Tuesday, December 20, 2011

Patent Trolls and Eight Year Old Patents

There is a meme in the patent world that says, "patent trolls stifle innovation."  Just put your ear to the drum beat of the digital dialog on the subject and you'll hear the patent cognoscenti bemoaning the evils of the NPE.  The message is spreading across the patentsphere and is fast becoming urban legend.  Trolls hurt innovation so they hurt the economy.

James Bessen, Jennifer Ford, and Michael J. Meurer of Boston University School of Law published a paper titled, “The Private and Social Costs of Patent Trolls”  on the topic of patent trolls in November 2011.  The authors state, “NPE lawsuits are associated with half a trillion dollars of lost wealth to defendants from 1990 through 2010. During the last four years the lost wealth has averaged over $80 billion per year."

This piece of information has made its way around the Internet landing at many serious business publications like the Wall Street Journal and lots of influential tech blogs including many that have just recently learned how to spell patent.

"The Private and Social Costs of Patent Trolls" is a good paper with lots of compelling discussion on the negative impact of patent litigation brought by non-practicing entities.  The financial arguments are sound, the numbers are good and supportable.  Mr. Bessen presented his paper at the USPTO Patent Statistics conference in November, and he makes a very compelling case about the economic and social impact of NPE lawsuits and their impact on the organizations defending themselves against them.  (I refuse to use the victim term here.  You'll see why below.)

There is another important fact buried in the paper.  It states:

"The mean NPE law suit occurs eight years after the patent is granted."  
Consider what this means.

The average patent's pendency runs around 36 months. (It was slightly lower in the timeframe of the author's study but let's use 36 months for illustrative purposes.)  There are plenty of patents in NPE litigation that were based on provisional applications so add another 12 months.  Twelve years works either way - with or without a provisional when you consider how prior art is looked at.  We are up to around four years of application pendency before the patent is granted.  Now add eight years before one of the evil trolls takes action.  So we now have a patent based on 12 year old science and technology.  So, when an NPE litigates, the inventions are 12 years old.  More than half way through their patent term.

NPEs are litigating patents with 12 year old technology.

The patent has been in the public domain for eight years before the NPE files suit.  Eight years.  Eight years that it's been on every free patent searching tool, eight years it's been in the tools for the patent cognoscenti, eight years that the patent examiners have had it as a source of prior art and as a consideration on the novelty of new patents that follow it.

NPEs enforce patents that has been in the public domain for eight years.

 If the inventor decided to file a PCT, the patent application was published internationally, and if it was after 2001, domestically in the US.  It may also have been translated into other languages - usually one of the trilateral languages - French, German, Japanese - but there are some in Korean and other languages.  The patents litigated by NPEs have been out there in other languages.

More than one version of the eight year old patent has been in the public domain at the time the patent troll decided to litigate. 

What do we learn from this?

Patent troll is really a pejorative term for guys who really know how to dig through the vast store of patent dreck to find valuable patents.  (Investors in non-correlated assets take note.)

Patent trolls watch the market and find patents that are enforceable and that were largely ignored by their product producing business counterpart, the practicing entity because they have been making products covered by the patents.  (Note to self, do freedom to operate search before finalizing the product.)

When the big voices of science and technology and their proxies start whining about how patent trolls are stifling innovation, what they are really saying is patent trolls do better research and have better tactics for finding valuable patents where the practicing entity has either decided not to get a license before building products or have decided to not to look at all.

How are patent trolls stifling innovation when they are dealing with 12 year old technology that has been public for around 8 years?

Please advise.

Thursday, December 15, 2011

On Inventing and Products

US Patent 686,046 
"If I listened to my customers I would have invented a faster horse."
- Henry Ford

"It's not the consumer's job to know what they want."
- Steve Jobs

US Patent Application
13/172649 (2011)

Tuesday, December 13, 2011

Why Patents Can Make Your Head Explode

Bioluminescent Novelty Item

"The present invention relates to systems for producing bioluminescent light, and to combinations of the systems with articles of manufacture including toys, textiles, food and beverages, to produce novelty items. By virtue of the combination, the novelty items glow or produce or expel a bioluminescent composition. Also, provided are compositions, encapsulated bioluminescence generating reagents, and methods for producing the bioluminescence. "

Fifty eight claims, 34 figures, 360 US patent citations, 39 foreign patent citations and 202 non-patent prior art references later we learn it's about blowing bubbles.  Basically it's an invention for a new way of blowing bubbles that mimics bioluminescence - a biochemical emission of light by living organisms like fireflies an deep-sea fishes.  Shiny colorful bubbles and it's use in devices that are used to create them.

The earliest prior art citation dates back to 1886 - US Patent 340,750.  USPTO cites the inventor on this patent as Salmon et al.  This is a patent for a truss invented by Edward Williams.  The correct citation is Design patent D340,750 for a toy water gun patented in 1993.  (It was cited on a divisional patent application.  A patent quality problem somewhere.)

It cites a fluid gas gun invented in 1939.  A device containing a liquid solution of pungent gas and water with a small amount of glycerine (soap) added to increase the viscosity of the fluid permitting it to evaporate almost instantaneously upon striking the target.  "The greatest use of ...is by penitentiaries or animal keepers, for the purpose of subduing a riotous prisoner or vicious animal...when the fluid strikes the person at which it is directed it immediately evaporates, a nauseating vapor is given off which the person or animal is forced to breath and subdues them sufficiently to bring them under control..."  Ok...bubbles hit their target and evaporate.  Weaponized bubbles that stink?

Also cited is 4,861,303 -  Toy bubble pipes with blow air-actuated pivoting animal shape blow pipes and plenty of chemical patents for things like FK-506 cytosolic binding protein, FKBP12.6 and a host of other stuff on the world of bubbles and bubble chemistry.

This is why patents can make your head explode.

Sunday, December 11, 2011

Assignees and Full Disclosure

USPTO has issued an RFI seeking comments on proposed changes to the filing of assignee data.  The Office, as the legal crowd likes to refer to it, presents several alternative approaches to compelling more complete reporting of assignee information.  Comments are requested by January 23rd.

It's our position that a patent should be treated like any other property with full disclosure of ownership and changes in ownership.  And full disclosure should include the names of the owners - the names of the people - of the entities that report that they are the assignee of a patent.  We're tired of having to hunt down "Hide in Plain Sight Patent Holdings of East Texas" and their ilk.

Thursday, December 8, 2011

On the Importance of Negative Know-How

US Patent 398,774

I have not failed.  I have found 10,000 ways that won’t work.

Thomas Edison on trying to find the right combination of materials for a working lightbulb.

Negative know-how is essentially what doesn't work.  Negative know-how is an important part of a firm's trove of trade secrets.  Knowing which drug formulations don't work is as important as knowing which formulations do work.  Knowing the temperature range that will turn the yummy treat into a tasteless brick is important too.  

Negative know-how even has a  strange place in trade secret law which basically says that a if  an employee resigns from one firm and joins a different business you can't use what discovery won't work.  If you move on and then don't make the same mistakes as the former employer than you may have misappropriated the former employer's intellectual property.  This theory implies that you should learn from our mistakes but only at the employer where you made the mistake.  If you move to a new employer, you can't use your knowledge or maybe you have to make the same mistakes only faster.  

Negative know-how has a very important place in research.  Dissemination of negative know-how has the potential to expedite critical medical and drug research, shortening the discovery timeline for new inventions by helping investigators avoid the mistakes of others that came before; providing valuable insight that might help other investigators use other's work to explore their own hunches.  Researchers who live in the world of publish or perish rarely publish the results of work that doesn't have positive results.  This is unfortunate.  Understanding what doesn't work is just as important as understanding what doesn't.

Tuesday, December 6, 2011

On the Patent Argot - The Language of Patents

“In patent applications and legal documents, too, the inventors had reason to think about their topic in the broadest possible terms: e.g. The giving, printing, stamping, and otherwise transmitting signals or the sounding of alarms, or the communication of intelligence.

 ...Confusion inspired anecdotes which often turned on awkward new meanings for familiar terms.”

James Gleick, the author of The Information: A History, A Theory, A Flood, describing inventions in the time of the telegraph.

Sunday, December 4, 2011

Access to Medicine and Medical Tests

Today's Wall Street Journal has an excellent article on the issues surrounding patents on medical tests.  The crux of the discussion is whether tests that reveal how the human body reacts to illness and disease are patentable in the first place.  Those on the Access to Medicine side of the discussion believe that these inventions are not patentable because they relate to both abstract ideas and laws of nature.  The inventors of the tests and holders of the patents claim that their inventions are novel and encompass new inventive steps.

If you aren't familiar with the issues this article provides a concise presentation of the issues and upcoming events at the Supreme Court.

Thursday, December 1, 2011

The Growing Market for Innovation

According to WIPO, "...two to three billion people are projected to enter the middle class in the coming decades. This will constitute a new source of demand for goods and services tailored to the specific needs of this middle class emerging in less developed economies. Adapting products to emerging markets will henceforth be a core activity of Multinational Enterprises (MNEs), including for households with fewer resources that will demand low prices for robust products with basic functionality."

The market for new and interesting products and services will mean new ways of thinking about how to solve problems.  Adapting products for these markets will require a new perspective on manufacturing and product delivery pipelines - how will you make the product, how will you package it, how will you sell it, and how will you get it to your customer.  This is an area where sustainability and profitability are expected to take primary positions in design and inventive decision making.  Innovators will find opportunities to use resources in new ways.  Geography and technology will have opportunities to collide in new ways, like how wireless technology facilitated providing communications in mountainous regions that would have been unreachable by traditional land line solutions.  Visualize cowboys on horses on mobile phones where there was no phone service before and you have a sense of the power of innovation and the scope and size of future markets.   Three billion people on the hunt for new products and technologies is a powerful motivator for scientists, engineers, and researchers globally.

Tuesday, November 29, 2011

On Inventing vs. Patenting

“Being imaginary, it was unencumbered by the real-world details one would need for a blue print, an engineering specification or a patent application.”

Alan Turing on imagining a computer, a machine to compute numbers.

Sunday, November 27, 2011

Coming Citation Crush

"The last decades have seen a significant increase in worldwide scientific publications, to about 1.5 million peer-reviewed science and engineering articles in 2008 produced by 218 countries – up from less than one million publications in 2000."

Source:  WIPO

Consider 1.5 million peer-reviewed science and engineering articles and the hunt for prior art.

There has been much discussion on the use of patent citations to understand how knowledge moves among researchers and inventors and then out into the world of products and commerce -  the spillover of knowledge from one domain to another.

Way Better Patents is working on new ways to use citations - patent and non-patent literature prior art references - to help you visualize how scientific publications and patents converge.

Please stay tuned.

Pandemonium In Patent Pendency

The precarious position of patent offices and patent pendence world wide portends continued unrest in the patent sphere and the potential decline in protection of precious inventions.  Please peruse the particulars.

In 2010, the number of unprocessed patent applications world-wide stood at 5.17 million.

As of 2009, the number of patent applications filed globally was about 1.8 million a year. (The last year the global number of patent application is available.)

In 2008, the US share of that number was 482,871, about 27%.

In 2010 the number of US patent applications hit 520,277.

In 2009 the USPTO granted 191,927 patents.

By 2010 the US number of patents granted hit 244,341 - less than half of the volume of new applications coming in the door.

In 2008 the global number of grants was 777,556.

The average patent pendency - the period of time between the time a patent application is filed to the time a patent office makes a final decision - is around 32 months.  This number is lower than the US average which stands at about 34 months.

The number of patents in force in the US as of 2009 was 1,930,631.  The global number is a confusing hodge podge of counts by national patent office that doesn't lend itself to compiling one consolidated number.

The bottom line is protracted patent pendency persists.

Monday, November 14, 2011

Race Against The Machine

Erik Brynjolfsson and Andrew McAfee published an ebook called, "Race Against The Machine: How the Digital Revolution is Accelerating Innovation, Driving Productivity, and Irreversibly Transforming Employment and the Economy."  At it's essence it offers economic and technical insight into why computers and information technology are irreversibly changing the employment and economic landscape of America and the world.

In a nutshell it's message is skills and technology rules.  Old school jobs for semi-skilled, high school educated people are disappearing and aren't coming back.  Entry level jobs that enabled people to gain a foothold in a company and work their way up have evaporated.  Mechanics need to be able to use computer diagnostics, high tech bar code readers recognize and sort package, ATMs replace bank tellers, and the nature of productivity is changing in ways we have yet to figure out.  Considering that Mr. Brynjolfsson and Mr. McAgee's ebook can be downloaded via Amazon and read on all manner of digital devices replacing printers, book stores, academic journals, and the whole food chain that goes along with it is an example of the very change described in this ebook with a very long title.

Monday, September 12, 2011

The Extra Ingredient

One of the biggest challenges in the patentsphere is solving the problem of information discovery.  There's a lot of information out there, and the quality of the data is not always great.  There is a practice of playing information hide and seek to describe things as broadly as possible to cover ever possible permutation of the invention now and into the future.  And it's hard to tell where a lot of it comes from, the data provenance predicament. Then when you finally find the information you need, then what?  How do you know it's factual and trustworthy?  A healthy dose of skepticism and good discovery and analytics go a long way.  Take the case of the extra ingredient.

Inventors are supposed to teach a person ordinarily skilled in the art how to build or make their invention.  If you are one of those people, you should be able to take the spec and make the invention.  But sometimes inventors insert a little negative know-how into the works to throw off the honorable competition.  Edmund McIlhenny of New Iberia, Louisiana did exactly that in his patent for the "Improvement on Pepper-Sauce" US Patent 107,701.  That pepper sauce based on the Tabasco pepper, know to us as the beloved Tabasco Sauce.

Negative know-how is the trade secrets that define what doesn't work.  Negative know- how is hard to detect and when attempting to practice an invention that isn't coming out exactly right, dismissed as a lack of skill or simply not getting it exactly right.  The Pepper-Sauce invention is an early example of the value of a little negative know-how.

Jeffrey Rothfeder’s book, “McIlhenny’s Gold: How a Louisiana Family Built the Tabasco Empire,” investigated the history of the McIlhenny family and their business, one of the oldest privately held family-owned businesses in the US.  In his book Mr. Rothfeder describes how the company’s founder, Edmund McIlhenny, modified one of the ingredients of the recipe for Tabasco Sauce in his patent application to throw off the competition. Writing about the company’s patriarch and his patent application, Mr. Rothfeder notes,

“ A drop of bisulphate of lime is added to every ounce received from the press. The two mixtures thus prepared are now put together, and the whole compound worked through a fine flower sieve. The sauce is thus completely prepared and ready for use. 
“McIlhenny had two reasons for patenting his formula. First a patent would enable him to boast, particularly in period before there were regulators to police truth in advertising, that this product was one of a kind created by techniques so original they were even endorsed by the U.S. Government…his second reason for obtaining a patent somewhat obviated the first. McIlhenney wanted the patent to thwart would-be imitators. So, he applied for it with a recipe that wasn’t precisely the actual formula for making Tabasco sauce. In other words, the patent McIlhenny received…was based on a false recipe, just misleading enough to sabotage anyone who attempted to use the patent as a crib sheet to copy the product. …According to McIlhenny historian Shane Bernard, “There are no records of his purchasing bisulphate of lime”

The 1870 patent is short by today's standards.  A list of ingredients - Tabasco pepper, a handful of rock salt, fine vinegar, and a drop of bisulphate of lime.  A method of preparation, and two claims.     It took over 100 years for this information to be discovered.  Long after the patent expired.  

The message is retain your skepticism, examine patent data with a grain of rock salt, trust your judgement and look deeper when things seem a bit off and be on the look out for the drop of bisulphate designed to throw you off course.

Sunday, September 4, 2011

Indicia of Extortion

The latest update to the Way Better Patents collection of patent argot comes from real life patent practice exegesis from the patent assertion entity part of the patent landscape.  Judge Lourie for provided the eloquently phrased definition of this practice in the CAFC decision in Eon-Net LP v. Flagstar Bancorp.

Patent Argot is our term for the impenetrable wall of patent vocabulary.  Or as someone once put it, the process of taking English and turning it into something somewhere between engineering, science and legal speak with a few riddles blended in just for fun.  

An argot is, "a specialized idiomatic vocabulary that is peculiar to a particular class of people (the Intellectual Property and Patent Cognoscenti.)  Argot is sometimes defined  as a special language, especially that of an underworld group, devised for private communication and identification; a language with its own style, grammar, and vocabulary.  

Indicia of Extortion - filing nearly identical patent infringement complaints against a plethora of diverse defendants where the plaintiff (the guy filing the lawsuit) followed each filing with a demand for a quick settlement at a price far lower than the cost to defend the litigation.