USPTO Budget Shortfall Causes: Maintenance Fees

A major reason for the current USPTO budget shortfall is the dropping rate of renewal. According to the USPTO annual reports, the "maintenance fees have traditionally been the largest category of patent fees." Renewal rates are charged in three-stages. The first-stage payment of $980 is due 3.5 years after issuance. The second-stage payment of $2,480 is due 7.5 years after issuance. And, the third-stage payment of $4,110 is due 11.5 years after issuance.

In FY2009 renewal rates dropped for each stage. Most troubling for future PTO revenue, the first-stage renewal rate for FY2009 was the lowest in a decade. The graph below is based on historic USPTO Annual Reports.

161 thoughts on “USPTO Budget Shortfall Causes: Maintenance Fees

  1. Thanks, you to, but I don’t fancy “lawyer’s arguments,” I prefer inventor’s arguments.

    My Mommy told me I could talk anybody into anything, Bless her soul.

    Perhaps we can pick this up another time.

    I will be snowed later tonight — lucky I have enough Bourbon and other provisions for the duration.

    It has been stimulating — I love a good debate.

  2. that’s what the big guys do to screw We the People all the time,

    The big guys are people too. And they also have to prove the same things you have to prove if they want an injunction. Namely, that an injunction is necessary to compensate them for the infringement.

    The reason everyone points to eBay is because it’s such a blatant case of a patentee only wanting money, having no use for anything but money, and clearly intending to use even an injunction only to leverage more money, and yet asking for something other than money to grief the other party. Extortion like that might look good from your perspective as an inventor, but it’s probably another one of those irregular verbs.

    so why not little guys like me have a tool to fight back.

    Keep fighting. You have shown yourself to be a formidable tool.

  3. Dear IANAE,

    Re:
    “eBay was pretty clear on that.”

    All eBay did was to give big-bus-oriented Judges an easy way to screw the little guy.

    I say, phuck the Supreme’s Constitutionally unlawful eBay decision.

  4. Dear IANAE,

    Re:
    “If you can show that money does not remedy the violation of your exclusive right, you will get your injunction.
    eBay was pretty clear on that.”

    I shouldn’t have to showshit – if my patent is infringed, and I want the infringement to be stopped so that I continue to have my Right to exclusivity, then the Court should make it so.

    Your comments about “squeeze money out of your patents” are a red herring – that is the American way, that’s what the big guys do to screw We the People all the time, so why not little guys like me have a tool to fight back.

  5. But then again, money does not remedy the violation of exclusiveness either.

    If you can show that money does not remedy the violation of your exclusive right, you will get your injunction.

    eBay was pretty clear on that.

  6. Dear IANAE,

    Re:
    “Your point is wrong. It’s completely unfounded in law (even without referring to eBay), it’s unsupported by the plain language of the constitution, …“

    To what plain language in the Constitution do you refer?

  7. Exclusive: adj. not divided or shared with others;

    So your honor, we agree that I have a valid and enforceable patent on this, correct?

    Court: Yes.

    And we agree that the patent, since the Congress has established a patent system, gives me a constitutional right, correct?

    Court: Yes. (Note – this step optional)

    And we agree that a patent gives me the exclusive right, correct?

    Court: Yes.

    We agree that exclusive means that only I can do this, right?

    Court: Yes.

    We agree that company X is violating my right and doing this, correct?

    Court: Yes.

    Since I have the exclusive right, I can have you make them stop and thus maintain my exclusive right, correct?

    Court: Um, no. well you see, we have them pay you, so you are OK, after all exclusive means, um shared, but paid, um, ok?

    But my right is exclusive, the Patent Act at 35 USC 154 explicitly states “right to exclude others from making, using, offering for sale, or selling the invention”. My right is to exclude others. That means NOT to share at whatever amount you want to pay. My remedy to my right means restoring that right to exclude. This is not about money, this is about my rights. I want my exclusive rights.

    Court: Svcks to be you.

    Note: the optional step does not impact the “remedy” for violating exclusiveness. But then again, money does not remedy the violation of exclusiveness either.

  8. Exclusive: adj. not divided or shared with others;

    So your honor, we agree that I have a valid and enforceable patent on this, correct?

    Court: Yes.

    And we agree that the patent, since the Congress has established a patent system, gives me a constitutional right, correct?

    Court: Yes. (Note – this step optional)

    And we agree that a patent gives me the exclusive right, correct?

    Court: Yes.

    We agree that exclusive means that only I can do this, right?

    Court: Yes.

    We agree that company X is violating my right and doing this, correct?

    Court: Yes.

    Since I have the exclusive right, I can have you make them stop and thus maintain my exclusive right, correct?

    Court: Um, no. well you see, we have them pay you, so you are OK, after all exclusive means, um shared, but paid, um, ok?

    But my right is exclusive, the Patent Act at 35 USC 154 explicitly states “right to exclude others from making, using, offering for sale, or selling the invention”. My right is to exclude others. That means NOT to share at whatever amount you want to pay. My remedy to my right means restoring that right to exclude. This is not about money, this is about my rights. I want my exclusive rights.

    Court: Sucks to be you.

    Note: the optional step does not impact the “remedy” for violating exclusiveness. But then again, money does not remedy the violation of exclusiveness either.

  9. I’m curious whether copyright law gives the authors of writings any “exclusive rights”. I assume it does.

    If it does, then how about those natural philosopher “inventors” who, rummaging through the natural world, “discover” in it a new method with which humans can do business with each other, and proceed to patent it? Should they be given exactly the same amount of “exclusive rights”?

    And, if so, would that mean that inventors, although enjoying “exclusive rights”, would not have the right to enjoin anybody (except copyists)?

    Would that then be in accordance with the US Constitution?

  10. The Constitution’s phrase “the exclusive Right” subsumes, nay, commands, an explicit remedy in its inherent meaning – no other meaning can rightly be implied from “the exclusive Right”, nonewhatsoever.

    That’s my point.

    Your point is wrong. It’s completely unfounded in law (even without referring to eBay), it’s unsupported by the plain language of the constitution, and it’s primarily motivated by your desire to squeeze money out of your patents. But don’t let that stop you.

  11. Dear IANAE,

    Re:
    “The right is exclusive. We both agree on that. It says “exclusive right”.
    The constitution doesn’t say anything about the remedy, …”

    The Constitution’s phrase “the exclusive Right” subsumes, nay, commands, an explicit remedy in its inherent meaning – no other meaning can rightly be implied from “the exclusive Right”, nonewhatsoever.

    That’s my point.

    I wonder if we have an audience?

  12. Oh, so now you want to debate politics; really?

    Sure, if you want to compare narrow-minded biases, let’s go.

    You’re politics are showing

    Thank you for correcting my English.

  13. The Constitution is clear and ambiguous – it specifically specified “exclusive”, i.e., the Right to exclude any one else from “making, using …”.

    The right is exclusive. We both agree on that. It says “exclusive right”.

    The constitution doesn’t say anything about the remedy, just like it doesn’t say anything about the remedy if your right to free speech is violated. Maybe you’ll get an injunction, maybe you won’t. It depends on whether you can prove that’s an appropriate remedy in your case.

  14. You’re politics are showing – you don’t even respect the Constitution enough to capitalize “Constitution.”

  15. Dear IANAE,

    Now we get to the nub of it:

    Re:
    “The constitution doesn’t provide for a particular remedy…”

    Of course it does! The Constitution is clear and ambiguous – it specifically specified “exclusive”, i.e., the Right to exclude any one else from “making, using …”.

    I knew you would not be happy when we got to the nub.

  16. Careful, your narrow-minded bias is showing.

    That’s one of those right-wing irregular verbs, isn’t it?

    I have a constitutional right
    You have a narrow-minded bias
    He/she has an opinion

  17. So, do you really want to throw out the Constitution’s specified “exclusive Right” provision based on a single lousy contrived example?

    1. Nobody is throwing out anything. The exclusive right is still there. Comes free with every patent. If you allege that someone else did what you have the exclusive right to do under your patent, you always have a cause of action. The constitution doesn’t provide for a particular remedy, but Congress was nice enough to list a whole bunch of them.

    2. It’s not a “contrived example”, it’s an actual example that actually went to trial, and appeal, and to the Supreme Court. It’s not unique, either.

    Nor is the Supreme Court buying the Constitution any longer on various issues.

    3. This isn’t a constitutional issue. It’s a remedies issue.

  18. Furthmore,

    Re:
    “No, I know exactly what goes on with those patents.”

    Careful, your narrow-minded bias is showing.

  19. Dear IANAE,

    So, do you really want to throw out the Constitution’s specified “exclusive Right” provision based on a single lousy contrived example? Is that the kind of guy you really want to be?, or have I Just got your goat?

    Re:
    “The Supreme Court isn’t buying it.”

    Nor is the Supreme Court buying the Constitution any longer on various issues.

    How’s that work for ya’?

  20. Man, are you really that naive when it comes to making money with a patent?!

    No, I know exactly what goes on with those patents.

    The patentee stands before the judge with his best approximation of a straight face, and says “the fact that he’s practicing my patent doesn’t harm me at all, and I actually want him to keep doing it and paying me money, but please order him to stop doing it so I can force him to pay me more money than you would ordinarily award me for future infringements.”

    If you think that kind of BS is a good enough reason for an injunction, that’s wonderful. The Supreme Court isn’t buying it.

  21. Dear IANAE,

    Man, are you really that naive when it comes to making money with a patent?!

    If really can’t answer your own questions, some will think you were born yesterday on a banana boat.

    But I know better — you’re just put’in me on, I bett’ca. Tnaks for the funn.

  22. ” Most troubling for future PTO revenue, the first-stage renewal rate for FY2009 was the lowest in a decade.”

    My guess is that the chaff has been filtered out early and that a higher percentage of future second and third stage fees for the remaining patents will be paid.

  23. Shame, shame on you!

    Why?

    Take the eBay case, for example. The patentee had an exclusive right. Someone infringed that right. The patentee sued for infringement and won.

    The next step is to determine what available remedy is sufficient to compensate the patentee for the infringement of his right.

    In eBay, the patentee didn’t have a business, and didn’t license exclusively to anyone who had a business. The patentee’s entire reason for existing was to allow people to infringe and to collect money from those people. The fact that other people were practicing the invention did not harm the patentee at all, let alone irreparably, except that they weren’t paying for the privilege. Only, the court has now ordered them to pay for the privilege.

    So tell me, what’s the point of an injunction on those facts?

  24. Dear IANAE,

    Finally, you fess up to being Okay with (the dreaded) “compulsory licensing.”

    Shame, shame on you!

    Now, we can start to go around and about with “how do you stop a fargin’ infringer?”

  25. “!=” means “does not equal”. The exclamation point is negation.

    Here’s your problem. You think a right to exclude implies a remedy to exclude. It doesn’t.

    See? I told you you wouldn’t like the answer.

  26. Dear IANAE,

    Above, you said, with my inserts in brackets:

    “To recap:
    “right to exclude others from making, using, … or selling” = [A] right
    [C] injunction = [B] remedy
    [A] right != [B] remedy”

    Now, if A=B and B=C, than A=C QED

    However, is you are relying on a !, as in
    “The statement !A is true if and only if A is false”
    it shows that you still do not know what “exclusive” means.

  27. What I am after is for you to learn what the word “exclusive” means.

    Exclusive means you have it, and other people don’t have it. “It” being the right to make, use and sell whatever you claimed.

    That’s why it’s actionable when other people do what you have the exclusive right to do.

  28. What I am after is for you to learn what the word “exclusive” means.

    Why do you not just look it up?

    Did you come up with Billy’s “is, is” line?

  29. This isn’t complicated. You (hypothetically) have an exclusive right. Infringement of that exclusive right does not necessarily entitle you to the remedy of an injunction.

  30. Dear IANAE,

    You are funnier that a barrel of monkeys.
    Thanks a bunch for the entertainment.

    I phrased the questions so that only a
    Yes, Yes or No, No are logical answers,
    not one of each.

    Now, don’t you think your answers were funny?

  31. Dear IANAE,

    Thanks for your answer.
    But I am still unclear.

    Re:
    “Yes, and it depends.”

    On what does it depend?

  32. At the conclusion of a simple, run-of-the-mill patent infringement case, if the validity of my patented invention – an invention which I do not practice – is upheld, and infringement is proven, do I have the right to exclude the infringer from infringing my patent even if the infringer offers to license the patent?, or can the Judge allow, under some basis, the infringement to continue against my will?

    Yes, and it depends.

  33. Dear IANAE,

    I am still not clear – please answer this simple two-part question with a simple two-part answer:

    At the conclusion of a simple, run-of-the-mill patent infringement case, if the validity of my patented invention – an invention which I do not practice – is upheld, and infringement is proven, do I have the right to exclude the infringer from infringing my patent even if the infringer offers to license the patent?, or can the Judge allow, under some basis, the infringement to continue against my will?

  34. Hobbes, I could also remark upon your own obfuscations, but you seem to be enjoying yourself so thoroughly, I shan’t spoil your fun. Carry on.

  35. What’s the problem with that characterization?

    The Supremes recognized the exclusive rights of the patentee (subject to further proceedings before the PTO), recognized that the exclusive rights had been infringed (by one or more of making/using/selling), and determined an appropriate remedy to compensate the patentee.

    That’s exactly what courts are supposed to do.

  36. Dear IANAE.

    Re:
    “Yes, that’s correct. That’s how the Supreme Court characterized the patentee’s right in eBay, quoting from 35 USC 154. Page 3 of the opinion.”

    The Supreme Court also characterized patents in eBay thusly:
    Page 3
    …Indeed, the Patent Act itself indicates that patents shall have the attributes of personal property “[s]ubject to the provisions of this title,” 35 U. S. C. §261, including, presumably, the provision that injunctive relief “may” issue only “in accordance with the principles of equity,” §283. (emp. added)
    Page 5
    …We hold only that the decision whether to grant or deny injunctive relief rests within the equitable discretion of the district courts, and that such discretion must be exercised consistent with traditional principles of equity, in patent disputes no less than in other cases governed by such standards.

  37. “NAL, you just made Hobbes’ day.”

    Mr. rox, this is likely the most accurate and least obfuscating posting you’ve ever made at our beloved “Trainwreck.”

  38. NAL: JAOI is using “exclusive right” as in the patent right gives him the right to exclude others from making or using his invention.

    JAOI: My point is, a patent’s grant of “the exclusive Right” gives all patent owners the right to exclude others from practicing the invention if the patent is upheld and proven infringed in court.

    Yes, that’s correct. That’s how the Supreme Court characterized the patentee’s right in eBay, quoting from 35 USC 154. Page 3 of the opinion.

    Also, as you pointed out, the Supremes added this: But the creation of a right is distinct from the provision of remedies for violations of that right.

    That’s a pretty basic distinction. Like, first day of law school. A right is not a remedy. A remedy is how you get compensated for the violation of your right.

    To recap:

    “right to exclude others from making, using, … or selling” = right

    injunction = remedy

    right != remedy

  39. Dear crakrox and IANAE.

    Please note: the last post I read before drafting this comment was at 10:22 AM; I have not yet read the interleaving.

    It appears we are all on the same page on my primary concern.

    Please correct to me if I am wrong. I am under the impression, in the post-eBay patent courtroom, that some infringements were allowed to continue even though the validity of the patent-in-suit was upheld and proven infringed.

    Such court’s rationale to allow some infringement to continue unabated was, citing eBay, that, in essence, the patent owner was not practicing the invention. If the patent owner had been practicing the invention, the infringement would have been stopped.

    My point is, a patent’s grant of “the exclusive Right” gives all patent owners the right to exclude others from practicing the invention if the patent is upheld and proven infringed in court.

    Anything less is tantamount to compulsory licensing, and there’s no way to properly interpret the Framers’ patent clause to encompass compulsory licensing for any inventor – the Framers’ words made “exclusive” compulsory; the meaning of “exclusive” is unambiguous.

    Page 3 of the United States Supreme Court eBay ruling:
    To be sure, the Patent Act also declares that “patents shall have the attributes of personal property,” §261, including “the right to exclude others from making, using, offering for sale, or selling the invention,” §154(a)(1). According to the Court of Appeals, this statutory right to exclude alone justifies its general rule in favor of permanent injunctive relief. 401 F. 3d, at 1338. But the creation of a right is distinct from the provision of remedies for violations of that right. Indeed, the Patent Act itself indicates that patents shall have the attributes of personal property “[s]ubject to the provisions of this title,” 35 U. S. C. §261, including, presumably, the provision that injunctive relief “may” issue only “in accordance with the principles of equity,” §283. (emp. added)

    Page 5 of the United States Supreme Court eBay ruling:
    Because we conclude that neither court below correctly applied the traditional four-factor framework that governs the award of injunctive relief, we vacate the judgment of the Court of Appeals, so that the District Court may apply that framework in the first instance. In doing so, we take no position on whether permanent injunctive relief should or should not issue in this particular case, or indeed in any number of other disputes arising under the Patent Act. We hold only that the decision whether to grant or deny injunctive relief rests within the equitable discretion of the district courts, and that such discretion must be exercised consistent with traditional principles of equity, in patent disputes no less than in other cases governed by such standards. (emp. added)

    The way I read it, this critical USSC ruling was based on a mere “presumption”!

  40. Crakrox,

    I was set to give you credit for constructively adding to the conversation at the onset of the day, yet you seem incapable of not dragging the discussion off course into obfuscation.

    Your path to obfuscation starts with a bald assertion concerning “Constitutional Right” and runs through purposeful twists, badly blurring the appropriate abstraction levels as explained in other threads on (R)ights and (r)ights and the levels of (L)aw and (l)aw that are instructional to a discussion on Constitution Law.

    Such purposeful confusion as a tactic of discussion nullifies any value you would otherwise bring.

    Starting then, back at the possible constructions of a list of prepositional phrases describing “the power” (IANAE – not “the power to”, as “to” begins the first prepositional phrase): the ascendancy of the directive intent (and not the abandonment of the first prepositional phrase as is the want of the obfuscating crakrox), does not in its own stead speak to whether the patent right is a constitutional right – at least not directly.

    The power is to secure. It is not to create. Now semantics can cause much additional confusion, and the noise created by the obfuscators must be meticulously screened out.

    What does it mean to say that something is a Constitutional Right? It is a heady question indeed. One meaning can be a right recognized at the bedrock level of our legal system (Ned, I put it this way so as not to invoke the nihilist/anti-nihilist discussion). Such rights can be recognized through the Constitution or through the Bill of Rights – as amendments to the Constitution. Notice that Clause 8 while not creating the right, recognizes the right and directs the government to do something with that right, to secure it. Therefore, (and unfortunately Ned, here is where the nihilist view must be purged), the patent (R)ight was recognized at the foundational level to be a true (R)ight. In this sense, Consitutional Rights are not created by the Constitution – but recognized by the Constitution for what they are – Rights that the laws of man can only attempt to capture in codification and thus, enforcement. In this sense, the patent Right, as directly recognized by the Constitution is very much a Constitutional Right.

    No further obfuscations with “all” or with lower level (l)aws should impact this understanding.

    As with any other Constitutional (R)ight, patent Rights are not unlimited, as clearly the Constitution prescribes power to administer the (R)ights. This however does not make the patent Right any less a Constitutional (R)ight, just as any transgression of a right does not nullify its status as a right (for example Pirates murdering Cavemen do not nullify the Cavemen’s rights) – violation does not cause the right to cease to exist.

  41. IANAE, you seem to be using “exclusive right” as in if JAOI gets a patent, then he alone holds the right to that invention. JAOI is using “exclusive right” as in the patent right gives him the right to exclude others from making or using his invention. That is, if a court determines that monetary measures are sufficient, then JAOI would “exclusively” get the money from the damages or licensing fees, but he would not be able to exclude the infringer from further making or using his invention.

  42. you’ve already taken things that you don’t think should be patentable (e.g. business methods) to be non-inventions,

    I never said I didn’t think business methods should be patentable.

    A novel and non-obvious sandwich or soup is arguably an article of manufacture, yet it would not currently receive patent protection.

    What is your source for that? Some USPTO policy statement that I missed?

  43. @ JAOI-
    Ignore my previous remarks about the exclusiveness of the patent right. I see your point.

    @ IANAE-
    You don’t mind “inventors” being taken as “all inventors” because you’ve already taken things that you don’t think should be patentable (e.g. business methods) to be non-inventions, and therefore those who came up with them to be non-inventors. A novel and non-obvious sandwich or soup is arguably an article of manufacture, yet it would not currently receive patent protection. This can be made consistent with the patent clause by taking “inventors” to mean “all inventors” but a sandwich to be a non-invention, or by taking the sandwich creator to be an inventor but Congress having deemed that granting him an exclusive right would not serve to promote the progress.

  44. I do not think you have bothered to understand the nuances of my eBay position.

    I don’t see any nuances. You keep saying that there should be an exclusive right, and in fact there is an exclusive right. That’s what patents are for. If you have a valid and enforceable patent, you have an exclusive right.

    It’s right there in 35 USC. I quoted it earlier.

  45. “Nihilists are for the most part harmless these days (other than potential rug damage). A lot has changed since your time.”

    That’s what they want us to think, crakrox. Say what you like about Nihilism’s tenets, it’s still an ethos.

  46. JAOI, I’m not seeing the basis for “all inventors”, unless you’re meaning “all inventors listed on a particular patent”?

    I don’t mind “all inventors”, with the qualification that the inventors first need to produce a specification in compliance with the Act and Rules. That makes it look a lot less like an entitlement and more like a privilege, but I’m good with that too.

    This isn’t an eBay issue. eBay actually did recognize the exclusive right of the patentees. The patent was held valid and infringed.

  47. Dear IANAE,

    That, right there, is where we disagree.

    I do not think you have bothered to understand the nuances of my eBay position.

    crakrox wrote:
    “The power that is being given to Congress is the power “to promote the progress of science and useful arts”, and “by securing for limited times [to Authors and Inventors the exclusive Right to their respective Writings and Discoveries]” is telling Congress how, when they choose to use that power, they are to do it.”

    That’s it in a nutshell…

  48. JAOI, I’m not seeing the basis for “all inventors”, unless you’re meaning “all inventors listed on a particular patent”? Aside from that, I don’t have much to say on the exclusive stuff. Are you saying that 283 is in tension because the inventor has an exclusive right to his invention, and therefore courts have no basis for deeming whether the actions he takes are reasonable? Maybe the distinction you’re talking about is “exclusive right” vs. “exclusive control of a right” (if there is one, I’ve got no strong opinion).

  49. I.e., “the exclusive Right” rules out any kind of “compulsory licensing,” directly or indirectly, for one type inventor but not other inventors – the very concept of “compulsory licensing” is inconsistent with the notion of patents – patents, in one essential regard, entail “the exclusive Right.”.

    That, right there, is your most fundamental misunderstanding related to this issue.

    The Supreme Court eBay decision relied on 283 and nothing more in rendering its eBay decision!, and thus, the eBay decision is constitutionally unlawful – the Constitution is the supreme Law of the Land.

    This one’s a close second. The Supreme Court isn’t bound by a grant of power to Congress, because it’s not Congress. Even if 35 USC 283 is unconstitutional in some way, that has to be raised (or at least argued) by the parties before the Supremes will consider it.

  50. Dear crakrox et al.

    crakrox wrote:
    “The power that is being given to Congress is the power “to promote the progress of science and useful arts”, and “by securing for limited times…” is telling Congress how, when they choose to use that power, they are to do it.”

    That has been my view for years. Is that the general consensus of other on this thread today?

    crakrox wrote:
    “But even ignoring the inconsistency, it still wouldn’t support a Constitutional right to a patent any more than the traditional interpretation.”

    There is no “…Constitutional right to a patent…”, never was.
    However, if Congress exercises its discretion to enact patent laws, the patent grant must be
    “…for limited Times…” and the grant must include
    “…the exclusive Right…” for all inventors.
    I.e., “the exclusive Right” rules out any kind of “compulsory licensing,” directly or indirectly, for one type inventor but not other inventors – the very concept of “compulsory licensing” is inconsistent with the notion of patents – patents, in one essential regard, entail “the exclusive Right.”.

    Congress can do anything else it wants re: enacting patent laws as long as what they do is consistent with the Constitution’s directives in the patent clause (as described directly above). For example, design patents can be different from utility patents, and they can have a different category for software patents, and patent terms can vary, etc.

    Thus, “35 U.S.C. 283 Injunction” is in tension with the Patent Clause:
    “The several courts having jurisdiction of cases under this title may grant injunctions in accordance with the principles of equity to prevent the violation of any right secured by patent, on such terms as the court deems reasonable.”

    The Supreme Court eBay decision relied on 283 and nothing more in rendering its eBay decision!, and thus, the eBay decision is constitutionally unlawful – the Constitution is the supreme Law of the Land.

    A patent must be for a “limited Time…” and, for all inventors, a patent must respect “the exclusive Right” provision in the Constitution, just as patents have always done up to the flawed USSC eBay ruling.

    Clause 8: To promote the Progress of Science and useful Arts, by securing for limited Times to Authors and Inventors the exclusive Right to their respective Writings and Discoveries;

  51. Hobbes, you need to rent the Big Lebowski. Nihilists are for the most part harmless these days (other than potential rug damage). A lot has changed since your time.

  52. “Also also, the actual issue with business methods is whether they’re inventions.”

    Ah, that is where you are mistaken, my dear IANAE. The issue is the essential distinction between (r)ights and (R)ights. You’re implicitly endorsing arbitrary and capricous distinctions in the inventive skein from which our technology-based culture is woven. The path that you propose inevitably leads to nihilism. I implore you to reconsider.

  53. Sidenote to AI:

    Take NAL’s suggestion and run with it. Here’s the suggested twisted logic -

    1. “The Congress shall have power… by securing for limited Times to Authors and Inventors the exclusive Right to their respective Writings and Discoveries.”
    This is a statement of whence Congress derives its power. As the only “by” clause in section 8, it is the only statement alluding to where Congress gets its power.

    2. As the only statement of whence Congress derives its power, it is the only source of power, and Congress therefore has power solely by securing for limited Times to Authors and Inventors the exclusive Right to their respective Writings and Discoveries.

    3. Find some reason that “Authors and Inventors” means “all Authors and all Inventors”.

    4. Not only do you have your Constitutional right to a patent, but if Congress denied any inventor a patent, they would lose the source of their power.

    5. …

    6. Profit!

    I’m not saying that any reasonable reader of the Constitution is going to agree with you, but it will at least be better than simply repeating “WE THE PEOPLE DO SO ORDAIN!!!” over and over.

  54. which is to make it impossible (or at least all or nothing) to exclude business methods and software from patent protection.

    That’s kind of a pointless distinction to make, because Congress is not attempting to exclude business methods or software from patent protection, and there are international treaties (that Congress is free to ignore, granted) that say they can’t discriminate between areas of technology.

    Also, this isn’t the eBay point, because in eBay the patent was held valid and infringed.

    Also also, the actual issue with business methods is whether they’re inventions. If they’re not, coming up with one doesn’t make you an inventor, so you’re still not entitled to a patent.

  55. IANAE, yes they would prefer that because then all they need to do is implicitly place “all” before authors and/or inventors and they’ve got the result they’re after, which is to make it impossible (or at least all or nothing) to exclude business methods and software from patent protection.

  56. Also consider that amongst the larger list, there are clauses which are not truly optional.

    Every single one of those is optional. Sure, some of them are a practical necessity from time to time, and some of them are a practical necessity most of the time, but you could easily contrive a situation where Congress could completely ignore any one of them without ill effect.

    Unfortunately, most of those situations involve people being civilized and nice to each other, so they’ll never really happen, but you could easily imagine them.

  57. Would you guys prefer if it said the following:

    The Congress shall have power

    *****to secure for limited Times to Authors and Inventors the exclusive Right to their respective Writings and Discoveries

    *****so as to promote the Progress of Science and useful Arts.

    Because to my mind that wouldn’t change the meaning at all. They have the power to grant exclusive rights that we recognize as patents and copyrights, and the framers were hoping the use of this power would promote the sciences. Because promoting the sciences isn’t something you can legislate directly.

    I honestly don’t know what you people are nitpicking about.

  58. “The Congress shall have power by securing for limited Times to Authors and Inventors the exclusive Right to their respective Writings and Discoveries.” That is a grammatically complete sentence, but it is a statement indicating from whence Congress’ power comes, rather than listing a power given to Congress. As such, it would be contextually inconsistent with the rest of the listed clauses.

    But even ignoring the inconsistency, it still wouldn’t support a Constitutional right to a patent any more than the traditional interpretation.

  59. This dialogue has been fascinating and edifying!

    Insofar as I am able, I am planning to summarize the salient points, my schedule permitting, hopefully today.

  60. I am also hesitant to ascribe the full force of the optional characteristic of “may” – as in equally “may not” that some will to the phrase “shall have power”.

    I do recognize that with some of the clauses (larger list), Congress has not always employed the power given to them. However, the scope of the powers is more a segregation to which branch of the government that power is assigned, than it is a list of items that that branch can choose to do (or not). Also consider that amongst the larger list, there are clauses which are not truly optional. The directive nature seems to compel rather than advise.

  61. Interesting – I see your point of view – and that of IANAE more clearly.

    Although if the “by securing” is a prepositional phrase, then IANAE is incorrect concerning the list construction.

    Unless, of course, the phrase “to promote” is also viewed as a prepositional phrase, then we are back to a series of prepositional phrases, but now following “shall have power”:

    The Congress shall have power

    *****to promote the Progress of Science and useful Arts,

    *****by securing for limited Times to Authors and Inventors the exclusive Right to their respective Writings and Discoveries.

    Your suggestion is much stronger in that the prepositional phrases act as an adverbs to the “shall have power”. However, there still appears differences in the strength of the prepositional phrases, one being descriptive and the other directional. I do not think the directional phrase is subordinate to the descriptive phrase based on the 2nd amendment construction theory.

  62. Ok, but you seem to be interpreting the wording as if it said “to promote the Progress of Science and useful Arts, and secure for limited Times to Authors and Inventors the exclusive Right to their respective Writings and Discoveries.”

    It says “by securing”, making the latter part of the clause a prepositional phrase modifying “to promote the Progress of Science and useful Arts”. Even ignoring “have power to”, I don’t think “shall promote by securing” is the same thing as “shall promote and secure”. The power that is being given to Congress is the power “to promote the progress of science and useful arts”, and “by securing for limited times…” is telling Congress how, when they choose to use that power, they are to do it.

  63. Mr Hobbes,

    Thank you for the sound advice (if I do say so myself).

    crakrox,

    Let’s look at it this way:

    The Congress shall

    *****have power to promote the Progress of Science and useful Arts,

    *****by securing for limited Times to Authors and Inventors the exclusive Right
    to their respective Writings and Discoveries.

    In this immediate context, the two verbal phrases start with “have power” and “by securing”. breadcrumbs noted that it was IANAE that pointed out that the “shall” part is NOT a part of any of the verbal phrases.

    It is important to stress this – This is evidently what confused breadcrumbs. I was not confused – IANAE did have a method to his madness as it were.

    For argument’s sake let’s take this as a matter of fact.

    Later, IANAE applied the “shall” term only to the first of two equal verb phrases – setting up his logical distinction that “shall” only modified “have power to” but not “by securing”.

    What I pointed out is that such a construction violates IANAE’s own professed logic. If you are going to hold that “shall” is not a part of any verb phrase and you are going to distribute “shall”, you cannot arbitrarily distribute the word, and apply to a first verb phrase, and then use the modified first verb phrase to control the unmodified second verb phrase.

    But, I see where you are getting confused. You are trying to apply the construction discussion from the patent section across more than just that one section. Simple mistake, and easy to make. There was a note that the construction across the other sections varied the meaning of “shall”. This point was put forth by AI and accepted by IANAE. The multiple meaning capability of “shall” was then applied to the specific section under discussion – since in proper construction the verb “shall” is applied to each verb phrase in the list. It was then noted that each verb phrase serves a different function – one descriptive and one directive. As we have seen in discussions of the second amendment, descriptive sections are not accorded as much weight as directive sections.

    Under IANAE’s faulty construction of applying the verb “shall” unequally amongst the verb phrases, he attempts to eliminate the directive verb phrase with the modified descriptive verb phrase. Sure, it suits his point of view, but it is a faulty construction based on his own rule.

    I hope that clears up my part.

    a good evening to all,

  64. Noise, I think that the credibility of a self-confessed crackhead should speak for itself. Nevertheless, this latest personal attack on you brings to mind those words you were good enough to share with me in a similar context:

    “Do not distress yourself with the small minds that so gleefully attack. Remind yourself that although big minds and big thoughts make big targets, they are worth having and expressing nonetheless.”

    And, addressed to one of the many nihilists (or is there just one?) lurking amongst us:

    “No matter how tightly you cling to a nihilist view – you cannot make the founding fathers change their beliefs. You only too readily throw the big R into your pile of theory, when it is so much more important than the little r that you put on the flip side of the coin of law.”

    I encourage you to keep the faith. Your efforts are not in vain!

  65. Noise, I don’t know what you and breadcrumbs are smoking, but it must be some good stuff.

    IANAE is saying that the construction is “… shall have power
    1) to lay and collect…
    2) to borrow…

    8) to promote the progress…
    …”

    You guys are saying that “have power” is only tied to “lay”?
    “… shall
    1) have power to lay and collect…
    2) to borrow…

    8) to promote the progress…
    …”

    That’s not even grammatically correct. Even I can see that and I’m a crackhead.

  66. breadcrumbs,

    You are not confused – IANAE is making up his construction rules as he goes along.

    Clearly he was correct in that the “shall” is what is missing from each verbal phrase, not “shall have the power to” as he wants to hand waive later.

    “have the power to” is the first verbal phrase in the list of verbal phrases. It no more deserves the single application of “shall” than any other verbal phrase singularly having the “shall” applied.

    It is expedient to him to limit the distribution of “shall” only to the first verbal phrase and subordinate all other verbal phrases because any other construction dooms his position.

    Perfectly logical, just not correct.

  67. You seem to violate your own point by limiting “shall” to only the first in the list of verbal phrases. Did you misunderstand the nature of the list, or did I misunderstand your point about “shall” not being in any of the verbal phrases?

    Okay, it turns out that technically there is another occurrence of the word “shall” in one of the clauses, which is not a “shall have power to”. I wasn’t talking about that.

    What I was saying is that there is a single “shall have the power to” at the top, that is to be read as a part of each clause, and that logically would have to mean the same thing each time because it’s only written once.

    Even if “shall have the power to” or “have the power to” had been explicitly repeated at the beginning of each clause, it wouldn’t change the meaning. It’s just that having it once at the top is even more obvious.

    But the meaning of “shall have the power to” isn’t JAOI’s point at all. He takes issue with a different term, and rather than strawman him I’m going to wait until he gets around to mentioning it.

  68. The USSC eBay decision, which is in direct conflict with the Constitution’s patent clause, did more to de-value independent inventors’ patents than any other decision.

    De-valuing patents is not a constitutional issue. It’s normal for the value of patents to go up and down as laws change and technology evolves and such. There’s no constitutional right for patents to maintain their value. Heck, the constitution provides for patents to be time-limited, so they inherently lose their value at some point.

    Try to articulate in one sentence what aspect of eBay you think runs afoul of the constitution. I know what you’re trying to say, and it should be easy to say in a relatively short sentence. You shouldn’t even need legal terms (other than “patent”) to do it.

  69. IANAE,

    I have to admit that I lost step with your logic along the path. You raise a valid point that “shall” belongs to no verbal phrase, appearing only at the top of a list. See the post at 04:37 PM: “The word “shall” isn’t in any of the individual clauses – it’s only written once at the top.”

    Then, I lost the crumbs. You seem to violate your own point by limiting “shall” to only the first in the list of verbal phrases. Did you misunderstand the nature of the list, or did I misunderstand your point about “shall” not being in any of the verbal phrases?

    - with your logic, the “shall” does not only apply to the first verbal phrase of the list, the “have power to” phrase. Yet, the rest of your post depends on the meaning of “shall” exactly limited to “shall have the power to”.

    But that’s not how the distributive “shall” would be applied to the list of verbal phrases.

    Help me get back on the path.

  70. Dear IANAE,

    I posted this above; please check out the link and the links therein.

    Dear IANAE,

    Re:
    “I’m not really seeing the constitutional issue here.”

    The USSC eBay decision, which is in direct conflict with the Constitution’s patent clause, did more to de-value independent inventors’ patents than any other decision.

    Because of eBay, inventors who chose not to practice their patents, or who cannot for reasons you discuss, are little threat to Patent Pirate infringers. More on this link and the links in the comment:

    link to patentlyo.com

  71. JAOI, just to be clear, I’m not trolling you. I’m trying to get you to articulate your actual point about eBay so I can address your actual point. It has nothing to do with this “shall” nonsense, so I’m hoping we can move past that now.

    You won’t like the answer when you get it, but at least it will address your actual point.

  72. you were just pulling my chain to be entertaining. Very funny, haha ,good one. Or are you Just a jerk?

    I could ask you the same question, since you’re the obvious non-lawyer arguing at length over the meaning of a strikingly unambiguous set of words.

    Please explain to me, nice and slow, what you think the problem is with eBay. Other than your patents won’t make you as much money now. The constitutional problem with eBay.

    Yes, I’m serious.

  73. Dear IANAE,

    I get it now — you were not serious all along — you were just pulling my chain to be entertaining. Very funny, haha ,good one. Or are you Just a jerk?

  74. Please excuse me — I thought you had heard about the USSC’s eBay decision.

    Obviously not the same one you heard about. In the version I read, there was a patent and it was held infringed. Also, the eBay decision I read wasn’t an act of Congress.

    Tell me about the eBay decision you heard about.

  75. Dear IANAE,

    With all due respect, you really don’t get it, do you?

    When I said, Don’t choke on this question, I was thinking about “… no Appropriation of Money to that Use shall be for a longer Term than two Years; ”

    I thought that would be obvious to even the most casual observer; sorry I was wrong about that.

    * * *

    I just glimpsed at your last comment. Please excuse me — I thought you had heard about the USSC’s eBay decision.

  76. However, since Congress chose to do so, that Right must be exclusive, because that’s what clause 8 plainly says.

    Okay, so what’s the problem?

    35 U.S.C. 271 (a) [...] whoever without authority makes, uses, offers to sell, or sells any patented invention, within the United States, [...] during the term of the patent therefor, infringes the patent.

    Looks like an exclusive right to me.

  77. Dear Norbert,

    Thank’s for your comments — you obviously are a serious intellectual person, in contrast to some others on this thread.

    I don’t believe Congress “must” have enacted patent Rights — that is not something I ever subscribed to. However, since Congress chose to do so, that Right must be exclusive, because that’s what clause 8 plainly says. And let’s face it — the Framers obviously did not intend their patent clause to mean any kind of compulsory licensing arrangement.

  78. But this brings us back to having more than one “shall” and apparently more than one meaning to the “shall” based on the differences in the verb phrases. For the descriptive phrase “have power to promote” the “shall” is permissive AND “shall” is mandatory for the directive phrase “by securing”.

    There’s no “shall” in the “by securing”. The “by securing” is just the manner in which Congress may (“shall have the power to”) promote the progress of science etcetera should they choose to do so. If you check 35 USC, you’ll see that’s exactly how they did it.

    Just like the raising armies thing. They have the power to do so if they want, and if they do so there is a limit on the term of appropriations of money to the purpose.

  79. what do you figure “shall have the power To” means in this clause:

    It means the same thing as in all the other clauses. It means Congress can raise and support armies if it wants to. Congress currently does that, but it hasn’t always.

    Why did you think that would be a difficult question? And why did you think the meaning would be affected by a preamble saying “we’re the guys who wrote this, and we hope the country will turn out well”?

  80. IANAE interestingly points out that “shall” is not in any of the individual clauses.

    This appears to be an important point.

    Perhaps I am missing a subtlety in IANAE’s position – it appears that his argument convinces me that his position is the untenable one, as the phrase “shall” not being in any of the individual phrases works against IANAE’s construction and his next exclusionary interpretation that “shall” only goes to “have the power”.

    Since as IANAE indicates there is a list and the “shall” is not a part of any one individual clause, it must apply to all clauses – the comma distinguishing verb phrases, so “shall” must be a part of each verb phrase.

    But this brings us back to having more than one “shall” and apparently more than one meaning to the “shall” based on the differences in the verb phrases. For the descriptive phrase “have power to promote” the “shall” is permissive AND “shall” is mandatory for the directive phrase “by securing”.

    I must have missed something. This discussion is very filling.

  81. Dear IANAE,

    Re:
    “That’s exactly what I’m suggesting. They may do it or not, and if they do it they can do it in whatever way they want.” (emp. added)

    Don’t choke on this question, but what do you figure “shall have the power To” means in this clause:

    Clause 12: To raise and support Armies, but no Appropriation of Money to that Use shall be for a longer Term than two Years;

    * * *

    I believe the Framers credited anyone who would read the Constitution with enough common sense to understand their intentions, i.e., e.g., when is an imperative, and when it is optional, to be decided, for example, in the context of what is consistent with the Preamble:

    We the People of the United States, in Order to form a more perfect Union, establish Justice, insure domestic Tranquility, provide for the common defence, promote the general Welfare, and secure the Blessings of Liberty to ourselves and our Posterity, do ordain and establish this Constitution for the United States of America.

  82. No comment on the interpretation of “exclusionary”.

    Now that would have been a curious choice of wording. The clause says “exclusive”, which isn’t the same thing at all.

  83. JAOI, I’m not going to comment on the use of shall in the “defence” portion, but given that you say that “shall” must have different meanings in different clauses, which I don’t necessarily disagree with, why in particular must “shall have the power to” be interpreted as “must” or “will” in the patent clause? If the authors intended that Congress must secure for limited times to inventors the exclusive rights to their discoveries, then the language “to promote the progress of science and useful arts” would be unnecessary. If Congress determines that granting exclusive rights for an entire class of inventions, say business methods, will not serve to promote the progress of science and useful arts, why would a reasonable reader conclude that the framers intended for Congress to be compelled to do so? If anything, that language points to the securing of patent rights as being discretionary.

    No comment on the interpretation of “exclusionary”. I don’t have an opinion on that one way or the other.

  84. JAOI, I’m not going to comment on the use of shall in the “defence” portion, but given that you say that “shall” must have different meanings in different clauses, which I don’t necessarily disagree with, why in particular must “shall have the power to” be interpreted as “must” or “will” in the patent clause? If the authors intended that Congress must secure for limited times to inventors the exclusive rights to their discoveries, then the language “to promote the progress of science and useful arts” would be unnecessary. If Congress determines that granting exclusive rights for an entire class of inventions, say business methods, will not serve to promote the progress of science and useful arts, why would a reasonable reader conclude that the framers intended for Congress to be compelled to do so? If anything, that language points to the securing of patent rights as being discretionary.

    No comment on the interpretation of “exclusionary”. I don’t have an opinion on that one way or the other.

  85. Try reading these 18 clauses and ascribing only one meaning to the word “Shall” for all 18.

    The word “shall” is mandatory throughout, of course.

    The thing is, it doesn’t say “shall”. It says “shall have the power to”, which means “may”. Which has the same meaning throughout. It means “here are some things that Congress can do”.

  86. Are you suggesting that Congress may or mayn’t, for example, “…provide for the common Defence and general Welfare of the United States;”???

    That’s exactly what I’m suggesting. They may do it or not, and if they do it they can do it in whatever way they want.

    Sure, from a pragmatic point of view they’d be retarded not to provide for the common defence, but they have no constitutional obligation to do it. If Canada had a really big army and offered to fully protect the US, or if World Peace broke out, Congress could totally scrap the military.

    Also, note that the US had no standing army during some stretches of its existence.

  87. Dear IANAE,

    Re:
    “The word “shall” isn’t in any of the individual clauses – it’s only written once at the top. It’s “shall have the power to” and then a list. There is no sane way to ascribe different meanings to the word in this context.”

    Are you suggesting that Congress may or mayn’t, for example, “…provide for the common Defence and general Welfare of the United States;”???

    Try reading these 18 clauses and ascribing only one meaning to the word “Shall” for all 18. If you say you can do so, you are in Mooney’s class.

    Section. 8.
    Clause 1: The Congress shall have Power To lay and collect Taxes, Duties, Imposts and Excises, to pay the Debts and provide for the common Defence and general Welfare of the United States; but all Duties, Imposts and Excises shall be uniform throughout the United States;
    Clause 2: To borrow Money on the credit of the United States;
    Clause 3: To regulate Commerce with foreign Nations, and among the several States, and with the Indian Tribes;
    Clause 4: To establish an uniform Rule of Naturalization, and uniform Laws on the subject of Bankruptcies throughout the United States;
    Clause 5: To coin Money, regulate the Value thereof, and of foreign Coin, and fix the Standard of Weights and Measures;
    Clause 6: To provide for the Punishment of counterfeiting the Securities and current Coin of the United States;
    Clause 7: To establish Post Offices and post Roads;
    Clause 8: To promote the Progress of Science and useful Arts, by securing for limited Times to Authors and Inventors the exclusive Right to their respective Writings and Discoveries;
    Clause 9: To constitute Tribunals inferior to the supreme Court;
    Clause 10: To define and punish Piracies and Felonies committed on the high Seas, and Offences against the Law of Nations;
    Clause 11: To declare War, grant Letters of Marque and Reprisal, and make Rules concerning Captures on Land and Water;
    Clause 12: To raise and support Armies, but no Appropriation of Money to that Use shall be for a longer Term than two Years;
    Clause 13: To provide and maintain a Navy;
    Clause 14: To make Rules for the Government and Regulation of the land and naval Forces;
    Clause 15: To provide for calling forth the Militia to execute the Laws of the Union, suppress Insurrections and repel Invasions;
    Clause 16: To provide for organizing, arming, and disciplining, the Militia, and for governing such Part of them as may be employed in the Service of the United States, reserving to the States respectively, the Appointment of the Officers, and the Authority of training the Militia according to the discipline prescribed by Congress;
    Clause 17: To exercise exclusive Legislation in all Cases whatsoever, over such District (not exceeding ten Miles square) as may, by Cession of particular States, and the Acceptance of Congress, become the Seat of the Government of the United States, and to exercise like Authority over all Places purchased by the Consent of the Legislature of the State in which the Same shall be, for the Erection of Forts, Magazines, Arsenals, dock-Yards, and other needful Buildings;–And
    Clause 18: To make all Laws which shall be necessary and proper for carrying into Execution the foregoing Powers, and all other Powers vested by this Constitution in the Government of the United States, or in any Department or Officer thereof.

  88. In some, but not all, of Article I, Section 8’s 18 clauses, “shall” cedes discretion to Congress, to act or not to act on the subject matter.

    The word “shall” isn’t in any of the individual clauses – it’s only written once at the top. It’s “shall have the power to” and then a list. There is no sane way to ascribe different meanings to the word in this context.

    Also, no matter how specific or general the subject matter on which Congress “shall have the power to” act, that still doesn’t change the fact that it says “shall have the power to” and not “shall”.

    Besides which, Congress did in fact exercise its power to grant an exclusive right etcetera for inventions. So what’s the problem here?

    Why not just be honest and say “my interpretation of this clause is clearly logically untenable given the context, but here’s what I wish it meant”?

  89. Dear just trying to keep up… & Norbert,

    Norbert wrote:
    “I think he’s saying that “shall” can have multiple interpretations but “exclusive” cannot.”

    Yes, that’s it.

    * * *

    Further, allow me to clarify my comment regarding Mr. breadcrumbs’ fascinating observation about the word “shall” as it relates to the 18 clauses in Article I:

    In some, but not all, of Article I, Section 8’s 18 clauses, “shall” cedes discretion to Congress, to act or not to act on the subject matter.

    For example, please consider Article I, Section. 8: Clause 1:

    “The Congress shall have Power To lay and collect Taxes, Duties, Imposts and Excises,”
    [this part is up to the discretion of Congress; Congress may or mayn’t do it, it has the choice to use common sense and its discretion]

    “to pay the Debts and provide for the common Defence and general Welfare of the United States; …”
    [this part is not up to the discretion of Congress; logically, Congress must do it.]

    * * *

    These following three specificities, for example, in clauses 8, 12 and 17 are not up to the discretion of Congress – there is only one way to interpretation these terms, i.e., there is only one way to interpret the meaning “the exclusive Right” in patent clause 8, and meanings of “two Years” in clause 12 and of “ten Miles square” in clause 17.

    I believe the Framers credited anyone who would read the Constitution with enough common sense to understand their intentions, i.e., e.g., when “shall” is an imperative, and when “shall” is optional to be decided, for example, in the context of what is consistent with the Preamble:

    We the People of the United States, in Order to form a more perfect Union, establish Justice, insure domestic Tranquility, provide for the common defence, promote the general Welfare, and secure the Blessings of Liberty to ourselves and our Posterity, do ordain and establish this Constitution for the United States of America.

  90. I think he’s saying that “shall” can have multiple interpretations but “exclusive” cannot.

    Did eBay not hold that the patentee had an exclusive right and that the exclusive right was infringed?

    Maybe I misread the decision, but I’m pretty sure that was the holding.

    If “shall” is treated as a directive,

    It’s not “shall (enact laws for a purpose)”, it’s “shall have the power to (enact laws for that purpose)”. Having the power to legislate on patents is of course not optional. How they use the power is up to them.

    This is a permissive clause, not a mandatory clause. It’s logically impossible for a law to contradict a permissive clause, doubly so for a judicial decision.

  91. A “bathroom wall” type feature on this blog might be useful, i.e., a perpetually open thread where the patent teabaggers could rave on about fundamental patent rights ad nauseum. Off-topic comments could be courteously moved there on an as-needed basis.

    That might keep every other thread from devolving into a re-beating of JAOI’s dead horse.

  92. Ok, but if “Congress shall have the power to promote progress…” means “Congress must promote the progress” then doesn’t “Congress shall have the power to declare war” mean “Congress must declare war”? It doesn’t make sense in that instance.

  93. Night Writer Patent Attorney,

    I do not think that “discoveries” is expressly limiting – but I could be off.

    “Promote” has been covered nicely by other writers – I think that Step Back especially has done a nice job, although I do not recall where at the moment – but there is nothing I see limiting in that phrase either, especially also given the current interpretation of descriptive phrases – 2nd amendment “a well regulated militia” coming to mind.

    The ability to do “whatever they want” does seem to be particularly limited, especially if the directive of “shall” is indeed directed to be in the process of securing. Securing, then, does not become optional. You cannot “not” secure wholesale (e.g., choose not to have a patent system) by playing around with the meaning of promote or discoveries. If “shall” is treated as a directive, the construction of the clause has a high impact to the discussion at hand.

    With “writer” in your name, I can imagine that you especially may notice the power of a comma in the explicit directions to Congress.

    Again, just food for thought…

  94. “And Rights is indeed capitalized.”

    As is Debts, Money, Part, Places, and Erection. I’m not sure the founders’ peculiar use of capitalization is particularly helpful.

  95. “In context, I believe “shall” must be interpreted both ways!
    For example, please consider Article I, Section. 8:
    Clause 1: The Congress shall have Power To lay and collect Taxes, Duties, Imposts and Excises, to pay the Debts and provide for the common Defence and general Welfare of the United States; but all Duties, Imposts and Excises shall be uniform throughout the United States;
    Clause 2: To borrow Money on the credit of the United States;”

    I’m sorry, JAOI, I’m having trouble following you. Are you suggesting that Congress MUST borrow Money on the credit of the United States? That interpretation would certainly vindicate our use of deficit spending to fund wars and bail out banks, wouldn’t it?

  96. “Yes, but what is “discoveries” and what is “to promote.”

    Well, according to Mike Masnick of techdirt.com
    “to promote the progress” means manufactoring a boatload of some plastic tech crap like IPOd Touch and selling a piece to every little punk in this country to play some crappy comp games for retards

    I’m sure Mooney and other anti-patent folks will agree with this definition
    of progress

  97. Dear Night Writer Patent Attorney,

    Re:
    “Yes, but what is “discoveries” and what is “to promote.” Those three little words are enough for them to do whatever they want.”

    Yes, about some things I agree, but there is no ambiguity today, and there never was, about the meaning of the word “exclusive,” none whatsoever.

  98. Yes, but what is “discoveries” and what is “to promote.” Those three little words are enough for them to do whatever they want.

  99. Please excuse my typos. I meant to say:

    … but there is only one way to interpret the meaning “the exclusive Right” in patent clause 8, and meanings of “two Years” in clause 12 and of “ten Miles square” in clause 17.

    These terms are literal and not subject to more than one interpretation.

  100. … but there is only one way to interpret the meaning “the exclusive Right” in patent clause 8, and meanings of “two Years” in clause 12, and the meaning of ten Miles square” in clause 17.

    These terms are literal and not subject to more than one interpretation.

  101. Dear breadcrumbs,

    Fascinating observation!

    In context, I believe “shall” must be interpreted both ways!
    For example, please consider Article I, Section. 8:
    Clause 1: The Congress shall have Power To lay and collect Taxes, Duties, Imposts and Excises, to pay the Debts and provide for the common Defence and general Welfare of the United States; but all Duties, Imposts and Excises shall be uniform throughout the United States;
    Clause 2: To borrow Money on the credit of the United States;

  102. Don’t worry, JAOI

    Supremes are very clever with weasel words to deprive little folks of their legally acquired property…
    …be it patents (in EBay) or real estate (in Kelo)

    I had little doubt about this SCOTUS, but now they have exceeded even my wildest expectations by proclaming corporations to be just like real people (for the freedom of speech no less…)

    This is beginning of the end of this great country

    Soon Mshit will be able to run for prez
    (after all it was born in USA and it is 35 yo :-)

  103. Dear IANAE,

    Re:
    “Do you really think the Framers would condone any compulsory licensing interpretation of their patent clause?
    Of course they would. Their clause was deliberately worded to let Congress do whatever it wanted about patents (including nothing at all), and certainly they’d have viewed compulsory licenses as far less extreme than having no patent law at all.”

    This is how the Constitution is in fact deliberately worded:
    Article I, Section. 8.
    Clause 8: — The Congress shall have Power –
    To promote the Progress of Science and useful Arts,
    by securing for limited Times to Authors and Inventors
    the exclusive Right to their respective Writings and Discoveries;

    This is how you are reading it, i.e.,
    modified according to Mr. IANAE preferred thinking:
    Article I, Section. 8.
    Clause 8: — The Congress shall have Power –
    To promote the Progress of Science and useful Arts,
    by securing for limited Times to Authors and Inventors
    the –limited– Right to their respective Writings and Discoveries;

    Re:
    “Besides which, aren’t there a couple of stray compulsory licensing clauses in US law?”

    No. Moreover, please check out Article. VI …
    Clause 2: This Constitution, and the Laws of the United States which shall be made in Pursuance thereof; and all Treaties made, or which shall be made, under the Authority of the United States, shall be the supreme Law of the Land; and the Judges in every State shall be bound thereby, any Thing in the Constitution or Laws of any State to the Contrary notwithstanding.

    Re:
    “Anyway, I still don’t see the connection to eBay.”

    That’s only because you didn’t read the links above which I cited.

    Please, let’s pick this up again after you’ve had time to read and think about those links.

  104. I’d thought I would throw a thought into the mix.

    Does the Constitutional mandate really include the power to do nothing at all? I would suppose it depends on how “power to” is read.

    I think it telling in the placement of the comma that separates the verb phrase “secure” from the phrase beginning with “power to”.

    Could the reading be that the “shall” is indeed a directive and is geared to the command to secure Rights?

    Of course it is necessary to grant Congress power, but “shall” is after all a directive verb, with the seeming connotation not to an option, but to a command. Doesn’t that strain the logic of the composition to maintain the directive nature of “shall” in an optional operative?

    And Rights is indeed capitalized.

    Just food for thought…

  105. Do you really think the Framers would condone any compulsory licensing interpretation of their patent clause?

    Of course they would. Their clause was deliberately worded to let Congress do whatever it wanted about patents (including nothing at all), and certainly they’d have viewed compulsory licenses as far less extreme than having no patent law at all.

    Besides which, aren’t there a couple of stray compulsory licensing clauses in US law?

    Anyway, I still don’t see the connection to eBay.

  106. “patent teabagger off”

    You are SO clever Mooney.

    Clap

    But all this clever blogging is not going to make your thing any bigger.

  107. Dear IANAE,

    According to the patent clause, Congress may or mayn’t enact a patent system.
    If Congress does enact, all valid patents must come with the Right to exclude, according to the patent clause, at the sole discretion of the patent owner, else wise it would be some level of “compulsory licensing” for those patents that do not come with the Right to exclude.

    Please answer this question directly:

    Do you really think the Framers would condone any compulsory licensing interpretation of their patent clause?

    * * * * * * *

    Anybody think this law could be utilized to reverse the eBay decision?

    http://www.law.cornell.edu/uscode/42/usc_sec_42_00001983—-000-.html

  108. Patents are negative rights to begin with

    Of course they are. That wasn’t the question. The question was “what’s wrong with selling them?”

    I’d like to move in, the Supremes will surely agree that since there is no irreparablre harm to you I can stay if I only pay some small change to you after the fact…

    If you can’t see how those facts are different from eBay’s facts, then… well, that’s more or less what I would have expected.

  109. “Do you think the framers intended that inventors should be unable to sell their patent rights?”

    Don’t play us for fools, plz

    Patents are negative rights to begin with

    When you sell non-exlusive patent license you do not sell your patent rights, you only promise not to exersize your right to exclude a particular entity – a licensee

    Just like when you own rental property and sign a lease with a tenant you promise not to evict that particular person for a prescribed period of time as long as he pays prescribed monthly rent (but you still can kick out everybody else cause this is your property after all)

    “eBay isn’t even a patent case at all. It’s a remedies case ”

    Would you mind giving us address of your vacant summer vacation home, IANAE, assuming that you have one ?

    I’d like to move in, the Supremes will surely agree that since there is no irreparablre harm to you I can stay if I only pay some small change to you after the fact…

    back to law school, IANAE

  110. By missing and dropping my emphasis on “all” you missed my point altogether.

    I did quote the word “all”. Sorry I didn’t emphasize it, but that wasn’t where your mistake was.

    Pretty sure eBay is generally the law now, so it applies to all patents. In fact, I’ll go you one better. eBay isn’t even a patent case at all. It’s a remedies case that happens to be about a patent.

  111. Dear IANAE,

    By missing and dropping my emphasis on “all” you missed my point altogether.

    In essence, you misquoted me — please get with it.

  112. IANAE Once again, eBay is just as good (or bad) a decision no matter how you interpret that part of the constitution. Unless you only see what you want to see, in which case every case ever decided is a vile affront to your precious rights as an American.

    Madison v. Marbury must be overturned!!!!!!!!!

    /patent teabagger off

  113. Any interpretation of the Constitution’s patent clause other than “the exclusive Right” for all inventors

    Nobody is making such an interpretation.

    Once again, eBay is just as good (or bad) a decision no matter how you interpret that part of the constitution. Unless you only see what you want to see, in which case every case ever decided is a vile affront to your precious rights as an American.

  114. Dear IANAE,

    Re:
    “I’m starting to get the feeling that the self-styled “inventors” on this board think the constitution says whatever they want to hear.”

    You attest to the this observation once again, that many people perceive flaws in others that they themselves bear. It is hard to persuade them to see the error in their thinking.

    Please focus on this:
    Any interpretation of the Constitution’s patent clause other than “the exclusive Right” for all inventors is tantamount to a compulsory licensing interpretation for those to which “the exclusive Right” does not apply.

    Do you really think the Framers would condone such?, i.e., a compulsory licensing interpretation.

  115. Well, folks, with anti-patent, anti-inventor, and, ultimately, anti-progress attitude like that of IANAE and other folks here,
    it’s no big wonder why patent filing are falling and patent maintenance fees are not being paid…

    Point proven, thanks

  116. “I’m starting to get the feeling”

    You’re just now figuring that out? Wake up and smell the tea bag, kid.

  117. Sounds very clear to me

    It’s very clear to me too. It says that Congress can create a framework for giving people time-limited exclusive rights. That’s exactly what Congress did. Check 35 USC, it’s in there somewhere.

    give exclusive rights to the actual creators, not to their corporate employers

    The actual inventors sell their rights to their corporate employers. Do you think the framers intended that inventors should be unable to sell their patent rights?

  118. isn’t your statement No. 3 exactly JAOI’s point? – that eBAY SHOULD turn on a a particular interpretation of the Constitution?

    That’s a ridiculous point, if it’s the one he’s making.

    eBay is an equally good (or bad) decision no matter how you interpret the constitution. eBay doesn’t decide a constitutional issue, and the constitution doesn’t decide the eBay issue. Isn’t that better than saying eBay ties us to a particular interpretation of a really, really important document? Why limit the constitution when you don’t have to?

    I’m starting to get the feeling that the self-styled “inventors” on this board think the constitution says whatever they want to hear.

  119. “To promote the progress of science and useful arts, by securing for limited times to authors and inventors the exclusive right to their respective writings and discoveries;”

    Sounds very clear to me or, in fact, everybody else, except IANAE and his ilk

    The Framers very clearly intended to give exclusive rights to the actual creators, not to their corporate employers (or refuse exclusive rights to independent inventors who are not employed by big corporations and therefore do not mass-produce their inventions)

    But the Supremes consistently give big corporations more rights than any real living person can have
    The consequences will be coming…

  120. IANAE,

    I have not followed JAOI’s stand on the eBay decision that closely, but isn’t your statement No. 3 exactly JAOI’s point? – that eBAY SHOULD turn on a a particular interpretation of the Constitution? The fact that it seems divorced from the chain of command from the Constitution should void it? Isn’t it his point that (l)aw should derive from (L)aw, and that the (l)aw as outlined in eBay violates the (L)aw?

    Please excuse the intrusion – correct me if I am mistaken.

  121. Any interpretation of the Constitution’s patent clause other than “the exclusive Right” for all inventors is tantamount to a compulsory licensing interpretation for those to which “the exclusive Right” does not aapply.

    1. The constitution is permissive, not mandatory.

    2. The constitution doesn’t dictate the content of any patent law enacted by Congress.

    3. eBay does not turn on any particular interpretation of the constitution.

  122. Hear, hear, JAOI…

    “Therefore, this United States Patent
    Grants to the person(s) having title to this patent THE RIGHT TO EXCLUDE OTHERS FROM MAKING, USING, OFFERING FOR SALE, or selling the invention throughout the United States of America or importing the invention into the United States of America for the term set forth below, subject to the payment of maintenance fees as provided by law.”

    I am holding this piece of trash in my hand, signed by some dude named dudas

    Now the dude is gone and my patent is worthless

  123. So the “direct the patent examiners to misuse their positions to deny patents and then blame the patent practitioners” approach of the last PTO administration resulted in less patents and less patent maintenance fees? Hum, now how could that have happened. Stoooooooooooooooooooopid.

  124. Dear IANAE,

    Have you read this link?:

    link to patentlyo.com

    Any interpretation of the Constitution’s patent clause other than “the exclusive Right” for all inventors is tantamount to a compulsory licensing interpretation for those to which “the exclusive Right” does not aapply.

    You’d have to be an asswhole to believe that the Framers would condone such, i.e., a compulsory licensing interpretation.

  125. The USSC eBay decision, which is in direct conflict with the Constitution’s patent clause,

    What’s the conflict?

    As was discussed to death in another thread, the constitution’s patent clause is merely permissive, so it’s not really possible for anything to conflict with it.

    Besides which, eBay doesn’t really conflict with anything other than certain people’s revenue prospects. As you already pointed out.

  126. Dear IANAE,

    This link may help clarify my point:

    link to patentlyo.com

    Re:
    “I’m not really seeing the constitutional issue here.”

    The USSC eBay decision, which is in direct conflict with the Constitution’s patent clause, did more to de-value independent inventors’ patents than any other decision.

    Because of eBay, inventors who chose not to practice their patents, or who cannot for reasons you discuss, are little threat to Patent Pirate infringers. More on this link and the links in the comment:

    link to patentlyo.com

  127. “A major reason for the current USPTO budget shortfall is the dropping rate of renewal.”

    Look at all the underlying assumptions in that statement.

    The whole budgeting process is ridiculous.

    It’s too bad that it’s too late to skip a year and fund the present year’s activities with the ACTUAL revenues from the previous year and eliminate borrowing, which would always result in a balanced budget.

    A major reason? What about the expenses side of the ledger? How much did personnel-related costs rise, and how much of a contribution did that make, relative to the “dropping rate of renewal”?

    Whatever. Classic governmental exclusive concentration on revenues, and a throwing-up of the hands when it comes to “uncontrollable” expenses.

  128. “…Cisco’s patent counsel, tricky Ricky Frenkel, on the infamous and anonymous (now defunct) Patent Troll Tracker blog, duped Cisco’s own General Counsel Mark Chandler.* If such an extraordinary high caliber attorney as Mr. Chandler can be hoodwinked…”

    You are joking, aren’t you ?

    Mr Chandler was most certainly the mastermind behind the “troll” blog and appointed Rick Frenkel to carry it on a daily basis
    (As a chief corporate legal counsel Mark Chandler was direct boss of Rick Frenkel, BTW)

    What happened to poor Rick (OK, maybe not so poor by common folk’s standards) ?
    Anybody know ?

  129. One most serious result of Cisco et als’. extensive lobbying and propaganda efforts is that the USSC has been steadily lowering the value of patents, especially for independent inventors, one decision at a time. Even our top nine Justices seem to have little knowledge of and respect for our Constitution!

    I’m not really seeing the constitutional issue here. I agree that it’s harder to monetize patents these days, and I guess I feel fatalist’s pain that he can’t obstruct an entire industry with a single patent anymore, but surely this is the sort of thing that could be fixed with ordinary legislation. If it’s a big enough deal to be worth fixing.

    It’s probably a direct result of our economy shifting toward more complex products like consumer electronics, and the mechanical arts becoming increasingly crowded. The garage inventor’s dream of coming up with an earth-shattering idea that results in a pioneering patent and billions of dollars simply isn’t realistic, unless he actually did invent a whole new product that he can get millions of people to buy. There are well over 7 million issued US patents out there, not to mention all the ideas that weren’t patentable for one reason or another, and most of them simply are not money makers. They can’t all be winners, kid.

  130. He-he-he

    Why would any independent inventor or small company file or pay maintenance fees for patents after what they did to the US Patent System over the last 5 years ?

    Let’s face it, folks: patents are almost worthless today (unless you are IBM or Mshit and have a huge portfolio of junk overlapping patents and a small army of in-house lawyers to derive “value” from your patent portfolio)

    Next thing is you guys, patent-prosecuting attorneys, go hungry…

    It’s already tough out there, right ?

  131. Dear Ronald J. Riley,

    Man, you sure got that right! But I’m not surprised – you always do. Your comment (above) on this link is precious:

    link to patentlyo.com

    May I add a bit and emphasis some of your insights:
    George Orwell’s 1984 was close in suggesting that Big Brother Government would essentially enslave We the People and take our freedom away.

    What is actually happening as we speak, is that globalized transnational internet, banking, insurance and other mega-global business powers and those in league with them in their cartels, such as the “Coalition for Patent Fairness,” are behind the curtains pulling governments’ strings.

    The bottom line for those in the IP industry is that the Patent Piracy Coalition members have managed to create a perfect storm over recent years which they benefit from while independent inventors get screwed.

    For example, using deceitful propaganda, Cisco’s patent counsel, tricky Ricky Frenkel, on the infamous and anonymous (now defunct) Patent Troll Tracker blog, duped Cisco’s own General Counsel Mark Chandler.* If such an extraordinary high caliber attorney as Mr. Chandler can be hoodwinked, then so can others be hoodwinked, including jurors and lay people, reporters, authors and professors, and (especially) judges, legislators and administrators.

    One most serious result of Cisco et als’. extensive lobbying and propaganda efforts is that the USSC has been steadily lowering the value of patents, especially for independent inventors, one decision at a time. Even our top nine Justices seem to have little knowledge of and respect for our Constitution!

    For more, please check out this link:

    *
    link to patentlyo.com

  132. Here’s a situation where no business would operate under this kind of payment scheme.

    This business model is the most modern thing about the PTO. This is the new internet business model, where you initially give people free or cheap services, and then charge them for upgrades or add-ons later. The PTO was there decades ahead of the rest of us, and now everybody’s doing it.

    Once they start selling ad space on the cover of published applications, they’ll be unstoppable.

    Patent holders now have the tools to make a realistic assessment of the economic viability of their invention.

    That assessment is pretty straightforward 11.5 years after issue, which can sometimes be over 15 years after the date of invention. The assessment goes as follows: Am I selling any of these? Y/N

    That’s a big part of the reason maintenance fees exist. By the time they come due, the people with really valuable patents should be making money from them, and they should easily afford enough maintenance fees to let the next generation of inventors get in the front door at the PTO. In theory.

    Many have decided that the maintenance fees are simply not a good investment.

    They probably weren’t even thinking about it before. In tough economic times, many companies that routinely paid maintenance fees just because they’re there will start thinking about the business case for each application. If you get 100 patents a year, that’s almost a million dollars a year in maintenance fees.

    Another problem is that as filing rates increase and the PTO has to ramp up examining capacity, it’s still being funded by maintenance fees from years when fewer patents were filed and proceeded to issue.

    Still another problem, though related, is that patents take longer to issue now. The examination backlog not only means it takes longer for costly examination to generate its economic return via maintenance fees, but the patents have less value to their owners by the time the fees come due.

  133. Thanks, Dennis. The report says “For example, in FY 2009, 80.3 percent of the patents issued three years ago were renewed, 63.5 percent of the patents issued seven years ago were renewed, and 45.4 percent of the patents issued 11 years ago were renewed.”

    link to uspto.gov

  134. “renewal rates will increase as the economy improves.”

    Curious, you can’t renew a patent at 3rd stage that you didn’t renew at 2nd stage. The precipitous drop in 2nd stage maintenance fees will ripple 4 years from now, at 3rd stage. With every failure to renew, the pool of patents gets smaller. Only the issuance of new patents can increase the pool.

    But I have been doing exactly what “curious” suggests: I’ve been doing analyses on competitors in my field, and it’s amazing what’s been dropped over the past year. Vast tracts of space are opening up, but not just to us, to foreign competitors, too. So in-house people should watch their competitors carefully – you might want to make licensing overtures sooner, rather than later, or that business space might open up to everyone.

  135. Thanks for the queries — These numbers are taken straight from the USPTO annual reports. The denominator for each calculation is the total number of patents that issued XXX years ago.

  136. Are these numbers for patents that were available for payment at each of the renewal windows or just based-on all patents issued and the projected schedule of for the fees being due? It would be interesting to see what percentages of patents were dead through other means prior to reaching each of their respective renewals and why. That would probably show the impact of litigations, re-exams, etc on renewals vs those who just decided that their patents were no longer required. Also, it would be beneficial to see if the PTO income associated with invalidating a patent outweights that from the projected renewals. A much broader piece of research might be to look at the foreign trends for the same inventions to see if they are being maintained internationally, or even if they are completing prosectution in other jurisdictions…

  137. Your charts demand better quantitative and economic rigor. You have not explained the underlying math or worse, you used USPTO math designed for general consumption rather than economic analysis. The all important third stage maintenance fees, while trending slightly down, are still above their 1998 level. The number of granted patents has gone up. What do these charts mean relative to the increase in volume of patents? Further, the chart doesn’t take into consideration the raw number of patents for which USPTO is collecting fees.

    Further, does this mean that the patents where fees are being paid are a better representation of “good innovation” and have more economic value. Is it a byproduct of companies with better patent administration systems paying on time vs. individual inventors and smaller firms not paying?

    Patent holders now have the tools to make a realistic assessment of the economic viability of their invention. Many have decided that the maintenance fees are simply not a good investment.

    We spend a considerable amount of time helping holders of portfolios figure out which patents represent monetization opportunities and which are not likely to produce revenue in their remaining term. I think that some of the drop in maintenance fees can be explained by owners doing a better job of determining which of their inventions have been overtaken by something newer, which have value, and which are just not worth the fees. It is also beneficial to look at maintenance fee behavior in light of the US Classes. Are there specific technology areas where patent holders have stopped paying fees? I believe you will see a lot of “overtaken by technology patents” where newer inventions offer better economic potential.

  138. Maintenance fees increase with time because, presumably, if the patent is valuable, there’s a bigger cost to society in granting the patentee exclusivity for the full term and the patentee should have to pay more. Who should get the revenue generated by those fees – the PTO or the government in general – can be open for discussion; the point is it’s wrong to consider maintenance fees simply as a means to raise revenue for the PTO. Frontloading the costs of application process doesn’t make sense – in many instances, at the time of filing it’s not known and can’t be known if the claimed invention is going to be valuable or not, which will result in a less than optimal amount of patenting activity. Back-loading the cost, through higher maintenance fees later on (especially if those fees go back into the PTO), places a greater burden for maintaining the system on those parties who are directly benefiting from it the most.

  139. competitors should check to see which patents have expired for failure to pay maintenance fees as they can now freely practice them

    might actually help the economy as I assume that the patentee were not practicing them

  140. The most direct way to solve this PTO budget “crisis” is to return a historically normal standard of patentability to the examining process. Historical patent issue rates are 60-70%, while in recent years they have been in the 40-50% range. This means approx. 60,000 or so patents are NOT issuing each year, with the payment of an average issue/publication fee well in excess of $1,000. This is some $60M to $100M in foregone fees right there. It also makes for a much smaller number of issued patents in the maintenance fee pool in future years, leading to additional lost fee revenue. Also, the low issue rate and difficult examination process is discouraging new filings.

    Sharply increasing filing fees and lowering maintenance fees, as has been suggested on this thread, probably would not deter a great many large entity filings, because such entities already pay such high attorney fees that the fee increases would be relatively small. However, it would be a sock in the gut to small entities such as start-ups and individual inventors. $3,000 (or even $1,500) just for the filing fees would price out most individual inventors, who use patent agents and small firm practitioners to sharply cut their practitioner fees to not much over that sum, typically. I don’t think we need to skew things even more in favor of big business than they already are.

  141. To Dennis’s post at 04:27 PM,

    since this is based on numbers in the fiscal year, the alarming dip in second stage payments must be correlated to the actions in first stage payments some four years earlier. A year over year analysis to be used in predicting future payments may be better based on a pseudo-knight’s move (up one stage, over four years).

    Dennis, it would be interesting to add additional data so that you have full cycles (first through third stage payments) for ten years and chart year over year survivor percentage through the cycle. This would mean that the last year available for full cycle data would be 1998 – Do you have data from 1988- 1997?

  142. I think people are missing the bigger picture.

    1) The courts have been steadily lowering the value of patents which makes it is less desirable maintain them.

    2) Years of patent deform efforts are causing more and more inventors to say screw it because their inventions are steadily dropping value. Which is exactly what patent pirating transnational companies want, exclusive use of the patent system.

    3) The financial dis-service industry has ripped off 30-50% of most people’s capital with their outrageous conduct. On top of that they duped or bribed our representatives into mortgaging every man, women and child to the hilt in order to hand them even more of our money. It also happens that banking and insurance interests are partners in the efforts of the Coalition for Patent Fairness & Piracy to destroy the patent system.

    Of course, a side effect of their disreputable conduct has been to strangle credit for small business and those inventive businesses can no longer afford to file for or maintain their patents. Kind of a win-win situation, rip off the treasury and then get free reign to rip off even more inventions than they had in the past.

    The bottom line is that Piracy Coalition members have managed to create a perfect storm which they benefit from while the rest of us get screwed.

    4) It is long past time that the patent office stops carrying water for large corporate interests. When is the last time that the office was run properly. Little has changed, different faces but still stooges for the biggest business. Obama has for whatever reasons surrounded himself with people from the least reputable companies of our times.

    5) Inventors come in all political strips but economics trumps ideology most of the time. Come the next election we will be telling all those poor slobs who have lost their savings, their houses, their jobs, and most importantly lost the American dream who they should be blaming. I am sure that there will be more than enough rage to go around.

    Ronald J. Riley,

    I am speaking only on my own behalf.
    Affiliations:
    President – http://www.PIAUSA.org – RJR at PIAUSA.org
    Executive Director – http://www.InventorEd.org – RJR at InvEd.org
    Senior Fellow – http://www.PatentPolicy.org
    President – Alliance for American Innovation
    Caretaker of Intellectual Property Creators on behalf of deceased founder Paul Heckel
    Washington, DC
    Direct (810) 597-0194 / (202) 318-1595 – 9 am to 8 pm EST.

  143. @ Paul Harvey-
    That’s a good point. Also, considering that the 3.5 year tally had dropped two consecutive years prior, the PTO can’t claim total surprise that maintenance fees dropped.

    *** WARNING: NERDINESS AHEAD ***

    I’ve been messing around with the numbers and assuming that the drops are 2/6/2% for the 1st/2nd/3rd fees respectively, and that the patents in question correspond to those issued in 2005/2001/1997 respectively, I get maintenance fees are down by about 4% of what they would have projected. Using Dennis’ handy revenue pie chart from a couple of days ago, that’s about a 1.3% drop in total revenue. Of course, if I’m misinterpreting Dennis’ graph above, those numbers are wrong.

    With respect to new filings, I figure that the PTO would have budgeted for a similar change in new apps as 2007-2008, which saw a 6% increase. However, new filings decreased 1.8%. That is, I figure the PTO probably expected a 6% increase, but got a 1.8% drop, which would give them a 7.8% shortfall in their budget for new filing revenue. That would equate to a 2.4% drop in total revenue.

    With respect to issue fees, I assumed that average pendency was 4 years, and that the PTO would budget for an increase proportional to the increase in new cases 4 years ago, which was 8%. Issue fee revenue increased by 6.8%. That 1.2% shortfall equates to about a 0.2% drop in total revenue.

    So anyhoo, it seems to me that gross revenue should be slightly down, and there should be about a 4% budget shortfall, due mostly to not seeing a projected increase in new filings and a drop in maintenance fee revenue. For all of this I was considering only utility patents and ignoring the small entity factor.

  144. Thanks, Dennis. I’m still a little confused though. If the second-stage maintenance fee was paid for 60% of the patents that reached the 7.5-year stage during FY2009, then compared to the number of patents that issued 7.5 years earlier, the number of those patents still in effect at that point would have already been reduced by 20% at the first maintenance fee. That is, if you have 80% of patents remaining after the first fee, and then of those 60% pay the 2nd fee, then 80%*60%=50% remain. If the 80/60/40 numbers represent the percentage of patents that make it to each stage that renew, then one would predict that the percentages of the patents issued any given year that will make it to each fee would be about 80/50/20% respectively. If the numbers represent the number of fees paid compared to the total cases issued in the corresponding year, then you would expect 80/60/40% to make it to each fee.

  145. Dear KRAKON & Professor Crouch,

    Professor Crouch wrote:
    “It is not clear to me that charging more for filing fees and less for maintenance fees will increase revenue.”

    Please consider this (i) cost analysis and (ii) analogy:

    (i) The major cost in filing a patent application is fees for the patent attorney.
    The patent filing fee is typically but a fraction thereof. Increasing the patent filing fee is therefore a secondary cost consideration – if patent filing fees were increased, the overall cost increase would be de minimis.

    (ii) Analogy: Compare the patent filing fee and attorney costs to the ante in a Poker game:
    in order to participate, i.e., you must put up the ante to take your chances.
    Down the 3 ½ year road, you can better evaluate whether or not your patenting efforts are still worth participation via paying the maintenance fees – (like “calling” in a poker game).
    Further, if the required maintenance fees have been reduced, it is logical to assume that more maintenance fees will be paid even if the potential of the patent has diminished somewhat.

  146. KRAKON Suggested that “no business would operate under this kind of payment scheme.”

    DDC Responds: The PTO has the luxury of operating in a somewhat monopolistic fashion. That means that it can set prices according to what its customers value (and will pay for) rather than looking primarily to the marginal costs. It is not clear to me that charging more for filing fees and less for maintenance fees will increase revenue.

  147. KRAKON Asked: what do these numbers represent exactly?

    DDC Responds: I find this easer to explain using an example. Lets look at FY2009. The first-stage maintenance fee was paid for 80% of the patents that reached the 3.5-year mark during FY2009. The second-stage maintenance fee was paid for a little over 60% of the patents that reached the 7.5-year stage during FY2009. In other words, the PTO counted how many second-stage maintenance fees were paid in FY2009 and compared that to the number of patents that it issued 7.5 years prior.

  148. I don’t buy the argument.

    There was no talk of a crisis in any other portion of the time frame shown in the graph, yet the FY2009 rates although dropped from FY2008 are still higher than most of the time frame shown with the possible minor exception of the first installment, which is the cheapest. In fact the most substantial increase is in the pivotal 2nd payment portion- indicaties that the Office should be having a surplus of funds AND be poised for even more third period payments.

    This doesn’t pass the smell test.

    Oh wait – since the office instituted its anti-patent agenda, the fruits of its labor are becoming evident – Now THAT is the rest of the story.

  149. Dennis, what do these numbers represent exactly? Is the chart indicating that, at the 2009 sample point for example, 80% of patents that were in effect had had the 1st maintenance fee paid, 62% the 2nd fee (implying the 1st had also been paid and they are counted in the 1st curve), and 43% had had all three fees paid? Or is it indicating that, of the patents having the 1st fee due, 80% were renewed, whereas only 62% of those having the 2nd fee due were renewed? The reason I ask is because I’m wondering how many of the patents it issues the PTO collects all three fees for. If it’s the first case, then it would be 43%, but if it’s the latter case then it’s about (.8)(.62)(.43)=21%.

  150. So ~$1k to file, ~$1800 to issue, and then $7500 is generated from maintenance fees (only if applicants decide to pay them). The whole USPTO fee scheme is ridiculous. All of the work is done up front, for which the PTO gets a small fraction of the total payment from the applicant, and then the PTO “makes it up on the back end” only if the applicants choose to pay, and if they don’t, the PTO is in a financial crisis. Somebody was criticizing the PTO the other day for not being run like a business (NWPA I believe). Here’s a situation where no business would operate under this kind of payment scheme. “Sure, we’re going to do that work for you, don’t worry about paying us now. Just wait several years, and if the project worked out for you, you just pay us then.” A more sensible fee arrangement would be $3k up front, $3k to issue, maintenance fees of $1k each. That would be better for the PTO and cheaper than the current system for the applicant over the full patent term.

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