No Patent Prosecution Panacea

In my previous post, I criticized Tim's $50,000 solution without offering any of my own.

While at first I thought that to be unacceptable and promised to post a "better" solution of my own, after a bit of reflection, I have realized that any pontificated solution, absent real discussions with and accounting for all stakeholders, will end up as biasing and counterproductive to real improvement.

So I will maintain my best efforts to not bloviate (blogviate?) in this space.

Should a patent application cost $50,000 before lawyer fees?

Today Patent TrollTracker linked to Tim Wilson, who has been blogging about raising large entity fees to $50,000 as a way of improving the USPTO and reducing patent "troll" cases in the IT industry.

It is not at all clear what percentage of the enforcement actions by non-practicing entities are being brought using patents formerly belonging to large entities. While large entity applicants do file the majority of patent applications, typically large entities hold onto their portfolios as assets for cross licensing, and likely would not want their names associated with enforcement actions of this type.

Further, many small entity applicants want to become large entity applicants someday. When they reach that crossover point, if they have to choose between filing 10X fewer applications or paying 10X more to keep filing at the same rate, they are going to file fewer cases, putting them at a real IP disadvantage with respect to both small entity applicants and larger entity applicants. From an innovation policy perspective, this does not seem to be reasonable.

Finally, knowing how legal budgets are formed in traditional large entity applicants, raising fees in this way would encourage far more litigation and aggressive licensing. IP departments exist fundamentally to protect the core business and enable new businesses. If fees were actually raised in this manner, law departments would be charged with finding new revenue streams to cover the fee increase and not let the company's inventions go unprotected. This too, does not seem to be a goal of the author.

While traditionally raising prices lowers quantity, this does not seem to be a situation where doing so would achieve the desired results.

American history predicts SIPO innovation

This week it is important to bring up a book review I did not write.

Patently-O had a patent quote from 1895, and last week IP Dragon posted about how Chinese policy is reducing the restrictions on skilled workers. Both reminded me of my time as a reviewer for the Journal of the Patent and Trademark Office Society.

The most interesting book which just missed Journal inclusion was "Trade Secrets: Intellectual Piracy and the Origins of American Industrial Power" by Doron S. Ben-Atar, history professor at Fordham University. Professor Ben-Atar presented rare and remarkable narratives about the intersection of individual and IP rights at the time of America's formation; however he calibrated his work in the modern context of misappropriation, and centrally posited that American industrial power was born, essentially, of IP theft.

A pitch perfect review was later published by Harvard Business School here.

The book details many 18th century European nations having strict anti-emigration laws for skilled artisans, as a method of protecting native technology. This led to global patent regimes where, regardless of inventor, the first to file a patent application in an individual country would be granted the patent rights in that country. So a successful invention in Germany could be patented in France by anyone aware of the German patent.

America realized that by granting inventors the right to their inventions only if they invented the claimed invention would make them attractive to "real" innovators. If an inventor is willing to risk life and limb, indeed breaking local laws in leaving their home country to seek a better existence, why would they go to a country where there is a chance that someone else may have already patented their core technology?

It can be easily argued that contrary to the "TS" thesis, America grew their industrial power by having a strong and innovative IP scheme, with few restrictions on inventors and allowing them protections in a global first to invent system.

So how does this relate to China? As they move toward strengthening their IP rights and encouraging technology development, they have limited the restrictions placed on Chinese employees with access to "critical trade secrets". They have made non-competition agreements include limiting "duration to two years, geographic scope to a reasonable area and the employer must pay compensation to the employee during the period that the non-competition restriction is in effect." These provisions seem far more inventor/entrepreneur friendly than any I have encountered.

On the face of it, this may discourage some investment. However, it also prevents a company from labeling merely confidential information as "critical trade secret" and allows skilled employees greater freedom to diffuse throughout China.

If the early American pattern actually holds true, I would expect some interesting IP innovations to come out of SIPO in the next few years.

IV, IP and VC's

In my earlier post I mentioned how IP can show good technology fit for private equity firms shopping new ventures. More traditionally, IP can act as a validating mile-marker to investors; the seeds of real invention to become implemented innovations and providing a sustainable, proprietary value proposition for the company.

Today there is a bit of buzz about what a company like Intellectual Ventures could possibly be doing in amassing incredible patent portfolios. Looking at it from the above prospective, it is possible that they could be doing exactly what entrepreneurs do when they first develop their ideas: use the protected technology to look for funding and start companies.

When a technologies future is uncertain, having access to a great number of approaches or techniques significantly increases ones probability of success. Having exclusive access a large pool of fundamental patents on related technologies could present an interesting opportunity for VC’s with access to capital, technology experts, and operational gurus looking to reduce the uncertainty in developing certain products.

Without trying too hard, here is a list of well known VC firms that may have interest in IV someday (reasonably good list for traditional entrepreneurs as well).

Accel
Alta Partners
Atlas Venture
Azure Capital (OQO investor)
Battery Ventures
Benchmark Capital
Berkshire Partners
Bessemer Venture Partners
Canaan Partners
Centennial Ventures
Charles River Ventures
Credit Suisse
Draper Fisher Jurvetson
Greylock Partners
HarbourVest Partners
HCP
IDG Ventures
Institutional Venture Partners
Integral Capital Partners
Khosla Ventures
KPCB
Lightspeed Venture Partners
Mayfield
Menlo Ventures
Mobius Venture Capital
Mohr Davidow Ventures
Morgenthaler
NEA
Norwest Venture Partners
Oak Investment Partners
Pitango Venture Capital
Polaris Ventures
Rustic Canyon Partners
Sequoia Capital
Sprout Group
TA Associates
Technology Crossover Ventures
US Venture Partners
VantagePoint
Venrock
Warburg Pincus
Wellington Partners Venture Capital

Blog title exegesis

Another quick post. I wanted to address by blog's name. Marketing experts will tell you that a name should be descriptive and impactful. Trademark attorney's will tell you that a name should be fanciful and meaningless to obtain broad protection.

I have willfully ignored both. Creating a title that is both hard to search, remember and say, while having just enough meaning to likely be unprotectable.

Whatever. I like it. For me, e^(ip) is a great math/intellectual property pun.

Chiefly, it represents me discussing ip issues (my first initial combined with the common intellectual property abbreviation).

However, it also is represents my appreciation of the special case of Euler's formula with x=pi, where e (the base of the natural logarithm) raised to the square root of negative one (the imaginary number i) times pi equals -1.

I will give you all (all ten of you) a moment to think about that... No matter how many times I have seen or used this, it still is wonderful to contemplate the connection of these two transcendental numbers. According to Wolfram's this "beautiful identity" connects: "the fundamental numbers i, pi, e, 1, and 0 (zero) and involv(es) the fundamental operations of equality, addition, multiplication, and exponentation."

I love this identity. Hopefully some of my posts too will connect some seemingly unrelated transcendental concepts and make things easier for people to understand. Marketing and trademarks not withstanding.

Have a good weekend.

New law firm of note

Just a quick note on the announcement of Michael Kondoudis. I have enjoyed reading patentlydefined.com for a while now and want to support a fellow astronomy grad turned patent practitioner turned sometimes IP blogger.

View his announcement here.