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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...
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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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.
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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Also make it so that every patent being the subject of a lawsuit is reviewed thoroughly for it's validity and make the loser pay the whole cost of the lawsuit.
sudo rm -r -f --no-preserve-root /
Exactly, yes. Your damages should be limited to the amount that you declared and paid taxes on.
Dewey, what part of this looks like authorities should be involved?
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.
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