Archive for IP rights
On Sept. 16, President Obama signed the Leahy-Smith “America Invents Act” which supposedly will strengthen innovation and improve our patent system. It’s a radical change in our patent system–one that seems to have been drafted by people who don’t fully understand patents or innovation.
Does this bill promote innovation as advertized? What about that 15% rate hike for patent fees–a new 15% tax on the IP that entrepreneurs need. That’s the most immediate and obvious change. Guess which way that increased burden tilts the balance? Economics 101 suggests that making innovation more expensive is not likely to make it more abundant. But Congress may know better.
Congress apparently recognizes that we have a problem with the patent system, where huge backlogs exist that cause enormous delay and expense for inventors. The backlog and efficiency problem they are allegedly fixing, however, does not require all the unintended consequences of revising patent law but simply improving the administration of the PTO. For example, if Congress would refrain from siphoning off many millions of dollars of PTO funds each year, effectively taxing innovation and crushing the ability of the PTO to properly staff itself and keep its systems up to date, then the backlog could be easily resolved, in my opinion. Unfortunately, we seem to have another case of politicians proposing costly solutions that won’t solve the costly problems that they caused. As long as Congress can redirect funds received by the PTO, the administrative problems at the PTO will not be resolved by changes in patent law. (See “Patent Reform–A Tax on Innovation?” and “Let the Patent Office Keep Its Money.“)
While probably not solving the problems it allegedly fixes, the America Invents Act clearly raises a host of new problems that may lead to unpredictable results in costly litigation for years to come. The radical changes involving who gets patents and what is prior art use confusing language that strips the bill of the “certainty” that its proponents allegedly sought to restore in the system. See excellent reviews of the controversies in these sources:
- Joshua D. Sarnoff, “Derivation and Prior Art Problems with the New Patent Act,” 2011 Patently-O Patent Law Journal, http://www.patentlyo.com/files/sarnoff.2011.derivation.pdf.
- Eric Guttag, “Some More Heretical Thoughts on Strategies for Coping with First to File Under the America Invents Act,” IPWathdog.com, Oct. 5, 2011.
- Gene Quinn, “Prior Art Under America Invents: The USPTO Explains First to File,” IPWathdog.com, Oct. 4, 2011.
Harold C. Wegner of the respect form Foley and Lardner has published an analysis of the law (3rd edition, Sept. 29, 2011) which highlights its pervasive ambiguity due to poor drafting. This is a serious issue which will cloud patent law and hinder the quest for patent rights for years to come. Wegner also rules that the new law may increase backlogs because appeal judges will have to continue dealing with their heavy load of existing cases as well as take on added cases of “post-grant reviews” and other new administrative procedures (supplemental examination and transitional examination of business method patents) which are provided in the new law. The backlog is sure to increase and fees will be raised even more to cope. Meanwhile, the new post-grant review process has “dractonian” elements, as Wegner observes, that may further impede the ability of an inventor with a real invention to obtain a patent. Further, there are numerous details Wegner identifies in his 177-page text showing potential harm to “upstream” entities like universities and small inventors while benefiting those downstream entities that want to use the innovations of others for their business as cheaply as possible. I smell innovation fatigue.
In my view, the bill reflects fundamental ignorance about the nature of invention. The perplexing provisions on prior art highlight this. Years of litigation that will be needed to clarify what on earth is meant by the new prior art provisions as patent professionals already express exasperation over issues of derivation, inventorship, and prior art in the new law.
A crucial part of the ignorance here is on the nature of invention itself, amplifying the confusion created by the judiciary regarding what is patentable. Viewing business methods and software as somehow being non-technical, in spite of typically involving highly technical systems and tools, opens many cans of worms. If something is novel, useful, and non-obvious, why should it not be patentable if it involves computers and electronic data? But the judicial backlash against vaguely defined “business method patents” has been institutionalized in this new law, where business method patents dealing with the financial services industry (thank you, Wall Street lobbyists) have been given special treatment, allowing Wall Street to have a special route to invalidate patents that otherwise have survived basic prosecution, reexamination, and prior litigation. Section 18 of the law describes how those being sued by a “covered business method patent” can have a special hearing to invalidate the patent. That section includes this gem to define that key term:
(d) DEFINITION.–
(1) IN GENERAL.–For purposes of this section, the term “covered business method patent” means a patent that claims a method or corresponding apparatus for performing data processing or other operations used in the practice, administration, or management of a financial product or service, except that the term does not include patents for technological inventions.
(2) REGULATIONS.–To assist in implementing the transitional proceeding authorized by this subsection, the Director shall issue regulations for determining whether a patent is for a technological invention.
The drafters of this law apparently view “business method” inventions as distinct from “technological inventions.” If science were to rule, it would be clear that one cannot clearly distinguish between “technological inventions” and a claim involving data processing or management of a financial product or service when technology is involved. Why is a new use of a computer to advance financial services not “technological”? Why is it a less worthy invention than a new use of a polymer or of amide chemistry or of coherent photons? This probably relates to the non-scientific but widely held view among judges and politicians that information, data, and electronic signals are somehow not part of the physical universe and should be viewed as abstractions rather than concrete entities that relate to physical measures such as entropy and require tangible matter and real energy to manipulate. Note that “technological” is undefined, perhaps because it cannot reasonably be defined in this unreasonable provision of an fatigue-generating law. I wish the best of luck to the Director of the PTO in clarifying this opaque miasma.
The richest innovations transforming our era involve inventions rooted in the processing and manipulation of information and these innovations must be encouraged and rewarded, not excluded from patent coverage because some failing but well-connected ‘too big to fail” entities don’t want patents from others to stand in their uncreative way. The AIA clearly shows the power of those Wall Street entities in guiding legislation and giving them special breaks, breaks that will do anything but strengthen innovation. Like much of the rest of the law, it’s directed at fixing the wrong things in the wrong way. May wiser heads quickly repeal or massively revise this legislation before backlogs explode and innovation fatigue is further spread across the US system.
Meanwhile, from my vantage point in Shanghai, I see China increasingly strengthening incentives for innovation and strengthening patent rights. This bodes well for the competitiveness of China in the future. America will soon be wondering how to catch up. How about some real patent reform down the road?
For a rather optimistic but definitely helpful overview of the impact of the AIA on patent practice, see PLI’s page, “America Invents Act: How the New Law Impacts Your Clients and Your Patent Practice.”
Subtle Corruption? The Weakening of US Patent Rights
Posted by: | CommentsOne of the troubling trends in US patent law, a trend I first heard about roughly a decade ago in a course “Drafting and Crafting Winning Patents” from Patent Resources Group, was the tendency for courts in patent litigation to twist the claims to limit their scope. Among the many examples of courts finding language or lack of language in the specification to import unintended and often questionable limitations into the claims is a 2011 case, Retractable Technologies, Inc. v. Becton, Dickinson & Co.. It took creative mental gymnastics by the court to rule that the “body” of the claimed syringe must not read on two-piece bodies, contrary to logic and evidence within the claims themselves. See the response of IP Watchdog to see how this decision may contradict fundamentals of established patent law. The Patent Prospector blog offers this view:
Somewhat subtlety, but most assuredly corruptly, the courts are on a continuing crusade to limit patent protection. In the past four years, the capriciously subjective Obzilla (KSR) has trampled many patents, where an objective evidentiary standard would have left them standing. In this episode, Retractable Technologies v. Becton, the crusade against patent enforcement continues, but from a different angle, with the CAFC distorting well-settled claim construction precedent to squeeze the scope of claims.
The courts seem increasingly ill-disposed toward protecting property and intellectual property rights, especially those of individuals and small companies lacking political clout. Is that due to corruption or just the twisted anti-property (well, anti-other-people’s-property) ideological bent that many of our leading universities impose on students? To be fair, many large companies also bemoan US patent law trends where intellectual property is increasingly taxed and stalled (e.g., through high costs and delay at the USPTO, and the siphoning of patent fees by Congress to pay for their excesses elsewhere), where claim scope is being limited, and where the capricious uncertainties and cost of litigation are ominous. To revive the US economy, there really is a need to strengthen innovation by strengthening and accelerating our patent system and strengthening, not diluting, property rights.
Meanwhile, here in China, there are serious efforts to strengthen enforcement of IP rights, to encourage patent pursuit (e.g., with generous tax incentives and some special incentives that local governments may add in some areas), and to facilitate enforcement. There is a rush in China to create IP and it will have profound long-term effects in terms of global competitiveness. I think that China will become the technology leader of the world and the IP leader, and the U.S. will pay dearly in the end–royalties and more. The U.S. needs to regain its IP and innovation momentum and abandon capricious judicial changing of the rules at the expense of innovators.
Graphene: A flat layer of carbon atoms bonded in a honeycomb crystal lattice a single atom thick.
gbrumfiel writes
“As we discussed on Tuesday, Andre Geim won this year’s Nobel prize in physics for graphene, but he never patented it. In an interview with Nature News, he explains why: ‘We considered patenting; we prepared a patent and it was nearly filed. Then I had an interaction with a big, multinational electronics company. I approached a guy at a conference and said, “We’ve got this patent coming up, would you be interested in sponsoring it over the years?” It’s quite expensive to keep a patent alive for 20 years. The guy told me, “We are looking at graphene, and it might have a future in the long term. If after ten years we find it’s really as good as it promises, we will put a hundred patent lawyers on it to write a hundred patents a day, and you will spend the rest of your life, and the gross domestic product of your little island, suing us.” That’s a direct quote.’”
While some people, including some in the anti-patent community, see this as a self-evident case for the problem with patents, it’s actually just the opposite, in my opinion. Tim’s a sharp thinker and great entrepreneur, but I have to disagree on this one.
Look at the story again. A genius on the verge of filing a foundational patent for a major breakthrough in technology approaches a large corporation who might benefit from the technology. The company learns that the inventor is about to file a patent. A valid patent would mean that the company would have to pay royalties for the invention, perhaps very expensive royalties. If no patent is filed, the company can use the technology for free and develop its own patents without having to cross-license or worry about what Andre Geim owns. Hmm, which would be better: paying a lot, or paying nothing? Having to work with an inventor or tech transfer office or new patent owner who may end up thinking an invention is worth billions, or having the whole thing pretty much gratis? Tough call, but I think the corporate leader was quick to recognize the advantages to nipping the patent threat in the bud. How could he talk the inventor out of a patent? What negotiating tactic to deploy? ah, how about the Hindenburg? That’s where you explain to the other party that their intended course of action would be a flaming disaster, with burning bodies falling out of the sky–oh, the humanity!–resulting in the adversary becoming toast themselves.
The Hindenburg: A flaming disaster and a common negotiating trick
Baloney! All bluff and bluster. But the intimidation and scare tactics work. “OK, OK, I won’t file my patent. Sorry for even thinking about that. Now I see that patents don’t help the little guy, Mr. Big. Here, take what I’ve got for free. I’m just honored to watch you commercialize my work.”
Patents are the great equalizer. It’s what gives lone inventors a fighting chance against the big corporation that wants to take what they’ve got for free. It’s not easy and may not work, but with patents you’ve got a chance and corporations know it. Good ones respect that and will work with out. Others will try to take what you’ve got anyway, or better yet if they can, talk you out of pursuing a patent. Without one, you’ve already surrendered. You might as well throw the keys of your car to any passing stranger and hope they will pay you someday after they drive away.
The story isn’t about why patents don’t help the little guy. In fact, I think it’s about how much some big corporations despise and loathe patents in the hands of little guys. So much so that they would make outrageous statements to trick a brilliant scientists into NOT doing the one thing that could have helped him most: filing a patent. Instead, he handed them his inventions for free. Score one for the big guys.
It would be fun to go back in time and be with Dr. Geim when he was given the Hindenburg treatment. I’d like to ask a quick question of the corporate executive who made the threat:
Wow, 100 patents a day. That’s so amazing, you know, because the world’s most prolific patent filers like IBM and Canon average less than 20 filings a day, and I would be surprised if they ever hit 100 patents a day, and certainly not on one single project and certainly not over an extended period of time. So how many US patents did your company get last year? Wait, it’s right here at USPTO.gov – hey, based in your pathetic past filing rate, it looks like you could never ramp up to 100 a day. You’re trying to spook me. So just what are you afraid of? Oh, I see, my patent. Nice try, Mr. Big. I’m going to file, especially now that I see how much you care. Now go ahead and hire a hundred lawyers and create your own little fiscal Hindenburg, or we can talk about collaboration.
Oh, one more thing. You need to work on that Hindenburg act. The flames shooting out of your ears were a bit freaky.
Chemical engineers interested in innovation and entrepreneurship should consider attending the AIChE 2010 Annual Meeting in Salt Lake City. On Wednesday, Nov. 10, I will chair a session featuring four outstanding speakers on topics that should be of interest to many engineers, including university researchers, corporate researchers, and managers. If you are conducting research that could lead to a new business, if you are involved in leading or managing R&D, if you are part of an effort where intellectual property could make a difference, then you should attend our session, “Intellectual Assets in the Digital Era.” You need to register for this conference through AIChE.
Time: Wednesday, November 10, 2010: 8:30 AM-11:00 AM
Location: Salt Palace Convention Center, Grand Ballroom G, Salt Lake City, UT
Chair: Jeff Lindsay, Director of Solution Development, Innovationedge, Neenah, WI
Co-Chair: Ken Horton, Gore School of Business, Westminster College, Salt Lake City, UT
Schedule of Papers and Abstracts:
8:30 AM, Paper #406A, “Business Development, IP, and Manufacturing Success: Perspectives From Utah’s Manufacturing Extension Partnership” by David Sorensen, Executive Director of Utah’s Manufacturing Extension Program. (See biographical information below.)
Abstract: The Manufacturing Extension Partnership of Utah has assisted many companies in strengthening their strategy for success and continued growth. We will discuss what it takes to advance your business, including lessons relative to leadership, vision, intellectual property, and coping with changing regulations and policies.
9:10 AM, Paper #406b, “The Role of IP in Successful Startups,” Mike Alder, Director of Technology Transfer, Brigham Young University.
Abstract: Many AIChE members will be involved with a startup at some point in their career. While the capabilities of the management team is of utmost importance, in numerous cases, the success of the startup also depends on the quality of its intellectual property. In this era, an IP-savvy team can take several steps to secure competitive advantage and realize greater value from the technology, products, or services the company offers. This presentation will draw upon experience with many startups and startup teams and will provide guidance to researchers, business leaders, and future entrepreneurs on how to better prepare for success.
9:45 AM, Paper #406c, “An Introduction to IP Law: The Underpinnings of Intellectual Assets,” Ken Horton, Kirton & McConkie, Salt Lake City, UT
Abstract: An understanding of the basics of intellectual property law can help chemical engineers in advancing their own research, in evaluating competitive efforts, in building their own business, or in general advancing their career. This presentation will cover some of the key concepts that engineers should know, including the nature of patents, the different kinds of patents (provisional, utility, design), the role of trademarks and copyrights, what it takes to be patentable, and how changes in patent law may affect your career and business.
10:20 AM, Paper #406d, “Cost-Effective Pursuit of IP in a Down Economy,” by Jonathan Lee
Abstract: How does one get the most protection and benefit from intellectual property when the economy is down? How can patents and other forms of intellectual property be obtained in a cost effective manner when budgets are tight? In this presentation, an experienced patent attorney shares insights into cost effective IP with guidance directed to managers, research leaders, inventors, and entrepreneurs.
Biographical information:
David Sorensen
Mr. Sorensen has over 35 years of experience in a wide variety of technical and managerial assignments requiring comprehensive knowledge in several disciplines relating to engineering, manufacturing, information technology and business systems. He has been directly responsible for major contracts with industry and government agencies and has a proven record of technical competence, customer relations, and business planning in rapidly expanding technical companies. Mr. Sorensen has held increasingly responsible positions in product and service organizations. He is innovative, resourceful, and aggressive in accomplishing assigned responsibilities with major strengths in strategic planning, marketing and management. He holds a Bachelor of Engineering Science and a Masters in Manufacturing Engineering Technology from Brigham Young University.
Since 1995 he’s been the Director of the Utah Manufacturing Extension Partnership (MEP-Utah), serving primarily the 6,200 manufacturers in the state of Utah. MEP-Utah was selected to initiate and manage the NIST Information Technology Network for over 60 MEP Centers nationwide. Mr. Sorensen is also a BYU adjunct faculty member and the Associate Dean of Technology, Trades and Industry at Utah Valley State College. With a staff of 18, in one year MEP-Utah helped create or save 2,719 jobs in Utah, increased manufacturing sales by more than $121 million and increased employee payroll by more than $84 million.
He’s been the Chairman & CEO for Echo Solutions, a start-up software products and services company; Executive VP of Eyring Research Institute; General Manager of EG&G Services; Director of Engineering at EG&G Idaho Inc.; Manager of Architect Engineering and Construction at Aerojet Nuclear Company and Manager of Power Generation Equipment at Bunker Ramo. He also has experience with GE’s Nuclear Instrumentation as a Senior Applications Engineer, and in engineering positions at Kennecott Copper, Intermountain Industries, and F.C. Torkelson Engineers.
Michael Alder
Mike is Director of Technology Transfer at Brigham Young University, where his work has been nationally recognized by BusinessWeek and others for their success. Mike is also Chair of the Board for WestCAMP Inc. where he has also chaired the National Centers of Excellence (NCOE), a division of WestCAMP. Mike is formerly the CEO of the Biotechnology Association of Alabama. He was also a Venture Partner with Redmont Venture Partners, Inc. He has been heavily involved in the founding of Tranzyme, Inc.; Vaxin, Inc.; Folia, Inc.; Chlorogen, Inc.; Allvivo, Inc. and Cr3, Inc. All but one of these are biotechnology companies (Folia produces specialty biopolymers).
Mr. Alder has 30 years of experience in leading technology-based startup companies. He was previously CEO of Emerging Technology Partners in Birmingham, Alabama from 1997 to 2003. Prior to coming to Alabama in 1994 he co-founded the Grow Utah Fund that focused on creating technology-based businesses. In 1989 he was asked by the Utah Governor to head the State’s Office of Technology Development, which he did for 5 years as its Executive Director, helping bring Utah’s Centers of Excellence programs to national prominence. In 1973 he founded NPI, a plant biotechnology company in Salt Lake City, Utah and served as President, COO and Vice Chairman of that company for 15 years as it grew to over 700 employees.
Ken Horton
Ken Horton is a member of Kirton & McConkie‘s Intellectual Property Practice Section in Salt Lake City. His practice includes domestic and foreign patent prosecution, patent opinions, intellectual property litigation (including both state and federal court actions), domestic and foreign trademark prosecution, trademark opinions, copyrights, trade secrets, intellectual property evaluations and due diligence, as well as technology and intellectual property agreements. Mr. Horton has extensive experience in both pharmaceutical and semiconductor technologies. He is a frequent speaker on the topic of intellectual property law and strategy, speaking both at the 2007 and 2010 A.I.C.H.E. annual conferences and the 2009 A.C.S. annual conference. Additionally, Mr. Horton is an Associate Professor in these topics in the MBA Technology Management Program at the Gore School of Business of Westminster College.
Jonathan Lee
Jonathan Lee is a registered patent attorney and a member of the Utah State Bar practicing at ALG (AdvantEdge Law Group). His practice focuses on adding real-world value to companies, both large and small, by acquiring, securing, and protecting intellectual property rights.
Mr. Lee has prepared and successfully prosecuted hundreds of patent applications throughout his career, primarily in the electrical, electro-mechanical, and computer engineering fields. He currently helps a number of Fortune 1000 companies manage and develop their domestic and worldwide patent portfolios. He also regularly counsels clients in other aspects of intellectual property law, including litigation, licensing, and opinion work, as well as due diligence examinations, copyrights and trademarks, and patent reexamination proceedings.
Prior to joining ALG, Mr. Lee worked for nationally recognized law firms in Washington, D.C. and Salt Lake City, Utah.
Mr. Lee was recently selected as a Mountain States Rising Star by Super Lawyers, a peer-reviewed publication.
Used Patents: A Potentially Deadly Part of Your Portfolio
Posted by: | CommentsIn Conquering Innovation Fatigue, we explain how “Patent Pain” is one of the external innovation fatigue factors that can slow down innovation. This factor includes actions by courts and lawmakers that add to the difficulty and expense of protecting intellectual property rights. A new aspect of this problem is the recent explosion in risk to patent holders–particularly the holders of “used” patents (patents directed to products that the patent holder markets). This risk stems from a recent Federal Circuit decision, Forest Group, Inc. v Bon Tool Company (link is to the PDF file of the Dec. 28, 2009 decision). The controversial aspect of this decision is that it suddenly changes the way the law has been applied in a way that could severely punish patent holders for what might be an innocent mistake.
The law provides a penalty of up to $500 per offense for false patent marking–inappropriately marking a product with a patent number such as one that has expired. It can be an act of intentional fraud or, in many cases, a simple mistake. That $500 penalty per offense has long been interpreted as $500 per continuous false marking act, not as $500 for every falsely marked product. All that changed a few months ago, thanks to the Federal Circuit Court’s decision. Now if you sell a billion packages of diapers and one of the patents listed happens to have expired a few months ago (oops, clerical error!), you could be sued and face up to $500 billion in penalties. Even if reduced to a mere, say, $50 million, it’s extremely dangerous for a corporation. Naturally, this has drawn in swarms of lawyers and looks like it could create a whole new cottage industry based on sucking capital out of the veins of those who actually use the patents they obtain. Patent holders are rushing to check their patent markings more carefully and to redo packaging (an expensive process, unfortunately) to ensure that expired patents are taken off.
The social harm of listing an expired patent on a product seems virtually negligible. A competitor interested in copying the product will naturally look up the patent and determine if the claims might be a barrier, and in this process can readily see whether it has expired. Yes, it’s a form of false advertising, but not because a real patent wasn’t obtained, only because it eventually expired and the marking wasn’t updated yet. Not as serious as making up a bogus patent number and listing that for honor never earned. $500 for a continuous act of false marking may seem too light a punishment (the law was written back when $500 was worth something), but up to $500 per product strikes me as ridiculous and threatens to only further penalize and discourage producers and innovators.
Here’s hoping that Congress will correct the abusive application of the law by the Federal Circuit and make owning a used patent less dangerous.
Related story from the Wall Street Journal: “New Breed of Patent Claim Bedevils Product Makers” by Dionne Searcey. This story discusses a more recent ruling that overturned a decision saying an attorney suing Brooks Brothers for expired patents had no legal standing to sue. Now lawyers everywhere can join in the feeding frenzy.
Update, Sept. 3: One of my favorite IP strategists asked what constructive steps we could be taking to help clients deal with this threat, apart from diligently checking every marking. Tough question. What if products were marked with codes—could be simple six-character strings that you plug into tinyrul.com or some other website–to bring up a page with the current patents applicable to a product? The page could be automated so it is tied in to patent databases so that only current patents are displayed, and/or status information was displayed for the patent. Thus, if a product does have a patent associated with it when packaging is designed, instead of listing the patent number(s), why not list something like: “For related patents, see PatentMarking.com/14Zq2″.
Could this indirect approach fully meet the demands of patent marking and provide sufficient notice? Perhaps not without a tweak of the law, but I’d be happy to see an electronic solution.
When I gave the example with PatentMarking.com, I hadn’t yet checked out that URL and was just throwing out what sounded like a good domain name for such a tool. Turns out that OceanTomo owns it and is using it for a related purpose. Cool! Glad to see that they are advocating online marking of patents.
So why not print each product or its packaging with a code that links the product to a website for automatically updated information, with disclaimers and means for flagging corrections to reduce corporate liability if something goes wrong with the automated process? Could this help reduce the future threat of patent marking sharks trying to shake down companies for millions of dollars for innocent and hard-to-eliminate marking errors?
Another update: Greg Aharonian‘s latest PATNEWS newsletter mentions the WSJ article, rejects the outrageous notion that false marking of patents is a serious evil, and contends that Congress should make these lawsuits illegal that seek to shake down companies for millions due to a marking mistake. May that happen swiftly! Thanks, Greg.
Ramping Up External Innovation Fatigue
Posted by: | CommentsWithout wishing to be political, I have to say that I am worried about the future of innovation in light of “external innovation fatigue factors” that arise when government creates imposing barriers for innovators, especially for small businesses and lone entrepreneurs. As we note in Conquering Innovation Fatigue, the problem is often one of unintended consequences from well-intended actions. In the past several years, there has been an acceleration in regulatory burdens, tax burdens, and litigation risks that make starting or running an innovative business riskier than ever. Mounds of cash have been taken from the private sector and given to government agencies and large institutions for so-called stimulus or bailouts, but the real cost of such “help” is rarely considered. We see failed organizations on life support and may be happy to hear of thousands of jobs in these firms that appear to be saved, but we don’t get to see and consider the small businesses that dry up due to the money that was channeled elsewhere or that face the burden of unfair competition from failing institutions shielded from the consequences of their less competitive business models.
We see many leaders calling for even higher taxes on those who are (or would have been) most likely to create jobs and launch businesses. We see government making it more difficult and costly to obtain the energy that is literally and figuratively the fuel of our economy. We see US corporations facing burgeoning regulations regarding environmental issues, hiring practices, benefits, etc., that are not found in the nations we import from, with the natural consequence of punishing those who wish to produce in the US and motivating them to close shop here and go elsewhere. We see increased government intervention at all levels of the private sector, often favoring the large and well connected while leaving the lone innovators and start-ups in the dust, strangled with red tape and choking with uncertainty about the future. Meanwhile, property rights, including intellectual property, are increasingly in jeopardy. This is the stuff of “external innovation fatigue.” It’s been bad for years, and it’s accelerating now at a dangerous pace.
Those who wish to launch new businesses and reap the rewards of their innovation can still succeed, but need additional help and caution in moving forward and finding the right partners, business models, and approaches to reduce the risks and create lasting competitive advantage that can survive the billowing waves of external fatigue factors. We offer guidance in the book on these issues, including the need to be more holistic in pursuit of intellectual property, taking the path that we call 360-degree intellectual assets. Thinking about patents exclusively can lead to excessive costs and disappointments. I suggest reading carefully our recommendations on holistic intellectual assets and giving us a call for further guidance. Innovationedge can be reached at 920-967-0466.
Amyris: Great Story of Open Innovation and Renewable Products
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In my ongoing work on analyzing the intellectual property landscape in biofuels, one of the most impressive companies I’ve run across is Amyris, a renewable products company whose clever use of synthetic biology goes far beyond biofuels. Amyris was founded by Kinkead Reiling, Neil Renninger, and Jack D. Newman who met at Berkeley and founded Amyris in 2003, headquartered in Emeryville, California. With a grant from the Bill & Melinda Gates Foundation, they first developed their technology under a non-profit initiative to provide a reliable and affordable source of artemisinin, an anti-malarial therapeutic. It was viewed as a long-shot, but they found success that paved the way for the growth of the company into other areas. They are now developing new microbial strains that can produce other useful molecules from renewable feedstocks. This industrial synthetic biology platform is providing alternatives to a broad range of petroleum-sourced products. he extremely useful molecule farnesene is an important part of their business. It provides a compound that can be used to produce flavors, perfumes, detergents, cosmetics, biodiesel, and other products.
This week Amyris created a stir by announcing a record number of deals and partnerships for a single week (a record among bioenergy companies, according to Biofuels Digest). These partnerships include P&G, Total, Soliance, Cosan, M&G Finanziaria, and Shell:
Amyris has taken it up a notch with a series of stunners surrounding its synthetic farsenene, which it has named Biofene – the first product that Amyris is seeking to produce at commercial scale.
Beyond its success this week with Biofene announcements, which are the basis for the P&G, M&G and Soliance partnerships — there are the broader arrangements with Cosan to develop a platform in renewable chemicals, and the equity agreement with Total that will provide needed capital as well as a broader platform for Amyris’s expansion into hydrocarbon fuels.
The mysterious agreement with Shell, regarding diesel, is one to watch. The decidedly vague disclosure was buried in Amyris’ amended S-1A registration statement, but not otherwise mentioned in a flurry of press releases from the company as it promotes its expansion in this pre-IPO environment. Shell Western Trading & Supply is one of 17 Shell trading companies that buy and sell to customers within and outside of Shell.
This news shows an interesting example of companies forming partnerships with an innovative start-up with great technology and apparently highly valuable IP. According to my Patbase search, Amyris has 21 patent families, quite a large number for such a young company. They clearly have been active and aggressive in pursuing patent protection, and those patents are critical for the meaningful partnerships they are now forming. It’s a great unfolding story of open innovation and technology transfer.
The story extends beyond the US. They have operations in Brazil, for example, which is one of the world’s hotbeds for bioenergy, bioproducts, and collaborative innovation.
Further information comes from today’s article, “Amyris: farnesene and the pursuit of value, valuations, validation and vroom,” also from Biofuels Digest.
Job Growth Through Sound Intellectual Property Rights and a More Efficient Patent System
Posted by: | CommentsGene Quinn’s article, “ Proposal: Unlocking Job Growth with Patent Acceleration” over at IP Watchdog, reminds us of the powerful link between IP rights and economic growth. It’s an issue we take up in Conquering Innovation Fatigue when we discuss Hernando de Soto’s findings (countries with respect for property rights have much better economic growth than those that don’t respect property rights). It’s an issue that Congress needs to take up if they really want to stimulate economic recovery and growth. As Thomas Jefferson said, innovation needs encouragement, and a strong, efficient patent system is one of the best encouragements.
Gene offers some specific suggestions that could help stimulate innovation, entrepreneurship, and job growth through a more efficient patent system. Change is needed. The years of waiting to get a patent and the other inefficiencies of the US system in recent years need addressing immediately. Strengthening our system and making it more manageable for start-ups and lone inventors would be an important step forward in mitigating innovation fatigue.
Weakened IP Rights as an Innovation Fatigue Factor
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Weakened IP Rights: An Innovation Fatigue Factor
Innovation fatigue due to inadequate intellectual property rights and property rights in general occurs in many other nations today, and is strongly correlated with economic difficulty in such nations. Hernando de Soto, a Peruvian economist and winner of many awards such as the 2006 Innovation Award from The Economist for the promotion of property rights and economic development, has shown that lack of property rights has been a key factor in keeping poor nations poor. It is respect of property rights that creates the means for men to be equal in opportunity. Intellectual property rights are part of that, and when they are in jeopardy, we should be concerned.
In Brazil, for example, a nation with tremendous potential for further economic development, recent government actions related to a trade dispute with the US over cotton threaten to reduce the value of US patents held by people in Brazil. In “Brazil Close to Declaring War on US IP” over at IAM Magazine, we read about the dangerous actions being taken by the Brazilian government. There may be many long-term costs for whatever short-term gains they obtain. This could harm innovation and economic development in that nation.
One example in the US of the attack on patent rights comes from the recent court case Association for Molecular Pathology v. USPTO in which a body of patents obtained by Myriad Genetics (NASDAQ:MYGN) has been declared invalid by a judge using dubious arguments presented by the ACLU. I am especially troubled that the patents were declared invalid for not treating patentable subject matter under 35 U.S.C. § 101.
Eric Guttag over at IP Watchdog offers some convincing arguments about the absurdity of the ACLU’s position and the injustice of Judge Sweet’s rulings. Please read the full article, “Foaming at the Mouth: The Inane Ruling in the Gene Patents Case.” Here is one excerpt:
What is most alarming about Judge Sweet’s opinion is his characterization (or more appropriately mischaracterization) of the CCPA’s Bergy case. Judge Sweet makes numerous quotes from Judge Rich’s opinion in Bergy on how 35 U.S.C. § 101 should be interpreted. But what Judge Sweet neglects to point out is that Judge Rich ruled in Bergy that a biologically pure culture was deemed to be patent-eligible under 35 U.S.C. § 101. Why did Judge Sweet neglect to point out this highly relevant fact? Instead, if the holding in Bergy is considered in appropriate context, it supports Myriad’s “isolated” BRCA1 and BRCA2 gene sequences as being at least patent-eligible under 35 U.S.C. § 101 because they don’t exist in nature and cannot exist without significant human intervention. . . .
In the end, it is my considered opinion that Judge Sweet knew the result he wanted to reach (i.e., invalidate Myriad’s patents), and simply cobbled together a justification for it. (Treating the claims in Myriad’s patents are a “lawyer’s trick” also doesn’t suggest impartiality.) If nothing else, there is enough of a dispute about the essential facts needed to reach Judge Sweet’s conclusion to deny the plaintiff’s motion for summary judgment of invalidity based on 35 U.S.C. § 101. That Judge Sweet needed to spend 152 pages trying to justify his grant of plaintiff’s motion for summary judgment speaks volumes about why this grant was inappropriate.
At many levels in the US and in other nations, there seems to be an increasing hostility toward patents and intellectual property rights for inventors. One of the best things that can be done to stimulate the economy right now would be to strengthen the USPTO, reduce examination time, and instill a healthy respect in the judiciary for property and intellectual property rights. Adding to the uncertainty, cost, and delay of patent protection only weakens the economy, and hinders innovation through yet another “innovation fatigue factor.”
GotInvention Radio: Listen This Thursday Night, and Next
Posted by: | CommentsOne of the real champions of innovation and entrepreneurship, Brian Fried, has created a successful new radio program to meet the needs of inventors and entrepreneurs: Got Invention Radio at GotInvention.com. It’s a one-hour show every Thursday night at 7:00 p.m. CST (if you’re in China or Singapore, for example, that should be 8 a.m. Friday morning–the perfect way to start your day!) I’m the next guest this Thursday night. I’ll be speaking about intellectual property, with practical tips for inventors who want to get quality patent protection. There are some pitfalls to avoid and some tips you need to know about. A quality patent can make all the difference for the long-term success of a product or business, so tune in and join the conversation.
At least two callers will receive free copies of the book, Conquering Innovation Fatigue. Please mention this blog when you call!
Go to Gotinvention.com/shows and click on the green area in the upper right-hand portion of the screen to launch your media player and listen. To be a caller, dial 877-474-3307. Please join us this Thursday night, March 18.
The following week, March 25, you can hear Cheryl Perkins, CEO of Innovationedge. Don’t miss that one, either!