Patents losing value

10 Oct

The anti-patent lobby (basically big business invention thieves who want small business patents to disappear) is WINNING.

1. ASIA Act of 2011 (America Stops Inventing Act, or in 1984 type doublespeak officially called America Invents Act or AIA) – I prefer to call it ASIA since that is where the jobs it creates will go and since it really is the America STOPS Inventing Act for reasons I have previously posted.  Anyway, the ASIA took a patent system heavily biased in favor of big business and distorted it much more in favor of invention thieves, big business, idiots, and patent challengers. The ASIA act was also riddled with special interest giveaways to particular fat cats such as a $214M malpractice bailout for a well connected law firm and a special infringement defense for Wall Street bankers.

2. Alice v CLS. A 2014 Supreme Court decision (or misdecision) that turned an obviousness defense into an ineligble-subject-matter defense and American software patents collectively lost billions of dollars in value. We would have previously thought that “take a known process and do it with a computer” would be patentable subject matter but ineligible for protection due to being obvious. Using a two-step analysis (First, is the basic idea, the basic method, known for non-computer use? And, second is there sufficient hardware or transformation present to make it more than just simple computerization? [i.e. is the application to computers obvious]  If yes to both, the “invention” is not an invention but rather “ineligible subject matter”.) Since Alice v CLS, courts are holding invalide virtually every software patent in which the defense asserts this new Alice v CLS test. That is, software patents have been rendered likely invalid and essentially worthless by the Supreme Court.

3. Fee shifting. In order to clumsily try to stop patent trolls from making bogus claims of patent infringement, the Supreme Court has in its Highmark and Octane Fitness decisions, basically dictated that a one-way fee shift should be imposed. If you assert a patent and lose you must now expect to pay the fees of the alleged infringer. If you assert a patent and win, you don’t generally collect your legal fees unless the case is really exceptional.

4. Expensive delaying challenges added to the system. Challenges drive up cost prohibitively. To get rid of BAD patents (i.e. ones you don’t own and want to infringe), new very expensive challenge procedures have been added. An infringer can basically bankupt any small entity patent owner. This allows big business, which can afford to defend against such challenges, to assert patents while small business cannot afford to assert patents.

5. First to File. In order to “harmonize” the US Patent System with the inferior patent systems of other nations, the AIA unilaterally gave up a “first to invent” system that our founding fathers had established in 1790 and which served the nation well for 226 years. James Madison wrote the patent clause (Art. 1, Section 8, Clause 8 of the US Constitution) to change King George’s policy of giving patents not to inventors but to courtiers and favorites. They felt the reward should go to creators for their labors not to fat cats as a reward for being rich. That is, patents were intended to favor the small inventor against fat cats that would steal, with the King’s assistance, the results of their inventive effort. Fast forward two centuries and the US now has its own fat cats, we know them as the 1%. Big business, which understands the rules and how to use them to advantage, got the best Congress money can buy to change the rules. Big business is now able to better steal inventions from small inventors by filing fast and lobbying Congress to pass a law that the first to file is the legal first inventor regardless of who was actually the first to invent.  This further favors big business by causing small inventor patent disclosures to be rushed out half-baked in sloppy form so they are easier to challenge, those challenges being expensive things where big business has an overwhelming advantage. A terrible change unless you are a big business (in which case it is a wonderful change.) The director of SIPO (Chinese patent office) said “thank you” for this gift to the Chinese economy.

5. Patent litigation costs skyrocketing. They were already outrageously high. Congress, at the urging of big business, has made them even higher. If you are a small business, any big business can probably use your invention with impunity unless the damages to you are over $10,000,000, which is about the threshold for a contingent fee patent litigator to take the case. Fee shifting has greatly reduced the incentive, however, for a contingent fee litigator to take anything but a slam dunk case. Hence, in part, the 40% drop in litigation. Unfair to small business was not enough. This enforcement cost makes the system EXTREMELY unfair.

The BOTTOM LINE is that patents are now strictly a rich man’s game, a means for the rich to oppress the poor. The US Patent system was for 226 years the engine that drove the US economy to world domination by leveling the playing field and rewarding true inventors. Now it’s just another means to stomp out the main source of new jobs in our economy. It does what James Madison designed it to prevent.


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