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Re: Patent Bubble

From: Rex Ballard
Subject: Re: Patent Bubble
Date: Mon, 17 Jan 2011 18:57:37 -0800 (PST)
User-agent: G2/1.0

On Jan 15, 8:15 am, Alexander Terekhov <> wrote:

> The research firm reports that 2010 was a record year for patents. In
> all, the U.S. Patent and Trademark Office issued 219,614 patents – which
> is 31% more patents than were issued in 2009.

These days, a lot of larger companies are filing patent applications
for almost anything, even if they don't think the patent will be
granted, just to make sure that their ideas, and all prior art related
to it, don't get patented by some guy who "Invents" on a kitchen table
and has a lawyer who will work for 1/3rd of any lawsuit judgements and
settlements he can collect.

The problem is that the patent office isn't funded for this level of
activity, so many patents that probably shouldn't be granted are being
granted - they just aren't enforceable.

Microsoft was recently sued for $180 million for technology that had
been Open Source for almost a decade, including much of the source
code for Open Office.

Most of the time, a patent isn't all that valuable by itself.
Something really innovative and revolutionary, that is critical to the
successes of something like a $100 compact computer charger, might be
worth $5 each.  Most, however, are worth a penny or two per $1000 of
revenue earned, and even then, only the newest and best ideas get

The problem for a patent holder is that he has to file for the patent,
prove to the patent office that it's an original idea, and then get
the patent.  Once they get the patent, if they want to make money on
the patent, they have to get some company to pay for the license to
use the patent (or sell the rights outright).  In most cases, the
inventor is an employee of a corporation, and the corporation owns the
rights to the patent, because the employee signed an agreement giving
them that ownership when they were first hired.

The problem with attempting to go after a company who is using
something like your invention, but you haven't mass-marketed your own
implementation yet, is that it is quit difficult to prove that they
actually did steal your idea.  At best, you could nullify each other's
patent claims, or if they haven't patented their implementation, they
could nullify your patent, because they could prove that it had been
"Intuitively Derived".

On the other hand, if you are part of a large corporation, and you
come up with a solution to a problem without using someone else's
solution, your company will probably "harvest" the solution and file a
patent on it.  The main reason is not because they want to sue someone
else, but because they don't want to get sued themselves.

Inventions rarely happen in a vacuum.  Often, a vendor is trying to
solve a customer's problem.  The customer describes the problem, and
asks the vendor to come up with a solution.  The vendor devises a
solution, and then give the customer permission to use that solution.
Unless the vendor is a full time employee, who has signed an
intellectual property rights agreement, the vendor owns the
intellectual property.

But the Customer might be so delighted with the solution that he tells
others about it.  If he tells another vendor, who is a competitor, and
it's all verbal, it becomes very difficult to establish a chain of
custody.  If the competitor is less than ethical, (often just an
employee of a competitor who is looking to get ahead), there is the
risk that the competitor will develop the same idea, and then file for
a patent themselves, not knowing that a prior version exists.

One of the reasons for establishing the patent office was to provide
proof of first filing.  If two companies filed similar applications at
different times, then it could be established that the first company
should get the patent and the second patent application should be

On the other hand, if two companies file at nearly the same time, how
can you tell which was the "true inventor" and which is the knock-
off?  In reality, you can't.  The patent office assumes that since
both companies came up with the same idea at nearly the same time,
that there must be enough common information available to both
companies that both would have "intuitively derived" the invention -
therefore neither is entitled to a patent.

If you look at some of the biggest patent holders, they don't even try
to enforce their patents, they just "cross license" patent portfolios
to make their "umbrella" larger, making it much harder for some
unethical lawyer with a kitchen table inventor to sue any of the
companies under the umbrella for huge amounts of money.

Not only do these huge patent umbrellas work for huge companies, but
they also work for the smaller organization as well.  A group with a
large umbrella might gladly extend their umbrella to a small company
willing to cross-license their patents to everyone in the umbrella.

These complex agreements can get very interesting for a company that
has 100 or 200 inventions it wants to enforce against a manufacturer
who his protected by a big umbrella.  The risk is that going after
such a company will trigger a review of the plaintiff's patents, and
could result in not only nullification of a patent, but even the
possibility of proving that a patent application was fraudulent.

Remember, the patent application doesn't just put the idea being
patented on file, it also puts all PRIOR ART related to that patent on
file as well.  Most larger companies want to file "high quality"
patent applications filled with LOTS of prior art.  Even though this
increases the risk that their patent application will be denied, it
makes it impossible for any other company to enforce a patent, not
only on the invention being applied for, but any prior art known to be
in the public domain.

In addition to all of this activity, there is also the Open Invention
network, which files patents that are similar to Open Source.
Everybody can use them, but they can't file patents of their own.

And strange at it seems, there is cross-licensing to expand protection
of Linux and other Open Source software under that huge umbrella.

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