Absurd WSJ Article Suggests Argues for Slower Patent Process

On Wednesday, September 8, 2010, the Wall Street Journal published commentary titled Want to Create Jobs? Certainly Don’t Rely on the USPTO, which was an attempted rebuttal of the NY Times op-ed written by Chief Judge Paul Michel and Tessera CEO Hank Nothhaft, which was titled Inventing Our Way Out of Joblessness. I say that it was an attempted rebuttal because simply stated the article was embarrassingly incorrect about virtually everything it stated as fact, and provably so. The fact that the Wall Street Journal published such complete and utter nonsense, which could have been proven to be factually incorrect had anyone even read the study relied upon by the authors, is quite sad.  Those who don’t believe innovation leads to job creation have their heads firmly implanted in the sand and simply must choose to ignore history, which proves otherwise.

My politics are well known, and I am not a fan of the NY Times, but neither am I going to simply ignore everything they publish. The only way to explain this ridiculous article that concludes the patent process should be starved for funds and slowed down, rather than speed up, is as an irrational anti-NY Times agenda. While the authors are obviously quite unknowledgeable, they are no doubt patent haters.  The editors of the Wall Street Journal, on the other hand, must have believed that if the NY Times took one position they should take the opposite position. The fact that the Wall Street Journal failed to fact check and threw innovators under the bus is inexcusable.

This horribly inaccurate article starts off by saying: “A patent myth is loose in the land about their importance to innovators and those that finance them.” Then the article goes on to make this astonishingly incorrect statement:

Mr. Michel and Mr. Nothhaft’s claim that “three-fourths of executives at venture capital-backed startups say patents are vital to getting financing, according to the 2008 Berkeley Patent Survey” is simply not true.

Really? Unbelievable! All you have to do is read the study to realize that this is EXACTLY what the study says!

The authors attempt to argue that the Berkeley Patent Survey is taken out of context. They then confuse the issue by quoting Pam Samuelson, who was the co-principal investigator of the Berkeley Survey, as pointing out that there are funded software companies that do not seek patents, and that “software startups that hold patents regard them as providing only a slight incentive to invest in innovation.” The incongruency of their arguments was aptly exposed by Hank Nothhaft, who scored the first comment and opened the gates that would expose the authors. Nothhaft wrote:

What Mendolsen, Feld and Kedrosky are trying not so subtly to do here is to confuse the question of patents’ importance to startup financing with their role in the innovation process or in securing competitive advantage, or the percentage of startups that actually hold patents.

Nothhaft went on to write:

“In sum, the 2008 Berkeley Patent Survey has found that startups are patenting more than previous studies have suggested; that patents are being sought for a variety of reasons and that there are considerable differences among startups in the perceived significance of patents for attaining competitive advantage, with biotech companies rating them as the most important strategy and software companies rating them least important.” [quoting Pam Samuelson]

So entrepreneurs in different industries rate the various benefits of patents differently according to the dynamics of their own sector. Hardly surprising…

The insidious nature of this WSJ article is that it is presented as if the Survey itself and Samuelson’s follow-up writings are evidence that the Study doesn’t say that 75% of venture capitalist backed startups say that patents are vital to getting financing. For crying out loud, read the Survey! Read what Samuelson wrote! The authors of this article are the ones with the biases and are practically engaging in fraud. Either they horribly misread the Survey, they simply do not understand what it says and that they are comparing apples and oranges, or they are maliciously spewing falsehoods in an attempt to promote their own anti-patent agenda.

Perhaps someone should explain to the authors of this article that it is not at all inconsistent to say that patents are essential to getting financed, but some companies choose to not seek patents and are willing to make raising funds harder on themselves than otherwise necessary. It is, of course, also not inconsistent to hold the belief that patents only provide slight incentive to innovate. It is also appropriate to point out, however, that without patents there wouldn’t be ongoing innovation for most companies because they wouldn’t get the funds to continue to innovate, but that is another story for another day.

Many individuals, including yours truly, have been the authors up in comments to their Wall Street Journal article. In a response one of the authors wrote:

With regard to misleading and inaccurate statements on our part, we have talked regularly with Pam Samuelson, the co-lead investigator of the study for this article. Our piece reflects our understanding of her beliefs … We encourage you to talk to her directly if you want to hear her perspective.

So the authors of this Wall Street Journal article decided to rely upon what they perceive to be the beliefs of Pam Samuelson rather than rely upon what the Berkeley Survey itself says or what Samuelson actually wrote. Terribly unsatisfying in terms of a response.

Perhaps the most ridiculous thing the article stated was this: “The U.S. innovation economy has been harmed by low-quality software and business method patents, as well as a legal system that biases process and lawsuits over real invention. Speeding up this flawed process would be negligent.”

Speeding up the patent process would be negligent? This comment alone demonstrates that the authors have little or no working knowledge of the patent process or the part the patents play for the overwhelming majority of investors.

Clearly the Samuelson study shows that the overwhelming majority of those doing the funding require patents, so why would anyone want to make obtaining funding more difficult for themselves? Perhaps the authors should read what Dean Kamen has said about patents and investment. He has repeatedly explained that without patents there will be no funding. In fact, just 10 months ago the Wall Street Journal quoted Dean Kamen as saying:

You get this young guy who quit his job to make this gizmo and he shows up at the bank or to his father-in-law. The first thing the bank or that venture capitalist will say is, ‘Do you have a patent?’

The authors should also check the comment to their own article, which are far more accurate and intellectually honest than their own misguided commentary, despite the fact that they charge everyone else with bias. For example, Steve Perlman, OnLive founder, president & CEO, and who is best known for the development of QuickTime®, WebTV® and Mova® Contour™ facial capture technologies, wrote:

I have over 100 US patents, and over 100 pending, plus hundreds of foreign. Every patent I’ve filed has been specifically to support products I’ve been developing, primarily to secure venture funding and, after years of work in getting products to market, to prevent companies from cloning the products and undermining our ability to market them and get ongoing funding to evolve the products…

The USPTO backlog situation is appalling and deeply harmful to US innovation, and to say “Speeding up this flawed process would be negligent” reflects a core lack of understanding of how patents are used to create groundbreaking products in the US. There are a vast number of products that utterly rely upon patents. And, much of the US economy relies upon them. Setting money aside, many are lifesaving products that only will come into existence because of patents.

Perhaps the authors should take a look at the new Visualization Center and Patents Dashboard published by the United States Patent and Trademark Office just this week. On average it takes nearly 43 months to obtain final resolution from the Patent Office. If an appeal is necessary the average balloons to over 76 months. Those are not technologically relevant time frames to a patent or patent decision.

It is flat out irresponsible to suggest that speeding up the process at the USPTO would be anything other than one darn good idea, and practically essential to the resurgence of the US economy.  The authors and the Wall Street Journal should be ashamed of themselves.  We all should expect more from one of the Nation’s papers of record.