Our broken patent system
RIM recently settled a patent case for $600 million with NTP while the validity of the patents was still under review. The threat of Blackberry shutdown forced their hand.
More recently NetApp filed suit against Sun in another Federal District Court over ZFS. They went to a court in Texas, even though both companies are headquartered a few miles from each other in Silicon Valley.
This court has seen a 10-fold increase in patent suits since 1999. What’s with the United States District Court for the Eastern District of Texas?
First, where the heck is the fabled Eastern District?
That’s it in the middle of the map.
Wake up call
The RIM/NTP case was a wake up call for the high tech industry. While RIM’s lawyers and RIM itself deserve major blame for the debacle, the idea that a business could be shut down due to possibly invalid patents galvanized the industry.
Patents are a good thing
If an inventor comes up with something smart he should be able to profit by it even though large and wealthy companies bring it to market. But should a patent holder be able to clear $600 million because prior art wasn’t considered and a review wasn’t timely?
- Federal courts and the Board of Patent Appeals and Interferences (BPAI) aren’t on the same page. They each have their own calendars and processes and laws. So even though the BPAI fast-tracked the RIM appeals, they weren’t fast enough to rule before RIM was forced to settle. If RIM hadn’t angered the judge by their earlier conduct things might have different, but so it goes.
- Patent examiners need help. Patents should be novel and non-obvious, but how do you know? RIM introduced evidence that the NTP patents were invalid due to prior art, i.e. weren’t novel or non-obvious, but why didn’t the examiner catch that before granting the patent?
- The Eastern District of the 5th Circuit Court. Federal judges have a lot of power over what happens in their courtrooms and judges like T. John Ward have turned their courts into preferred venues by forcing fast discovery and quick trials. Justice delayed is justice denied, so speedy civil suits are a public good. Yet reports that the good citizens of the Eastern District sometimes discount technical testimony about prior art in favor of a “they got the patent, so give them the money” attitude suggests another problem.
And another strategy.
How about marketing the benefits of innovation?
I got to thinking about this when some guy went ballistic on the Sun CEO’s blog over the suggestion that the Eastern District is a preferred venue for patent trolls. Jonathan didn’t say anything derogatory about the district or its people, but that didn’t stop the rant.
A little defensive perhaps?
I have no opinion about the people of eastern Texas. It is an area of small towns, adjacent to Louisiana and east of Dallas and Houston. I’ve seen reports that it has an older-than-average population which suggests it could have lower-than-average education levels. While the jury system isn’t perfect, it is an important check on government power.
The 3rd prong
Industry is already after Congress to change the laws to reduce some of the draconian provisions of current law, a version of which just passed the House. Farm-state senators need support for yet another huge agri-biz subsidy program, so the high-tech states have some leverage.
The GAO just issued a new report on problems in the patent office, and the USPTO is responding. The Peer Reviewed Prior Art Pilot is a pilot project to make it easier for interested and competent parties to contribute to the discussion on prior art during patent exams.
The legal challenge is going well, too. The Supremes just ruled in KSR v Teleflex that the non-obviousness is a legal question, not a factual one, which has implications for the appeals process. It isn’t clear how KSR will play out, but in the short term it almost certainly reduces the value of existing patents.
But what about Texas?
Given the amount of money at risk in the Eastern District, I propose that an industry association form to educate the people about the patent system. There are lots of small towns and small town papers and radio stations that could be briefed. Advertising could be bought and opinion leaders consulted. Unlike major metro areas, the Eastern District would be fairly cheap to reach.
This is just another marketing campaign: focus groups; issue analysis; target demographics; messaging and the like. A few million dollars could go a long way towards making the Eastern District jurors more discerning and critical on patent-law issues.
Comments welcome. Tech companies don’t seem to believe in marketing except when all else fails. Why?
Also, I didn’t say a word about software patents. The US is the only industrialized nation that patents software. Smart or dumb?