“American dominance with respect to 5G technologies is not going to suffer because Verizon is getting sued by Huawei. This will come as a shock to those who watch TV in America, but Verizon is not the innovator of technologies that enable 5G telecommunications.”
Here we go again! Another day, another ridiculous attack on the U.S. patent system. This time the attack comes from the R Street Institute, who claims that patents are too strong and are inhibiting American companies from achieving success in the race for leadership in the 5G marketplace and continued leadership in Artificial Intelligence (AI).
R Street will hold a panel discussion on their wildly outlandish theory, for which they can’t possibly have any factual support, on Tuesday, October 15, in the Capitol Visitor Center. In the announcement they claim that patents are inhibiting American companies because Chinese telecommunications company, Huawei, asserted more than 200 patents against Verizon Communications earlier this year. Therefore—and ipso facto—patents are too strong and American companies are suffering.
There may be legitimate security concerns around Huawei’s infrastructure, but to suggest that the company’s patents are at the root of these threats is in a word—Absurd!
Patents Don’t Discriminate
There is only one small problem with this R Street concoction—American companies are allowed to apply for U.S. patents too! And American companies are allowed to apply for Chinese patents just the same. Patent systems are not protectionist with respect to which companies are allowed to file for protection. All that is required in order for a patent to issue is an innovation to be present and appropriately disclosed, whatever those two things mean in the country granting the patent.
Moreover, American dominance with respect to 5G technologies is not going to suffer because Verizon is getting sued. This will come as a shock to those who watch TV in America, but Verizon is not the innovator of technologies that enable 5G telecommunications. Companies like Qualcomm, Ericsson, Nokia, InterDigital, Huawei and others are the innovators. While the omnipresent TV commercials for Verizon tout the company’s investment in 5G technologies, companies like Verizon and AT&T use 5G telecommunications innovations invented by pioneers in the industry, not the other way around.
In other words, the innovators (i.e., Qualcomm, Ericsson, Nokia, InterDigital, Huawei) do the research and development that provide the first 999 miles, while the implementers (i.e., Verizon and AT&T) roll out the final mile to consumers. Without the innovators there would be no 5G, so for R Street to get all upset about an innovator suing an implementer and then claiming patents are too strong and American companies can’t succeed is—well, misleading at best and outright fraudulent at worst.
The Real Threat: FTC Abuse of Antitrust Law
If R Street wants to investigate a national security issue, as they claim, what they should be investigating is the abusive use of U.S. antitrust laws by the Federal Trade Commission against Qualcomm. The egregiously overbroad order by Judge Koh of the Northern District of California against Qualcomm threatens to knock the only American 5G innovator out of the race for the telecommunications system of the future. That is a national security and economic security issue, not that patents are too strong.
Huawei Patents: The Next Nutty Narrative
Finally, anyone who claims patents are too strong in 2019 is too uninformed to be concerned about in any sane world. Unfortunately, we don’t live in a sane world. If you think this ludicrous narrative that patents are too strong because implementers like Verizon can’t infringe Chinese technology won’t stick, you obviously haven’t been paying attention for the last decade.
For reasons I cannot explain, virtually no one in Congress is worried about the utter disintegration of the U.S. patent system and the associated rise of the Chinese patent system. What we are throwing away, the Chinese are all too eager to pick up. Patents are strong in China, with patent owners prevailing over 95% of the time, according to former Federal Circuit Chief Judge Randall Rader, who provided this insight during a recent keynote speech at an IPWatchdog SEP event.
The U.S. patent system and the Chinese patent system are like ships passing in the night. In the U.S., medical diagnostics are unpatentable, any invention relating to software falls to a motion to dismiss, and even garage door openers are considered abstract as if they don’t exist. Pretty soon it will be the U.S. patent system that is abstract and doesn’t exist!
Still, the narrative about what China is doing and how they are filling the patent void left by the U.S. and venture capital for AI leaving the U.S. in favor of Chinese firms has made no difference in policy or direction. But don’t be surprised if Huawei suing a U.S. infringer doesn’t kickstart the next wave of misguided, irrational, patent hating nonsense.
Join the Discussion
19 comments so far.
Mr. Arthur NutterOctober 17, 2019 06:26 pm
Nope. You can get paid directly by a new commercial patent license clearinghouse just now coming online. Gene and I are friends. He and his team have asked me to not mention the name of the first commercial system where patent holders can publish their patents and receive compensation for other’s use of their inventions based on the quality of their patents, but you can figure it out if you just search on my name, address, and the companies I’m associated with. The first technology vertical where this compensation mechanism has been created is in autonomous vehicles.
angry dudeOctober 17, 2019 03:16 pm
Arthur M. Nutter @17
“…once the system for paying for and receiving compensation for inventions is in the commercial sector, not the government”
You mean you can only be paid (and only salary) for your invention if you happen to work for one of those multinational tech corps ?
It’s already like this, dude…
Arthur M. NutterOctober 17, 2019 02:04 pm
The US can and will be restored to being the best place in the world for inventors and innovators once the system for paying for and receiving compensation for inventions is in the commercial sector, not the government.
It’s already been announced, and is gaining momentum as we speak…
angry dudeOctober 17, 2019 10:51 am
Yes, the best (used to be) patent system in the world
But, also, USA (used to be) a magnet for talented and educated people from all over the world to come over here and try to start tech companies, and patents (used to be) indispensable for attracting investors
None if these is true anymore …
AnonOctober 17, 2019 09:40 am
You keep on misconstruing why you were (and continue to be) ridiculed.
When your message is exactly what the Efficient Infringers WANT you to be saying, you have become THEIR mouthpiece and for that reason you should be ridiculed.
The fact that the situation is tough, even dire, is NOT reason for a call to just quit and let the Efficient Infringers win.
As I have noted previously, “your call” is NOT the same as “boycott” or other such organized effort for effecting change. Your call is a quitter’s call – and that cements the opposite of what “we” want.
TernaryOctober 17, 2019 09:27 am
Anon. Absolutely. The role of technology entrepreneurs in the USA has been subject of intense study by foreign governments. They have been trying to emulate the successes of independent inventors in the US. Armies of foreign policy makers have visited our country to find the secret sauce to create successful start-ups. Innumerable measures, subsidies and support programs have been tried to kick-start a US-like start-up economy.
Our success did not happen because Americans are smarter than other people. It happened because of a set of unique circumstances. One of those circumstances was without a doubt the existence of an affordable and effective patent system that allowed start-ups often (but not always) to fend off monopolistic attacks by incumbent market leaders. The stifling effect of dominant market leaders (in combination with anti-monopolistic legal rules) was much less so in the US than elsewhere.
There are many more aspects to the success of US companies and much more complex than can be described in a brief article. However, the US patent system without a doubt has been critical to our success. Reason why so many foreigners watch with astonishment (and some glee) how we are disassembling the tools of our success.
angry dudeOctober 16, 2019 02:09 pm
To summarize your point: To the morgue !
(And I was ridiculed here many years ago for exactly predicting what would happen to US Patent System…)
AnonOctober 16, 2019 02:06 pm
Ternary, to your point @ 10, let me add what (should be) obvious to most everyone:
Large multi-national corporations have NO allegiance to ANY one Sovereign.
The same cannot be said of smaller entities (be those entities juristic in nature — that is, corporations that are not multinational; or entities that are not juristic, but are “real people” and for those real people, country of citizenship (and country of residence) have REAL effects.)
It cannot be dismissed (as has been attempted to be dismissed by those with a Big Pharma known background) that innovation very much has localized Sovereign effects.
ALL US citizens should be desirous of US patent laws that advance US innovation capabilities. So while it may be true (to a limited degree) that innovation anywhere may raise “all boats” to some degree, having a strong US patent system is KNOWN to have a pro-US Sovereign innovation effect.
Those that advocate otherwise should be looked at minimally with jaundiced eyes, and quote possibly with suspicions of (dare I say) treason.
Anyone who has seriously studied innovation and politics well knows that there ARE nation-states that are “in a war” as far as technology goes. It is beyond f00lhardy to think otherwise.
So while I do appreciate some of that “innovation anywhere raises boats everywhere” as well as appreciate any such comity that may inure from international treaties, one must NOT have such an open mind that one’s brain falls out when it comes to the innate view that Innovation and Innovation protection laws are Soveregin-CENTRIC laws.
BOctober 15, 2019 06:21 pm
” I truly believe that a current stagnation in new high growth technology start-ups finds at least one of its causes in a greatly weakened patent system, preventing young companies to get off the ground. R-Street plans merely continue that strategy of protecting certain economic interests.”
That is extremely well-stated. Unfortunately, such wisdom is lost among the black robe and bone-head crowds.
TernaryOctober 15, 2019 04:33 pm
Let’s not confuse Huawei’s proper IP rights with the potential problems of installing Huawei equipment in networks. Huawei is exceptionally close to the Chinese authoritarian regime which has an extensive and intrusive surveillance infrastructure with the help of Huawei. So far, no proof of “designed backdoors” in Huawei equipment have been found. (which does not mean they are not there.) Alleged backdoors appear for now to be bad cryptographic practices as probably will be found in equipment of other manufacturers. But our intelligence community is against Huawei 5G equipment in the US. That should be a warning to be taken seriously.
However, Huawei does its own and excellent R&D in 5G. 5G domination by US companies is certainly not a given, considering the work being done by non-US companies. A consequence of obtaining a patent on a technology is that, if infringed, the patent owner is entitled to reasonable compensation. Even Huawei. As I said before, I see the R-Street effort as part of an effort to diminish the overall value of patents. And, as others have stated above, diminishing the value of patents will not help US companies to dominate a market they once owned (see: steel, memory chips, cars, cameras, super computers, tv-sets, airplanes, enterprise software, and telecom equipment). As Gene said: it is a nutty idea that does not work.
The best technology may come from abroad. For instance both the Advanced Encryption Standard (AES) and Secure Hashing Algorithm SHA-3 find their origins in Belgium not the USA. The Polar Code, considered for 5G, has Turkish origins. The USA does not have a natural or innate right to dominate a market. That we did and sometimes still do was/is often the work of independent inventors and entrepreneurs. We know how that story is unfolding. I truly believe that a current stagnation in new high growth technology start-ups finds at least one of its causes in a greatly weakened patent system, preventing young companies to get off the ground. R-Street plans merely continue that strategy of protecting certain economic interests.
U.October 14, 2019 02:59 pm
Perhaps it’s time to remind Congress of 35 U.S. Code CHAPTER 18—PATENT RIGHTS IN INVENTIONS MADE WITH FEDERAL ASSISTANCE. How will the Government protect its assistance to so much R&D conducted by universities etc.?
Killing the system would kill Federal Assistance.
BPOctober 14, 2019 01:58 pm
Interesting stuff, from R Street:
– – The problem would only get worse if the STRONGER Patents Act became law. In particular, the STRONGER Patents Act places a significant thumb on the scale in favor of issuing injunctions. An injunction based on a patent covering a voting system standard could quite literally threaten the ability of much of the country to conduct elections. And of the 338,072 patents issued in FY2018, more than half—177,564—were issued to residents of foreign countries.
As we talk about SEPs and their potential national security impacts—the topic of an event on Tuesday, Oct. 15 in Washington, DC—and about patent policy more broadly, it’s important to keep in mind that we have a uniform patent system. While U.S. patents limit the behavior of U.S. entities, it might not be a U.S. entity who’s deciding whether and how to assert that patent. – –
I like the part about the incredibly detrimental and damaging, let’s apocalyptic effect, that patents have on US entities: “U.S. patents limit the behavior of U.S. entities”.
Yes, that is the problem, we need to adjust the system so US patents do not limit the behavior of US entities. The US Patent System should become a meritorious system – you pay the government $$$ with hope that they recognize an inventor’s merit – and give the inventor a meaningless plaque to hang on the wall.
How much longer before EFF and R Street start making that argument?
Pro SayOctober 14, 2019 12:01 pm
Be careful what anyone wishes for in this regard.
Because; were we to start discriminating against foreign patent holders (and patent applicants?), how long will it be before other countries start discriminating against their foreign patent holders and applicants — like the U.S.?
As distasteful as it justifiably is to see a Chinese communist government controlled, privacy stealing company like Huawei asserting their intellectual rights against American companies, American companies including Verizon would do well to step us and forcefully denounce patent discrimination efforts by entities such as the R Street Institute.
Should they not, they may someday hear:
Oh, you’re an American company?
Sorry; no patents for you.
John WhiteOctober 14, 2019 10:22 am
Every ten years or so, this “patents are the problem” vis-a-vis innovation gets a new start. This view is borne of ignorance. Patents, and the rate of filing, are a broad measure of innovative activity in a particular area. Lots of patents = lots of activity. I.e., The last patent in “track sanding” was 100+ years ago. Patents do not inhibit innovation, they foster it. Filings reflect companies and people looking to get around the efforts of others. Motorola dominated the analog world, and was left at the digital alter by those trying to get past their Analog dominance. Patents are a rough outline of what the future holds. Keep filing, I for one, want the innovation.
AnonOctober 14, 2019 08:40 am
Would you dare say: Efficient?
U.October 14, 2019 07:54 am
That initiative is so shameful one should look into their list of sponsors. An initiative aimed to ruining the patent system in an effort to save less than 5% from implementers’ Cost of Goods Sold. They simply don’t want to pay license fees, and the heck with innovation. Same way they did with TiVo: instead of apologizing for using their technology and pay reasonable royalties like everyone else, they borrowed patents from IV to go after Tivo. Shortly after hitting Vonage for it’s free ridership. A lesson in hypocrisy.
Arthur M. NutterOctober 14, 2019 06:13 am
Gene, you are absolutely correct. Patents are vehicles for universal knowledge sharing. Anyone can read and learn from patents, especially in this age of the internet and machine translation. The fact that courts have been the platform for patent owners to receive compensation when patents are used shows how ill-equipped the courts really are to assist in the transaction.
Patent transactions must be done at scale. Watch this space! Art
TernaryOctober 13, 2019 11:47 pm
Gene, nutty is the right characterization here. But there is a certain method to this madness. That is: large companies (like Google, Facebook, Verizon, etc) who dominate the market are consumers of technology as you point out. They don’t care where the technology originates from. They prefer to pay zero for new technology. What makes this possible is a non-functioning patent system. These companies can then pick-and-choose where they buy from with virtually no supplier having an IP advantage. Weakening patents of foreign companies (who file a large part of US applications) is a fairly easy and ideologically advantageous approach in the current xenophobic atmosphere. Part of the plan, I believe, is to weaken the IP position of all suppliers, including or should I say, especially including Qualcomm.
Though Huawei is the preferred target at this time, don’t be mistaken: the overall goal are all patent holders. After successfully attacking independent inventors, it is now the suppliers’ turn. The plan is brilliant in its simplicity and focus. There will be many who will find this attack on Huawei overdue and reasonable. If this wasn’t so devious, I would admire the Machiavellian planning behind this.
BOctober 13, 2019 05:57 pm
Point 1: One of the big winners in the Alice/Mayo fiasco is Huawei.
Point 2: All the big 5G players cross-license, and all the big players are the ones determining the SEPs. No one is cut out of 5G – just that companies with more meager portfolios pay more in licensing fees and are less profitable.
Point 3: As to evidence of economic effect, R-Street needs no evidence. R-Street is the equivalent of an anti-vax group.
Point 4: The stupid order against Qualcomm is better explained by “Northern District of California,” rather than “FTC.” Further, Judge Koh is a gift from the same concerns that gave us Judges Reyna, Hughes, Stoll, and Taranto. THIS IS NOT SAYING I’m giving the FTC a pass.