03.01.19

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Lesson From the United States: Overly Permissive Patent Policy (Maximalism) Can Drive Technology Companies Away

Posted in America, Europe, Law, Patents at 12:44 am by Dr. Roy Schestowitz

Rodney Gilstrap wanted to attract plaintiffs to his town; instead he drove actual companies away

Rodney Gilstrap

Summary: Technological ‘wastelands’, or places where science and technology firms choose not to have business (shops/operations/staff/services/hosting), are the main legacy of a lawyers-centric patent policy; EPO must pay careful attention or drive away innovation

On the heels of our previous post about software patents promotion under António Campinos at European Patent Office (EPO) let’s look very briefly at what happens in the U.S. Patent and Trademark Office (USPTO).

“Making a country/state/superstate (like EU) friendly to patent trolls and abstract patents simply means that real businesses will go away (or choose not to come); they might be replaced by parasites such as trolls and the arrival of parasitic lawyers who represent the trolls. “The CCIA‘s Josh Landau has just written this post about Apple’s Texas exodus; we wrote about it twice recently (the past few days), on both occasions highlighting the danger this poses to Europe. It is a cautionary tale. Making a country/state/superstate (like EU) friendly to patent trolls and abstract patents simply means that real businesses will go away (or choose not to come); they might be replaced by parasites such as trolls and the arrival of parasitic lawyers who represent the trolls.

In Landau’s own words:

Last week, it was widely reported that Apple plans to close its retail stores in the Eastern District of Texas in order to avoid facing patent lawsuits in the district. Given that a single patent lawsuit can easily cost just as much as opening an Apple store (estimated at $8-10 million per store), even if Apple wins the lawsuit, it probably wasn’t a difficult financial decision for Apple: move the stores out of the district and avoid being subject to litigation in a notoriously patent-owner friendly jurisdiction.

But it’s one thing for Apple to close a couple stores in Dallas suburbs. Apple has the financial resources to absorb that cost and the national presence to be able to forgo a store in the Eastern District.

What about a local store located in the Eastern District? (As I covered last week, small business are already frequently targeted by non-practicing entities.) Or a tech startup in Austin, located in the Western District of Texas—a venue already being touted as the next Eastern District?

Yet another reason for Apple to abandon East Texas (as it does), as per this report from earlier this week (with emphasis added):

According to the firms, they were discussing licensing the patents to Apple with the company as recently as January 2017. However, no agreement was formally reached. Optis does not appear to have developed the technology itself. Instead, it purchased many of the patents from companies including Ericsson, Samsung, and LG.

The patent lawsuit was filed against Apple in East Texas. The claimants are requesting a jury trial. A previous case involving the same court and many of the same LTE patents fined Huawei $10.6 million in damages.

East Texas as usual. And this latest “Dallas Invents” post is a symptom of the problem; they mistake patents for inventions. It’s a litigation pipeline and a deterrence.

“They just know that software patents have no legitimacy, so they wrap these up in different paper (“AI”).”Europe ought to get wise and reject this American/Texan policy, seeing it has led to nothing but trouble. After TC Heartland (
SCOTUS) and 35 U.S.C. § 101/Alice a lot of this newly-formed 'litigation' industry is also collapsing, leaving the country and the state with little of anything. 2018 was a really hard time for patent zealots (unlike minimalists) as a lot of patents got invalidated and lawsuits went nowhere. Litigation rates have collapsed. Janal Kalis, a patent maximalist, is still (this week) obsessing over patent applications (not even patents!) because rarely does the Federal Circuit overrule/overturn the Patent Trial and Appeal Board (PTAB). Watchtroll is meanwhile promoting software patents under the cynical guise of “AI” in “Japan Patent Office Case Examples on Artificial Intelligence Offer Guidance for Other Offices on Treating AI Inventions” (link omitted by intention). They just know that software patents have no legitimacy, so they wrap these up in different paper (“AI”).

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