Watch Out: The Patent Maximalists Are On The Warpath To Destroy Innovation And Empower Patent Trolls

Patents

from the it-never-ends dept

Over the last year or so there’s been a concerted effort by patent maximalists to try to shred a long line of very good Supreme Court rulings that finally (after two decades) limited just some of the destructive nature of patent trolling. There was an attempt in Congress to literally reject all of those key Supreme Court cases, and bring back Congress’s full support for patent trolling. The current head of the patent office has been spewing a bunch of similar nonsense as well, and seems to have no recognition that patents that are too broad hinder, rather than help innovation. And now we have Judge Randall Rader, who ran the federal patent court, the Court of Appeals for the Federal Circuit (CAFC), for many years before stepping down due to an ethics scandal.

That ethics scandal? Being way too chummy with patent lawyers who practice before him. As we’ve noted over the years, part of the problem with the setup of CAFC — a special appeals court for all patent appeals cases to go to — was that the judges on it tended over time to buy into patent maximalism, because they basically only spoke to patent lawyers.

Judge Rader has now decided to pop back up again to argue that we need more bad and broad patents in order to enable more patent trolls. Or America won’t be able to compete. Or some such nonsense.

Our country?s founders understood that patents are critical to innovation. For that reason, the principle is enshrined in our Constitution, which grants Congress the power ?to promote the Progress of Science and useful Arts? by awarding ?Inventors the exclusive Right? to their discoveries. Indeed, our patent system incentivized and empowered early inventors like Thomas Edison and Alexander Graham Bell, and helped create today?s technological giants like Apple, Google, Microsoft and IBM.

This is basic economics. Patents guarantee a limited monopoly on inventions (usually 20 years), which lets inventors recoup the costs of research and development, and repay investors who help convert scientific theory into usable technology. It is no coincidence that America in the 20th century had both the strongest patent system and the most powerful economy in the world.

This is ahistorical claptrap. Patents have never been “critical” to innovation. Plenty of studies have shown that innovation occurs in the absence of patent laws (and seems to occur even faster in those markets). And if we’re talking “basic economics” let’s send Judge Rader back to his Econ 101 class. Monopolies are the antithesis of innovation. Inventors recoup the cost of research and development by selling a product in the market. And yes, there are reasonable concerns about copycats, but copycats are what drive innovation. The originator has to keep innovating, and making their product better, and copycats tend to trail innovators.

Indeed, the monopolies are what slow innovation, by taking away the incentive for inventors to actually make their product better. This is why the steam engine didn’t really take off until the patents expired. We see this over and over again.

Also, Rader ignores that while his argument might make sense in a few limited areas of innovation, the vast majority of innovation happening today has nothing to do with patents at all. The R&D cost of developing “software” doesn’t need to be recouped the way he describes, and software is already protected by copyright. Google didn’t rely on the patent system — and it’s insulting to the company to say that they did. Microsoft and Apple didn’t start relying on the patent system until much later in their lives — well past what’s considered their “innovative” period, and only to limit smaller competitors and slow down the pace of innovation.

In short, Judge Rader has no idea what he’s talking about. And that’s just in the lead in to this piece. Because now he’s going to complain that we don’t have more software patents — attacking the most important and useful Supreme Court case in decades, the Alice case that effectively invalidated a ton of ridiculous software patents that never should have been granted. The impact of the Alice ruling was fantastic. Tons of software patents were invalidated. It destroyed the business model of a bunch of patent trolls and it (for a little while at least) got the US Patent Office to start rejecting a bunch of bad patents.

But, of course, the ruling in the Alice case was overruling one of the most ridiculous CAFC rulings in which Judge Rader himself said a bunch of ridiculous things. So now he wants to undo the Supreme Court’s ruling that rejected his ideas about software patents.

In Alice Corp. v. CLS Bank, the Supreme Court ruled that a computer service designed to mitigate risk in financial transactions could not be patented despite the fact that computers and software were involved because the invention related to an ?abstract idea.?

In so ruling, the court undid decades of strong patent protection by throwing open the floodgates to categories of U.S. innovation that would no longer qualify for patent protection. Twenty years ago, America largely protected computer software and emerging technologies while Europe and Asia did not. Since then, patent protection in Europe and Asia has advanced, while the U.S. has taken a huge step backwards with Alice and cases that followed.

The result is that many countries are now more competitive than ours in promoting innovation.

This is ridiculous. Yes, China is doing a lot more patenting than before, but as an anti-competitive tool to block American companies. There is no sign that software patents is why the US is somehow “less competitive” than before. Rader is making that up.

Now the phrase ?abstract idea? does not appear in any patent law that Congress enacted. Despite the fact that almost every invention starts with an abstract idea, the Supreme Court declined to define what the phrase means. It noted that it ?need not labor to delimit the precise contours of the ?abstract ideas? category in this case.?

This is hogwash. The reason abstract ideas are not patentable is because the whole point of the patent system was supposed to be to get inventors to reveal the details of what their invention was so that others could make use of it once the patent expired. But there is no invention of an “abstract idea.” The Supreme Court was right to reject it because the idea of patenting abstract ideas was a huge drain on innovation in the first place, where you just had a bunch of lawyers throwing around dumb ideas, adding “on a computer” or “on the internet” and then being able to shakedown companies that actually innovate.

American companies are now struggling to keep up with foreign competitors like Huawei and Samsung, which benefit from patent rights in their home countries that no longer exist in our own. As Senators Coons and Tillis observed, high-tech inventors ?are receiving patents in Europe and China, but not in the United States. Why should we cede our competitive edge at this critical juncture??

Oh bullshit. They’re not struggling to keep up with foreign companies because of patents, but because of some bad decisions in building out their own product suite — which is part of the reason that Cisco has been pushing efforts to ban Huawei around the world, rather than fighting on an even playing field. It’s not about the patents.

Despite bipartisan support, however, efforts to change the law stalled. Some might think that, in the midst of a global pandemic, Congress was right to put patent rights on the backburner. But the current crisis only highlights the need for reform. Under our current approach to patent eligibility, diagnostic tests for Covid-19 cannot be patented, so the resources and incentives to develop new tests in the U.S. were weak and unready.

Yes, Congress was right to put patent reform on the backburner (and it happened way before COVID-19 because there wasn’t nearly enough support in Congress for the bill). And, again, patents are not the incentive to create tools to fight COVID-19. Public health, public safety, and the market are all doing a pretty fucking good job creating incentives. The idea that we were unready because of weak patent laws is complete and utter hogwash.

Besides, after nationwide shutdowns and an uncertain path to reopening the economy, American industries could use a break.

A break… meaning tons of new patent trolls shutting down the actual innovative companies by a bunch of patent lawyers shaking down the system to buy new yachts? Fuck that.

One hope still remains: the Supreme Court, which has the power to clean up its own mess. One of the Federal Circuit?s most egregious decisions, Chamberlain Group v. Techtronic Industries, is now on appeal to the Supreme Court. In a decision that Senator Tillis called ?madness,? the Federal Circuit put a garage-door opener patent under its sledgehammer. If garage-door openers are too ?abstract? for patenting, what else is left? As the patent owner in the Chamberlain case put it, this is ?a patent emergency.?

As Judge Rader well knows, he is totally misrepresenting the Chamberlain case. The patent was not on a “garage door opener” but a specific type of garage door opener, in which one of the key claims was for “wirelessly communicating status information about a system.” THAT is the “abstract idea” that should not be patentable, because of course that shouldn’t be patentable. We didn’t need a patent system to add a fucking wireless communication system to a garage door opener, Randall. Get real.

What the CAFC, correctly (I should add), found was that if you took out abstract ideas like that, there was nothing inventive at all going on here. This was just combining a few well known ideas into a new use case. And, sure, that should be rewarded, but that’s how the market works. It gets rewarded in the market. Make a better mousetrap, etc. etc. etc. Not hire a lawyer to patent your better mousetrap and then wait for others to make the same obvious mixing and matching of off the shelf technology and sue them out of existence.

This is patent maximalist gaslighting.

Filed Under: business model patents, cafc, innovation, patent eligible subject matter, patent maximalism, patent trolls, patents, randall rader, software patents