Unions Make Ridiculous Arguments Against Patent Reform

from the a-little-economics-would-be-good-here dept

Ronald J. Riley runs an organization called the Professional Inventors Alliance, which fights vehemently against any kind of patent reform that might make life harder for patent trolls or those who obtain horribly obvious or broad patents. He has been known to show up here at Techdirt to argue with us in the comments, but his arguments are based on the faulty assumption that pretty much all patents are good and anyone accused of patent infringement has clearly “stolen” the hard work of someone else. The fact is that that’s very rarely the case. As we’ve seen repeatedly, many patents should never have been issued as they don’t qualify as non-obvious or they’re too broad. In those cases, patents are clearly an economic hardship, and there’s plenty of research to back that up. Also, most cases of patent infringement occur when multiple companies come up with the same type of solution independently, which is hardly “stealing.” No matter though. By focusing on the false idea that all patent infringement is stealing, it can be a very compelling case for those who don’t delve into the details.

The latest news is that Riley has convinced the AFL-CIO to come out against the latest attempt at patent reform. Now there’s a lot to dislike in the latest attempt at patent reform, and we’d be upset if it passed as is. But the two specific things that the unions are complaining about are the two most reasonable things in the reform package. The first would change how damages are calculated, so that if the infringing component is only a small piece of a larger product, the damages shouldn’t be based on the value of the larger product, but the value of that small piece. That seems completely fair. Why shouldn’t the damages be reflective of the actual value? It’s hard to see why that’s controversial, but it is if you hold completely irrelevant patents and you want to hold up those companies that are actually making useful technologies. The second complaint is with making it easier to contest a patent after it’s been issued. This is also a no-brainer. Given how little review goes into a current patent, along with the fact that patent examiners are given incentives to approve, rather than reject — combined with the length of time it currently takes to get a patent reviewed, the incredibly arcane rules that everyone is required to go through to contest a patent and the quick draw of some courts who refuse to wait for the patent office to review patents, it makes sense to have a better system to make sure a patent is valid. Why would anyone be opposed to improving the quality of patents… unless they hold questionable patents?

Unfortunately, Riley’s organization appears to have blinded the AFL-CIO to what’s really happening. In convincing them that this is about stopping theft, he apparently left out all the economic research showing that it would actually do plenty of harm to the industries that most employ AFL-CIO workers. That’s because it would limit their ability to innovate, make it more expensive to do research, and open up opportunities for foreign companies to do a much better job innovating and beating us in the market. Of course, given the history of the AFL-CIO, they must be used to that kind of effect, because that’s been the result of previous policies in previous decades. In the meantime, Riley is hoping that by getting the support of unions, Democrats will feel compelled to vote against patent reform — and, in fact, a Wall Street Journal article on this same subject suggests that the AFL-CIO’s letter has been effective in slowing the reform effort. Hopefully, though, someone will explain to both the unions and the politicians the basic economics of monopolies and how they slow competition and innovation. If the folks at the AFL-CIO would like a detailed explanation for why their letter actually goes against the best interests of the people they supposedly represent, they should give us a call.

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Comments on “Unions Make Ridiculous Arguments Against Patent Reform”

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Rick says:

They're covering their own butts too...

Many unions, including the AFL-CIO buy patents and hoard them so nobody can use them.

In the 80’s I recall a Popular Mechanics article where they bought the patent for a carburetor. They paid a million dollars for it – a hefty sum in 80’s dinero. It got much better gas mileage than what we currently get, I want to say 200MPG, but I can’t recall the specifics. Apparently they bought it out because it would have cost them thousands of jobs, since it only had about a dozen parts as opposed tot he 200 some parts used at the time.

There have been many other patents they have boughten up for the same reasoning.

Unions are just as evil as corporations, they all only think about themselves, not society. That carb patent alone would have eliminated the current dependence on foreign oil and kept us out of this stupid war for oil in Iraq.

As far as I am concerned, a patent should not be valid without a marketed product that is freely available. That’s one step towards real patent reform.

Marc says:

Rick- you are full of it

This “patent” would have expired LONG AGO and we would all be “enjoying” this “breakthrough” today (I would LOVE to get 200 MPG) because the knowledge would revert into the public domain.
I guess it DIDNT happen and I guess you are an IDIOT who knows NOTHING about patents.
It’s OK to support patent “reform” but please do not try to do so by spreading lies.

Darkeye says:

Re: Rick- you are full of it

Trolls and arguments aside, Patent reform is needed for the reasons he intends. The current patent restriction hurts the market by restricting innovation into the process of acquiring the patents you need to make something.

Inventing is the process of using old ideas in new ways. If we cant use the old ones, we wont have any new ones.

Richard Cauley (profile) says:

Patent reform -- damages

What drives me crazy in all of this is that the patent reform bill doesn’t actually change the law on damages — it just puts explicitly in the statute what the courts have already said is the law. The problem has been that no one, including the courts, has applied the law correctly, leading to damages awards which make little sense, either economically or legally. The patent-holder’s lobby is in a panic that the courts might actually apply the law correctly and thus are trying to keep the issue thoroughly confused.

Ronald J Riley (profile) says:

Mike, like usual you have the facts wrong.

It is important to note that unions have entered the fray on patent reform for a multitude of their own reasons. There are many very intelligent and committed people in organized labor. They are perfectly capable of judging the merits of the respective arguments for themselves. I very much doubt that any of the people from organized labor I have had the pleasure of meeting could be bought or mislead into backing the agenda of disreputable interests. Frankly, if I was on the side of patent pirates I would be afraid to show my face in public.

I most certainly was not surprised to see Mike paint the unions as being “blinded”. It is this kind of arrogance by the patent pirating crowd which has led to broad spread disrespect of the Coalition for Patent fairness & PIRACY and their agenda being discredited in Congress.

I do want to profusely thank organized labor for their insight related to patent pirating companies massive propaganda campaign. A warm relationship is blossoming and the Professional Inventors Alliance is looking forward to working with organized labor to both preserve and create jobs so that America and other developed countries can preserve a decent standard of living in the face of globalization.

In regards to the economic issues surrounding patent piracy I believe that I can safely assume that you are personally ill qualified to comment on the issues. For that reason I suggest that you should consult someone like Pat Choate who is in fact an economist and an expert in the economic impact of patent deform. Also, the patent reform fight has gone on for may years and we were fortunate to have the support of three Nobel in economics recipients.

If someone is going to spout off about the impact of patent reform perhaps it would be wise to consult someone who is actually an expert. Professor Irving Kayton is the leading patent law expert in the US. While others are strutting around claiming expertise in the hope of being put on the dole by one of the infamous patent pirates, fully 75% of practicing patent practioners have taken patent law classes created by Professor Kayton.

It is unfortunate that so many people in the software community rationalize that recoding another’s invention in a marginally different way somehow makes them an inventor. And even if they by some miracle invented something their failure to teach the invention clearly leaves them with no rights. So what we have are a bunch of parasitic people and companies who are doing their best to socialize other’s property. We and they know that they are at best second rate, and majority of them are far below that!

Ronald J. Riley,
President – http://www.PIAUSA.org – RJR at PIAUSA.org
Washington, DC
Direct (202) 318-1595 – 9 am to 9 pm EST.

Mark Murphy says:

Open Letter to Mr. Riley

If your comment (#5) on this thread is an example of your writing skills, you would serve your organization better by not writing. For example:

“Frankly, if I was on the side of patent pirates I would be afraid to show my face in public.” — over-wrought hyperbole makes you look weak.

“Coalition for Patent fairness & PIRACY” — name-calling your opponents makes you look weak.

“I believe that I can safely assume that you are personally ill qualified to comment on the issues.” — there’s a oft-cited assertion regarding assumptions you may wish to research.

“Professor Irving Kayton is the leading patent law expert in the US.” — citing as an example someone with a vested financial interest in the prevalence of patents (http://www.patentresources.com/) makes you look weak, as if the only people who back your cause are lawyers who make money off the existence of patents, rather than actually inventing things themselves. You would do better citing a “leading patent law expert” who does not have a financial stake in the outcome of your cause.

“one of the infamous patent pirates” — claiming a category as “infamous” and failing to provide any examples makes you look weak.

“fully 75% of practicing patent practioners have taken patent law classes created by Professor Kayton” and “We and they know that they are at best second rate, and majority of them are far below that!” — citing statistics without sources makes them look fake and, therefore, makes you look weak.

I will skip the multiple spelling, grammatical, and punctuation errors, which would have this comment get a sub-par grade in any high-school English composition class worth its salt.

Darkeye says:

Re: Open Letter to Mr. Riley

Whereas, you not replying directly to his post, and citing the wrong post number (the second post was a reply to the first, and my post bumps Ron Riley down to #6 as of the time of this writing) only makes you look a little bad.

That aside, I agree with you. I do not trust any organization before I’m aware of their motives, and R.R. there makes his well known.

RandomThoughts (user link) says:

Mark Murphy, I bet you wish you could have posted that in red, don’t you? WTF is this, a blog or a debate site for Harvard?

I do have to say though, the line about “I very much doubt that any of the people from organized labor I have had the pleasure of meeting could be bought or mislead into backing the agenda of disreputable interests.” is pretty funny.

Ever been to Jersey Mr. Riley?

Rusty Mase (user link) says:

Get a Grip

To start, at least you acknowledge that “Now there’s a lot to dislike in the latest attempt at patent reform, and we’d be upset if it passed as is”. So do not pass it. Simple solution.

Starting with “Why shouldn’t the damages be reflective of the actual value?”. Then just eliminate the infringing technology in your product if the actual value of that improvement is not important. This is like the intermittent windshield wiper patent that drug out for so long in the courts. Surely you can make a useful automobile without an intermittent windshield wiper.

Adding “but it is if you hold completely irrelevant patents and you want to hold up those companies that are actually making useful technologies”. If the technology is truly irrelevant then who cares. Making products is unrelated to developing useful technologies.

Then “Given how little review goes into a current patent, along with the fact that patent examiners are given incentives to approve, rather than reject — combined with the length of time it currently takes to get a patent reviewed…”. How do you know this! Do you have an issued patent and been through hassling with the process of patenting a technology?

Unions represent the right’s of American citizens; people. The US Constitution grants patent rights to American citizens and then implements these rights in patent laws and patent regulations. I would expect our workers unions to strongly support protecting the rights of individual American citizens versus the self-serving interest of a few multi-national corporations.

Richard Cauley (profile) says:

Reply to Rusty Mase's excellent comment on damages

Rusty raises exactly the point on damages that the courts miss — the “value” of a patent is the benefit the infringer gets over the next best [non-infringing] alternative. The way damages [at least reasonable royalty damages] are supposed to be calculated is to assume that the parties were actually negotiating, assuming the patent is valid and infringed. What the infringer would pay is governed by the benefit he gets from infringing over not infringing [i.e. taking the infringing feature out or using a non-infringing alternative]. So, if I can sell a car for $20K with an intermittant wiper and for $19900 without it, the patent is “worth” $100 per car — the patentholder normally gets half of this benefit. If I could make an intermittant wiper in another way without infringing the patent, but it cost $50 more per car to make, the patent is “worth” $50 per car and the patentholder would get $25.

If I could not sell the car at all without an intermittant wiper and I could not design around it, the roaylty would be based on the entire market value of the car — a relatively rare occurance in my experience.

This s what the law is at present and this is exactly what the patent reform bill provides. And why the arguments over patent reform damages drives me nuts.

Ronald J Riley (profile) says:

Mike said:

“Yes, they should support the rights of American citizens. I never said otherwise. The problem is that Riley’s policies don’t support those rights. Instead, they support the weakening of American innovation by strangling the ingredients of growth: ideas.”

No, what they do is give the inventor time to enjoy the fruits of their creativity and in so doing allow the inventor to recover the investment they made in making the invention.

Here is reality for you Mike. The Patent Pirates are scrambling to get their bill on the floor next week because they know that time is on the side of those who actually invent. What they don’t quite understand yet is that patent deform is essentially dead but we will continue to see the Coalition for Patent fairness & PIRACY and their stooges thrash around for the next month or so. It is dead because it was never about actual reform or about addressing the real problem which is exactly what unions are experts about.

The problem is classic, in that there are not enough examiners and the management of the USPTO is grossly incompetent. The solution is to hire another 10,000 or so examiners and to do a management house cleaning at the USPTO. We are addressing both those problems.

The second part of the solution is to give every patent pirating company their day in court. That problem is also being addressed. Of course those companies are being handed their heads for their disreputable conduct, and that is why they are spending hundreds of millions of dollars in an attempt to mitigate the consequences of their taking liberties with other’s property.

I am going to leave the rest up to your limited imagination. Keep your eye on media coverage of this issue. I promise you that you will have much more to whine about in the coming weeks.
Sorry, but I have to return to toiling away in obscurity to promote truth and justice. I hope that you all enjoy the upcoming show as much as I expect to enjoy it.

Ronald J. Riley,

President – http://www.PIAUSA.org – RJR at PIAUSA.org
Washington, DC
Direct (202) 318-1595 – 9 am to 9 pm EST.

RandomThoughts (user link) says:

Most of the complaints I see here are directed at how poorly the patent office actually operates, how they overlook things, how they don’t research enough or how slow they are to review a patent. These are of course valid, but you can’t just throw out the baby with the bath water. It is worth doing, it is worth doing right. I believe there is an attitude within certain circles that believe everything should be free. Forget patents, copyright, IP rights. I argument is for advancement but actually just boils down to not wanting to pay.

Countries that don’t respect IP rights can become good imitators, but not good innovators. China is facing that now, they became the manufacturer of the world, they now serve America, but their goal is not to serve America, it is to pass America. They are strengthening their IP rights in order to take the next step. India with its education system turned itself into a generic drug manufacturing powerhouse. They could supply its people with cheap drugs of high quality. They grew, they knew they didn’t want to just copy other companies’ drugs; they wanted to be the next Pfizer or Merck, not just make cheap pills. They increased their IP rights laws.

There are many ingredients to growth and innovation. Respecting and enforcing IP rights is part of the recipe. Don’t scrap the system, fix the process.

angry dude says:

Mike, you are WRONG !!!

OK, dude, you don’t like patent trolls (aka small inventors who are unable to produce their creations in large volumes) We already know it
You don’t like arguments Unions make in support of US competitiveness.

How about this letter from the IEEE President sent to the Senate Majority Leader:

Read it, dude
It speaks for all of us, scientists and engineers
of this great country
Of course, you don’t care
You are just a PR hack, probably on a payroll of some of those “Patent fairness” corporate bullies
Or maybe you are a Chinese ? 🙂

Patent Guy (user link) says:

Who's Behind Patent Reform and Who's Against It?

The Patent Reform bill is the brainchild of a small group of very large computer technology companies, including Microsoft, Intel and Oracle. It is not coincidental that each of these companies has been a defendant in an antitrust suit. They rely upon market power to maintain their dominant positions and are serial patent infringers. Patent infringement on the cheap is part of their business plans.

The state of innovation at these companies is best summarized by Larry Ellison’s statement that software technology innovation can no longer be accomplished in large companies. Microsoft spends billions to come up with incremental improvements.

The Patent Reform Act is “almost everything an infringer could ever want,” says Phil Johnson, chief patent attorney for Johnson & Johnson.

Who opposes the current patent reform bill? Here’s a representative sample of a much longer list:

The University of California system
Every Big Ten University
The National Venture Capital Association
General Electric
Every major biotech company
Dow Chemical Company
Northrup Grumman
Texas Instruments

angry dude says:

Re: Who's Behind Patent Reform and Who's Against I


You forgot to include someone important in your list of entities opposing “Patent Deform” of 2007..
A small independent inventor, the proverbial LITTLE GUY

Inventions are not made by corporations, they are dreamed up by some bright individuals, scientists and engineers
Most of them, of course, work for hire and do not own their inventions
But at least some of these inventors manage to break free from corporate slavery and start companies on their own, creating high-paying local jobs in USA
These individuals depend heavily on their patent rights
to fight off large corporate bullies
US Congress should try to protect American inventors, not the filthy rich executives of huge multinational corporations like MS, Intel or Cisco.

Both sides says:

A thought

I’m not even a lay person when it comes to patents but couldn’t this whole thing be at least helped for both the holders and the people who are being wronged ;which is us IMO, If holders weren’t intentionally stopping people from using the tech. I can understand R&D costs but come on you can’t really expect to recoup costs by not selling your product or technique(or worse yet not advertising your invention instead waiting for it to be essentially invented again and then suing because inventor #2 is actually going to use it for something) . If the market is not willing to bear your price then it is not because your invention is irrelevant but that it does not have as high a market value as you hoped and you need to lower your price. Isn’t that what licensing is about. You don’t have to sell out to one company. I mean why invent something just to wave it front of all of us going NA NA NANA NA you can be helped by this invention. I thought invention was for the benefit of all humanity (as well as for profit) If you don’t use it you should lose it because eventually it will go to someone who will allow it to be used ( for a reasonable and market acceptable price) for the benefit of us all.

George H. Morgan (user link) says:

AFL/CIO patent reform position

After many years in management with a variety of manufacturing companies, as well as other organizations, I have nothing but respect for organized labor.

They have their own sources of information, are patriotic, and not stupid. They represent their constituently well against many powerful and hostile companies that can hire the sharpest lawyers and anti-union consultants in the world.

Abraham Lincoln, who was disappointed many times in his career by people, said something to the effect of “Always listen to the people, they will never steer you wrong”.

I remember an experience while working for Schlumberger, an oil field service company in 1960 in the Louisiana off shore oil fields, where two thirds of our operators (i.e. laborers) had lost time injuries during a period of six months. Schlumberger was a French owned corporation, both non-union and anti-union.

The writer of the anti-union position in this matter comes across as a paid tout for companies who do not have the interests of inventors or patents at heart.

George H. Morgan
Professional Engineer

steve says:

Say That Again

Say That Again
by Mike Masnick
Mon, Aug 27th 2007 1:55pm

Thank you for your article. Please permit me to respond to a few things.

What is a patent troll?

According to some a patent troll is a firm who licenses patents they do not themselves commercialize. Yet many of the large firms who are most critical of the practice do it themselves. Out licensing is now an important profit center of most every firm. Often, as a result they end up licensing out patents covering technologies they themselves do not use as they are not consistent with their corporate plan. Rather hypocritical isnt it?

Still, there is nothing illegal or unethical about a small entity only licensing or selling their inventions. In fact, the traditional approach for many if not most independent inventors is to solely license or sell the rights to their invention. This is because most inventors, while they may be quite creative and even have genius in their field, are not always so adept at business, such as marketing or manufacturing, or simply lack the money. Inventors frequently find they are better off leaving the business end of it to someone else. Then again, some just love inventing and don’t want to be bothered with the business end of it so that their time is fully focused on invention, not on business. Edison himself, one of the world’s most prolific inventors, most often sold or licensed his patents to others that they might commercialize his inventions. No one derided him as a “patent troll”. Many times when he attempted to manufacture and/or market his products himself he struggled with profitability. Therefore, the argument by large multinationals and other parties that there is something wrong with inventors solely selling or licensing their inventions is mere dissembling or only signals a lack of understanding in invention and inventors. So they should stop this childish name calling.

Sadly, some legislators and other parties have been duped by these slick firms and their well greased lawyers, lobbyists (some disguised as trade or public interest groups), and stealth PR firms. Don’t be surprised to find the Washington lobbyist scandal spreading into the patent deform proceedings.

All this talk of “patent trolls” is then but a red herring fabricated by a handful of large tech firms as a diversion away from the real issue…that they have no valid defense against charges they are using other parties’ technologies without permission. The objective of these large firms is not to fix the patent system, but to destroy it or pervert it so only they may obtain and defend patents; to make it a sport of kings. Patents are a threat against their market dominance. They would rather use their size alone to secure their market position. Patents of others, especially small entities, jeopardize that. For example, the proposed change to eliminate the use of injunctions would only further encourage blatant infringement. Any large company would merely force you to make them take a license. They would have little to lose. Everything would be litigated to death -if a small entity can come up with the cash to pursue. That’s what these large multinationals are betting against. This legislation in regressive, not progressive.

Actually, even the present threat of injunction is not sufficient to deter would be infringers. Just look at the Blackberry case. RIM had to have known they were infringing or likely so and yet they still held out to the bitter end. They took the nuclear option and guess what…they got nuked. If anything, we need harsher penalties to force large aggressive firms into thinking twice before thumbing their nose at small patent holders. I recently noticed one country is considering jail time for infringers. That sounds like a great solution to me. “Don’t bother to pack boys, we’ve got your suits all ready…pinstripes!”

The problem is that companies who are using your technology aren’t so genteel as to stop using it merely because you politely ask them to do so. Invention is rough and tumble. The fact is, a patent is merely a right to sue someone to not make your invention without permission. Unless you have the will and money to sue them, they will turn a deaf ear. Unless you have a good patent, you will not get the money. It’s sad, but it’s the reality of business. All this talk about patentees gaming the system with bad patents is then a hoax. Why do these detractors never identify these supposed bad patents? Surely if they exist they can be identified?

If anyone is gaming the system, it is large multinationals. After losing in court they coerce the Patent Office into conducting a reexamination on the patents they have been found guilty of infringing. That is pure abuse of process!

The fact is, there is no systematic abuse of the patent system by patentees which would require an overhaul of the system. To the contrary, there is a reason why the patent system works the way it does. We didn’t get here by accident. That’s because of past abuse of the system by large companies who used their wealth to give inventors the run around and make a sham of the system. Take a look at the RCA/Armstrong case of years ago on FM radio. RCA ruined Armstrong with a legion of attorneys. They so destroyed Armstrong and made a mockery of the patent system that he committed suicide. Check out Tom Lewis’s “Empire of the Air”, chapter 10, p313 and p356. Part of RCA’s outrageous conduct was to string Armstrong along making him think they were interested in his invention only to copy his work and file patent applications of their own. Later they then entered into an interference against him at the patent office -a fraudulent act. RCA committed similar abuses of the patent system against electronic television inventor Philo Farnsworth. See “The Boy Who Invented Television” by Paul Schatzkin.

As to the quality of patents; based on court rulings of the last several years, roughly half of all litigated patents are upheld in court. That’s pretty balanced and suggests there is no problem with patent quality. Further, seldom do cases ever make it to trial as the parties settle out of court. The facts do not support the contention that there is a patent quality issue. Still, with almost half a million patent applications filed each year a few are bound to be issued that shouldn’t. However, rarely are they ever an issue because you can’t enforce them without money and you wont get the money unless you have a good patent. Keep in mind it costs the patent holder about as much in a patent suit as it does the accused infringer. Investors are not stupid. If they don’t have confidence in your patent, they will not invest. It’s that simple. Bad patents do not get funded.

If there is a problem with the patent system, it is not that patents are issued too hastily but rather that many are issued too slowly. Witness the current backlog and pendency. I for example have applications with a pendency of 15 years! In one instance it took 3 years just to get a first office action. With this kind of pendency by the time an inventor gets their patent their technology is of no value. That is the problem everyone should be focused on -not this imaginary issue of patent quality trumped up and propped up by large multinationals as a way to stifle innovation and further cement their market control. Can you say “monopoly”?

Further, certain large multinationals speak of the need for harmonization. Why is that necessary? If others are backward would we want to modify our system just to match theirs? When one looks at the efficacy of patent systems throughout the world the US patent system has produced far more innovation than those of other countries over the last several decades. If anything, other countries should be changing their systems to get inline with ours. Rather what’s going on is these large multinationals and those they have duped are using specious arguments to get what will benefit them personally. The rest of the country be damned.

Ours is a finely tuned patent system developed over 200 years which has led to US dominance in technology. We had better think carefully and move cautiously lest we create more problems than we solve and reap unintended and unforseen consequences.

All this is then not about present abuse of the system by inventors or a need for patent reform, but rather systematic past and present abuses by large companies. Witness the present conduct of firms like RIM in using the courts to drag out a final verdict. The judge in that case remarked about how delays frustrate justice. Also, look at the exploitations and predations of Medtronic.

Even worse; not only is there no need for reform, but the proposed changes will actually damage our functional system.

When corporate America agrees to not use our inventions without consent, American inventors and small entities will agree to stop suing them.

Stephen Wren

For further balance and fairness, please contact the following…

F. Scott Kieff
Associate Professor of Law
Washington University School of Law
One Brookings Drive, Campus Box 1120
St. Louis, MO 63130
Phone: 314-935-5052
Fax: 314-935-5356
Email: kieff@wulaw.wustl.edu
Web: http://www.law.wustl.edu/kieff
For papers on the SSRN, see:

balanced article example-

Ken says:

Re: Say That Again

While respect Steve’s position, one of his comments was especially telling: “roughly half of all litigated patents are upheld in court. That’s pretty balanced and suggests there is no problem with patent quality.” I beg to differ. That means that half of the litigated patents were wrong — i.e useless, worthless, bad, should never have been issued. So, we are defending a system that gets it right only half of the time?

BY the way, way has no one mentioned the National Academy of Sciences and the Federal Trade Commission studies that called for patent reform?

David Kline (profile) says:

Patent Reform

The need for some sort of sensible patent reform is real, and periodic reform has always been part of a healthy U.S. patent system that truly promotes innovation.

In fact, whenever the United States has undergone a major industrial renaissance — such as occurred during the 19th century when first steam and then later the telegraph, telephone and electric power industries emerged — patenting rates have skyrocketed, as have concerns about a resulting decline in patent quality and an increase in patent litigation.

As Senator John Ruggles noted in 1836: “The quality of patents has suffered, many are neither novel nor useful. And the courts are overwhelmed by patent infringement and validity suits.”

Boy, does that sound familiar or what?

In any event, in 1836, and again in 1870, Congress reformed the patent system to better enable it to meet the challenges created by new technologies and new industries. Examination became more thorough and more strict, and requirements for novelty and non-obviousness did likewise.

Today’s renaissance boom in information age technology has once again strained our patent system. Patent quality has suffered and litigation rates have risen — although at .0018% of all issued patents they are still far below the litigation rate of 2% of all issued patents which prevailed during the patent heyday of the late 1800s.

The simple fact is that the PTO does not have the resources or technological skills to respond to the three-fold increase in patent applications over the past 20 years.

Hence the need once again for reforms to help the patent system meet the challenges of today’s new technologies and new industries.

The fact that competing interests (e.g., big companies vs. small inventors) are fighting over certain proposed reforms does not diminish the overall need for sensible reform.

By the way, patent licensing is NOT the same thing as investors buying up patents for the express purpose of litigation. Licensing in the 1800s is precisely what created the world’s first national marketplace for independent invention, which all large firms relied on for their internal R&D needs until early in the 20th century when legal and other changes enabled large firms to hire a permanent staff of inventors and own the work that these inventors created.

And incidentally, licensing is increasingly becoming a vehicle for collaboration between firms (i.e., “open innovation”) rather than strictly a money machine. According to a recent Economist Intelligence Unit report, 68% of European firms now say their primary innovation strategy is to increase collaboration with other firms via licensing.

Steve C says:

Bad patent reform

You say

“The first would change how damages are calculated, so that if the infringing component is only a small piece of a larger product, the damages shouldn’t be based on the value of the larger product, but the value of that small piece.”

Let’s look at the quick-release socket wrench. That invention only took three little ball bearings and three little springs, cost .0001 cents. But because of this system Sears made a killing.

Of course if you make it easy to contest a patent then big companies will swamp smaller companies with law suits and things will be worse than they are now.

The best reform would be to pay patent reviewers a lot of money to make it a desirable job. I would not leave my job to be an under paid reviewer. The patent reviewer is in the same boat as teachers, under paid and over worked and no amount of “patent reform” is going to fix that.

David Kline (profile) says:

Regarding the role of independent inventors, it’s worth noting that the Founders of our country very deliberately set out to construct a patent system that would stimulate the inventive genius of the common man.

Unlike the British patent system, which charged exorbitant application fees equal to 10 times the annual per capita income of its average citizen, U.S. patent fees were reduced to a level that even ordinary workers and farmers could afford. Administrative procedures were also simplified. And through a host of other means as well — including allowing anyone applying for a patent by mail to do so postage free — the patent system encouraged innovation on a mass scale.

The results were immediate and dramatic — as Thomas Jefferson put it, the new American patent system “has given a spring to invention beyond my conception.” Only 13 years after the first patent law was enacted by Congress, the United States had already surpassed Britain — until then the acknowledged leader in the industrial revolution — in the number of new inventions patented. By the 1860s, the number of new inventions patented in the U.S. was an astonishing seven times the number in Britain.

One very important reason for this dramatic surge in American innovation, of course, was the fact that by design the American patent system encouraged a much broader range of creative individuals to take part in inventive activity than was the case in Britain or other Old World countries. Whereas most British inventors were of privileged status, the vast majority of America’s new inventors came from humble beginnings — farmers, factory workers, carpenters and other artisans for the most part.

According to the economists Kenneth L. Sokoloff and B. Zorina Khan, who studied patent records and biographical data from the period, nearly 70 percent of the 160 “great inventors” of the 19th century had only a primary or secondary school education. Half had little or no formal schooling at all. And many of the most famous names in American invention — men such as Matthias Baldwin (the locomotive), George Eastman (roll film), Elias Howe (the sewing machine), and Thomas Edison (the electric light and the phonograph) — had to quit school at an early age to help support their families.

But the American patent system did not simply encourage the masses to participate in inventive activity. It made it economically feasible for them to do so. Indeed, by granting secure property rights to inventions for a limited time, the patent system enabled innovators to make a full-time career of invention through the licensing of their discoveries. This in turn created the a national market for technology innovation — the world’s first — which proved critical to powering America’s emerging industrial economy to a position of world dominance by the end of the 19th century.

As Abraham Lincoln (himself a patentee) noted, the brilliance of the U.S. patent system was that it “added the fuel of interest to the fire of genius.”

It wasn’t until the end of the 19th century that most European nations amended their patent laws to match at least some of the innovation-enhancing character of the American system. It was this hundred-year lead in democratizing our patent system, more than any supposed special ingenuity of the American people, that made the United States the “arsenal of democracy” in the 20th century and the economic powerhouse that we are today.

The independent inventor’s role in national innovation went into decline between the 1930s and 1980s when large-scale in-house corporate R&D dominated the scene. But there is good evidence that with today’s increasingly rapid and fragmented nature of technology development — along with the rise of Open Source and “Open Innovation” development — the independent inventor is gaining new importance in innovation.

Given the emergence of new kinds of intermediaries between independent inventors and corporate licensing arms, I wouldn’t be surprised to see the re-creation of a viable independent marketplace for independent invention in the next 5-10 years.

Ronald J Riley (profile) says:

Re: Using this forum in the best manner.

Random Thoughts, you hit my approach dead on. Mike simply spews out Microsoft, Cisco, Micron, Dell and the rest of the Piracy Coalition’s propaganda. There is no point in trying to carry on a conversation with him.

Also, he reveals a profound ignorance of what is really happening in the patent reform fight, which tells me he is a pretty low level player. He is intellectually dishonest in his replies.

Collectively all this tells me that it is not worth spending much time on him because he will continue to advocate for the Piracy Coalition’s agenda no matter how compelling counter arguments are.

So I am not here to convince Mike about anything. The reason I drop in is to take advantage of the fact that his outrageous comments draw potential inventor supporters. So by spending a small amount of time on the sites which are stooging for the Piracy Coalition I attract new solders to our side.

Thank you Mike of helping me identify and recruit kindred spirits 🙂

By the way, the Piracy Coalition and their elected stooges have been running around this week begging legislators to tell them what changes they can make to save the bill. I smell the blood of our arch enemies!

Piracy Coalition members and their shills are also running around telling legislators that union opposition is soft. They are about to be handed their heads for that one. I cannot think of anything more they could have done to help drive even more labor support for inventors. These guys have tons of money, most of which they are stealing from real inventors, but they surely are not the brightest bulbs in the pack.

There you go Mike, some real honest to goodness intelligence about what is going on in the trenches.

One more thing Mike, your article which started this discussion had a distinct whine about the turn of events. I promise you that when you come to understand the full scope of what is happening that both the pitch and the volume will greatly increase.

Ronald J. Riley,
President – http://www.PIAUSA.org – RJR at PIAUSA.org
Washington, DC
Direct (202) 318-1595 – 9 am to 9 pm EST.

RandomThoughts (user link) says:

Mike, I think it may be you who buys into the myth.

From your own suggested reading on India, page 8, paragraph two, I quote “Our approach does not address the potential dynamic benefits of innovations that may result from international property rights protection.” So while you talk of innovation, your example (of proof) does not. From page 35 “Hence, we do not find much support for the claim that TRIPS would have detrimental effects on the Indian pharmaceutical industry. In fact, under some scenarios we find that the profits of domestic firms may even increase”

Read Fabio Pammolli’s (Professor of Economics and Management at the U of Florence) paper on the decline on Europe’s pharmaceutical industry. He writes “Europe can most effectively boost its competitiveness by abandoning protectionist pricing and marketing strategies that discourage pharmaceutical innovation. European Union (EU) member-state governments should guarantee and enforce strong patent protection for innovative medicines, and their national health authorities should avoid excessive intervention in pharmaceutical markets in ways that restrict patient access and discourage innovative research. In particular, EU countries should foster a wider variety of mechanisms and sources for financing healthcare and pharmaceuticals, and they should adopt more open formularies as a way to spur market competition.”

Your proof just does not pass the moron in a hurry test. People say that time travel isn’t possible, because if it were, someone from the future would have come to visit us. Innovation growth in pharmaceuticals without patents? Tell me, that is possible today, right now. A company or inventor could discover something and choose not to patent it, why isn’t that happening, or happening more often?

Are all patents good? Of course not, but they are not all bad either.

RandomThoughts (user link) says:

Mike, I find it funny that I read something you pointed to and then say that I am “selective” in what I quote. Your paper stated that it does not cover innovation and it does not attempt to.

OK, so companies can do it the easy way and use Govt. granted monopolies orrrr they could make even more money by not patenting things. Wow, all these companies are doing the dead wrong thing here. All these artists are doing the dead wrong thing by signing with labels. They should just do it themselves, not worry about patents or copyrights and they will make more money.

Somehow I think the line for that boat is pretty short.

RandomThoughts (user link) says:

Mike, by saying that India recognizing patents and introducing patents into their country, you are in fact stating that you are against patents. How can I come to any other conclusion?

I agree, there are bad patents out there, but if you advise that countries don’t recognize any patents, how can it be imagined that you are not against all patents?

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