Saturday , June 15 2024

Patent System, Like Copyright, Reaching Meltdown

It’s as simple as this: companies would rather sue over a patent or copyright claim than duke it out in the chancy world of open competition. Congress, in its eagerness to please its corporate masters, has helped facilitate the mess. The public, long disinterested in the complex and dry niceties of such things, is becoming aware that they have a stake in who owns what for how long. A very fine two-part article in the LA Times takes the matter on:

    For decades, finicky children have been eating peanut butter and jelly sandwiches with the crust removed. From a legal point of view, however, the lunchbox staple was invented on a patio in Fargo, N.D., in 1995.

A pair of entrepreneurs patented the crustless PB&J:

    Incredible Uncrustables, a sandwich the two entrepreneurs mass-produced for Midwestern schools. It also began a long-running dispute over whether the U.S. Patent and Trademark Office went too far when it gave Geske and Kretchman the first patent on a mundane household sandwich.

    “This doesn’t mean your grandmother can’t make you a peanut butter and jelly sandwich,” said Ann Harlan, a lawyer for J.M. Smucker Co., which now owns Geske and Kretchman’s company.

    But it does mean that Smucker will try to prevent other companies from making them. For more than two years, Smucker has been arguing in court and the patent office that a crustless peanut butter and jelly sandwich made by Albie’s Foods Inc. is violating its patent and must be taken off the market.

    “They’re misusing the patent system,” said Albie’s lawyer Kevin Heinl. “It’s outrageous.”

    ….Meanwhile, the system as a whole is breaking down. Patent applications are increasing in complexity and length, but the 3,500 examiners still are evaluated by how many they approve. The inevitable consequence, says one former examiner: “The path of least resistance is saying yes.” Three-quarters of applications get approved.

    Two former heads of the patent office have described the agency as sitting “on the edge of an abyss.”

    “Crisis is a strong word,” the American Intellectual Property Law Assn. has noted in correspondence, “but we believe that it aptly describes the situation.”

    ….Since patents tend to be complex, infringement can be determined only by a professional. That’s one reason the number of intellectual property lawyers has quadrupled since 1985. During the same time, the number of court cases involving intellectual property has doubled.

    Technology companies, in particular, spend massive amounts of time and money either suing over patents or being sued. Research in Motion Ltd., maker of the popular BlackBerry hand-held e-mail device, sued competitors for alleged patent violations, gaining licensing fees. Then the company itself was sued for infringement. A private holding company called NTP Inc. said Research in Motion was violating its patents on wireless e-mail.

    Research in Motion lost the case, recording a $32-million charge for litigation and related expenses. NTP is seeking an injunction to prevent the company from selling BlackBerrys. Meanwhile, the patent office is reviewing whether it should have granted the NTP patents in the first place.

    ….For a long time, the scope of patents was sharply limited and easily understood. Ideas and natural phenomena were not patentable. Machines and industrial processes were — provided they were both new and useful.

    In 1880, Supreme Court Justice Noah Swayne added a third requirement: A patentable invention, he wrote, should be inspired by “a flash of genius.”

    This put a high bar on patentability, and through the decades the courts raised it. In 1950, Justice William O. Douglas wrote, “The Constitution never sanctioned the patenting of gadgets. Patents serve a higher end — the advancement of science.”

    Inventors and patent-seeking corporations didn’t like that. Two years later, Congress removed the “flash of genius” standard and replaced it witha vaguer requirement of “non-obviousness.”

    That began to loosen the patent floodgates. In 1980, the Supreme Court said life, in the form of genetically engineered bacteria, was patentable. The decision gave birth to the modern biotech industry.

    ….In a recent speech, Judge Richard Posner of the U.S. 7th Circuit Court of Appeals in Chicago said a large part of the recent jump in applications “is defensive or strategic patenting.”

    “You get a patent because [otherwise] someone else will patent it,” he said. “Or you get a patent because you would like to block a competitor.”

    The walls protecting this ever-expanding pool of intellectual property are getting stronger. One reason is the 1982 creation of the Court of Appeals for the Federal Circuit. It handles only patent cases – and usually rules in favor of the patent holder.

    “A specialized court tends to see itself, I think, as a booster of the specialty industry,” Posner said.

In part two, the nonsense comes to the Internet:

    Lockwood, whose firm is called PanIP, is one of a new group of patent holders who say they own the rights to key Internet technologies. They are blanketing hundreds of small and large Web sites with lawsuits, threats of suits and demands for licensing payments.

    A former CIA technology officer is bringing EBay Inc. to trial this spring, claiming that the hugely successful trading site is infringing an online auction patent he applied for in 1995 — six months before EBay began.

    Charles E. Hill & Associates, a software firm, is suing 18 e-commerce companies, including EBay, alleging that they violated its patents on an “electronic-catalog system” and a “method of updating a remote computer.”

    Acacia Research Corp. in Newport Beach has filed legal complaints against 27 adult entertainment Web sites, alleging that they violated its patents on “the transmission and receipt of digital audio and/or video content.” The company is demanding licenses from mainstream music and movie companies too.

    ….”If you’re selling online, at the most recent count there are 4,319 patents you could be violating,” said David E. Martin, chief executive of M-Cam Inc., an Arlington, Va.-based risk-management firm specializing in patents. “If you also planned to advertise, receive payments for or plan shipments of your goods, you would need to be concerned about approximately 11,000.”

The system is now clearly stifling innovation and competition and needs to be radically changed. We are now in the throes of a leech economy.

About Eric Olsen

Career media professional and serial entrepreneur Eric Olsen flung himself into the paranormal world in 2012, creating the America's Most Haunted brand and co-authoring the award-winning America's Most Haunted book, published by Berkley/Penguin in Sept, 2014. Olsen is co-host of the nationally syndicated broadcast and Internet radio talk show After Hours AM; his entertaining and informative America's Most Haunted website and social media outlets are must-reads: Twitter@amhaunted,, Pinterest America's Most Haunted. Olsen is also guitarist/singer for popular and wildly eclectic Cleveland cover band The Props.

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