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Drew Clark: Why a Well-Functioning Intellectual Property System Needs to Strike Down Bad Patents

in Intellectual Property by

Editor’s Note: This past week, Drew Clark’s column in the Deseret News of Salt Lake City, Utah, was on the importance of balance in our patent system. Click here for links to all of his Deseret News columns.

ASPEN, Colo. — As with many former mining camps in the Rocky Mountains, this one is best known for winter sports like skiing. But this mountain town has also developed a summertime niche: Hosting policy-makers seeking the cool air refuge from humid Washington summers.

This year, the refreshing breeze came in from the new head of the United States Patent and Trademark Office.

For nearly 20 years, Aspen in late August has been home to a small but influential gathering of the Technology Policy Institute. It gathers legislators, regulators, lobbyists and academics who seek to shape the course of policy surrounding information and communications technology.

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Distressingly enough, this year’s theme was “The Government Back in Business: Revenge of the Regulators.” Whether the topic was network neutrality, securing cyber-defense, monitoring online privacy or dealing with dated topics like subsidizing telephone service, the record of the Obama administration does suggest that regulation is back in vogue.

Which is why it was so refreshing to hear luncheon remarks from Michelle K. Lee, the undersecretary of commerce for intellectual property and the director of the USPTO.

Lee, an electrical engineer, a business executive and a lawyer, has headed the USPTO since January. Unlike other agencies that seek to control cyberspace (think of the Federal Communications Commission, the Federal Trade Commission, or the U.S. Department of Justice’s antitrust division), the patent office is less of a regulator and more of a bureau of land records.

It dutifully records, examines and certifies the “claims” that are so important to the innovation economy.

As Lee recounted, only a few decades ago, intellectual property — patents, copyrights, trademarks and trade secrets — was tangential to core business assets like factories, plants, warehouses and inventory.

By contrast, today’s inventions, designs, algorithms and brands are closer to the center of economic value. Lee cited a government report showing that one-quarter of all jobs, and one-third of our country’s Gross Domestic Product, relies upon intellectual property.

All of this talk about the value of these intangible assets is to be expected from the nation’s chief cheerleader for intellectual property. Previous heads of the patent office or the copyright office have sung similar tunes.

What Lee did that was different was emphasizing the second point: “The importance of a balanced intellectual property initiative.”

What does it mean to have balanced patent laws?

It means that the inventor of a novel creation that is useful and not obvious can obtain a 20-year grant — a patent — for the right to exclude others from making use of that particular invention.

Hence the most critical role of the patent office is its ability to assess the individual claims that inventors make when they line up at the doors of the USPTO.

In the same way that a county land records office puts the public on notice of real estate claims of other landowners, patent office decisions publicly mark the terrain of innovation that has already been trod. This helps subsequent inventors know what has already been claimed. They can instead focus on something new.

Seen from this light, it’s clear that a bad patent — a decision that grants expansive patent claims to a purported invention — is as damaging as a bad real-estate title.

Lee highlighted the patent office’s dogged determination to weed out those bad patents that might have slipped through more careful examination through its “enhanced patent quality initiative.”

“There is a cost to society if we issue a patent that should not have been issued, just as there is a cost to society for not issuing a patent that should have,” she said.

At root, issues of patent quality are lurking behind the current congressional debate over so-called “patent trolls.” That term refers to those using a bogus claim and imposing the toll of litigation on innocent entrepreneurs creating jobs and economic growth. Lee said the Obama administration supported legislation to combat abusive patent litigation.

In this fight against “trolls,” USPTO was granted a new weapon with the creation of the Patent Trial and Appeal Board in the America Invents Act of 2012.

That law allowed the patent office to beef up the number of adjudicators capable of reviewing patent challenges through an expedited procedure that must be conducted within one year, significantly shorter than the timetable for litigating patent claims in federal court.

And in the three years since the board has been in existence, it’s received 3,655 petitions challenging patent claims. That’s three times the amount that the prior director expected under the law. Of those petitions, the board has struck down 25 percent of claims challenged as unpatentable innovations.

Striking down bad claims is good. And when that kind of balance is actively advocated by the USPTO, it’s a positive sign for the future of innovation.

Consumer Electronics Industry’s Gary Shapiro Offers Kinder Words to Hollywood at CES Show Opener

in CES2013/Intellectual Property/The Innovation Economy by

LAS VEGAS, January 8, 2013 – One year after Consumer Electronics Association President Gary Shapiro opened his technology trade show with a war cry against the entertainment industry, Shapiro this morning touted “two industries working together to solve problems” of sharing digital content.

In his welcoming remarks at the launch of the Consumer Electronics Show here, Shapiro welcomed five motion picture industry executives to tout the movie-sharing service UltraViolet.

This olive branch came just minutes after excoriating Hollywood for the entertainment industry’s aborted efforts to pass the Stop Online Privacy Act (SOPA) and the PROTECT IP Act (PIPA). The two bills in Congress advancing copyright interests stalled after Google, Wikipedia and a range of technology companies mounted a successful effort press legislators to abandon the bills.

“Some 40 members of Congress withdrew their names from that legislation, and it died,” said Shapiro, referring to the fall-out when Wikipedia and other sites went dark on January 18, 2012.

“There will never be SOPA or PIPA legislation with that name again,” Shapiro said. “It [would be] like calling your kid Adolph” after the wake of German dictator Adolph Hitler.

After that remark, Shapiro attempted to emphasize the positives of innovation-led collaboration in Washington. He sited his recent book, Ninja Innovation, and its efforts to highlight “collaboration, solving problems, [and not] always going to the government.”

Shapiro then touted UltraViolet as just such a collaboration. The free service is designed to let consumers share their movies in the broadband “cloud,” meaning that consumers are able to access content from a television, a computer, a mobile device or a game console.

Warner Brothers President Ron Sanders called the alliance a “great cross-promotion for the industry” and one that allowed consumers to “unlock the value” of their existing video libraries.

Joined on stage and executives from Sony Pictures, Universal Studios, 20th Century Fox and Lionsgate, Warner Brothers’ Sanders thanked Shapiro for his help in promoting alliance, which includes significant consumer electronics companies LG, Panasonic, Philips, Samsung, Sony, Toshiba and Vizio.

Such broadband cloud-based services enabling content sharing have proven difficult in an electronics ecosystem populated by multiple companies. Within a single company, Apple’s iCloud service is among the most successful service enabling smartphone-to-tablet-to-computer-to-television sharing. Apple employs digital rights management technologies to ensure entertainment-industry buy-in to the company’s cloud technology.

Shapiro also highlighted other priorities of the Consumer Electronics Association, which hosts the annual CES: fighting to stop “patent trolls,” or entities that assert patent rights against technology companies, and promoting small business growth through “strategic immigration.”

He also urged trade groups to join CEA in supporting federal budget-cutting initiatives, such as those put forward by the Simpson-Bowles Commission.

Editor’s Note: This story has been corrected from its original version.

Follow Broadband Breakfast’s coverage of the Consumer Electronics Show at http://twitter.com/broadbandcensus. Our goals for #CES2013 are to promote the upcoming series of Broadband Breakfast Club events; to get the latest information on how broadband is driving digital technologies in 2013; and to test ideas for a book on technology, broadband, and digital media that Broadband Breakfast’s Publisher Drew Clark plan to write in 2013. He is on Google+ and Twitter.

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