05.08.16

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The Economist Says What Patent Lawyers and Other Maximalists Prefer Not to Hear About the Patent System

Posted in Patents at 5:47 am by Dr. Roy Schestowitz

The EconomistSummary: Responses to a new batch of complaints from The Economist over what’s increasingly perceived as patents excess (due to maximalists who would have us believe that the more, the merrier)

“T

oo much of a good thing” is a famous term we have recurringly seen mentioned in relation to the USPTO, where patent quality has gone downhill and patent numbers skyrocketed, just like in China.

“Too much of a good thing” is the headline of this recent article from The Economist (very influential publication), which angered many patent lawyers when it said the truth about patents some time ago (less than a year). “The Economist is at it again,” IP Kat wrote some days ago, “when it comes to patents” (it’s sort of a rant, as words like “at it again” serve to insinuate).

“The Economist is at it again,” the author starts with (not just in the headline). “This time the issue is not innovation but the decline in market competiveness and the increase in industry concentration, both as embodied in the stickiness of oversized corporate profits. Companies are making too much money and displaying too little competitive instincts, preferring to consolidate their positions, to the detriment of the economy writ-large.”

When excessive, abundant, wide thickets of patents are everywhere, who benefits? It is interesting to see patent scope (or examination lenience) coming under attack from the Establishment media too, more than once even. What we found more interesting than the response from IP Kat are the comments in response to IP Kat, namely:

The Economist attack on patents mentions a number of legitimate problems with the patent system, including reducing the number of unenforced or weak patents. However, some of the proposed solutions, e.g. reducing patent terms and expanding the options for challenging patents without a full blown court case, seem to be unrealistic.

Reducing patent terms is virtually impossible since nearly every country in the world is a party to the Trade Related Aspects of Intellectual Property Rights (TRIPS) agreement, which mandates a 20 year patent term. Amending TRIPS would be far more difficult than amending the US Constitution. Forget it. An alternative solution would be to tinker with maintenance fees payable by patent holders. Before the European Patent Office, maintenance (renewal) fees are payable every year, start the third year after filing an application and reach €2000 by around year 10. If the US adopted a similar system, rather than only charging fees after grant of a patent and making them payable every 4 years, it could have a helpful effect.

As for out-of court options for challenging patents, these may already go too far. Witness the recent activity of Kyle Bass, a well known hedge fund manager, in using Inter Partes Reviews (IPR) before the USPTO to challenge key pharmaceutical patents in order to take advantage of the effects of the challenges on the stock prices of the companies holding the patents. Another way to reduce the number of weak patents would be to raise the quality of examination by making a job as a US Patent Examiner more attractive. This could be achieved by increasing the compensation of Examiners, particularly senior Examiners. The compensation of US Examiners is significantly less than their counterparts at the European Patent Office (EPO). In fact, partners at European law firms have been known to leave their jobs to become Examiners at the EPO. This would be unheard of in the US.

Regrettably, any changes to maintenance fees or significantly impacting the compensation of Examiners would require the most unproductive Congress in history to stir itself from lethargy, which could be an unrealistic proposition.

The part which says “partners at European law firms have been known to leave their jobs to become Examiners at the EPO” (we know about exodus in the opposite direction) triggered this comment: “I have not heard of this at all in recent times.” Neither have we. People don’t want to work for the EPO, which has a serious brain drain problem, as we covered here before.

Here is another (newer) comment that says:

I haven’t read “The Economist” recently, but in points I and II it is absolutely correct, certainly in the fields in which I work. The gaming of the system by big companies is especially egregious. Thankfully the EPO has realised to some extent what’s going on and the Examiners involved (I’ve spoken with some of them) do their limited best to restrict some of the more outrageous cons. However, they are always playing catch-up.

On the far side of the Atlantic, where it sometimes seems that the USPTO selects examiners on the basis of a rather unique blend of incompetence, laziness, stupidity, sheer bloody-mindedness and downright dishonesty, things are often much worse, and these obstructive patents, filed purely for that purpose, block off whole areas of legitimate research and actually impede progress.

The patent system may not be broken, but it is certainly badly distorted and rigged against the little guy.

The part worth emphasising says that “it sometimes seems that the USPTO selects examiners on the basis of a rather unique blend of incompetence, laziness, stupidity, sheer bloody-mindedness and downright dishonesty, things are often much worse, and these obstructive patents, filed purely for that purpose, block off whole areas of legitimate research and actually impede progress.”

Amen to that. “Adding software patents as yet a further mechanism for concentration on top of that makes for a landscape that looks even more worrying,” says a later comment.

Thankfully it’s widely recognised, even in IP Kat circles, that software patents contribute little to competition, economics, innovation and so on. They oughtn’t exist at all.

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