10.21.17

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In the United States, the Patent ‘Industry’ is a Dying Breed and China Adopts This Destructive Force

Posted in America, Asia, Patents at 12:26 pm by Dr. Roy Schestowitz

This IMF chart shows that the US is still doing fine compared to China

IMF chart

Summary: The decaying patent microcosm, or the pipeline of low-quality patents and frivolous lawsuits these entail, loses its grip on the US; China, much to the astonishment of people who actually create things, is attempting to attract that ruinous microcosm (which preys on real, producing companies)

THE world changed a lot in recent years. Probably for the worse.

On the patent front, however, the world is improving, especially in the US. The only exception to this seems to be the emergence of ‘zombie’ patent portfolios, offloaded by the truckloads onto trolls. The concern about the fate of software patents in the US is very real. The patent microcosm is furious and there are staff cuts, too. They’re becoming increasingly redundant.

The EPO and the USPTO may still be granting software patents, but fewer of these will be deemed eligible in the courtroom; fewer people will even bother filing. The numbers already speak for themselves. Litigation is down sharply.

“We are growingly worried about and frequently confronted with buzzwords as means of patenting software, in essence misleading patent examiners into granting software patents (in defiance of Section 101).”From the patent maximalists who try to convince us that more patents mean more innovation (even computer-generated patents and other awful ideas) comes this latest suggestion of “Automated Analysis of 101 Eligibility” (Alice et cetera). This is pseudoscience and a waste of time, but for lawyers with no background in the sciences this may still seem worthwhile. We previously remarked on all sorts of proprietary software packages whose marketers vainly claim to be able to asses the value/worth of patent portfolios based on text alone. Facts don’t seem to matter to these people. They even compare patents to “assets”. That’s beyond laughable and it totally misinterprets the very essence of patents.

We are growingly worried about and frequently confronted with buzzwords as means of patenting software, in essence misleading patent examiners into granting software patents (in defiance of Section 101). These patents are disguised as “cloud”, “AI”, “IoT” and all sorts of other gobbledygook. Apparently, based on this new article from Nick Beckett and Matt Pollins in CMS (China), “cloud” gets used as a loophole even in China. “New patent examination guidelines are friendlier to software patent owners,” they explain and then there’s this (the opening paragraph alone uses the word “cloud” five times):

China is in the middle of a rapid shift towards cloud technologies. Execution of the 13th Five Year Plan will deliver substantial investment into cloud computing and the sector is undergoing unprecedented growth. Meanwhile, organisations operating in this digital economy face an increasingly complex intellectual property (IP) environment, as China becomes a global IP centre and scales up IP protection, enforcement and penalties for infringement. Indeed, the number of cloud-related IP lawsuits in China grew 158% between 2011 and 2016. Against this backdrop, organisations face an important question: how can they take advantage of the enormous opportunities presented by the cloud in a way that manages this complex IP landscape? In this post, Matt Pollins and Nick Beckett from CMS look at the practical steps organisations can take to protect themselves and succeed in the cloud.

It’s no secret that China is now very much open to software patents. It’s also open to patent trolls (which typically rely on software patents). It’s a terrible strategy and a doomsday scenario, yet one that SIPO gleefully sleepwalks into. Yesterday, for example, IAM said that the person in the business of patent Armageddon (SIPO official) urges universities give patents to patent trolls in order to ‘assert’ (i.e. sue). It’s unreal, but here it goes:

This week the Intellectual Property Department here in Hong Kong played host to the annual meeting focused on IP developments on the mainland and its two Special Administrative regions (Macao being the other). One of the main topics was university tech transfer issues, and it was in this area that SIPO officials most frankly acknowledged the need for significant reform. Based on their comments, there could be big changes ahead in the field.

Patent filings by Chinese universities took a major leap in 2016, reaching over 300,000 in total. Applications for invention patents, which are typically the highest quality and most valuable rights, grew by about 28% year-on-year. These impressive numbers reflect huge investment in research on a national scale, as well as recent reforms that give universities more autonomy to set their own patent strategies.

But Deng Yiyou, a deputy division director in SIPO’s Intellectual Property Development & Research Centre, says that the vast majority of these rights are not being utilised. As many as 96% of them are never commercialised, he said, meaning no product has been produced encompassing the protected technology.

[...]

Even as patent litigation has skyrocketed in China, we have not seen university assertions on a scale that has registered among industry players. The same is largely true for government-run research labs. A case filed earlier this year by the Chinese Academy of Sciences, the biggest such entity, against US LED maker Cree could prompt more IP managers in government and academia to consider a more aggressive approach. If that happens, the risk environment for all tech companies in China will shift significantly.

So basically, China seems eager to replicate the very horrible system which the US tries hard to get away from (with growing levels of success).

Watchtroll, which watches out for the trolls’ interests and promotes these interests, is obviously unhappy about where the US is going. It is still attacking TC Heartland (Supreme Court decision which hampers patent trolls) and it latched onto "China!" for the delusion of lost leadership (in trolling). Fake panic and fear-mongering again. The site is full of such garbage and almost every day one can find these rants.

“Watchtroll, which watches out for the trolls’ interests and promotes these interests, is obviously unhappy about where the US is going.”Watchtroll must be supremely envious, seeing how patent trolls are migrating to China and doing all their blackmail/mess over there. Good for litigation ‘industry’? Sure. But at whose expense? Watchtroll is basically celebrating rubbish patents where these directly harm the respective disciplines, e.g. programming/development of software.

“In direct contrast to the United States,” says Watchtroll, “innovators [sic] are finding that China is increasingly welcoming to business method and software innovations after it relaxed patent examination guidelines in those sectors earlier this year.”

They mean programmers, not innovators. They tend to frame programs as “inventions” in order to warp this debate. And yet, in spite of China’s lenient policy on software patents, there still aren’t many internationally-recognised software companies in China, are there? They’re mostly based in the US, in spite of (or because of) Section 101.

What’s probably even worse to come out of Watchtroll in recent days is this attack on the Supreme Court. So having already attacked judges and insulted PTAB staff, Watchtroll is now attacking the US Supreme Court, calling it “activist court when reviewing patent law…”

“Watchtroll must be supremely envious, seeing how patent trolls are migrating to China and doing all their blackmail/mess over there.”Disgusting!

This was published by Robert Stoll two days ago. Like David Kappos, he’s an official-turned-lobbyist and he is still lobbying for software patents, just like the former employer of Kappos (IBM). Watch what IBM’s patent chief is pushing at the moment. These are attacks on Section 101. Remember that IBM is close to Watchtroll and IBM also uses the IPO to water down Section 101 (they call it a “taskforce”).

Quite frankly, all we have here is a bunch of panicking patent bullies and their lobbyists. They make a living out of telling people that they need more and more patents while suing these people over patents.

“As one can easily see, this underestimates the importance of patent quality and focuses instead on quantity (the mistake increasingly made by the EPO under Battistelli).”What worries us a great deal is that former USPTO officials such as Stoll and Kappos resort to this kind of cronyism. It’s like there’s no separation between industry and government; policies are just being ‘tailored’ for very rich people — a direct departure from proper functioning and decency.

“Putting Yourself in the Shoes of a Patent Examiner” is a new paper recommended by the patent microcosm yesterday. The abstract (with our emphasis) says: “The mission of the United States Patent and Trademark Office (USPTO) is to ensure that the Intellectual Property system contributes to a strong global economy, encourages investment in innovation, and fosters entrepreneurial spirit. In order to ensure that the large volume of newly filed patent applications are examined in a reasonable timeframe, the USPTO has a system for determining the average amount of time an examiner should spend examining a patent application. Under the current production system, productivity is assessed based on Production Units (“PUs”) achieved relative to the Examiner’s production goal. The production goal is calculated for each examiner based on the number of “Examining Hours” worked in the evaluation period and quantitative values assigned to examiner seniority and complexity of the technology examined. To quantify “Production Units”, a Patent Examiner receives different “counts” for different tasks performed at different stages in prosecution. Understanding this examiner production system – also known as “count” system – is important at least because it educates a patent applicant on the system in which Patent Examiners operate. For instance, the Examiner production system underscores the importance of the events conducted in the early stages of patent prosecution. The goal of this note is to provide an overview of the system in which Patent Examiners operate by summarizing important aspects of the system currently used to evaluate the performance of a Patent Examiner.”

“Wait and watch how China collapses under its own weight of patents.”As one can easily see, this underestimates the importance of patent quality and focuses instead on quantity (the mistake increasingly made by the EPO under Battistelli). Moreover, it fails to take into account the likely virtue of a patent or its expected effect on economics. If a patent is granted to just give some company a multi-billion dollar monopoly on a life-saving drug, then maybe it’s better off not granted at all.

Debates about patent scope will likely carry on like this. Sites like Watchtroll will approach anyone willing enough to bash the US patent system and insist that it needs to grant an infinite number of patents. If left unchallenged, these ludicrous theories of theirs might even be regarded as truthful.

Wait and watch how China collapses under its own weight of patents.

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