Lauder Partners, LLC

 

            

 

  Perspectives on Patent Reform


By Gary Lauder

Most of this page is about the America Invents Act, which, unfortunately, passed in 2011.  This next section is the beginning of materials on the 2014 pending legislation aimed at the "troll problem."

12/3/13: Gary's presentation on the house's "Innovation Act" (HR 3309) at a house staffer briefing prior to its passage.
http://www.lauderpartners.com/3309/


  America Invents Act

This page is not dedicated to the idea that our patent system can't be improved; but rather that the specific changes in the "America Invents Act" would be bad for entrepreneurs and small companies.

Summaries:
One word: Bad

One sentence: 
Due to the willful exclusion of small companies from the process, congress and the administration have crafted a bill that might mildly benefit big companies, but would drastically harm technology entrepreneurship/start-ups.

One paragraph: 
There are many things wrong with our patent system, and many ways in which it might be improved, but this bill does not materially improve it, and would make it much harder for start-ups to obtain and enforce patents.  Unlike the Senate bill passed in March, the bill passed by the House (HR1249) in June does not fix the problem of the patent offices's fees being diverted to help cover our federal deficit.   The change to First-to-file would be a benefit to those who would like to steal other's ideas, and consequently will force entrepreneurs in the USA to have to follow the same advice that exists in Europe: file for your patents BEFORE talking with investors, potential customers or even potential co-founders.  This will stifle the open innovation model that has flourished in America.  Other changes will make it easier to accidentally lose the ability to obtain a patent (e.g. if you offer your invention for sale or publicly use it), will more easily enable an infringer to defend themselves by showing such actions prior to the plaintiff's application, and will enable infringers to postpone the issuance of other's patents by filing expensive post-grant review procedures...which can also cost a company more than they can afford.  The proponents have sold this bill based on superficial talking points that sound plausible, but are deceptions.  Every well-known US inventor opposes this, as does Judge Paul Michel, the US's #1 patent judge who resigned early from his lifetime appointment in order to speak out against this.

Longer pieces are linked below.  URL's are visible for ease of copying & forwarding.  Related articles are lumped together.

Requested action:
Please call your senators (and any others) to express your disapproval of this bill.  Their phone #'s can be found at:
http://www.reformaia.org/call TOO LATE. IT PASSED ON 9/8/11.

Gary Lauder's writing and publications on patent reform:
One page article = 650 words: "Patently Absurd Changes Threatening Patent System" in Venture Capital Journal, 6/1/11:
Reprint at: http://www.lauderpartners.com/PatentReform/PatentlyAbsurdChangesThreateningPatentSystem.pdf
Magazine at: http://www.vcjnews.com/story.asp?sectioncode=32&storycode=5824547 (subscription required (free trial available))
1.5K words: Forbes.com "New Patent Law Means Trouble For Tech Entrepreneurs" 9/20/11
http://www.forbes.com/sites/ciocentral/2011/09/20/new-patent-law-means-trouble-for-tech-entrepreneurs/
400 words: USA TODAY guest column: "Unique U.S. patent system in peril" 9/2/11, p.13A:
http://www.usatoday.com/news/opinion/forum/story/2011-09-01/Column-Unique-US-patent-system-in-peril/50231894/1
1.1K words: Fortune.com "How the new bid to reform patent law will kill jobs" 9/2/11:
http://finance.fortune.cnn.com/2011/09/02/how-the-new-bid-to-reform-patent-law-will-kill-jobs
4.7K words and most complete: Unpublished: "Patently Absurd: Or How to Go From the World's Best Patent System to Worst-Than-Most in One Easy Step" 7/11/11: http://www.lauderpartners.com/PatentReform/HorrorsOfPatentReform.pdf
2K words: The Huffington Post, 3/7/11, "Patently Absurd or: How to Go From the World's Best Patent System to Worse-Than-Most in a Single Step"
http://www.huffingtonpost.com/gary-lauder/patently-absurd-or-how-to_b_832703.html (Note: comment function no longer works)
4.3K words (and a bit dated): "Venture Capital: "The Buck Stops Where?" in Medical Innovation & Business, Summer 2010, Volume 2, Issue 2, p.14 - 19 http://journals.lww.com/medinnovbusiness/Fulltext/2010/06010/Venture_Capital___The_Buck_Stops_Where_.4.aspx
875 Words: "The Impact of Fee-Diversion on the Innovation Economy" 9/8/11
http://www.lauderpartners.com/PatentReform/The-Impact-of-Fee-Diversion.pdf
On 8/14/11 the Washington Post wrote a misguided editorial in favor of patent reform. My critique is at (downloads a word document): http://www.lauderpartners.com/PatentReform/Critique_8.14.11_WP_editorial_in_favor_of_patent_reform.doc


Presentations:
PowerPoint: Creating the "Good Old Days" Via Patent Reform: "First-to-File Issues" presented at US Patent Reform Forum 2012, Panel: First-to-file system: Implications of a significant change in the law in Washington, DC on 3/27/12
http://www.lauderpartners.com/PatentReform/Gary_Lauders_Presentation_US Patent_Reform_Forum_2012_in_DC-New.ppt

Video/Audio files:

First TV coverage of this subject...the day after it became a fait-accompli (passed Senate): on CNN's Situation Room on 9/9/11. 4.5 min. GML 30 second cameo.
http://www.youtube.com/watch?v=ZpQZJe_xQzU
Fox Business News coverage of signing of Leahy-Smith America Invents Act (patent reform) on 9/16/11. Interviewed me (GML) (4:16):
http://www.youtube.com/watch?v=7HBxWCyu7vU
Gary's 4-minute speech at the Aspen Ideas Festival in early July:
It's also on YouTube, but the visuals don't add much:
Legal Radio Talk Show "The Docket" on KUCI (UC Irvine) on 9/22/11: GML with 2 patent attorneys from Jones Day: Lester Savit & Evan Simon (host).
http://www.lauderpartners.com/PatentReform/TheDocketRadioShow_on_9-22-2011.mp3 (21.3 MB)
Shelly Palmer Digital Living Podcast interview of Gary Lauder on 8/2/11 (duration: 37 minutes)
http://www.shellypalmer.com/2011/08/shelly-palmer-digital-living-podcast-episode-3-gary-lauder/

On 9/6/11 I participated in a briefing for Senate staffers.
My presentation is available in PPT: http://www.lauderpartners.com/PatentReform/SenateBriefingonPatentReform2.ppt (with links to references in the notes areas) and PDF: http://www.lauderpartners.com/PatentReform/SenateBriefingonPatentReform2.pdf
My presentation (13 minutes):http://www.youtube.com/watch?v=As6bCYbp7d4
I also recorded the Q&A session on my camera (wobbly in parts):
http://www.youtube.com/watch?v=0x4wpicPhSI
Edited Q&A: only Judge Paul Michel's answers after USBIC senate staff briefing.
http://www.youtube.com/watch?v=mVuQ5CK5g5E

Patent SHIELD Act
"Here they go again - this time with the Patent SHIELD Act" by Dr. Ron Katznelson in IPWatchdog, August 26, 2012
http://www.ipwatchdog.com/2012/08/26/here-they-go-again-this-time-with-the-patent-shield-act/id=27476/

Excellent summary of how the AIA will harm small businesses:
"Patent reform bill hurts small business" By Todd McCracken, President & CEO of the National Small Business Association, 1/13/12
http://webcache.googleusercontent.com/search?q=cache:ErRnCAxFIQcJ:newsandinsight.thomsonreuters.com/New_York/Insight/2012/01_-_January/Patent_reform_bill_hurts_small_business/

Senator Maria Cantwell speaks out against the America Invents Act on 9/8/11 on the Senate floor, describing the Act as a "big corporation patent giveaway that tramples on the rights of small inventors."
http://www.youtube.com/watch?v=O4R9KU1U71U

Some excellent presentations were given at this conference:
THE OVERHAUL OF U.S. PATENT LAW
FORUM: The Impact on Patenting Practice, Patent Protection, and on Science & Engineering Jobs
Supporter: NSBA; Technical Sponsor: IEEE Washington D.C., Northern Virginia and Baltimore Sections
WHEN: Tuesday, August 30, 2011; 1:00 PM - 4:30 PM
Links to presentations (mostly AGAINST the America Invents Act):
http://j.mp/Forum-Page
Note: the A/V people failed, so the only audio that exists was recorded by one of the members of the audience, so it's not good quality.

Lo and behold, most patent professionals don't support the patent bill that just passed:
Patent Reform 2011 Survey Results - in Patently-O (Patent Law Blog), 9/6/11:
http://www.patentlyo.com/patent/2011/09/patent-reform-2011-survey-results.html

The main reason why the administration favors it: they hired the main proponent of patent reform and made him the head of the PTO:
Here's his testimony in favor of patent reform while at IBM on 3/10/09:
Kappos's ongoing promotion of patent reform was in violation of Obama's Revolving Door Ban which Kappos signed:
"I will not for a period of 2 years from the date of my appointment participate in any particular matter involving specific parties that is directly and substantially related to my former employer or former clients, including regulations and contracts."


Intellectual Property Watch Interview With Chief Judge Paul R. Michel On US Patent Reform, July 14, 2011

This presentation is by Steve Perlman, an entrepreneur whom I have backed twice who also is an inventor in >100 patents:
House bill took out the PTO funding part (which was the only thing good about the bill that he referred to)

History of broken promises regarding fee-diversion (why the present bill doesn't fix the problem):
Innovation Alliance's Release (6/11): http://bit.ly/IAHistoryLesson
Senator Coburn's talking points: http://www.lauderpartners.com/PatentReform/FeeDiversionTalkingPoints(Staff)9.6.11.pdf

The problem with First-to-File (FTF) for start-ups as well-described by Senator Diane Feinstein:
YouTube (20 minutes): http://www.youtube.com/watch?v=xTWTpbIx4tE
Text of her speech: http://www.patentdocs.org/2011/03/senator-feinstein-opposes-the-first-to-file-provisions-of-s-23.html
Senator Cantwell's speech in favor of the Feinstein Amendment (7 minutes): http://www.youtube.com/watch?v=cz8BjsTZ-lc&feature=related

Presentation: The Pending Patent Bill: Toward a More Expensive, Lawyerly and Complex Patent System, by Professor John Duffy, U. Va. School of Law
http://www.lauderpartners.com/PatentReform/Prof.DuffyPresentationExpensiveLawyerly&Complex-110830.pdf
Patent Reform problems Presentation 8/30/11: http://www.lauderpartners.com/PatentReform/RonKatznelsonPres-PatentReform110830.pdf


Cybersecurity:
There is a cyber-security problem w/FTF that has been completely ignored. The shortest description of that is this 2 page memo I wrote:
 http://www.lauderpartners.com/PatentReform/Cybersecurity_ImplicationsofTheAmericaInventsAct.pdf
The best descriptions of this threat are in the letters from the Inventors Network of the Capital Area to Speaker Boehner:
http://www.dcinventors.org/wp-content/uploads/2011/07/incaletteronHR1249.pdf
http://www.dcinventors.org/wp-content/uploads/2011/07/UPDATEtotheApril2011INCALetter.pdf


America Invents Act (formerly Patent Reform Act of 2011) - so big business can more easily steal inventions
America Invents Act - the erosion of inventors' due process protections and a legislative cover for theft of patent rights



Jobs:
A study by The Kauffman Foundation found that all new job growth in our country comes from start-ups:
http://www.kauffman.org/newsroom/u-s-job-growth-driven-entirely-by-startups.aspx
Assertions by AIA proponents that the bill will create jobs are unsubstantiated/fabricated:
http://www.investors.com/NewsAndAnalysis/Article/582790/201108251842/Will-Patent-Reform-Spark-Jobs-.aspx
Op-Ed against by Rep. Manzullo
http://washingtonexaminer.com/opinion/op-eds/2011/06/patent-reform-proposal-threatens-american-jobs

WP: "Patent reform measure ignited fierce lobbying effort" (exposes the vast sums the proponents are spending)
National Venture Capital Association position (against):

Judge Paul Michel: "Rein in the Big Bank Bail-Out" 7/7/11
Andrew Ross Sorkin/DealB%k: "In a Bill, Wall Street Shows Its Clout" 7/4/11
Good telling of the Data Treasury story (what motivated the bank provisions of the AIA) in "Patent Reform a Sham: Data Treasury Story Exposes True Motives" 6/6/11
 http://hallingblog.com/patent-reform-a-sham-data-treasury-story-exposes-true-motives/

Post-Grant Review (PGR):
Judge Paul Michel on Post-Grant Review (PGR): "Torpedoing Patent Rights" 7/11/11
Former Senator Birch Bayh on the misuse of EXISTING post-grant review procedures (7/11/11):
"The Use and Abuse of Patent Reexamination: Sham Petitioning Before the USPTO" by Raymond A. Mercado in Columbia Science & Technology Law Review, March 10, 2011
http://www.stlr.org/html/volume12/mercado.pdf

Wikipedia:
The most comprehensive coverage - even though it under-represented the proponents' views - was the Wikipedia page from this summer. Since then it has been attacked by the bill's proponents. Old page (7/19/11)(better): http://en.wikipedia.org/w/index.php?title=America_Invents_Act&oldid=440219858
Current page (who knows what inaccuracy today brings):
Small Business Organizations Urge Substantial Amendments to House Version of Patent Bill

Several Universities Oppose Pending "Patent Reform" Legislation
Detailed letter from one of those universities:

Two former Chairs of the House Judiciary Committee

Article on how the bill won't solve the backlog and will probably worsen it:

Article by Chinese IP judge on prior bill that is mostly the same as this one.  Last page is perfect summary:

Source of information on the monies that flowed to congress associated with the bill:

National Small Business Assoc. (NSBA) opposition: 

Inventor of MRI: Ray Damadian's critique: "Patents Shrugged Redux" 6/16/11

Foreign Policy Magazine: "The Prevent American Invention Act" by Clyde Prestowitz, 5/16/11 

Another overview article: Patent Reform Favors Corporations, Multinationals

Another venture capitalist opines on the passage of AIA:
American Innovators Lose Big in Newly Passed Patent Bill, by Robert Nelsen on 9/9/11
http://www.xconomy.com/national/2011/09/09/patent-bill-continues-the-assault-on-american-innovators/

Brookings article on bill that does not take a position but is revealing: "Balancing Disclosure, Protection of Trade Secrets, and Patentability in Light of Patent Reform"

Two papers on the problem w/the Grace Period by Dr. Ron Katznelson:
How we got here: "Section 2 of America Invents Act: the undisclosed story of legislative obfuscation":
http://works.bepress.com/cgi/viewcontent.cgi?filename=1&article=1057&context=rkatznelson&type=additional&sei-redir=1
Letter from semiconductor manufacturers regarding contract manufacturing triggering "on-sale" bar:
http://www.lauderpartners.com/PatentReform/SemiconLetter

In 2010, an ENTIRE issue of Medical Innovation & Business magazine was devoted to patent reform - against it.  I have never before seen an entire issue of magazine dedicated to stopping bad legislation:
(I wrote one article in it)

URL's are self-explanatory:

Hoover Institution:  6/7-13/11

NY Times, "Two Views of Innovation, Colliding in Washington" By John Markoff, 1/13/08 It is still quite relevant, particularly as it applies to the law of unintended consequences: http://www.nytimes.com/2008/01/13/business/13stream.html?pagewanted=print

Article that rebuts many of the myths promulgated by the proponents, particularly the myth that patent law has not changed much since 1952.
http://saveourjobs.net/articles/america-under-attack/


Foreign Patent Systems' Problems:
Example of how foreign patent systems, whom we are supposed to harmonize with, are not serving the needs of small companies:
http://www.bloomberg.com/news/2011-05-09/smeia-red-hat-google-adidas-pepsico-intellectual-property.html
Incorrect link in that article should have linked to: http://www.smeia.org/smeia-org/_img/PM-letter.pdf
European study published in 2009: "Lost property: The European patent system and why it doesn't work."
http://www.bruegel.org/publications/publication-detail/publication/312-lost-property-the-european-patent-system-and-why-it-doesnt-work
This is whom we are "harmonizing" with?
"Inventor fury as patents prove too costly to defend," By Richard Tyler in The Telegraph (UK), 3/8/12
 http://www.telegraph.co.uk/finance/yourbusiness/9130815/Inventor-fury-as-patents-prove-too-costly-to-defend.html
"Patent Reform: One Giant Step Backwards?" by Dale L. Carlson in The National Law Journal, September 02, 2011:
http://www.law.com/jsp/cc/PubArticleFriendlyCC.jsp?id=1202513148515
Canada changed from FTI to FTF in 1989 and experienced a measurable "adverse effect on domestic-oriented industries and skewed the ownership structure of patented inventions towards large corporations, away from independent inventors and small businesses.":
"Does it Matter Who Has the Right to Patent: First-to-Invent or First-to-File? Lessons from Canada," April 2009, NBER Working Paper No. w14926
http://papers.ssrn.com/sol3/papers.cfm?abstract_id=1394833#%23
6 days prior to the bill's passage, two U.of Pa. professors released this study that found "a significant drop in the fraction of patents granted to small inventors in Canada coincident with the implementation of the change over to the "first-to-file" law.":
http://www.law.upenn.edu/blogs/news/archives/2011/09/patent_study.html
A 2010 study found that "long-term returns in the Canadian venture capital industry are such that capital has fled the market." Canadian Venture Capital Industry Review, P.6 (released 2/11)
http://www.bdc.ca/EN/Documents/other/VC_Industry_Review_EN.pdf
Dale L. Carlson on the Experience of Other Countries with Post Grant Reviews and its Implication for the America Invents (not) Act
http://hallingblog.com/guest-post-dale-l-carlson-on-the-experience-of-other-countries-with-post-grant-reviews-and-its-implication-for-the-america-invents-not-act/
"'Europe is facing an innovation emergency' - Commissioner warns"
http://www.siliconrepublic.com/innovation/item/24074-europe-is-facing-an/
Figures reveal 'failing' patent system By James Hurley in The Telegraph (UK), 4/2/12
http://www.telegraph.co.uk/finance/businessclub/9181842/Figures-reveal-failing-patent-system.html

The other side of tightening the "patent quality filter" is to cause legitimate patents to be denied. This is far more prevalent than trolls suing, but they receive less attention:
The Great Patent Debate: The Untold Story, 8/19/11
http://hallingblog.com/the-great-patent-debate-the-untold-story/
I used to be against trolls until I read this. It's the best thing written on the subject that I have read:
"Defending the Patent Troll: Why these Allegedly Nefarious Companies are Actually Beneficial to Innovation,"The Journal of Private Equity (Fall 2007).
http://www.iijournals.com/doi/abs/10.3905/jpe.2007.694790
Unfortunately, that article is behind the most onerous pay-wall ($45) AND anti-copying hurdles (after you have purchased) that I've ever seen.

Patents Pending | A Journal Sentinel Watchdog REPORT
Patent rejections soar as pressure on agency rises: Penalized for flawed approvals, examiners keep pace - and pay - by refusing applications
By John Schmid and Ben Poston of the Journal Sentinel (8/16/09)
http://www.jsonline.com/business/53367952.html
Patent Reform Passes but Relief for Examiner Corps is Still Pending as USPTO Churns through Staff
http://www.digitaljournal.com/pr/426535

"The America Invents Act's Patent Reform Might Strengthen Patent Trolls" 7/27/11
http://www.litigationandtrial.com/2011/07/articles/attorney/patent-infringement/the-america-invents-act-and-patent-trolls/

Good history of the bill: "The America Invents Act - How it All Went Down" on IP Watchdog 9/20/11 by Manus Cooney of American Continental Group
http://ipwatchdog.com/2011/09/20/the-america-invents-act-how-it-all-went-down/

Certainty?
Many proponents claim that the AIA will bring certainty. Perhaps in some questions, but it raises a great many more. These just touch on just a few. (More to come):
"The "Matrix" for First-Inventor-To-File: An Experimental Investigation into Proposed Changes in US Patent Law" summarized in Patently-O on 12/10/09
http://www.patentlyo.com/patent/2009/12/the-matrix-for-first-inventor-to-file-an-experimental-investigation-into-proposed-changes-in-us-patent-law.html
Full Article at: http://ssrn.com/abstract=1518660
"When being first-to-file is not enough" by Courtenay Brinckerhoff of Foley & Lardner 9/20/11
http://www.lexology.com/library/detail.aspx?g=a981ceed-8d8f-48bb-85f4-d36b2454f4f2

Oldie, but goodie (and just as relevant): "Don't Change the System That Fuels Innovation," by Skip Kaltenheuser in The Commercial Appeal (Memphis, TN) 10/19/97:
http://ipmall.info/news_activities/news_rines/rines022.asp

Humorous illustration of the difficulties entrepreneurs will face getting VC's to sign NDA's (i.e. another problem w/FTF):
http://vc101.squarespace.com

Other relevant info on bill:

Scholarship for hire
"Did Serial Infringers Commission "Academic" Patent Study To Support Widespread Infringement?" in Gametime IP 9/20/11:
http://gametimeip.com/2011/09/20/did-serial-infringers-commission-academic-patent-study-to-support-widespread-infringement/
Criticism of a forthcoming paper that appears to be intended help undermine our patent system: "A Critique of Mark Lemley's "The Myth of the Sole Inventor" by John Howells & Ron D. Katznelson
http://bitly.com/Lemley-Critique
Congressional Research Service's 35-page report on the bill.  One of the authors (John Thomas) was on IBM's payroll and has shown a pattern of bias in favor:
John Thomas's long association with IBM:
His decade-old backgrounder on international patent law (interesting, but not opined on here):



Detailed Analyses of the Bill:
"COMPARISON OF SELECTED SECTIONS OF PRE-AIA AND AIA U.S. PATENT LAW." by Intellectual Property Owners Association
http://www.ipo.org/AIACHART
Detailed critical analysis of bill: "Objective analysis of HR 1249 America Invents Act patent reform (S23 modified)" by Bruce E. Burdick
http://www.burdlaw.com/blog/?p=217
THE 2011 PATENT LAW: Law and Practice: An Analysis of the Leahy Smith America Invents Act, Pub. L. 112-___ (H.R. 1249) as enacted 9/16/11
by Harold C. Wegner of Foley & Lardner LLP (176 Pages)
http://www.grayonclaims.com/storage/PatentLaw2011secondedition.pdf
USPTO's summary of the bill's sections: http://www.uspto.gov/patents/init_events/section_summary_26jul2011.pdf
Detailed legal analysis of the bill that passed (61 pages):
http://www.neifeld.com/TheNewPatentLawsEnacted9-2011.pdf
Bill itself: http://pub.bna.com/ptcj/HR1249VotedJun23.pdf
The bill's Grace Period language is quite confusing. Compare the bill section 102 (p. 5-9) with the existing Grace Period law:
http://www.uspto.gov/web/offices/pac/mpep/documents/appxl_35_U_S_C_102.htm  
See if you can figure out the double/triple negatives.  The proponents created a deception that takes advantage of the confusion to state that the bill means the opposite of what it really says.  The colloquies on this claim the bill means the opposite of what it actually says.  Courts hold that the bill always supersedes the colloquies.
Senate Colloquy:
http://www.gpo.gov/fdsys/pkg/CREC-2011-03-09/pdf/CREC-2011-03-09-pt1-PgS1496.pdf#page=1

Web sites against:
http://www.noonhr1249.org/ (defunct) (Links to excellent articles on the bill's constitutional problems)

Hall of shame: Organizations who should have stood up for start-ups/tech entrepreneurs but have, in the words of Dante "retained their neutrality":
The Kauffman Foundation
http://www.kauffman.org

The Small Business Administration
http://www.sba.gov/about-sba

The movie, "Flash of Genius" was based on a book about Robert Kearns, who invented the intermittent windshield wiper, and his struggle w/Ford to get paid after they ripped off his invention.  It is a perfect example of what entrepreneurs face and what we are fighting to keep.  If you have not seen it, I recommend it. 
Book: Flash of Genius: And Other True Stories of Invention  (by John Seabrook Paperback - Sep 2, 2008)
New Yorker article that tells the story (also by John Seabrook)(about 23 pages when printed out): 

Please call your senators (and any others) to express your disapproval of this bill.  Their phone #'s can be found at:
http://www.reformaia.org/call TOO LATE. IT PASSED ON 9/8/11.

Thanks,

-Gary