We Waited Too Long To Figure Out If Genes Are Patentable

from the now-it-will-only-cause-problems... dept

Yesterday, at the excellent Tech Policy Summit, I got to interview Stanford professor and IP expert Mark Lemley on stage. Lemley has a new book out, The Patent Crisis and How the Courts Can Solve It. It's a good read -- and I recommend it to everyone interested in what's happening with patents. I don't agree with everything Lemley says in the book, but I think it is a much more thoughtful view than you hear coming from the two big industries fighting over patent reform. Patent reform has been (unfairly) set up as the tech industry vs. the pharma industry, and that totally misses the real problems with the system. Lemley believes that the problems can be fixed via the court system... whereas I'm not convinced, but I do think that the current patent reform proposals miss the mark by a wide margin.

The interview was quite interesting, and while most of it reviewed some of the big discussion points (what's the "problem," where is the reform plan heading, does it make sense to carve out exceptions -- such as for software patents) my final question to him was about the lawsuit we wrote about yesterday concerning the patentability of genes.

Lemley did a great job outlining the issues brought forth in the case, but concluded by highlighting what I believe is the big problem with letting the courts sort things out. He noted that while there had been legal battles over patented genes before, they had always been between two biotech firms, neither of which wanted to challenge the very idea of gene patents. So, instead, the very concept of patenting genes has been left untested in the courts for twenty-five years. What's the result? Well, an entire industry built up around it. If we suddenly say that genes are unpatentable, that will wreak havoc in that industry. Now, that may be a good thing, but it highlights the problem of leaving the question to the courts. Since no one challenged this for so long, the disruption could have quite an impact.

Earlier in the interview, Lemley quoted one of my favorite quotes about the patent system, by economist Fritz Machlup, who noted that, if we had to do it all over again, there appears to be no reason to actually create a patent system, but since we already have one, it doesn't make sense to get rid of it. But that's a big part of the problem. Now that we already have "patented genes" and an entire industry built up over 25 years around it, some will undoubtedly argue that it doesn't make sense to get rid of gene patents because of all the problems that would cause. And thus, we're left with a situation that has been highlighted in Petra Moser's research: the patent system, by default, distorts the market by creating certain industries built up around those patents, and makes it very difficult for more complete market forces to take effect.

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New Presidential Science And Tech Advisory Council Includes Patent Reformer

from the it's-a-start dept

While plenty of us have been quite concerned about President Obama's decision to appoint a bunch of copyright maximalists to the Justice Department (and the likely appointment of a maximalist to the IP Czar position), there's still the question of where the administration might come down on patent reform. While most of the press reports about President Obama's new Science And Tech Advisory Council have focused on names like Google's Eric Schmidt or Microsoft's Craig Mundie, one interesting appointment is Richard Levin, the President of Yale, and an economist with a long-term interest in patents.

While Levin is in the camp of folks who seem to believe the system can be fixed with some tweaks, he definitely recognizes many of the problems with the system, and his earlier research has noted (like similar research) that for new technology markets, patents can often get in the way -- especially in situations (like high tech) where innovation is "cumulative." Levin has pushed hard for increasing the obviousness bar, and making sure that patents actually are new and non-obvious -- something that would significantly help. He also was among the team that wrote A Patent System for the 21st Century. While there's plenty that I disagree with in both the assumptions and conclusions of the book, on the whole, it does show a rather thoughtful analysis. It's nice to see at least someone talking to the President recognizes that "more" isn't always "better" when it comes to intellectual monopolies. Separately, as others have noted, the really big deal here isn't necessarily who's on the board, but how much the new administration is willing to invest in funding for science and tech initiatives...

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Lobbyists Get Random Unsuspecting Groups To Rally Against Patent Reform

from the who-said-what-now? dept

We've discussed in the past the neat little trick of some underhanded lobbying groups in DC who run down a list of random "interest groups" and get them to sign on in "support" of some bill or another, without having any knowledge or real interest in the matter. The key quote from that article was: "You go down the Latino people, the deaf people, the farmers, and choose them.... You say, 'I can't use this one--I already used them last time...' We had their letterhead. We'd just write the letter. We'd fax it to them and tell them, 'You're in favor of this.'"

Well, it appears that the same thing is happening with patent reform. Wired has done a little digging, and was curious why an anti-communist Hungarian group, the Minutemen (vigilante border guards), and various religious groups have suddenly come out against patent reform. In pretty much all cases, the groups don't seem knowledgeable at all about the actual issues, and were basically told to "sign on" after being given a one-sided presentation that falsely claimed that patent reform was designed to harm American inventiveness and help foreign companies. The best explanation, however, goes to Laszlo Pasztor, the 87-year-old "honorary chairman" of the National Federation of American Hungarians, who is very much opposed to patent reform, though he seems rather confused why:

"It was in Chicago or Detroit, I can't remember. Somebody brought this up, I don't know for what reason... So I gave them permission to use my name."

But, then it gets better. Wired asked Pasztor if it could speak to others in his group that were more knowledgeable about the issue, when Pasztor admitted that the group was being disbanded, but:

"I am a 87 and a half years old," he explained. "And our treasurer is 91 years old. Our chairman, who is a Roman Catholic priest, is so busy working on church issues in Ukraine and Slovakia, it is impossible to reach him."

Pasztor volunteered to get us more information once he reaches Washington. "I will try to reach the still living members of the board," he said.

Nice coalition against patent reform there...

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Patent Reform Bill Reintroduced; More Of The Same

from the the-debate-is-misleading... dept

This is hardly a surprise, as it's been expected for quite a while, but the same folks who have been pushing a patent reform bill in the past have reintroduced essentially the same legislation that has been unable to advance far enough in previous Congresses. As in past years, supporters of the bill insist this is the year it will get passed. While there are plenty of good things in the bill, there's also an awful lot of bad things as well.

Unfortunately, the stuff that I think is good and necessary in the bill, such as limiting damages to the actual contribution of the patented technology, are what's considered "controversial," whereas many of the things I think are bad, such as switching from a "first to invent" to a "first to file" system aren't being considered that controversial at all. On the whole, this bill would solve some problems, while creating plenty of other problems, so I have a lot of trouble supporting it.

I can see why some big tech companies are supporting it, as it would definitely help some of the problems those companies face, but I don't think it does very much to fix the overall system. That said, it's pretty amusing to see the patent maximalists insisting that this bill will be the downfall of the American economy. There's nothing in the bill that would indicate that's true at all. It might cause some trouble for some firms that don't do anything in the marketplace, but about the only parts of the economy that will be harmed are a few patent attorneys (and some patent hoarders).

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Who Should Be In Charge Of Patent Reform?

from the everyone-wants-their-cut dept

Every year for the past few years, Congress has put forth a patent reform bill. Every year that bill has had serious problems in that it might fix some of the problems of the patent system, but would exacerbate others. And then, of course, there's a big lobbying fight, and the pharmaceutical companies (who don't want any sort of patent reform whatsoever) win -- and the bill gets killed. It's an annual tradition. However, plenty of people still realize that patent reform is necessary, and now they're debating just how it's going to happen.

Apparently, everyone seems to think they should be the ones to determine how it works. At an FTC hearing on the matter last week, FTC Chairman William Kovacic suggested that the FTC should guide the process of patent reform. Meanwhile, Chief Judge Paul R Michel of CAFC (the appeals court that handles all patent cases) disagreed, suggesting (not surprisingly) that CAFC was perfectly capable of handling modifications to patent law, claiming that CAFC had a much better handle on the situation than Congress. Of course, that ignores the long series of problematic CAFC decisions over the past few decades that only slowed once the Supreme Court got involved and started overturning CAFC time and time again.

Of course, what this probably means is that despite plenty of hand-wringing and tons upon tons of evidence of harm done by the current patent system, nothing is going to change any time soon.

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Patent Re-Exams Improve Patent Quality; So Why Does Congress Want To Limit Them?

from the questions-that-should-be-answered dept

I've explained why I'm not comfortable with the proposed patent reform effort, as there are a number of changes in it that could potentially make the system much worse. One example, as the EFF highlighted last month, was that it would unnecessarily limit the ability of third parties to request a re-exam of a patent. Now the EFF is looking through some statistics and noting some rather shocking numbers about third-party-initiated patent re-exams. Contrary to what some supporters of the patent system claim, it appears that a large majority of these requests aren't just legitimate requests, but serve to have a patent's claims limited or rejected entirely. 92% of re-exam requests are granted, with 3 out of every 4 exams resulting in adjustments (or total rejections) of the patents. In other words, clearly, the process helps improve patent quality. So why would Congress want to remove that part?

However, a much bigger question should probably be: why is the Patent Office so bad at getting things right the first time around? If so many patents end up needing to be corrected on re-exam, it certainly sounds like patent examiners aren't doing a very good job. Given the already massive economic costs that result from bad patents, this should be a major concern.

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Can We Get Rid Of The Myth That More Patents Means More Innovation?

from the pretty-please dept

I've talked repeatedly about some of the problems with the current patent reform efforts underway in Congress, but it amazes me when I read some of the arguments made against the bill. The latest comes from Steve Tobak at News.com, who argues that patent reform will harm US innovation. It's a position that others have taken, but you need to be able to back it up. Tobak's entire argument seems to be that since this new law would make it more difficult to get a patent, it would be harder to innovate. The problem with this argument is that it simply equates patents to innovation, which has never been true. In fact, if you look at the research you quickly realize that actual innovation is totally disconnected from patents. That's because the important part of innovation (unlike Tobak's claims) have little to do with invention and much to do with the process of making any technology more useful for the market. Patents don't help with that. In fact, patents quite often can often do a lot more damage by slowing the pace of innovation -- limiting the ability for companies to improve upon a technology or even a business model concept. Tobak's article is based on a faulty premise. I agree that the patent reform act has many problems, but the reasoning that fewer patents would mean less innovation is not supported by the research about the impact on patents.

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Psst! Patent Examiners Do Not Scale

from the repeat-after-me dept

It's a refrain we've been repeating year after year: patent examiners don't scale. While some patent system supporters continue to insist the only problem with the patent system is not enough examiners, that's simply incorrect. Thanks to the way the patent system has changed over the years, combined with the ever-increasing rate of technological change and advancement, the number of patent applications are only going to increase at a rather rapid rate -- far exceeding any attempt to hire out of the backlog. The Government Accountability Office has basically said as much, admitting that even if the USPTO could hire 1,200 new examiners each year over the next five years, the patent backlog would continue to increase.

The answer is clearly not to focus on hiring more patent examiners. The way the system is currently designed, this is not a problem you solve by hiring more people. You only solve this problem by reducing the number of patent applications. And, the only way to do that is to completely revamp the patent system itself. Don't think the current attempt at patent reform is the answer, either. While there are some good things in there, the proposal to switch from a "first to invent" system to a "first to file" system will make this problem worse. By using a "first to file" system, the incentive is to file as quickly as possible for any idea possible, to make sure you beat anyone else. A first to invent system at least gives the person some leeway to make sure that it's worth filing.

In the meantime, let's repeat it once more: patent examiners don't scale. If you design the patent system to expand at a rapid rate (which, thanks to the USPTO, the courts and Congress, we have...), then it's only natural that it will scale well beyond the reach of a system that requires humans to analyze each and every patent. The end result is that a lot of bad applications get approved, which only increases the problem, since more people try to patent bad concepts, knowing that they have a decent chance of getting it through the system.

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EFF Worried About Patent Reform Re-Exam Process

from the for-good-reason dept

While I'm obviously a strong believer in the idea that our patent system is fundamentally broken, I've also made it clear that the current plans for patent reform have a lot of problems. While it will fix a few things, it will also make other parts much worse, and will lead to even more abuse of the system. It's "reform" that's designed to simply patch a few things that are seen as problems, rather than recognizing the core, fundamental problems with the system -- and, thus, it will do little to help (and could hurt). The EFF, which supports this patent legislation generally, is complaining about another potential problem with the current reform package. As written, the patent reform effort would make it much more difficult for third parties to contest questionable patents in some cases. Basically, rather than allowing them to request a full patent re-exam, it will force third parties to use the newly created post-grant review system, which has some limitations. For example, it would mean that groups like the EFF would need to contest a patent within 12 months of it being issued. That's a problem, because it often doesn't become clear how problematic a patent is until much later. In fact, if this policy were in place, it would have made the EFF's patent busting project impossible. From the very start of the patent system, it was supposed to only be used in the rarest of circumstances. With that in mind, it makes sense to make the process for getting rid of bad, unnecessary and dangerous patents as easy as possible. It's unfortunate that the system has morphed into the exact opposite.

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Why Is Yahoo Siding With Patent Hoarders?

from the something-yahoo-wants-to-share-with-us? dept

Back in September, we noted that the Supreme Court was going to hear a rather important case concerning patents, determining whether or not it's possible for a patent holder to "double dip" and get license fees up and down the supply chain. The anonymous Patent Troll Tracker alerts us to the fact that a ton of organizations and companies have now filed amicus briefs in support of one side or the other (or neither, in a few cases). While the Troll Tracker's post focuses on the fact that most of the briefs filed in support of LG's position appear to come from patent hoarding firms (and their attorneys), at the end he does mention in passing that Yahoo! sided with LG as well. While he doesn't name them, the Troll Tracker notes that most of the firms filing against LG's position come from the tech industry. This is the usual breakdown. Companies that rely on patents to make a living tend to want stronger patents (no surprise there). Companies that tend to focus on business models that don't require intellectual monopolies tend to favor weaker patent laws. That said, it seems quite odd that Yahoo! falls in with the former, rather than the latter. While it has been involved with some patent lawsuits (most notably, the dispute with Google over paid search patents), Yahoo tends to be more focused on providing useful services rather than focusing on its patent portfolio. Hopefully, this isn't a sign of things to come. We've certainly seen other formerly successful companies turn to patent lawsuits after they failed in the marketplace. Perhaps Yahoo is signaling to the world where its future lies.

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Patent Reform Battle Descending Into Farce

from the shredding-the-constitution? dept

John Bennett at Against Monopoly points out that a medical device firm has been taking out full page ads in the NY Times arguing against the latest attempt at patent reform. Bennett notes that the ad is only in the paper copy of the Times, but the company behind it also put a pdf version on its website. The ad has a variety of problems in how it presents its argument, which highlight how the debate over this particular topic has descended into farce. To be clear, we agree that the patent reform act has many problems and actually won't fix the bigger problems of the patent system (and, in fact, will make some worse). Yet that doesn't excuse some of the ridiculous statements being made by those who oppose the law. First off, the ad starts out by claiming that the patent reform act is an attempt to "alter the constitution." That's a blatantly false statement. The Constitution is clear that the purpose of the patent system is to promote the progress of science and the useful arts. The problem with the patent system is that it's not doing that. Nothing in the attempts at reform alter the Constitution. The goal is to bring actual patent law back into alignment with the Constitutionally-expressed purpose of the patent system: to promote innovation.

The second big problem with the ad, is that it pretends (incorrectly) that the Founding Fathers wanted to treat what's now referred to as intellectual property as regular property. It is true, as the ad notes, that the Founding Fathers understood the importance of protecting private property -- but they were not talking about intellectual property. In fact, if you read the letters back and forth between Madison and Jefferson, you see that they're not discussing "property rights." They're discussing their (now realized) fear, that giving people monopolies on ideas could do more harm than good. They wanted to be very clear that the rights they were granting were not property rights, but very, very limited monopoly rights solely for the purpose of promoting innovation -- and were only to be handed out in the rarest of circumstances, when it was necessary to promote innovation. To claim that the Founding Fathers meant for patents to be property is absolutely wrong.

Next, the ad basically makes up a bunch of numbers for how much patent reform will cost. It points out that it costs a lot to bring a drug to market -- but there's a big implicit assumption in there that patents are necessary for pharmaceuticals to exist, when there's evidence to the contrary -- suggesting that patents actually do more to hold back medical innovation than to help it along. It also claims pretty much all revenue associated with certain inventions as being owed to patents -- ignoring the fact that those inventions would have come along even in the absence of patents (and may have developed much faster without patents). It's absolutely laughable that the ad includes the airplane industry, when the Wright Brothers' patents almost destroyed the US airplane industry by holding back innovation and keeping other more innovative firms out of the market. It took the pressure of World War I and the US gov't to finally get around the stranglehold on airplane innovation.

The other laughable part of the ad is that it says that the plan to reveal patent applications after 18 months will have "dire consequences" involving foreign entities stealing American ideas, while invoking the disclosure myth of patents. These "dire consequences" would be a lot more believable if the patent office didn't already reveal most patent applications after 18 months. In other words, this bit of "reform" isn't really reform at all, since it's what the USPTO already does... and the so-called dire consequences did not show up.

At the very end of the ad, the company tosses a bone to the software industry, saying that maybe we should have a separate patent system for the software industry because the fact that the software industry distributes its goods on computers and disks, it's impossible to determine prior art. This doesn't actually make any sense, but given the rest of the ad, perhaps we shouldn't be surprised. Either way, this seems to highlight the level of debate on this issue. Various folks throw out complete nonsense without being able to back it up, and insist that the world will end if the patent system changes. It's a farce.

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Reminder: Patent Examiners Still Don't Scale

from the nor-will-they dept

It's a pretty common refrain from folks who are against patent reform that all the problems of the patent system could be easily solved by hiring some more patent examiners. Even some people who do support patent reform think that hiring more examiners would help deal with the problems of the systems. Last week, the GAO, who we often agree with in its analysis, came out with a report also suggesting that hiring more patent examiners, and now existing patent examiners are agreeing with the analysis. The problem, though, is that this hides the real issue. The patent office isn't inundated with such a huge backlog of patents because it doesn't have enough patent examiners -- but because the system is fundamentally broken. As the courts have continually expanded the reach (and value) of patents, it's simply encouraged more and more applications to be filed, no matter how ridiculous. Hiring more patent examiners doesn't solve that. The real trick to solving the problems the patent office is facing is in realizing that patent examiners don't scale. You don't just hire more as more patents are being filed -- you figure out why more patents are being filed and if there's a better way to do things. That means looking at the fundamental nature of the patent system and realizing how far the current patent system has drifted from those ideals -- and then solving those problems. If they did that, they'd realize that they probably don't need more patent examiners -- they just need a better patent system.

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Supreme Court To Determine If Patent Holders Can Shake Down Entire Supply Chain

from the more-judicial-patent-reform dept

While Congress continues to fight over patent reform (often missing the bigger issues for those that the lobbyists are most interested in), it's been the Supreme Court that's been doing its best to bring some sanity back to the patent system. After ignoring patent law as being a boring "commercial" dispute for years, the Supreme Court finally realized a few years ago that the Court of Appeals for the Federal Circuit (that handles patent cases) had basically redefined patent law over the last few years, creating much of the mess we're in today. Suddenly, the Court started taking a bunch of patent cases -- and almost every time it slapped down CAFC and brought some common sense back to the patent system. Of course, there's still a lot more to do on that front, and apparently the Supreme Court agrees. It's now taken yet another patent case that could have major ramifications.

This case, officially between LG and Quanta, really concerns the question of how many times patent holders can get a cut of any component found violating a patent. Currently, patent holders will often sue up and down the food chain. So, if you happen to have a patent on a component within a motor that is used in automobile wipers, you could sue the motor maker, the wiper maker and the auto manufacturer -- and get all three to pay, even though the same product is used throughout the supply chain. This case will look at whether or not it makes sense to allow for that type of double, triple or quadruple dipping. Patently O has a good summary of the case, pointing out that it's effectively asking if the concept of the "first sale doctrine," which applies to copyrights, also applies to patents. If the Supreme Court follows its recent trend in overturning CAFC, this could have a big impact on a lot of patent cases. For example, it would entirely derail NTP's latest patent suits. In that case, NTP forced RIM into licensing its (questionable and likely to be invalidated) patents, and is now suing all the service providers who offer RIM's Blackberry -- effectively double dipping. Once again, it's nice to see both the sudden interest in patent law -- and what often appears to be very clear thinking on the part of the Supreme Court on the issue.

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Patent Reform Is Only Bad For Startups Who Rely On Patent Law

from the patents-are-not-a-business-model dept

There are some news reports coming out about "small inventors" and "startups" coming out against patent reform, but when you read between the lines, that's not what's happening at all. What's happening is that a few entrepreneurs who have relied heavily on patents as part of their business model are coming out against patent reform. That's not surprising. After all, this form of government protectionism did help them. However, that does not mean that it's good for society or promoting innovation overall (which is the purpose of the patent system). There is no single view from startups. If a startup's business model is going to rely on patents, then obviously they'll want stronger patent protection. However, plenty of startups these days don't rely on patent protections, and focus on other types of business models instead. For them, patents are a real worry -- because even as they innovate, they always need to be wary of some no-name, no-product company suddenly suing them for actually building a product people want. So, while the press and some lobbyists will spin the press conference as "startups" against patent reform or even (as they're trying to say) "startups" vs "big tech companies," it's really "startups who rely on patents" vs companies who recognize they don't need patents to innovate.

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Shocking: Patent Examiners Against Patent Reform That Tries To Fix Patent Examiner Mistakes

from the what-a-surprise dept

This ought to come as no surprise at all. A group that supposedly represents patent examiners has come out against the latest attempt at patent reform. As we've made clear, the attempt at patent reform certainly has some major problems, but those don't seem to be the focus of the complaint. Instead, the document seems to be a combination of patent examiners claiming "it's not our fault!" for approving all sorts of awful patents along with a plea to hire more patent examiners. This is wrong on both accounts -- though, perhaps you can blame others (the USPTO and the courts, for instance) for pushing patent examiners to approve patents that had no business being approved. As for the old myth that hiring more patent examiners will fix the problem, that's been thoroughly debunked. Patent examiners simply don't scale at the same pace as innovation. The problem isn't that we need more examiners, but that too many people have lost sight of the real purpose of the patent system: to create incentives for innovation. It is not, as many people now assume, to give full ownership of an idea to the first person to claim it. The sooner people recognize the real purpose of the patent system, the faster we'll get rid of the problems the current patent system creates in hindering innovation.

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