Hooray for the USPTO!

The New York Times is reporting that the USPTO has taken the unusual step of notifying both RIM and NTP that NTP's patents will be invalidated.

We do our fair share of criticizing the patent system here at Right to Create, and often the criticism lands squarely on the USPTO. But we will admit that the USPTO sometimes gets things right when they try, and their involvement in the RIM v. NTP case is a great example of them putting forth extra effort.

But let us not forget that NTP wouldn't have had a case to take to court against RIM if the USPTO hadn't approved these spurrious patents in the first place, that both RIM and NTP have wasted millions of dollars in court because of these bad patents, that RIM has seen massive losses in potential sales and stock devaluation as a result of the case, and that a large number of your tax dollars have also been wasted in this court battle.

We shouldn't lay all the blame at the feet of the USPTO; much of the blame lies with Congress' abdication of patent system oversight and unwillingness to put forth truly meaningful patent reform measures. But let us also see the USPTO's actions for what they are: a demonstration that it does have power to do the right thing when it wants to. Saddly, it doesn't have the resources to take this kind of action for many, many cases that are identical to NTP v. RIM in their absurdity. Undoubtedly, the USPTO acted in this case because of tremendous pressure put on them from the press as well as internally from actors within the government. Would they have done the same had the press not covered the case so fervently? Would they have done the same for you or I if we were in RIM's position against a patent troll like NTP? I hope so, and I hope this case causes the USPTO to take another serious look at their processes. But I fear that the answer is simply, "no," and that until serious, meaningful reform is enacted in law, we are stuck with a system that punishes innovation at least as much as it helps it.

BusinessWeek on our Failed Patent System

From the article:

For over 200 years, the U.S. patent system has catalyzed economic growth and protected the national interest. Unfortunately, over the past few decades, patents have become irrelevant -- even harmful -- to the innovation process.

The striking thing is, this editorial wasn't written by some crank. This is Greg Blonder, who led research at AT&T for a number of years, has 70 patents to his name, and is now involved in funding startups through venture capital. What does someone with his experience think of the current state of affairs with our patent system? He thinks that there is a serious problem with patent quality, even admitting that most of his 70 patents shouldn't be protected by government granted monopoly.

Read this article. Then read the comments in the feedback section. It seems that we are reaching broad consensus on these issues: the patent system needs some serious, meaningful reform.

Why Drug Companies Don't Need Patents

In any debate over the utility of patent systems, IP-maximalists will almost always fall back to the example of the pharmaceutical industry. If this industry didn't have the incentive of monopoly on new drugs, they would never invest the millions of dollars that are necessary to perform new drug research and development, so the argument goes. Without new drug research, no new drugs would be produced. And if new drugs aren't produced, we all suffer from sickness and death. Therefore, they claim, patents are not only good, but directly vital to our well-being.

At first glance, this argument seems quite compelling. Those who put forth this argument choose it carefully -- no other industry, it seems, spends so much money on research and development, and is in such need of protection from cheap knockoffs. Or so it seems.

The truth is, these arguments are so poorly-founded and so misleading that we shouldn't feel bad about calling them, simply, "lies." Here are 6 reasons why:

1. History. Historically, western countries have had vastly different levels of monopoly protection for chemical production and chemicals themselves, ranging from almost no patent protection (in Switzerland prior to 1977 and Italy prior to 1978), to patents only for chemical production processes but not the products themselves (in France and Germany), to full monopoly grants on both processes and products (in the US and UK). Boldrin and Levine summarize these facts as follows:

   Now, you may be wondering, why are we boring you with all these details about specific countries, patenting of chemical processes, and pharmaceutical products, and so forth? For a very simple reason: if patents were the source of medical innovation as claimed by intellectual monopoly apologists, the large historical and cross country variations in the patent protection of medical products should have had a dramatic impact on the pharmaceutical industries of the different countries. In particular, at least between 1850 and 1980, most drugs and medical products should have been invented and produced in the United States and the United Kingdom, and very little if anything in continental Europe. Further, countries such as Italy, Switzerland and, to a lesser extent, Germany, should have been the poor sick laggards of the pharmaceutical industry until the other day. Instead, as everyone knows since high school, the big time opposite is and has been true. This is as macroscopic a contradiction of the intellectual monopoly apologists' argument for patents in general, and for medical patents in particular, as one can possibly imagine.

   Boldrin and Levine are correct: the most prolific innovators in the pharmaceutical industry during this period were precisely and consistently those countries with the weakest patent monopoly protection.


2. Patents Hinder Drug Research. Much as we've seen before with patents hindering science in general, patents are having a major effect on killing drug research. The chief scientific officer at Bristol Myers Squib, Peter Ringrose, told The New York Times that there were "more than 50 proteins possibly involved in cancer that the company was not working on because the patent holders either would not allow it or were demanding unreasonable royalties."


3. Public Funding of Drug Development. According to the NIH, taxpayer-funded scientists conducted 55 percent of the research projects that led to the discovery and development of the top five selling drugs in 1995. The assumption in the argument for patents is that no one but commercial interests will do drug research. This is nonsense. We spend billions of dollars in tax money on new drug development every year -- in many cases, these are drugs that save lives that the pharmaceuticals are uninterested in researching, because their profit margin is too low. So we already have government subsidized drug development. What this means is that we, as a society, agree that this is an important public good, and should be funded as such. Do other public goods need patent protection? And yet we give our government-funded and developed goods patent protection, and allow pharmaceuticals to pay public researchers and universities for those exclusive rights. Tell me again, how does this setup benefit anyone but monopolists?
   
   Here are a handful of additional stunning facts with regard to private vs. public spending on drug development (from the Public Citizen report on drug R&D myths):
   
   
   • A study by a Massachusetts Institute of Technology (MIT) scholar found that publicly funded research played a part in discovering 67% of the most important drugs introduced between 1965 and 1992.
   
   
   • 90% of the top-selling drugs from 1992-1997 received government funding for some phase of development.
   
   
   • The NIH report discovered that only 14 percent of the drug industry’s total R&D spending went to basic research, while 38 percent went to applied research and 48 percent was spent on product development. The report concluded, “To the extent that basic research into the underlying mechanisms of disease drive new medical advances, the R&D in industry is not performing the role played by public research funding.”


4. Pharmaceutical Spending. The fortune 500 drug companies dedicate 30% of their spending for advertising and administration. Only 12% gets reinvested in research and development. So much for the massive costs of drug development. Does this industry that requires so little on up-front investment in R&D really need the added benefit of government sponsored monopoly protection?


5. Excessive Profits. One of the most effective indicators that anti-trust regulators use to determine monopoly power is the presence of excessive profits; monopolies have the power to 'rent-seek' and set prices artificially, and so profits that are out-of-line with other industries are good evidence for monopoly power. In the case of pharmaceuticals, the evidence is not hard to find: exorbitant amounts of money spent on advertising (most in the form of drug rep visits to offices, purchased lunches and trinkets, fully-paid vacations to expensive resorts given under the guise of conference attendancee, etc), exorbitant amounts of money spent on lobbying (pharmaceuticals are perennially in the top 3 of campaign contribution industries), and exorbitant profits (how often do you hear about a "struggling pharmaceutical?"). Does this industry that makes so much money at such high prices to consumers really need the added benefit of government sponsored monopoly protection?


6. Patents Kill. Sadly, in much of the developing world, patents restrict countries from obtaining or manufacturing medicines that could save lives. It seems that our Intellectual Monopoly Regime says that patent claims by pharmaceuticals are more important than life itself in many cases.

So, when someone tells you that the pharmaceutical industry is a perfect example of why patent monopolies should be granted, go ahead and agree with them -- just make sure to help them understand that even that strongest of pro-patent examples is not very strong at all. As Boldrin and Levine summarize:

the case for patents in pharmaceuticals is weak – and so, apparently, even under the most favorable circumstances patents are not good for society, for consumers, or in this case, for sick people. Patents are good for monopolists, but that much we knew already.

Another Patent Reform Proposal

Patently-O summarizes a recent proposal by two law professors and an economics professor: weaken the 'presumption of validity' of granted patents, offer a new higher-priced examination that comes with a 'presumption of validity', and institute a post-grant opposition system.

These reforms sound like a very small baby-step towards meaningfulness. But those steps are hampered by the advantage they would continue to give to well-healed parties over those without the resources to participate. Large corporations, for example, would be more able to afford the higher-priced examination, and would be much more likely to fund a small army of lawyers to participate in the post-grant watchdog process. Meanwhile, independent inventors, startups, and small businesses are left with the scraps of patents stripped of the presumption of validity, and with lingering fears that a rich competitor will post-grant their patents to the grave.

Here's a reform that helps the small guy: make Statutory Invention Registrations (SIRs) free. Subsidize their examination costs with the fees collected for patent applications (the USPTO takes in more money than they spend). SIRs don't provide inventors with exclusive monopolies, as patents do, but they do offer protection in the form of documented prior art and proof of inventorship. And, perhaps most importantly, with more SIRs the chances for examiners to find claims on applications that should be invalid is increased, and patent quality increases.

Why would a small startup want to use SIRs instead of patents? The more I talk with people doing startups, especially in the high-tech industry, the more clearly I see that their fears are not that big companies will 'steal' their ideas, but more that big companies and patent trolls will force them out of business. Their attitude, by and large, is, "I don't care if someone wants to try to compete with me on merits. What I do care about is the constant fear that someone will get a court to grant an injunction against our innovative products." For this group, SIRs could be a powerful tool, without removing the option for others to file for patents. The only problem? SIRs, although slightly cheaper than patents, are not cheap enough to make them attractive over patents. By subsidizing their examination, we would incentivize innovators to file.

'Patents Kill,' say Doctors Without Borders

This year's World Trade Organization (WTO) meetings are producing some interesting debate:

The Nobel Peace Prize-winning relief group Doctors Without Borders warned Tuesday that WTO rules on intellectual property rights make life-saving drugs too expensive for poorer nations.

As one example, a recent WTO agreement on protection of patents has left some 26 million people in Africa without hope of gaining access to AIDS medications that were available before the treaty:

in all these countries one company has the monopoly to sell and make the drug available. Before WTO rules, it was possible in WTO countries for local manufacturers to produce their own versions of newer medicines and that always led to a downward effect on prices. The newer medicines - and I'm talking about medicines that have been developed since 1995 - are almost all priced out reach of people in developing countries.

The newer rules do allow countries to domestically produce and sell patented medicines in the interest of public health, but only Kenya and South Africa have the industrial know-how to attempt this -- the rest of the continent is essentailly excluded from medical treatment because of patent monopolies.

AIDS is perhaps the most striking example, because of its nearly pandemic nature in Africa and its deadliness. But similar arguments can be made about a multitude of other medicines that are considered vital to public health in the developed world, yet are withheld by force from those who need them most: the poorest and needy.

This Christmas season, perhaps we can try to help these people. You can certainly post your feelings about these things in the forums at the WTO website, but it might be more effective to try to get your locally elected officials to push for reform. Write to your senators and representatives.

Followup: Why Drug Companies Don't Need Patents

Creative vs. the World

As you may have heard from the mainstream press, Creative Technology is threatening to sue all makers of portable music players over an interface patent that covers selecting songs hierarchically in a music player, e.g., by selecting genre, then artist, then album, etc.

Peter Zura is betting that they won't go after Apple's iPod, because Apple's patent portfolio is 5 times larger than Creative's. If Creative were to go after Apple, Apple could use their portfolio defensively in a counter-attack against any number of Creative devices, products, and technologies. But what about smaller companies that aren't as well endowed with patents? What about the startup with an absolutely phenomenal new way of listening to music that gets shut down by Creative? What about small inventors?

This is an excellent example of how our patent system works to benefit large corporations and disadvantages the independent inventor and small business. Only those with huge patent arsenals are allowed to play this game, and if you've only got a couple of handguns and rifles, well, good luck. You probably aren't any match for your opponent who has uranium-depleted armor-piercing automatic machine guns.

Ridiculous Patent: Patenting Math

Today we point you to US Patent #6,434,582, "Cosine algorithm for relatively small angles." You read that right. The USPTO granted a patent on generating cosines for small angles.

If you read the claim, it appears that it applies only to a physically embodied circuit inside of a arithmetic logic unit (ALU). If you look at the diagrams, it certainly looks like it covers schematics. But this is almost certainly misleading. The talk of AND gates and OR gates and wired inputs and outputs describes precisely the logic required to perform the computation. And, if you read claims 11-14, it is clear that the patent is meant to apply more broadly than to just the physical embodiment of the circuit, that it is intended to extend to the algorithm itself. Any theoretical computer scientist or electrical engineer did homework excercises in college whose answers looked a whole lot like this.

Why is this dangerous? The patent covers pure logic. Pure logic is mathematics. Math is considered to be a fact of nature. Under 35 U.S.C. §101 patents can't be granted that cover the "laws of nature, natural phenomena, and abstract ideas." But here you have it: a government granted monopoly on a natural phenomena.

This is but one example. All computer software reduces to math (this too is a fact of nature, resulting from theoretical work of men like Alan Turing and Alan Church). All algorithms are math. All computer software, therefore, should be excluded from being patentable. Yet it is not. In fact, the USPTO has granted over 170,000 patents on software.

Why is software so fundamentally different from other types of inventions? Software is easily authored by anyone who wants to spend the time to do so, much like books are easily authored by anyone who wants to put pen to paper. It takes a bit of training and practice of course, but the end result is the same: an abstract idea implemented inside of an abstract device (in the case of a novel, inside the pages of a book; in the case of a program, inside the processor of a computer).

As Ben Klemens at the Brookings Institute wrote,

When you use the Record Macro feature of your word processor, you are writing a computer implemented technology which may infringe a patent—and if you put that document online, you are distributing your infringing technology worldwide. There are over 170,000 software patents filed with the U.S. Patent and Trademark Office, many very broad and all written in unintelligible legalese. It is clearly absurd to propose that every person in the U.S.A. must do a full patent search every time they record a macro, but that is theoretically what one would need to do to avoid liability.

The result is a law which is only partly taken seriously. Ronald Mann, a scholar at the University of Texas, interviewed venture capitalists and programmers, and found a resignation toward software patents: programmers do not do a patent search on every line of code, but instead simply assumed "[...] that there would be something in IBM's [patent] portfolio that their product infringed." Testimony after testimony to the Federal Trade Commission by businessmen and programmers said the same thing: to stay within the law requires such an absurd, paralyzing amount of work that nobody bothers. Conversely, one would be hard pressed to find a pharmaceutical company which does not bother with regular patent searches.

To give a more ironic example, the Recording Industry Association of America is famous for its crackdown on infringement of the intellectual property of the artists it represents, but a company named Altnet claims that the RIAA's technological attempts to stop peer-to-peer networks are infringing its patents. Even the most vehement defenders of intellectual property are unable to ensure compliance with the vast array of software patent claims.

Simply put, it is effectively impossible for you or the people in your IT department to use a computer without infringing on a patent.

India Strikes Back at Bad Bio Patents

The Indian government is creating an encyclopedia of traditional Indian medicine, hoping that it will be used as evidence to invalidate existing patents and prevent new ones. This is a good example of a disadvantaged country striking out against the Intellectual Monopoly Regime (we previously wrote about less effective attempts by Andean nations to do something similar).

In 1995, the US Patent Office granted a patent on the wound-healing properties of turmeric.

Indian scientists protested and fought a two-year-long legal battle to get the patent revoked.

Last year, India won a 10-year-long battle at the European Patent Office against a patent granted on an anti-fungal product, derived from neem, by successfully arguing that the medicinal neem tree is part of traditional Indian knowledge.

In 1998 the US Patent Office granted patent to a local company for new strains of rice similar to basmati, which has been grown for centuries in the Himalayan foothills of north-west India and Pakistan and has become popular internationally. After a prolonged legal battle, the patent was revoked four years ago.

And, in the US, an expatriate Indian yoga teacher has claimed copyright on a sequence of 36 yoga asanas, or postures.

Dr Vinod Kumar Gupta, who is leading the traditional wealth encyclopaedia project and heads India's National Institute of Science Communication and Information Resources (Niscair), reckons that of the nearly 5,000 patents given out by the US Patent Office on various medical plants by the year 2000, some 80% were plants of Indian origin.

As it becomes increasingly clear to the developing world that IP-maximalism hurts them more than it helps, we should see more efforts like these. With any luck, they will prove to the rest of the world that the freedom to create is more important than artificial idea monopolies.

America's Most Prolific Inventors, as per the USPTO

USAToday has a wonderful article today on our most prolific inventors, as determined by how many patents they hold. Who is America's top patenter? Thomas Edison? I'm afraid not:

So much for the legend of Edison. America's greatest inventor is apparently an obscure guy in Japan who makes stuff most people can't comprehend. And the nation's greatest native inventor seems to be a man who has come up with 100 different ways to make a flower pot.

That's innovation for you, US Patent Style.

Activity: Join IPac

IPac is a political action committee dedicated to "preserving freedom through balanced intellectual property policy." While perhaps not advocating as drastic of reform measures as you may hope for, they are pushing in the right direction. Head over and sign their petition, support their candidates, read their guiding principles and decide if they align with your own (if they do align, make a donation).

VideoLAN Legislated Out of Existence?

VideoLAN, one of the most popular free DVD players and network video streamers (and, I would argue, the most useful piece of software in this category among all, free or proprietary), may be shut down by legislation pending in France, where its core team of developers reside.

The legislation in question is the DADVSI law, a french transcription of the EUCD (European Union Copyright Directive) text, which itself comes from the American DMCA (Digital Millenium Copyright Act). You didn't think it could get much worse than the DMCA, did you? You were wrong. Not only would this legislation outlaw devlopment and distribution of VideoLAN, but if you are caught using any non-sanctioned DVD player (for example, any DVD player on Linux), you can go to jail for 3 years. The law will also outlaw ripping MP3s from CD and such practices as lending music to a friend.

I suppose that if we haven't yet been successful in exporting full democracy to places like Iraq, at least we can take some solace in the fact that our oppressive copyright laws seem to spread like wildfire.

Ridiculous Patent: Combing Hair to Conceal Baldness

Claim #1 from the patent:

A method for styling hair to cover bald areas using only the individual's own hair, comprising separating the hair on the head into several substantially equal sections, taking the hair on one section and placing it over the bald area, then taking the hair on another section and placing it over the first section, and finally taking the hair on the remaining sections and placing it over the other sections whereby the bald area will be completely covered.

Fortunately, the patent was filed in 1975 and thus expired in the early 90s. Today you are free to style your bald head this way without paying royalties to Frank and Donald Smith. That's progress for you, brought to us by the USPTO. Thanks, Patent Office!

Previously Ridiculous:

• Swinging
• The Wheel
• Anti-gravity device
• Highlighting Numbers

Patent Sanity Pending?

A fabulous editorial appeared in this weekend's LA Times:

On many levels, the U.S. patent system is profoundly flawed. Too many patents are issued for "innovations" that are obvious, vague or already in wide use. Too many patent holders try to extend their claims to devices and services that weren't even contemplated when the patents were granted. And it's a difficult, costly exercise to overturn a questionable patent after it has been awarded.

Compounding the problem, federal courts have been quick to hand patent holders a sledgehammer when their patents have been infringed. The appeals court in Washington takes the position that, except in exceptional circumstances, courts must issue permanent injunctions to stop infringers from using the inventions in dispute.

Some have criticized the editorial because it makes these claims without supporting evidence - but that portrays a fundamental misunderstanding of the editorial format; there is not room in an editorial for a treatise with footnotes. Suffice it to say that evidence supporting the writer's position is in abundance. A quick google search on "ridiculous patent" will give the reader a wealth of reading to peruse (you can also try "patent obvious vague" etc). Or you can simply visit the USPTO's website and type random, innocuous queries into the patent database and be amazed at the things that turn up, or you can skim through many of our past posts here at Right to Create. Wherever you look, patent system abuse abounds.

Experts Debate Software Patent Reform

BoingBoing points to a debate on software patents occuring on Dec. 7 at the Brookings Institution. If you are in the D.C. area next week, you might want to register and attend to bolster audience support for software patent reform.

From the event's moderator:

There'll be two of the best advocates against software patents, Richard Stallman (of the FSF) and Brian Kahin (of the Ford School at UMich and the CCIA); and there'll be two of the best advocates for software patents, Ken Dam (who sired many a software patent as a former IBM VP), and Emery Simon (of the Business Software Alliance, one of the key players in passing the DMCA).

USPTO to Invalidate NTP Patent?

To follow up on our recent coverage of the ongoing BlackBerry litigation debacle, the USPTO has issued a non-final rejection of the patent at the core of the BlackBerry case, according to new reports (additional coverage here). The summary of a USPTO document dated Nov. 30 states, "the next office action is expected to be a final rejection of all current claims."

This is good news for RIM and BlackBerry users, and good news for innovation. It is bad news for companies like NTP, considered by many to be the worst kind of patent troll.

If the rejection is finalized, RIM is exonerated. But at a high cost: this litigation has been proceeding for more than a year now, with both sides spending large sums of money that drive up the cost of consumer products and steal earnings from stockholders. Worse, RIM is still looking at the possibility of having to pay NTP several billion dollars to make this all go away; the courts seem to have already decided to force a settlement even if the patent becomes invalid.

You may ask yourself why a company like NTP with shaky patent claims can get this far. The answer is that the system is set up to encourage this type of behavior. Patents on overly-broad, obvious, or outright invalid claims are far too easy to obtain, and the rewards for trying to extort money with these claims is far too great, while the negative consequences are almost non-existent. If it loses, NTP could walk away from this whole thing with no punishment other than a bill for its own court fees. RIM and the BlackBerry, on the other hand, have suffered marketplace uncertainty over the continuing viability of its main product line (read: potential sales loses) and corresponding setbacks in its stock price. It has also had to invest in re-implementing its network and technology to skirt the disputed patent claims.

Can RIM recover any of these loses by counter-suing NTP for damages? Unlikely -- NTP can claim good faith in its persecution of RIM; it had a patent in hand that was issued by the USPTO, stating that it was the sole owner of this idea of sending email over wireless signals.

Update: Further coverage at Peter Zura's 271 Patent Blog

BlackBerry with a Gun Against its Head

Articles that predict an imminent injunction against the BlackBerry network are now appearing in the press.

No one knows how this will turn out, but RIM is hinting that it wants to keep fighting, threatening to rollout a new implementation that they claim doesn't infringe NTP's patent. So let us suppose for a minute that RIM bravely fights on. What could happen?

The courts could decide, as early as in the next few weeks, to put the injunction back into effect and shut down the RIM network in the U.S. What effect would this have? It would certainly enrage millions of American BlackBerry users. For the first time in quite a while, a large populous would feel the oppressive weight of our current patent system bearing down directly on them, their businesses, their lifestyles, and their comfort. They would directly feel the unfairness inherent in a system that impedes innovation and progress at the behest of idea monopolists. With all that pain, they might even clamor for effective reform.

Here's hoping that RIM maintains the course, and bravely fights to expose these serious flaws in the U.S. Patent System.

Previous coverage of the BlackBerry:

• The Wright Brothers & the BlackBerry
• BlackBerry Tiptoes
• Supreme Court to Reform Patent Law?