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IAM at the INTA
I am off to Germany tomorrow (Sunday) to attend the 130th annual meeting of the INTA, which is being held in Berlin. If you are also going to be in town, please come by stand 221 in Exhibition Hall 15, where IAM will be based from Sunday until Wednesday.
Joff Wild, IAM Magazine | 17 May 2008
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US top for competitiveness and innovation, but is an also-ran on IP protection
The United States is the world’s most competitive economy, yet it does not make the top 20 when it comes to the protection of intellectual property. These were among the findings of the most recent Global Competition Report, published by the World Economic Forum at the end of October 2007.
Produced annually, this report is compiled by the WEF in conjunction with a number of academics and research institutions, and also reflects the findings of an Executive Opinion Survey which “captures the perceptions of several thousand business leaders across the countries covered on topics related to national competitiveness”. In total, 131 countries, generating 98% of global GDP, are rated in the report.
While the US comes in number 1 on the overall Global Competitiveness Index and also hits the top spot for innovation, it is ranked in only 22nd place when it comes to the protection of intellectual property. For the record, the top 10 in the IP category is:
1. Germany
2. Finland
3. Switzerland
4. Denmark
5. Singapore
6. The Netherlands
7. Sweden
8. The UK
9. France
10. Australia
Other notable placings include Canada (15), Japan (17), Korea (23), Italy (42), India (48), China (71) and Russia (115). Note that I got these figures by trawling through all the countries listed – there does not seem to be a specific section on IP.
In an article last week, the US Commerce Secretary Carlos Gutierrez talked about the country’s patent system being “the envy of the world”. Clearly, this is not a view which is universally held. Although I have not been able to find out the basis on which rankings were put together, my guess is that what has seen the US score comparatively poorly on the IP front are things such as the expense of litigation, the level of damages, perceptions of patent quality and overly-broad protection in areas such as business methods and software. What is noticeable is that most of the countries that do make the top 10 are jurisdictions in which none of the above apply – although the UK can be a much more expensive place in which to fight patent cases than other countries in Europe, while Australia has a relatively relaxed approach to business method and software patents.
What’s worth remembering here, however, is that this is a study based on international opinion. Close to half the organisations now filing for patents at the USPTO are non-US resident, but their motives for filing in the country are very different to the reasons why, say, a small American start-up or university spin-out might want to get patent protection. So while companies from other countries – who, after all, are more likely to be defendants than plaintiffs in a litigation - may find the US system burdensome and, frankly, pretty scary, that does not mean it is not doing its job of encouraging home-grown innovation and protecting home-grown innovators. This may explain why many groups representing the individual and small company inventor community, as well as universities and other research organisations, are among those that have been most opposed to the Patent Reform Act.
That said, it seems sensible that US regulators and policy makers look for ways in which the patent system could be improved. Presumably a lot of the business people questioned in the WEF research process for the report were American and you don’t get to be at 22 just on the say-so of those based outside the country. However, what the report also shows is that any reform process needs to be very carefully considered. The US is deemed the world’s most competitive and innovative economy on the back of the patent system that it currently has. Maybe it could be even more competitive and innovative with a reformed system, but by the same token badly thought-out changes could see the US lose its leadership in both categories. In my view, the emphasis is on advocates of change to demonstrate beyond doubt that it will bring benefits. If they cannot, the US is better off as it is.
Joff Wild, IAM Magazine | 17 May 2008
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Johnson & Johnson should stop digging
Last August, this blog wondered what on earth Johnson & Johnson was thinking when it announced it was taking legal action against the American Red Cross over alleged trademark infringement. Given the terrible publicity such a strategy was always going to engender, there had to be very strong reasons for doing it and, on top of that, surely the company had to be absolutely certain that it was going to win. Well, it did not.
Today, a Manhattan court rejected almost all of J&J’s case against the Red Cross, with the judge deciding that the medical charity had the right to license its logo for business purposes, despite a co-existence agreement with J&J which also uses a red cross device. “The fact that the ultimate purpose of these licensing activities is a ‘charitable purpose’ — ie to raise funds that ARC, a not-for-profit organisation, can utilise for its charitable endeavours — only further emphasises their legitimacy,” the judge wrote in his ruling.
A J&J spokesman has expressed disappointment at the outcome of the case. It also looks suspiciously like the company is not going to let things lie and will pursue the case further. There is a wise old saying which goes “if you are in a hole, stop digging”. Johnson & Johnson would do well to remember that as it plans its response to today’s disappointment.
STOP PRESS: The Motley Fool has published an interesting comment on the case. It may turn out to be right, if J&J decides against any appeal.
Joff Wild, IAM Magazine | 16 May 2008
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Patent office users must take their share of quality and backlog blame
PatentlyO, the Patent Prospector and Peter Zura’s 271 blog are among those reporting on a letter sent by Congressman Howard Berman, chairman of the House of Representative’s Sub-committee on Courts, the Internet and Intellectual Property, to USPTO Director Jon Dudas.
The letter is primarily composed of a series of detailed questions. These give every impression that Berman and his colleagues believe that Dudas and the senior management at the office have not been entirely straight when talking about a number of issues. Subjects covered include examiner retention, how the size of the USPTO backlog will grow and alleged secret meetings with representatives from RIM concerning the re-examination of patents owned by NTP relating to the famous Blackberry litigation..
It is worth mentioning here, I think, that Berman was (and presumably is) a prominent supporter of the Patent Reform Act. This is a piece of legislation that the US government, of which Dudas, of course, is a member, has probably played no small part in holding up due to its trenchant opposition to changes the Act proposes to the way damages are calculated. Also quite strange to my eyes is that although the letter is written specifically to Dudas, several of the questions use the term “you” within them (numbers 1, 9 and 10, for example), while others (eg, 7, 8, 11, 14, 15) refer to the director in the third person. I wonder if some of the questions were penned by a third party and merely inserted into the letter without any edit being applied. If so, it would be interesting to know who that third party was.
However, that is by the by. Clearly the letter raises a number of serious issues and it is important that Dudas responds fully and unambiguously to each one within the time limit that Berman sets, which is by 19th May.
It seems that underpinning a number of the questions is an assumption that is widely shared among US patent owners and patent attorneys: namely that many of the problems which the USPTO identifies and holds responsible for the growth of the backlog are overly exaggerated to hide office failings, and that if the office were better at retaining examiners and managing the prosecution process, there would not be any serious pendency issues and perceived problems with patent quality would not exist. In other words, if the USPTO is in trouble it is all trouble of the USPTO’s making and has nothing to do with the users of the office.
Seeing things in that way, of course, absolves patent owners and their representatives from any kind of self-examination and gives them carte blanche to carry on pursuing business as usual. This may be one of the reasons why some of them are so keen on someone who has worked in patents for a long time take over from Dudas when he stands down. They want a director who sees things their way, rather than someone who talks about poor quality applications and seeks to change the way in which the patent application process works.
While I can understand the attractions of blaming the USPTO and the man who leads it for the problems the US patent system faces, I am afraid that I just don’t buy it. It’s all just a little bit too easy and lets a lot of people off the hook. I am sure that there are serious managerial issues inside the USPTO - I have heard too many times from too many sources that there are for me to dismiss such claims – and it could well be that projections as to how the backlog will grow have not been properly put together, while examiners may be leaving in their droves because of the conditions under which they work. But here’s the thing: what Dudas is saying about growing backlogs and questionable applications, other people in other offices, which Dudas does not run, are saying as well.
If growing pendency times were just a USPTO issue, then Alison Brimelow of the EPO would not have told me last week that she believed that the EPO would have a backlog of around one million within in five years and that because of this she feared it “could not be mastered”. And here’s something else we talked about last week: anecdotal evidence that poor quality applications are clogging up the system. “I spend a lot of time talking to examiners and they tell me without doubt that there is stuff which crosses their desks which is of poor quality – it is one of their constant themes,” Brimelow said. “There does seem to be a problem with opportunistic use of the system, when we were set up to deal with unopportunistic use,” she continued. While this is all anecdotal at the moment, it may not be for too much longer. The EPO Controller Ciaran McGinley, who also sat in on the interview, told me: “We are beginning to hear about systematic evidence that could soon emerge that will back up what the examiners are saying.” If and when it does, that will make for fascinating reading.
Any patent attorney, will tell you, off-the-record, about the little tricks they pull to keep an application alive when it is clear it has no chance of finally being granted; they will laugh as they recount the applications that they have submitted in the full knowledge that they should not lead to a patent; they will shake their heads and smile wryly at some of the stuff that has got through, which should not have done. Taken individually, each of these stories is pretty harmless. But then when you think that just about every patent attorney in the world can tell them, you begin to understand how we get the backlogs we do. And, don't forget, patent offices know these stories too.
So it is no surprise that offices think that if they could rid themselves of the “opportunistic” applications Brimelow refers to, while backlogs may not disappear, they could well become considerably more manageable. Given this, it is no great leap of the imagination to understand that patent offices are going to do all they can to limit such applications. Patent owners and their representatives can, of course, continue to turn a blind eye to the abuses of the patent system that are taking place, or pretend that they do not matter, or blame patent offices for them. But if they do, they cannot complain when offices take unpopular action – such as limiting claims and continuations (which, by the way, the Future Workload document published in December suggests the EPO also take a look at) – to tackle these abuses.
Of course, it is incumbent on all patent offices to ensure that their own houses are in order; but surely it is just as important for those that use the offices to ensure they are not abusing the service. It cannot be one rule for Jon Dudas and Alison Brimelow, and another rule for patent owners and attorneys. Unfortunately, it seems that this is just the situation we find ourselves in at the moment. And, I am afraid, it is not good enough.
Joff Wild, IAM Magazine | 15 May 2008
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Francis Gurry will be the new director-general of WIPO
Francis Gurry has been elected the new director-general of WIPO. In a run-off poll with José Graça Aranha this evening, after the other candidates for the post had either been eliminated or had withdrawn, Gurry defeated the Brazilian by 42 votes to 41. The election of the Australian will be welcomed by many countries in the developed world and should also prove popular among WIPO staff. This is something that will be important as Gurry attempts to restore morale inside the office after the turbulent reign of Kamil Idris. The Sudanese national will depart with a tasty pension when his term officially ends in September. It is then that Gurry will be officially confirmed in his post by the General Assembly of all WIPO members.
Given the political way in which so many of the decisions around these types of appointment are made, I had thought that Graça Aranha was going to be a shoe-in, so it’s lucky I am not a betting man! However, I am pleased that Gurry has come out on top. He is someone I have met on several occasions and who I know thinks deeply about intellectual property. From the conversations I have had with him, it is clear that he understands IP’s political and, crucially, its economic importance. He also has a track record of delivery, having presided over the creation of the WIPO Arbitration and Mediation Centre, which has provided a highly-successful domain name dispute resolution service since its inception back in the 1990s.
But he has a hell of a job on his hands. During the latter years of the Idris regime, WIPO was embroiled in controversy as the DG was found not only to have failed to disclose his true age, but was also accused of various other things that called into question his integrity, although it is important to add that nothing was ever proved. But whether he was guilty of misdemeanours or not, Idris clearly lost the confidence not only of a number of WIPO’s member states, but also of many of the office’s staff. Gurry’s job is to ensure that everything inside the office – such as promotions and money allocation - is fully transparent, while at the same time putting WIPO in the centre of the debate about how IP can and should affect the world. I am sure we all wish him luck!
Here is the report that the IP Watch online news service, which has very strong connections inside WIPO, has put together on the vote. Note that the US is pleased, that some WIPO staff, at least, are delighted, that Gurry's most recent WIPO brief encompassed patents and that he has also served as the organisation's general counsel. This is a good appointment.
Joff Wild, IAM Magazine | 13 May 2008
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EU presidency hails patent advances, but money could scupper deal
The Slovenian presidency of the EU has produced a document outlining the progress that has been made in the on-going discussions among EU member states about a possible single EU-wide patent jurisdiction and the Community patent. If both proposals were to become a reality, we would see the introduction of a patent issued by the EPO that would be valid in the jurisdictions of all EU member states and the creation of a unitary court system to hear dispute relating to all patents awarded by the EPO.
Importantly, as I understand it this court system would not only deal with Community patent disputes, but also disputes relating to the types of patent the EPO awards now. In other words, patentees that have decided not to use the Community patent system but have instead opted for the traditional EPO route by which they decide in what countries their EPO-granted right should apply, would also use the new court structure in the event of a dispute. What I am not clear about is whether it would be compulsory to use the new court, or whether you cold still pursue cases on a jurisdiction by jurisdiction basis.
However, we are a long way from having to worry too much about the details, there is still a lot to be done before any final decision is made. That said, as I reported from Ljubljana, the signs are looking positive. In this new document, the Slovenians confirm that there has been progress and that discussions are advancing, although some areas of difficulty remain. My hunch is that, as my EPO source told me last week, it is all going to come down to money. Some national patent offices are worried that they are going to lose considerable income from EPO renewal fees if the Community patent comes into force and this could mean they are going to look for reasons why it should not. That will have a knock-on effect on the litigation discussions. It will then come down to how much the big players – France, Germany and the UK – want everything to fall into place. If they do, then it is unlikely any other government will choose to expend valuable political capital in order to make a stand; which means that a deal will be reached and we will get the patent right and the litigation system. But, whatever happens, we are talking years here, so don't hold your breath!
Joff Wild, IAM Magazine | 12 May 2008
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Bush Administration urges Congress not to give up on patent reform
I have had a couple of comments from US-based readers concerning the blog I posted last Saturday on the demise (or so i thought) of the Patent Reform Act. According to both correspondents, I could be jumping the gun. This is what they had to say:
I wouldn't be too quick to jump to the conclusion that Congress is done with patent reform.
This Congress is done with patent reform. There will be a whole new Congress and Executive branch within a year. We just don't know how they will view things. These dynamics are both the best and worst thing about being an American.
Michael Martin, Venetian Capital Management
I agree with Michael that you shouldn't jump to conclusions on this. Future Congresses will likely take this up again. I would go even farther to say that things could still happen this year. Congress is just as likely to pass things in a rush at the end of the session (which, given the budget situation may just run until Jan in a lame-duck). So May is way to early to be saying "game over."
Kenan Jarboe, Athena Alliance
Just to clarify what I said previously: my view is that given recent developments there is not going to be any patent reform legislation between now and the elections in November, but that we could see something reintroduced next year. So, Michael and I are probably on the same wavelength. However, if Kenan is right, it could be that a deal might be done later this year, even – perhaps – after the election, when, as I understand it, the old Congress sits for a few weeks before the newly elected one takes over in January. It was in this lame duck period that the Bayh-Dole Act was passed in 1981 and then signed into law by Jimmy Carter, on one of the last days (if not the last) he was Commander-in-Chief.
So, you never know. Maybe we will see an attempt to revive things. Indeed, if this article by Commerce Secretary Carlos Gutierrez is anyting to go by, it looks like the Bush Administration is keen to see a deal done. However, I guess it will have to be on its terms and, as Gutierrez makes clear, for that to happen something is going to have to give on damages apportionment. Any legislation voted through by Congress still has to be approved by President Bush for it to become law. I don’t know exactly how that works, but I am sure he has the option either to veto or just not to sign. Given his government's oft-stated and trenchant opposition to the current damages apportionment provisions in the legislation, there would surely have to be significant changes before the President was happy to put pen to paper. On that basis, supporters of the legislation - for whom, it seems, changes to the damages regime are really the only game in town - may feel they are better off waiting until 2009, when there is a new Congress (one predicted to contain many more Democrats), a new President and a new head of the USPTO.
Joff Wild, IAM Magazine | 12 May 2008
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Two IAM IP publications now available free of charge online
IAM has just published two guides, both of which are available online and completely free of charge:
• Brands in the Boardroom, released to coincide with next week’s INTA meeting in Berlin, examines how Playboy and E&J Gallo manage their respective brands portfolios, and also takes an in-depth look at Google’s controversial AdWords programme. In addition, there are a series of other articles detailing key trademark issues in some of the world’s major jurisdictions.
• Patents in Europe, first made publicly available last week at the European Patent Forum in Ljubljana, has been produced in association with the European Patent Office. The publication is divided into two parts: in the first, chapters – including an introduction from EPO President Alison Brimelow – look at recent developments inside the EPO and in Europe generally; in the second, there are detailed guides on how patent litigation is conducted in 21 European jurisdictions, including all the big players.
Brands in the Boardroom and Patents in Europe are among a number of free IAM guides that can be accessed via our website, by clicking here. You will also find a link to the website dedicated to IAM’s yearbook IP Value: Building and Enforcing Intellectual Property Value.
Happy reading!
Joff Wild, IAM Magazine | 12 May 2008
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McCurdy leaves Thinkfire to become chairman of anti patent troll online venture
I understand that this week Thinkfire will confirm that its CEO, Dan McCurdy, has resigned to become chairman of a spin-out from the company called PatentFreedom. McCurdy is succeeded by Steven Hoffman who was previously Thinkfire’s president; he will stay on at the company until July to help in the transition process.
As one of the founders of Thinkfire back in 2001, McCurdy has played a prominent role in building the company into a successful and profitable business. Although it rarely gives any details of its client base, Thinkfire has been involved a number of high profile litigations, including, I believe, working for Alcatel Lucent in its on-going dispute with Microsoft. Of course, before setting up Thinkfire, McCurdy was president of Lucent Technologies’ IP business responsible for managing 300 employees and a portfolio of 26,000 patents that generated annual revenues of $500 million.
Interestingly, it seems that the very nature of Thinkfire’s business has precipitated McCurdy’s departure. PatentFreedom’s is an online community that is designed to help companies defend themselves against attacks from patent trolls: they will subscribe to join the community – which is how PatentFreedom will make its money – and will be able to access a database of trolls to find out more about who they are or could be up against, as well as share information anonymously with each other. In this way, so the thinking goes, companies that find themselves under attack from trolls will be better placed to devise effective strategies to fight back, so helping to reduce payouts, minimise time and money lost to litigation and maintain product lifecycles and margins.
All of which could well interest the trolls’ frequent targets. To my knowledge, beyond law firms there is nothing out there at the moment which is focused on the needs of defendants in these cases and which offers access to detailed information about trolls – up to now companies have pretty much been on their own.
However, what may have caused PatentFreedom problems if it had remained inside Thinkfire were potential conflicts with the company’s existing services, many of which have at least some element of assertion to them. Just last year, for example, Thinkfire announced the launch of its Leveraged Transactions Group, a service designed specifically for small entities looking to exploit their rights. Senior figures inside large corporations may well have felt reluctant to do business with an organisation that, with another cap on, could have been helping an organisation to get damages from them. Spinning PatentFreedom out gets round that problem rather neatly. And putting McCurdy in charge gives the project a very well-known public face. When his departure is formalised in July, Thinkfire will have no equity in or control over PatentFreedom.
Depending on whom you speak to, the term troll can mean a lot of things. The definition PatentFreedom intends to work from is pretty wide-ranging. It is, essentially, any entity that earns, or plans to earn, the majority of its revenues from the licensing or enforcement of patents. To become a subscriber to PatentFreedom, you must be an operating company with revenues of $100 million or more from the sale of products other than revenues from the licensing, enforcement, enforcement for fee or sale of patents.
Joff Wild, IAM Magazine | 11 May 2008
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A complete waste of time that has weakened the US patent-owning communities
It has looked dead for a month or so. And now it is. The Patent Reform Act has been officially withdrawn from the schedule of the US Senate and with that decision goes just about any chance it had of being enacted in 2008. Once it became clear that no deal was going to be reached over damages apportionment, the writing was on the wall for the proposed legislation When John Whelan, on secondment from the USPTO, packed up his things and left Senator Patrick Leahy’s office and Leahy’s chief counsel started to work on other things, the game was up.
But, when you think about all the words expended – not to mention the money spent on lobbyists – what is surprising is that absolutely nothing has come out of the last year and bit's worth of debates. Having been led to believe that the US patent system was fundamentally flawed and needed fixing if it was going to be fit for purpose in the 21st century, we have now found out that the only game in town was actually an argument about how damages should be calculated in patent infringement cases and that nothing else on the table was worth taking forward.
Apart from no changes to the damages regime, here are a couple of the other things we are not going to be seeing in the US as a result of the Act’s failure to get through the legislative process:
• No first to file. The US will remain the only country in the world (I think) where first to invent holds sway.
• No system of post grant oppositions at the USPTO – your options will remain re-examination or litigation if you want to get a patent invalidated.
It is surely extraordinary that, given the chance to make changes to the system, the greater US patent community could not find any kind of consensus over what it might want. Basically the last 14 months – and all the divisions they have caused and all the questioning of the patent system they have encouraged – might as well not have happened. In effect, all they have done is expose fault lines in the US patent-owning community that, although always present, had never been so visible in public before. It is difficult to see how relationships can be repaired given some of the bitter exchanges that have taken place and the accusations that have been made. In fact, can we really talk about a single patent owning community in the US these days? Probably not.
Given that new proposals for legislation are unlikely to surface before the middle of 2009 at the earliest - and stand almost no chance of being enacted before 2010, if at all - should reform happen now it is much more likely to be piecemeal through the courts, through regulatory authorities such as the FTC and through the USPTO, none of which the US patent communities have much control over (in the case of the latter, much to the chagrin of so many, of course). Basically, US patent owners had their chance to help shape legislation that so many of them claimed was necessary. And they blew it. As a result, they could end up discovering that a lot of what happens over the next few months and years is not much to their liking, whatever sector they are involved in. I can’t help thinking that you reap what you sow and that in the not too distant future we may be hearing an awful lot about the law of unintended consequences.
Joff Wild, IAM Magazine | 10 May 2008