Posts Tagged: "Mark Lemley"

To the surprise of Lemley and Zyontz, their study uncovered a striking disparate treatment in the way federal courts handle patent eligibility matters based on entity size, with startup companies doing poorly when it comes to Alice-related patent eligibility matters, and individual inventors doing even worse. Their abstract summarizes their findings thusly: “Most surprisingly we find that the entities most likely to lose their patents at this stage are not patent trolls but individual inventors and inventor-started companies,” Lemley and Zyontz write. “As biotech worries about deterrence of new innovation and software worries about patent trolls dominate the debates, we may be ignoring some of the most important effects of Alice.”

On November 27, briefing concluded at the Supreme Court with the filing of Fossil’s respondent’s brief in Romag Fasteners, Inc., v. Fossil, Inc., et al. The final briefing sets the stage for the Court to hear the case on January 14, 2020. The Court will hopefully resolve a current Circuit split on the availability of disgorgement of profits as damages for trademark infringement. Currently, the First, Second, Eighth, Ninth, Tenth and D.C. Circuits all require willful infringement before allowing disgorgement of an infringer’s profits (the First Circuit requires willfulness if the parties are not direct competitors and there is also some disagreement on where the Eighth Circuit falls on the issue). The Third, Fourth, Fifth, Sixth, Seventh and Eleventh Circuits all allow for disgorgement of profits without willful infringement. There has been a Circuit split for some time on this issue and the Supreme Court previously denied certiorari on similar cases but the Court is now set to resolve the split.

On Thursday, October 17, a Capitol Hill staff briefing will take place at 3:30 PM in 226 Dirksen Senate Office Building on a proposal to increase the amount of time that patent examiners at the U.S. Patent and Trademark Office have to examine patent applications. At the briefing, Professors Michael Frakes of the Duke University School of Law and Melissa Wasserman of the University of Texas at Austin School of Law will present findings from their paper, Irrational Ignorance at the Patent Office , recently published by Vanderbilt Law Review. While the professors’ conclusions regarding increasing time spent by examiners on patent applications are seemingly innocuous, the entire paper is infected with the “bad patent” premise that has proven to be incredibly detrimental to the U.S. patent system in recent years. Branded as a work that updates prior research on patent quality produced by law professor Mark Lemley, the Frakes and Wassserman paper concludes that the costs of increasing USPTO resources for weeding out “bad patents” during the patent prosecution process are far outweighed by the costs borne by society in waiting for the courts to invalidate those patents during litigation.

As I noted in part one of my talk at the IPWatchdog Patent Masters Symposium, the validity statistics for SEPs do not look very good at first glance. Thus, according to a 2017 PricewaterhouseCoopers study, plaintiffs in U.S. courts (ignoring patent type) have on average a 33% chance of success—only a 27% chance in the case of telecommunications patents. This chance of success is probably overstated for Standard Essential Patents (SEPs), based on the easy availability of prior art. Indeed, according to RPX’s 2014 study, in the United States, SEPs are likely to be less than half as successful as non-SEPs.In my talk, I pointed to the high invalidation rates in Europe to buttress my point that, at first glance, SEPs seem particularly vulnerable to validity challenges. Thus, in Germany, a supposed nirvana for patent assertion, the authors of the study “Patent Paper Tigers” reviewed the case law of the German Federal Patent Court and the German Federal Court of Justice in nullity matters in the period from 2010 to 2013 and found that: The nullification rate of all Senates of the German Federal Patent Court is 79.08% in total; and the nullification rate at the German Federal Patent Court regarding Software and Telecom patents which are (currently) of particular relevance from an economic point of view is 88.11%. Returning to the point made in the first part of my talk, having noted that most SEP nullification comes from obviousness, and not novelty, there should be no public interest exception to my argument that: unprovoked—that is, without first having made a FRAND offer or counteroffer—serial nullification of SEPs is contrary to the duty to negotiate in good faith and should remove a party’s defense against an injunction to SEPs.

Now, there is a flaw in this theory, and that is that, in the past few years, third parties have emerged that will—for their members or other contracted entities—kill patents.

Yesterday, we ran a series of excerpts from responses to Senator Thom Tillis’ (R-NC) questions for the record to panelists following the June hearings on U.S. patent eligibility law, held by the Senate Judiciary Committee’s Subcommittee on Intellectual Property. Along with Tillis and Senator Richard Blumenthal (D-CT), Senator Mazie Hirono (D-HI) also posed several questions to the participants in the 101 hearings. Hirono’s questions overall demonstrate a good faith desire to get to the heart of the problems in search of real solutions.

The problem with not having an independent invention defense, according to Lemely, is that people who invent themselves couldn’t possibly find out about what others have invented because these inventions lay in unpublished patent applications at the Patent Office. “You have people who genuinely tried not to infringe,” Lemley said… While Professor Lemley is entitled to his opinion, and he is an excellent and formidable attorney that no one should ever take for granted, he is not entitled to his own facts. Deliberate disdain for patent property is a purposeful business model driving mega-tech IT incumbents. This business model is called “efficient infringement.” Efficient infringement is a cold-hearted business calculation whereby businesses decide it will be cheaper to steal patented technology than to license it and pay a fair royalty to the innovator, which they would do if they were genuinely trying not to infringe as Professor Lemley suggests.

In 2008 the surrogates did at least increase the emphasis on having some form of post grant challenge procedure in the bill that would pass Congress and be signed into law. Their work began to surface in March 2008 by way of surrogates speaking at public and private events focused on innovation related issues. While the campaigns today may not spend many bytes on patent policy soon enough surrogates will be convening at events around the country to discuss innovation policies. If innovation policies or broader tech issues matter the time to get involved is now. As the field of candidates continues to narrow it will become increasingly more difficult, and more costly, to influence policy.

Simply stated, Lemley is wrong and his suggestion that eBay v. MercExhange is at all positive, let alone the best development, strikes me as utterly ridiculous. The true mischief of the eBay decision isn’t that patent owners can’t obtain a permanent injunction, but rather that the Supreme Court has taken the threat of a permanent injunction off the table. This means that infringers have no incentive to deal. If infringers had to fear the possibility of a permanent injunction they would be forced to enter into meaningful arms length negotiations with patent owners. Instead, now infringers can merely say “sue me,” which is exactly what they do.

They found that citations were elevated for licensed patents. Moreover, most citations occurred after the patent was licensed. That licensing of patented technology increases its diffusion and relevance more broadly is supported by Drivas et al. (2014), who found that citations by non–licensees to patents exclusively licensed (either by geographic area or field of use) by the University of California increased after the licenses were executed. These are objective empirical indicia – not subjective responses of accused infringers to selective surveys.

There are a variety of problems with this paper, the conclusions reached and the methodology. Perhaps the largest problem is that Professors Feldman and Lemley rely on subjective evidence rather than volumes of objective evidence that contradict the self-serving responses from those who are licensing rights they are already infringing. What else would you suspect from a homogenous subset of individuals who collectively don’t like the patent system very much? Collective bias seems a far more likely answer as to why there is “near unanimity,” as the Professors claim. Even so, how is it possible that any group could ever achieve near unanimity about anything? The fact that there was near unanimity demands one to question whether there is a bias or flaw in the survey, yet no such inquiry seems to have been made.