Does the Shift in IP Ownership Predict a Political Shift in the IP Debate

By Dennis Crouch

One reason for the US strong pro-intellectual-property position is based on US national interests. US IP rights have historically been held primarily by US entities. In that scenario, US IP enforcement was primarily a transfer of wealth between US entities. That setup allows for strong political support for IP rights so long as the rights offer additional benefits (such as incentive to innovate and market products).

A major change in this political environment is the new reality that most new US IP rights are of foreign origin and held by foreign entities. In that context the US national interest in IP enforcement is at least marginally reduced because a larger portion of IP enforcement actions will involve a transfer of wealth from US entities to foreign entities.

The chart below shows the percent of US utility patents issued each year that are of foreign origin. The general trend is that a smaller and smaller percentage of US patent rights are owned by US entities.

For more consideration of this issue see the following new report: /media/docs/2013/03/foreignownrep-paper.pdf

46 thoughts on “Does the Shift in IP Ownership Predict a Political Shift in the IP Debate

  1. Completely agree, anon. Multinational companies in patent law, are like “runaway flag ships” in admiralty and martime law in owing allegiance to no country.

  2. You know, the biggest proof that the patent system works? The Chinese want a patent system to compete with Korea.

    That is the real world.

  3. Excellent post Anon. And, this fear is what drives innovation. Most big corps want to get rid of patents for exactly the reasons you say.

  4. I think the effort to “harmonize” US patent laws has always been an effort supported by international filers and international companies. As the trend continue towards foreign filers, their interest will even more prevail against the interests of the American startup inventor who has long provided America with breakthrough inventions and jobs.

    We are moving to a corporatized world described to us often by polictical and science fiction writers. This is not a world where the rights of individuals are held in high esteem, let alone the rights of individual patent holders. (See the Shield Act as a manifestation of things to come.) This is a Brave New World indeed: a world of the corporation by the corporation and for the corporation.

    Pass the aspirin. I have a headache.

  5. much is off shore subsidiaries of US companies

    A better (and similar) question: do you count a Big Multi-national Corp as a “US company?”

    (hint: you shouldn’t – there is no allegiance to support the notion)

  6. How much of the decline is legitimately foreign companies, and how much is off shore subsidiaries of US companies (which seems to be a trend)

  7. Yup. They must be “copying” because it’s sooooo hard to invent software.<:i>”

    Nice frolic into the weeds of “but for.”

    It must take a flash of genius for you to continue to post your banalities.

  8. the small fry has done the work for them they want to swoop down and steal it

    Yup. They must be “copying” because it’s sooooo hard to invent software.

    I mean, what are the odds that someone could have thought of sending a message from my robot car to my bank to put a hold on my grandma’s credit card over Spring Break? Sure, all the technology was there. But not everybody has a grandma who likes to get freaky.

  9. Comment gone missing, but in essence, the notion of vieing to be “most patent friendly” is more than a bit naive and quite misses the impact of Big Multi-national Corp.

    Compound that with another baseless assumption of “if they are all more or less effective as each other,” which should be a given as affirmatively NOT so (the fact that real differences in national patent laws really do make a real difference is ignored), and one is left to wonder what suffices as a baseline definition for raionality.

  10. Nothing rational, just gut feeling.

    Democratic governments in technologically advanced countries vie with each other to be perceived as the most “patent friendly”. If they are all more or less as effective as each other, at being patent-friendly, then my gut would expect the aggregate outcome to be that they all have about as many patents in domestic ownership as owned by aliens.

    How 2rational” is that, I wonder.

  11. ought to be about the same

    Why?

    I mean, other than “symmetry,” what rational basis would you have?

    (btw – I think your reasoning on an expected win rate is a good start)

  12. K LB, I’m cool. I like to think that, in the balance of non-agricultural, non-natural resources, non-energy sector trade between any two post-industrial jurisdictions, the IPR flow ought to be about the same in the opposed directions.

    Another number I like is 25%, the number of times a patent owner should win, when the patent system is functioning as it should. What do I mean by “as it should”? Litigation a last resort, happenOing only when both sides think they ought to win ie in 50:50 cases by which I mean 50:50 on “Infringement y/N” AND 50:50 on “Valid Y/N”. In these 50:50 cases, owner wins ONLY when the answer is Infringement Y AND Valid Y.

    But some people think that the patent owner’s win quota should be much higher than that. I think that’s wrong.

  13. Relax, Max. I think everything in your last comment is fine, but I still don’t see 50% foreign patent ownership being a “natural” number. The first sentence in your last comment describes a healthy balance of trade (flow in equals flow out), but I would expect patent activity to correlate more with the proportion of foreign economic interests in Europe to the total economy. There’s also the fact that a large proportion of foreign trade is food and energy, neither of which are patent hotspots, I believe. But I’m no economist either.

  14. Europe doesn’t do much, you suggest. Have you opened Dennis’ Link and read the Paper there? All that output, for 30 hours of work, is not bad at all, I should have thought. The question might be turned around, to ask: why so little output for folks in other countries who are working a 168 hour week?

  15. Any examples from the useful arts? In the past ten years? And in which case were those two patents asserted against Goliath and Goliath was totally toppled and a whole new industry sprang forth from his ruins?

  16. What? Man I get that you guys all think you and your clients are some sort of super heros as “small fry” inventors. Indeed, I have a stack of inventions I have put my hand to drafting, and I may yet give one of the better ones a go at making it a reality.

  17. One could reflect on the new EU Design Patent regime. Potent rights (25 year term, fast central injunctive relief from infringement in 27 countries) quickly, cheaply and easily obtained at bargain basement cost.

    Europe’s politicians naively supposed that it would be European industry that would, overwhelmingly, own these potent exclusive rights. After all, it has only ever been so, in design patent law, that nobody ever files foreign.

    Except that this is not how it worked out. Who was quickest off the mark, to patent their designs, EU-wide? Why of course, the Americans and the Asians. How so? They are more IPR-savvy than the dozy Europeans.

  18. 50% “sounds” nice, but has no touch with reality and what drives a large multi-national corp, which is what the law is evolving to serve (at the painful disenfranchisement of the start-up).

    It’s also more than a little pollyanna to think that innovation alone is key – and thus that anything truly approaching an “innovate or die” world is really being approached.

    Quite in fact, the vehemence attaching to this proposed legislation is precisely because it goes in the opposite direction and enables large powerful companies to “compete” on things other than innovation.

    Between the AIA and this, what you see is a degradation of the US patent system. The legislative process has been captured. The academia has been captured (note this plays perfectly to my long noted comment about the patent system under attack by both the Far Right and the Far Left).

    I don’t see where “maturity and self-confidence” fit into the Big Corp picture.

    Prosperity? Sure, but that merely translates to profit, is surely not tied to any individual national patent system (hence the push to “internationalize”), and is driven by the lowest (and lowly) cost factor models (still).

    You don’t need to be an economist.

  19. That presupposses that we’re not emulating Japan. We’ve put their inflation, aging populace, and money printing to shame. We’re doing Japan far better than any Japanese ever dreamed of.

  20. Some animals are more equal than others, huh?

    Where have I heard that before? But it’s a good thing, right?

  21. I was supposing that flow in should equal flow out, that free trade benefits everybody more than protectionism, that we live in an Innovate or Die world and that if we want the world to buy our goods we have to let theirs in to our economy. So I see 50% as a sign of maturity, self-confidence and prosperity.

    But I’m no economist. Hence my “is it not?” ending. Tell me where I’m going wrong, do.

  22. In a free and open trading market, 50:50 is the natural steady state, is it not?

    Why would 50:50 be the natural steady state, MD?

  23. Dennis writes “The general trend is that a smaller and smaller percentage of US patent rights are owned by US entities” but I am sceptical. At the EPO, from the start and still today, 30+ years later, the proportion of grants to Applicants from EPC Member States has always been around 50%. In a free and open trading market, 50:50 is the natural steady state, is it not?

    Of course, if you want a Patent Office where foreigners don’t bother to apply, just look at Japan. But does anybody want to emulate that economy, these days?

  24. “most new US IP rights are of foreign origin and held by foreign entities”

    Could that be because too many American kids want to study Art History, Gender studies and finance and not the know-how needed to make a real contribution to science and technology?

  25. Big Corp’s are now people too you know.

    And these ‘people’ have more ‘equity’ than others.

  26. “If only this would not ignore the fact that a ridiculous number of patents are invalide under 102.”

    In which case there should be a singular number of prior art references that shows all the steps/elements performed in the exact same way or arranged in the exact same manner of the invention.

    “Historically speaking, when do you reckon this last occured?”

    What difference does that make 6? But I “reckon” it will occur much more often as soon as you get off your duff and start allowing more new, useful, novel and non obvious business methods and software patents.

  27. “idea by some small fry can turn the market upside down and upset all of the size advantages of Big Corp. ….it is the singular patent that still present the thorn in the paw of the King of the Jungle.”

    :: Applause Applause!!!! ::

    And this is why Big Corp and their paid shills want to kill off business methods and software patents.

    Some singular small fry inventor comes up with one idea to do something different, to use technology in a new way, that when applied will change the world forever.

    Big Corp, never thought of it, and with the the speed and grace of a tap dancing elephant, and a dinosaur culture for innovation, could have never thought of it!

    And now that the small fry has done the work for them they want to swoop down and steal it, or kill it, ( whatever is most profitable) with impunity!

  28. So in response to more offshore multinationals operating in the US, we propose the SHIELD law which would make it impracticle to sue them, or even threaten them (as they could DJ you).

  29. The shift may forecast who the next Pope will be? A Cardinal of foreign (non-Italian) origin?

  30. “Just ask i4i.”

    i4i is a small fry? Last I heard they had like a hundred or more employees (pre-layoffs anyway).

  31. “If only this would not ignore the fact that the patented innovation – by definition – is unique.”

    If only this would not ignore the fact that a ridiculous number of patents are invalide under 102.

    “One single idea by some small fry can turn the market upside down and upset all of the size advantages of Big Corp”

    Historically speaking, when do you reckon this last occured?

  32. If only this would not ignore the fact that the patented innovation – by definition – is unique.

    Yes, Big (multi-national) Corp plays the patent game and is ‘above’ the national effects of patent law (or clearly desires to maximize that ability).

    But it is still the very disruptive nature of patents that are the bane of Big Corp. One single idea by some small fry can turn the market upside down and upset all of the size advantages of Big Corp. In this sense, while Big Corp can play the patent game with more volume (quality), it is the singular patent that still present the thorn in the paw of the King of the Jungle.

    Just ask i4i.

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