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Patent Trolls Are Losing More. Will America's Supreme Court Change That? (nytimes.com)
jespada writes:
New York Times has an article warning that the Patent Appeal and Trial Board is being challenged on the basis that patents represent real property and that a government agency is not empowered to take real property.
Here's a quotes from the Times article. (Non-paywalled version here): In the five years since it began its work -- a result of the America Invents Act of 2011 -- the Patent Trial and Appeal Board has saved companies more than $2 billion in legal fees alone, according to Joshua Landau, patent counsel at the Computer and Communications Industry Association, offering an expeditious and relatively cheap avenue to challenge patents of doubtful validity. The benefits of stopping bad patents from snaking their way through the economy have been even greater. Companies no longer have to pay ransom so the threat of lawsuits over dubious royalty payments -- filed by aggressive litigants known as trolls -- will go away... But for all the benefits of culling faulty intellectual-property rights, the board is under existential threat. Next week, the Supreme Court will hear a challenge that the patent office's new procedure is unconstitutional...
Here's a quotes from the Times article. (Non-paywalled version here): In the five years since it began its work -- a result of the America Invents Act of 2011 -- the Patent Trial and Appeal Board has saved companies more than $2 billion in legal fees alone, according to Joshua Landau, patent counsel at the Computer and Communications Industry Association, offering an expeditious and relatively cheap avenue to challenge patents of doubtful validity. The benefits of stopping bad patents from snaking their way through the economy have been even greater. Companies no longer have to pay ransom so the threat of lawsuits over dubious royalty payments -- filed by aggressive litigants known as trolls -- will go away... But for all the benefits of culling faulty intellectual-property rights, the board is under existential threat. Next week, the Supreme Court will hear a challenge that the patent office's new procedure is unconstitutional...
I don’t want to hear a damn thing from a patent holding company until they show tax returns demonstrating that they’re paying their fair share to maintain the legal system they disproportionately consume.
Dewey, what part of this looks like authorities should be involved?
I'll accept that logic as soon as they also acknowledge that "a government agency is not empowered to create real property," meaning all patents are invalid, and we can shut down the PATB due to it no longer being needed.
This is my signature. There are many like it, but this one is mine.
We're about to get a very, very pro corporate Supreme Court. This is yet another consequence of the 2017 election.
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Their legal argument is based on a false premise. Eminent domain empowers the government to seize real property.
Owning an invalid patent is like having a forged property deed.
It's not worth the paper it's printed on, except for its value to a criminal.
I suspect, and hope, the Supreme Court refuses to here the case.
Since patents are granted administratively, an administrative finding that the patent was improperly granted seems fine to me.
Article 1, Section 8 of the US Constitution:
The Congress shall have Power ... To promote the Progress of Science and useful Arts, by securing for limited Times to Authors and Inventors the exclusive Right to their respective Writings and Discoveries;
That doesn't even mention HOW "Congress shall" do that. "Patents" are therefore a creation of Congress, and they can regulate them as they wish.
Of course, what do I know. The so-called "liberal" Supreme Court justices said the government can take your property and give it to another private person...
Because they expire after a prescribed time. The only real property I've ever seen disappear slid into the Skagit River recently.
And if they are real property, then pay up that property tax.
Have gnu, will travel.
just getting a jump on the response from the hipster crowd.
Let's for a moment accept the argument that a patent is real property. that property is created by a government agency it seems it would not be unreasonable to argue they can rescind any patent issued in error without a court order. Otherwise, any error they might make would potentially require a court to correct since they conceivably would be taking real property. I would hope SCOTUS would be loath to open that Pandora's box.
I'm a consultant - I convert gibberish into cash-flow.
And even if the Supreme Court hears the case and decides in favor of the patent holder, it could decide that a refund of fees paid to the USPTO for granting an invalid patent constitutes "just compensation" pursuant to the Fifth Amendment.
We're about to get a very, very pro corporate Supreme Court. This is yet another consequence of the 2017 election.
No. We were going to get a very, very pro-corporate Supreme Court no matter who won. The difference is we are getting a supreme court staffed with people who are to the right on many social issues. (anti-poor, anti-homeless, anti-minority, anti-gay, anti-abortion, etc...) While there's some room for disagreement, ultimately this is pretty ridiculous once you know much about these issues.
And if your argument is court fees, then why not just raise court fees for patent cases?
Exactly, make it so that only the very wealthy can challenge patents, that's the ticket.
I'm a lawyer. I work in this field and have been following this case. It's very unlikely to overturn PTAB trials (known as IPRs).
The apellant's argument about "real property" is weak. The Supreme Court has held many times that patents are in essence a public right, or at most quasi-private. They haven't ruled on that question explicitly, but that's consistent with all their recent patent rulings (past 30+ years). A ruling against would also upset settled administrative law precedent in many other agencies that have nothing to do with patents. I expect a decision that's 9-0 or 8-1 in favor of PTAB. Not even close.
The S Ct likely took this case not to overturn the law but to settle the question once and for all. Many patent holders who lose at PTAB appeal to federal court on Constitutional grounds, among other things. This case should finally put those appeals to rest and quit clogging up the lower courts.
FWIW the best interpretation I've heard is that while the rights to exploit a patent are private property, the scope of the patent itself is a public right. That means the scope is properly subject to administrative adjudication by competent federal agencies such as PTO, while the right to exercise that patent is not. That view is entirely consistent with both the appellant's position that patents are real property (at least in part) and that PTAB trials are constitutional. However I don't expect the S Ct will adopt such a clean distinction, given their lack of expertise in this area.
Democracy is two wolves and a sheep voting on lunch.
Consider.
You invent something and patent it. You want to get cash to finance your business and don't want to go after people who infringe it. So you sell it to Nathan Myhrvold's Intellectual Ventures. Now Intellectual Ventures pay you for your patent and do the licence fee collecting themselves.
If Intellectual Ventures didn't exist then you'd be screwed - you'd have spent money on a patent and you need money to run your business but you don't have money for lawyers to collect royalty fees.
Now you can make an argument that the patent system is flawed but this transaction is a valid use of it.
It's like how ambulance chasing lawyers are widely reviled as parasites but if a fear of getting sued makes a business take extra precautions to avoid killing or injuring people, that makes me think the ambulance chasers are doing a societally beneficial thing. Essentially having middlemen to make the information passing more efficient can improve society. And in the US the information passing is done by lawsuit.
I remember reading about a portable computer design in the very early 80's. It was designed in the UK and run off AA batteries. Because running it of non rechargeables was prohibitively expensive they decided to run it off Nickel Cadmium rechargeable cells. And they had a very simple circuit to trickle charge them when it was plugged in. So when you unplugged it and ran off batteries those batteries were guaranteed to be fresh. Problem is, non rechargeable batteries get hot if you try to trickle charge them. So in the UK they put a sticker on the back to say 'rechargeable batteries only'. When it came time to launch in the US they were advised this was a bad idea - if someone ignored the sticker, put in non rechargeables and burned themselves they'd sue and maybe win. However they went back to the engineering team who pointed out that there was an easy fix - stick a thermistor in the battery compartment and shut off the trickle charge if it got warm. This seemed to me to something rather profound. In the UK if you're dumb you get injured and that's just tough. In the US you have a right not to be injured even if you are dumb. In a sense the system in the US had the intelligence, not the individuals. And all the information passing was done by lawsuit, or more accurately people making subtle improvements to minimise their chances of being on the wrong end of a lawsuit. This seems to me to be a more scalable system.
Of course patents can produce a comfortable cartel of insider companies who've sued each other and cross licensed their patents but who can use those patents to discourage new entrants to the industry. And it's clear from Intel's patents on SSE that x86/x64 won't be patent free for a very long time. AMD has a patent licence but is not profitable. Intel might end up with a monopoly and technology might stagnate.
And you can make a case for Tort Reform in the US to reduce the worst case damages in a personal injury lawsuit.
https://en.wikipedia.org/wiki/...
But I think getting rid of patent trolls and ambulance chasing lawyers completely is a bad idea. You just need to fine tune the regulation to maximize their incentives to do socially valuable things and minimize their incentives to do socially harmful ones. Of course in the US's hyper partisan, clickbait haunted world everything is boiled down to "Those evil $(OTHER_PARTY) are up to Pure Evil again. Share this and vote for us to stop them!"
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The SCOTUS has never, that I can remember, sided against Congress in altering the scope of IP law. In fact, the SCOTUS has basically told the public we're SOL if Congress does something we don't like. The "pro-IP side" is part of the general public and has no standing either to challenge Congress in defining the scope of IP protection because Article I, Section 8 is a blank check to Congress.
I already posted earlier so I can't mod this up.
Seems like a double standard.
Why isn't there an expeditious and relatively cheap avenue to challenge patent applications of doubtful validity and prevent these patents from existing in the first place? Shouldn't patent application examiners have the benefit of hearing these challenges before making their decisions?
If the patent trolls have retreated under their bridges and judges and juries are more awake about patent abuse and IP extortion then I think we all owe a great dept of thanks to pj and Groklaw - http://www.groklaw.net/
Way back in 2003, Darl McBride thought that his company SCO (pretending to be the defunct Santa Cruz Operation) decided on a scan to monetize Linux, through some disputed Novell IP.
pj, a paralegal, aided by a growing cohort of assistants, tracked down and followed every slimy twist and turn of the multiple cases brought by SCO against Novell, IBM and several others. They dug up so much forgotten information, case-law and witnesses that even the lawyers admitted to using Groklaw as a source.
Eventually it was decided that Novell did in fact own the IP in question, and "millions of lines of :copied code" turned out to be a couple of headers of no consequence.
Finally Darl's dreams of wealth beyond belief collapsed and SCO went into bankruptcy.
The whole saga, and SCO's ultimate ignominious collapse, was a big wake-up call for patent/IP trolls and Groklaw played no small part in it.
Groklaw stopped in 2013 because their messenger anonymizer was forced to close, but their archives are still online.
We owe a big dept of thanks to pj and Groklaw
Mac
You're right, the guy complaining doesn't pay an annual tax on most of his property. In many states businesses DO pay an annual tax on objects they own, which is an expensive pain in the ass which generates little revenue compared to the expense. Individuals are MUCH better off in this regard. As a business owner, I pay annual taxes on my desk, my stapler, my printer, etc.
The observers supporting the patent review board in this case mostly seem to be coming from the perspective of "stopping bad patents as easily as possible is good". I'd certainly agree with that!
The issue on the other side is that the Constitution has two things to say about the matter. The federal government *Constitutionally* can't take things without due process of law (opportunity for a trial), and the seventh amendment guarantees the right to a *jury* trial for "controversies".
This tension between the efficiency of an administrative decision by the executive branch and Constitutional right to a jury trial has been successfully overcome with respect to decisions by IRS, FCC, FAA, etc. The key is to write the law in such a way that an administrative decision (faster and cheaper) can be appealed to a court (Constitutionally required) and the court will take due notice of the administrative body's decision and the reasoning behind that decision. That way you get the best of both worlds.
To use the IRS as an example, if a revenue or collections officer makes a decision you disagree with, you can first appeal to an separate appeals board using a Collections Due Process request. To maintain Independence, appeals employees generally aren't even allowed to talk to collections and revenue officers (with some minor exceptions). If you don't like the outcome of the appeals hearing / discussion, you can then appeal to the federal courts. The court will take notice of the IRS decision, so MOST of the time, if someone lost their argument with the Collections office and lost against with the appeals office, they have a weak argument and will lose in court. But they CAN go to court if they want to, and that preserves their rights.
Most issues are handled fairly efficiently - even if the revenue officer is wrong, the appeals office can correct it. That in no way limits someone's right to go to court, though. A similar process is supposed to be there for patent appeals decisions. If you think the patent appeals board got it wrong, you should be able to go to court. Because the court will read the appeals board decision and if it makes sense the court will uphold it, the board decision should be a strong predictor of how a court will decide. In other words, once the board decides, it's not likely that the court will reverse it unless the board is clearly wrong. That should, and apparently does, discourage patent trolls from pursuing a court action if the board rules their patent invalid.
Plaintiffs in this case say that the exact procedure allowed for appealing to the court doesn't meet the Constitutional imperative. They may be right. If so, the process will simply need to be adjusted to be more like the process uses to appeal IRS decisions, which has been held Constitutional.
As a business owner, I pay annual taxes on my desk, my stapler, my printer, etc.
I think you misspelled "take deductions equal to the cost of my desk, stapler and printer divided over the useful life (MACRS) as documented in IRS Publication 946. See explicitly the section about how "[O]ffice machinery (such as typewriters, calculators, and copiers)" which specifies a 5-year depreciation timeline".
Either that or your accountant is not very good.
First, no, it's called "business personal property tax". Businesses pay ANOTHER tax every year for owning things, such as desks and staplers. This has nothing whatsoever to do with income tax. If you've never run a business, you could be forgiven for thinking that the only taxes are income taxes and sales tax (but please don't vote if you think that); businesses pay a dozen separate kinds of taxes, filing taxes at least 12 times per year.
> "take deductions equal to the cost of my desk, stapler and printer divided over the useful life (MACRS) ... Either that or your accountant is not very good.
Maybe you're accountant isn't an accountant, he's just trying to play accountant on Slashdot. Items costing $2,500 or less each can be fully expensed in the first year. No need to wait five years for those tax savings, but more importantly no need to spend $30 tracking depreciation on each $10 stapler! If you're tracking depreciation on staplers, you're very much Doing It Wrong. For items over $2,500, you also expense $500,000 of equipment annually.
Maybe,
On the other hand, someone donated $28.5 million to put Gorsuch on the Supreme Court and keep Garland off, among other things. Nobody knows who, but buying a justice could be a really good investment.
https://maplight.org/story/tax...
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There's still a bit of a difference though -- unlike real property, the patent is granted by the government. Its not something they built, found or bought themselves.
That is, the government isn't so much taking something away as correcting a mistake they previously made in issuing the patent originally.
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The constitution is pretty clear that patents aren't property, if they were the whole "to promote the progress of science and useful arts, by securing for limited times to authors and inventors" part wouldn't make any sense. Their purpose is to drive innovation via encouraging people to create unique and useful inventions by allowing them to profit from those inventions for a short time.
Do you pay more for filing a patent and having it accepted than you do for filing and having it rejected?
In the linked page, the "Patent Post-Allowance Fees" section mentions "issue fee". The "Patent Maintenance Fees" mentions periodic renewal. The "Patent Petition Fees" mentions "Extension of term of patent", which applies to undue delays by the USPTO or FDA. None of these apply to denied applications.
If I build a new table, I have exclusive control of that table, it's my property.
If you catch a fish, you have exclusive control of that fish, it's your property.
If you build a new method of mixing paint in a sealed can, you exclusive control of that method, it's your property.
The government issues you a document recognizing your ownership of your car. The government issues a document declaring your ownership of your house. The government issues a document declaring your ownership of your invention.
It seems a lot like property to me, but actually it doesn't matter. Certainly a patent fight is a controversy under federal law. I don't see any fundamental reason we can't allow a patent holder to exercise their Constitutional right to a jury trial "in all controversies arising" under federal law. A quicker, less expensive adminstrative hearing can resolve most cases without having to go to court, but ignoring the plain language of the seventh amendment in order to deny patent holders their right to a judicial hearing seems a bit crazy to me.
by definition, ip isn't real property. writer has poor understanding of law.
real property is physical assets, typically hard to move, like real estate. Writer meant property without adding real, period.
I am American and the patent system is fundamental part of this economy. With hope now when we have a rational, pro-market government in power (and we must hope permanently given how radical left has become in their anti-Republican parnoia), we will see more and more power given to patent holders to enforce their rights against people who violate them. This is good and right is the way things should work for us in USA.
IANAL, but ... I don't see the patent as being the property. I see the original idea as being the property (if anything is). The Patent is a right granted by society on certain terms. Society can dictate those terms. To put in real property terms it may be more like you have a river or stream flowing through your property. The stream may in fact be yours while it is inside your boundaries, but the state has the right to dictate how you use the water, by setting quotas or not allowing you to divert it to the detriment of people downstream etc.
The New York Times article does not mention, anywhere, the phrase "real property". The claim is that patents are "private property". Now you can argue about the actual issue.
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