No, unfortunately, the patent system is not dying. The title refers to deaths caused by the patent system. According to the BBC News science report, Patent system 'stifling science', findings by the Canada-based Innovation Partnership indicate that "Life-saving scientific research is being stifled by a 'broken' patent system". "'Blocking patents' are delaying advances in cancer medicine and food crops," according to the report.

While "[t]he traditional view is that strong patent protection stimulates innovation, reassuring companies that it is safe to invest in research without fear of being stung by rivals," this strategy "deters grass roots research in universities." As an example, "Work on the BRCA1 and BRCA2 genes that can cause breast cancer has been held up by legal disputes over patents held on the genes by Myriad Genetics, a biotech firm based in Utah, US. ... Meanwhile, patients in European countries were denied access to the cancer screening kits, because national health services were unwilling to meet the cost."

In previous posts (Troll Tracker's Identity Revealed :( and Troll Tracker [Why People Hate Lawyers]), I discussed threats and bounties put up by patent attorney Ray Niro against the then-anonymous Troll Tracker (who repeatedly highlighted various patent lawsuits Niro was filing), which finally resulted in Troll Tracker being exposed as an in-house patent attorney at Cisco, Rick Frenkel. Frenkel was then sued for defamation by two lawyers in Texas, based on comments he had made about them on his blog.

Good news: as reported in Troll Tracker blogger Rick Frenkel moves to Wilson Sonsini, he has "left Cisco Systems and moved to Wilson Sonsini Goodrich & Rosati, a top Silicon Valley law firm, where he is of counsel. 'We were impressed with his breadth and depth of experience,' said Michael Barclay, an IP litigation partner at Wilson Sonsini and a PTT reader, natch. 'Rick has developed a lot of knowledge and insights about patent trolls that will be helpful to our clients who have to deal with them.'"

Good! Go get 'em, Rick!

See also Cisco Blogger Decamps to Wilson Sonsini. Regarding the related Scott Harris matter, see Scott Harris v. Fish & Richardson litigation is settled (discussed in my Troll Tracker [Why People Hate Lawyers] and A Tangled Web of Patent Rights).

Re the defamation suit: see East Texas lawyer subpoenas Google for more info about PTT and Patently-O blogs.

Under the Declaratory Judgment Act, if you are threatened with a patent infringement suit, you can file a "Declaratory Judgment" action to get the court to declare the rights and settle the matter. The MedImmune decision made it easier for licensees to challenge the validity of patents they had previously licensed with a DJ action.

See The Scream, for a recent example: in this case, a potential infringer failed in its attempt to to institute a declaratory judgment action:

"Prasco got so paranoid about infringing patents from competitors Medicis Pharmaceutical and Imaginative Research Associates that it filed a declaratory judgment motion. The problem for Pasco was that Prasco wasn't even on the defendants' radar screens. The district court pitched the case, and the appeals court concurred."

So here's my proposal. I welcome any comments:

The Declaratory Judgment Act should be expanded to make it easier for potential infringers to bring an action against a patentee if there is any doubt by the potential infringer. For example, if A is worried about violating B's patent, A could request B to provide a written exoneration statement that it does not intend to sue A or request a license, for a given product. If B does this, B is estopped from ever suing A for patent infringement with respect to that product--B waives his right. If B refuses to provide the statement within 30 days (say), then A has a right to seek a DJ. Better yet A provides B a description of its product and demands an exoneration statement; if B does not provide one, it releases its right to sue A. This would give B 30 days to decide whether to admit to A that it intends to sue. If it makes this admission, this triggers A's right to seek a DJ.

One person I ran this by asked why the patentee can't just always reply with a ridiculously high license offer. The answer is: because that opens the patentee to a DJ action. The patentee would have a dilemma: say no, and give up the right; or say yes, and be (maybe) sued. To my mind, this puts them in the same position as potential infringers: potential infringer never knows when the patentee might simply decide to sue him... or not. If he does, the accused infringer could face millions in legal fees. So he has to sit there, hoping not to get sued.

In my proposed system, the potential infringer can turn the tables: give the patentee, who after all is sitting on a legal right to intimidate--give him a choice, make him decide whether he will use it or not. At least say "maybe", and give the infringer the right to sue for DJ. So the patentee is not ready for such a suit? He can't handle it? Aww, poor patentee, sitting there at the mercy of potential infringers. Just like they are at his mercy!

A patent attorney friend comments:

"Interesting idea - allow the potential infringer to create the "case or controversy" with its request for exoneration rather require some act by the patent holder. Wouldn't this effectively allow Federal Courts to give advisory opinions on patent infringement? I guess you could argue that there is still a "case or controversy" under Article III. I think the potential infringers could abuse such a procedure by burying the patent holders with requests for multiple products or variations of products and by referring to multiple patents. Then again, patent holders can (and do) abuse our current system by threatening and asserting multiple patents against potential infringers."

Senior EPO official warns of tougher patentability standards and higher fees

The latest issue of IAM has now gone to press and will be published at the end of this week. There are a number of highlights, but for the cover story this time around I have gone for a piece written by Ciáran McGinley - the Controller of the EPO and so one of the office's most senior staff members - on the subject of "global patent warming". In the article, Ciáran goes into some detail about what the phrase means and what is causing it. "Incoming volumes are increasing per patent office due to globalisation driven by patent propensity and trade," he writes. "Pendency volumes are also increasing, pretty much independently of what has been happening to pendency times in the different offices. Finally, woolly boundaries are widespread, not just between granted patents but especially among pending applications. It is becoming too much, the system is gradually becoming much warmer. It may not be warm everywhere (yet). It may not be warm in all industrial sectors (yet). But it is definitely temperate."

I guess anyone daft enough to believe in "global warming" nonsense might also be alarmed at the patent system having problems.

You scratch our back, we'll scratch yours. As reported on Patently-O:

Outsourcing of Patent Preparation: PTO Says Beware

In a recent notice, the PTO has indicated that it may be illegal to outsource invention information to a foreign county for the purposes preparing a US patent application.

1. A foreign filing license from the USPTO does not authorize the exporting of subject matter abroad for the preparation of patent applications to be filed in the United States.

2. Applicants who are considering exporting subject matter abroad for the preparation of patent applications to be filed in the United States should contact the Bureau of Industry and Security (BIS) at the Department of Commerce for the appropriate clearances.

Can you just picture thousands of U.S. patent lawyers pumping their fists and collectively hissing Yes!--as the spectre of unscrupulous Indians writing $12,000 patent applications for $1000 recedes... No wonder so many patent lawyers are pro-patent system! The "patent bargain" conventionally refers to the government giving inventors a monopoly in return for their publicly disclosing how the invention works. But I think it has a second meaning. (Cross-posted at Mises Blog.)

Update: See Patent Baristas, Hold Up There On That Outsourcing of Patent Work. The patent bar is loving this!

One of the factors missing from discussions of the cost of out patent system is hard data dollars and cents of what it costs society. Some of us have long known that it was a net loss, but that is hard to argue when you don't have the numbers. That has just changed, according to a book review by Timothy B. Lee link here. The book reviewed is Patent Failure: How Judges, Bureaucrats, and Lawyers Put Innovators at Risk by James Bessen and Michael Meurer .

The hypothesis actually tested was, "Patents are supposed to create a positive incentive for innovation by enhancing the profits of companies that develop new technologies. If the patent system is working properly, the average firm's patent portfolio should generate more profits than the total cost of defending against patent infringement lawsuits from other firms. If, in contrast, litigation costs exceed patent profits, that suggests the patent system is actually creating a net dis-incentive to innovation. In that case, innovative companies would be better off with no patent system at all."

"Their data suggests three broad conclusions. First, patent litigation began rising sharply in the early 1990s. The costs of defending against patent litigation for non-chemical firms held steady at about $2 billion per year during the 1980s, but by 1999 (the last year for which they have reliable data), patent litigation was costing defendants more than $10 billion annually. Second, while the chemical and pharmaceutical industries also experienced increased litigation during the 1990s, the problem was much less dire; the patent system still appeared to offer positive innovation incentives for drug and chemical firms."

"Most shockingly, Bessen and Meurer's data suggest that outside of the chemical and pharmaceutical industries, litigation costs for the average public firm actually exceed profits from their patent portfolio by a wide margin. By 1999, the last year in their sample, defending against patent lawsuits cost non-chemical public firms about $12 billion, while their patent portfolios generated only about $3 billion in profits. This data suggests that outside the chemical and pharmaceutical industries, the patent system actually reduces the net returns to innovation; firms don't earn enough from their patents to offset the costs of defending themselves against patent infringement lawsuits brought by other firms."

There are some caveats to the study, so more work needs to be done. But with that proviso, not just the voter (consumer) needs to think about our busted patent system, but so does business and other patent owners. They should be banging the doors down on the Congress to get this changed.

Here's another apparent example of another USPTO boner. The Patent Office has granted the GraphOn Corporation a patent on two-factor authentication. According to the Business Wire post on this:

U.S. Patent 7,360,244 describes a method for authenticating a user access request over an initial communication medium to a device protected by a firewall system. The method involves communicating a password, or a portion of a password, which is required to complete the authentication back to the user on a communication medium other than the initial communication medium. This process is commonly referred to as two-factor authentication.

Now, according to the Wikipedia entry on two-factor authentication:

It should be remembered, however, that strong authentication and multi-factor authentication are fundamentally different processes. Soliciting multiple answers to challenge questions may be considered strong authentication but, unless the process also retrieves 'something you have' or 'something you are', it would not be considered multi-factor. The [Federal Fincial Institutions Examination Council] issued supplemental guidance on this subject in August 2006, in which they clarified, "By definition true multifactor authentication requires the use of solutions from two or more of the three categories of factors. Using multiple solutions from the same category ... would not constitute multifactor authentication."

Given that this kind of authentication is a business method, I would have thought that this kind of readily available evidence of prior art would have been enough to invalidate GraphOn's application for a patent.

In Nobel Prize Winning Economist Explains How IP Rights Are Part Of The Globalization Problem, techdirt's Mike Masnick (who is heroically great on IP) notes the "fascinating speech by Nobel Prize-winning economist Joseph Stiglitz on Making Globalization Work. We've written about Stiglitz in the past, for his explanation of how patents often do more harm than good economically."

But not so fast. Is Stiglitz really that good on IP? As I noted in Patents and Utilitarian Thinking Redux: Stiglitz on using Prizes to Stimulate Innovation, Stiglitz has advocated replacing the patent system with a system for "awarding prizes"--presumably taxpayer funded--for innovations and inventions. In Scrooge and intellectual property rights, Stiglitz endorses a "medical prize fund" that "would give large rewards for cures or vaccines for diseases," which "prizes could be funded by governments in advanced industrial countries." Two cheers for capitalism! Or is that the other one?

As reported on Patently-O, after Microsoft was ordered by a jury (where else: the Eastern District of Texas) to pay over $100M in damages for patent infringement, and after losing on appeal to in the CAFC, Microsoft is asking the Supreme Court to overturn the CAFC's requirement that "clear and convincing evidence" be presented to invalidate a patent even when a defendant presents evidence of invalidity that was not considered by the PTO. Microsoft is right. Why there should be any presumption of validity at all for any issued patent, given the PTO's bureaucratic incompetence, is not clear (or convincing).

Timothy Lee at Ars Technica reminds us that the Patent Reform Act of 2007 is being debated behind closed doors in the Senate, after already passing in the House link here. He concludes that the bill is of little help compared to the long list of problems with patent law as currently experienced by business. And not even the modest proposals under consideration seem likely to go much farther, given the seemingly balanced alignment of business forces on opposing sides who see their interests hurt by one aspect of the legislation or another. Lee seems to think that the Supreme Court may be the most likely source of important changes.

Read the post for the details. But reconciling the differences on the opposing sides seems no solution to the monopolies that current patent law has created, at enormous cost to the consumer and imperceptible increases in innovation. We have simply failed to create real anger among the public who have been taught for generations that patents embedded in the constitution are good for them.