[Ip-health] Patent ‘Trolls’ Recede as Threat to Innovation. Will Justices Change That?

Michael H Davis m.davis at csuohio.edu
Sun Nov 26 19:17:37 PST 2017


This will be good news when the large corporations aren't celebrating it but are the targets of it. The jury is out on this one.

Mickey Davis



Sent from my T-Mobile 4G LTE Device


-------- Original message --------
From: Tahir Amin <tahir at i-mak.org>
Date: 11/22/17 4:40 PM (GMT-05:00)
To: ip-health <ip-health at lists.keionline.org>
Subject: [Ip-health] Patent ‘Trolls’ Recede as Threat to Innovation. Will Justices Change That?

https://www.nytimes.com/2017/11/21/business/economy/patents-trolls-supreme-court.html

In August, real estate agents in Texas fended off a company’s demands for
royalty payments for a feature of many websites: the ability to show
prospective home buyers where local schools, parks and grocery stores are.
Administrative law judges at the United States Patent and Trademark Office
found that the patent claims were simply not valid
<https://www.patentprogress.org/2017/09/28/ipr-successes-realtors-association-defends-members-using-ipr/>
.

A few months before, in February, judges at the patent office put an end to
“Project Paperless
<https://arstechnica.com/tech-policy/2013/01/patent-trolls-want-1000-for-using-scanners/>,”
an attempt to extract royalties from small businesses using off-the-shelf
scanners to scan documents to email. The litigants pressing for payment,
the judges determined, had no right to the technology.

In September last year, they stopped Teva Pharmaceutical
<https://www.ptabwatch.com/2016/09/3-is-a-magic-number-for-mylan-3-teva-copaxone-patents-struck-down-in-iprs/>
from
extending its exclusive right to sell the blockbuster multiple sclerosis
drug Copaxone, and fend off generic drug manufacturers for years after its
original patent expired, simply by patenting the method to administer it in
a 40-milligram dose three times a week.

In the five years since it began its work — a result of the America Invents
Act of 2011
<http://www.nytimes.com/2011/09/09/business/senate-approves-overhaul-of-patent-system.html>
—
the Patent Trial and Appeal Board
<https://www.uspto.gov/patents-application-process/patent-trial-and-appeal-board-0>
 has saved companies more than $2 billion
<https://www.patentprogress.org/2017/09/14/inter-partes-review-saves-over-2-billion/>
in
legal fees alone, according to Joshua Landau, patent counsel at the
Computer and Communications Industry Association, offering an expeditious
and relatively cheap avenue to challenge patents of doubtful validity.

The benefits of stopping bad patents from snaking their way through the
economy have been even greater.

Companies no longer have to pay ransom so the threat of lawsuits over
dubious royalty payments — filed by aggressive litigants known as trolls —
will go away. Consumers no longer have to pay for bogus intellectual
property covering, say, a method to take their pills. The appeal board has
rejected questionable patent claims over technology to clean up polluted
groundwater and wastewater
<https://www.patentprogress.org/2017/09/26/ipr-successes-cleaning-messes/>,
over podcasting
<https://www.patentprogress.org/2017/08/10/end-podcast-patent-know/>, and
over a system that Los Angeles wanted to introduce that looks a lot like
E-ZPass
<https://www.patentprogress.org/2017/09/19/ipr-successes-trolls-tolls/>.

“It probably hasn’t made patent trolls go away, but it’s changed their
demands,” noted Mark Lemley, a law professor at Stanford University. “Now
they sue and ask for $50,000 rather than sue and ask for $1 million.”

After years of aggressive intellectual-property claims, experts argue that
the new panel is helping to push patent law in a much-needed direction: to
relax its stifling effects on the economy.

“At a high level, we have made an impressive amount of progress over the
last five to 10 years in getting the patent system more into balance,” said
Carl Shapiro, an expert on competition policy at the University of
California, Berkeley.

But for all the benefits of culling faulty intellectual-property rights,
the board is under existential threat. Next week, the Supreme Court will
hear a challenge that the patent office’s new procedure is unconstitutional
because invalidating a patent amounts to an unlawful takeover of private
property.

The accusers in the case, Oil States Energy Services v. Greene’s Energy
Group
<http://www.scotusblog.com/case-files/cases/oil-states-energy-services-llc-v-greenes-energy-group-llc/>,
argue that taking private property is something only a court — not a
government agency like the patent office — can do.

It’s hard to tell how the Supreme Court will rule. Patents are not
standard-issue private property, like a plot of land. They are granted by
the government to encourage innovation, a public good, because inventors
might not invent without a period of exclusivity over the fruits of their
idea.

Beyond the constitutional questions, I would suggest to the justices on the
court that they consider the ramifications of their decision on the United
States economy.

Charging royalties for ideas that are obvious or were concocted so long ago
that they are already in the public domain — like making a call by touching
numbers on your smartphone screen, or fastening your trousers with a zipper
— exact a cost but provide no benefit. Striking down a bad patent is less
about confiscating property than about discovering that the property right
should not have been awarded in the first place.

Stringent intellectual-property laws seem to be doing little to encourage
real innovation and entrepreneurship
<https://www.nytimes.com/2017/09/20/business/economy/startup-business.html>.
Indeed, an increasingly robust body of research finds that the gradual
strengthening of patents has hindered innovation
<http://www.nber.org/papers/w21964> rather than foster it.

The patents Teva was trying to uphold, which the patent office tribunal
shot down, were designed not to establish its exclusive rights over a new
technology but to prolong its exclusive rights to an old one. Its case is
not unusual: Researchers are finding that more and more pharmaceutical
companies are recycling and repurposing old medicines rather than inventing
new ones.

Researchers at the University of California Hastings College of the Law
found that three-quarters of the drugs associated with new patents in the
records of the Food and Drug Administration were not new drugs coming on
the market <https://papers.ssrn.com/sol3/papers.cfm?abstract_id=3061567>,
but existing drugs. Pharmaceutical companies extended their exclusivity
over blockbuster drugs 80 percent of the time, attaching new patents on
dosage and other aspects that had nothing to do with the original invention.

Here’s how it works: Pharmaceutical companies start moving doctors to the
tweaked formulation before the initial patent runs out, so that by the time
it expires nobody is prescribing the original drug. That gives them an
extra 20 years of exclusivity in which they can charge patients and their
insurance companies exorbitant fees. Society has nothing to gain.

In a brief to the court, the Initiative for Medicines, Access and Knowledge
— a nonprofit  <http://www.i-mak.org/>group <http://www.i-mak.org/> arguing
for broader access to affordable medicines — argued that the patent
office’s panel “is an important and necessary tool in the fight to lower
drug prices because it allows the timely removal of unmerited patents,
which promotes competition.”

Tahir Amin, a co-executive director of the initiative, added that “there
are a lot of patent trolls trying to extort rents from low-quality patents.”

The Supreme Court has in recent years shown itself sympathetic to the
argument that patent protections have become too restrictive. On half a
dozen occasions since 2013, it has overturned decisions by Federal District
Courts granting patent rights over what were ultimately fairly intuitive
processes.

Notably, the Supreme Court’s 2014 decision in Alice Corporation v.
<https://www.supremecourt.gov/opinions/13pdf/13-298_7lh8.pdf>CLS Bank
International <https://www.supremecourt.gov/opinions/13pdf/13-298_7lh8.pdf>
held
that where a patent claim is based on an abstract idea, which is not
patentable, using generic computer implementation does not transform that
idea into a patentable invention.

Corporate interests are not aligned in this case, though. Pharmaceutical
companies despise the patent office’s new powers. Information-technology
corporations, which incorporate thousands of ideas into one gadget and see
themselves as victims of patent trolls, are strong supporters of this
relatively cheap and expedient avenue to challenge patents once they have
been written.

The Goliaths of technology are, of course, out for themselves alone. Yet in
this case they are aligned with the economy’s interest. For too long,
innovation has been narrowed to fit patent holders’ argument for sacrosanct
property rights. For these rights to hold, however, at the very least we
need a system to undo those that prove to be invalid.

Email: eporter at nytimes.com;
Twitter: @portereduardo <https://twitter.com/portereduardo>


--
Tahir Amin
Co-Founder and Co-Executive Director
Initiative for Medicines, Access & Knowledge (I-MAK)
*Website:* www.i-mak.org<http://www.i-mak.org>
*Email:* tahir at i-mak.org
*Skype: *tahirmamin
*Tel:* +1 917 455 6601/+44 771 853 9472
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