Patently-O TidBits

• Last month, TiVo won its patent case against EchoStar.  The district court judge issued a permanent injunction and refused to stay the injunction pending appeal. In an emergency action, the CAFC immediately issued a temporary stay. Now, the CAFC has reportedly determined that the stay will remain in force until the appeal is concluded. [Can someone forward the order to dcrouch@gmail.com]. [Background]
• Attorney David Donoghue continues the trend of local IP litigation blogs — he’s focusing on Chicago district court cases here. He also continues the trend of using the industry leading law blog developer - LexBlog.
• My former property professor Richard Epstein recently gave an excellent talk on the “big tent” theory of property that spans the space from real property to water rights and, of course, intellectual property. [video] [paper — very accessible]. Highlights:
• Supreme Court made a “complete intellectual hash” in the eBay case.
• Troll problem: unfortunately dominated the discussion because this is a fringe issue.
• Fewer injunctions lead to compulsory licenses, and the damage model for compulsory licensing is pretty poor. [forced business relations don’t work well anyway].
• The potential for troll-like holdouts are better than forced exchanges.
• Lear should be overturned — contract rights should be strong because that gets you better licensing transactions. (these are hard enough deals to complete without the ambiguity added by Lear).
• Independent Ink: Patents do not confer a monopoly — that was a correct decision because there are many cases where patents do not confer any economic control over a market.

Comments

[Michael Slonecker]

Excellent discussion in the video presentation my Professor Epstein.

[Joe Smith]

This is a pretty shallow piece of work. He assumes that patents have an overall strong net positive impact on innovation. He pays lip service to transaction costs and ignores entirely those costs associated with the risk of being found to be infringing a patent (inadvertently) after spending millions of dollars developing and marketing a product.

He ignores the sequential nature of discovey and while he asserts that patent law may accelerate an invention ignores that it will then tend to delay follow-on improvements (think airplanes and steam engines where this happened). At the very end he admits that there is a problem with claim definition in patent law. Well "duh".

The real problem the SCOTUS was dealing with in eBay was how to deal with garbage patents and inadvertent infringers. Patent law needs a serious review starting with what is patentable and recognizing that the constitution only permits the granting of patents to the extent that the net effect of the patent law is to promote progress. If the overall effect of any provision is to impede progress that provision is unconstitutional.

Since Professor Epstein likes property law for analogies let's compare the patent law with the Homestead Act: to get an enforceable title to the land the homesteader had to work the land; land "trolls" who only invested in a fast horse, staked land, and then waited for someone else to make the land valuable, without them selves working the land were not recognized or rewarded. Our modern day patent trolls who, at best, are just investing in a fast horse should not be rewarded either.

[Michael Slonecker]

It takes a lot to rile me up, but the recent spate of discussions employing "buzzwords" does just that.

I have scoured Title 35 for more years than I care to remember and have as yet to find the terms "troll", "garbage", "monopoly", "stupid", "silly", "bad" (as opposed to "good"), etc. defined anywhere in its many sections. Yet, these terms and many others have proliferated as of late to mount challenges to a system that despite its imperfections has been around in the US for 200+ years.

Perhaps someone can direct me to a more enlightened treatise that can help me better understand these new terms.

[Joe Smith]

Mr. Stonecker

The world has changed. Every institution must prove its worth over and over. Calls to tradition are not a sufficient defense.

There are several reasons why the patent system is under scrutiny:
1. After 200 years we can ask: is there statistical evidence it works at all as it is supposed to?;
2. The nature of technological advance has changed. Where once inventors were like lonely prospectors chipping by hand at rock faces seeking signs of gold, now we have institutions which are more like giant strip mines using industrial techniques to search for industrial treasure;
3. the impact of technological advance is pervasive and rapid - the public has a huge stake in the health of the market for ideas - quite literally our lives may depend on whether patents are accelerating or impeding progress.
4. The expansion of patents into business processes and software techniques has enormously increased the impact of the patent system and the potential for abuse.

Professor Epstein appears to feel that the eBay decision was an assault on the traditional patent system. I on the other hand think it was a rear guard action by the SCOTUS trying to save the patent system from "root and branch" legislative reform after the fiasco of the NTP v. RIM litigation.

If you are in some doubt about what is meant by a troll I suggest you look at the history of NTP or at the efforts of Forgent Networks to lay claim to the jpeg file format.

[Tom Kulaga]

I think the point Mr. Stonecker is making is that the new terms are ill defined and have no legal meaning.

What may be a silly patent to a "sophisticated" person, may be proudly owned by an inventor who has no idea of its value, but he has a "patent." I often call these "vanity patents," and they are priceless to many owners, even though they will never be marketed or generate a positive cash flow.

A common definition of a troll is a patent owner who does not practice his invention. Such a definition is too broad. What is a "troll" to one person may well be an independent inventor or a small company that does not have the resources, wherewithall, or whatever to develop and market a patented invention. Are defensive patents obtained to prevent workarounds for another successful product owned by a troll? I do not like defining a term by pointing to an example. It is a very imprecise method of defining terms. To paraphrase, popular examples do not make good definitions.

Is a bad patent an invalid patent? If so, I don't see a problem. I've quieted several bad patent owners by researching the prior art and informing them of my efforts. If someone is willing to take a patent to court, they must obviously believe the patent is not bad.

The popular press, and some patent practitioners, have adopted these terms as sound bites to promote a particular point of view. I prefer substance, not sound bites. Those who rally against garbage patents, silly patents, bad patents, whatever, need to define those terms so the real issues can be debated. I am not for or against garbage patents because I really don't know what a garbage patent is.