Archive for regulations

Jan
06

How Abstract Is Your Automobile?

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carBe careful about the vehicle you’ve been driving. As sturdy, tangible, useful, and inventive as it looks to you, it may turn out to be merely an abstraction, perhaps nothing more than the mere idea of “transportation” or “going places,” making it unworthy of the thousands of patents protecting its numerous technologies — if the USPTO and America’s elite judges get their way. An abstract automobile? You don’t want to be caught dead driving one. Unfortunately, since the USPTO’s Patent Trial and Appeal Board (PTAB) just ruled that an MRI machine is abstract and thus not patentable under the odious and vague principles of the Supreme Court’s recent Alice decision, it could be that automobiles and virtually every other machine under the sun could be next on the anti-patent chopping block. Your trusty Toyota or your faithful Ford are about to go abstract on you, courtesy of the USPTO. Look out.

In the PTAB’s elite view, as Gene Quinn explains, all the physical wizardry of the mighty MRI machine as claimed in a recent patent application for an improved MRI is just an abstract idea based on the abstraction of “classification.” It defies logic and defies the requirements of the Alice decision and the USPTO’s rules for applying Alice, but the PTAB has become a patent munching zombie that doesn’t seem bound by logic or law. They are one of the strongest forces promoting innovation fatigue. Many innovators are just giving up or going to other nations where IP rights are more meaningful.

The anti-patent forces that have taken hold of far too many influential posts in America view property rights and especially intellectual property rights as a barrier to the ideal society they envision. If only we could get rid of patents, they seem to think, drug prices would fall and Obamacare, for example, would not be such a disaster. But the bounty some intellectuals promise by weakening property rights is an illusion, for without IP rights, what is the incentive to take on the risks and costs of innovation if you cannot benefit from the occasional successes that come from your uncertain work? If your hit product can be taken and marketed by others who did not have to spend so much time and money developing it, then the inventor is often at a competitive disadvantage to everyone else. Why bother?

America’s war on patents is a war on the future of innovation. It’s a war we cannot afford to lose.

Sep
11

Crazy Over Innovation at Uber

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uberAt the Marcus Evans Innovate 2014 Conference in Shanghai today, I met Rosalie Wu, the head of marketing in China for the rapidly growing startup, Uber. Rosalie was Uber’s first hire in China and exemplifies the energetic, entrepreneurial spirit that is driving Uber to global success. She spoke about the development of Uber’s innovative business model and the many innovations they continue to add in their unique approach to “glocalization,” wherein a company going global adapts its products and business model to the unique constraints and opportunities of each local market. I see Uber at the poster child for sound and innovative glocalization.

Uber began when one of its founders and first CEO, Travis Kalanick, attended Le Web in Paris in 2008 and struggled to get a cab in snowy weather. He realized there had to be a better way to use the free market to solve the basic problem of getting a ride. His passion for solving this problem resulted in forming a San Francisco start-up that began in 2010 with a mobile app for ride sharing in San Francisco. Today they offer a refined and clever business model with services in over 200 cities. Beijing was #200, and Uber is marching rapidly across China and other parts of the world. Rosalie’s enthusiasm for Uber is contagious and really stirred the audience here at the Hongqiao Marriott Hotel.

Uber’s business model innovation includes systems for registering, insuring, and rating drivers. It offers flexible pricing that helps tap the power of the free market much better than conventional taxi pricing and taxi systems can. With Uber you can select quality drivers and have simple, positive experiences getting to where you need to go when you want to be there. The business model is being extended with many other innovations such as delivery of products and even services (in China, they have even offered the service of having a traditional Chinese lion dance sent to be performed in your office). The innovate their offerings to meet local needs and adapt to local regulations and customs, while finding clever ways to continually make people’s lives better. This will inspire the competition to do more and bring ongoing innovation that will benefit us all. Amazing what a bad snowy night can do when an innovator is around.

Less than a year ago, Uber was valued at over US$3.5 billion.  A few months ago in 2014, Uber was valued at around $17 billion. This is the power of doing something that brings people together in new ways.

Uber has faced and overcome a host of innovation barriers. Funding challenges, regulatory burdens, and stiff competition. But they have forged ahead with a relentless focus on making life better for its customers with green, energy saving, disruptive innovation . May the path before them remain wide open. Kudos, Uber!

Jun
26

Innovation Fatigue in Portugal: The Burden of Eurozone Bureaucrats

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Dave Galland’s recent column at Casey Research discusses the malaise that has swept Portugal, resulting in utter discouragement across the rising generation. In spite of the beauty and natural richness of Portugal, the entrepreneurs and innovators of the future tend to be looking to leave as quickly as possible. What has gone so wrong? Casey suggests that the innovation fatigue factor of stifling Eurozone bureaucracy and oppressive regulations have gutted Portugal’s spirit.

‘ll give you a hint by relating that as a condition for inclusion in the Eurozone, functionaries in the European Commission based in Brussels required the Portuguese to retire and destroy a large percentage of their fishing fleet. As I understand it, the commissioners felt that the size of the Portuguese fleet coupled with the sea-faring nation’s long history in commercial fishing gave it an unfair advantage over other nations in the Eurozone. They also helped rationalize the demand to burn the boats by saying that the Portuguese fishermen were putting the ecosystem of the Atlantic Ocean at risk.

The result of forcing the Portuguese to burn these tools for capital creation is that since joining the Eurozone in 1986, Portugal’s fish harvest has effectively been cut in half. I was told that the country is reduced to buying many of the sardines that find favor in the local cuisine from the Spanish fleet.

The Euro-meddling doesn’t stop with fish. The Portuguese are mandated to trash a large amount of their annual orange production lest they exceed the quotas set in Brussels. Apparently the Spanish, ever attuned to capitalize on Portugal’s mandated misfortunes, buy the unsellable excess oranges and use them to make marmalade… which they then sell back to the Portuguese.

Of course, actions have consequences. One of them has been that Portugal has run a trade deficit for about twenty years now – in other words, starting soon after joining the EU in 1986.

And even though the country (and the continent) is tight in the grips of the most dire crisis in living memory, the EU commissars are still at it. In fact, as I write, Portugal is being forced by the European Commission to kill a large percentage of its chicken population, with the slaughter to be completed over the next month. This by virtue of the ironically named EU Welfare of Laying Hens Directive, forbidding the continued use of conventional egg-laying cages.

Once the chickens are destroyed, and provided the Portuguese egg farmers can ever find the capital needed to rebuild, they will have to build to the specifications of the EC Directive that requires that all laying hens must be kept in “enriched cages” providing each hen with at least 0.8 square feet of cage area, a nest-box, litter, perches and claw-shortening devices, allowing the hens to satisfy their biological and behavioral needs.

Tragically, as Europe stumbles in a massive economic crisis, the bureaucrats aren’t backing off, but increasing the burdens on the backs of the people and making it harder than ever for business to grow and innovation to thrive. This is sadly typical of minds disconnected from reality and deaf to the voice of innovators, a voice that will become largely silent if the burdens on their backs aren’t eased.

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Mar
03

Eaten Alive By Regulation: Innovation Fatigue and Fish Therapy

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“This is something that is dangerous and clearly unsanitary,” warned New York senator Jeffrey Klein in October 2009. “Once we shed light on this dirty little process, more people will avoid it and we can ban it.” The terrifying menace that so worried the good state senator and led him to introduce legislation to ban it is a natural therapy that has been used successfully for 400 years to treat the skin of feet. 400 years of successful, healthy treatments in the form of fish pedicures. In the US, though, the process is very foreign and has a certain squirm factor to it. Small fish that nibble at dead skin are a relatively common treatment offered in several parts of Asia, but in the West, worried officials have been applying or creating various regulations to fight against the invasion of new options for beauty care, one of many highly regulated business areas where innovation fatigue often comes from the burdensome and sometimes unpredictable applications of regulation.

In the US, approximately 15 states have banned fish pedicures. Some regulators say that they require tools used for pedicures to be completely sterilized after each treatment, which would mean, of course, frying the little critters after they’ve nibbled on your feet. An expensive proposition for business owners. Several people wishing to bring this new service to their community invested heavily in the systems needed for safe, clean tanks and fish, only to have new regulations added that would single out their business and ban it.

Can’t people make their own decisions about where they stick their feet, or how they deal with their bunions? If someone wants to use a natural method that has 400 years of successful history, do we really have to tell them that they aren’t allowed to for their own good? Sure, there are risks, perhaps similar to the risk of putting one’s feet into the water at a beach or swimming pool. But regulators protecting the public from themselves with unnecessary layers of regulation and bureaucracy represent one of the most difficult and painful forms of innovation fatigue. Someday we need to allow business and innovation to flourish and just get out of the way.

Yes, I recently tried fish therapy and found it to be remarkably refreshing and effective. The fish–I think these were Chinese chin chin fish, though Middle Eastern doctor fish are most commonly used–just nibble at dead skin and leave the healthy live skin alone, so they don’t cause bleeding or irritation. It’s hard to see how this could be any more dangerous or terrifying that placing one’s foot in a lake, a stream, or swimming pool, with the exception that there are 100% organic fish like to tickle your feet. I hope to try this again.

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Mar
15

The Future of Biofuels: Environmental Innovation Fatigue for Environmental Advances?

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The federal government has set bold and challenging goals for future increases in the production of energy from non-fossil fuel sources. Seeking to curb our dependence on foreign oil as well as fossil fuels in general, our nation is encouraging the development of fuels from biological sources. Biofuels, diesel and gasoline made from renewable sources such as agricultural waste, forest sources, and algae, are a top priority and are the subject of extensive government-funded research and tax credits. Biofuels are a rich source of innovation and show an explosion in patent activity in the past 3 years.

Unfortunately, biofuels are also facing daunting challenges from uncertainty in federal regulations and tax policy that threatens to bring many innovations to a halt as industry puts many developments on hold due. The uncertainty in the environment–the regulatory and tax environment created by the government–is actually hindering many biofuel projects aimed aimed at enhancing the environment in the long run. This was the sentiment from several speakers in the midst of biofuels innovation in sessions at BioPro Expo 2011, a major conference on biofuels and forest bioproducts, being held in Atlanta, Georgia, March 14-16. Concern about government barriers to commercialization of biofuels advances was a repeated theme.

One example is federal regarding the definition of “renewable” for those seeking federal incentives for the use of renewable sources of fuels. Municipal solid waste (MSW) has a large component of plant-based materials such as paper and food waste, and is one of the most available and commercially attractive biofuel sources. The technology is proven, the raw material is available and economically feasible, and projects are ready to roll–except they have largely been put on hold until the federal government rules on whether MSW can be counted as “renewable” or not. Then there are strict new rules on boiler operation (the Industrial Boiler Maximum Achievable Technology, or BI MACT, rule) throwing another wrench and major cost burden on the backs of those with boilers generating energy from biomass sources. There are a host of other rules and conflicting definitions and policies adding to uncertainty, risk, and cost in commercializing biofuels. For the innovator, it is a challenging era with the potential of innovation fatigue from external or environmental factors.

Let’s hope that the rich opportunities being uncovered in biofuels can be commercialized rapidly and that the barriers to innovation can be reduced.

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In the United States and many other nations, a question is being asked by many who struggle with the brutal reality of innovation fatigue. In many sectors, it is taking bigger investments, longer times, and much more pain to deliver innovation, and much of what passes for innovation in some sectors ends up being incremental fluff or mere cost-cutting. Some blame it on employee productivity, some blame it on short-term thinking in pubic companies driven by the unnecessary compulsion to please stockholders above all others, some blame it on the MBA culture instilled by leading business schools, and others blame it on governments that make every entrepreneurial move a slow trudge across the regulatory mire and a possibly fatal descent into quicksand. Some point to numerous factors including the capital crunch, creating a perfect storm in which even cash-rich companies are afraid to invest in real innovation because of uncertainty and fear.

Innovation fatigue, of course, is not uniform. Individuals and individual companies often buck trends and rise above currents of fatigue, and sometimes entire sectors seem energized and vibrant with innovation. For example, innovation in mobile applications and devices seems vigorous, but even then we have former innovation leaders like Nokia and Motorola feeling the burn of fatigue across many parts of their business.

Where are the real pressure points? What are the next steps that America or other nations need to take to restore a vigorous innovation culture across many sectors and help their nations overcome innovation fatigue? What do corporate leaders need to be doing differently to turn their companies in havens of innovation that can deliver growth and success for the long term? What do our political leaders need to do and understand to let the fire of innovation burn more brightly?

Let me know your thoughts. The five answers I like best will be rewarded with a free copy of Conquering Innovation Fatigue mailed to wherever you are. All submissions will implicitly have your permission to share them, though I will withhold your name if you ask me to. Send your comments to jeff at magicinnovation d0t com.

taco-bell-beefWhen I eat at Taco Bell, I usually get chicken, steak, or even just a filling bean burrito, but I have tried the seasoned beef and can confirm that it is beef. I love to cook and naturally prefer my own cooking (and tend toward vegetarian fare these days), but being familiar with ground beef, I suggest that you can look at it, feel it, and taste it to recognize that it’s mostly ground beef. The popular chain, though, faces an expensive class action lawsuit because one woman (actually a team of lawyers in the name of one woman) claims that Taco Bell’s “seasoned beef” does not meet US legal standards. This story is making international headlines and generating a lot of buzz–see, for example, the story at CNN and the Washington Post. In some of the news stories I see, I wonder if anyone has actually read the legal complaint to see where the beef really is in this complaint, available in PDF form at http://www.beasleyallen.com/webfiles/Taco-Bell-Complaint.pdf.

News stories typically state that the suit is about Taco Bell’s seasoned beef having just 35% beef, less than the 40% standard for beef filling. (Some stories even put the 35% claim in their headline.) If so, Taco Bell will have no problem because anyone familiar with ground beef can recognize that Taco Bell’s beef filling is obviously mostly beef, and Taco Bell claims that it is manufactured with 88% beef. (What’s the other 12%? A little water, some oat products, spices, etc., as you can read in the lawsuit or hear explained by Taco Bell’s CEO on YouTube.) But the complaint as filed is not about 35% vs. 40% for beef filling, but over the alleged misuse of the term “seasoned beef” instead of more proper terms such as “beef filling” or “taco filling.” A beef “filling” has to be at least 40% beef, but to call something “seasoned beef” or “seasoned ground beef,” so argues the plaintiff, one has to meet the USDA standard for “ground beef” which means that it cannot have added water, binders, or extenders. So the basis for the suit is not whether lab tests show 35% or 40% beef (it’s obviously well over 50%, in my opinion, unless some rogue Taco Bell shop is watering everything down), but whether Taco Bell is incorrectly marketing their product as “seasoned beef” when it should be “beef filling,” “taco meat filling,” or some other less beefy term.

Some news stories even talk about lab results showing that the filling is only 35% beef. Perhaps this is an additional line being pursued by the law firm, but it’s not in the original complaint.

“Beef filling” vs. “seasoned beef”: that is the basis for claiming that Taco Bell is “immoral, unethical, oppressive, and unscrupulous” and “injurious to consumers.” Even if Taco Bell needs to tweak their marketing lingo, the allegations in the lawsuit seem a bit much.

A larger issue here is the inequity of class action lawsuits which enable the fiction of allowing a team of lawyers to claim to represent millions of people in suing companies for minute offenses. Yes, companies need to comply with the law, but when every successful company suddenly must face numerous shakedowns, each of which can cost millions to defend, it adds to the unnecessary burdens of being in business and creating jobs and real products. If Taco Bell needs to improve their terminology, call the USDA and let them issue penalties and corrective orders. Problem solved. But this is going to be a shakedown for millions. It’s hard for me to see how this is worth millions of dollars of penalties to see that justice is done–defining justice, of course, as paying large amounts of money to lawyers.

The complaint, by the way, is signed by attorney Timothy G. Blood. Interesting surname for a class action lawyer.

Update, Jan. 29, 2011: CNBC has an article about Taco Bell’s forceful response. Turns out that the USDA regulation cited in the lawsuit doesn’t even apply to restaurants. “The USDA’s rules apply to meat processors — the companies Taco Bell buys its meat from. Tyson Foods Inc., the company’s largest meat supplier, said it mixes and cooks the meat at three USDA-inspected plants and that the meat is tested daily to make sure it meets requirements.” That makes the lawsuit all the more ridicuous–and one more example of the many costly fatigue factors that businesses face these days.

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Dec
17

Children Present: Innovators Beware

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One of the most challenging areas for innovators, entrepreneurs, and businesses of any kind now is field of children’s products. Innovation fatigue has reached new heights in this area due to “external innovation fatigue”–the kind that comes when outside forces from government and others, often with the best of innovations, deliver hard-to-evade punches to the body of entrepreneurs, including some very low blows.

The problem is especially severe when the governmental forces that can shut down a business or change the playing field unexpectedly arise not from legislators accountable to the voters, but from lone appointed individuals who may not be directly accountable to anybody.

The Consumer Product Safety Improvement Act (CPSIA) in 2008 dealt with, among other things, the problem of lead that had affected some books imported from China. Rather than address the specific issue of Chinese imports, the law sought a broad “fix” by banning lead in children’s products in general. Who could oppose that? But what it means in practice is that millions of toys and children’s books were unnecessarily discarded–wasted–by small businesses around the country because they could not afford to have lead testing done for the products in their inventory. For used products, there weren’t technically required to do testing, but they still had to comply with the law forbidding them from selling products with lead above a certain threshold. In practice, it was test or toss. I know of local entrepreneurs in Wisconsin who had to discard a lot of products.

For inventors and entrepreneurs, the added cost of certifying that your product is lead free can be one more tax that stands between success and failure, even when you have diligently avoided working with companies where lead could possibly be a problem.

At least the lead ban had its roots in law from Congress. The most recent ban affecting children’s products comes from one unelected leaders of an agency who has made tough new regulations on children’s cribs a top priority. In the past decade, 32 children died from defective children’s cribs with drop-down sides. Now drop-down sides will be banned in 2011, making it illegal to make, sell, or distribute them. (See “Baby Asleep in a Drop-Side Crib? Soon They’ll Be Banned” at Time.com.) Any death is regrettable, but 32 deaths from tens of millions of users is remarkably small. Chances are the deaths are not evenly distributed among companies, yet a blanket ban on a product punishes all, including those who had a flawless safety record and had delivered innovations that made their beds more reliable and safer than the competition. Now they are out of luck, as are the millions of parents (myself included) who have found safe and sturdy drop-down beds to be a big help in safely taking care of children and grand-children.

30 deaths across a decade: all tragic, but consider those numbers in light of the risk we face every time we take a step, turn a corner, plug in a product, or take a bite of food. Far more children die each year from salmonella–do we ban chicken and meats? There are about 30,000 deaths a year in the US for accidental poisoning and about 40,000 automobile deaths a year, with thousands of children in both categories. 3.5 million children aged 14 years and under suffer medically treated sports injuries each year, with many more deaths than cribs could ever cause. Do we ban sports? About 50,000 people a year go to the hospital because of skateboards, with many more deaths than cribs. Among useful but dangerous products, consider lawnmowers, where over 150 people die each year (that’s 5 decades worth of deaths from cribs at our current rate). Time for a ban?

There are hidden costs and even injuries for safety measures that are too strict. Alternative products and alternative behaviors have their own set of consequences. Will parents now be tempted to let kids sleep on beds or without the enclosed protection of cribs because the new generation of cribs are too expensive or too inconvenient? Is there any guarantee that children nationwide will be safer because of the ban?

I love kids and want them safe, but am most comfortable when informed parents take responsibility for that. When one person in an unelected position can make broad new rules that wipe out products that millions of people have found to be safe and effective, this changing of the rules midstream is a terrible disincentive for innovation in children’s products and innovation in general. Why bother with making the safest, most innovative drop-down crib when you’re going to be lumped with inferior products and stuck with a blanket ban that wipes our your business? It’s easy to do in the name of the children, but there are a lot of more pressing problems that children face, and better ways to deal with them than having one regulator issue laws without direct accountability to the people. Chalk one up for innovation fatigue.

Anytime is a tough time to be an innovator, but it’s especially tough when government gets overly involved in helping without considering the unintended consequences of the help, or the opportunity cost from helping in areas where help isn’t really needed. The quest to protect children is one area where the temptation to be overzealous can be especially strong. Who could be against protecting children?

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Further stories in the news illustrate the important issue of external innovation fatigue factors as raised in our book. Recent examples:

  1. The Feds vs. Fruit Juice: The FTC goes to war against those who promote the health benefits of the pomegranate.
  2. Small-Scale Regulation May Bring Big-Time Troubles for Wisconsin Nanotech
  3. Licensing to Kill from today’s Wall Street Journal: A “study to be released this week by the Institute for Justice … has collected dozens of examples of regulations choking economic growth by taxing and over-licensing small businesses. In a survey of eight major cities, the study found that entrepreneurs routinely face obstacles of bureaucracy and red tape that deter them from otherwise promising opportunities.”
  4. CSPC Issues Final Rule on Definition of Children’s Products” (My take: let’s make products for children or that could even conceivably be used by children up to age 12 more expensive and riskier than ever, with a huge cloud of uncertainty about what products are covered just to keep innovators nervous and in the dark.)

Here’s an excerpt from the first story about pomegranates by L. Gordon Crovitz:

These days, pomegranates are far down the pecking order of fruits, though some think it was a pomegranate, not an apple, which Eve offered to Adam. Fewer than 4% of Americans had tried the fruit before 2002, when marketing mavens Lynda and Stewart Resnick launched the 100% fruit juice they call POM Wonderful. It’s since become a top seller, in its curvy hourglass-shaped bottle.

The Resnicks, who also owns the Teleflora and FIJI water businesses, invested in orchards in California in the 1980s. They’ve also commissioned research on the anti-oxidant properties of pomegranates—too much research, according to a Federal Trade Commission (FTC) complaint last month alleging deceptive advertising. “Any consumer who sees POM Wonderful products as a silver bullet against all diseases has been misled,” said David Vladeck, who runs the agency’s Bureau of Consumer Protection.

This is hyberbole—no POM ads claim the pomegranate can cure “all diseases.” But the complaint is a stalking horse for the agency’s more radical position: that health-food companies now need to get Food and Drug Administration approval for scientific claims, similar to the process pharmaceutical companies follow for drugs.

Ms. Resnick told me last week that the FTC complaint is “a 20th-century idea in a 21st-century world.” She says that “there is so much information available that consumers can make up their own minds. They are smarter than the FTC gives them credit for.”

I’m a huge fan of healthy food and a lifelong pomegranate eater (decades before POM helped people appreciate how delicious this fruit is). My introduction to pomegranates came from my mother who and her southern Utah roots (my mother was raised in hot “Dixie,” the St. George area in southern Utah, where pomegranates grew in her backyard. In fact, the photo below shows the flowers of a pomegranate tree in my grandmother’s backyard. It’s an amazing tree with beautiful, healthy, delicious fruit. But thanks to the Federal Government’s attitude about such things, one innovative company faces a surprising external “fatigue factor” from bureaucrats who might be happier if we all just drank Kool Aid.

Pomegranate Flowers, St. George, Utah

Pomegranate Flowers, St. George, Utah

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In 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.

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InnovationFatigue.com is the official blog for the new book, Conquering Innovation Fatigue. Here we provide supplementary innovation, news, tips, updates, and, when needed, a correction or two, to keep those who are using the big on the inside edge for innovation success.