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08.02.18

The Number of Granted US Patents is Declining and Transparency in Patent Courts is Improving

Posted in America, EFF, Patents at 6:10 am by Dr. Roy Schestowitz

Not good for patent law firms, but good for everyone else

Patent Lawyers' Tears

Summary: The EFF has managed to improve access to judgments (or briefs) and there are various indicators which suggest a generally positive trend in the United States, which had 50% more patent lawsuits just half a decade ago

THE QUALITY of patents granted by the EPO keeps sliding. Contrariwise, based on widely reported estimations, things go in the opposite direction in the United States.

“So this is indeed what we’ve heard — that patent grants will have declined this year.”Will the USPTO only chat about patent quality or actually do more to improve it? Iancu has thus far done nothing to tackle this issue, unlike his predecessor.

Dennis Crouch has just rendered this chart which serves to reaffirm rumours that patent numbers (or number of granted patents per annum in the US) is finally, belatedly, declining. He looked at a subset of these and said: “With two-months left in the fiscal year, the USPTO is on-track another 300,000+ patent year. The chart above shows the number of utility patents issued each fiscal year for the past two decades. The current forecast for FY2018 is a bit below FY2017 – but still the second highest number of patents issued in a single year. Examiners will push to make their quotas prior to the end of the year – however those will not be reflected in issued patents in FY18 because of the lag between allowance and issuance.”

So this is indeed what we’ve heard — that patent grants will have declined this year. Crouch went on to say that the PTO will discuss patent quality. Quoting Crouch, a patent maximalist: “USPTO is planning to exercise its fee setting authority to set or adjust patent fees. As part of the rulemaking proceeding for the issuance of regulations under Section 10, the USPTO will publish a proposed patent fee schedule and related supplementary information for public viewing no later than August 29, 2018.”

Things have changed a lot since Alice (SCOTUS), reducing the scope of patenting/eligibility. This is important because low-quality patent grants sometimes result in frivolous lawsuits, in turn resulting in banruptcies/embargoes, owing to a trigger-happy ITC, whose latest imposition of sanctions is being celebrated by Watchtroll. This is from yesterday:

PopSockets LLC is a Boulder, Colorado-based company that designs and manufactures mobile accessories. Its flagship product, the PopSockets Grip, is a phone grip and stand that is collapsible, customizable, and re-positionable.

PopSockets’ Grip is protected by PopSockets’ U.S. Patent No. 8,560,031, titled Extending Socket for Portable Media Player. On June 14th, the U.S. International Trade Commission (ITC) issued a general exclusion order which prohibits the importation of any collapsible sockets for mobile electronic devices that infringe upon PopSockets’ ’031 patent.

That’s an embargo. Were all legal avenues and appeals exhausted? Probably not, but the ITC doesn’t care about these. It just “shoots first and asks questions later,” as the famous saying goes. That’s a problem. It’s also a problem because embargoes never help the market; they just help a single corporation, typically a monopoliser.

Josh Landau (CCIA) has incidentally just responded to the likes of Watchtroll when he said (two days ago): “There’s been an increasing usage of the term “efficient infringement” in the debate over patent reform. The basic idea is that large companies make an active choice to ignore patents and just pay for them when they lose a lawsuit.”

We’ve seen this smear many times. It’s being popularised by Watchtroll. Landau then puts in perspective what it means to be accused of infringement:

Now you have to pay a patent lawyer to go through that list of 2,000. They have to look at all of the claims of each patent. Some can be dismissed quickly—maybe they require an infrared lamp and our device doesn’t have any infrared, or they require the device to attach to the skin with an elastic band and our device is glued on. Some will require more thought. When working as a patent attorney, I conducted this kind of analysis. I typically estimated an average of 5 minutes per patent to make this initial determination of “clearly not relevant” or “more time required.” That’s 165 hours of attorney time. We’ll assume an inexpensive attorney who charges $200/hour. That’s $33,000 to cull our list down. Of that 2,000, we might wind up with 50-100 patents that still require significant thought, and we’ve already spent nearly $60,000.

Now, for each one of those 50-100 patents, we’re going to go through the patent in detail, read the file history, think about how the claims might apply to the product. The goal is to either be able to tell the manufacturer “this patent is unlikely to be a problem” with a convincing argument inside of a single paragraph, or to say “this patent would benefit from an opinion of counsel.” That’s about an hour per patent, for another 50-100 hours, and another $10,000-$20,000 in attorney’s fees. We’re at $70,000-$90,000. We probably have a list of around 20 patents left at this point that require an opinion.

It’s pretty obvious who can and cannot afford these fees; this is why patent trolls typically target small companies. They don’t even need to go to court.

A couple of days ago Joe Mullin wrote about a patent troll that preys on small companies [1, 2]. His employer, the EFF, hired him for his decade-long experience writing about patent trolls and TechDirt published a copy that says:

When patent trolls threaten and sue small businesses, their actions draw the public’s attention to the worst abuses of the patent system. In 2013, a company called MPHJ Technology got called out in a U.S. Senate hearing as a “bottom feeder” engaged in “garden-variety extortion” after it sent out thousands of demand letters demanding payments from small businesses that dared to use printers with “scan-to-email” functions. Lawmakers, understandably, found it incomprehensible that broad, stupid patents were being used to sue burger stands and grocery stores.

It’s essentially a patent on having a prepaid account for—well, anything.

There’s a good reason for that concern. It’s hard to see how lawsuits against small businesses using basic technology do anything to “promote the progress of science and the useful arts.” By contrast, it is easy to see how these lawsuits harm companies and consumers by increasing the costs and risks of doing business.

But the intermittent public attention hasn’t stopped this most basic abuse of the patent system. Upaid Ltd., a shell company based in the British Virgin Islands, has been filing patent infringement lawsuits throughout 2018, including 14 against laundromats—yes, laundromats—from California to Massachusetts.

Upaid says that laundromats are infringing U.S. Patent No. 8,976,947. Claim 1 of the patent describes a computer system that performs “pre-authorized communication services and transactions,” after checking an account to see if a user “has a sufficient amount currently available for the … transaction.” It’s essentially a patent on having a prepaid account for—well, anything.

Right now, Upaid lawyers are focused on systems run by Card Concepts, Inc., a service provider that markets a system called Laundry Card to laundromats. Many of the Upaid’s complaints simply point to online photos of the laundromats and the relevant card dispensers as evidence of infringement.

Mullin’s colleague, Daniel Nazer, has meanwhile heralded/spread some good news about the Federal Circuit agreeing to become more transparent about these proceedings:

In a modest victory for public access, the Federal Circuit has changed its policies to allow the public to immediately access briefs. Previously, the court had marked briefs as “tendered” and withheld them from the public pending review by the Clerk’s Office. That process sometimes took a number of days. EFF wrote a letter [PDF] asking the court to make briefs available as soon as they are filed. The court has now changed its policies to allow immediate access.

Earlier this month, the Federal Circuit announced a new compliance review policy. While that new policy [PDF] doesn’t specifically mention the practice of withholding briefs as “tendered,” we have confirmed with the Clerk’s Office that briefs are now available on PACER as soon as they are filed. Our review of recent dockets also suggests that briefs are now available to the public right away.

The EFF has understandably come under attack from patent extremists. It means that it’s doing good work. The funny thing is, these extremists now call everyone they don’t agree with a “shill”; some try to argue that Google is behind everything.

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