Patently-O Bits and Bytes No. 26

  • BusinessWeek: Michael Orey has written another interesting Troll Tracker article: Busting a Rogue Blogger.
  • A recent comment raised an interesting question: Why do the pharmaceutical companies rarely (if ever) file their patent infringement suits in the Eastern District of Texas?
  • In a tight economy, is there a tendency file more patents (to secure some assets as insurance against business failure) or fewer patents (to tighten the outflow of cash)?
Dennis Crouch

About Dennis Crouch

Law Professor at the University of Missouri School of Law. Co-director of the Center for Intellectual Property and Entrepreneurship.

16 thoughts on “Patently-O Bits and Bytes No. 26

  1. On the third point relating to the economy and patent filings, I suggest comparing increases in patent application filings over a running average and GDP increases over a running average. The resultant graph shows GDP growth drop with the depression, quickly ramp up during WWII, then have a slightly upward linear trend from about 1950 to the present. The slightly upward linear trend is similar to the trend from 1850 to the years just before the depression.
    Patent-application filings trend flat (with substantial variation about a flat trend line) to the depression, drop, then trend ever-so-slightly upward until about 1967 and then are flat until 1984. From 1984 on, the trend is stunning positive growth over the moving average to the present. The growth in patents to foreign inventors is flat from 1873 on, so this does not seem to be a factor. What does seem to be a factor is not GDP growth (except the depression), but changes in the law. The depression and post-war eras could be construed as not patent friendly in the US. The creation of the Federal Circuit (1982, I believe?) has been very pro patent, explaining the rapid rise in growth of patent-application filings.
    By the way, I describe the trends looking at a graph visually, without any mathematical modeling. Someone else may wish to take this analysis further.

  2. If somebody stuffed a sock in Mooney’s mouth the world would be a better place. I find the Business Week article just more propaganda. It tends to try to make the case that Cisco didn’t know about the blog even after they seem to have admitted knowing about it. What a load of hogwash.

  3. A couple quotes from the Business Week article:

    “a Troll Tracker reader posted a comment to the blog: “If you shoot and kill Ray Niro tonight, I would consider it a justifiable killing.”

    For the record, that’s not a death threat. It’s obnoxious, but it’s not a death threat. And if you go to the comment threat where that comment was posted, I think you’ll find that the commenters did not approve of the comment. I think the odds are quite good that the comment was posted by someone who had more animosity to PTT than to Niro.

    “The comment reverberated across the blogosphere. At the tech blog Slashdot, another anonymous poster amplified the threat to include Niro’s family members, publishing his wife’s name, as well as their home addresses and phone numbers.”

    Again, the comment was not a threat. Saying “if someone killed X I would be glad” is not a threat. It’s obnoxious, to say the least, but it’s not a threat. As for the posts about Niro’s address, again, it’s silly as hell but … that’s about it. And it has very little do with Frenkel. Were the police or FBI notified about the posting of the information?

    My point here is not to defend the action of these anonymous commenters but rather to compare Niro’s statements and characterization of what Frenkel was posting with this less helpful (to Niro) collection of facts we know as “reality.”

    Frenkel’s anonymity is really beside the point. The point is that if a person like Niro decides that he doesn’t like what you are saying, he can make your life a living hell. It doesn’t matter if you are “anonymous” or not. According to Niro’s “logic” as expressed in the interview, if he believes that Dennis Crouch (for example) has a secret “bias” or a connection to some big company, then it is reasonable for Niro to put a $15,000 “reward” out there to encourage someone to investigate all such possible connections because, hey, something interesting might turn up. Then Dennis (or whoever should be so unlucky) can enjoy “regretting” all the stuff that he or she wrote, and maybe get sued by some sensitive soul that has been “hurt” by this or that statement.

    But all this is really “civilized”, apparently, according to Niro.

  4. “there was an enablement case last fall that held it would require undue experimentation to effectively swap an electrical sensor in for a mechanical one. The claim construed to include the electrical sensor was thus invalid for lacking enablement.”

    Uh, I think there was a bit more to the case than that.

    Just a bit more.

    But it would help if you quoted the language from the case you are referring to.

  5. step back-

    just a brief thought. there was an enablement case last fall that held it would require undue experimentation to effectively swap an electrical sensor in for a mechanical one. The claim construed to include the electrical sensor was thus invalid for lacking enablement. While undue experimentation and obviousness are not the same inquiry, after KSR they both look at what would be routine and predictable to one skilled in the art. Perhaps the PHOSITA is dumber when trying to make somethig work than when trying to come up with something new.

    Of course, this doesn’t sit well with Motorola or Rockwell’s “in order to render a claim obvious, the prior art must enable that claim” (paraphrase).

  6. Dennis,

    Are you going to address Agrizap (CAFC 3/28/08) on Monday?

    I’m not saying the ultimate decision is wrong or right. However, IMHO Judge Moore eviscerates much of the separation between an appeals court and a trial court by making de novo and stealth factual findings at the appeal level.

    How can one say in a first breath: “—we presume all factual disputes were resolved in favor of the verdict [by the jury of nonobviousness]. See Jurgens v. McKasy” and then in a second breath: “the objective evidence of nonobviousness simply cannot overcome such a strong prima facie case of obviousness”?

    Moreover, how does a mechanical switch make obvious a “resistive switch further comprising a trigger circuit having a trigger output and an arm/disarm input”? Does a mechanical switch have an arm/disarm input? Is it electronically couplable to an electronic timer? It seems that the appeal court bypasses a rigorous analysis of Claim 16 in whole and jumps (LeapFrogs) all too quickly to the conclusion it had in mind in the first place. If it all was so obvious, why did the Defendant have to copy the patentee’s design by use of fraud? Isn’t copying a strong indicator of nonobviousness?

    Any thoughts on this by the blog community?

  7. My personal theory is that the reason patent litigation tends to rise during bad times is that prospective defendants/targets are less able to afford the license/settlement fees demanded by prospective plaintiffs and thus disputes which would otherwise have settled prior to litigation don’t. These defendants figure it is cheaper to spend $3-5 million defending a patent case and put off the day of reckoning for a couple of years than to pay high royalties up front, which they might not be able to afford During litigation, they figure, they may find prior art which will weaken the patent (and enable them to demand a lower license fee) or may get a good Markman ruling which might avoid infringement altogether (or lower the settlement value of the case). For large cases involving big dollar amounts, the possible good effects that could be gained during litigation plus the delay will outweigh the lawyers fees.

    At least that’s my theory.

    Or maybe recessions just make everyone cranky.

    I have noticed, however, that patent litigation also rises during good economic times. I don’t have a theory for that one.

  8. “It looks like Knobbe’s filings are bucking the trend (up 21.7%). I wonder what the cause might be.”

    It looks like they were fairly flat from 2005 to 2006, where many of the firms listed took a big jump. Is it bucking the trend or lagging behind?

  9. It looks like Knobbe’s filings are bucking the trend (up 21.7%). I wonder what the cause might be.

  10. Here’s pretty good evidence that filings are DOWN:

    link to iptoday.com

    I’d further wager that the abandonment rate is UP. Anecdotal (!) evidence confirms that 1) prosecution budgets get slashed right after new app budgets, and 2) prosecution is becoming more costly due to USPTO policies. It’s a shame too, some of these new rejections need to be appealed to CAFC to get the law/USPTO straight. But abandonment is more fiscally prudent in these times.

  11. “Plan for the worst – it’s coming.”

    Way to put the “happy” in “happy hour” . . .

  12. How about I ask a more direct question.

    Forget about when times are “tight”.

    How about when we are entering a period of massive economic depression and bank failures? Globally?

    I’d say look at the stats from the Great Depression and extrapolate them substantially.

    Plan for the worst – it’s coming.

  13. Merely an anecdotal observation, but my experience has been that as economic times get tougher clients have a tendency to retrench and cut expenses across the board. Among the first to be reined in are fees to counsel.

  14. Dennis: Patent practitioners who have practiced for decades (and thus long enough to see trends) have told me that in economic downturns, patent prosecution business tends to go down and patent litigation business tends to rise. The rationale is that, during downturns, companies may be seeking additional sources of income from litigation and seeking to avoid additional expenses from patent prosecution. Those, of course, are macro observations.

  15. Dennis wrote: “Why do the pharmaceutical companies rarely (if ever) file their patent infringement suits in the Eastern District of Texas?”

    Dennis, it depends on who is doing the filing, but generally pharmeceutical cases take a different philosophy than other infringement cases.

    An accused infringer typically wants to delay as long as possible, hoping to wear down his opponent. The patent owner typically wants rapid enforcement to stop the bleeding, or otherwise to monetize the patent.

    In a pharm case, the patent owner already has enjoyed an exclusive market share b/c competitors must get FDA approval before selling competing drugs. The filing of an infringement suit based on an ANDA application will delay the competitor’s entry into the marketplace, effectively extending the patent owner’s monopoly.

    Food for thought, check statistics on ANDA cases filed in D. NJ. I suspect you’ll find many of those cases are filed by the patent owners. New Jersey also has, from what I understand, one of worst pendency rates in the country. Cases filed in other jurisdictions, such as ED Mich where cases typically go to trial in 18-20 months, for example, are typically sought by the competitors.

Comments are closed.