Jim Moore’s blog: Innovation, Strategy, Public Policy

Another personal friend of mine worked diligently for years for a well-known billionaire (well-known, among other things, for his admiration for Jimi Hendrix). Many things were invented, patents were filed and are now issuing in my friend’s name.  These patents were assigned to the company, as part of my friend’s employment agreement.
The compensation to my friend was in private, non-liquid stock in the company controlled by the billionaire, which my friend was assured would fairly repay him someday. A few months ago the stock of the firm was diluted 100 to 1, and my friend’s nest egg pretty much wiped out. He left the firm.

The irony? His patents, all assigned to his former employer, are now issuing.

The point is that it is important for idea people to own their own intellectual property.

United States Patent: 7194511
United States Patent 7,194,511
Stettner March 20, 2007
System and method to manage participant input for an interactive show

As recently as two months ago a young entrepreneur took an invention to a company I am invested in, negotiated to sell or license the invention. After many meetings the CEO told this person that the company had decided it could just copy the invention. At the next meeting the CEO said that he had just discovered that his company had, unbeknownst to him, “been working on just the same invention for several months before” negotiations had begun with the young entrepreneur. This seemed rather incredible, but what was the young man to do?

Theft of legitimate inventions, original innovations, is a day-to-day occurrence in the technology ecosystem. This is the elephant on the table in discussions of patents. What is needed by true innovators, by creative people, is better protection, not weaker protection.

Honestly, I am angry about this situation. I am saddened by the stories of young people and young companies whose inventions are stolen by those with the money and the market power to capitalize on these inventions.

A few months ago I spoke with the director of the EFF effort on “peer-to-patents,” which is an experiment, funded mainly by IBM, to subject a few patent applications to public, wiki-based scrutiny. I suggested maybe I might put one of my applications through the project. With care for me, and perhaps excess candor, she said,

“Look, I love IBM, and they support our project. But let’s not be confused about their motives. They are going to use this process to look good. The two or three patents they put forward will have been scrubbed by hundreds of lawyers. The result is going to show that IBM, at least, files for “high quality patents.” In addition, remember that IBM files for 3000 new patents each year, so they are putting forward one one-thousandth of this year’s applications. Even if these applications are delayed or fail to be granted, IBM has risked nothing. By contrast, if a small company or an individual puts one up–perhaps her or his only application–the risk is enormous.”

Just to emphasize the point, in addition, the individual or small company will not have the resources to stack the deck in the manner IBM will, with advanced screening and study of any patents proposed to be submitted.

The following is the most balanced of the views being promoted about the recent Supreme Court decision.  Essentially, the ruling makes it more difficult for companies to gain new patents.  This advantages large companies that have become systems integrators rather than innovators, such as IBM.  It advantages companies with large existing patent portfolios and licensing systems, again, IBM with 32,000 patents in its own name, 45,000 in its control, and filing 3000 new patents per year.  And finally, it advantages large companies with deep pockets and large markets who are able to benefit from sourcing technology from small companies but not paying for it.  After all, the infringer who was absolved in this case was General Motors.  Hmmm.  A victory for innovators???
New Supreme Court patent ruling may create uncertainty - 5/3/2007 - Electronic Business

New Supreme Court patent ruling may create uncertainty
By Debra Bulkeley, Executive Editor — Electronic Business, 5/3/2007

The Supreme Court and the U.S. Department of Justice (DOJ) both made significant announcements on April 30 concerning patents that have implications for the electronics industry.

The Supreme Court adopted a new standard that will make it easier for patents to be denied or challenged on the grounds that the invention is too obvious to deserve patent protection. It’s not uncommon for patents to be rejected on obviousness.

The patent ruling, KSR International Co. v. Teleflex Inc., could also subject existing patent-holders to litigation over obviousness. The decision has been viewed as one of enormous importance for U.S. patent law. Many say the ruling was necessary to protect the country’s competitiveness while others wonder whether the ruling will hurt many firms that are at the heart of innovating—start-ups and small companies.

Bruce Sunstein, co-founder of the Boston law firm of Bromberg & Sunstein LLP and who heads the firm’s Patent Practice Group, calls the ruling “somewhat irresponsible” because the justices set the bar higher without being specific.

“In setting the bar higher, they created uncertainty as well. It’s one thing to set the bar higher, but the uncertainty undermines the patent system,” he says. “One of the weaknesses of the ruling is the frequency of the term ‘common sense’,” he adds. Some interpret that as judges will now be able to use their own common sense instead of objective data when deciding whether or not to grant a patent.

While some think the opinion will have stronger implications for companies in specific industries over others (technology companies, for example, that make minor improvements in software programs), the opinion’s impact could be viewed as more of a David vs. Goliath story. Sunstein adds the ruling may yield another example for the law of unintended consequences.

“I think it cuts across industries,” he says. “I think the smaller companies will suffer most, and that’s where a lot of innovation comes from.”

Sunstein contends that if fewer patents are granted and applications are scrutinized more, start-ups and small companies will also be granted fewer patents. Big companies with existing market power, on the other hand, won’t feel the sting of rejected patents as much, he says. He points to a market leader such as Intel, which probably wouldn’t suffer as greatly if a patent wasn’t granted to it.

“If you obsess with not granting patents, don’t you also increase the chances that something that deserves a patent, won’t get patented?” he asks.

The DOJ announced that it will not oppose a proposal by the Institute of Electrical and Electronics Engineers (IEEE) to implement a policy on the disclosure and licensing of patents in IEEE’s standards-setting process. The policy allows patent holders to commit publicly to specific restrictions on their future licensing terms and conditions for the use of patents that are essential to IEEE standards.

“I think it’s a terrific development,” Sunstein says. “It’s not guaranteed that it eliminates fighting, but since this is the beginning of standards making it is a wonderful beginning.”