White House Also Releases Report On Patent Problems

from the good-for-them dept

We’d already discussed President Obama’s proposals for patent reform, but now that the announcement is official, it’s worth also looking at the report about the broken patent system that was released at the same time from the White House, put together by the President’s Council of Economic Advisers, the National Economic Council, and the Office of Science & Technology Policy. It’s a quick read, but does cover many of the high points of just how broken the system remains. There’s a pretty good list highlighting problems with patent trolls:

  1. They do not “practice” their patents; that is, they do not do research or develop any technology or products related to their patents;
  2. They do not help with “technology transfer” (the process of translating the patent language into a usable product or process);
  3. They often wait until after industry participants have made irreversible investments before asserting their claims,
  4. They acquire patents solely for the purpose of extracting payments from alleged infringers;
  5. Their strategies for litigation take advantage of their non-practicing status, which makes them invulnerable to counter-claims of patent infringement.
  6. They acquire patents whose claim boundaries are unclear, and then (with little specific evidence of infringement) ask many companies at once for moderate license fees, assuming that some will settle instead of risking a costly and uncertain trial.
  7. They may hide their identity by creating numerous shell companies and requiring those who settle to sign non-disclosure agreements, making it difficult for defendants to form common defensive strategies (for example, by sharing legal fees rather than settling individually).

Among other things, it shows just how much troll suits (what they refer to as “Patent Assertion Entities” or PAEs) have exploded in the last few years. Ridiculously, yesterday, we saw someone claim that trolling activity is a mere “anomaly” rather than a huge part of what’s happening with patents these days. It seems like this chart should put that claim to rest:

The report also does a nice job highlighting how obvious concepts and broad claims are being patented, and that this really needs to stop.

Setting an appropriate bar for novelty and non-obviousness is particularly important in a new field; if the bar is not set high (something difficult to do in a new field), firms may well find themselves inadvertently infringing patents, both because of the sheer number of patents and because commercial need is driving many inventors to create similar inventions near-simultaneously (Lemley and Melamed 2013). Many practitioners of such technologies (such as railroads in the 19th century and software today) find it more profitable to focus on expanding the overall market for their products by technological cooperation with rivals, rather than working to clearly delineate property rights (Boldrin and Levine 2013).

An additional reason that the issue of overbroad patents is particularly salient in software is due to the prevalence of “functional claiming” in these patent classes (Lemley 2012). A claim term is “functional” when it recites a feature by “what it does rather than by what it is” (In re Swinehart 1971). Functional claiming involves claiming exclusive rights over any device that performs a given function, regardless of how that function is performed.

The report cites many of the economic and legal studies we’ve discussed for years, and it’s clear that the people who put it together did their research. It’s nice to see this stuff getting the recognition it deserves. Now let’s see if it all leads to real change.

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Comments on “White House Also Releases Report On Patent Problems”

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41 Comments
Arthur Treacher says:

Re: Re: Re:5 Re:

You cannot cite even one example of where Mike supported an exclusive rightholder.

Yeah, because THAT’S INSANE. Copyright campaign slogans and sue because of infringement to stifle political speech.

Copyright the science or math, and you could suppress debate about environmental damage by nuclear power. Or wind power, or whatever.

Exclusive rights are an invitation to suppress free speech, and therefore THEY’RE INSANE.

Josh in CharlotteNC (profile) says:

Re: Re: Re:3 Re:

Again, can anyone name even one single IP exclusive right that Mike supports?

Mike supports trademark laws that allows a company to prevent competitors from confusing the public as to who the maker of particular products are.

If you want to lump vastly disparate laws under the heading of IP, well, I can play that game, too. Your move, sparky.

BearGriz72 (profile) says:

Re: Re: Re: AC8 (AKA: DuMbass)

Oh, then exactly which IP rights does Mike support?

1) First, to clarify “IP” (Intellectual Property), the term itself is troublesome, it is a propaganda term which should never be used, because merely using it, no matter what you say about it, presumes it makes sense. It doesn’t actually make sense, because it lumps together several different laws that are more different than similar.

2) I would guess (I’m not going to speak for him), but based on what he has said previously, that he supports those “IP” laws (NOT a right) that actually do the job “To promote the Progress of Science and useful Arts”.

tanj says:

Re: Re: Re: Re:

Are there any restrictions on IP that you would support?

On the side of strengthening IP we have seen the 76 copyright act and the 98 copyright extension combine to retroactively extend the copyright length on works for hire by 40 years. The public domain has been eviscerated by the life +70 years automatic copyright. The DMCA has enabled unprecedented post sale restraints.

I think it’s time to reexamine how these laws can best benefit society.

out_of_the_blue says:

Re: Re: Re: @ "Oh, then exactly which IP rights does Mike support?"

What’s funny is that his fanboys have to GUESS! But Mike carefully maintains himself in ivory tower aloofness, so in fact they’re just assuming that he agrees with them.

Mike is supposed to be — I mean, presumed to be — an expert in precisely the “economics” angle, and he’s therefore is supposed to be an intellectual leader who puts out daring new ideas. BUT WHERE ARE MIKE’S IDEAS? If copyright and patents are both broken, what should replace them?

You can’t fight organized monied interests without good solid practical real-world alternatives, so Mike is at best “leading” from the rear, waiting for someone else to work out how — for which he’ll probably try to take credit, just as he gets others, including we incisive critics, lowly minions, and ankle-biter fanboys, to do most of the writing here, while he gets all the money.

Anonymous Coward says:

Re: Re: Re:2 @ "Oh, then exactly which IP rights does Mike support?"

What’s funny is that his fanboys have to GUESS!

Exactly. And some are so fooled that they think there are actually exclusive rights that Mike supports. LOL! He’s too scared to even admit his own beliefs to his strongest followers.

TheLastCzarnian (profile) says:

Re: Re: Re:2 @ "Oh, then exactly which IP rights does Mike support?"

Followers? Seriously? It’s like I’ve said all along. Copyright maximalists like yourselves don’t understand like-minded people sharing ideas. You only understand leaders and followers. You understand fealty, fascism, royalty. You have no concept of democracy, intellectualism, discussion among peers. Mike runs the blog, not our lives. I started hating software patents when I learned of them in 1999, and I’ve been bitching to anyone who will listen ever since.

Does Mike need a manifesto so that everyone knows his position on all of the issues? No, that’s stupid. He is reporting on what is going on in relation to government regulations which interfere with the markets. If he was trying to be a leader, then yes, a manifesto is practically a requirement. Instead, he is a journalist.

We’ll just leave the manifestos up to you two ass-hats. Damn, I hope you don’t live in the U.S.A. Royalty-lovers really make me sick.

Anonymous Coward says:

Re: Re: Re:2 @ "Oh, then exactly which IP rights does Mike support?"

What’s funny is that you clowns think what Mike really thinks in his heart of hearts is somehow relevant when it actually doesn’t matter at all. You’re just making ad hom arguments that he’s arguing in bad faith because you can’t make any tangible contribution to the thread beyond that puerile shit.

fogbugzd (profile) says:

The fact that we haven’t seen big Pharma beating the war drums in the past few days suggests to me that they are finally realizing that the only way they are going to preserve their patent playground is to get some of the non-pharma bad actors out of the business.

If you look at the proposals that are currently under active consideration you will notice that almost none of them would crimp patents on pharmaceutical companies. In fact it might help them with their efforts to evergreen their patents. A lot of the evergreened drugs use things like implementing slightly different compounding methods, and this is something that the PAE’s could easily start going after.

Big pharma has always lobbied to not make any patent reforms in the fear that something might be done to harm their current monopoly system. Perhaps they now feel that the need for reform is so urgent that they need to get out in front of it to protect their own interests.

Anonymous Coward says:

Re: Re:

Or perhaps they already had their talks with the president and congressmen. There’s really nothing in any of the statements and proposals that would drive a wedge in Big Pharma’s patents. Perhaps they realize the people are losing faith in the patent system because of the trolls and would rather a small band-aid fix while the problem is still technically minor than a huge sweeping reform when it goes completely out of control?

Anonymous Coward says:

Re: Re:

I hate to do this, but here it is the ugly truth of the matter.

People surrendered their care to psychopathic companies that just don’t care, to corrupt and incompetent(not an attack on their intellectual capabilities but in a descriptive manner since politicians are not capable of understanding what they are actually regulating at all) politicians. There will be no changes until people start producing their own solutions, until people start competing again, it doesn’t matter how much noise people make there are no alternatives legal or illegal at the moment.

Want to see change?
Start studying how to produce the compounds necessary to treat diseases, start regaining the capabilities necessary to actually create alternatives then it won’t matter if there are laws or not, then those laws become meaningless, then competition starts to happen and then only then change happens.

Knowledge is a powerful thing, if you know how to build a boat and make your own fishing nets and everybody else knows too, how can they stop you from going fishing?
Would you respect laws that would let you starve to death?
Of course not

Now if you don’t know how to produce the things you need to survive, then you are at the mercy of others and you bet your ass you will get exploited and abused.

DannyB (profile) says:

Will they fix the already existing patents?

What about patents on ridiculous things like slide to unlock, which was described in a book on touch interface user interaction back in, I think 1991 or 1992? (Saw reference on Groklaw recently.)

Will they fix ridiculous patents that have already been granted?

Can they streamline the USPTO to require less human labor while scaling better by throwing patent applications into a room full of cats with PATENT GRANTED stamps attached to their feet?

Anonymous Coward says:

i find it a bit troubling that this sort of thing is always left far too long before anything is done to curb it. people in positions of power are aware of the problems but are either stupid (which i doubt), blind (which i also doubt), being bribed (which i hope isn’t true) or disinterested (which i suspect is the reason, mainly because they are not in themselves, adversely affected). however, by the time something is done, there has been so much damage done in so many areas, progress has been stunted quite severely which obviously affects other areas as well. however, patents are not the only area that suffer from delaying, if not defeating progress. copyright is as bad if not a worse area. the problem here, more than anything is that there are so many high powered government representatives that are ‘sponsored’ by the entertainment industries, that any sort of reform is met with such resistance that it is stopped before it gets started. add to that the continuous revolving door between government and industries where a politician quits and is immediately employed in the industry. that isn’t because of their ability in the field of entertainment but because of the friends they have made and still have in government. if ever there were an area of obvious corruption, this is it. even the head of the MPAA, Chris Dodd stated that the funding given by Hollywood could be withdrawn at any time if what they wanted wasn’t fulfilled by government. what does that then tell you? patent reform may be on the cards. it may even be forthcoming but as for the more serious problem of copyright, that wont change until it is illegal to have a government that is funded by and thinks more of a music and movie industry than doing what is right, what is needed, for both the people and the country!!

TheLastCzarnian (profile) says:

The pendulum begins to swing back

Wow! Now that I’ve seen this, I can finally believe that the administration is serious. If this causes the economy to pick up (and I can’t see how it won’t), we may actually see a move to a more reasonable IP policy. I’d love to see it go back to 50 years for copyright and 5-10 for patents.

Until then, I’ll keep talking to everyone I can about the subject.

Anonymous Coward says:

Re: The pendulum begins to swing back

I doubt it, I will believe when I see it happen.

Every time I see something like this, I am wondering where is the catch, where is fine printing?

I don’t expect change to come from political initiatives but by social pressure, meaningful non violent social pressure that is.

Shmerl says:

What about practicing trolls?

The problem of PAE type trolls which don’t produce anything is important, but it’s only part of a bigger problem – general patent protection racket. Big companies like Microsoft which engage in patent protection racket are not PAE, but they still are trolls – i.e. extortionists. This report doesn’t seem to address that issue at all.

Anonymous Coward says:

President has "Overturn" powers

The US ITC found Apple guilty of infringing some of Samsung’s patents on some Apple products.

How does the President have the “power” to overturn the ruling? WTF? Talk about a “political” boondoggle.

“All exclusion orders are sent to President Barack Obama, who has 60 days to review them. If he does not veto the order, it goes into effect.”
http://www.reuters.com/article/2013/06/04/us-apple-samsung-patent-idUSBRE95319C20130604

madasahatter (profile) says:

A Harsh Solution

If a shyter for a troll loses a the case and associated principals:

1. They personally liable for all the defendants costs; if they cannot pay then a minimum 10 years for fraud.

2. Permanent disbarment without an reinstatement possible.

3. Invalidation of all patents owned by the troll – directly or indirectly through bogus shell companies.

4. Refund all money collected with 15% year interest. If unable to pay all the principals are personally liable and if unable to pay each gets 10 years for fraud. Permanent forfeture of any professional licenses (MD, PE, CPA, etc) with no reinstatement allowed.

5. The only “exemption” is in the case of a company/person actively producing a product using the patent in their products. This is needed to define trolling.

Harsh penalties with real hard prison time might convince some that risks are not worth it and convince more defendants to fight.

However I doubt the 9 Seniles aka US Supreme Court would let these proposed penalties stand.

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