Funding the Patent Office, Corruptly

From a Washington Monthly article of nearly a year ago:

The 1991 decision to make the PTO pay for itself, however, has created a series of perverse incentives that encourage the office to approve undeserving applications, and has made it easier for applicants to game the system.

Because each new application now brings in a $380 fee, the agency has an incentive to approve those patents sending a signal to the market to apply for more. Additionally, patent-holders pay annual maintenance fees for the first 12 years of a patent's life, meaning that each approved patent brings in a total of over $3,000 to the office. So every patent issued means a bigger budget for the patent office, and helps to guarantee that Congress will continue to look kindly on the office. “It's like telling the Treasury Department, go call the Bureau of Engraving and Printing and tell them that they're gonna get paid by how many twenties they print,” says David Martin, who runs M-CAM, an intellectual-property consulting firm based in Charlottesville, Va., and has testified frequently before Congress about the patent system.

Dan Ravicher, of the Public Patent Foundation, a non-profit legal organization, agrees. “At the agency level, if you want to increase the number of people applying for a patent you don't want a reputation for being tough on applications,” he says. “You want a reputation for being a rubberstamp. And that's pretty much what the patent office is now.” The agency denies that management encourages examiners to approve applications. But one examiner told The Washington Monthly that he had been told by a manager, “We're not the rejection office ... if you can't figure out what's going on, don't reject it.” Another examiner agrees: “That's where the push is coming [towards allowing more applications], because allowances bring maintenance fees.”

The USPTO hates fee diversion, yet funding the office in this way can only lead to ever spiraling corruption and an ever increasing number of faulty patents.

Related: Patent Fee Diversion

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Nano-thickets: Setting Back Innovation

The burgeoning field of nanomedicine is already smothered with more than 5000 patent claims by different parties. In an article titled The Patent Land Grab in Nanotechnology Continues Unabated - Creating Problems Down the Road, Dr. Raj Bawa says:

"Patent thickets are considered to discourage and stifle innovation. Claims in such patent thickets have been characterized as often broad, overlapping and conflicting – a scenario ripe for massive patent litigation battles in the future." According to Bawa, nanomedicine start-ups may soon find themselves in patent disputes with large, established companies, as well as between themselves. In most of the patent battles the larger entity with the deeper pockets will rule the day even if the innovators are on the other side.

Breakthroughs in nanotechnology may experience significant set-backs because of these patent thickets, resulting in delayed deployment of technologies that can save and extend lives.

See also:

• Why Drug Companies Don't Need Patents
• On the Necessity of Drug Patents

Presumption of Validity

Courts currently grant injunctions against an accused patent infringer nearly automatically. This is done because patents carry a presumption of validity. Every patent issued by the USPTO is given the same status. The courts treat them all equally, as if the quality of each patent were beyond question. Yet we know that patent quality varies wildly, and that the patent office isn't always very good at distinguishing what is/isn't obvious, novel, without prior art, etc.

Today's Supreme Court Hearing in the eBay vs. MercExchange case provides evidence that at least some of the Justices understand this discrepency. Chief Justice John Roberts described the MercExchange patent this way:

It's displaying pictures of your wares on a computer monitor and picking the ones you want. I might be able to do that.... It's not (like the patent describes) the internal combustion engine. It's very vague.

and Justice Stephen Breyer suggested that if eBay's "Buy it Now" feature could be patented, then

maybe A&P could patent its process for a supermarket.

Will any of this talk result in the removal of the presumption of validity? Opponents claim that taking such a step would result in pandemonium, with inventors getting a raw deal, rapists and murderers going free, and wild mountain gorillas declaring outright war on babies and little children. Personally, I think removing the presumption of validity would be a step in the right direction; let patents stand on their merits, not on the decisions of a single patent examiner in the PTO beauracracy.

Battling Editorials: Is the Patent System Broken?

From The Reflector:

the patent system is fundamentally and frighteningly broken. The emphasis has moved from encouraging innovations -- the stated purpose of patents in the U.S. Constitution -- to encouraging greedy profiteers to extort both true innovators and others who could benefit from the technology. No process, observation or thought is safe from these so-called patent trolls.

We have a hard time disagreeing -- a broken window is a broken window, and calling it otherwise doesn't make the window-breaker innocent. Of course, others are still trying to laud the economic benefit of vandalism. A reader of the LA Times wrote this:

The patent system does not need an overhaul. The standard of business ethics needs a major overhaul. It is time that large companies are held accountable for stealing the property of others. Lawyers should not determine who can steal what. The patent office should include a government-funded court of appeals to protect the intellectual rights it grants against encroachers and thieves.

When we talk about physical property, of course theft shouldn't be allowed. And sure, lawyers shouldn't be the ones deciding this issue. But, alas, ideas aren't physical property, and never can be. Bad patents shouldn't be used by unscrupulous individuals and unethical patent holding firms as a means of extorting money from other business, both large and small, or as a way to stifle innovation and scientific research. Period.

Ridiculous Patent: Rice

Yesterday, India and Pakistan thumbed their noses at the worldwide Intellectual Property Regime, agreeing to jointly patent basmati rice (India has a recent history of not bowing to external pressure to let the rest of the world walk all over it with dubious patent monopolies).

A U.S. firm had patented three varieties of long-grain Basmati rice in 1997, and sold rice under its brandnames, but the issue has irked South Asian farmers.

Science Friday Looks at Patents

NPR's Science Friday dedicated the last segment of their program to patent law, its effect on science, and recent/upcoming Supreme Court cases. It is very nice to see these issues starting to enter the mainstream dialogue.

Wonderful Facts of Idea Monopoly

Mother Jones collects a fascinating list of facts regarding the [mis]use of idea monopolies (patents, trademark, copyright):

• In 1982, Motion Picture Association of America head Jack Valenti told Congress that “the VCR is to the American film producer and the American public as the Boston Strangler is to the woman home alone.”
• Microsoft UK held a contest for the best film on “intellectual property theft”; finalists had to sign away “all intellectual property rights” on “terms acceptable to Microsoft.”
• By Passing the memorial Sonny Bono Copyright Extension Act, Congress added 20 years to copyrights. “I Got You Babe” now won’t enter the public domain until 2061.
• For including a 60-second piece of silence on their album, the Planets were threatened with a lawsuit by the estate of composer John Cage, which said they’d ripped off his silent work 4’33”. The Planets countered that the estate failed to specify which 60 of the 273 seconds in Cage’s piece had been pilfered.
• A French director had to pay $1,300 after a character in his film whistled the communist anthem, “The Internationale,” without permission.
• Martin Luther King JR.’s estate charges academic authors $50 for each sentence of the “I Have a Dream” speech that they reprint.

Many more are listed at the linked article.

This Essay Breaks the Law

A very well-written (and illegal) essay appeared in the New York Times Op/Ed section today. I can't tell you what it said, however, as doing so would infringe someone's patent. Apparently, even thinking about what is written there is illegal. If you want to break the law, you'll have to go read it yourself, and I'll have to hope that I don't get sued for providing the link. :)

Obstructing Invention

I came across this quote at one enlightened software vendor's website:

It was never the object of patent laws to grant a monopoly for every trifling device, every shadow of a shade of an idea, which would naturally and spontaneously occur to any skilled mechanic or operator in the ordinary progress of manufactures. Such an indiscriminate creation of exclusive privileges tends rather to obstruct than to stimulate invention. It creates a class of speculative schemers who make it their business to watch the advancing wave of improvement, and gather its foam in the form of patented monopolies, which enable them to lay a heavy tax on the industry of the country, without contributing anything to the real advancement of the arts. It embarrasses the honest pursuit of business with fears and apprehensions of unknown liability lawsuits and vexatious accounting for profits made in good faith.

Who said it? The U.S. Supreme Court, in 1882.

Here we are, 124 years later. Do we grant monopolies for 'every trifling device, every shadow of a shade of an idea, which would naturally and spontaneously occur to any skilled mechanic or operator in the ordinary progress of manufactures?' Do we allow a 'class of speculative schemers' to 'make it their business to watch the advancing wave of improvement, and gather its foam in the form of patented monopolies, which enable them to lay a heavy tax on the industry of the country?'

The Court of 1882 must have spent the last 50 years constantly rolling over in their graves.

Your Patent Reform Ideas

Yesterday, we highlighted some of the best ideas we've come across for meaningful patent reform. What ideas did we miss? Do you have an idea for fixing the patent system that you'd like to see enacted? Post it here in the comments section. We'll invite the best submittals to write a full-fledged posting on the front page in the coming weeks.

Reforms We Like

We've pointed you to many useful patent system reforms in the past. Today, we collect a few of our favorites together:

• The Independent Invention Defense
• Striking down Business Method Patents
• Eliminate Software Patents
• Premature Patent Expiration for Lack of Usefulness
• Fine Patent Holders for Valid Prior Art
• Make Statutory Invention Registraions Free
• Introduce a "Limited Patent" Option

Would you like to make a difference in this battle over the future of innovation and creation? Write to your Senators and Congressional Representatives. As always, feel free to cut & paste from any of the above articles (all content at Right to Create is donated to the public domain).

Independent Invention: The Light Bulb

Who invented the light bulb? Thomas Edison? Are you sure? From willitsell (via IPBiz):

An English gentleman (Joseph Swan) patented a similar light bulb in England a few months before Edison and other light bulb development considerably predated that. In fact, on October 8, 1883 the US Patent Office ruled that Edison’s US Patent was invalid due to prior art by William Sawyer. To summarize the story so far, the “light bulb” idea was not Edison’s, successful development took considerable resources, and Edison’s patent was worthless well before it had a chance to expire.

Edison, Sawyer, and Swan were not the only ones pursuing improvements on the light bulb idea. But even with Edison eventually winning the U.S. patent, it didn't do him a whole lot of good:

But Edison’s light bulb must have been a smashing success right? After all, it cost him over $10,000–in 1879 dollars when cheap labor cost 7 cents an hour–and everybody must have wanted electric light bulbs right? Some $200,000 plus later the light bulb was commercialized and 3,144 light bulbs had been sold to 203 customers by sometime in 1882. By 1889, 10 years after the patent, there were only 710 customers. The problem was that electricity and its support infrastructure cost too much and, of course, had to be installed. Ten more years later, after electricity costs had come down, there were 3 million customers and all the basic light bulb patents had expired. In fact it took 46 years for electric lighting to reach just 25% of the US population.

Seven years, and more than $100,000 in litigation expenses after Edison’s patent was invalidated by the US Patent Office, on October 6, 1889, a judge ruled that the electric light improvement claim for "a filament of carbon of high resistance" was valid. Unfortunately further research exposed in A Streak of Luck by Robert Conot (1979), also shows that Edison and his attorneys hid significant information from the judge. They cut out the October 7-21, 1879 section of a notebook that the judge might have determined showed that they were simply extending Sawyer’s (or Swan’s) work with carbon "burners" or "rods" in an evacuated glass bulb.

The reality probably is that all Edison and his team did was change their terminology to "filament" and there is a high probability they got that from a presentation Mr. Swan made in the US after filing for his patent in England. In fact, Edison and his team did not find a commercially workable filament (bamboo) until more than 6 months after Edison filed the patent application. The weak and short lived (40-150 hours) carbon filament was laid to rest for good by the coming of the tungsten filament in 1906.

We love to beat a dead horse here at Right to Create, and our current system of ignoring the independent invention defense is certainly a rotten, stinking corpse.

Previous Independent Invention Coverage:

• The Telephone
• The Airplane
• The Automobile

Broken Windows, Broken Patents

Many of you, no doubt, are familiar with Bastiat's Parable of the Broken Window, in which is illustrated the fallacy of economic benefit caused by a small boy who throws a stone through the shopkeeper's window, causing money to be spent by the keeper to pay a glazier to replace the window, which the glazier then uses to buy bread and shoes, etc. The parable illustrates the fallacy of ignoring hidden costs by pointing out that the money the keeper had to spend on the window, if not broken, could have been applied directly to the breadmaker or shoemaker (or the coatmaker, or even the glazier), resulting in the keeper having both the window and other materials. Instead, the money now only buys him a window, those other possible transactions are no longer possible, and the boy has indeed caused economic harm to society as a whole.

What does this have to do with bad patents? The little boy in this case is he who seeks bad patents, whether a patent holding company, an independent inventor, or a large portfolio-stuffing corporation. Patent lawyers are represented by the glazier. A society which does not punish windowbreakers, or at least does not hold them accountable to pay for damages they cause, is a society that does itself great economic harm. Do we, by endorsing a broken patent system and allowing the USPTO to be hijacked by patent-holding interests, encourage window breaking?

When patents that clearly harm innovation, science, industry, and the freedom of creation are allowed to punish those who seek to bring inventions to the market, do we see the broken window for what it is?

What if the glazier were in league with the little boy, paying him a small amount for every window he breaks? Clearly, this would be seen as stealing, and punished as such. But what if the glazier, instead, pushed for laws that enshrined window-breaking as a beneficial activity, laws that actually encouraged window breaking? What if window breakers could get money directly from the shopkeeper when they broke his window, instead of from the glazier? Would we see through such a scheme?

Such is the current relationship between patent lawyers, patent holders, and our legal system. Overly-broad, obvious, and non-useful inventions are granted patent protection regularly. Patent trolls, who have no desire to ever create products from their patents, regularly shake-down others who do. We have no exceptions for independent invention, for scientific research, for private tinkering. We patent 'anything under the sun', even if it causes great harm to the useful arts and sciences. We allow software and business methods to be patented, even though both embody purely abstract ideas, and even though most of the rest of the world does not protect these pure ideas with patents. We've set up the USPTO to be incentivized to grant as many patents as possible. Our legal profession has every reason to prop up a broken system. And current patent-holders are self-interested to see that the broken system propogates, encouraging our legislators to 'reform' the system in ways that benefit only them.

The evidence is massive. When it comes to patents, we love window breakers.

Do we see it?

BlackBerry: Inspiring Patent Reform?

We've posited before that a complete shutdown of the BlackBerry network through an injunction at the request of a troll whose 5 patents have all been found [pre-finally] invalid would be an incredible catalyst for patent reform, as millions of BlackBerry users march on Washington (so to speak). Unfortunately, RIM blinked, NTP got their extortion money, and we'll never know for certain if Judge Spencer really would have had the guts to issue such an injunction.

Perhaps some change will come of this experience after all, the Financial Times writes.

Independent Invention: The Telephone

Who invented the telephone? Was it Alexander Graham Bell, Elisha Gray, Thomas Edison, or Antonio Meucci? How about all four, independently?

The problem with rewarding only the first inventor, or the first to file the invention, is that this is a completely arbitrary designation that is fundamentally unfair to the other independent inventors. It also illustrates problems of obviousness; if four distinct inventors could all arrive at the same invention, independently, within months or even a few short years of each other, doesn't that imply that the invention is 'obvious to one skilled in the art'?

The independent invention defense fixes this.

And of course, the telephone isn't the only example. We've talked in the past about the airplane, the automobile, and the digital computer. Add telephones into the mix and you have four of the most important inventions of our time, all independently invented by more than one person. Yet we award a monopoly over the invention to only one of the discoverers. This is fair, how?

Brits 'Get' Patent Problems

The UK Patent Office appears to understand that the current patent system has severe flaws. Andrew Gowers, who was asked to lead an independent review into intellectual property law in the UK, claims that small firms are failed by patent law. He also claims that, "There are patent thickets, which are a complex web of patents which may stunt invention and discourage research and development."

Hooray for independent assessments! Perhaps if the US appointed an independent party to assess the patent system, we'd get further than non-legislative internal tweaks and pleading for more money to hire more examiners, and we'd actually get meaningful reform proposed in law.

Blaming Lawyers

The law-blog-o-sphere (blawgosphere) is up in arms ([1] [2] [3] [4] [5] [6]) over an editorial in the Wall Street Journal that blames lawyers for some of our patent woes.

Okay, I'll say it: patent lawyers don't deserve all of the blame for our current mess. If I had to put accountability on one group's shoulders, I'd probably first blame Congress, for abdicating their responsibility of oversight and allowing the courts to invent patent law (a la State Street, etc.). But, the lawyers don't get off scot-free here either. They do make a lot of money from a broken system, and have a vested interest in keeping it broken. I know I'll catch some flak for saying it, but the more broken the patent system, the more we need lawyers to help us sort it out. And by not pushing for reforms that would eliminate such court-created patent categories as software and business method patents, attorneys become complicit in supporting a corrupt system (The EU recently rejected software patents, and in Asia, only Japan has them). Of course, software and business method patents are very profitable for attorneys, so they have nothing but disincentives to change the system. It's awfully difficult to have the courage to stand up against an oppressive regime, especially if that oppressive regime pays for your large home and nice car.

So, to my lawyer colleagues and fellow bloggers, I'd say this: if you want to ensure that editorials like the one in WSJ don't keep appearing, stand up on the right side of these issues and actively push for reform. It would help if you occasionally sought out volunteer pro-bono patent defense work for those individuals, researchers, and even small businesses who are harangued by unjust cease-and-desist letters. Or find a couple of patents that you view as obviously bad and donate your time to help out in invalidating them through the USPTO's re-exam process. Pick high-profile cases, publicize your activities, and help the common man see that you really are in this because of ideals, and not just for the money.

Perhaps you are already doing this, but we aren't hearing about it. If so, speak up!

But sadly, from the looks of most of your blogs, you've chosen to adopt 'ideals' that conveniently align with your own profit motives. Maybe those mores are convincing to you, but they aren't to the rest of us.