Guest Post: America Invents Act Cost the US Economy over $1 Trillion

165 thoughts on “Guest Post: America Invents Act Cost the US Economy over $1 Trillion”

1. 31

   I agree with Night Writer 100%

   The US Patent System is being burnt down.

   For small patent owners like myself with one or few valid patents on actual technology the moral is this: fool me once – shame on you, fool me twice – shame on me.
   We are not going to be fooled again into publicly disclosing important technological know-how in return for some piece of paper with zero value.

   What now ? In many fields innovation will practically stop – those are the fields where it’s easy to reverse engineer products.
   In other fields people will do their best to keep everything a secret.

   From now on I will never distribute even compiled binary code to anyone, only as part of device with embedded hardware-enabled code encryption microprocessor.
2. 30

   […] [27]《America Invents Act Cost the US Economy over $1 Trillion》，https://patentlyo.com/patent/2015/06/america-invents-trillion.html [28] […]
3. 29

   […] there’s any ‘reform’ here, it’s just the empowerment of large corporations. “America Invents Act Cost the US Economy over $1 Trillion,” says this alarmist headline from Patently-O. It’s a propaganda piece from “President of […]
4. 28

   From . . .

   In the two and a half years since the first IPR was filed, 77% of all patent claims reviewed have been invalidated[1].

   Mr. Baker somehow arrives at . . .

   If 77% of all valid patents are canceled through this new proceeding, then the risk adjustments on patent values should also decrease by roughly the same amount. While our empirical data is showing a 60-70% drop in values, the theoretical impact should be 77%.

   That’s a nasty twisting of the data IMO. 77% of all claims reviewed and 77% of all valid patents are two entirely different things. Mr Baker takes the figure for the percent of claims reviewed and contorts it into percent of patents busted and then draws his conclusions as to the “values of patents” based on the twisted 77% of all patents figure.

   Some comments, such as 2.3, have fallen for this sleight of hand. (But I agree with Insignificant Dallasite that it is surprising this piece found its way into this otherwise august blog of venerable and academically-minded patent wizards and wizardesses.)

   Mr. Baker, quoting Mr. Bechtel:
   “US Patents have lost 2/3rds of their value since the AIA was passed in 2011.”

   Another way to put this would be: Prior to AIA, 66% of income derivable from patents was ill-gotten b/c the patents were actually trash and unenforceable. And so the calculation we need is the cost to the economy of everyday people being ripped off by having to pay the ill-gotten royalties through the price add-ons.

   Whiners to the left, please. Moaners to the right.
   1. 28.1

      This article misses – and misses badly for several reasons and “jumps” in logic (not just the one you identify).

      What is even worse though, is that this miss creates a torrent of equally misbegotten anti-patent rhetoric.

      This then would be a thread simply better off being boarded up and flushed away.
   2. 28.2

      I realize that Dennis can run his blog anyway he wants. And I understand that there’s no peer review requirement (except perhaps at the comment level). But this article is the worst sort of snake-oil masquerading as statistical analysis.

      Among other things: it entirely forgets the OTHER SIDE of the equation. If you’re trying to compare before and after costs, you might want to consider the impact of the same patents before and AFTER the changes. This loss almost entirely focuses on the patent holders. There were (and still remain) huge costs to the economy arising from: payments for nuisance settlements (claims never litigated because its cheaper just to pay $100k to settle), money spent defending or partially defending infringement allegations (a million bucks to get to summary judgment or claim construction), time and energy spent addressing would-be licensors (is there any study conducted to account for internal costs, advice, response, negotiation, etc.) prior to litigation, and so on.

      In some ways, I’d wager the shift has almost been neutral for the economy because good, valid patents still have value.

      Anecdotally, while we’re still engaged with one patent troll in litigation, we have seen a decrease in what I would consider “other frivolous assertions”. The particular troll we’re currently fighting is the quintessential reason for the frustration with the system: they acquired the patent in a fire sale, the patent expires shortly, the claims are very likely invalid, rather than allege infringement of things near the core of the patent, they’ve stretched their contentions to apply loose language of the 90s to standards-based technology that came a long a decade later. Yet, now, they’re willing to force us to run up litigation costs, have little incentive to settle since the patent expires even if it’s invalid, etc.
      1. 28.2.1

         I thought the whole modus operandi of a patent tro ll was to settle? What benefit do they have for staying in litigation?
5. 27

   Look at the Rac is t response to this post by R.J. Lehmann.

   link to rstreet.org

   “”After all, ending slavery also meant mass write-downs of a highly valued form of “property.” It was still the right thing to do.””

   This guys has no clue of what slav ery was like for slaves. And he is comparing slaves to patents.

   In his mind we should make all US Patents FREE !

   So China, India, and Russia can copy our inventions ? and get a FREE ride on our R&D ?

   Mr R.J. Racist Lehmann wants to make US a third world country.
   1. 27.1

      You don’t seem to know what “racism” means, Justin.
      1. 27.1.1

         When I drive back home today, I will tell my family that someone named “go arthur” on the web told me today “that I dont know what racism means”, and that I am now white ! (not)

         Thank you go arthur, let me go buy a mirror today.

         Should I change my pseudo name to rahimm from Justin ! for you “go arthur”
6. 26

   Experienced brokers are seeing that software patents with Alice issues are simply not being sold

   Hooray!

   And more to come. There’s still a lot of information-processing junk out there that needs to be expunged from the system before we get anywhere close to sanity.
   1. 26.1

      For instance, elsewhere in this thread you can find a wannabe “innovator” bemoaning the fact that the “financial industry” doesn’t like his patents on “methods” of (try to believe this) presenting information to banking customers and the like.

      Accounting and financial gambling schemes were never one of the “useful arts” intended to be promoted by the patent system. The infamous Judge Rich and his fellow patent huffers on the Federal Circuit tried to change that but they failed miserably. They failed so miserably, in fact, that their failure is ongoing and the mess they created is going to take years to clean up. Meanwhile the parasites who became addicted to the patent hustling way of life are looking to monetize every last scrap of “do it on a computer” junk before the gates are bolted shut.

      There’s more to come. The clean up is just beginning, friends.
      1. 26.1.1

         The financial services industry would appear to disagree considering they are holding a conference this summer – for the 12th year in a row – on how to get patents.

         link to worldcongress.com

         Attendees of the conference include the same entity who filed the IPRs against the patents cited in the other post here.
      2. 26.1.2

         Your mantra of “they failed” is itself a clear failure, Malcolm.

         3, the new 4, is still not 5.
7. 25

   I wonder, how does the described change affect design patents? Are they more or less vulnerable than utility patents?
8. 24

   Invalid patents stifle competition and need to be removed. The author should also have considered the financial losses of the competitors that can’t enter into the market because of the invalid patents.
   1. 24.1

      Don’t you know that all patents are valid and moar patents are always better? Less patents equals economic depression. Patents are an inventor’s birthright, it says so in the constitution. You silly anti-patenter. Who’s paying you to post this? Google?
   2. 24.2

      This article is truly absurd. It does not dispute the correctness of the decisions of the PTO in the relatively small number of challenges which are accepted for review (which, of course, are appealable to the federal circuit). But bemoans the loss of “value” of invalid patent claims. Whatever value those claims have is derived from their ability, in most cases, to extract unearned revenues from parties who have developed successful products or, in others, to artificially inflate profits by deterring legitimate competition. That “value” adds nothing to the economy as a whole but simply redistributes wealth from parties who have earned it to those who have not.
      1. 24.2.1

         George, correctness of the decisions of the PTO?

         Observe that the IPR standard of proof is much lower than that of court, where there is a presumption of validity that essentially gives a strong benefit of the doubt to the patent owner. The PTO standard of of proof only requires that the petitioner move the needle slightly over the midpoint.

         Add to this that the claim construction, BRI, is designed to read on prior art.

         Add to this that the same people who decide to institute at a very much lower standard of proof also decide the final decision on essentially the same evidence.

         Add to this that the Federal Circuit on review is bound by the substantial evidence rule to the facts determined by the PTO.

         So how can you determine, realistically, whether the PTO decision is right when one compares the PTO decision to the hypothetical decision coming out of a court? One can expect that with all the disadvantages given to the patent owner in the IPR, that in the ordinary case as patent will be declared invalid, while it would be sustained in court.
         1. 24.2.1.1

            The high presumption of validity presumes that the PTO did its job adequately. I can tell you from working there that this is not likely the case. And that is not because the examiners were not willing, but because the government considered the PTO only a first line defense against improper patents. Even at the high end an examiner only gets around 15 hours to examine a patent once submitted. That is simply not enough time to comb through the trove of prior art, especially when applicants are allowed to be their own lexicographer and intentionally obfuscate.
            1. 24.2.1.1.1

               That is simply not enough time to comb through the trove of prior art, especially when applicants are allowed to be their own lexicographer and intentionally obfuscate.

               And when (1) the PTO still barely understands how to identify and apply relevant prior art because it continually looks to its worst “customers” for guidelines on how to apply the law and (2) the Federal Circuit habitually goes out of its way to pretend that it, too, was born yesterday.

               But bad habits can sometimes be broken. In that regard, keep an eye out for the decision in Circut Check v. QXQ. This should be a Rule 36 affirmance of the district court judge (claims invalid as obvious over thousands of years of prior art notwithstanding a verdict by a confused jury).
      2. 24.2.2

         Actually, I think they are bemoaning the loss in value of patents whose value was artificially enhanced by the high cost of patent litigation (which has been reduced somewhat by the use of the IPR and business method review). Just because some patents are losing value does not mean that all are (as the author’s assumption that the patents involved in transactions are the high value patents is just that, an assumption), or that all of that value was properly supported.
9. 23

   These exotic numbers by folks who unfortunately got into the patent selling business when it peaked for certain types of patents during the “smart phone wars” (when parties were aggressively collecting “ammunition”} are amusing speculations. [Back when, BTW, we already has lots of effective reexaminations and, unlike now, only rare patent litigation sanctions awards, and few prior art searches done on patents for sale or even pre-litigation.] I know of folks with lots of patents offered for sale for several years who cannot even get a nibble, much less those kinds of valuations, except for a few with broad internet functional claims.
   Contrary to other allegations, the actual Congressionally expressed purpose of reexaminations and other post-grant proceedings is to reduce patent litigation costs. Naturally that is hated by many patent litigators who were used to getting easy cash settlements in the vast majority of patent suits made to avoid massive discovery and other litigation costs before any prior art was ever considered by the Court. But the expressed intent of Congress is viewed as successful by many patent suit defendants. See. e.g., the following article:

   “Auto Companies Are Enjoying Benefits of Inter Partes Review

   Companies in the automotive industry face patent litigation on a regular basis. A frequent target of non-practicing entities, both car manufacturers and suppliers frequently get dragged into federal district court where the balance of hardships weighs heavily against the auto companies. Specifically, auto companies can spend millions of dollars defending themselves while the NPE-plaintiff, who’s only assets include the patent rights (typically purchased from a third party), spends very little. To combat this inequality, the America Invents Act created new administrative review procedures, including inter partes review, that cost significantly less than litigation and focus solely on the validity of the patent. Very quickly, auto companies have turned to these new procedures to combat unwarranted patent infringement claims. …”
   [Finnegan firm newsletter]
   1. 23.1

      the expressed intent of Congress is viewed as successful by many patent suit defendants

      But patent defendants (and potential patent defendants who vastly outnumber patent owners and always will) are the wrong kind of people to pay attention to.

      Congress needs to pay attention to people like Richard Baker because Richard Baker is sooper dooper important. Without Richard Baker, we’ll go back to the iron age because Richard Baker will take his shiny True American Innovator football home and nobody will ever invent anything anymore because, well, lazy copiers. How do we know all this? Because Richard Baker told us so! And he’s a very serious person.
10. 22

    Mr. Baker’s article raises an issue that is not often mentioned and which haunts patent law constantly. The issue is reliance, a well known defensive concept in the law.

    As Mr.Baker points out, money is spent and businesses are based upon patents which are valid at the time they are issued. Maintenance payments are accepted assuring that patent life continues, but years or decades later, the Courts can change “interpretations” of the rules (not the rules themselves) and patents which are valid up to that point are suddenly worthless. At least when Congress acts to change rules, a grandfather period is acknowledged. Not so with the Courts.
11. 21

    The article is misleading.

    According to the PTO, 2,176 out of 20,206 claims in 617 petitions were found unpatentable. That is 11%. The other 89% were either denied review, not challenged, remained patentable or were found patentable.

    link to uspto.gov
    1. 21.1

       Thanks, and below are the numbers right off that PTO stat report for terminated IPRs
       But I bet the blatantly false statistical claims of the IPR claim cancellation rate of IPR challenged claims will continue unabated in the Beltway, where finding the truth is of no interest to many lobbyists and the financially self-interested:
       9,048 Claims Challenged
       (617 Petitions)
       6,114 Claims Instituted
       (68% of Claims Challenged)
       (425 Petitions)
       2,176 Claims Found
       Unpatentable
       (36% of Claims Instituted,
       24% of Claims Challenged)
       (173 Petitions)
       11,158 Claims Not Challenged
       2,934 Claims
       Challenged
       but Not
       Instituted
       (32% of Claims
       Challenged)
       893 Claims Cancelled or Disclaimed (Non-PTAB)
       (15% of Claims Instituted, 10% of Claims Challenged)
       643 Claims Found Patentable by PTAB
       (10% of Claims Instituted, 7% of Claims Challenged)
       2,402 Claims Remaining Patentable
       (39% of Claims Instituted, 27% of Claims Challenged)
    2. 21.2

       Steve,

       I spend much time trying to decipher the USPTO slide that you refer to. First of all, the 11,158 claims that are not challenged never were the subject to an IPR, they are simply other claims in a patent that had other claims challenged. This should not be in the count at all.

       Of the 9048 claims that were challenged, 2934 were challenged but not instituted. While I chose not to included these claims, a good case can be made to include them as the PTAB did make a decision not to institute (although deeper study is required to see if they are rejected for formalities and refiled, or rejected on merits).

       This leave 6114 claims that an IPR was instituted. 893 claims were canceled or disclaimed by the patent owner. A case can be made to include these in the count of the unpatentable, as that is their status today, but this decision with not the PTAB’s. Neither was the decision on the 2402 that were settled by the IPR being dropped during the process. So neither the disclaimed or the settled should be included, as these were not the PTABs decision.

       The PTAB made a final decision on the 643 claims they found patentable and the 2176 claims they found unpatentable. This is the 77% unpatentable percentage used in the article.
       1. 21.2.1

          Why not include those cases where petitions were denied or where claims aren’t challenged in the calculation?

          The hardest part of IPR is getting the case reviewed, so when claims are denied review or the attorney decides not to challenge them (presumably because they would fail the initial review), wouldn’t those numbers be the most crucial to include?

          Only 45 % of all claims get challenged. Out of those only 65 % get instituted. So this is a total of 29 % of claims that even get to the board!!

          So who cares what happens after. Of course if you get to the board you probably win! Why? Because you need to establish a reasonable likelihood of success. So putting aside all of the BS, all you proved is that those who can establish a reasonable likelihood of success are more likely to succeed! (*bangs head against wall*)
          1. 21.2.1.1

             Bull, I think the point is to compare as closely as possible the validity rates between the courts and the PTO. Not all claims are challenged in court, nor do the accused infringers have a right to challenge all claims in court. They only can challenge those claims for which they are accused of infringement.

             There are similar reasons why not all claims are challenged in an IPR.

             Thus, we should compare the claims results of the claims actually challenged and instituted versus the validity rates in courts. Nothing else actually would result in a valid comparison of validity rates because the whole point here is to determine whether the PTO is finding higher rates of invalidity than the courts.
             1. 21.2.1.1.1

                OK. Let’s say I concede your point. There is still no reason not to take into account that only 65% of claims get to the review stage at all.

                65% of 75% is 48.75 % of total claims petitioned found invalid. Not quite as egregious anymore.
                1. 21.2.1.1.1.1

                   Whoops wrong pseudonym. I use a bunch of these and get them mixed up.
             2. 21.2.1.1.2

                Ned, if you are going to compare the claim invalidity decision % in litigation with the % in IPRs, you have to add in all the Fed. Cir. reversals of jury validity decisions and exclude the high % of patent infringement suits entirely argued and decided on non-infringement. Because of the vastly higher cost of patent litigation few parties even get to trial and settle and thus invalidity is never even decided.
                Also it makes no sense to exclude all the IPR petitions that were denied, because these have essentially the same effect as if defendant claim invalidity arguments in litigation were thrown out ab initio on partial summary judgement or otherwise [which, unfortunately rarely is even considered at that stage other that for 101].
                1. 21.2.1.1.2.1

                   Paul, all we really want is a comparison of decisions actually made. IPRs can be settled just as court cases.

                   Regarding not getting to trial, we have gone through this before. This a game big litigation firms play to make money. First they advise their clients to litigate. Then they do a lot of law and motion, making millions. Then they advise their clients to settle. Usually, the settlement value is unchanged or substantially unchanged from prior to litigation.

                   The result is, the litigators clean up and the client is not “harmed.”
12. 20

    Dennis,
    Great Article. I can confirm first hand effects of IPR challenges on an independent inventor holding patents not involved in litigation. I personally own three patents (8,297,502, 8,523,063 and 8,540,152) that are part of a 28 patent set that has been issued, which are being challenged in IPR2015-00122; -00123; -00124; -00125; -00133; and -00137 by a well funded entity representing the financial industry, who is a strong lobbyist and submits a legion of amicus briefs favoring the interest of huge entities over individual patent owners. This entity (Askeladden/The Clearing House Payments Company) is one of the key players currently pushing for ‘patent reform’ legislation. I am responding to the IPRs pro-se, due to the funding restrictions you mentioned. The process is daunting for a private patent owner, given the disparate funding positions (While representing myself pro-se, I am constantly conversing with 3-5 different NY Patent Attorneys for the Petitioner). Basically, the process provides a way for (in my case) a company that processes 2 trillion dollars (the Clearing House) a day to attack issued patents of a private patent owner without provocation (the IPR record admits no contract was made of the financial industry for the patents, no litigation is present). The discovery process of IPRs is known to be restrictive, which allows for a hiding of the most basic information. After tremendous expenses, the PTAB has determined that the original RPI was incorrect (IPR2015-00122, paper 30) as The Clearing House Payments Company (PayCo) has tight rein over Askeladden for the IPRs. Close entanglements between PayCo and owner banks and the Clearing House Association exist, which may cause these entities to be RPI as well (see IPR2015-00122, Paper 47 for an elaboration and publicly assessable evidence, significant additional evidence has been hidden by protective order). Basic information has been requested of the Petitioner continuously (See IPR2015-00122, Preliminary Response “IV. RPI is Improper) and is strongly opposed at every turn. In short, the Duty of Candor for IPRs where Petitioners are to provide facts opposed to their position appears to be in impractical safeguard – in practice. To emphasize this, a companion IPR was filed by Askeladden on the same day (IPR2015-00129) with Askeladden as the only RPI, no facts have been disclosed in that proceeding about the IPR2015-00122 RPI change to include The Clearing House, despite the duty of Candor that would presumably require Askeladden to disclose this information. The process is unfair to patent owners, who can be financially intimidated without recourse by huge entities, simply for having innovations for which patent rights have been granted (even when no litigation or licensing efforts are pushed. I’d be happy to write a guest article or provide you with additional information – as noted by the included support, I can back the above with clear, publically available information. It is a travesty when IPR Trolls (serving the interest of billion dollar companies with patent portfolios) can attack private patent owners simply because they own patents showing innovations in the same space. What is happening to our innovation system?
    1. 20.1

       Wake up, Brian: it’s not just your targets that don’t like you and your patents. It’s ordinary people who can smell a bottom-feeder like you a mile away.

       Try to believe this junk:

       1. A method comprising:

       a computer presenting a graphical user interface (GUI) on a display, said graphical user interface showing a quantity of non-negotiable credits earned through previous interactions with an entity

       This is unadulterated garbage of the lowest order and it’s existence in the patent system is *exactly* why we are having this “discussion”.

       You’re days are numbered, Brian. Good riddance.
       1. 20.1.1

          So, assuming that Mr. Buchheit does not use his patents in an offensive manner (and note that there is no indication he is), why do you think it’s good that he’s in IPRs with people he has not sued for patent infringement?

          Even if his patents are “garbage”, if they’re “garbage” used defensively, what is your problem with that?
13. 19

    The America “Invents” Act is like a bull in a china-shop of tech startups. I have equity positions in a number of tech startups, and I am seriously worried that if our patents get in front of the ‘hanging judges’ on the PTAB, where assertions of constitutional rights are literally expunged from the record, out entire investment will be subject to theft by any competitor who has sat back while we invested millions of $s and figure out and proved how to many money with these inventions. I am in a network of angel investors, and I am close to ringing the alarm bells with my colleagues that investments in patents are a waste of money, and that we will only get pennies on the dollar in acquisition for what our inventions are really worth because the Patent Office won’t stand behind the patents that they issue.
    1. 19.1

       Mark Syman: I have equity positions in a number of tech startups, and I am seriously worried that if our patents

       Share the patent numbers and I’ll give you some free advice, Mark.

       assertions of constitutional rights are literally expunged from the record

       Oooh, they sound like really important patents if you’re getting all constitutionally with your arguments. Most of the best innovators focus on their unexpected results and provide evidence with actual data. What did you do? Share the application numbers, Mark, so we can all see exactly what you’re talking about.

       I am in a network of angel investors

       The most important people ever! Can you show everybody something you wrote in the run-up to Prometheus v. Mayo so we can all see how deeply you think about the operation of the casino where you gamble your money? Thanks in advance, Mark.
    2. 19.2

       IPR was set up to eviscerate the US patent system.
       It is succeeding.

       What ever happened to “harmonization” to make the US like the rest of the world??

       Post grant review – say for 9 months like cases before the EPO or the JPO would be fine to see “if the PTO made a mistake”.

       Putting the ability to kill each issued patent into the hand of each accused infringer, long after the fact of patent issue, is a huge and unfair disadvantage for the patentee. However, popular in today’s political climate, it should ultimately be killed by the Supreme Court – or after theUS patent system fades into irrelevance in the patent world, perhaps politicians will begin taking “campaign donations” from a different cast of characters. But, many of today’s young patent practitioners may not live that long, and given the current trajectory, likely will be doing something other than patent prosecuution long before IPRs are killed – unless the court acts…
       1. 19.2.1

          IPR was set up to eviscerate the US patent system.

          No, it wasn’t. Nice try, though.
       2. 19.2.2

          Blindman Putting the ability to kill each issued patent into the hand of each accused infringer, long after the fact of patent issue, is a huge and unfair disadvantage for the patentee.

          ROTFLMAO.

          There is nothing at all unfair about it.

          Nothing.
          1. 19.2.2.1

             >>There is nothing at all unfair about it. <<

             Au Contraire…

             I agree with Judge Newman's dissent in In re Cuozzo Speed Technologies LLC….

             — Limited motions to amend… ability to get new claims is illusory (MUCH DIFFERENT THAN IN JPO OR EPO PROCEEDINGS)….

             — Use of BRI rather than "correct construction" as would be done in Federal Court…. Use of BRI should provide opportunity to amend, per Newman….

             –Reduced standard of proof – treats cases on a "patentability" basis, rather than on a "validity" basis, as set out in the implementing statute.
    3. 19.3

       I know what you mean Mark. I have been on the corporate side where we would evaluate whether to buy or build new tech. The price and decision depended on whether they had patents.

       The IPRs make it so that any large company can just beat up any small company. The cost of just one IPR is $300-$800K and the big corp can file multiple IPRs.

       But the big problem is that IPRs use BRI, more likely than not, and don’t allow claim amendments. It is really unfair if new art is applied. The PTO is supposed to find the best art. That is what they are paid for and it makes the most sense for them to find it. So, instead you get a patent, and then you get a $300-$800K budgeted Office Action with new art and you can’t amend the claims.

       It is burning the system down. Don’t pay attention to the likes of MM on this blog. He spends like 40+ hours a week blogging anti-patent propaganda and has been doing it for 11 years. You figure out how he supports himself.
       1. 19.3.1

          And, by the way, (not legal advice–seek out your attorney), but one consequence of the IPRs is that you should always keep a continuation pending so that you can amend the claims at a pending application at the PTO.
       2. 19.3.2

          So, be clear:

          Failure of PTO, if IPR (PGR or CBM) petition includes better art than the last Office Action before allowance.

          Lee (as if she even knows what an office action is) should make that a rule.

          (And be real—those that are patent attorneys like me know that finding the best art is too time consuming and there isn’t even someone to turn to get the job done at a reasonable cost. The only people that can spend the time becoming experts in a niche and make it economical are the examiners or specialize people.)

          I’ll note that some post-grant petitions I’ve seen couldn’t come up with better art than the EPO. Think about that. The EPO can do it. They can find the best art. Why can’t the PTO?
          1. 19.3.2.1

             finding the best art is too time consuming

             Boo hoo hoo hoo!

             Poor baby.
          2. 19.3.2.2

             Night, you raise a very good point here that IPRs seem to be instituted whenever there is better art. This is the same as the former “substantial new question of patentability” standard which was observed by all to be far too easy of a standard and practically no barrier at all. Yet, if IPRs are instituted whenever there is better art, is the new standard, “reasonably likely … [to] prevail,” any different from the former standard? It was intended to be different. It was intended to be far more difficult.

             But as we know, the statute provides that an institution decision cannot be appealed. Thus we can never have judicial review of the standard used by the patent office in instituting IPRs and whether the standard is too high or too low. This lack of judicial review places the patent office in the position of being both judge and jury, an institution completely without control by the judiciary, and therefore out-of-control as an institution.

             Assuming, and I do not agree with this, that this is all constitutional in the first place, Congress is seriously look at the monster it has created. It needs to change the institution requirements to require at least standing, and should further provide judicial control over whether an IPR even begins.
             1. 19.3.2.2.1

                Congress is seriously look at the monster it has created

                Most people (i.e, VOTERS) love seeing invalid patents invalidated, Ned.

                It’d be pretty silly for a Congress person to reverse a system that is working exactly as it was intended to work.

                Maybe you should focus on making it harder for ordinary people to vote. Then you could just buy the result you want.

                Oh right: Republicans are already doing that. How’s that working out for them?
                1. 19.3.2.2.1.1

                   Perhaps Ned’s underlying point is that the Art I USPTO has now become – arguably – the most powerful adjudicatory body in the nation. A de facto monopoly over the claim of patent validity confers tremendous power (relative to its importance to the American economy).
                2. 19.3.2.2.1.2

                   MM, I don’t know what cool aid congress was thinking when they passed IPRs into the law — just some modest improvement on inter partes reexamination, as if there such reexaminations were not themselves a problem.

                   The point, MM, is not that there are invalid patents. There are. It is about the rule of law. This is fundamental. There are reasons why we divided the power between three co-equal branches, MM. We should not forget these reasons just because the PTO and the Federal Circuit have driven patent law into the muck by not being overly concerned about junk patents. The short term problem with recent history is fixable. What is not fixable is an abandonment of the rule of law.
                   1. 19.3.2.2.1.2.1

                      Agreed. SCOTUS rule of law establishes when a particular claim may or may not be resolved with finality by an Article I tribunal. There is an ideological war currently brewing at the SCOTUS between the Justices backing “functionalism” and those who tend to support more traditional notions of separation of powers.
       3. 19.3.3

          you can’t amend the claims.

          Try writing better claims in the first place.

          It’s what the grown-ups do.
    4. 19.4

       ” that investments in patents are a waste of money,”

       Not if you’re actually patenting upon technology rather than “ideas” about technology.

       “because the Patent Office won’t stand behind the patents that they issue.”

       Oh come on, they’ll go where the evidence leads them. I know several of the judges, they’ve seen things survive just fine.
14. 18

    So, it looks like most people on the blog agree with the post whole heartedly. Great post!

    (Don’t mind the noise from MM and his sock puppets. He has to earn his living somehow.)
    1. 18.1

       Refusing to acknowledge dissenters is an odd way of declaring a majority.
       1. 18.1.1

          Are the dissenters really paid bloggers or just self-interested bloggers that have some little axe to grind?

          The fact is that academia–the real ones not the judicial activists like Lemley– came out and said enough! You guys are burning the system down.

          I have been laughed at on this blog for 11 years because I said the massive weakening of the patent system was coming. It was an easy prediction because big international corporations wanted it. They always get what they want in the US.
          1. 18.1.1.1

             You guys are burning the system down.

             Nothing is burning down.

             Some vermin infesting the system are being poisoned.

             And we all knew that they whine and cry really loudly because that’s all they know how to do.
15. 17

    Like they said in law school. Lawyers are bad at math.
    1. 17.1

       Ah, most of us in patent law have engineering degrees. Normal attorneys don’t, but we do.
16. 16

    Alice was decided less than a year ago and at first was not seen as a big change in patent law

    LOL

    Really?
17. 15

    LOLOLOLOLOLOLOL

    Just $1 trillion?

    Why not $100 trillion?

    C’mon, patent maximalists! Eat your wheaties. Show everybody what you’re all about it.

    Funniest. Post. Ever.
18. 14

    What bunk!

    How about patent prosecutors stepping up and getting up to speed on the prior art?
    1. 14.1

       You are trying to switch the burden from the applicant from the PTO. Typical anti-patent stance.

       As a side note, it would be interesting to see how many IPRs are filed with new art or different arguments of the same art. If new art and 75% of claims are dying, then search at the PTO–Rachael–needs to be improved.
       1. 14.1.1

          Bunk^2.

          Where did I hear this type or argument before.. that’s right, this is akin to a cigarette manufacturer crying fowl years after researchers spend years proving what the manufacturer already knew.
          1. 14.1.1.1

             So, 35 U.S.C. says it is the director’s responsibility to find the prior art, but according to you the applicants are like the tobacco company? Wow, bat sh1t cr@zy stuff.
             1. 14.1.1.1.1

                35 USC is what she’s talking about changing mah brosef.
             2. 14.1.1.1.2

                Keep hiding behind 35 USC, problem is that the sun is shining right through it. Even the SCOTUS can see the light!
                1. 14.1.1.1.2.1

                   Don’t be ridiculous Rachael. There are many reasons that the PTO needs to be the expert on prior art. I work with many Ph.D.s at the top tech companies. They tell me what they think is the closest art and sometimes we do a search. But the reality is searches —by the top search firms by the way—aren’t very good. You don’t get much for $1000-$2,500. The searchers just don’t know what they are doing.

                   So, you need an expert in the field. The PTO examiners should all have at least master’s degrees and be experts in their niche. That is the only way for them to police their niche. Anyone that holds differently is clearly just a judicial activist. Or, Rachael, I have given you substantive reasons why and you blab out ad hominem attacks.

                   So, Rachael, try to give me substance-I know I put in some ad hominem at you, but I also gave you the real reason why.

                   Fact: those $300-$800K IPRs petitions should not come out with better art than the examiner. If they do, then the PTO has failed.

                   That is the problem Rachael and you yapping about light and implying that we know we are doing something wrong won’t change that. But, I am sure you will endless yap with no substance like all the other judicial activist.

                   By the way, thank Obama for appointing Lee–someone that is totally ignorant of prosecution–to fix PROSECUTION problems. You bought off little man.
                   1. 14.1.1.1.2.1.1

                      “Fact: those $300-$800K IPRs petitions should not come out with better art than the examiner. If they do, then the PTO has failed.”

                      lol^

                      Though NWPA isn’t lying about the other searchers suxoring even harder than examiners.
                      1. …

                         Not “lol” 6. You should be able to find the best art Examiner 6.
                      2. …

                         “Not “lol” 6. You should be able to find the best art Examiner 6.”

                         Bro, there’s more art out there for many apps than there is seconds in a week. It’s literally not physically feasible. And don’t get me started on word searching such apps.

                         That’s not even counting the NPL for such apps.
                   2. 14.1.1.1.2.1.2

                      You write well, but your logic is hollow.

                      My recommendation to you; take a few courses in probability theory and reliability analysis.

                      The fact that you don’t realize that you are complicit doesn’t make it no so.

                      Repeat if necessary.

                      “Start with the man in the mirror, ask him to change his ways”
                      1. …

                         That’s your substance, Rachael? Take probability and statistics? (I have.) I got an A in both of them.

                         Why am I complicit? My contention is that the PTO needs to be the expert and come up with the best art. Simple. Why is that wrong?
    2. 14.2

       Rachael, What?

       The mission of a prosecutor is to get a valid patent. Obviously, they initially file what they believe to be valid claims and thereafter engage in a back and forth with the PTO until the patent issues.

       Unless the PTO made a huge mistake, such as not finding and applying anticipatory art, their call must be given some respect and deference.

       The article is right that patents are property, and one who has a patent has a right to rely on its presume validity.

       IPRs throw this right into the proverbial trash.
       1. 14.2.1

          No. Patents are not property, they are a limited monopoly right granted by congress. All of the literature supports this.

          Congress has the power to dictate the limits of this monopoly (including mechanisms through which it can be challenged).

          Congress made the decision not to give the USPTO deference during these proceedings precisely because it has show it repeatedly “makes huge mistakes, such as not finding and applying anticipatory art”

          This is why IPR has been so successful in invalidating patents. There’s no grand conspiracy, just lots of bad patents that never should have issued.
          1. 14.2.1.1

             “Patents are not property, they are a limited monopoly right…”

             You’re incorrect. And you have some company.
             1. 14.2.1.1.1

                Why?

                and Who?
                1. 14.2.1.1.1.1

                   Bull, before you spend too much time trying to argue with Mr. “Appeal! Appeal! Appeal!” (aka Mr. “Take the money from the client and RUN RUN RUN!!!”), consider the fact that the guy has advocated impeaching judges who use term “monopoly” in their patent decisions.

                   When Mr. “Appeal Appeal Appeal!” was reminded of this fact, he tried to pretend that he was joking.

                   But he’s a very serious person! Yup. You can trust him.

                   $1 trillion dollars??? ROTFMAO.

                   What a bunch of clowns.
                   1. 14.2.1.1.1.1.1

                      How sad Malcolm, instead of mindless ad hominem, why not simply agree with the immediate FACT that AAA JJ is correct and that our “new” friend Bull had been gored?

                      And Bull, patents are property – by law, so I don’t know what type of “literature” you are depending on, but you would be best advised to throw is away (and stop quaffing the copious amounts of koolaid that you have been imbibing).
                2. 14.2.1.1.1.2

                   35 U.S.C. 261 Ownership; assignment. Subject to the provisions of this title, patents shall have the attributes of personal property. …
                   1. 14.2.1.1.1.2.1

                      Subject to the provisions of this title

                      Kinda important.

                      Patents are like “personal property”to the extent they can be assigned like personal property. Hence “35 U.S.C. 261 Ownership; assignment”.

                      But other than that everybody knows that patent rights are more like quasi laws, written by applicants and “approved” by a government agency which is relentlessly attacked by many of those same applicants when it doesn’t crank out enough “product.”

                      Best part about your whining: it doesn’t matter. Nobody believes that expanding patent rights is going to help the economy. It certainly will help you but of course we all know what you’ll do if we lengthen your leash. That experiment was tried by Kappos and Rader and the result was appalling to pretty much everybody.

                      So whine louder! After all, it’s all you know how to do.
       2. 14.2.2

          Quality of search and examination does need to be improved. Bureaucracy makes this difficult to do in reality . Hence, IPR.
          1. 14.2.2.1

             Bull, why IPRs? Why not the courts? Ah, you do not like the presumption of validity.

             The major problem with our patent system is and has been for some time the PTO leadership that has so long been focused on satisfying the customer — who they view as the applicant and not the public. They have no metrics in place to actually determine whether they are issuing junk patents or not. So long as the I’s are dotted, the T’s crossed, the ink on the patent is legible and the backlog reduced, they think they have done a good job and give themselves bonuses, parties, and are well received at patent applicant lobby organizations, such as the AIPLA.
             1. 14.2.2.1.1

                Well amen to that.

                If there were a practical way for the courts and PTO to ensure patent quality, I would obviously be in favor.

                I’m not sure there is though. Something like IPR where patents can be challenged for a short time period under a lower standard seems like a realistic way to combat poor quality without creating institutional chaos.
                1. 14.2.2.1.1.1

                   How about examiners that just do their Fn job?

                   Rubber stamping has never been “OK.” Either Accept-Accept-Accept OR Reject-Reject-Reject (as all the Kappos bashers crow, and “conveniently” forget that the backlog mess is STILL largely the fault of the Reject-Reject-Reject era. Some “too friendly with the clients horse-shtuf from Ned there)
                   1. 14.2.2.1.1.1.1

                      “Rubber stamping has never been “OK.” ”

                      Rubber stamping is built somewhat into official USPTO policy bro. We do a search, we send out a patent if we don’t find anything. We’re not instructed to scorch the earth, and nobody expects that. This situation builds in “rubber stamping” to a degree.
                      1. …

                         You clearly do not know what rubber stamping means 6 – little surprise given that you think key word searching without first reading and understanding the application is somehow the pinnacle of “examination.”
                      2. …

                         reading and understanding the application

                         Right. Because if you “read and understand” the patent that claims the “invention” of exposing people to advertising before exposing them to the information they really want to see then you’d know that it was sooper dooper shiny and techno.

                         Because there’s a flowchart in there.

                         Funny stuff. Keep the laughs coming.
             2. 14.2.2.1.2

                Ned: you do not like the presumption of validity

                Pretty much nobody likes it, Ned. And that’s because — as you know and everybody else knows — the PTO has demonstrated utter incompetence for about two decades now when it comes to examining The Most Important Innovations Ever (aka “do it on a computer” junk).

                For cripesake the same folks here who are whining now used to get their undies in a bundle *every* time anybody criticized the kind of junk patents that routinely get tanked at the PTO or elsewhere because they were “presumed valid”. Somehow they had convinced themselves (or they pretended to) that this silly “presumption” meant that attorneys and agents were forbidden from suggesting that a junk patent was a junk patent. It was absurd but that was the echo chamber they lived in.

                Then “anon” and his buddies tried to shut the blog down with their sockpuppets for years when they saw the writing on Mayo’s wall. These entitled and wealthy people will never, ever, ever stop whining because that’s all they really know how to do. “Waah give me my patent! Waaah you’re stepping on my imaginary property that some incompetent said was all mine! Waah!” “You’re just jealous!” and on and on.
                1. 14.2.2.1.2.1

                   You mean “Bull” and “MM” aren’t the same person? The way Bull overwhelmed the conversation, it made me think they were the same.
                2. 14.2.2.1.2.2

                   What a load of C R P Malcolm.

                   Nice fantasy world you inhabit.
             3. 14.2.2.1.3

                “for some time the PTO leadership that has so long been focused on satisfying the customer — who they view as the applicant and not the public. ”

                That will remain the case so long as patents are an entitlement.
             4. 14.2.2.1.4

                Good heavens, I just found myself wholeheartedly agreeing with Ned. Thank you, Ned.
          2. 14.2.2.2

             So, Bull, what should the Bureaucracy do to improve the quality of search and examination?
             1. 14.2.2.2.1

                My point exactly.
       3. 14.2.3

          Also, lots of fun theory with “The mission of a prosecutor is to get a valid patent. Obviously, they initially file what they believe to be valid claims and thereafter engage in a back and forth with the PTO until the patent issues.”

          Back to reality. Does anyone who has worked one day in the system honestly believe this?
          1. 14.2.3.1

             Bull, it is with me. I do not knowingly file invalid claims. I have never tolerated anyone inside or out to knowingly do this.

             To actually believe that patent attorneys are little better than dishonest liars and cheats from the get go put them into the same category as litigators, an entirely different breed of lawyer.
             1. 14.2.3.1.1

                Nobody “knowingly files invalid claims.” It is more that attorneys will file claims that they “should know” are invalid and rationalize it on several grounds.

                1) “It is my duty to get the broadest possible claims for my client”
                2) Mental gymnastics that allow the attorney to lie to him or herself and convince him or herself that the invention is more complex, novel and non-obvious than it actually is.
                3) a corollary of 2 where attorneys convince themselves that an improvement on the art is more than incremental where almost everyone without a vested interest would believe the opposite. and finally
                4) believing that it is the office’s duty to find evidence of unpatentability rather than their duty to find evidence of patentability prior to filing.
                1. 14.2.3.1.1.1

                   Bull, you might have a point here.

                   Also, most patent attorneys today use functional claiming to an exclusion of any other form, even when claiming mechanical or electrical inventions. There is no excuse for this, but I haven’t seen a well drafted claim coming out of a lawfirm in some time. It is all, “configured to” do something or to accomplish a particular result. The structure itself it never claimed.
                   1. 14.2.3.1.1.1.1

                      “I haven’t seen a well drafted claim coming out of a lawfirm in some time. It is all, “configured to” do something or to accomplish a particular result. ”

                      Because that is where the invention is. The invention is not in the preferred embodiment of moving a portion of the wing out of the plane of the wing (wing warping). The invention is in moving some portion of the wing out of the plane of the wing, by what ever mechanism…..
                      1. …

                         Les, those are method claims.

                         The fact that patent attorneys cannot distinguish between structure and method is a real problem with today’s patent attorneys.

                         Wright Bros: Apparatus comprising a wing having a leading edge, and an air deflector rotatably mounted to the leading edge.

                         Les: A wing configured to provide varying lift.
                      2. …

                         I’m not sure what you were doing there at the end Ned, but the Wright’s did not claim an aileron or a flap, though they did assert their patent against those. They claimed, as I suggested, a mechanism for moving a portion of a wing out of the plane of the wing.
                   2. 14.2.3.1.1.1.2

                      The C R P fest in full bloom from the anti’s – who clearly don’t know law and Ned (oops, that was redundant).
                2. 14.2.3.1.1.2

                   “more than incremental”

                   There is no requirement that inventions be more than incremental changes.

                   Blu-ray is incremental over DVDs. Nevertheless, Blu-ray represents several inventions over the prior art, I hazard to guess.

                   So, whats your point?
                   1. 14.2.3.1.1.2.1

                      Obviousness is supposed to deal with preventing incremental changes–ie modifications that would have been obvious even though not explicitly-disclosed.

                      Perhaps we differ definitionally. Blue ray is not an incremental advance. It is more than incremental. I should have probably used the word obvious instead
                      1. …

                         Apparently you do not grasp the meaning of either word, Bull.
       4. 14.2.4

          “Unless the PTO made a huge mistake, such as not finding and applying anticipatory art, ”

          I’m pretty sure that is not a “huge mistake”.
       5. 14.2.5

          “believe to be”, now that’s a good foundation to start prosecution. Ha!
19. 13

    This is basically the same argument that the RIAA and MPAA use when they say that file sharing piracy has cost them zillions of dollars in lost sales. It ignores the fact that most of these so-called lost sales would never have taken place under any circumstances.

    Besides that, keep in mind that $2.3 billion of the $2.9 billion in patent sales from 2012 involved only six bulk transactions, the largest of which were a $550 million sale of 650 patents from Microsoft to Facebook and a $1.05 billion sale of 925 patents from AOL to Microsoft. 2012 was most likely an outlier year for patent sales, and most likely owed to the economic climate at the time, but since the data presented in the table only provides three years worth of statistics, there’s no way to know whether this is true without doing further research for several prior years – which the article’s author should have done and included in the table.
    1. 13.1

       Forgot to include a link for those six transactions.
    2. 13.2

       APoTU, the central fallacy is that the article does not compare the validity rates of the courts and the PTO.

       Also, several years ago, the phone wars were driving a large demand for patent portfolios by those engaged in the war.
    3. 13.3

       They should really have a like function here.
20. 12

    “Another way to look at the impact of the AIA starts with the count of the number of US Patents in force, about 2.1 Million according to Professor Dennis Crouch of the University of Missouri School of Law[6]. Given our 2012 IPOfferings value of $422,000 per patent, the value of patents to the US economy was $886 Billion. The AIA dropped the value to one third, leaving $344 Billion in value. This one act of Congress, the IPR proceeding of the AIA bill, destroyed $546 Billion of the US economy using this methodology.”

    ^Hilarious. Presuming the “average value” of 422k! And then multiplying by the number of patents in force! Hilarious!

    It’s like that “The Onion” article about hollywood math making your iphone full of stolen MP3’s worth more than everything ever created on earth.
    1. 12.1

       Can you offer an alternative?
       1. 12.1.1

          Something like this maybe:

          link to m.youtube.com
       2. 12.1.2

          Oh come on! An alternative to what is at best a “back of the envelope” calculation? This is like asking “can you provide me with a more complicated math equation than 2+2=4?” Impossible to even answer because there are an infinite number of superior, more rigorous methodologies one can employ.
       3. 12.1.3

          I heard not too long ago that the “average value” of a patent was 15k, which sounds to my uninitiated ears to be a much more reasonable avg. And that was from some scholarly source but I forget where.

          That’s a start.
          1. 12.1.3.1

             6, the average value has to be larger than its cost of acquisition.

             Still, most of the big shot patent counsel at the IPO use to brag about how they could get a patent application filed for about 5k when everyone else was paying 10k+. I assume their prosecution costs were about the same. So, add another 5k plus. Adjust for inflation and fee increases since the ’90s, and we get around 15-20k for the cheapest patent around.

             Most patents cost a lot more.
             1. 12.1.3.1.1

                “6, the average value has to be larger than its cost of acquisition.”

                Actually it doesn’t. Iirc that was the point the article was making, amongst others. One other one was that the low avg value was the reason so many patents go expired without paying some maintenance fees.

                “Most patents cost a lot more.”

                Then most people are spending too much money.
             2. 12.1.3.1.2

                Why would the average value have to be higher than the acquisition cost

                In a perfect market with perfect knowledge and rational actors knowing in advance what the value of the patent would be, then yes, no one would acquire a patent unless it was worth more than acquisition, but we don’t live in that world.

                We live in a world where:

                1) Some patents that have been filed should never have been filed and have little or no economic value (unduly narrow, hard to enforce claims, or claims to a technology/product that has no commercial value/will not be infringed etc.)

                2) Some patents may have reasonably been expected to have value when filed, but no longer do so as:
                a) technology changed/didn’t change (product never caught on, technology surpassed by alternative technology, no market adoption, poor marketing, etc.)
                b) competitive landscape has changed (company went bust, competitor acquired the company and no longer needs as many defensive patents, etc.)
                c) change in law altering the validity or enforceability of the patent.

                3) Some people rationally spend other people’s money to aqcuire patents worth less than the acquisition costs, and other people act irrationally (Gambling/Fear of Loss/Bureaucracy)
                Ex. -Each patent might cost your company 15k to acquire and be worth 10k on average. But if you don’t file anything you don’t have anything to manage, and your CEO doesn’t have anything to brag about.

                -Doubling down might not be bad in some scenarios even if the odds favor the house. If you’re the CEO/Founder/Partial owner of a speculative start up it might make sense to bet on patents even if they are on statistically likely to be worth less than you pay for them, because their value is not independent of your success, and probably correlate with one another. If you invest in 10 patents and the company’s a flop, well, your equity goes to zero anyhow. If you invest in 10 patents and the companies a success your 10 patents are probably winners and worth more than you paid for them.
21. 11

    Any accounting for the cost of invalidation of patents that attributes zero economic cost for invalid patents (or zero benefit for their invalidation) is, at best, a partial accounting. If it purports to offer a total net economic cost, it is misleading.
    1. 11.1

       Miles, how do you know the patents are invalid if they would not have been invalidated in court?
22. 10

    What sort of pandering is this? Will PatentlyO run a rebuttal from the defendant’s side?
    1. 10.1

       PO lets most everyone post their views.
    2. 10.2

       Adam, you like IPRs? Why?
       1. 10.2.1

          I actually like ex parte review for speed and cost, but if you can’t trust the examiner’s to review a patent by themselves for the first time, you can’t trust them to do it a second time.
          The data shows that IPRs are working to clear out junk patents, and though costly, IPRs are much less expensive than patent litigation.
          1. 10.2.1.1

             Adam, a question for you. How can a patent be junk unless it is clearly anticipated? (Excludes from this conversation issues of patentable subject matter.)
23. 9

    We participated (with a number of hugely important companies) in a communication to congress urging that the IPR process not be altered at this time. link to 1drv.ms

    This idea that the AIA has damaged the real economy appears to have no relation to actual economic performance by any econometric measure that I am aware of. Speculative pricing and basis calculations of unrealized losses and gains is essentially pointless numerology.

    The failure in this piece to tally the real costs of invalid patents and the litigation abuse that derives therefrom is mere garden variety hackery, IMHO.
    1. 9.1

       Drank the cool aid, did you?
24. 8

    “In essence, the IPR procedure is a request for the Patent Office to admit that they made a mistake and reverse themselves on the validity of the patent. ”

    Not really bro. People get to bring this new thing called “new evidence” into consideration. Often something sworn to or whatev that wasn’t even available to the office. Sometimes the other side doesn’t even bring any counter evidence. Guess who wins?
    1. 8.1

       Moreover, the Supreme Court keeps changing the rules. The IPRs are looking at claims drafted, prosecuted and allowed under Rules 1.0 which are now being evaluated under Rules 3.6.
25. 7

    Some have argued that the IPR procedure is weeding out the weakest patents in the United States, but experience has shown that the opposite is true. The IPR procedure is only being used against the best United States patents.

    If the patents that are going into IPR are the “best” patents, the patent system has a much bigger problem than changing IPR to “assure that a much greater percentage of patents survive the IPR process.”
    1. 7.1

       Yeah that’s what I’m hearing.
    2. 7.2

       Depends on your definition of “best”. If one means “best for leveraging beyond the reasonable scope of the invention”, then yeah, those would be the “best” patents, at least for litigation.
    3. 7.3

       Jane, I assume that the IPR’ed patents are asserted patents. I would think that most people would not assert patents that have obvious and known validity problems because they don’t like spending money on sure losers.

       The vice of IPRs is primarily related to their unfair procedures, BRI, and the bias of the “court.” BRI is designed to read on prior art. There is no live cross of experts. And the same judges who decide that there is a reasonable likelihood of unpatentability also make the final decision on essentially the same evidence. Are they really going to change their minds?

       Thus the ultimate standard of proof is not really preponderance of evidence, but the much lower standard for institution.

       A system rigged against the patent owner and intentionally so.
       1. 7.3.1

          “I would think that most people would not assert patents that have obvious and known validity problems because they don’t like spending money on sure losers.”

          Respectfully, Ned, I think your assumption is wrong. If anything can be characterized as “trollish” activity without getting into rhetoric, it would be the filing of what are effectively nuisance lawsuits using patents “that have obvious and known validity problems” in order to get a quick settlement without actually proceeding to the merits. The point in such cases is not whether the patent is a “sure loser”, the point is that the process is unfairly leveraged using the “sure loser” as the lever.
          1. 7.3.1.1

             Too much koolaid for you sky…

             Peter Zura of 271 awhile back had a study debunking that particular flavor of koolaid.
          2. 7.3.1.2

             skyywise, we hear of these tall tales, but judges who actually tell us what they see filed tell a different story.

             Now if people asserted flaky patents until they were DJ’ed, whereupon they routinely got out by granting a covenant not to sue, then yes, I would agree with you that such is troll behavior and it should be punished with an award of attorney fees.
26. 6

    “In essence, the IPR procedure is a request for the Patent Office to admit that they made a mistake and reverse themselves on the validity of the patent”

    Won’t survive Art III scrutiny before the SCOTUS.
    1. 6.1

       Steve M, I agree. But hopefully the Fed. Cir. also sees the Article III problem of holding validity trials at the PTO. If they hold IPRs unconstitutional, the government may not even petition the Supreme Court.

       The oral argument in MCM Portfolio LLC v. Hewlett Packard has yet to be scheduled.
       1. 6.1.1

          If the CAFC disagrees with your Article III position, will you seek a rehearing en banc or a petition for cert?
          1. 6.1.1.1

             Steve, it somewhat depends, does it not? I daresay, that as a matter of courtesy to the court, that we should petition for en banc if the panel concludes that they are bound by Patlex regardless of all the developments at the Supreme Court since that case was decided.
27. 5

    It is also worth noting that Richard Baker’s company is infamous for suing Adam Corolla and many other of the top podcasters for allegedly infringing a patent on podcasting.

    Yes the company alleges that all podcasts fall under their patents. Now who is damaging the economy again?
    1. 5.1

       Here’s the wonderful claim:

       1. A media player for acquiring and reproducing media program files which represent episodes in a series of episodes as said episodes become available, said media player comprising:

       a digital memory,

       a communications port coupled to the Internet for transmitting data requests for data identified by specified URLs, for receiving downloaded data identified by said URLs in response to said requests, and for storing said downloaded data in said digital memory,

       a processor coupled to said digital memory and to said communications port for performing a sequence of timed update operations, each of said update operations comprising:

       downloading via the Internet the current version of a compilation file identified by a predetermined URL and storing said current version of said compilation file in said digital memory, said current version of said compilation file containing attribute data describing one or more episodes of a series of episodes, said attribute data for each given one of said episodes including one or more episode URLs identifying one or more corresponding media files representing said given one of said episodes,
       processing the content of said current version of said compilation file to identify attribute data describing one or more newly available episodes in said series of episodes which were not described by attribute data found in a prior version of said compilation file previously identified by said predetermined URL and previously downloaded by an earlier one of said sequence of timed update operations, and

       downloading one or more new media files identified by one or more URLs in the attribute data describing said one or more newly available episodes and storing said one or more new media files in said digital memory, and
       an output unit for reproducing one or more of the media files representing episodes in said series at the request of the operator of said media player.
       1. 5.1.1

          I don’t understand.

          Are you saying that podcasting is not an invention?

          This claims does not cover all podcasting. It only covers podcasting that involves downloading a current version of a compilation file and comparing it to a previous version of a compilation file and then downloading episodes represented by a difference between the compilation file.

          That seems to be easy enough to work around and clearly does not pre-empt the entire ancient abstract idea of podcasting.

          So, whats the problem?
          1. 5.1.1.1

             “casting that involves downloading a current version of a compilation file and comparing it to a previous version of a compilation file and then downloading episodes represented by a difference between the compilation file.”

             This is literally every podcast on the apple store. In plain English, the claim covers distinguishing one podcast from another so they can be in separate files.

             For one, they didn’t sue apple, they decided to sue individual podcasters.

             Second, the pros. history is extremely sketchy. Priority to 1996 but a filing date in 2009. Presumably they kept adding new matter as technology was invented.

             In essence the claims on their face seem narrow but in reality they are extremely broad because every podcast on the itunes store uses this mechanism. This would be OK (perhaps) if they decided to sue apple. They did not.
             1. 5.1.1.1.1

                They didn’t sue apple because they can’t sue Apple. Apple doesn’t download those files. Apple makes files available for download. Apple doesn’t infringe. Listeners might infringe the posted claim.

                Your outrage is only justified if the inventors named in the patent didn’t actually invent what they claimed.

                If they did, then the patent owners are entitled to the patent and the royalty they are asking for.

                Why aren’t they?
                1. 5.1.1.1.1.1

                   “In plain English, the claim covers distinguishing one podcast from another so they can be in separate files. ”

                   NO. In plain English the claim covers what I said it covers, which is not every method of podcasting imaginable.

                   One method not covered is listing a set of available podcasts and allowing a user to select the one the user wants. In that method there is no comparison of compilation files and therefore no infringement of the claim.
                   1. 5.1.1.1.1.1.1

                      Most downloading systems distinguish files from one another. The claim recites “attribute.” This attribute can merely be the file name
                      1. …

                         “Most downloading systems distinguish files from one another. The claim recites “attribute.” This attribute can merely be the file name”

                         From the claim:

                         “processing the content of said current version of said compilation file to identify attribute data describing one or more newly available episodes in said series of episodes which were not described by attribute data found in a prior version of said compilation file previously identified by said predetermined URL and previously downloaded by an earlier one of said sequence of timed update operations”

                         So, there has to be two compilation files, a previous compilation file and a current compilation file.

                         The files have to have different content. That is, the current one has to have an attribute (file name if you will) that is not in the previous one.

                         The system has to find that difference and download the all the podcasts represented by that difference.

                         As I said, that can be worked around many was, such as simply having the user select the podcast the user wants. Alternatively, new podcasts (or links thereto) can simply be pushed to subscribers when they are available.
                2. 5.1.1.1.1.2

                   They didnt invent it. The board invalidated the patent using tech journal articles this year.

                   Also, they can get apple for contributory infringment or inducement based on the infringer, which would be the user.

                   But how do content creators infringe? They don’t download.
                   1. 5.1.1.1.1.2.1

                      No, they don’t. So, either there are other claims at issue or as you suggest, they are being tagged for contributory infringement.
28. 4

    1) The article, in stating “[t]he IPR procedure is only being used against the best United States patents ” because a patent won’t be litigated unless it is one of the best patents, appears to use circulaer logic and at the least certainly doesn’t prove the point.

    2) The lack of data before 2012 makes the analysis problematic. The argument for the AIA was, in part, that too many worthless patents were being issued and asserted, thus leading to inflated values. Any worth figures from before 2012 were more or less at the peak values, which is why the perceived need for the AIA. The newer lower numbers reflect the value of the AIA in squeezing out the inflated, worthless patents.
    1. 4.1

       This
29. 3

    What about nominal vs. real value? It very well could be that the AIA saved the economy from a patent bubble. The AIA has done a good job of weeding out financial speculation on patents that has been increasing the nominal value of each individual patent. This value per patent has more to do with the ability of the patentholder to reach settlement than any real value.
    1. 3.1

       Bull, if one assumes that IPR’ed patents deserved to be invalidated and one represented only infringers, one might not see the problem.
30. 2

    This is a great example of the broken window fallacy. To say that a 1 trillion dollar aggregate loss in patent value equals a 1 trillion deadweight loss is ludicrous.

    What about all the economic actvity and competition that opens up due to the invalidation of the patent? The more valuable a patent is for the patentholder, the more expensive it is for competitors.

    To get a proper measure of the value of a patent to the economy as a whole, litigation, settlement, liscensing costs etc. must be deducted. These numbers dont include this deduction.

    I haven’t even gotten started yet and the piece is already massively flawed.

    This is garbage propaganda and self promotion. The blog has lowered itself posting this nonsense.
    1. 2.1

       As well, why are decreases in the value of foreign owned issued patents, who’s only value exists in the ability to take money from the US economy to their foreign owners, calculated as part of a ‘loss’ to the US economy?
    2. 2.2

       Bull, I would say the data should show the difference in validity rates in court and in the PTO at a minimum.

       But there is little doubt the PTO is finding claims invalid at a much higher rate than in court. Why?
    3. 2.3

       I’m surprised that Patently-O would post this obvious advertisement for NEIP. Of course the conclusion is silly. There is no principled argument for keeping bogus patents around just because the PTO made a mistake in the initial examination, when the office relied on the knowledge and searching skill of the examiner, who has no real incentive to do anything. If companies are spending millions of dollars to invalidate garbage patents, maybe the problem is with an office that issues 77% invalid patents.
    4. 2.4

       Agreed on all points. And this article is a bit of a ding on the blog because it is so superficially defective (the author ignores the value gained by competitors that no longer have to pay royalties).
31. 1

    This is no surprise. As soon as I read the AIA it was evident this would happen.

    a.) more likely than not
    b.) BRI
    c.) can’t amend claims.

    So, it is as if the PTO gets another round in prosecution without a response from the applicant.

    I’d add that any patent attorney reading the AIA knew that this was going to have a profound affect on patents.

    I’d also add that I expect to see innovation drop by at least 1/2 in the US, but there is a lag. As reports like yours come out the spending will dry up. When Microsoft figures out it doesn’t need patent, it will cut drastically back on R&D as will most big companies.

    Innovation won’t end, but it will morph into a different and smaller thing.

    As I have said before, I don’t see this ending as long as Google is pouring Google bucks into the system. This study doesn’t even take into account the fact that the Fed. Cir. has been loaded with anti-patent judges appointed by Obama via Google and that Lee is very anti-patent.

    (What did I say? The system is being burnt down.)
    1. 1.1

       Night, we need to identify who did this to us. Google is not the only villain. Brad Forrest, it is my understanding, lead the AIPLA special committee that came up with IPRs, obviously at the urging of the Board and probably others. Brad used to be a division counsel with

       IBM.

       IBM — that name has a familiar ring to it. IBM was always in favor of reexaminations, of inter partes reexaminatons and of IPRs. IBM has long advocated removing patent validity from juries. IBM has tremendous influence in IP law.

       And, do not forget who shepherded the AIA through congress. None other than Kappos, ex of IBM.

       Google may have helped, but the central player here probably was someone else.

       IBM is free to look out for number one. But we should all recognize that they have a lot of power and influence in IP Law. What it good for IBM is not always good for inventors who are not among the largest companies in the world, a company that obtains more US patents, year in and out, than any other company.

       The only area where IBM has not been successful recently is with software and business method patents. The value of its portfolio in this area must have taken a major hit when Alice was announced.

       But hopefully, IBM will change course here and begin to oppose IPRs in favor of a system that has standing, has a right to a trial de novo in court, and which uses the conventional presumption of validity, and which does not involve patent attorney judges except as special masters under control of an Article III judge.
       1. 1.1.1

          Well, I wouldn’t think that IBM would want IPRs. And, I don’t think that the results of the IPRs are somehow unexpected. I read the AIA before passage and was stunned.

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