Archive for patents


Another Innovation Knifing: Cutting “Natural Products” Out of the Scope of Patentable Subject Matter

Posted by: | Comments Comments Off on Another Innovation Knifing: Cutting “Natural Products” Out of the Scope of Patentable Subject Matter

One of the important new antibiotics discovered and developed by pharmaceutical companies in the past few years is Rifampicin and its relative Rifamycin. These potent antibiotics remain key tools in fighting off serious infection. Their story begins with a soil sample taken from a pine forest on the French Riviera in 1957 that was then studied in an Italian laboratory, where unusual antimicrobial properties were observed in a newly discovered bacterium.  eventually an unusual molecule produced by the bacterium was identified, isolated, mass produced–and, yes, patented.

Rifamycin was credited with conquering drug-resistant tuberculosis in the 1960s. These drugs are marvelous discoveries, important pharmaceutical inventions, and became the subject of multiple patents providing protection and incentives to the developers and improvers of this unique products.

Thank goodness these products were discovered and patented decades ago, because today the USPTO would probably reject any patent application out of hand using its newly fabricated and terribly damaging rules that rule out “natural products” as patentable subject matter. This is the result of what appears to be a politically motivated attack on the pharmaceutical industry by the US government, using a Supreme Court decision (Myriad Genetics) as the excuse, but twisting it to go beyond what the Supreme Court said. The political angle is that politicians want to “stick it” to the pharmaceutical industry and appear to be taking steps to lower the cost of drugs by limiting patent scope and other means. But the long-term effect will be reduced innovation and less progress in medication.

If a product is actually novel, useful, and non-obvious, the fact that it had origins of some kind somewhere in nature should not be a barrier to patentability. The fact that an unknown bacterium in some French soil existed in nature does not enable the public to understand and produce a powerful, pure antibiotic useful in treating many diseases. Those who discovered, tested, refined, and modified the compounds produced by the bacterium deserved and needed patent production. Without it, there would be lessened incentives to take on the burdens of discovery, testing and drug development. We would be less innovative, not more, without patents for novel materials with some kind of basis in nature. But today, such patents and such innovations are threatened. It’s another example of innovation fatigue driven by political agendas and political machinations.

If you think about it, every invention has some roots in nature. The protons, neutrons, and electrons used in every object or affected in every process come from nature. Are we sure that we need a vague and indefinite “natural products” exclusion beyond the more sensible previous criteria for patentability?




Comments Comments Off on Another Innovation Knifing: Cutting “Natural Products” Out of the Scope of Patentable Subject Matter

Excluding Natural Products from Patent Protection?

Posted by: | Comments Comments Off on Excluding Natural Products from Patent Protection?

In response to recent court cases, the USPTO has dramatically revised its approach to dealing with a wide variety of patents. Its new guidelines to patent examiners on subject matter eligibility for inventions involving natural products seem to go way beyond the legal decisions on which they are allegedly based, adding extremely high barriers to patentability. If your invention uses natural products, as almost every tangible invention does to some degree, you now must show that what you claim is “significantly different” that what might be found in nature or from natural phenomena. This vague requirement gives examiners a new club. I’ve already seen it abused.

One client from a previous employer of mine was on the verge of having her patent allowed, but instead just received a ridiculous rejection based on the new guidelines.  The invention is a real breakthrough in consumer products that replaces a potentially harmful active ingredient with a novel formulation of several natural compounds with unexpected benefits. The value of the invention is potentially huge, but the examiner notes that since all the ingredients are natural and not significantly different from what can be found in nature, the overall invention is not patentable. End of story. I hope this examiner doesn’t realize that every atom, electron, and photon used in any invention can be found in nature.

Those in the biotech industry are highly agitated by this development. “IP Practitioners ‘Horrified’ by USPTO Guidelines on Myriad” is a recent article from Managing IP Magazine with the following:

Sherry Knowles, principal at Knowles Intellectual Property Strategies [said]:

I think the guidelines that were promulgated by the Patent Office are horrifying to the pharmaceutical and biotech industry. That is probably the nicest thing I could say about them. According to the utility guidelines that came out in March this year, not only is no natural product patentable in the US, arguably derivatives of natural products may also not be patentable. That is a clear change in the law.

She said the guidelines include a number of questions to find out if something is patentable. The first is: is it a natural product and does it include chemicals derived from natural sources such as antibiotics and proteins. Knowles noted that 47% of drugs over the past 30 years include derivatives of natural products.

“According to the guidelines, if it is not a natural product you look at whether it is ‘markedly different’ from the natural product. That’s the test. Of course that is clear as mud and that will be defined over time in case law. But let’s say two-thirds of approved drugs that are derived from natural products are markedly different you are still down to 390 drugs over the past 30 years that arguably under the utility guidelines are not patentable. I find that horrifying. I am very concerned,” she said.

These new guidelines, as well as the questionable court cases behind them, reflect a growing anti-patent mentality among our judges, politicians, and bureaucrats. We need to educate a new generation to understand that intellectual property is a critical tool to lift all boats by encouraging innovation and the sharing of secret knowledge obtained by inventors. We need to reverse the popular trend of pointing to patents and trolls as the biggest barriers to progress, when it is not that way at all. Sound patents, properly examined and granted, encourage innovation and lead to gains in knowledge for all.

Comments Comments Off on Excluding Natural Products from Patent Protection?

Chester Carlson and the Xerox Story: Do Great Inventors Really Have to Die Early and Lonely?

Posted by: | Comments Comments Off on Chester Carlson and the Xerox Story: Do Great Inventors Really Have to Die Early and Lonely?

The photocopier, one of the most valuable inventions in the modern world, began with the all-consuming passion of one man, Chester Carlson, who sacrificed almost everything he had for years to realize his dream of “dry printing” using electrostatic means. In the end, he became wealthy and successful, but the years of effort required should be noted by all seeking to launch a major new invention. One of the most important lessons in his story is that he obtained a valid and valuable patent, otherwise companies could have taken his idea and left him behind. You cannot neglect IP if you are an inventor.

Chester’s path to invention and innovation began in poverty at age 13, working as a printer’s assistant. It was there that he began thinking about better ways to print. He went on to graduate from Cal Tech and then, still at the edge of poverty, dedicated his spare time to tinkering in his kitchen, looking for ways to pint without wet inks, taking advantage of the potential he saw with static electricity as a tool for moving dry particles onto paper.

Chester’s story is told well in the Engines of Our Ingenuity radio program series by John Lienhard at the University of Houston. Here is an excerpt:

Carlson patented a copying process in 1937, before he’d really figured out how to make it work. Author Dean Golembeski tells us that he hired a German refugee named Otto Kornei to help him. Working on a budget of 10 dollars a month, they finally managed to reproduce an inked message by electrostatic means. Kornei saw little future in the process, so he went on to a regular job. Carlson spent the next six years looking for corporate backing.

Battelle finally bought into his patent, and Carlson vanished into the work of developing the process. First his marriage fell apart. Then Battelle gave up on the process. Finally, a little company called Haloid bought the patent rights and hired Carlson.

Haloid turned to a Greek scholar for help in naming the process. Since it didn’t use any photographic liquids, he suggested that they base the name on the Greek word for dry — xeros. He suggested that they call it “Xerography.” That word was simplified to “Xerox,” and Carlson’s dream was finally on its way. It took another 13 years to produce the first really successful Xerox machine, but then Carlson was suddenly worth 150 million dollars.

Endless toil, an all-consuming passion, years of sacrifice, then an invention, a patent, and years more of work to obtain corporate investment and eventually commercialize the process–this was what it took for Carlson to achieve success and wealth. And then he dropped dead at age 62, a lonely man. Was it worth it?

Frankly, one thing that passionate inventors often need is a touch of balance in their lives, with more attention to family and personal growth. Chester’s zealous focus appears to have cost him his marriage and perhaps his health. Sometimes that kind of balance gives people insights and connections that help them bypass some of the fruitless decades of futile meandering that occurs in many inventor’s lives and more directly realize their goal. It also gives them longevity. High stress for decades to realize your passion, only to be promptly terminated with an early heart attack, is too common a pattern in “successful” business leaders and innovators. Again, with balance, more complete and meaningful success may be realized and enjoyed for much longer. Don’t overdo it, inventors! Slow down, pay attention to your family and your health, and open channels of creative inspiration to realize you dream more efficiently.

Comments Comments Off on Chester Carlson and the Xerox Story: Do Great Inventors Really Have to Die Early and Lonely?

Judicial and Legislative Fury Against “Business Method” Patents: A Retreat from the Information Age

Posted by: | Comments Comments Off on Judicial and Legislative Fury Against “Business Method” Patents: A Retreat from the Information Age

For big business, life would be simpler without patents. Then success would be determined by factors related to size such as lobbying budget, marketing prowess, and the combined power of your legal team. Upstarts could be squashed and cleared out of the way or acquired for a pittance. That’s not how our economic system is supposed to work. Patents can and should be a great equalizer, allowing a small company with a valuable product and valid patent to protect itself and prevail, even against a giant. The big guys, especially in the technology sectors, hate the risk of outside patents and are much happier stirring up wrath against so-called “patent trolls” to vilify those with patents.

The assault against patents has been especially forceful in the so-called “business method” area. These vaguely defined patents generally involve processing information and using computers in new ways. While there have been some terrible business method patents issue due to the failure of the USPTO to perform serious prior art searches, the problem is not with business method patents per se, but with the office that issues them with underfunded examiners faced with absurd quotas that limit the time they can spend on a case.

The area of computer-related and software-related innovation is not something where intellectual property should be feared, but celebrated. We have moved from the industrial age, where innovation was largely with physical gadgets and chemical compounds, to the information age or knowledge economy, where unlimited progress is possible through advances in how we manage and process information. Information is every bit as real as a mousetrap, a wheel, or a new drug, and while it is intangible to our physical senses, it is tied to physical processes such as entropy and material transformation of memory and signals as data is processed. It is impossible to implement a practical business method of any kind without physical interaction with reality, but our judges, lacking a basic understanding of science and especially information science, have conjured up the concept that information and its manipulation is “abstract” and this not patentable. This ungrounded believe is based in ignorance and is a tragic departure from reality. Failure to encourage advances in IT, in software, and in knowledge management in general with fair IP will hinder our progress and limit economic growth.

The latest potentially fatal blow to business method patents comes from a Federal Circuit Court case, CLS Bank International v. Alice Corporation. Robins, Kaplan, Miller and Ciresi, a highly regarded law firm, published a somewhat humorous overview of this macabre case. The article predicts that this case will recent in many more patents coming under attack for being inelgible subject matter (this is called a Section 101 rejection) and, worse yet, creating vast new uncertainty for inventors and investors. This weakens our economy and contributes greatly to innovation fatigue in a very broad area with some of the greatest promise for the future.

The recent America Invents Act also struck a blow against business method patents, adding a severe new route for invalidating patents more easily that have some financial component to them. Why give one particular area of patents such unfair treatment? It’s an indication of the lobbying prowess of certain companies that dislike patents in this area. Congress, recognizing the harm that this special invalidity treatment can do to that particular class of patents, is thinking of taking action–to extend this easier invalidation route to even broader classes, thereby further weakening patent protection in some of the most vital sectors of the economy. Innovation fatigue squared–at a time when our economy needs to strengthen innovation and give it ample encouragement with sound IP protection and increased, not decreased, certainty if we are ever going to get this economy off the ground.

Comments Comments Off on Judicial and Legislative Fury Against “Business Method” Patents: A Retreat from the Information Age

A Chance to Decrease the Uncertainty in Patent Enforcement

Posted by: | Comments Comments Off on A Chance to Decrease the Uncertainty in Patent Enforcement

One of the vexing problems in patent enforcement is the high uncertainty in litigation caused in part by a particular legal principles in the U.S. dating back to a 1996 court case, Cybor Corp. v. FAS Technologies, Inc., in which the Federal Circuit concluded that claim interpretation–the critically important step of determining what the clams in a patent actually mean– was a purely legal issue subject to de novo review on appeal, meaning that all the work and analysis conducted in a trial to determine the scope and meaning of the claims is pretty much tossed out the window as the appellate court stats over scratch, often coming up with completely different results. This is believed to be an important factor contributing the painfully high 50% reversal rate for patent cases when appealed. The Federal Circuit has a chance to repair the damage and may do so, if we are lucky, in a new case they are deciding. See “The Single Most Important Event In Patent Litigation: Will the Federal Circuit View It Differently?” from the law firm Allen and Overy. The case is Lighting Ballast Control v. Phillips Electronics.

The writer at Allen and Overy offers these benefits to reversing de novo review of claim construction:

The potential impact of the Federal Circuit’s ultimate ruling is significant. In particular, should the court overrule Cybor even partially (by holding that claim interpretation is a mixed question of law and fact, for example), parties may be more likely to settle cases after a district court decision, as the possibility of reversing the decision with a Federal Circuit appeal will have decreased. Also, any district courts that may have been reluctant to engage in fulsome Markman hearings, complete with witnesses, could be motivated to conduct such hearings, as the district courts’ ultimate rulings would be less likely to be overturned. Finally, with a partial or complete reversal of Cybor, the cost in both time and money of patent litigation could decrease, with fewer appeals of claim interpretation rulings, and fewer remands to the district court in view of those reversed rulings.

Fingers crossed!

Categories : patents
Comments Comments Off on A Chance to Decrease the Uncertainty in Patent Enforcement

Abandon the US Patent System? Sure, If Killing Innovation is Your Goal

Posted by: | Comments Comments Off on Abandon the US Patent System? Sure, If Killing Innovation is Your Goal

Billionaire Mark Cuban, after complaining about patent lawyers making too much money, condemned the US patent system for blocking innovation. He and some other wealthy elites are troubled by US patent rights and would like to dismantle large parts of the system. This is a growing and troubling trend. The voices in the tech community claiming to have a “consensus” against patents are not the ones creating the technology, so argues Gene Quinn at, but those who want patents out of their way so they can more easily exploit the work of others. I think Quinn’s argument has a great deal of merit.

The patent system has plenty of problems that can discourage innovation, but these problems arise from poor law, poor courts, poor examiners, and other problems that weaken the ability to obtain and enforce valid patents for genuine inventions. The solution is not to dismantle patents, but to strengthen them and their quality. The basic patent system is fundamental to encouraging innovation. If my invention can be copied by someone else at no cost, why would I go through all the trouble and cost of bringing it to the market? There is a need to protect property rights in order for an economy to flourish, and the existence of the US patent system has been one of the main reasons for the phenomenal growth of the US economy over the years, while the weakening of property rights in that nation is now contributing to its economic decline.

To overcome innovation fatigue, we need to keep property rights, including intellectual property rights, alive and well. Don’t listen to the rantings of Cuban and his ilk. Understand the basic economic incentives needs for innovation to flourish, and then join me in pressing for a healthier patent system.

Here in China, copyists used to be the foundation of the economy, and there was little need for patents. Now China is changing dramatically and its government and industries see the need to strong IP to encourage invention and innovation for the new China. So here, patents are becoming stronger as America weakens its system progressively with the help of “progressives” like Cuban and some very poor judges and politicians. Chinese companies are racing to build aggressive IP estates while America complains about its patents. At this rate, in the next 10 or 20 years, who will lead and control the global economy?

But wait, haven’t there been studies showing that patents hurt innovation? Allegations, yes, but a careful look at history does not support the argument. Below is Ron Katznelson’s valuable input to the Gene Quinn article mentioned above, taken from the comments section. The links Ron provides should be helpful in debunking popular myths:

However, we have a greater challenge when history is rewritten by those who mischaracterize, distort, or otherwise ignore historical facts to “demonstrate” that patents block downstream development. This revisionism has been going on for the last century and has produced certain myths and false “proofs” of the patent blocking/hold-up hypothesis. The number of scholarly sources that repeat the patent blocking allegation may now be so great that the allegation has become an entrenched and unchallenged “truth.” It is being taught in economics, business and law schools. In my opinion, it is the major source of misguided patent legislation and court opinions. The myths are originally perpetrated to serve agendas that have very little to do with innovation policy.

In every instance so alleged, a further investigation of the real facts surrounding the subject patents reveals that no downstream development suppression occurred, and in some cases the opposite had occurred. The details of some examples that my colleague John Howells and I looked at are detailed in the following papers recently submitted for publication:

The Myth of the Early Aviation Patent Hold-Up – How a U.S. Government Monopsony Commandeered Pioneer Airplane Patents, at

Inventing-around Edison’s incandescent lamp patent: evidence of patents’ role in stimulating downstream development. at

In each of these studies, we sought to collect, assemble and convey, a definitive and unassailable empirical evidentiary record including primary sources that cannot be characterized as “just another view” of the facts. Similarly, the economic historian George Selgin and his colleague John Turner have debunked patent blocking allegations regarding James Watt’s steam engine:

Strong Steam, Weak Patents, or the Myth of Watt’s Innovation-Blocking Monopoly, Exploded at .

We have similar detailed analysis on other alleged patent blocking cases in the pipeline. Hopefully, these and future articles may change the misconceptions that fuel the patent blocking myths.

Comments Comments Off on Abandon the US Patent System? Sure, If Killing Innovation is Your Goal

Patents: Sucking the Lifeblood from the Economy??

Posted by: | Comments Comments Off on Patents: Sucking the Lifeblood from the Economy??

There’s an anti-patent sentiment in some parts of the public that argues that they are destroying the economy rather than helping. There is particular resentment against non-practicing entities (NPEs), often called trolls, for owning (and typically acquiring large numbers of) patents for products and processes that they don’t actually use themselves. That sentiment, naturally, is most likely to be held by large companies who want to make a lot of money by making and selling whatever they want without some little guy’s patent getting in the way. Trolls with their patents are, we are told, sucking the lifeblood out of the economy. They are especially deadly in the areas of greatest innovation such as software. The related field of business methods is one where the whole concept of patenting is viewed by some as especially dangerous and destructive.

A healthy perspective is now offered by Jeff Wild in his post for IAM Magazine’s blog, “If trolls are destroying US jobs, why is the apps sector booming?” Here is an excerpt:

Last week a shocking report was produced by an organisation called TechNet. Based in the US, it describes itself as “the preeminent bipartisan political network of CEOs and senior executives that promotes the growth of technology-led innovation”. Where the Jobs Are: The App Economy claims that more than 450,000 app-related jobs have been created in the US during the last five years and that the app economy could now be generating annual revenues of up to $20 billion. What’s more, there seems to be no sign of a let-up in the good news. “In the year ending December 2011, the average number of tech want ads containing the word ‘app’ was still 45% higher than the previous year. That’s rapid expansion by anyone’s standards,” the report states.

As I say, it’s shocking stuff. For those of us who remember the multiple news stories and blog pieces during 2011 that focused on NPEs such as Lodsys taking action against app developers in the US, the idea that the sector is actually booming and creating jobs at breakneck speed is hard to comprehend. Weren’t the “trolls” supposed to be destroying a nascent industry and driving jobs and dollars away from the US? How can it possibly be that the reverse seems to be happening? Indeed, how can a serious report on the American app sector not mention NPEs or trolls at all?

Surely, it must be an amazing oversight. Or perhaps not. Maybe all the outrage and doom-mongering last year was overhyped hysteria. Maybe the reality is that NPEs, or “trolls”, or whatever you want to call them, are really not a decisive issue in the app economy at all. And maybe that applies to NPEs and trolls generally: in the great scheme of things, they are not a big deal.

In a piece published by Forbes last week, Ken Lustig, head of strategic acquisitions at Intellectual Ventures, points out that the number of patent suits initiated in the US has remained relatively flat for the last 10 years and that only around 100 actually go to trial. What’s more, there is much less patent litigation now than there was in the 19th century, supposedly a golden age of American innovation. Indeed, says Lustig, revered names such as Thomas Edison used the NPE model to diffuse their inventions and grow rich. What is being reported today in such dramatic and negative terms is what has always happened in the US when new technologies appear:

Every major technological and industrial breakthrough in U.S. history—from the Industrial Revolution to the birth of the automobile and aircraft industries and on up to today’s Internet and mobile communications revolutions—has been accompanied by exactly the same surge in patenting, patent trading, and patent litigation that we see today in the smartphone business. This is how the rights to new breakthrough technologies have always been distributed to those best positioned to commercialize them—to the benefit of the whole nation in terms of new jobs, new medical advances, and new products and services.

He also summarizes the important research compiled by Michael Risch of the Villanova University School of Law. The bottom line is that both sides in the debate about NPEs have made mountains of molehills, though the defenders of NPEs do have a valid point in one particular area: “the evidence does support one defense of NPEs: they provide a better way for individual inventors to enforce their patents than bringing lawsuits themselves.”

NPEs don’t just include patent aggregators like Intellectual Ventures or Acacia. Universities and numerous lone inventors are often not (yet) in the business of producing and marketing goods but have significant inventions to market. Based on the research about the impact of NPEs and their patents, there is no need for alarm and no need to revise patent laws to stamp them out. Doing so could stamp out the fires of innovation that have brought us out of the stone age into the booming knowledge economy. IP needs to be protected and nurtured, not vilified and weakened. And certainly not discouraged with much higher fees at the USPTO, which the current Administration is proposing. Taxing innovation and other steps that discourage inventors by making it harder to protect their inventions are far more likely to suck the lifeblood from the economy than the existence of NPEs. More innovation fatigue is not what this economy needs.

Comments Comments Off on Patents: Sucking the Lifeblood from the Economy??

Innovation Fatigue Through Bad Patent Law: The Innovation Burdens of the Leahy-Smith “American Invents Act”

Posted by: | Comments Comments Off on Innovation Fatigue Through Bad Patent Law: The Innovation Burdens of the Leahy-Smith “American Invents Act”

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:

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:


(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.”

Comments Comments Off on Innovation Fatigue Through Bad Patent Law: The Innovation Burdens of the Leahy-Smith “American Invents Act”

Why Smart Startups File Patents

Posted by: | Comments Comments Off on Why Smart Startups File Patents

Startup companies, unlike our “too big to fail” banks, can’t afford to make too many Enormous Mistakes without perishing or losing much of their value. One of the Enormous Mistakes that some startups make is neglecting intellectual property. That includes neglecting opportunities to protect their business, as well as the need to make sure they aren’t infringing other patents. These are separate issues and require separate efforts and tools. Some of the common mistakes and misconceptions of startups regarding IP are addressed in the slideshow presentation below, “What Do Startups Need to Know about Patent Law” by Jeffrey Schox.

An important point that Schox makes is that reasons smart startups file patents aren’t necessarily because they expect to license their technology or successfully sue a competitor. But having an issued or pending patent with some degree of quality is essential for attracting investor support. Investors typically expect a startup (in many fields, at least) to have IP that can be of value to the business for many years to come and can help limit the harm of competitive copying. Without that in place, that startup is much less likely to get the funds needed to thrive.

Patents play different roles at different stages in the life of a company. But neglecting IP at any stage is an Enormous Mistake that can lead to extinction.

Comments Comments Off on Why Smart Startups File Patents

The Bogus IP Registration Scam: Becoming a Global Phenomenon, Beware!

Posted by: | Comments Comments Off on The Bogus IP Registration Scam: Becoming a Global Phenomenon, Beware!

The good folks at the China Law Blog recently discussed a common scam that occurs in China. Actually, this is a scam that is shaking down small and large companies and lone inventors all over the globe. I’ve warned against it in the US for a long time and was intrigued to see it is going full-bore here in China.

When you file or obtain trademark registrations or patents, scammers are likely to send you an invoice asking for some large sum of money in return for being “registered” in their international database of patents or trademarks. In the Chinese version of the scam, you may received a bound volume of Chinese law with an enormous invoice. Failure to pay, they will tell you in annoying repeat calls, could result in all sorts of problems. Don’t pay. Don’t waste your time with them.

In US and European versions of the scam, the invoices sometimes come from Serbia or Croatia. But they can come from anywhere. If it’s from the government where you registered or filed your IP, throw it away. Unfortunately, enough businesses and gullible inventors just routinely pay invoices without asking tough questions that the scam is successful, thus causing it to spread. Don’t be fooled. When your innovation results in being ripped off, you’re on your way to innovation fatigue. Steer clear.

Comments Comments Off on The Bogus IP Registration Scam: Becoming a Global Phenomenon, Beware!

Our Mission 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.