Protecting Innovation

Posted by Cyberbear on May 3, 2015 in Computer Hardware, Intellectual Property, Litigation, Patents |

Posted by: Michael Avila

April 20, 2015

Page_37_Digest_of_United_States_automobile_patents_from_1789_to_July_1,_1899_closeupArticle I, Section 8 of the United States Constitution provides Congress with the power “To promote the progress of science and useful arts, by securing for limited times to authors and inventors the exclusive right to their writings and discoveries”. Through this statement the legitimacy of copyright and patent law was born, and the rights of these innovators were protected and codified under Title 35 of the United States Code. Recently the rash of so called “Patent Trolls” has reached epidemic levels has threatened this system and put many such innovators on the defensive as evidenced by Apple’s claim that they had been the target of over one hundred Patent Trolls in the three years preceding 2014.

Patent Trolls, to the unfamiliar, are persons or entities that buy up broad patents in the hope that they will be able to use them against a business in the future. Due to the overbroad nature of many patents, especially software patents, many major software and Internet companies have become targets of these Patent Trolls. Because the cost of litigation is so high and the chances of winning against an established patent so unsure, it is often more cost-effective to settle out of court than to fight the actual claim. In a sense, these Patent Trolls are using a form of legal extortion to get exorbitant amounts of money out of businesses and are therefore putting the very foundation of what those patents were created for in jeopardy.

To give an example, Uniloc is a company that at one point filed twelve different patent lawsuits in a single week. Two years ago Uniloc sued Austin Meyer, the designer of a flight simulator app on the Android platform that used an authorization platform, provided to all Android app developers, for which Uniloc claims to hold the patent. While Meyer is fighting this infringement claim, the fact that he is one man fighting against a company that has made an inordinate amount of money doing this weighs the odds heavily against him.

On the other side of the coin, as recently as February of this year Apple lost a verdict that penalized them for damages of upwards of $533 million. The company that won the lawsuit has no employees and produces not products, but instead owns a patent that describes gives the vague description of a music player that hooks up to a computer. On top of this, the very same company is making moves towards suing Samsung, Google, and Amazon for alleged infringements.

Does this sound like a product that Apple makes? Absolutely, they’re success can more than likely be put down to the success of the iPod and the general goodwill that the highly popular product bought the company. Did they rip off an idea that had previously been patented? Possibly, though to claim that they stole and unsuccessful product seems to be missing the mark a bit. Does the legal system side against Apple on this? At the moment, without question.

According to the Washington Post, Patent Trolls now account for 67% of all patent lawsuits and the average verdict in favor of these plaintiffs is $4.3 million. In short, though other companies may be innovating and inventing, the problems of an overworked patent office that has allowed overbroad patents to be accepted in the past are seeping through and hurting legitimate businesses with legitimate concerns.

What can these businesses do the face of such aggressive and predatory tactics? At the moment there is unfortunately little that can be done. On top of taking advantage of the legal system there is strong evidence of forum shopping to the Eastern District of Texas in which the rules are much more beneficial to the plaintiffs in these cases.

Recently the Supreme Court has been taking on more cases involving patents, seemingly in response to the undeserved deference given to them by judges and juries and in order clarify how they should be filed and interpreted. This is a step in the right direction, but without legislative support the courts will be fighting an uphill battle. While the decisions of the Supreme Court supersede any other decisions, legislative action allows for much more far-reaching remedies to solve the issues of Patent Trolling.

That is not to say that Congress has not tried to address this issue before – in 2013 the House of Representatives voted overwhelmingly to pass the Innovation Act, which, among other things, would have required more specificity in the beginning stages of an infringement action and thereby give more even footing to the defendants in these cases. It would also have required that the losing party pay for the winning party’s attorney fees, making this type of litigation much more of a gamble. Unfortunately the vote did not even reach the Senate floor and was passed over.

This has unfortunately left the system in limbo. While the courts are doing what they can to take care of the needless litigiousness of these lawsuits, not everything can be fixed with such a slow process that can often take years to reach as high as the Supreme Court. There is an obvious toll being taken on the potential of the United States’ tradition of innovation and its recovering economy as well. If people and businesses are under threat to be sued out of nowhere by a patent holder that may have no legitimate right to a lawsuit, but that they cannot afford to fight, then perhaps it may be smarter to just stay out of the game until it’s safe to come out and play again.

The Patent Office is, unfortunately, not always well suited to its duties either. In an article for the Journal of Technology Law and Policy in 2006, Steven Greenberg pointed out that, “More than forty percent of all Examiners in TC2100 have less than one year’s experience. For many, the position within the USPTO is a first job held after graduating college. Moreover, attrition rates among experienced Examiners in TC2100 now approaches twenty-five percent. Given the complexity of determining statutory subject matter, it is not reasonable to expect a junior examiner without any legal training to properly find a rejection…in most cases.” This leaves a lot of unsuitable patents in the system, and due to the previously mentioned advantages given to plaintiffs, a blind spot in what is supposed to be a system that promotes innovation.

However, on a much more optimistic note the House once again seems united in its desire to bring about patent reform. Despite its failure in the Senate, the House intends to push the bill through again, hopefully to at least some attention from the Senate instead of flat out apathy.

There are still other people who oppose this new bill and don’t see it as the right way to reform the patent system. Carly Fiorina recently theorized that under the Innovation Act inventors such as Thomas Edison would have been found to be Patent Trolls. While there is a risk of overbroad legislation, it seems better to err on the side of protecting actual innovators than get overcautious due to the fact that some people may be pushed out, especially when such a large number of lawsuits are started by Patent Trolls anyway. It seems that the aggregate good would be in favor of preventing such litigation from continuing at its current pace.

There will never be a perfect solution to this problem without breaking a few eggs. Overprotection of patents may lead to overbroad patents that shove out others and prevent continued invention and innovation. The opposing lack of protection could lead to the profit in the creation of new ideas declining to the point of it not being worth it to participate in new processes.

There have been recent studies that patent lawsuits have affected the economy negatively by reducing venture capitalism. And although, as quoted in that article, some may argue that constant litigation is the sign of a strong economy, it is hurting what is truly important: innovation. Without it the economy will become stagnant and the United States may find itself even more in the dust academically and industrially as time goes on.

Predation of this sort is at odds with the philosophy behind patent law and the American Dream. It adds to the growing perception that the United States is host to a needlessly litigious society that encourages people to get rich not off of their own work, but instead by finding how to steal the profit from the work of others. Action needs to be taken immediately if we are to see any sort of significant decline in these types of lawsuits.

Additionally, allowing such penalties and threats to continue to exist could pose a threat to the open source movement. If a broad, pre-existing patent could be shown to exist for what was thought to be an open source software, designers and end users could also be at risk to litigation that they could not possibly have seen coming.

However, the solution does lie in making sure that frivolous lawsuits are too risky to undertake. By legislating to make the courts a hostile environment to those who would seek to exploit the system there is a chance that we could get through this and allow the courts to dance around the roadblocks to legitimate concerns as they have always endeavored to do. In the current market nobody wins except for those with the pockets and the ambition to take money that they never really earned in the first place.

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