General Question

Ernie

Thanks for your answers.
Let me just say that my intention was not to "drop a bomb" by saying the patent system does a lousy job. It was really meant to inlighten my own ignorance, and I think that of many people, on the subject.
My reasoning is as follows:
If cheap "imitations with a twist" are allowed to be patented then the person/firm that spent the most time/effort/money in the original breakthrough will get protected, but not for long, since the cheap imitations will quickly follow. This means, in the end that firms will not have incentives to go too far with their R&D because they will not see the benefits.

I don't have any good examples for this argument and I don't even know if it holds true in general (again, some example from the pharmaceutical industry may apply).

My question was really aiming at the heart of "non-obviousness". My point is that if this requirement is loose, or set to a low standard then it may be hurting innovation. Compare it, say, to Germany. There, non-obviousness standards are perceived to be stricter (here I'm speculating again so correct me if I'm wrong). So in that sense, are we lagging behind?

I hope it is clear by now that I was not trashing the patent system,  I'm sorry I mislead you to that interpretation. I have a certain perception of how things work and I just want to confirm or rethink it through more experienced eyes.

Thank's for your time.

M. Arth...

The patent law and its execution is too complex to be dealt with as an abstraction. It can be and has been both used and abused.

eric st...

ernie,

you are asking an interesting question - do patents adequately protect innovators?

patents are the most powerful tools available to an inventor for protecting her invention. most of the limitations with regards to their effectiveness derive from how "the system" is used, rather than with fundamental flaws in "the system."

history is replete with examples where innovators with patent in hand have been screwed out of their innovations:  

philio farnsworth, inventor of the television - screwed by david sarnoff and RCA,

edwin armstrong, inventor of the superheterodyne receiver and father of FM radio - also screwed by david sarnoff,

hakan lans, swedish inventor of the computer mouse and the next generation air traffic control system - screwed by MS, Apple, IBM, Motorola....

farnsworth and armstrong were the victims of early 20th century juggernaut and a historically weak patent system.

lans, despite having a strong patent protection available to him, was screwed by incompetent representatives and a general lack of business accumen.

on the other side of the coin, there are also inventors such as thomas woolston who recently won a sizeable award from e-bay and thomas doyle whose company, eolas, was awarded one of the largest damage amounts ever for patent infringement.

the question of where to draw the line on obviousness has only a tangential impact on this issue. a well-conceived, well-written, and properly prosecuted patent on a pioneer technology should anticipate and prevent patents on a trivial modifications from being granted, and hinder any non-infringing commercial exploitation.  

but it is difficult to foresee everything.

japanese companies pioneered the idea of filing "a picket fence" of patents around breakthrough technologies in order prevent the original inventor from implementing necessary improvements in order to bring her innovation to market.

filing such "picket fence" patents creates the conditions for a cross-license. this strategy undermines the original inventor's absolute monolopy, but still gives her room to negotiate some market space.

the current standards of "obviousness" (or "inventive step" as we say in Europe) have been beaten out many years of trial and error over many decades. depending on the case, one can still argue convincingly that the standard is too soft, too hard, and both too soft and too hard.

at the end of the day, however, everyone is best served by stability in the definition. as long as the standards for non-obviousness are clear and definable and consistently applied, you can work with them as need be.

so to answer your question, i am of the personal opinion that the standard of non-obviousness applied by the USPTO is good enough.

hope this helps.

regards,

M. Arth...

There is also another phenomenon, life is not always fare.

eric st...

Auslander,

Thank you for your enlightenment.

Regards,

Ernie

Thanks for the Answer Eric. It was very helpful.
So in your opinion, regardless of how strict the non-obviousness criterion is, as long as it is reasonably stable through time, there will be no major impact on innovation. Am I correct?
And given that you are European, I would like to confirm or correct another "generally accepted fact":
Is it true that it is much harder to patent in Europe (I'm thinking Germany)?
Does the non-obviousness criterion have anything to do with it?

Mr. Auslander, I'm very sorry the question bothers you so much. Still, I appreciate the answer and would enjoy your opinion on the above.

Thanks, Happy new year.

eric st...

Ernie,

You wrote "So in your opinion, regardless of how strict the non-obviousness criterion is, as long as it is reasonably stable through time, there will be no major impact on innovation. Am I correct? "

Not exactly. I'm sorry, what I wrote was a little confusing on this point. What I believe is that the present standard of non-obviousness applied by the USPTO is adequate. I see no obvious benefit to innovation by making it more strict, or less so. U.S. patent laws - and their application by the courts - have evolved over the last two centuries so the present standard seems to have a pretty solid basis in economic reality.  When one considers the steady progress of innovation produced by the United States it would be difficult to argue that the standard for obviousness has been a hinder.

In my opinion, what is important is that the present standard be consistently applied, rather than that adjustments be made to suit the specific circumstances of the moment.

"And given that you are European..."

Actually, I don't know what I am. I was born and raised in Philadelphia, Pennsylvania, but I've been living abroad for so long that I am as much European as American. (My father calls me a reverse immigrant.) I am a U.S. patent agent (and I have been deeply involved in U.S. patent litigations), but my practice and focus has always been primarily international.

"I would like to confirm or correct another "generally accepted fact": Is it true that it is much harder to patent in Europe (I'm thinking Germany)? Does the non-obviousness criterion have anything to do with it?"

I believe it is something of a myth that the standard of obviousness applied by the USPTO and the requirement for inventive step used by the EPO are substantively different. There are some wide differences between the EPO and USPTO, but this is not one of them.

A big difference is the opposition process which exists in Europe. Patents which are questionably obvious can be challenged at both the EPO and the national level in Europe. The procedures are administrative, the people involved are experts in patent law, and the opponents are fully involved in the entire process. Re-examination at the USPTO, even under the new rules, remains an overwhelmingly  patentee-friendly process. In this regard, it is indeed harder to obtain a patent of questionable inventive step in Europe than in the U.S.

I understand that the U.S. FTC has made recommendations in their recent report to the U.S. Congress to enhance the possibilities to oppose U.S. patents. I think this would be very helpful in creating a more consistent application of the standard for non-obviousness.  

Regards,

JimIvey

As I follow this thread, I feel I have to point something out.  The question seems to be to what extent the requirement of non-obviousness affects patent scope -- at least by way of subsequently filed applications.  In short, it doesn't.  I once argued in law school that the obviousness standard should be used to measure equivalents under the doctrine of equivalents, but that isn't the way the law is (except for at least one dissenting opinion, so someone out there likes my idea).

The thing you're asking about is known as the issue of "blocking patents."  They involve an earlier, broader, base patent and a later, narrower, improvement patent.  As an example, consider a patent for using magnetic tape to record a video signal and the improvement of using magnetic tape in a cassette (video cassette).

The base patent prevents the patent holder of the improvement patent from practicing the improvement invention.  Remember, having a patent of your own grants no rights to make, use, or sell anything -- only the right to exclude others.  So getting the improvement patent doesn't give the improvement patent holder any right to practice her invention.  Similarly, having come later and been granted patents "close" to the base patent does not affect the scope of the base patent.  The improvement patent holder won't be able to practice their inventions without the consent of the base patent holder.

But, the later, improvement patents limit what the base patent holder can do.  The base patent holder can't practice any of the improvements patented by others without their consent.

So they "block" each other.  If the base patent holder is happy limiting herself (himself) to the base technology, then only the base patent holder can practice the technology at all.  However, if the base patent holder wants to practice any of the improvements, the typical solution is a cross-license in which the base patent holder and the improvement patent holder grant each other licenses and both can use the base technology and the patented improvement(s).

But it's important to note that the later patents don't affect the scope of the original base patent.  However, the *value* of the base patent is affected.  Suppose someone with none of the patents came along and wanted a license.  They'd have to pay the base patent holder and  one or more of the improvement patent holders.  So, the amount of royalties the base patent holder can collect before making the license economically infeasible is reduced.

I hope that clarifies somewhat.

Regards.

eric st...

ernie,

for what it is worth, i have a very high opinion of the USPTO as a whole. it is however a government bureaucracy subject to all the inherent limitations thereof.

at the end of the day, the patent office issues patents to applicants. while a great deal of blame is placed on the patent office for poor patent quality, i attribute a large portion of the problem to the applicants and their representatives.

the "scam industry" aside, there are honest, decent, hard-working representatives who are experts at dealing with this government bureaucracy, who have very little concept of how patents are actually used in a business setting.

attorneys who zealously represent their clients and attempt to get the "broadest claim coverage" in many, many cases are unknowingly doing their clients a disservice.

it is not what patents are issued, but what patents are applied for that is the important question. when i was licensing director at LM Ericsson, i met many inventors who tried to license their inventions to my employer but who through no fault of their own, or their representative, had patents which were completely useless.

good ideas, poorly patented is not the fault of the USPTO or even necessarily the representative or inventor - it is a misunderstanding of business strategy.

the USPTO gives you what you ask for, if you don't know what to ask for you can't blame the patent office.

time and time again i would leave a meeting shaking my head thinking, "she had a great idea, too bad she didn't have a decent patent strategy." in some cases the inventor was screwed by an incompetent representative, in other cases the representative was screwed by an incompetent inventor. in the majority of cases, neither the inventor nor her representative had the slightest clue as to how to create a business strategy.

licensing is hard sales work - the hardest. as my former boss used to say - patent licensing is selling something no one wants and everyone thinks is too expensive.

if you don't have a business strategy behind your patents, you are probably wasting your time. good inventions are rare, good patents are even rarer, a good business strategy combining both is the rarest of all. but honestly, it's not that complicated!

at the risk of self-promotion, i recommend that you read my book "patent or perish" available at amazon.com. it is not a traditional "patent" book, but discusses business strategies behind patenting. before you spend $350 for an hour with a patent attorney, spending  $39.95 for a book about patent strategies might save you a lot of time and money.

happy holidays.

regards,

JimIvey

I'll have to second most of what Eric said.  The "patent system" is just a system.  What matters most for how much different inventions are protected has much more to do with the efficiency with which people use the system rather than the system itself.  

The system is complex.  The law always must find some compromise between being simple (simple rules frequently work injustices) and being perfectly just and fair (and being extremely complex in dealing with the wide varieties of circumstance people find themselves in).  For what it's worth, the US has leaned toward perfect justice and therefore high complexity.  

Because of the complexity, Eric is right that you need to have a good patent strategy.  You need to understand what patents can do and what they can't do.  You also need to know how to get patents to live up to their potential.  

One point that you raised that is a real problem is the value of pioneering technology relative to improvements of existing technology.  A pioneering invention is heralded in the scientific and engineering communities but isn't worth much in the marketplace -- at least in its first incarnation.  Real value is realized in the marketplace in the improvements that are pooh-poohed a bit by the scientific/engineering communities.  And, being a "first-of", it's not easy to anticipate every feasible alternative -- either for the inventor or the patent attorney.  Accordingly, it's not all that simple to get very broad coverage on the pioneering invention.  

That's where the smart patent strategy comes in.  Don't sit back and wait for royalties to come pouring in.  Keep working on improvements and variations and alternatives.  Patent all of those.  

gotta cut this short... gotta go.  Happy Holidays to everyone!