Does the Wall Street Journal Understand Patent Law?

Last year I had a refreshing course in the positive power of patenting. We had sued a handful of companies for infringement.  They were clear copy-cats, and the cases quickly settled.  Several months later, our client sent an e-mail showing the competitors’ new product lines.  They had gone back to the drawing-board and created what was arguably a design that was even better.  Consumers are the beneficiaries with better products and even more competition.  America has always been a place of innovation — and in this case it was our patent system that forced the free-loaders to take some initiative. 

I had two companies approach me this week about patent work. They are both small businesses who want to go global.  They believe that they have great innovations, but the only way that they will have get a fair shake in the world of investors and business development is if they begin the process of securing their IP rights. 

As you may know, I am up-beat about our patent system.  Despite the bad press, there are genuine success stories that continue to drive the uniquely American innovative spirit.  Lets bring about legislative and PTO reforms to fix the problems — and I believe that there are problems — but the system is far from broken.  A complete overhaul makes interesting press, but it is not the right solution.

With all this on my mind, I was saddened by today’s Wall Street Journal’s editorial that “blame[s] the lawyers.”  Here are highlights from the paper:

  • Patents now operate to deter research and penalize innovation.
  • Patent cases are dubious if they involve patent-holders who never commercialized their inventions.
  • A third party has no standing to challenge a patent unless he is accused of infringing it.
  • The rise in filed patent applications “has less to do with genuine innovation than it does with innovative lawyers filing a patent on anything that moves.”
  • “Blame the lawyers.”

Several online articles have already been written about the editorial.  Matt Buchanan takes real issue with the over-arching blame game being played by the WSJ.  The Patent Baristas make several interesting points, including a note comparing the number of patents obtained by major corporations with those obtained by the so-called patent trolls.  This morning, an upset Patently-O reader e-mailed me about the editorial with the following comments:

Shouldn’t the writer have consulted you to get a better balanced  and more educated viewpoint?

Of course, I am apparently not so high on the speed-dial of the WSJ editors, but Stephen Nipper found an interesting response:

“It is much easier to suggest solutions when you don’t know too much about the problem.” – Malcolm Forbes.

Even the staunchly concervative IPO noted its problems with the editorial:

[T]he Journal asserted, “the percentage of [patent] approvals has climbed; approvals were close to 90% in 2000, up from 69% in 1984 . . . .” Contrast the recent speech by USPTO Director Jon Dudas at the AIPLA meeting in Palm Springs, California, in which he said approvals are now less than 60%.

12 thoughts on “Does the Wall Street Journal Understand Patent Law?

  1. I’m a computer software designer, and I can tell you that the current situation with the software patents has got me to thinking seriously about finding a different profession.

    What is happening is totally insane. The ground is covered with huge invisible land mines with time delay fuses. Several months ago I read a press release from Microsoft in which they were boasting about their “innovation” and how they were filing about 1000 patents per year, yes, that’s right, one thousand!!! But if you ask anyone in the industry, they will tell you that Microsoft is not exactly known for it’s innovation.

    It is now nearly impossible to design a computer program that has not in some way been thought of before. If the early pioneers of the computer systems had been so greedy, we would not now have the computers and the internet that we take so much for granted. Everything that works well about the internet was all based on “open standards”.

    Once upon a time, software was considered to be equivalent to a math equation and was therefore NOT PATENTABLE. That’s how it was in the 70′s and 80′s. I have often wondered when/how that changed or why; it just sort of snuck out of nowhere.

    Whatever happened to the fundamental principle of “Non-Obviousness to someone skilled in the art”?

    Nearly all of these patent suits that made the news are based on concepts that are logical extensions of well understood principles. Amazon’s patent of a mouse click is absurd. Suppose Netscape had patented the web form… I would not now be able to “Post” this comment! And Amazon would not even be in business.

    But even more important and relevant. Where is the Public Good/Benefit? What is happening now is that the megacorps with deep pockets are plastering the world with so many trivial applications about everything under the sun, that it is totally impossible for the small independent to do anything without stepping on something.

    Todd, above, mentioned patent trolls who grab “open standards”, I have also heard of this happening, it is not an isolated event. A group of people come together to create an open and public standard that will be to everyone’s benefit. And behind their backs some a** runs out and applies for a patent on a key component of the standard.

    The stated intent of a patent is to benefit the public… by getting businesses to reveal what they would otherwise have kept secret. But the standard was already open, so how does the public benefit by turning it into a monopoly?

    Or consider the mess with the gif file format. Initially published and distributed by the original company as an available standard for anyone to use… and adopted by the entire industry. and then along comes a spider… and buys the company and then announces to the world that huge royalties are now due and payable by any user of the image format, which because of the manner of it’s publication, everyone thought was an open standard.

    Frankly, I am rather surprised at Microsoft’s behavior of patenting everything in sight, perhaps it is self preservation; but I should think that after the ActiveX patent fiasco that they would be doing everything they could to show how bad software patents are for the industry; how they stifle development and cause untold damage. Instead they are helping to create a world in which software innovation simply can not happen.

    I have also not heard anyone speak to the a phenomena which I have observed; that the patent office lacks the technical knowledge to properly evaluate many of the claims, and therefore they tend to err on the side of granting what should have never been allowed to be patented.

    The other problem of course is with the juries who decide these things. They also lack the knowledge needed to properly asses the merits of the patent claims. With many gross miscarriages of justice as a result.

    And yes, lawyers are a major part of the problem, they “game” the court system. Most people do not realize that the battle is primarily won or lost by the maneuvers which occur before anyone sets foot inside the court room. Many horrible decisions have been reached because the jury was not allowed to see “all of the evidence”. The real battle is over what evidence is allowed to be shown to the jury. It makes a mockery of the process because they are given partial information in a distorted way. and thus reach conclusions which are correct in accord with the distorted “evidence” that was presented, but which are totally wrong with regard to the real truth of the situation. Whatever happened to the principle of telling the whole truth???

    Justice lies in tatters upon the floor. I have seen it happen over and over again.

    – Erik

  2. I am fed up of being dragged into depositions by defendants fighting an absolutely ridicuous patent that should never have bee filed.

    The US patent system is broken. Only in the US can a patent troll read an email on a standards forum, nip round to the USPTO and file a patent and the get the benfit of being presumed to have invented it up to a year earlier. All it takes is a little perjury that is all but impossible to disprove.

    I am fed up of the USPTO granting patents that are obvious to a person with the most basic knowledge of the art.

    Patents are very definitely deterring innovation in the Internet. There are numerous cases where I have been told to remove ideas from specs that appear to be just a bit too clever in case someone might decide to make a patent claim.

    I have spent millions of dollars ‘winning’ patent cases that should never have been brought that never had the slightest chance of success.

  3. The patent system *is* broken, and patent attorneys *do* deserve some of the blame. Not all of it, mind you, but a good piece of it.

  4. I really appreciated reading your post this morning and seeing some optimism. The perception of the patent system by the media, particularly the role patent litigators play, has really had me down lately. I agree with you, the system has problems, but it is by no means broken.

  5. Microsoft’s search to be better than Google (and coat of silence)

    In today’s IT Blogwatch, we look at Microsoft’s search to be better than Google. Not to mention a coat of silence …

  6. Do you suppose that the op-ed might be motivated more by the Blackberry case than by any kind of serious consideration of the patent system generally?

    The WSJ has done a decent job of keeping up with the Blackberry case, and it’s published at least one op-ed from RIM basically arguing their case to the public. If you focus only on that case, it’s really easy to think of patents as potential land mines and of lawyers as unscrupulous. Just like focusing narrowly on one meritless class action case can make you think that the whole system is screwed up.

    As your blog has highlighted, there are some serious difficulties with the patent system, and there’s a decent, nuanced debate going on about how to fix it. It’s a shame when a respectable publication like the WSJ ignores the real debate and just publicly scoffs at the whole thing.

  7. The Daily Memo – 3/2/06

    In blaming attorneys for the over-proliferation of issued patents, the Wall Street Journal may not get how the patent process actually works. (Patently-O) The United State federal government has sued the state of New York in an attempt to get…

  8. The Daily Memo – 3/2/06

    In blaming attorneys for the over-proliferation of issued patents, the Wall Street Journal may not get how the patent process actually works. (Patently-O) The United State federal government has sued the state of New York in an attempt to get…

  9. The Daily Memo – 3/2/06

    In blaming attorneys for the over-proliferation of issued patents, the Wall Street Journal may not get how the patent process actually works. (Patently-O) The United State federal government has sued the state of New York in an attempt to get…

  10. Dennis – WSJ articles usually provide a mechanism for reader response and often include the author’s email address. I’ve emailed WSJ reporters about things that I thought were reported in error and received responses. I’ve also spoken to one or two WSJ reporters who were looking at patent infringement law suits brought in the E.D. Texas and got the sense from them that they were interested in accurate reporting.

    There is no question that the WSJ makes mistakes, but my impression is that the WSJ is mostly interested in accuracy. Based on having more than one communication with WSJ reporters, my sense of things is that one ongoing problem they have is simply the inherent difficulty of reporting about the operations of a system that is very complex and difficult for members of the general public to understand (including the reporters). The other problem they seem to have is that their information about the patent system comes from biased sources who speak from self-interest, although that problem may be typical to all reporting.

    Nothing stands in the way of contacting the WSJ and pointing out errors.

    Now, an editorial is obviously an opinion piece where the editor might take a little more license with the facts, I believe, relative to stories reported in the conventional way. My take on the editorial points that you highlighted is this:

    .”Patents now operate to deter research and penalize innovation.” – Other than varying anecdotal information (for and against) that all of us have, I don’t believe the WSJ or anyone else can presently point to any reliable, substantive evidence that establishes that patents, as a whole, promote or penalize innovation, one way or the other. That issue has probably been debated in the United States for 200 years and it will continue to be debated.

    .”Patent cases are dubious if they involve patent-holders who never commercialized their inventions.” – I’ve had a number of actual litigation experiences involving patent-holders who never commercialized their inventions. In fact, I’ve represented patent-holders in litigation who never commercialized their inventions, although more recently, I’ve represented companies sued by entities of that kind. Based on my own experiences, I have to agree with the WSJ editorial.

    .”A third party has no standing to challenge a patent unless he is accused of infringing it.” It might depend on the context, but by and large, this is probably a true statement. Some might say that ex parte or inter partes reexamination are an exception. Those with experience know that ex parte reexaminations simply do not work the way they were originally intended, i.e., to give the public a more inexpensive vehicle to invalidate patents. No one knows enough about inter partes reexaminations to comment on their effectiveness, one way or the other.

    .”The rise in filed patent applications ‘has less to do with genuine innovation than it does with innovative lawyers filing a patent on anything that moves.’” No one can point to any reliable evidence that establishes the absolute truth of this statement. However, based on my own experiences in defending more than one lawsuit that involved patents that issued from continuation filings, I can testify that there is at least an element of truth to the point.

    .“Blame the lawyers.” We do not like hearing that. However, there are reasons why a member of the general public could legitimately say it. Having had more than a few experiences of my own where I believed the patent system was abused, lawyers always seemed to be at the forefront. In my opinion, it involves a minority of practicing lawyers, but the seriousness of current abusive practices taints everyone. What is worse, in my judgment, is the unwillingness of many lawyers to simply remove the blinders. The very last sentence in your posting that quotes Jon Dudas is illustrative, “…he said approvals are now less than 60%.” If the general population of patent lawyers is willing to accept that statement as truth, then lawyers are very much to blame for problems with the system.

  11. You are forgetting that the operative words in the title of the newspaper are WALL STREET. It writes for the street, not the tens of thousands of small businesses where patent protection is, to paraphrase Al Shugart, more important than your mother. The big companies create their own monopolies, they don’t need patents.

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