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Against Monopoly

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Patent

Monopoly corrupts. Absolute monopoly corrupts absolutely.





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Let's See: Pallas, Pan, Patents, Persephone, Perses, Poseidon, Prometheus...

When people think of patents, if they do at all, they usually picture a crazed inventor who looks a lot like Christopher Lloyd in Back to the Future, working late nights in the lab to come up with something completely crazy and absolutely amazing, that no one else would ever have thought of:

What a DeLorean is Good For...

If you've read this series of posts you know that this image is mostly mythological. The vast majority of patents are owned by corporations at filing, and describe minor modifications of what has gone before, if they describe anything useful at all. But that doesn't mean there isn't the occasional individual making a real contribution to a field.

Today, if that person wants to realize a profit from her or his work, they may choose to file for one or more patents and then either try to fund a company, sell the patents to a company, or just go sue people after others come up with the idea on their own. We have argued that the last behavior should not be supported or encouraged: no social value has been added. Let's replace it with a more worthwhile alternative, consistent with the open-source world, for individuals filing patents.

Once a patent filed by an individual or group of individuals is allowed, they should have the option of laying the patent open to the public. We might forgive them the issuance fee (only a few hundred bucks anyway for a "micro-entity"). Once a patent is laid open, it becomes part of the public domain, and cannot be converted back to property. However, the inventor or inventors become eligible for inventor awards. The USPTO will be responsible to administer the awards, which should be granted to inventors whose patents have proven useful in the relevant fields. Evaluation could sensibly wait 3 to 5 years to separate out stuff that actually works from the merely promising. That's also a time scale a government agency can handle, and it's not very different from the time needed to form a company and build a business. Awards ought to be big enough to get excited about - say $100,000, providing a 5-10x return on the cost to file. This is similar to the popular small business innovation research grants (SBIR) program, whose awards range from $40,000 to $100,000 for phase 1. Note that once a patent is laid open, all continuations must also be open, since otherwise the inventor could do a bait-and-switch to sue the user of the laid-open version with slightly different claims.

These awards could be easily funded from application fees. As we noted in a previous post, only 10% of applications are assigned to individual inventors. If 10% of those are laid open, and 10% of laid open patents receive an award (which is pretty generous), only one of 1000 granted patents is awarded. Adding $100 to application fees would cover the direct cost. That's about $40M for the 400,000 patents issued each year -- not a lot of money, but certainly welcome for the winners. Including a few special awards at e.g. $1M each would make a big public impact without costing much.

Having the USPTO administer the system is no worse than having the USPTO grant these monopolies in the first place. If the USPTO were required to reach out to industry to evaluate candidates, the process would have the ancillary benefit of exposing examiners to how ideas become useful (or not) in the real world. Companies will have no particular incentive to be deceptive about a method they are free to use, or an award they pay for anyway (as do their competitors), though of course political games and under-the-table payments will naturally occur at times. The candidate inventors could take no action, or campaign vigorously for companies to adopt their methods -- the latter being a great way to see if they've actually done anything useful.

A change like this would require legislation, but it should be relatively easy to achieve. The cost is small, it is in accord with public perception of the system, and provides nifty photo ops. Should some of the changes proposed in previous posts be implemented (not likely any time soon!), an award system would provide a way to compensate individuals for whom, for example, the path to demonstrating enablement had become prohibitively expensive and time-consuming.

And if it didn't work out, you could always get in the DeLorean, accelerate to 88, and go back the way things were before. Doesn't that work?

Some history

From USC:

USC

Empirical Testing: Challenges and Benefits

In the previous posts we discussed the possibility of requiring applicants to prove that practitioners of the relevant art can, aided by the application, solve a problem that they could not solve without it. What are the challenges in implementing such an enterprise, and what do we get in return?

Naturally the first complaint will come from applicants: we will have to pay for building the object we want a monopoly on? That's expensive! It takes a long time! It might not work!

Having been on the other side - developing products that take a lot of money and a long time, and might not work - for the last few decades, I don't have a lot of sympathy for this position. As we noted previously, only about 10% of US applications these days are owned by individuals, the remainder being assigned to corporations or other organizations. Corporate filers who are filing to protect their product line have the resources to build what they patent. Corporate filers who don't are probably Non-Practicing Entities (trolls), and should be expunged from the system in any case. Individual filers who don't have the resources to practice the invention they claim to have conceived can't demonstrate that they've actually enabled anyone else to do so. In effect, they are now required to find a partner with sufficient resources - which they needed to do anyway to get anything out of their patent, unless their strategy was to sue people who have independently developed what they claim to own, a reprehensible position society need not support.

A more serious objection is raised when one asks how to actually proceed with a test. Many real products require access to specialized resources, in some cases not easily reproduced. For example, an application dealing with semiconductor processing (the techniques used to make an integrated circuit wafer) may require modifications to a process step. Semiconductor fabrication factories ("fabs") cost hundreds of millions of dollars to set up and more millions to run, and do not make modifications to their processes for one customer, as this can put other customer's products at risk. An applicant who is an employee of such a fab may have the ability to test enablement - but they already know what the invention is and can't test obviousness. And if the test is conducted in the applicant's facility, they can provide numerous resources for enablement that are not disclosed in the application and not available to skilled people elsewhere, allowing them to appear to pass the test while not disclosing important information. Similarly, an algorithm might require specialized code libraries that are not publicly available; a drug might need unique catalysts or analytical capabilities.

But the problem here is more apparent than real. The false assumption that everyone ought to be granted monopolies, in the absence of any demonstration that they are deserved, is the difficulty. The result of imposing an empirical test requirement in the above circumstances is that filings cannot be made for ideas whose practicality cannot be demonstrated without an applicant's specialized resources. In business terms, we have just defined the situation where competitive advantage is mainly obtained from internally-developed or acquired resources not readily available to competitors or the public. Rights to exclude are irrelevant to the business and thus not needed by society. Typically such resources become available with the passing of time (and the competitive advantage of early vertically-integrated players is eroded). Empirical testing becomes possible just when it becomes necessary.

A more fundamental challenge is to ensure that both obviousness and enablement tests are not contaminated by the applicants. Testing should ideally proceed using resources that are independent from those available in the applicant's organization, and with no personal contact between the applicants or their representatives and the people performing the test. Further, the folks performing the tests should be able to act independently of their client's perceived interest. In the iterated-prisoner's-dilemma world of real business, where people deal with each other repeatedly, a firm may be tempted to always be stupid about invention and brilliant about enablement. The only way to avoid this result is to allow both applicants and competitors to fund the tests, and forbid their identity to be revealed. In this case, the performing person or firm doesn't know which side they are working for, and thus has no incentive to taint the results.

Another subtle issue is that in the event that the test is performed when the relevant patent application has been published, how are the testers to be prevented from accessing the application or patent during the obviousness test, while still having access to other relevant art? It seems necessary to implement a search engine that excludes the patent or application under examination, and any continuations [1] thereof. That's not very hard. However, the persons performing the test must agree to avoid the use of general-purpose patent search engines, so they don't get the patent before they are supposed to. That's harder: now we're dealing with human nature rather than code. A successful implementation will require procedures that do not impede research but also don't give away the answer, and the procedures may work better in some areas of art than in others. It's also possible the procedures will be different for e.g. a drug for human consumption and an embedded software program.

Finally, even if the testing is conducted in an ethical and thoughtful fashion, the results may be unintelligible, not just to a lay jury and judge but even to experts in the field. Engineers generally don't write well. That's why you probably need the people involved to provide testimony, so that the mysterious parts have some hope of explanation. (Not that a deposition is the best environment to get clarity - but it's what we've got.)

We can conclude that considerable thought, and some experimentation, will be needed to produce a useful implementation of empirical testing. And that's in addition to the need for legislation and international agreements. I told you it would get harder, not easier, as we progressed.

The great benefit of empirical testing is the stripping out of crap. In the absence of reference to experiment, human activities become the proverbial counting-angels-on-the-head-of-a-pin silliness. That's what the modern patent system is. Testing exposes plausible but false assertions in a system whose assumptions are today never challenged. Instead of unending silly arguments about what is obvious and what isn't, we have a factual examination of whether a bunch of folks came up with the "invention" after ten minutes of brainstorming, or worked for six months and never thought of anything like it. Instead of trivializing the hard part of innovation - getting an idea to actually work - we see if the supposed revelations of the specification produce a working model or a catastrophe. Litigation will still be an exercise in rationalization, but at least judge and jury will have anchors in reality they can use to constrain the fantasies of the competing parties.

The requirement for testing will also greatly reduce the number of granted patents that are likely to be the subjects of litigation. Most patents will simply be abandoned as not worth testing. Many others will be found obvious in testing, or fail enablement, causing their owners to abandon the patent, or at least to avoid litigating with it.

A secondary if narrower benefit is an opportunity for useful employment for people in any field in which patents are sought. As an engineer, I am, of course, lobbying for my folks here, though if the regime of applicability of patents continues to increase, other groups benefit, too. Why should the system only employ attorneys and patent agents? An empirical test regime would create an opportunity for people and consulting firms to make a living while (hopefully) adding value for society.

Finally, in making public the results of development work funded by would-be monopolists, we do what the system is supposed to do but often doesn't: we show folks exactly how to practice the supposed invention, and thus ensure that an invention that is enabled actually adds to our knowledge of how to do useful things.

And that's only the second-most insanely audacious proposal. More next time.

NOTES

1: A continuation is a patent application that uses the same specification as an earlier application, but has a different set of claims. A continuation-in-part adds new material to an earlier specification, and has additional claims.

Claimed Monopolies Over 'Running A Game of Skill Tournament'

How sill can patents get? This silly:

http://www.courthousenews.com/2011/09/13/GameShow.pdf [PDF link]

Thanks to CourtHouseNews.com for reporting this.

Apparently the Game Show Network felt it could just steal another company's property by having a computer match, rank and distribute awards to competing contestants based on their relative skill levels. They obviously need to pay dearly for this moral outrage...

More on the specific patent that the U.S. Patent office deemed worthy enough for a monopoly here:

http://www.google.com/patents?id=9ysFAAAAEBAJ&printsec=frontcover&dq=6,174,237&hl=en&ei=NXxvTvDyEOzOiAKYiIG4Bw&sa=X&oi=book_result&ct=result&resnum=1&ved=0CC0Q6AEwAA

Supreme Court Agrees To Once Again Tackle The Issue of What Can be Patentable

In what could be interpreted as a tacit admission that their previous ruling in Bilski last year was about as clear as mud, the Supreme Court has decided to take up another case concerning the validity of a patent claim "that covers observed correlations between blood test results and patient health, so that the claim effectively preempts all uses of the naturally occurring correlations, simply because well-known methods used to administer prescription drugs and test blood may involve 'transformations' of body chemistry."

This is another case that will be closely watched.

The full case name: Mayo Collaborative Services v. Prometheus Laboratories, Inc.

Background details of the case here:

http://www.scotusblog.com/case-files/cases/mayo-collaborative-services-v-prometheus-laboratories-inc/


More from the Patently-O blog here:

http://www.patentlyo.com/patent/2011/06/supreme-court-to-revisit-patentable-subject-matter-eligibility.html

The Next Important Legal Phase In The Gene Patenting Case

Andrew Cohen over at the Atlantic has a good primer on the important argument taking place this week at the Federal Circuit Court of Appeals:
In a closely-watched oral argument Monday at a federal courthouse in Washington, the core questions of the case read like scripts from a college philosophy exam: are isolated human genes and the subsequent comparisons of their sequences patentable? Can one company own a monopoly on such genes without violating the rights of others? They are multi-billion dollar questions, the judicially-sanctioned answers to which will have enormous ramifications for the worlds of medicine, science, law, business, politics and religion.

Even the name of the case at the U.S. Circuit Court for the Federal Circuit -- Association of Molecular Pathology, et al. v United States Patent and Trademark Office, et al -- oozes significance. The appeals court judges have been asked to determine whether seven existing patents covering two genes -- BRCA1 and BRCA2 (a/k/a "Breast Cancer Susceptibility Genes 1 and 2") -- are valid under federal law or, instead, fall under statutory exceptions that preclude from patentability what the law identifies as "products of nature..."

Read the whole thing here:

http://www.theatlantic.com/national/archive/2011/04/nature-vs-nuture-the-continuing-saga-of-the-gene-patenting-case/73359/

US Government says genes should not be patented

Yesterday's New York Times writes that the US Government has filed a brief stating that genes should not be eligible for patents. The arguments is that gene are part of nature and that extracting them without altering them does not change anything to their nature, much like when coal is extracted from the earth.

The brief seems to be a negotiated outcome among several federal agencies. The US patent office has not signed it.

Paul Allen Files Patent Lawsuits Against The Entire Web (Except for Microsoft )

Microsoft co-founder Paul Allen has filed a patent lawsuit that is breathtaking in scope - even by the ridiculous standards of modern patent claims. Defendants include Google, Apple, Yahoo, Netflix, Facebook, AOL, eBay, Youtube, Office Depot, OfficeMax and Staples. He alleges the companies violated patents owned by his now-defunct idea lab Interval Research.

As Wired reports:

The four patents at issue allegedly cover basics of online commerce, including recommending products to a user based on what they are currently looking at, and allowing readers of a news story to see other stories based on the current one. Two other patents relate to showing other information on a web page, such as news updates or stock quotes.

Obviously, the less-than-clarifying Bilski decision from the Supreme Court isn't deterring him.

Read more details (and see a copy of the lawsuit itself) at Wired.com here:

http://www.wired.com/epicenter/2010/08/paul-allen-patent-lawsuit/

Bilski Decision Watch (The Final Stretch?)

Unless the Supreme Court agrees to hold the Bilski patent case over until the next term and have the case re-argued (an almost inconceivable possibility since Justice Stevens is retiring at the end of this term), the Bilski patent case will be handed down on Monday, June 28th.

Even the most ardent defenders of the current patent regime expect the Court to strike down "business method" patents. The big question will be if the Court goes even farther and delivers a broader decision affecting software patents and other controversial forms of patent monopolies.

Stay tuned...

More Predictions That The Supreme Court will Rule Bilski's Claim Unpatentable

Read all about it here:

http://www.patentlyo.com/patent/2010/05/chien-recent-history-suggests-that-supreme-court-will-rule-bilskis-claim-unpatentable.html

The Bilski case will be issued within 6 weeks time at most (when the Court ends its session).

I'm doubling down on my earlier prediction that Justice Stevens will be writing the majority opinion - hopefully giving a memorable, final shot across the bow to our broken patent system before he retires.

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