Historic Underpinnings of the Inventor Rights Act of 2019

I received some questions regarding my statement that the provisions of the Inventor Rights Act of 2019 “have historic roots.”  This post addresses those in more detail.

Profit Disgorgement – Reset to 1946: I will start with the profit disgorgement provision – which is a major change away from the current compensatory scheme in U.S. Utility Patent Law.  That said, disgorgement remains available for design patent infringement as well as other IP regimes such as copyright, trademark, and trade secret misappropriation.  The basic approach to disgorgement is to calculate the infringer’s profits associated with the infringement and then hand those profits over to the rights holder.  As Supreme Court explained in Tilghman v. Proctor, 125 U.S. 136 (1888), this approach is designed to avoid unjust enrichment by the infringer — what patent owners term “efficient infringement.”

The reasons that have led to the adoption of this [profit disgorgement] rule are that it comes nearer than any other to doing complete justice between the parties, that in equity the profits made by the infringer of a patent belong to the patentee and not to the infringer, and that it is inconsistent with the ordinary principles and practice of courts of chancery either on the one hand to permit the wrongdoer to profit by his own wrong

Tilghman v. Proctor, 125 U.S. 136 (1888).  Profit disgorgement was eliminated from the text of the Patent Act in 1946 and Courts have held that it is no longer an available remedy. See Aro Manufacturing Co. v. Convertible Top Replacement Co., 365 U.S. 336 (1961) (“The purpose of the change was precisely to eliminate the recovery of profits as such, and allow recovery of damages only.”); Caprice L. Roberts, The Case for Restitution and Unjust Enrichment Remedies in Patent Law, 14 Lewis & Clark L. Rev. 653 (2010).

The provision found in the Inventor Rights Act of 2019 would effectively reinstate the disgorgement option close to what it was back in the 1870s when disgorgement became available for cases at law in addition to those in equity where it was already available.

Venue – Reset to 2017: Under TC Heartland LLC v. Kraft Foods Group Brands LLC, 137 S. Ct. 1514 (2017), federal patent infringement lawsuits can only be filed in states where the defendant either (1) is incorporated or (2) “committed acts of infringement and has a regular and established place of business.” Quoting 28 U.S.C. § 1400(b).  Prior to TC Heartland, venue was much broader and was proper so long as the court had personal jurisdiction over the defendant (i.e., minimum contacts).  The proposal in the Inventor Rights Act of 2019 would not fully restore the broad venue, but would allow an inventor to sue in states where the inventor conducted research or has a regular and established physical facility.

Injunctions – Reset to 2006: For many years courts issued injunctions as a matter of course against adjudged infringers.  That changed following eBay Inc. v. MercExchange, L.L.C., 547 U.S. 388 (2006). In eBay, the Supreme Court ruled, inter alia, that no injunction should issue absent proof of irreparable harm caused by the infringement as well as inadequate remedy at law.

The proposal in the Inventor Rights Act of 2019 would would restore the pre-eBay law and thus allow for injunctive relief.

Post-Issuance Review – Reset to 1980: The Bayh-Dole Act (1980) authorized involuntary ex parte reexaminations. Since then, the scope of involuntary post issuance challenges have grown — most significantly with Trials under the 2011 America Invents Act (AIA).

The proposal in the Inventor Rights Act of 2019 would would restore the pre-1980 setup – barring any involuntary post-issuance review by the USPTO:

The United States Patent and Trademark Office shall not undertake a proceeding to reexamine, review, or otherwise make a determination about the validity of an inventor-owned patent without the consent of the patentee

IRA 2019.

Of course, a key principle of the proposal here is that it applies only to a subset of patents — those owned by their inventors.

(k) The term ‘inventor-owned patent’ means a patent with respect to which the inventor of the invention claimed by the patent or an entity controlled by that inventor—(1) is the patentee; and (2) holds all substantial rights.’

Id.

79 thoughts on “Historic Underpinnings of the Inventor Rights Act of 2019

  1. 16

    Ideally, the restored rights this bill would provide individual inventors should be available to all patent holders.

    That said, due to the terrible eBay decision, we already have a de facto bifurcated patent system in that virtually all patent-successful operating companies are able to obtain permanent injunctions against infringers . . . while virtually no one else can.

    This bifurcated-rights state of affairs is unfair, unreasonable, and indeed unconstitutional.

    The exclusionary right is the exclusionary right.

    A right which should be available to all.

    Yet; because to starving men and women, a half-loaf is far better than no loaf at all, Congress should — and quickly — pass this bill.

  2. 15

    Any thoughts on an equal protection challenge to the “inventor-owned” provision? Corporations, after all, are people, too … (it’s neither the time nor the place to get me started on that one) … remembering that the patentee need no longer be the inventor (two hot buttons in the same post, a record for me, I think; must be anticipation of the new decade starting a year from today — ooops, there’s number three).

  3. 14

    Irony alert. Disgorgment became, over time, subject to many infringer games concerning apportionment. This in turn lead to long and contentious discovery fights and complicated litigation. This was one of driving factors in changing the damages statute to “no less than a reasonable royalty” the idea being having a floor for damages that was much less contentious and would simplify this aspect of a patent enforcement action. Of course, as we all know, the apportionment creature is back, born again in the last decade or two, but this time applied to the “no less than a reasonable royalty” statute. Maybe we should dump the CAFC as a failed experiment. And happy new year.

    1. 14.1

      Interesting points, iwasthere, but I am not sure that I would follow where you lead.

      If, as you indicate, the gamesmanship was from infringers, then a parallel exists in that “reasonably royalty” is ALSO gamesmanship from infringers.

      We should return to first principles and realize that infringers should not be driving the restitution equation. At all.

      The notion that “reasonable royalty” is (and most likely always has been) a “bad” idea is that the infringer is faced with a “worst case” situation of even if ‘caught’ and forcing the patent holder through all types of expensive enforcement actions, the infringer merely pays some token payment, human nature will push for Efficient Infringement as a default action (along with the counter intuitive “don’t read patents for plausible deniability” — which is the opposite of why we have patents in the first place). This is a double lose setup.

      We want to make it practically necessary for patents to be read — especially in tech areas at the forefront of advancement, and especially in view of those that would rather compete on non-innovation terms (aka, Efficient Infringers, Big Corp who are established and can compete on prior market presence or larger cash reserves).

      We WANT disruptive innovation.

      If disgorgement was leading to gamesmanship, the better answer would be to control that gamesmanship (for example, require better clarity through simplified accounting requirements).

      I also do not follow how you throw the CAFC into the mix. There are reasons not to like the current (brow-beaten, fire-hose trained simians in a cage) version of the CAFC, but that’s quite different than your post.

      1. 14.1.1

        My point being that apportionment was the gamesmanship that made disgorgment (read infringer profits) complicated and many believed unworkable. Thus the “corrective” statutory response – was “no less than a reasonable royalty” i.e., putting in a floor for damages. Read carefully “no less” meaning it’s not a real arms length royalty – of which many are ill-informed – thinking the legal damages statute is some kind of simulated negotiation over a reasonable royalty. It’s not. It’s a legal construct to inform the jury, and to inform the jury that no matter what the infringer argument – it must award “no less than” a reasonable royalty. So I fault CAFC or was it SCOTUS? that re-injected apportionment into the modern damages statute – when the intent of the modern statute was to get rid of the unworkable “apportionment” paradigm that plagued the old ‘infringer profits’ statute. IMHO, the most appropriate corrective action at this point is to codify the equitable doctrine of “unjust enrichment” and this would be the remedy sans the injunction or during the stay of the injunction. And of course, the remedy for unjust enrichment is disgorgment of the infringer’s profits. Then and only then is the equation going to be in balance and ergo eliminate the efficient infringer. To be sure, during the period of 7th Amendment “legal damages” pre-trial, trial, and before final judgment (D. Ct. judgment – not the ‘end of all appeals’ judgment BS), it’s going to be the current statutory floor of ‘no less than a reasonable royalty’ and you can make a good case that leads to efficient infringement during that period. But then again, patent title has not been fully litigated to a finality at that point. Furthermore, let’s say the D. Ct issued an injunction – what’s the remedy for continued infringement? I would say – well that’s “unjust enrichment” so the contempt citation would be disgorgment of infringers profits. IMHO, the ‘fly in the ointment” is the post trial damages calculation being somehow deduced by a judge as some type of compulsory license AKA efficient infringement. Mosshoff and I disagree on this point, but in my view, the statute is silent wherein an injunction is not granted post trial. In other words, post trial, the only authorized remedy is under the court sitting in equity. There is no equity “law” for a compulsory license unless something unusual like public safety of sewage treatment or some such extraordinary matter. The only equity law at this point is injunction (full relief) or unjust enrichment – infringer profits – disgorgment. As pointed out above, in my view, you get to unjust enrichment with or without the injunction. Althought without the benefit of the specificity of the injunction as to what conduct is falling under that first trial. So if you are going to amend or clarify the damages statute – the amendment should be the post trial relief. Or another way, would be to flip the eBay case by statute. Meh, complicated stuff. Happy New year Anon.

        1. 14.1.1.1

          iwasthere,

          I think we agree far more than we may disagree.

          Happy New Year to you too!

  4. 13

    My alternate “solution” is to simply give individual inventors $50,000 cash for every distinct independent claim that is granted by the PTO, but leave every other patent statute unchanged. The amount is doubled if the inventor is a birthright citizen married to a non-immigrant with at least one offspring.

    This is the most direct and satisfying way of recognizing the incredible importance of Rich Whitey to the survival of our increasingly great country.

    1. 13.1

      …whitey…

  5. 12

    This sure seems like a complete reset + disgorgement.

    Two inventors: inventor A and inventor B. Each owns a 100% undivided right in the patent. Inventor A assigns all her rights to a PAE and Inventor B keeps his rights. Inventor B still has “all substantial rights” as does the PAE. It’s an inventor owned patent.

    Patent law starts to look like estate planning.

    1. 12.1

      … throw in state-by-state variances with spousal ownership rights…

    2. 12.2

      Exactly H2H. That is my comment below too. The problem is that it is trying to cut out an exception and when ownership changes from an inventor owned patent, then value is lost. This is a classic case of something the law should never do.

      1. 12.2.1

        … and there are further wrinkles in the University settings. In some cases, individuals are set up to transfer ownership to a university (State owned or otherwise), and if the university at some point decides not to prosecute, then the ownership rights revert back to the individual.

        What happens then in those cases? Are these “individual” sticks in the bundle of property rights somehow “kept alive” and remain with the individual, even though total property rights are transferred (and then transferred back)….?

    3. 12.3

      That is no different than the standing issue which is frequently disputed.

      1. 12.3.1

        Not following you Josh.

        The standing issue (as I understand it) is vastly different and is centered around the non-patent right holder and that person’s ability to bring challenge.

        (Currently with the IPR regime, in a split mode setting of Non-Article III standing for the executive branch portion, but NO bootstrapping into actual Article III land (actual Article III standing still required, and NOT mere set-up by Congress of the free-for-all anyone can challenge portion I.

  6. 11

    Allowing profit recovery sounds like a great way to reward good patents without making bad patents easier to enforce. I’d be onboard with this for all patentees. Pair it with a beefed up 112(a) and maybe it could get passed.

    1. 11.1

      without making bad patents easier to enforce.

      Attacking ‘ease of enforcement’ is NOT the way to eliminate “bad patents.”

      Please stop passing on fallacies, Ben.

  7. 10

    Will “Mike” who is allegedly worth “only” $300k (LOL) (from the previous thread) please share with us his patent numbers so we can see how oppressed he is by being unable to monetize them for millions?

    We already know that super oppressed white dudes Joshie and Paulie have earned $$$money$$$ from invalid junk so need to rehash that.

    1. 10.1

      Mike, don’t forget to tell Malcolm if you are “white” or not, because to him, Race is a critical attribute.

    2. 10.2

      New additions below, but worth noting that Malcolm has added yet more expungements to his record level of expungements (and ones that other posters have taken issue with yet remain).

      It will be 15 years this February of the same type of blight from Malcolm.

      As for Malcolm’s quip at 7.1 below, since it is so excessively rare that Malcolm actually provides a post with substance, one would be right to wonder what basis serves as Malcolm’s reference for his view of “deep substantive stuff.”

    3. 10.3

      Happy Hanukkah MM! Don’t forget to celebrate the rising against oppressors! Also, don’t forget that I oppressed you last week to the tune of a few k. :)

    4. 10.4

      Do you find my limited net worth funny?

      I will happily share my patent numbers, but only once I have secured representation for PTAB challenges. Given that anyone can challenge a patent in our AIA patent system, only a fool would show his cards if he doesn’t have the financial resources to defend his patent if challenged. A single challenge would wipe me out. I do not enjoy the fact that a patent today is a liability and not an asset.

      This points out yet again how the AIA created an unbalanced system. What the framers of the AIA failed to recall — a patent is an exclusionary right; it does not give an inventor the right to produce anything. Thus, one cannot assume that a patent holder of a valuable patent will readily have the financial reaources to defend his patent once challenged at the PTAB. This is another example of how the AIA threw small inventors under the bus.

      1. 10.4.1

        Completely agree.

        The AIA evidences what is called “Legislative Capture.”

        Not the first area of law to suffer this.
        Won’t be the last.

        (we really do need to corral the power of juristic persons)

        1. 10.4.1.1

          @anon.
          Can you elaborate on “corral the power of juristic persons”? What do you mean, and what do you have in mind?

  8. 9

    The law of venue was the same before and after TC Heartland; however, prior to TC Heartland, the Federal Circuit misinterpreted the law. What you’re suggesting would be a reversion of the law, would actually be a legislative adoption of this misinterpretation.

    1. 9.1

      Not sure I buy the whole “Supreme Court decision does not rewrite the law” underpinning to your statement, id.

      Sure, that maybe the case for your point, but that line is just not accurate for every attempted use.

    2. 9.2

      Correct, the patent venue statue was never changed, and remained on the books. It was only effectively rendered moot for all corporations [almost all defendants] for several years by an incorrect Fed. Cir. statutory interpretation [not based on any expressed Congressional intent] until the Sup. Ct. finally overruled that Fed. Cir. interpretation in TC Heartland. Whereas this proposed legislation would have to expressly change that statute for certain patent owners.

    1. 8.1

      One can just feel the renewed American greatness oozing out of these trade war sequelae:

      The U.S.’s move sparked outrage in Germany… A senior German government official said, in response to the pipeline sanctions, that Germany would… create a separate financial infrastructure that would allow European companies to escape the scope of U.S. sanctions. The banks involved would have to be based in jurisdictions out of the U.S.’s reach, such as China or possibly Russia, the official said.

      Yes, shafting the U.S. financial sector in favor of Russian and Chinese finance is definitely a sign of our renewed strength and vigor. The trade wars move from success to success.

      1. 8.1.1

        link to en.wikipedia.org

        Living in Europe, these days, feels like being on the Western Edge of the Middle Kingdom. The Link is to the Wiki entry for China’s “Belt and Road” project through and around the landmass one would until now call “Eurasia”. From here, the USA looks like part of an offshore island. Sort of like another island continent, Australia.

        Telecoms, now banks. Spread of influence into Africa, now Europe.The Middle Kingdom seems to be moving forward determinedly. Those around Trump are presumably bent on driving China back. Not sure they are succeeding though.

        1. 8.1.1.1

          Not sure they are succeeding though.

          China cannot believe its luck—the way that the U.S. has chosen actively to sabotage its own global leadership. If Pres. Trump were perversely intent on toppling the U.S. from its global preeminence and reducing us to a risible byword on the global stage, it is difficult to think of a discernible manner in which his policy actions would have been different from those that he has actually taken.

          1. 8.1.1.1.1

            Risible? Well, not quite there yet. But what really impresses some people in Europe is the possibility that, next year in America, the voters in the USA will be misguided enough to put Trump in for a second term.

            It’s a bit like in England: the voters seem to be wilfully blind to what is in their own interests. What is so puzzling is that it is n3rc1ss1sm, bluster and w1lful bl1ndn3ss which hits the voters’ sw33t sp0t most accurately. It’s what they admire the most, I guess, the boundless and unwavering self-confidence. They crave it too, I suppose.

            It must be making fascinating viewing for Team Xi Jinpeng. Surely, they can’t believe their luck.

            1. 8.1.1.1.1.1

              But what really impresses some people in Europe is the possibility that, next year in America, the voters in the USA will be misguided enough to put Trump in for a second term.

              It’s worse than you imagine.

              As exemplified by the multitude (from a very select group) of non-patent law rants that blight this sight, the even bigger problem than the Circus TV show president possibly being re-elected, is that the Circus polarized political party system here is NOT learning the lessons provided BY having a Circus TV President.

              We have two parties so at odds with each other that they BOTH are effectively giving the middle finger to the US population.

              Focusing only on “it’s Trump” badly misses the actual dynamics here.

              1. 8.1.1.1.1.1.1

                I don’t understand your point. What reasonable person, concerned for the future of representative democracy, can be anything other than “at odds” with the positions taken by Trump and his enablers? And how is that “at odds” posture in any way “giving the middle finger” to the electorate?

                Coming up with their own Trump-esque candidate, fighting fire with fire, is an insuperable problem for any Party seeking consensus, the centre ground, where every crucial issue is nuanced, complex. Voters today have no tolerance, no patience, no concentration, for any issue that is nuanced. When Trump goes low, voters today want the other side to go even lower, not higher. That, for me, spells the death of democracy. The next 5 years are going to be challenging.

                1. That you “don’t understand my point” is exactly why we got Trump in the first place. Granted that you are not of this sovereign (and may not grasp things those living here may readily grasp), but that you cannot pick up the point that the continued political fighting — as unrelenting as it has been through and including impeachment (but withholding delivering the articles to the Senate) IS the point that the real problem is NOT the circus of Trump, but the circus of polarized politics. Both sides of that polarization only care for their side, and the actual citizens in the middle are “d00med” to get what the parties will continue to provide (as we lack a viable third alternative).

                  People pretty much picked Trump the first time around BECAUSE he was a “TV show” personality, and largely outside of the usual Repub-Dem crowd. And sadly, he actually stands with the best chance currently of being elected again, because is not “politically savvy” (read that as most outside of the Republican-Dem established system.

                  People by and large are tired of BOTH political parties, but BOTH political parties seem oblivious to “flyover country” types of concerns, and pander only more so to the polarized elements.

  9. 7

    How refreshing to see an entire thread of substantive and thoughtful comments not tainted by the stench of MM’s offensive and off-topic rants.

    1. 7.1

      Right, lots of real deep substantive stuff here.

      LOL

  10. 6

    Thanks for this post. The damages part in particular I wasn’t aware of.

  11. 5

    It would reset patent law a lot further back than 1980, as it would also preclude interferences [or derivation proceedings] against issued patents. [Note, for example, that it was an interference that finally ended Hyatt’s highly lucrative patent assertions against any electronic device containing a microprocessor.]

  12. 4

    The proposal in the Inventor Rights Act of 2019 would would restore the pre-eBay law and thus allow for injunctive relief.

    I am all in favor of statutory repeal of Ebay (for everyone, not just for inventor-owned patents). Still and all, I am not really sure how meaningful it is to speak of “allow[ing] for injunctive relief.”

    If you go looking at district court orders post-Ebay in which the patent has been found valid and infringed, you do not actually find all that many instances in which an injunction is not granted. I do not see much evidence that the incidence of injunctions concomitant with a holding of validity and a finding of infringement has actually declined post-Ebay relative to pre-Ebay. If anyone knows of rigorous statistical analysis on this point, I would be interested to read it.

    The one exception to the above is cases involving FRAND technologies. However, I expect that courts would have treated FRAND cases differently even if Ebay had never happened, so it is hard to say that Ebay actually made a difference in FRAND cases.

    1. 4.1

      Greg:

      You might enjoy reading this paper:

      link to ilr.law.uiowa.edu

      From the abstract:

      “This Article helps fill this gap in the literature by reporting the results of an
      original empirical study of contested permanent injunction decisions in
      district courts for a 7.5-year period following eBay. It finds that eBay has
      effectively created a bifurcated regime for patent remedies, as operating
      companies who compete against an infringer still obtain permanent
      injunctions in the vast majority of cases that are successfully litigated to
      judgment. In contrast, non-competitors and other non-practicing entities are generally denied injunctive relief. These findings are robust even after
      controlling for the field of patented technology and the particular court that
      decided the injunction request.”

      1. 4.1.1

        Thanks. I had not seen this before. I will be interested to read it.

      2. 4.1.2

        eBay has effectively created a bifurcated regime for patent remedies, as operating companies… still obtain permanent injunctions in the vast majority of cases…[, while] non-practicing entities are generally denied injunctive relief.

        In practice, this essentially means: (1) that Ebay‘s overall effect is increasingly slight, because NPE suits grow increasingly rare (see Fig. 5); and (2) the effect of the proposed “Inventor Rights Act of 2019” (IRA2019) will be fairly slight along this dimension, because the folks most in need of a reversal of Ebay (i.e., PAEs) will largely be unable to take advantage of the IRA2019 provisions.

        1. 4.1.2.1

          This legislation aims to Make Patent Trolling Scary Again.

          1. 4.1.2.1.1

            … IF you believe that myth ever was reflective of reality…

  13. 3

    Great article. I can see I’m way out of date on a lot of these issues, and OMG.

  14. 2

    Rep. Danny Davis (D-Il) and Paul Gosar (R-Az) have introduced the Inventor Rights Act. H.R.5478…

    Paul Gosar, where have I heard that name recently? Oh yeah

    1. 2.1

      A prince among men…

    2. 2.2

      Danny Davis is also a reliable water carrier for dubious interests, providing he gets paid for it in some manner.

  15. 1

    Of course, a key principle of the proposal here is that it applies only to a subset of patents — those owned by their inventors.

    … and my biggest beef with the proposed law.

    Making the property right substantively dependent on the particular owner of the property is simply a step in the wrong direction as to the original intent of the property right being FULLY alienable.

    What appears to be on the surface a “benefit” to the small inventor may well be a nightmare when it comes to those who would rather invent and then pass of the invention to others to put into practice.

    ANY of the changes desired (for any of the reasons provided) should be entertained ACROSS THE BOARD for any owner of a patent right (and thus, maintain the full functioning of alienability).

    Notably, this is NOT to say that the reasons for change are somehow “invalid.” This is to say that there are no truly good reasons that any of the proposed changes should be limited to a particular subset — those who practice their innovation — (of a subset — non-Big Corp) of innovators.

    1. 1.1

      I agree. It gives with one hand and takes from the other.

      Plus setting up these strange systems always creates massive weirdness. I can image a case where you sell licensing rights when you sell your company but retain the rights to the patents under weird circumstances and agree to sue when asked to sue.

      The whole thing is a massive mess that will create all sorts of problems.

      1. 1.1.1

        [S]etting up these strange systems always creates massive weirdness. I can image a case where you sell licensing rights when you sell your company but retain the rights to the patents under weird circumstances and agree to sue when asked to sue.

        Sure. If this bill were to pass, one would expect to see a great deal of innovations emerge in the way that employment agreements treat ownership of patent rights from employee inventors. Most (all?) of these innovations would turn out not to work in the way that the innovators hoped, although these points would not be established in litigation until years after the fact. Of course, many established companies would (quite sanely) ignore the law altogether and just keep doing what they do presently.

        Mercifully, this bill is not at all likely to pass into law. Therefore, we will likely never need to deal with the complications that such a law would engender.

    2. 1.2

      I agree with you anon. I also agree with Josh Malone and that guy (forgot his name) who spoke at the Patent Office.

      The AIA created an underrepresented class of inventors. eBay and TC Heartland also contributed. Also, that an infringer can steal, pay damages, and still profit from the theft is bad as well.

      If Congress wants to keep the provisions of the AIA, something like the Inventor Rights Act is necessary to keep that class participating in the patent system. The only reason anyone in this class does so now is because of ignorance in the realities of today’s patent system. They will find out the painful truth when it comes to to utilize their patent instrument. A patent today gives an inventor no more than an expensive piece of paper and an increased risk of having their patent challenged in an expensive proceeding.

      If Congress doesn’t like the Inventor Rights Act, then they should undo the AIA and the PTAB altogether for everyone.

      Today’s AIA system completely removes the incentive to seek patent protection. No protection, no investment. No investment, no progress of useful arts.

      Either include the Inventor Rights Act, or undo the AIA. I don’t ever see Congress undoing the AIA.

      1. 1.2.1

        Today’s AIA system completely removes the incentive to seek patent protection. No protection, no investment. No investment, no progress of useful arts.

        Any empirical basis for this assertion? Per page 179 of this PTO document, patent application numbers continue to rise every year, except for a less than 0.2% drop from 2014 to 2015.

        I’ll agree that in general the AIA makes patents easier to challenge less valuable overall, but I’m not aware of any evidence that it’s led to inventors opting out of the patent system en masse.

        link to uspto.gov

        1. 1.2.1.1

          Your numbers include foreign filings which have gone way up and first filings from foreign inventors that don’t live in the USA.

          The applications from inventors in the USA have dropped.

          There would be layoffs at the PTO if it were not for China.

        2. 1.2.1.2

          Number of applications increasing, but by whom? Inventors employed by big businesses who assign to them, or inventors who actually own and retain their own inventions.

          Evidence regarding the latter can be found in the “comments by individuals” in the SUCCESS Act study:

          link to uspto.gov

          link to usinventor.org

          1. 1.2.1.2.1

            Number of applications increasing, but by whom? Inventors employed by big businesses who assign to them, or inventors who actually own and retain their own inventions.

            Why should anyone care about the distinction? Do inventions made by inventors who retain title to the patent ipso facto advance the state of the art or improve public welfare more than inventions made by employees of large businesses?

            1. 1.2.1.2.1.1

              >> Why should anyone care about the distinction? 

              You’re right. The intent of the patent clause of the U.S. Constitution is “To promote the progress of science and useful arts,” and progress should be able to arise, no matter the source.

              But the AIA et al changed that. As shown and as stated, the current state of the patent system serves to discourage small inventors from seeking and thus possessing patent protection for their inventions and discoveries. Thus, not leaving anyone behind is why one should care about the distinction.

              >> Do inventions made by inventors who retain title to the patent ipso facto advance the state of the art or improve public welfare more than inventions made by employees of large businesses?

              Do they not? Besides, “why should anyone care about the distinction?” Promotion is promotion, no matter the subjective “advancement”. But when an inventor elects to not participate in pursuing a patent due to the inability to enforce/defend it once granted, this is a whole different ballgame. This is not “inventions made by inventors who retain title to the patent”, but rather, inventions made by inventors who do not retain title to any patent in the first instance because they elected not to pursue it based on the financial risks – a predicament large businesses less likely face given that large businesses can more likely afford to enforce/defend their granted patents.

              1. 1.2.1.2.1.1.1

                The intent of the patent clause of the U.S. Constitution is “To promote the progress of science and useful arts,” and progress should be able to arise, no matter the source. But the AIA et al changed that.

                Did it? What is the evidence?

                Do we see meaningfully less innovation post-AIA than pre-AIA, with an inflection point meaningfully after the advent of the AIA? I am unaware of any such data. Perhaps you can point me to them?

                1. Greg,

                  You seem to want to pretend that there is no such thing as Efficient Infringement.

                  Your calls for data (in and of themselves not cringe-worthy), appear in context here to lower your credibility.

                2. Greg, there will always be innovation. The point is that a democratic patent system accelerates it. The best evidence is the technological superiority of the USA 1790 to 2006. But I don’t see any way to do a controlled experiment. The hypothesis would be that a democratic patent system produces at least 2X the innovation of an elitist patent system. How can we test it? What innovations are we missing now that the cost of an enforceable patent is in the 8 figures?

                3. Greg, there will always be innovation. The point is that a democratic patent system accelerates it.

                  Agreed. There will be some baseline of innovation even without a patent system, so the point of the patent system is not mere that one have innovation, but rather that one have more innovation with the system than one would have without. So far, we are still on the same wavelength.

                  The hypothesis would be that a democratic patent system produces at least 2X the innovation of an elitist patent system. How can we test it? What innovations are we missing now that the cost of an enforceable patent is in the 8 figures?

                  I take your point about the difficulty of knowing whether the system is working. We only know what innovation we are getting, not what we are not getting.

                  Given that we both accept the axiom that the patent system does accelerate innovation relative to the rate of innovation that would obtain in a (purely hypothetical) otherwise identical society different only in that it lacks a patent system, it seems to me that we can make the argument against this bill fairly simple. My argument is predicated on the commonly accepted principle “if it ain’t broke, don’t fix it.”

                  The AIA was meant to reduce the social costs of a patent system (i.e., to reduce total patent litigation costs) without negatively affecting innovation. By all accounts, the AIA appears to have succeeded. We can see a significant drop in the amount of money spent on patent litigation, but no observable decrease in the rate of new patent filings, or new products coming to market (or any other objective index of the rate of innovation).

                  In other words, the AIA appears to be working. If it ain’t broke, don’t fix it. Therefore, one should eschew “fixes” to the AIA at this time. There is no “problem” with the AIA from the perspective of the broader society, and therefore no “fix” needed.

                4. The best evidence [of the democratic patent system accelerating innovation] is the technological superiority of the USA 1790 to 2006.

                  (1) This is no evidence at all. What “technological superiority” between 1790 and 2006? U.S. inventors invented the cotton gin, nylon, automobiles, and airplanes (etc) in that time interval. During that same time interval, the British invented wireless radio transmission, RADAR, penicillin, vaccination, asphalt roads, locomotive engines, Portland cement, and the first mechanical calculator (etc). Similarly, the Germans in that time interval invented pretty much every phosphorus- or nitrogen-based fertilizer presently used, a variety of polymers (PVC, PMMC, polycarbonate, polyethylene), the first digital computer (Z3), the elevator, the hydraulic break, aspirin, heroin, the submachine gun, (etc.). The Japanese invented the walkman, ephedrine & epinephrine, methamphetamine, MSG, the Li ion battery, the blue laser, the CD player, (etc).

                  Sure, we invented a lot of really great inventions. America definitely deserves a place in the top tier of technological innovation. It is not clear to me, however, that we are really “superior” to the rest of the world during the whole of that time interval.

                  The only portion of that 1790 to 2006 interval during which we were really, incontestably “superior” to the rest of the world was in the interval from 1945-1960. That is to say, we blew past the rest of the world during the time interval in which the rest of the industrialized world was rebuilding after being bombed to smitherines in WWII. Not surprisingly, most scientists of note immigrated to the U.S. during that time interval. It is hardly surprising that when Einstein (from Germany), Luria (from Italy), Cori (from Czechoslovakia), Fermi (Italy), von Braun (Germany), Bethe (France), Okazaki (Japan) & Wu (China) all immigrate to the U.S., that the U.S. should outpace the countries that they left behind.

                  This seems to me to have rather less to do with the patent system and more to do with our distinctively welcoming immigration laws (now sadly being neglected).

                  (2) In any event, even if the U.S. had been technologically superior to our peer nations across this whole asserted time interval, it is hard to see how that could be laid at the feet of the patent system. During almost all of that time interval, U.S. patents were available to citizens of Britain, France, Belgium (etc) and later German, Japan, China (etc.). It is not as if U.S. patents incentivize U.S. innovation, while foreign patents incentivize foreign innovation. Pretty much all patent systems incentivize pretty much all innovation.

              2. 1.2.1.2.1.1.2

                Well stated — and worth noting that the US “Great Experiment” (included in our Sovereign’s set up and Quid Pro Quo) was to avoid the “Game of Kings” syndrome that had afflicted many other contemporary patent systems.

                The US designed its patent system such that one did not even need to be wealthy enough TO “put into practice” one’s own innovations.

                This does of course include the notion that others (other than the inventor) should not be disadvantaged after purchasing (or licensing) a property right from another.

                This is also why my comments are geared to making patents strong (regardless of class, or sub-class, of inventor).

                We want strong patents.

                We should not sacrifice any strength by then artificially constraining substantive strengths of a patent to any subset of owner — and we should preserve the full value of property being fully alienable.

            2. 1.2.1.2.1.2

              Of course we should care about this. The patent system is meant to provide incentives to invent. If a segment of the people that may invent are not getting that incentive, then we should care.

              1. 1.2.1.2.1.2.1

                Greg’s “Big Pharma” taint is quite evident.

                Both here and on the related thread in which Greg tries to co-opt the proposed legislation and make juristic persons even stronger.

                Corporatacracy is a real thing to be aware of and beware of.

              2. 1.2.1.2.1.2.2

                Greg’s past posts also reveal that he does not care about Sovereign-centric effects of patent law.

                Night Writer, you simply won’t make any ground with Greg on these points (no matter how ‘polite’ you may be).

              3. 1.2.1.2.1.2.3

                If a segment of the people that may invent are not getting that incentive, then we should care.

                How could we ever hope to know this? I am sure that you are correct that if we could detect this social segment with unfulfilled potential and if we could know why they are not living up to their potential and if the reason why was tractable to legal intervention, then it would be worthwhile to effect that legal intervention. I despair of (or shudder at) the sort societal monitoring necessary to know those three “if”s, however.

                To my mind, the most we can hope to know is “are we getting innovation?”. If the answer to that one is “yes,” be happy. Do not worry about whether the innovation that you are getting is made by garage tinkerers or by professionals working in well capitalized labs.

                1. Greg – I would posit that it is entirely rational to assume that throwing out a large carrot (i.e. strong, relatively inexpensive U.S. patent protection for small, individual inventors) creates a paradigm in which you have an R&D department consisting of 350 MILLION men & women (and that is just in the USA alone).

                  Limiting incentives to Patent to the relatively tiny subset of inventive individuals employed by large corporations seems extremely shortsighted.

                  Additionally, the incentive to invent within a large corporation (where your invention and the resulting profits are immediately assigned to the corporation) are not nearly as strong as in a system where the individual inventor receives the majority of the profits of the invention.

                2. I despair of (or shudder at) the sort societal monitoring necessary to know those three “if”s, however.

                  Now that is some massive prevarication and equivocation.

                  It’s not nearly as difficult as Greg wants to make it out to be.

                  And it is also NOT needed.

                  Make the patent right itself strong – make the property fully alienable. Do the “retrograde” things outlined to reverse the relatively recent trends that have weakened patents and THOSE changes alone will bring benefits to the identified subset of particular owners (and to all owners).

                3. [A]… strong, relatively inexpensive U.S. patent protection for small, individual inventors… creates a paradigm in which you have an R&D department consisting of [hundreds of millions of] men & women…

                  Limiting incentives to Patent to the relatively tiny subset of inventive individuals employed by large corporations seems extremely shortsighted.

                  Agreed. I do not want to favor innovation from large businesses over innovation from individuals. I also do not want to favor innovation from individuals over innovation from large businesses.

                  The patent laws exist to promote innovation—full stop. If you are getting less innovation than previously, it might make sense to adjust the patent laws accordingly. If the rate of innovation is not declining, however, one should resist the temptation to adjust and calibrate. There is nothing about “built in a garage” innovation that makes it intrinsically better (or worse) than “built in a research lab” innovation.

                4. >> How could we ever hope to know [if a segment of the people that may invent are not getting that incentive]?

                  By their testimony: link to usinventor.org

                  All comments have been made available here: link to uspto.gov

                  You will clearly see that segment of people stating that the incentive has been lost.

                5. anon,

                  That is hilarious.

                  Someone admits to burning a house. House owner cries out: “I do not accept. Give me the data from a study!”

                  …or something like that

                6. By their testimony…

                  Surely you can see why one might not be inclined to regard self-interested but unsubstantiated ipse dixit as terribly convincing. It is “evidence” for whatever little it might be worth, but that is very>/i> little.

                7. @greg,

                  You suggest societal monitoring as the means to know whether one has an incentive. To prefer the impossible task of reading minds rather than actual testimony from on the matter leaves me speechless.

                  Cheers.

                8. Fair enough, of course. I will not begrudge a fellow a little performative incredulity at this festive and indulgent season. Cheers, likewise.

                9. >> I will not begrudge a fellow a little performative incredulity at this festive and indulgent season.

                  Likewise. Once the season has passed, I look forward to your investigation of the testimonies delivered by a segment of the population expressing that they are not getting that incentive by the links provided.

                  Happy New Year!

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