didn't greatly influence my thinking. Sure it was interesting hearing what tech executives think. But as Larry Ellison has pointed out in business "following a group" will not make you rich. The Berkeley paper did not prove software patents are not that important; it merely indicated some thought them not so important in 2008. And it didn't prove the group's thinking was right. It certainly offered no insight how a company can deal with the patents in the IT industry. If anything the Berkeley Patent Study lulled some into thinking software patents are not that important before the mobile patent war started in earnest. I guess when you don't have many patents it's easier to say they aren't so important.

Copyright © 2012 Robert Moll. All rights reserved.

Mayo v. Prometheus - Supreme Court Patent Eligibility - Links to Articles

In my opinion, the Supreme Court's Mayo Collaborative Services v. Prometheus Laboratories decision will raise questions of eligibility for some medical diagnostic patents. Thus, I am supplementing my March 20th post with links to recent articles:

Mayo Collaborative Services v. Prometheus Laboratories, Inc. Scotusblog.com - This aggregates much of the information of this case, including links to the Supreme Court opinion, the Federal Circuit opinion below, and the related legal briefs, documents and amicus briefs.

Mayo Collaborative Services v. Prometheus Laboratories -- What the Supreme Court Said - Patent Docs

The Supreme Court's Bad Precedent for Innovation - Xconomy - Fenwick & West's Robert Sachs

Mayo v. Prometheus: Natural Process + Known Elements = Normally No Patent - Patently-O

Scholarship Cited by Supreme Court in Mayo v. Prometheus - Patently-O

Life After Bilski - Stanford Law Review - Professor Lemley et al.

Copyright © 2012 Robert Moll. All rights reserved.

Law Review Circulations Drop?

In the last two decades the information explosion has driven many of us to move from paper to data storage so we can keep information organized, searchable, and distributable to others. This concept is not recent, but appears missed in the recent Wall Street Journal article, Law Review Circulation: A New Low.

There  Professor Davies calls out law reviews for exaggerating their paid circulations and noting they dropped in 2011. The article does not discuss why the drop. Instead it gives a chart showing the drop is across the board for the top ranked law schools starting with Harvard Law. In particular, Professor Davies notes "The Harvard Law Review remains the top journal, but its paid circulation has declined from more than 10,000 during much of the 1960s and '70s to about 5,000 in the 1990s to 1,896 last year."

My initial reaction? Oh too bad as law reviews have impacted the development of the law and influenced courts for decades. And too bad we have become a nation of non-readers. I am not so sure of my initial reactions, however, as the drop appears to coincide with the time frame law review papers became free at websites like Social Science Research Network - see download ranking among top law schools and could be downloaded, searched and emailed to clients and colleagues with a few mouse clicks.

Copyright © 2012 Robert Moll. All rights reserved.