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?
Several problems
- 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?
Software patents? Dumb.
One thing that would help would be to make venue shopping harder. As it is now a national company can just about pick any federal court district in the US to file a patent suit. It would be far better to either limit venues stringently or establish a separate patent court to hear patent cases.
And yes, the East Texas court is a haven for patent trolls. Hardly a secret. If that offends people, tough.
“Software patents? Dumb.”
Indeed; in brief:
No clear need: prior to the recent introduction of them, we had a VERY healthy software development industry.
Do not fulfill the intent:
Patents are supposed to encourage the movement of intellectual property from trade secrets, which never get intentionally disclosed, to the public sphere, in return for a limited monopoly on their use. This allows, e.g., another company to look at one, figure out a refinement, patent that, and if it’s good enough the two will cross license and everyone including the public will benefit.
We are now constructing the most complicated artifacts in history with software (e.g. disk drive “operating systems” in firmware). Given that the USPTO previously didn’t even try to police their quality—by definition an examiner wasn’t selected to be a software expert—and they are now so horribly over worked (8 hours per patent???), how little of the field is formally documented in published form (not that they checked, I once worked for Netword, a company that I later learned had the poster child of bogus patents, essentially on DNS, prior art *published* by Xerox PARC), and the impossibility of an practitioner knowing enough patents, the above just breaks down.
As a matter of practicality, when writing anything of more than minimal complexity, you KNOW you’re going to be violating one or more patents (most or all bogus, but until very recently that didn’t really matter). It’s a given. So practitioners avoid learning what’s been patented like the plague to avoid greater legal exposure (not that reading a software patent is at all useful to learning anything is a short period of time). That negates the “public disclose” presumed benefits.
Basically, when moved from e.g. chemistry (my other field) to software, the system just doesn’t work except in rent seeking. And given that, only atrocities like the Blackberry one (particularly egregious where they hired and then suppressed the possible testimony of one guy who’d developed prior art—again, Blackberry’s lawyers seemed to have dropped the ball) *may* result in reform. Worst case, some programmers worry about not being able to practice their art in the US—me, I’m glad I am moving back to my true love of science now….
Why is so much money at stake for East Texas? Why should they care if an award is given or not? Do they get a percentage of the award amount for processing, or something similar to that?
I believe it’s bonkers to be asking juries of commoners to evaluate the contributions of “prior art” in highly evolved, dynamically evolving technologies. The good citizens of northern California are no more competent at it than the ones in eastern Texas. Your suggestion that these juries are “an important check on government power” is bonkers.
But I do appreciate this blog overall, thank you.
Steve,
My take is that this is a kind of economic development program for East Texas. They get a lot of high-proced attorneys visiting and a lot of work for the Federal courts. They don’t get a percentage.
Seanwal.
We ask juries – in America – to evaluate more important things, like life or death. “Jury nullification” is where a jury decides that they don’t like a law and don’t convict. This is one reason the US has lots of unenforced laws on the books. If juries won’t convict, prosecutors won’t prosecute and the police, eventually, won’t arrest. Our deliberative bodies can pass all the stupid laws they want – and they do – but the necessity of getting 12 regular folks to agree is an important check on government power.
Patents are civil cases with a lower burden of proof. Since the good people of east Texas are currently friendly to patent holders, I merely suggest that modern marketing techniques be applied to raising their awareness of the benefits to a freer flow of ideas.
And yes, I think software patents are particularly egregious examples of bureaucratic over reaching.
Robin
Good post. Bookmarked.