Innovation Act might be dead, but innovation lives on

As a former patent examiner, I recognize that the patent system, in its purest form, should protect and incentivize innovation through a limited-term contract, offering exclusive monopoly rights covering a technology, product or design element.

In practice, it’s much uglier, and by no means did the Founding Fathers intend for patents to be utilized toward incremental monopolization ploys, but rather a means to serve the public as an incentive to share knowledge for the progress and benefits of science and commerce.

And let’s face it, that description wasn’t the sexiest. Though the next wave of patent reform legislation may be tabled for now, if not dead entirely, steps can be taken to better apply the policies we have, thanks to the America Invents Act (AIA), and to ensure dated policies are functional in the new digital age.

Complex disputes, such as many patent infringement claims, should seemingly require a foundational technological expertise to resolve. As AIA has sought to rectify some of these disputes through the extension of the allowance for pre- and post-grant challenges to applications, issues are still often laid at the feet of judges and juries with limited technical expertise, and the consequences are very real.

In a recent Bloomberg Business article, the race for control has emerged between “Big Banks” and Silicon Valley in the controversial “Business Methods” patent rights. This has resulted in a showdown creating an environment ripe for abuse and confusion that could potentially impact the third-party’s willingness to challenge patent applications.

Application challenges frequently come in the form of “prior art,” which is any published evidence that the patent application covers a design or technology that is simply not new or has already been patented by another party. Prior art can come in the form of existing patents, a previous illustration from a book or even an image from a television program which aired previously.

Companies must resist the temptation to sue first and negotiate later.

On one side of the equation, patent examiners are tasked with the often-unappreciated job of interpreting and evaluating patent applications — trust me, it can be tough and grueling. So it’s no surprise that some applicants often use vague language in their applications to avoid tipping their hands to competitors.

Examiners must dig through these cryptic explanations and illustrations to not only decipher what, exactly, is at the heart of a claim, but also to determine whether the claim actually demonstrates “newness” above existing patents. This is done by reviewing prior art in a limited timeframe — an average of 20 hours — from the start to finish of a determination.

There’s also the challenge of patent limits. Patents frequently cover complicated functionality (technology) or design elements, and, as a result, identifying what’s being patented requires a lot of information about what isn’t. For example, getting a patent on the cord that connects a receiver to the console of a rotary phone might require a great deal of detail about the intricacies and inner workings that make the technology work. As devices get more complex, so does the information about what goes into them.

As I’ve written before, it’s critical for the technology industry and courts not only to get the facts straight on a patent dispute, but also to comprehend what the legal issues are from an infringement perspective; that is, to understand what is truly being claimed when a patent is violated.

Considering the rapid explosion of technology in recent years, it’s not hard to imagine just what a Herculean task patent examiners face and why some applications are wrongly approved. In 2014, more than 615,000 patent applications were filed. A singular smartphone typically contains more than 250,000 individual patents alone, so dispute is commonplace.

But even when the United States Patent and Trademark Office (USPTO) recognizes a mistake and invalidates a patent, there is no guarantee those rights won’t still be leveraged against the holder’s competitors. For example, in the high-profile case between Apple and Samsung, the court awarded Apple more than half a billion dollars in restitution for infringement on a set of patents, including one that has been invalidated since.

Getting the patent system back to driving creativity will require more than a legislative fix.

That case hinged on design patent infringement, which allows for a remedy of disgorgement of “total profits,” damages from the entire product which was deemed infringing. The patent only covered design features, like the rounded rectangle shape. Even though the USPTO has since invalidated that patent, stating it was wrongly issued in the first place; Samsung still had to pay up.

In March, the U.S. Supreme Court granted review of the case in relation to the “total profits” issue, and we can now expect the Court to offer clarity and establish precedent for design patent remedies. This is not just about a case between two big companies; unfortunately, this problem may be bigger as Non-Practicing Entities (NPEs), sometimes called “trolls,” have taken notice.

Recently, NPEs like VirnetX and Intellectual Capital Consulting, Ltd. (ICC) have targeted companies like Cisco, Microsoft, Apple, LG, Sony, Samsung, BMW, General Motors, Hyundai, Volkswagen and other major electronics and auto manufacturers for allegedly infringing on their patent portfolios. For instance, ICC sued many of those companies for infringement of its 2003 utility patent covering a watch that allows users to remotely start cars.

Keep in mind this watch exists only in the patent and hasn’t even been manufactured. The patent troll’s demand letter to Samsung even included infringement claims over pending design-patent applications, in addition to the utility claims, specifically citing the total profits awarded in the Apple case for design-patent infringement.

Though the technology for the “smartwatch” entered the marketplace well after the 2003 utility patent was granted, even if eventually invalidated (possibly through presenting the Go-Go-Gadget Watch as evidence of prior art), those targeted companies are currently facing litigation and potential damages.

I have seen this same type of abuse happen to small, promising, innovative companies, and it’s a sad indictment of the current process when some of the most impressive innovations are legal maneuvers to game weaknesses in the current system rather than groundbreaking new products.

In my career as a patent examiner, many of the patents that moved forward succeeded on a technicality, not because they showcased groundbreaking innovation. Correcting that problem, and getting the patent system back to driving creativity, will require more than a legislative fix — not that we should hold our breath.

The Supreme Court’s decision to review the Apple design patent ruling could potentially lead to a recalibration of design patent damages in cases of infringement, a chance to better align our policies with modern products often containing thousands of patents. This could provide more clarity through precedent and limit the incentives for would-be patent abusers seeking total profits with questionable patents. But this alone will not correct the course.

The USPTO has and should continue to refine the patent examination process and reduce the granting of weak or invalid patents.

Government and court action, however, won’t be enough. Companies must resist the temptation to sue first and negotiate later; it’s time to take attorneys off speed dial. The positive impact of innovation typically relies on collaboration, particularly among high-tech companies producing complex devices. Infringement suits are frequently levied against suppliers and between licensing partners.

The result of the seemingly perpetual barrage of lawsuits slows innovation through gridlock and a hesitancy to bring new products to market for fear of lawsuit liability, which can be crippling and diminishes investment in the cutting edge.

The economic benefits of innovation are closely tied to evolving technology and demand for the new, faster and more affordable. Without cooperation, however, the status quo will reign over creativity, and the technology economy — and all those who depend on it — will continue to suffer.

Views represented do not necessarily reflect USPTO, Eisenhower Fellowship and AAAS-Lemelson Invention Ambassadors