Sep
10

China’s Answer to Gutenberg, Wang Zhen, To Be Honored in the Paper Industry International Hall of Fame, 2015

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On October 15, 2015, Appleton, Wisconsin’s Paper Industry International Hall of Fame will be inducting six people into the Hall of Fame. One of them is an innovator and leader from ancient China who can be considered as China’s answer to Gutenberg. Gutenberg is frequently honored in the West as one of the most important inventors ever for giving us the world’s first book printed with movable type, a remarkable achievement from around 1455. As with many inventions long thought to have had European origins, there’s a touch of Eastern flavor in this one, for Gutenberg’s Bible came 142 years after the world’s first mass-produced printed book made with movable type, the large Book of Farming (Nong Shu) from China, printed in 1313 by Wang Zhen.

Wang Zhen was a Chinese official who recognized that vast amounts of agricultural technology scattered across China needed to be preserved to help all of China reduce famine and be more productive. He took a Chinese invention, movable type, and improved upon it to make a practical way to print an entire book. He used carved wooden blocks for each character, and developed a sophisticated way of arranging them on two rotating tables to allow typesetters to quickly find needed characters to place them in his press. The Nong Shu was printed and preserved many notable inventions in China, including an early form of a blast furnace driven with a reciprocating piston attached to water works, something long that to be a later European invention.

Recognizing Wang Zhen for his important role in the advance of printing is a fitting step for the Hall of Fame, and I look forward to many more Asian inventors, scientists, and business leaders being recognized in the Hall of Fame in future years. The historical contributions of China in numerous fields have received far too little attention, and I’m delighted to see folks in Appleton taking the lead in rectifying this problem. Kudos to the Paper Industry International Hall of Fame!

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Jul
20

Take a Broad Approach to Intellectual Property Strategy

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I’ve noticed that many companies tend to emphasize patents in their IP strategy. Sometimes that’s almost all they consider. Sound IP strategy, however, requires applying a variety of tools. A broad approach to intellectual assets is more important than ever. Patents of various kinds, trademarks, trade secrets, copyright protection, and low-cost publications can all play a useful role.

Utility patents can protect your products, their components, the machines for making them, the methods of making them, and methods of using them, among other things. Design patents can protect aesthetic elements. Copyrights can protect commercial expression (ads, for example) of that function. Trademarks protect the brands that are based on the consumer perception of the product. Packaging relevant to your products may also be protected with utility patents, design patents, trademarks, and copyright.

The power of trademarks in protecting a company is illustrated in a recent case involving Adidas, owner of trademark for a tennis shoe with three stripes on the side. In May 2008, an Oregon jury ruled that Payless Shoes should pay $308 million to Adidas for infringing that trademark. (Payless appealed but subsequently abandoned its appeal after agreeing to an out-of-court settlement with Adidas.) Payless may have hoped to evade the three-strip trademark of German-owned Adidas by using four stripes, but Adidas successfully argued that their stripes create a distinctive mark that is a sign of origin, and that both two-stripe and four-stripe shoes may cause confusion in the minds of consumers. Three simple parallel stripes have become a distinctive part of the Adidas brand. This coverage may last as long as the brand does, unlike the limited coverage afforded by patents. Adidas, of course, relies on both utility and design patents as part of its IA strategy.

In recent years, U.S. trademark rights have been expanded to cover not just traditional logos and names, but to also cover colors, scents, characteristic sounds, and three-dimensional shapes. Examples include:

  • Yamaha’s distinct water spout from its WaveRunner® personal water craft. As U.S. Trademark 74321288 states, “The mark is comprised of a three-dimensional spray of water issuing from the rear of a jet propelled watercraft and is generated during the operation of the watercraft.”
  • Tiffany’s famous robin-egg blue gift box (US Trademark 75360201).
  • Intel’s five musical notes (US Trademark 78721830).

Trademarks can have an unlimited life, unlike the 14-year-life design patents have from the date of filing, or the 20-year life of regular utility patents. Under U.S. law, trademarks can be used to sue both manufacturers and distributors of infringing products.

We recommend that innovators look for creative combinations of both trademarks and patents, as well as other forms of intellectual assets.

One of those other forms can be called “digital intellectual assets,” a broad category that includes domain names. They may be trademarked, but if you don’t own the domain name, you’ll have an expensive battle trying to wrest it from someone else. As soon as you consider candidates for trademarks, quickly register the related domain names. Also consider getting the related Gmail accounts, Facebook accounts, Twitter accounts, Youtube channels, Pinterest accounts, etc. Those are free or inexpensive and can be worth a great deal if your brand name becomes important.

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May
21

More Cold Water on the Fire of Innovation: Unnecessary Patent Reform

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iStock_000050431454_LargeAbraham Lincoln said that the patent system “added the fuel of interest to the fires of genius.” Today the fires of genius and the fire of innovation itself is getting doused with something less helpful than fuel. These fires are being cooled and, in some cases, extinguished with harsh attacks on the IP rights that once enabled and motivated lone inventors and small businesses to take the fruits of their genius to the market.

The owners of small businesses, the people who generate most of the innovation and business growth in the United States have good reason to be worried. Their ability to attract funding through valuable intellectual property is being compromised. Their ability to protect their products and innovations from the power of corporate giants is being whittled away. This has come from many quarters, but there is a widespread anti-patent movement driven by politics and misinformation. It’s the bitter fruit of a bitter anti-property rights movement that exaggerates the threat of a few bad actors to justify widespread weakening of property rights in ways that will hurt the economy and our society for years to come.

We have seen a recent series of Supreme Court cases that have made it much harder to obtain patents and enforce them. We have seen massive changes in US patent law that make it easier to invalidate patents after they are granted and make it harder and more costly to stop infringers if your patent survives. Now the bogeyman of “patent trolls” is held up as a threat to America that requires more sweeping “patent reform” to make it even harder to enforce a patent, and it looks like both parties are united in a quest to do “something big” to shake up the IP rights that helped drive the American economy for so many decades. Corporate giants benefit from this reform as it clears away the annoyance of other people’s IP rights standing in the way of their marketing muscle. But the economy as a whole and the rights of many are hurt in this process this amplifies innovation fatigue .

Several recent articles highlight just how serious the problem has become. Louis Carbonneau in “Toxic Asset: The Gradual Demise of the American Patent” (IPWatchdog.com, December 10, 2014),  surveys the radical changes in the past two or three years:

On the judicial front, in 2014 we saw no fewer than 5 Supreme Court decisions going against patent holders on the various subjects of obviousness (a key test for patent validity), what constitutes “abstract ideas” (which now undergo a more stringent test for patentability), business method patentability, indefiniteness (how you construe claims), reasonable royalty (how you calculate damages), willful infringement (how you punish the “bad actors”) and fee shifting (making losers pay for winners legal fees). All of these decisions have collectively made it harder for patent owners to: i) maintain the validity of duly issued patents (previously presumed by law), ii) pursue infringement claims, ii) prove damages (let alone treble damages), iv) have open discussions with potential infringers prior to litigating, and have left the unsuccessful patent owner at risks of paying millions in legal fees to the other side if the judges so decides.

Parallel to judicial reform at the federal courts, recent US patent reform with the American Invent Act (AIA) introduced a new post grant review mechanism called Inter Partes Review (IPR) which allows a party to challenge the validity of any issued patent before the Patent Trial & Appeals Board (PTAB). Strangely, despite the PTAB being an emanation of the same USPTO that delivered all these patents in the first place, there is no longer a presumption of validity before the PTAB for the patents being challenged while other rules make it easier to invalidate patents based on prior art.

Finally, on the political front, in 2013 the US House of Reps. passed the Goodlatte bill, which would erode rights conveyed to all patent holders despite being primarily directed at NPEs. It is now expected that the new Republican led Senate will revive the bill -currently on hold- in early 2015 and, with a rare showing of bipartisanship from the White House, it is expected to be signed into law. At the same time, 27 US States have passed or are in the process of passing laws that make it harder for people to assert the patents they own.

Carbonneau goes on to explain that in recent Federal Circuit cases, patent owners are being crushed, and in Inter Partes Review (IPR) cases before the USPTO, nearly 80% of the owners of challenged patents are being told by the USPTO that their patents are not valid over the prior art that the USPTO itself supposedly considered before granting the patent in the first place. Carbonneau puts it rather wryly:

The most interesting statistics come from the PTAB [the USPTO’s Patent Trial and Appeal Board, which processes IPR cases] because it only focuses on validity issues based on prior art; the very same prior art patent examiners are supposed to have found and analyze prior to issuing a patent. Since patents going through IPRs are usually the same ones that being litigated, you would assume that owners did a lot of due diligence before investing in a costly patent lawsuit. Well, the PTAB is declaring 77.5% of reviewed patents invalid! And this is not limited to “abstract” software; patents related to biotech and pharmaceuticals, medical and mechanical devices, are being invalidated at an even higher rate! Remember, this is an offspring of the very same agency that inventors paid thousands of dollars in the first place to review applications and issue their patents. Now, after having to pay a quarter to a half million dollars in legal fees (average cost of an IPR procedure for a patent holder), the same agency is telling patentees nearly 80% of the time: “Very sorry we made a mistake; we would not have allowed your application had we looked more carefully for existing prior art. And no, there is no refund available.

Personally, I cannot think of any industry that could survive more than a month with a nearly 80% defective rate, let alone by forcing you to spend a fortune for the “privilege” to confirm that indeed your title was invalid in the first place! Only a government can come up with such a broken system and get away with it.

The impact of these anti-patent efforts has been a surprisingly sudden break from the trend of increasing IP litigation, with litigation in 2014 down about 13% from the previous year according to a new 2015 PwC report on patent litigation. The problem of explosively increasing patent litigation, a common excuse to justify the slashing of patent rights, is not supported by the data.

Richard Lloyd, writing for the IAM Blog, draws this observation from the PwC report:

Of these three classes [of patent litigants considered], NPE [non-practicing entity] companies have been successful 31% of the time in patent cases brought since 1995; this compares with a success rate for universities and non-profits of 48% and a lowly 18% for individual inventors. Individual patent owners also do far worse with damages pay-outs, getting a median award of $3 million compared with $11.5 million for company NPEs and $16.2 million for universities/non-profits.

There could be many reasons for individual inventors doing relatively badly. Although the PWC study doesn’t provide any, it’s easy to speculate that small inventors may have lower average quality patents to begin with, while they probably don’t have the same kind of litigation savvy as other NPEs and are much less likely to have access to the same kind of litigation expertise that larger, better funded patent owners can turn to.

But what PWC’s numbers also strongly suggest is that the US patent litigation system is strongly stacked against small, patent owning entities. Bearing this in mind, it is worrying that the main packages of reform proposed in the House of Representatives (the Innovation Act) and the Senate (the PATENT Act) are only going to penalise them further.

Lloyd notes that potential irony now that many lone inventors, recognizing that they have little chance of winning and have almost no chance of affording the punitive legal bills they may face if they sue and lose, may be more likely to turn to NPEs (“patent trolls”) for help as the most practical way to realize any benefit from their work.

There is a need to rebuild an innovation climate in the United States, starting with educating our leaders about the need for IP rights and the value of patents. If we don’t teach this lesson from within, it will eventually be taught rather loudly from without, for Europe and China are both moving to strengthen IP rights and strengthen IP enforcement. Europe’s Unitary Patent system could be a boon to IP there, though much remains to be seen, but the changes in China are strong and dramatic. That nation has gone from no patents and no IP system in the early 1980s to the world’s biggest source of IP generation and IP litigation, with many changes steadily strengthening the nation’s IP system. There is a long ways to go for China still and there have been some setbacks, but at current rates we can see China becoming a leading source of global innovation while the US loses its lead.

Will the flames of innovation be largely quenched in that nation? Much depends on what we do with IP rights now, the rights that will shape our culture and economy for decades to come. May the fires of genius be encouraged with something other than the cold water Congress and Courts have been sloshing.

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Mar
15

A Need To Save the US Patent System: A Warning from Dana Rohrabacher

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Many leading IP professionals working with the US patent system are growing increasingly concerned about the weakening of the IP system there. Some are so concerned that they are wondering what steps can be taken to save it. Save it from what, you might ask? Save it from erosion of the basic property rights that the Constitution sought to protect. Solve it from the capricious destruction of the incentives that inventors need to create and share their work. Save it from judges and politicians who see patents and property rights as problems.

One man who wants to save our IP system is Rep. Dana Rohrabacher (R) from California’s 48th District and a member of the House Science and Technology Committee. He recently authored a piece for the Washington Times called “Patent ‘reform’ is killing the right to invent: How a congressional misstep could imperil creativity” (March 1, 2015). I agree with much of what he says.

He warns that Congress’s zeal to stop “patent trolls” will actually result in them simply doing the bidding of powerful companies who are annoyed by little guys able to defend themselves with patents. In effect, Congress is being manipulated into apparently “reforming” the US patent system but in reality they will be weakening it for small inventors and making it more friendly to the big empires that see patents as unpleasant sources of cost and annoyance. Here is some of what Rohrabacher has to say:

With the best intentions, and naively going along with the corporate world’s hugely financed publicity machine, Congress is about to stomp on America’s most creative citizens, its inventors.

The target is not the much-hyped “patent trolls.” They are a minuscule matter. What’s at stake is average Americans’ constitutional right to own what they’ve created. We’re really up against corporate lawyers acting like ogres, devouring the little guy’s innovative accomplishments.

Many of my colleagues, without understanding the legislation’s impact, will soon vote on “HR 9,” a misnamed “patent reform,” also dubbed “pro-innovation,” that is anything but. In reality, it deforms our patent system beyond recognition.

This legislation — pushed by my Republican colleague, House Judiciary Committee Chairman Bob Goodlatte, and deep-pocketed multinational corporations — appears on its way, again through the House, to the Senate, thence to an eager President Obama for signing.

When that happens, America’s exceptional system of invention will be shoveled into the depths of mediocrity, there to seep into the murk in which less scrupulous global competitors spend their resources.

In the last session, a bipartisan band of my Republican friends (some of whom made their pre-political marks as patent-holding inventors); members of the Black Caucus; and a heroic Ohio congresswoman, Democrat Marcy Kaptur, failed to dissuade our House colleagues that the bill was not the litigation-curbing effort as advertised.

The bill went to the Senate where, fortunately, it stalled. It’s back, this time resurfacing in the House with just one hearing. A whole class of small inventors, among the many who will be injured, is being kissed off as scarcely deserving a voice. All in a day’s work for the corporate influencers who shaped HR 9 from start to finish.

Just because a measure holds itself up as “tort reform” should not mean it escapes the scrutiny of free-market Republicans. It should instead call for a skeptical second look, and then more throughout its progress. Guaranteed: Such close-eyed analyses of this bill will encourage deep suspicion.

Fair-minded members will find themselves aghast at how this leaves defenseless our individual inventors, small and midsized companies, researchers, even universities who depend financially on their patent portfolios. It is a coup in the making by the biggest and best protected operators….

Legislative reform efforts invariably build on a narrative of great injustice. This one moves wildly beyond the need to fix real abuses, wherein at considerable cost companies must defend their legitimately acquired patents against unscrupulous claimants.

But the term “patent troll,” directed against such bad actors, has been transmogrified by corporate marketers to include legitimate small inventors — many of them minorities, which is why my Black Caucus friends sized up the issue astutely — who are outgunned and outspent when they try to protect their intellectual property.

Almost all infringement cases are brought by people who own a patent legitimately. If not, such cases should be decided in court. There is nothing wrong with bringing such matters to court — a cornerstone, not of crony capitalism, but of the free market itself.

Our economy and culture depend on the disruptive nature of innovation. Our Constitution deliberately made all people equal, giving no advantage to those of social status, wealth or position. The founders, even before they added the Bill of Rights, secured the right to hold patents in the Article I of the Constitution itself, the only right mentioned prior to the amendments.

We all know our country’s history of innovation. Large companies reject new ideas. It is the innovator who challenges the status quo, not the corporation.

Under the proposed bill, the pretrial discovery process — just one part of many dubious sections — tilts heavily against the small inventor, who of course must share his or her secrets with an opposing corporation’s well-armed legal team. In another era, I might have considered this an innocent, unintended consequence of ill-considered drafting. Not now.

I implore my colleagues in both the House and Senate to stop this monster aborning.

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Feb
07

The Dangerfield Theory of Innovation and IP in China

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Rodney Dangerfield's 1980 comedy album No Respect. From Wikipedia, licensed under their Fair Use policy.

Rodney Dangerfield’s 1980 comedy album No Respect, an image that describes Chinese IP and innovation in the eyes of the West. From Wikipedia, licensed under Fair Use.

In a few days, I’ll be speaking about IP and innovation in China at the RISE 2015 conference in Miami, Florida, sponsored by INDA (a professional organization for the nonwoven fabrics industry). In my presentation, I’ll be sharing my “Dangerfield Theory” of IP and innovation in China. The Dangerfield Theory is based on comedian Rodney Dangerfield, who famously and repeatedly complained that he got no respect. China, in spite of remarkable advances in IP and innovation, continues to get no respect. Like Rodney himself, China is also a heavyweight, now leading the world in patents and IP litigation, and leading in the pursuit of many key technologies. Their innovation and IP is no laughing matter, but continues to just get no respect. This make China like Dangerfield, and for those companies and nations that ignore the threats and opportunities China creates, Chinese IP and innovation will also become “danger field.” Ignoring this field of danger and opportunity is foolhardy. It’s the kind of sleepy, lazy response we seen when a company or nation is beset by innovation fatigue.

The tendency of Chinese IP and innovation to be invisible to the West is an issue I raised in 2011 right after the Thompson Reuter Top 100 Global Innovators report for 2011 included nothing from China, Taiwan, or Hong Kong in its list of 100 top innovators based on international patent filings over the past three years. I was astonished at how Chinese IP could be so invisible and overlooked, given that Foxconn/Honghai Precision, the Taiwanese and Chinese partner of Apple, compared to Apple itself actually had 3 times as many US patents in the time period of interest. Honghai had roughly 50 times as many US patents field as some companies that made the list. Other heavy international filers like Huawei, ZTE, and Lenovo were also neglected.

I contacted Thompson Reuters to complain, wondering also if they had made errors in their search or forget to include Honhai Precision in their search terms. I was told that they had done the analysis accurately, relying on a proprietary algorithm that requires a company to file in the US, the EPO (Europe), and Japan for a patent to count as an “international” patent. This definition tends to discriminate against Chinese IP, in my opinion, for Chinese companies, when they seek international protection, are usually content with IP in China and the US, plus some other specific nations, but tend to do relatively few filings with the EPO or with Japan. Japanese companies naturally file their first, just as Chinese companies file first in China. Given the high political tensions between Japan and China, and the relatively small market it is for Chinese companies, the motivation to file in Japan is small, regardless of the quality of the invention. Insisting on filing in Japan rather than China puts China at a great disadvantage and favors the many Japanese companies that make the list. Requiring that a patent be filed in the EPO and Japan in addition to the US sets a very high bar that does not properly reflect whether an invention is good enough to be pursued with international IP.

In 2012, the Thompson Reuters Top 100 Global Innovators report still had nothing from China. Its 2013 report finally mentioned Taiwan, but not Honghai/Foxconn. Only the Taiwanese semiconductor giant TMSC broke into the top 100. But the latest report from the end of 2014 finally mentioned a mainlaind Chinese company: Huawei. It’s about time. It’s not like Huawei just barely broke into the ranks of companies pursuing international IP. For several years they, like ZTE, have been in the top 5 international filers, according to the World IP Organization which administers PCT (Patent Cooperation Treaty) filings. Huawei is actually the world’s #1 international filer and has been for some time. Looks like they managed to barely break past whatever algorithmic blinders Thompson Reuters has, and for that tiny bit of progress, I guess we have to congratulate the folks at TR.

My soft and hesitant congratulations, though, may not be heard amid the roar of complaints that TR is facing for its related report, China’s IQ (Innovation Quotient), which praises China for its rapid rise in innovation and patent filings (in spite of meagre recognition on the Top 100 report). Some loud voices immediately complained, reminding us that Chinese innovation is weak and most of its patents are low quality. On Dec. 13, 2014, the influential magazine, The Economist, ran an editorial, “Patent fiction: Are Ambitious Bureaucrats Fomenting or Feigning Innovation?,” criticizing TR for their  positive report on China and reminding us that China’ does not file as high a percentage of international patents as Japan, and suggesting that Chinese innovation and IP is “feigned” by bureaucrats and not driven by real inventions from real innovators. Still no respect!

Yes, there is a problem with poor quality patents in China driven by tax breaks. But that is changing as companies increasingly look to patents as strategic tools for the future, and are striving to increase quality. The quality problems in China may more severe than they are in the US, but the quality is improving, and expensive international filings are increasing, with China now #3 in the world, ahead of Germany, and likely to overtake Japan in a few years.

It’s true that Japanese patents are much more likely to be filed overseas than Chinese patents (something like 30% for Japan versus 5% for China), but this is not necessarily a reflection on the quality of the patent. The economic value is also an important issue. Japan is a small market. Its businesses prosper by selling products to many large foreign markets like the US, Europe, and China. There are strong economic reasons why Japanese companies would seek foreign patent protection. China, on the other hand, represents a huge and growing market. Apart from manufacturing for foreign companies using foreign IP, Chinese companies producing and creating their own products tend to find the Chinese market to be a big enough opportunity to keep them busy for years to come, and rely much less on exporting these to the confusing and uncertain overseas markets in the US and Europe. The economic incentives to seek IP overseas is less for many Chinese innovators than it is for Japanese innovators, and naturally we can expect foreign filings to be somewhat diminished, even when the invention is of high quality.

There is a tsunami of quality IP and advanced innovation coming from China. China is learning and rapidly improving its approach to IP. Those who continue to ignore the threats and opportunities coming from this very change will find that the “Dangerfield Theory of Chinese IP and innovation” ultimately means the joke will be on them.

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Jan
04

The Anti-Patent Revolution in the United States

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Decapitalizing IP value with our current revolution

Decapitalizing IP value with our current revolution

Many intellectual property practitioners worldwide are scratching their heads over what is happening to IP in the United States. There’s a revolution underway that over the past few years seems to have steadily eroded the value of patents and any semblance of predictability and order in the law. Patents can still be valuable, if you are lucky and have the right connections. For ordinary people and companies, patents, once the great equalizers against big companies, are now an unreliable tool. The erosion of IP rights is becoming a major factor in the growing problem of innovation fatigue in the United States.

This erosion has been achieved from a confluence of powerful currents are leading in one strong downhill direction. Congress has enacted patent reforms that make it vastly easier to challenge and destroy a patent and much harder to realize value, all of which favors those with marketing muscle, political influence, and existing market share. The Supreme Court has handed down a series of patent decisions that have eroded the value of patents. These blows have been especially forceful in the pharmaceutical and biotech fields, wiping out the value of many patents linked to “natural products,” and in the software and business method areas (e.g., Bilski and most recently Alice), making it extremely difficult to obtain IP in the technical fields with the greatest potential for innovation and growth as we move from the coarse manufacturing of the industrial revolution into the knowledge economy. Alas, in such fields and many others, the Supreme Court has created a new subjective tool against patents by ruling that anything “abstract” cannot be patents, while refusing to give any clear, non-abstract definition for “abstract.” This vastly adds to the uncertainty and chaos in many IP areas. In addition to these and other abuses of IP rights from the courts and Congress, the USPTO itself has gotten into the act with its own interpretations of judicially created rules that go even further than required by the courts in limiting IP rights. Sadly, we can expect ongoing hostility toward IP from the USPTO now that it is led by someone from one of the most powerful anti-patent (or, more accurately, anti-everyone-else’s-patent) force in Corporate America, Google, the former employer of Michelle Lee. Her selection as Director of the USPTO by President Obama came as a real surprise to many IP workers, but it was less of a surprise to those who see the political power Google has amassed.

These troubling events are now compounded by one of the most troubling IP cases in recent memory, a dramatically unjust case in which the Court of Appeals for the Federal Circuit (CAFC) totally disregarded the extensive fact-finding of previous courts, a jury, and the USPTO regarding the non-obviousness of some patents, and instead turned to so-called “common sense” to fill in the missing details of the prior art to render patents invalid after they had withstood repeated and thorough tests finding them to be valid and non-obvious. This was done in violation of the duty of the CAFC to respect the factual determination of the previous trial court in an appeal. Instead, the CAFC acted like a trial court, but without the information and testimony needed. “Common sense,” like “abstraction,” can be pulled out of the air at whim to poison a patent–when the rule of law is weakened and those charged with respecting the law instead make their own law as they go.

The case I’m referring to, not surprisingly, involved a company suing Google for patent infringement. We can expect to see more of this kind of thing, big companies with influence getting off free when infringing the patents of smaller companies (especially if they can be called “trolls”). For details, see Jeff Wild’s article, ” IP/Engine v Google, AOL et al – the most troubling patent case of 2014” in the IAM Magazine Blog, Dec. 22, 2014. This case involving the company Vringo deserves careful scrutiny (and howls of outrage).

Sometimes revolutions are necessary for the good of mankind, but many turn out to be excuses for someone to seize power, loot innocents, and create chaos. Until the US returns more fully to the rule of law in the IP arena and strengthens its laws to respect IP, especially for small companies and innovators who need an equalizer when facing Goliaths (or Google-liaths), we will face ongoing chaos, looting, and innovation fatigue as we reduce incentives and increase risks for the most innovative segments of our society, the small companies and lone inventors who are striving to create the future that giant companies are often to slow or risk averse to pursue.

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Dec
08

Simple Steps Can Dramatically Increase Participation in Innovation

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At the IP Business Congress Asia 2014 (IPBC Asia 2014), a collection of IP experts from around the world are here in Shanghai, China sharing best practices and advice to help fellow IP workers. Yesterday during a panel discussing ways to build a world-class in-house IP team, a comment from the audience provided a valuable example of how management can stimulate innovation in a company inexpensively. At Aruba Laboratories, a social event was held in which a number of people cam wearing a T-shirt that said “Thought Leader.” Before the event, such T-shirts had been ordered for every person who had submitted an invention disclosure in the past year. There was buzz about what the T-shirts might mean and why some were wearing them. Then an executive spoke and congratulated those with the shirts, explaining what they meant. This simple, inexpensive act of recognition created an incentive to submit invention disclosures, which more than doubled that year. A 200% increase in invention disclosures shared–that’s a great return for a small amount of effort.

It’s important that management work to consistently recognize and show appreciation for the innovators in the company. It doesn’t require large bonuses, though I recommend that cash incentives also be used to recognize IP creation. Creating a culture of innovation above all requires the attention of management and leaders throughout the company.

There are many other issues to consider. For example, the attitude of the Legal Department in interacting with inventors can affect inventor attitudes for good or bad. When IP attorneys are aloof and bureaucratic, it can be a barrier. When they interact regularly with innovation teams and get to know and like the potential innovators of the company and take simple steps to encourage them, this can draw out important contributions. Facilitate innovation. Small things can become big barriers or big incentives. Pay attention to these factors and constantly gauge the health of your own innovation culture.

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Oct
18

Unpatentable “Abstract” Claims in US Patent Law: How To Know It When You See It, Thanks to Abstract Art

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The US Supreme Court recently ruled that “abstract” concepts are not eligible for patents. The 2014 case, Alice Corporation Pty. Ltd. v. CLS Bank Intl. or more simply Alice, is said by some to mean the death of thousands of patents if not entire industries. Critics such as Gene Quinn say it is unworkable, vague and indefinite, giving judges and enemies of patents a capricious tool to assault patents for software and other fields. One of the alleged problems with the Supreme Court’s ruling is that they expressly refused to define the word “abstract” because, of course, it is a very difficult word to define precisely for legal purposes. Greg Aharonian has expressed outrage over the “incompetence” of the Supreme Court in failing to even attempt to explain what they mean by “abstract.” IAM Magazine‘s blog warns of “potentially catastrophic effects” of the ruling. Even the calm and collected IP professor, Dennis Couch expresses concern that “there is no standard definition for ‘abstract’ and so it is difficult to identify abstract ideas from non-abstract ideas.” Many other IP experts and patent owners are up in arms because this allegedly adds confusion to patent law and gives judges a broad club to attack patents by merely calling them “abstract.” So much whining!

So how can you know if a claimed invention is “abstract” or not, when claim language invariably requires some degree of abstraction to describe the invention? OK, that’s a fair question, but there’s an easy answer thanks to the visual arts!

With a little artistic understanding, it is easy to predict precisely where the boundaries are for the hard-to-define term “abstract.” This is a case where art comes to the rescue. In my role as both a patent agent and an amateur artist, I can combine my skills to bring a little clarity. Students of art, especially the visual arts, know that artistic expression can capture and define concepts that cannot be precisely rendered by words alone and certainly not legalese.

The eye can often see what the pen cannot express. We should have learned this lesson decades ago in the debate over pornography. As Justice Potter Stewart once said, “I shall not today attempt further to define the kinds of material I understand to be embraced within that shorthand description; and perhaps I could never succeed in intelligibly doing so.  But I know it when I see it.” This statement is from Jacobellis v. State of Ohio 378 U.S. 184, 197 (1964) and while decades old, it still applies brilliantly today. With that judicial framework, we can readily see that pornography is equivalent to the abstract in patent law. Yes, you can know it when you see it, and seeing is what we need to do now to understand the keen thinking of the Supreme Court on this topic. So let’s take a look and understand “abstract” based on abstract art, or more specifically, photographic abstracts selected from my own work, including collections of abstract photographic art. I think after a few examples you will better appreciate just where the boundaries are that separate “abstract concepts” from the concrete, tangible concepts suitable for patentable inventions.

Knowing It When You See It: Examples of Abstraction, Illustrated by Photography

Here I present a series of works from my abstract photographic art and discuss the nature of the abstraction.

People in the Capital, Madison, Wisconsin

People in the Capital, Madison, Wisconsin

The abstract above resembles abstract geometric concepts found in many paintings, almost cubist in flavor, but achieved using photography. I snapped a photo of a group of people inside the Wisconsin State Capital in Madison, Wisconsin, but using a slow shutter speed that resulted in blurring of many features. But you can recognize a black man with a baseball cap on the left. In his right hand is an iPod and you can see a white line representing the ear buds he is wearing. On the right side we see the side of a woman with a purse. Of course, while baseball caps, iPods, ear buds, and purses, like people themselves, are relatively tangible objects, in this context they are rendered less specific by the way in which they are captured or described, thereby creating abstraction from that which was initially concrete and specific. Let that be a lesson to patent drafters, by the way!

Here’s another with a related technique:

Rental Car Dashboard

Rental Car Dashboard

This abstract is based on the structures and controls of the front panel of a rental car. The camera was moved as I snapped the shot. Not a random mistake, but a deliberate effort to convert the concrete into the abstract by blurring and twisting. Of course, the limitations of language tend to do this to some degree to all inventions, no matter how tangible, as they are “blurred” and captured with the unsteady lens of a single patent claim. A little burring in inevitable, but this much blurring definitely turns the tangible into the abstract.

Now let’s consider abstraction without blurring:

Entrance to a Mall in Milwaukee

Entrance to a Mall in Milwaukee

This is a geometrical abstract wherein the elements (abstract circles and lines) from a physical structure dominate the image and create an abstraction. This essentially untouched photo was taken from the entrance of an abandoned shopping mall in Milwaukee, Wisconsin. The scene is drawn from the concrete–or rather, from metal beams, glass, and brick–but when viewed in this way, becomes a combination of abstract elements: circles and lines, rhythm and color. Clearly abstract. The silhouette derived from a remote tree reflected in glass at the bottom is an abstraction representing the intrusion of nature into artificial man-made realms. Don’t let the hint of a tree distract you from the abstract theme here. After all, anything derived a tree is a product of nature and thus unpatentable, according to the Supreme Court in their recent Mayo v. Prometheus decision, which served as a basis for the reasoning in the Alice decision.

Now it’s time for something trickier but still abstract.

Mirror and Roofing Above Cable Car Station in Rio de Janeiro, Brazil

Mirror and Roofing Above Cable Car Station in Rio de Janeiro, Brazil

This image shows a mirror and a section of translucent plastic roofing above a cable car stop on the way to a tall mountain overlooking Rio de Janeiro. The mirror and the roofing are tangible, distinct objects, as are the buildings in the background. But here the image celebrates the blues and greens in conjunction with arcs and circles. The mirror does not display the photographer, but another section of the building, and is a symbol of the failure to reflect upon one’s self, becoming lost instead in the haze of what we call civilization, even while standing next to a towering temple of nature (the unseen mountain). The mirror also punctuates the series of repeated curves of the roofing, like a grand period putting a stop to the rhythms of the sky, an abstract concept again reflecting the invasive nature of civilization. It’s all very abstract stuff, though individual components are tangible, just as patent claims may contain concrete elements such as servers, computers, and processors, but in the end create an overall impression in the mind of the viewer or judge that is decidedly abstract.

Now I turn to an abstraction that is linked to the whole concept of innovation and IP, the famous light bulb, but here an abstract version thereof.

Abstract Light Emitter

Abstract Idea Representing the Concepts of “Light” and “Bulbs”

This photo is little more than an abstract idea representing the concepts of “light emission” and perhaps “bulbs.” It was actually abstracted from a fairly specific and tangible device, a fluorescent light bulb, but with extreme photographic settings and color adjustment that removed much of what is concrete in favor of the abstract. Sure, you can argue that it has components that are somewhat tangible and concrete, but those of us who know the abstract when we see it have no trouble calling it such. It’s not a patent-worthy bulb. It’s just an embodiment of an abstract idea. Patent ineligible. I know it, because I, like any good judge, know it when I see it. Try proving me wrong! Or rather, just try proving a judge or patent examiner wrong when they see something abstract in your carefully claimed invention.

As you can see, the boundaries of “abstract” are surprisingly clear and easy to predict–and surprisingly difficult to evade. I hope this will help all those complainers worried about “uncertainty” from the Alice decision to appreciate the new kind of certainty that it gives. Good luck to all you inventors and small companies out there. May your patents be less abstract and more valuable in the future.

Originally posted at  JeffLindsay.com as “Abstract Art to the Rescue of Abstract Patent Law: How to Know “Abstract” When You See It.”

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Oct
06

Monopolies vs. Health Care Innovation: What Happens When Incumbents Decide Who Gets to Compete?

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Monopolies can innovate, just like elephants can play tennis. The results usually just aren’t very elegant or successful. Competition, on the other hand, is famous for driving innovation. Even in state-owned monopolies, like NASA’s initial monopoly on space exploration in the US, it was competition between nations during the rush to outer space and then competition between suppliers of technology that inspired the hundreds of inventions and innovations that NASA can proudly boast. But without the incentive to do better and stay ahead of competitors, innovation is slow and clumsy. An elephant might occasionally connect with a tennis ball and score some points, but real success is unlikely.

That all seems pretty obvious to most people, but not to those who benefit from monopolies. Real monopolies do not arise from the success of a competing company like Apple or Google as they rise above competitors and increase market share. In a free market, the competitors are still there and can enter the battle as they wish. Real monopolies arise from the power of the State that prohibits or restricts competition to favor a protected entity. Real monopolies can result in huge profits for the players and great power for the politicians and bureaucrats controlling the field, but they tend to crush meaningful innovation, especially from small start-ups with bold new ideas. If you can keep the start-ups from every showing up in the marketplace, you have enshrined innovation fatigue. Sadly, that’s what is happening in the United States now in the health care sector.

As William Jasper reports, “Certificate Of Need” laws in over 30 states restrict market entry in medicine and healthcare as they protect overpriced hospitals and medical providers. The federal Department of Housing and Urban Development exercises authority over Certificates Of Need. According to Jasper:

Before a hospital, clinic, nursing home, or other healthcare facility can be built, a Certificate Of Need, a CON, must be obtained. Not only that, but in many jurisdictions, a facility must obtain a CON even to install new equipment, such as a CT scanner, MRI machine, a lithotripsy machine, or other important medical technology.

This system prevents new competitors from entering the market and rewards the current dominant players. It is a corrupt cartel system that prevents innovation and competition, denies consumers choices in healthcare, and guarantees ever-rising prices. It’s no surprise, then, that the big companies in the healthcare industrial complex and their Big Government allies support this system. Certificate Of Need laws are indeed a con game — and we are the victims.

If your state has this system, urge your leaders to repeal them and break the grip of incumbents over innovation in health care. The effect of a free market in innovation in healthcare is well illustrated in the fields of cosmetic surgery and Lasik eye surgery, areas not highly regulated, not covered by insurance and Medicare, and areas where advertizing of price and abundant, aggressive competition is allowed. In these fields, real prices have been declining while patient satisfaction (especially in the Lasik areas) is extremely high. When innovation and competition can prosper, good products and services can flourish and prices can actually come down.

Give innovation a chance. “Certificates of Need” do just the opposite. A better name would be “Certificates of Greed.”

Categories : government, health care
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Sep
20

David and Googleliath (or VSL vs. Google): A Small Company Fighting a Giant Reminds Us Why Software Patents Matter

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A small start-up company fighting one of the great giants of all time: it’s a classic story of David vs. Goliath, or in this case, David vs. Googleliath (a.k.a. VSL vs. Google).

Googleliath's Googleplex (source: Wikipedia)

Googleliath’s Googleplex (source: Wikipedia).

Many small companies have claimed that Google misappropriated trade secrets or other IP, but rarely has Google graciously (and accidentally) cooperated in providing smoking-gun evidence the way they apparently did for Vedanti Systems, Ltd. (VSL). In this case, they allegedly left sticky notes on VSL’s trade secret materials showing their questionable intentions to take Vedanti’s technology. If VSL prevails against this giant, it may be more a case of Googleliath falling on its own sword than David being great with a sling.

VSL and their partners are now suing Googleliath for infringement of patents and theft of trade secrets in two courts. The suits are against Google (here also known as “Googleliath”) and their subsidiairies, YouTube and On2 Technologies. London-based Vedanti Systems Limited and their U.S.-based parent, VSL Communications, Inc., have turned to Max Sound for help in enforcing IP rights. The patent suit was filed in U.S. District Court for the District of Delaware, while the trade secret suit was filed in Superior Court of California, County of Santa Clara.

The complaints claim that Google executives met with Vedanti Systems in 2010 to discuss the possibility of acquiring Vedanti’s patented digital video streaming techniques and other trade secrets. Vedanti’s compression technology for streaming audio and video files is far superior to what Google had, Google’s own standards for streaming video t the time led to “jittery, low-quality video and sound for large-sized video files,” according to the patent complaint.

As part of the talks with VSL,  Google had access to trade secrets such as VSL’s proprietary codec for encoding and decoding a digital data stream.  That codex has proprietary techniques for “key frame positioning, slicing and analyzing pixel selection of video content to significantly reduce the volume of digital video files, while minimizing any resulting loss of video quality.”

Shortly after the negotiations began, Google allegedly began implementing VSL technology into its WebM/VP8 video codec, applying what they had learned from VSL but not letting VSL know. The WebM/VP8 video codec is extremely important for Google. It is used in many of their services and websites including YouTube.com, Google TV, the Android operating system, and Chrome web browser. They had inferior technology, but by allegedly stealing Vedanti’s, they were able to quickly advance their business at virtually no cost.

There’s just two pesky little problems for Google:

1. Vedanti has patents for its technology and is not afraid to sue. Now you might see why Google seems to really hate software patents (rather, other people’s software patents). They have been a leading force in some of the patent reform measures and related steps that have made protecting IP rights harder than ever for little guys like Vedanti. This giant, with its easy access to the White House and many other influencers, has also been an important voice against software patents, and may have helped influence popular opinion and the courts into recent devastating attacks on software patents. But Vedanti’s patents are still alive for now, so Google has cause for concern.

2. Google seems to have assisted VSL’s case by returning VSL’s trade secret materials with tell-tale sticky notes all over them showing their intent. Huh? This is really an amazing part of this story.

Attorney Howard Ankin puts it this way in a post from Sept. 17, 2014:

When the VSL Google talks ended, VSL demanded the return of its files. The returned documents were covered with incriminating Post-it notes that had apparently been left behind by Google employees. Attorney Adam Levitt claims that the notes said, among other things, that Google might possibly be infringing VSL’s then-pending patent and that Google should “keep an eye” on VSL’s technology and sweep it into a Google patent. In addition, notes warned Google engineers not to be caught “digging deep” and to “close eyes to existing IP.”

The complaint alleges that Google began to amend its preexisting patent applications and file new applications using VSL’s technology. Then in early 2012, VSL noticed that there were significant improvements to the video quality of Google’s Android operating system as well as other Google software. In June, the staff at VSL analyzed Google’s publicly available code only to discover that the code contained VSL trade secrets. Levitt asserts that the “Defendants’ theft of VSL’s trade secrets pervades virtually every website and product offered by defendants.”

“The use of new technology by established companies should be based on original creation and innovation,” said Adam Levitt, head of Grant & Eisenhofer’s Consumer Protection practice, who is representing the plaintiffs. “Vedanti Systems created groundbreaking digital video technology — technology that has forever changed the way that video content is streamed and displayed over the Internet.”

The lawsuits allege that Google willfully infringed Vedanti Systems’ patent and did so deliberately and knowingly, while recognizing the serious shortcomings of their own video streaming capabilities prior to the infusion of stolen IP.

Whether the suit will succeed or not remains to be seen, but I find Google’s lapse in leaving sticky notes on the borrowed materials to be rather hilarious, if it is true. One thing is for sure: If Vedanti’s allegations are factual, their chances of seeing some degree of justice are vastly greater by virtue of having a patent than if they did not. Software patents are essential for protecting innovations in the hugely important arena of information technology. This is the Knowledge Economy, folks, not the Iron Age. Economic growth and progress is more likely to come from advanced software and IT innovations than from hammering out better cogs and gears, and we need an IP system that understands this. Most judges and politicians ranting against software patents or patents in general do not understand this. Recent ruling that make many software innovations not even eligible for patents show that we have judges and influencers very ignorant of the physical nature of information and computer systems. Innovations like those of Vedenati are not tantamount to mere abstraction and mental exercises. They should have just as much right to be considered for a patent (provided they are novel, nonobvious, and useful) as any tool wielded by or widget hammered out by an innovative blacksmith.

Software patents matter, and they are vitally important for the best innovators of our day if they are to stand against the anti-patent giants that want anything but a level playing field. VSL vs. Google, or David vs. Googleliath, is a compelling reminder of that.

VSL’s patents in Europe are already causing pain for Google. Here is an excerpt from “Court Seizes Google’s Infringing Android Devices in Germany at IFA,” Stockhouse.com, Sept. 11, 2014:

SANTA MONICA, CA–(Marketwired – September 11, 2014) – VSL Communications, creators of Optimized Data Transmission technology and Max Sound Corporation (OTCQB: MAXD) (MAXD) creators of MAX-D HD Audio solutions, have been granted multiple preliminary injunctions from the District Court Berlin against OEM’s (Original Equipment Manufacturers) to stop the sale of certain Google Android devices in the Federal Republic of Germany at the Premier show IFA in Berlin (Internationale Funkausstellung, http://www.ifa-berlin.de/en), the world’s leading fair for Consumer Electronics and Home Appliances).

Max Sound, under agreement with VSL Communications, is enforcing intellectual property rights on VSL’s behalf and has obtained preliminary injunctions against Shenzhen KTC Technology Co. Ltd and Pact Informatique S.A., France. German Customs authorities further inspected several other exhibitors of smartphones and tablet PC’s with Android operating system. Shenzhen KTC Technology Co. Ltd. is one of the largest Chinese electronics groups operating worldwide, and Pact Informatique is a French electronics company operating in many European countries under the brand Storex. Max Sound’s actions were based on infringement of VSL’s European Patent EP 2 026 277 concerning an Optimized Data Transmission System Method. The Infringement was found on the basis that Google’s Android OS implements the H.264-Standard for video encoding, which is protected by VSL’s patent. A bailiff seized all smartphones and tablets of KTC and Pact at the trade fair IFA in Berlin on September 10, 2014. The injunctions have no automatic time limit, and opponents can file an opposition.

So what will Google do? For starters, I’m predicting we’ll see VSL and their allies soon being called some kind of “troll.” I also think we can rely on Google’s friends at the USPTO and beyond to find all sorts of reasons why Vedanti’s patents aren’t even drawn to patent eligible subject matter, regardless of how novel they may be. But the trade secret case is where I think tiny Vedanti might have a fighting chance, thanks to Googleliath’s cooperation with the sticky notes. Who said IP law wasn’t entertaining? Weird Al could have a lot of fun with this story. Suggestions for what tune to use in his spoof?

Note: The US cases referred to are captioned as: Vedanti Systems Ltd. and Max Sound Corp. v. Google, Inc., YouTube, LLC, and On2 Technologies, Inc., No. 1:14-cv-01029 (D. Del., filed Aug. 9, 2014) and Max Sound Corp., VSL Communications Ltd., et al. v. Google, Inc., et al., No. 114-cv-269231 (Cal. Sup Ct.).

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