Patent trolls celebrate as Trump's new rules breathes fresh life into parasitic grifter capitalism

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Originally published at: https://boingboing.net/2019/01/10/federal-troll-circuit.html

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We continue to devolve as a species under capitalism

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Just to point out another reason too many patents get granted. If somebody is unhappy that they have been denied a patent, they sue the USPTO. (rare, but it does happen on occasion) If somebody believes that a patent was granted in error (it was obvious or there is prior art) they can either violate it and wait to get sued by the owner of the patent or they can try to get an injunction against it’s enforcement. Either way, it is not the USPTO itself that has to defend its actions.

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So… how does executive branch guidelines or directions supersede SCOTUS decisions?

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So… how does executive branch guidelines or directions supersede SCOTUS decisions?

For all its noble goals, Alice didn’t really do a very good job providing a workable framework for deciding whether something is claiming abstract–and thus unpatentable–subject matter. For example, the court seemed to import some ideas from the 103 (obviousness) analysis into the 101 (patentable subject matter) analysis, with the result that courts have to do a miniature obviousness analysis as part of the 101 determination–because “abstract” for these purposes sometimes means “we’ve done this for a long time.” The result is that there is a pretty broad swath of stuff that you could pretty reasonably argue (and litigants have argued) might or might not be excluded from patentability under Alice. A lot of the really easy “do x but on a computer” cases were decided in the first couple of years after Alice, but harder line-drawing cases remain.

The Federal Circuit has some judges who are on board with a robust 101-rejection regime, and others who are more patent-friendly and want the doctrine to be limited to cases where it’s absolutely clear that the patent is claiming ineligible subject matter. Some of this uncertainty also results from the fact that patents challenged in a post-grant review proceeding (like “covered business method” review) in the Patent Trial and Appeal Board are analyzed under a more challenger-friendly evidentiary standard than patents challenged in district court. (And although 101 eligibility is considered a legal rather than a factual question, the Alice regime means that courts have to look at some subsidiary facts for the mini-obviousness analysis.)

The big result of all of this is that there is a large zone of uncertainty around what is 101-ineligible under Alice. And because the Patent Office is a branch of the executive, the President gets to set the rules for how to handle that uncertainty.

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I doubt Trump even particularly knows what a patent is. Does “Trump’s Patent Office” actually involve someone appointed by Trump who would be acting differently if someone else was president? Trump’s name doesn’t even appear in the linked article, which seems to relate to a 2016 decision from well before the election.

It is unwise to blame Trump for absolutely everything, is it not? Is there someone here who could possibly remain after a change of administration, whose name should be written down on a list somewhere?

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I think the short answer is the executive branch is supposed to figure out how to enforce the laws, so they have internal rules for everything. If their rules are challenged, they may need to be changed, but somebody has to bring suit.

For example, the IRS doesn’t audit every tax return. They don’t have a fraction of the staff that would require, so they have to choose their battles. Back in the Bush years they were ordered to stop cracking down on the rich and instead to scrutinize the Earned Income Tax Credit. AFAIK, those rules might still be in place, because who cares about a bunch of single moms, right?

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This post misstates certain things and steamrolls over any nuance in what is a very complex topic.

The original Alice guidelines were created under the direction of Michelle K. Lee, the previous PTO director. She was formerly the Head of Patents at Google. It is important to note that software patents are not just used by trollies, but also start-ups looking to break into a market. Google hates software patents because they are a potential threat to their monopoly. The Alice decision and accompanying guidelines undermined software patents across the board, even for those patents that may have captured real innovation.

This is a pretty ham-handed comment. As anyone who has actually dealt with the PTO knows, there is more incentive for the PTO to reject applications than grant them, from a fee-collecting perspective. It is also worth noting that the PTO is fully funded by the fees they collect (how many other government agencies can say that?), but they do not even get to keep all revenue generated. Congress diverts a significant amount away from the PTO. So it is highly dubious to say there is a conflict of interest or perverse incentive.

Regarding the push to address “bad patents” via the PTO instead of the courts, Mark Lemley made an interesting argument a while back: https://cloudfront.escholarship.org/dist/prd/content/qt1tc166q2/qt1tc166q2.pdf

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I have lost track of the myriad number of ways the country is falling apart in very specific tailored ways like this that will take generations to fix.

Excuse me while I use my savings to go buy a wood chipper to jump into face first. There is nothing good that can come in this world anymore. Con men and bastards run the world forevermore.

If only I had a way of reversing my position with them, in a long line of evil people, and pointing the waste chute directly into the capital building.

Seriously though, I’m really losing hope of decency or sanity ever firmly rooting itself in the US again. One party has nearly become inhuman, the other is reduced at best to being a spineless mess when it counts. Which is always.

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Well, we shouldn’t spare the nuance. This IS BoingBoing. So I just spent a couple hours reviewing the USPTO’s financials and behavior. If you really want to understand a situation, you need to follow the money. It was difficult and dangerous, but I have a vast supply of Diet Coke to keep me awake :slight_smile:

If you wish to review this for yourself, you will need about 4 liters of Diet Coke equivalent. AND:

I find your logic fundamentally flawed for the following reasons:

  1. Patents don’t guarantee production or innovation. They only enable lawsuits. The patent debate has fallen victim to a big lie: Patents are good. More patents are more good. This is caused by a misconception on the nature of Patents. Patents are not Innovation. Patents are not Progress. Patents are simply grounds to file a lawsuit against an industry. More Patents are simply more grounds for more lawsuits. An occasional lawsuit might possibly spur innovation. BUT LAWSUITS DO NOT PRODUCE. Lawsuits are parasitic on innovation and production.
  2. Running the US Patent Office as a cost-recovery operation is a mistake. The US Patent Office is a very small, but critical component of the US economy. It’s purpose was "…to promote the Progress of Science and useful Arts…" (US Constitution Article One, Section 8(8).) But, once the USPTO became completely cost recovery in 1990’s, that primary goal became overshadowed by the more pressing goal of securing funding via patent fees. Currently, the USPTO must generate about 3.5 billion in revenue to stay in business. It currently does this by processing 650 thousand patents/year. Diverting USPTO revenue simply makes the situation much worse. It also makes vast swaths of the Federal bureaucracy complicit in abusive patents. (I am ignoring Trademark. They are only about 10% of the revenue and expenses.)
  3. It is a mistake to organize the US Patent Office to create economic incentives to grant poor patents. Currently, most of the revenue of the USPTO comes from GRANTING patents. Application Filing fees are only 3% of the revenue (USPTO 2017 Accountability report page 31.) This means that, regardless of merit, a large percentage of all patent applications must be granted in order to fund the US Patent Office. This economy creates unavoidable pressure to grant many patents that should not otherwise be considered. The Richmond analysis found that the USPTO Net Grant Rate is currently running at 92%. In 2013 it was 89%. In 2001 it was 99%. In 2001, it didn’t matter if an application was overbroad, obvious, trivial, a duplicate, or unreasonable, they ALL got granted. Things haven’t improved much since then.
  4. It is a mistake to grant all patents that meet minimum standards. A review of the last couple decades changes in the patent approval criteria will shows that the minimum standard for granting a patent has consistently shifted downwards. We must abandon the idea that any patent that meets minimum standards is granted. Over time, the standard always degrades.
  5. It is a mistake to allow patent applicants to modify or extend their patents after submission. This complicates the patent pipeline. It facilitates ‘submarine’ patents. It enables capturing Standards. It enables gaming the patent system. It is also extremely frustrating for BOTH applicants and examiners. Currently, Average Patent pendency in 2017 is 16.3 months (first action), 24.2 months (total) (Accountability pg 27)

The current Patent industry doesn’t spur creativity and innovation. It enriches lawyers and causes pain to everybody else. Reform is possible. Some better approaches would be:

  1. Admit cost recovery is a failed experiment. Revert the funding model of the USPTO to the model used 35 years ago. The USPTO must be centrally funded by the US government. Any collected fees should be returned to the US Government. Fees may offset the cost of the USPTO, but fee collection must not be the primary goal of the USPTO.
  2. Eliminate and unify the Patent Office processing fees into a single filing fee. This single fee should be large enough to fund most of the operations of the USPTO. This fee would provide no guarantee of receiving a patent, only a guarantee that your patent would be considered. This would free the Patent Office to be able to deny poor patents.
  3. Rank Patent Applications according to an agreed measure of quality, and only grant the top few percent. Grading on the curve works for our precious children. It should work for our precious patents. Over time, the pressure will be to improve the quality of patent applications, instead of degrade them.
  4. Simplify and reduce the patent process. Patents should be quickly evaluated. Most should be denied. If an applicant wishes to modify a denied patent, they should alter it, resubmit, pay a new filing fee, and restart the clock.

The biggest problems with patent reform aren’t understanding how to improve quality. They are:

  • How do you reform in the face of determined opposition from the Patent Industry? Or
  • How do you strip the Patent Industry of it’s enormous influence? And
  • How can we possibly survive the current flood of crappy patents.

Finally, I read that “Rational Ignorance at the Patent Office” paper. It made no economic sense. It starts off with a fairly reasonable statement: “… very few patents are actually litigated or licensed;” But, then it wanders off into the conclusion that “… society would be better off spending its resources in a more searching judicial inquiry into validity in those few cases…”

This makes absolutely no economic sense. It continues the current broken situation where the USPTO breaks stuff and passes the costs to others. It would create more expensive judicial proceedings. It would enhance the power of patent-trollies. There is NO LIMIT to the USPTO ability to break stuff. It can easily break stuff faster than others can clean up.

A more rational conclusion would be: This condition has persisted for more than 20 years. Therefore almost all patents must be garbage, and provide negative value to society. So the judicial system should automatically assume that any presented patent is junk, and quickly declare it invalid, unless there is overwhelming evidence (from society external to the patent industry) that the patent in question creates positive value to society as a whole.

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A Turing-complete device is capable of doing any calculation. A modern computer is capable of doing a very general class of calculation in reasonable times. If there is something we need but the conventional computer cannot do, such as real-time ray-tracing right now, then special hardware has to be developed. This additional hardware may be patented.

If you buy a computer, you buy the ability to do very general calculations. Many computer users just run a few existing programs, which may be protected by licences and copyright, but the computer has this very general capability. It seems that you should not be able to use patents to fence in regions of this general capability that the computer user originally had, and licence it for your own gain.

Would this ruling be harmful to the software industry? Many programs have a limited life span, or have to be continuously re-written to keep track of hardware advances. Few programs last unchanged for the lifetime of a patent. If you file a patent, you have to describe how your invention works. If you have done something smart, it will probably be hard to prove infringement somewhere within compiled code. In effect, patenting gives away the idea, but does not give you a practical way of enforcing the patent. This is only a good deal if your original idea was obvious.

Ergo, we can get rid of all software patents.

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It is the kind of policy favored by crooked lawyers though. Now who do I know who associates with a bunch of those, I wonder?

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Wow! Once again America leads the world by negative example.

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Can you say that speed limits do not guarantee road safety, but only enable speeding tickets?

Filing fees are only 3% of the revenue (USPTO 2017 Accountability report page 31.)

I could perhaps be looking in the wrong spot, but I did not see that figure in the PDF you linked to. Page 30 says that “filing, search, and examination” fees account for 29.7%, and those fees don’t require a patent to be issued.

Unfortunately I lack a vast supply of Diet Coke and am unable to continue at this time.

I expect other patent offices are much the same, and required no American example to arrive at such.

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As a patent attorney, I feel compelled to address the myths that this article and its responses perpetuate.

  1. No one likes patent trolls but most people don’t understand that their definition also includes small businesses and individuals in the process of trying to commercialize their technologies. The drive against trolls was largely a targeted effort by big business to stop small business in its tracks while they infringed with impunity. Microsoft is a prime example of this behavior.
    Small businesses lack the resources of large companies and are slower to commercialize. Being treated the same as trolls makes it even harder to raise the necessary capital to go to market. If someone beats them to the shelf with infringing tech the high cost of litigation almost ensures their failure.
    Let me clarify for those that have a hard time understanding. The current pursuit of patent trolls is driven by big business that want to enforce their own patents but don’t want to have to worry about the patent rights of others.
    Through this article you are acting as a surrogate for large international corporations that are attempting to kill off the competition. Congratulations!
  2. While the patent office is funded by patent applicants, the USPTO cannot be described as patent friendly. It is a very adversarial organization. Patent examiners generally approach their job with the mindset that they should defeat all attempts to obtain patents. It is incredibly naive, or perhaps self-serving to add a little umph to this article, to argue that patent examiners are basing patentability decisions on their desire to increase USPTO funding. This demonstrates a profound ignorance of how the system really works and adopts a conspiracy theory to try to make a point.
    3.The Trump administration has no impact on day to day operations at the USPTO. These are career professionals who have been there over several administrations. If journalists and those that comment on this article can’t grasp patent law and the prosecution process, it is unlikely that the administration can either and both should stay out of it. Anti-Trump and anti-capitalism conspiracy theories don’t help. If you don’t like capitalism then don’t accept any paid advertising on your website.
    4.Patents are property, just like real property. If you don’t mind someone taking your yard by arguing that you aren’t currently using it, then and only then do you have any right to argue that patent owners don’t have a right to their property.
  3. Software is becoming an increasingly important intellectual property in our economy. The socialist approach promoted here, that we have a right to take someone else’s property, i.e. software, it it suits our needs is a slippery slope and will stifle innovation. By the way, it appears that both you and your readers fail to grasp the fact that most innovation takes place in small business these days. The Soviet model you are trying to advance worked wonders in Russia…right?
    6.“Reforming” the patent system by eliminating most patents simply means that innovators will turn the clock back to trade secrets and cumbersome licenses. You still won’t be able to use the invention, but it will never become part of the public domain and available to the pubic to use and improve upon. Brilliant suggestion. it will also discourage commercializing valuable technology developed in other countries in the US.
  4. Allowing patent applicants to expand their applications to include new matter does not extend the life of the patent, it only ensure that the new matter will eventually be turned over to the public.
  5. The notion that patents do not promote innovation is heavily repeated by those than cannot innovate. The limited monopoly guaranteed by patents encourages innovation…period. If you are just going to get copied after you launch a new product or technology you aren’t going to spend much time or money in research and development. These suggestions, if adopted, would cede technological dominance to China. Now wouldn’t that be nice…for them.
  6. Every attempt to “reform” patent law has led to an increase in litigation. Patent litigation is rare and exceedingly expensive. However, the threat of litigation keeps people honest. If you don’t like patent litigation the answer is to eliminate civil actions altogether. Good luck keeping those evil companies and business people you despise honest at that point.

Please feel free to educate yourselves on the subject prior to writing ignorant articles and posting uneducated suggestions in the future.

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I’d be happy to buy the wood chipper if you’d use it. Those that whine but don’t try to understand only contribute to the problem.

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That was a quite a rabbit hole you went down! That’s a good start, but you might need some more diet coke. Trust me, a few hours on the internet will not clarify the full picture of what is good and bad about the U.S. patent system. And just think… you were only focusing on the U.S. Try researching the differences in patent offices and laws in Europe, Japan, China, etc. Many features are the same or similar internationally, but local laws and approaches can sometimes have some huge effects.

I don’t think you pointed out any specific logic, but I’ll try to respond to some of these points. I also note that our patent system is largely set up to be a one size fits all approach. However, arguments could be made that different approaches should be taken depending on the technology area.

Yes, patents only give you the right to exclude others from making, selling, or using your invention. However, if you are a start-up (or single inventor) with an innovative technology, good luck trying to convince someone to invest in you if you have no leverage to prevent others from using your technology.

I think everyone can agree that we should not have economic incentives to grant poor patents. But that’s currently not the case. That PTO accountability report indicates that fee collection is roughly a 50/50 split between prosecution and grant (see that graph on p. 30: “maintenance” and “issue” are the only categories associated with granting a patent, everything else is filing/prosecution). Also, do some research on the Patent Examiner count/quota system to see how Examiners get paid. PTO fees are just one part of the equation. There is also an aspect that is purely driven by the human nature of Examiners and their paychecks. And that system is heavily geared towards rejecting applications.

I think there are a ton of misconceptions in the rest of your post, but I simply do not have the time to spend on explaining the nuances of the patent system in an internet comments section. I only note that I don’t think you completely understood that “Rational Ignorance at the Patent Office” article based on your comments. I’m not saying I fully agree with that article, but I am guessing you might be able to continue to educate yourself by digging deeper into the footnotes, if you are so inclined.

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Oh dear…

You were doing so well until you got to the second of your points numbered 3.

(I can never get numbering to work properly in BB/Discourse’s implementation of markdown either).

All the rest is fair enough although I could do without the insults at the end.

Point 5 doesn’t really say much given that China is now in the US’s previous position of nicking everyone else’s inventions anyway.

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YMMV, but most of the definitions of “patent trolley” that I’m aware of start from the supposition that the trolley is a nonpracticing entity, primarily engaged in rent-seeking from practicing entities.

Well, that’s a dramatic oversimplification. Some big corporations engage in offensive infringement litigation. But others use IPR, CBM, and district court litigation only when they’re being held up for rents by trollies wielding low-quality patents.

Truly innovative, novel, and nonobvious software inventions deserve patent protection. But a patent claiming “do this thing we’ve been doing for years, but on a computer!” does nothing to “promote the Progress of Science [or] useful Arts.”

Except when that new matter was already in the public domain and the expanded application removes it from the public domain for 20 years.

Well, I guess if you say “period,” that means you’ve proved your point, right?

Patents can be a means of incentivizing innovation. They can also be a means of stifling it–as you yourself recognize when you point out that some big businesses seek to enforce their own patents at the expense of the smaller businesses that you appear to claim are the only real innovators.

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The USPTO 2017 Performance and Accountability report never directly states fhe Filing fee percentage. They lump it in with other fees. But is states that total revenue for 2017 is $2.8 billion, and that “Application fee revenue earned upon filing in 2017” was $81.2million (pg 31). 81.2/2800 is .029 or 3%.