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October 23, 2013


Please let the bill die quickly.


Ill-conceived and unnecessary legislation, like the AIA (Abominable Inane Act) to have unfortunate and unintended consequences that will hurt more the "innocent," rather than the alleged "patent trolls." Goodlatte and his colleagues would do better to address more pressing problems that include the failure to pass a federal budget, the failure to control our spiraling federal debt, and the utter "meltdown" of the (Un)Affordable Care Act.

a dumb proposed law from an even dumber low maker.

did this moron shut down the government?

This is so discouraging. Why call patent owners patent trolls, even if they are NPEs? The "troll" term is pejorative. That term is intended to inject condescending, dismissive emotion, i.e., trolls are bad things, not objective clarity into the debate. Emotion skews clear-headed logical thinking.

People who use this term have already decided what they think based on their ideology/prejudices/ignorance/self-interest. Facts and reality do not matter nearly as much as the end conclusion. What if it is the case that patent trolls, witches, goblins and/or alien baby snatchers actually contribute to the creation of wealth and our standard of living? Bring on the unspun data and unbiased analysis. If "trolls" are bad, then they are bad. But what if they are good?

It sounds about like this: Federal judges make up their minds on a patent case based on whatever emotional bias they have.

Or, does that never, ever happen? (Hint: See Scalia's dissent in the Myriad case) Here it isn't a federal judge. It is a "selfless" politician. Unfortunately, intellectual nonsense is so very easy.

Oops. Not Scalia's dissent. His concurrence. Nuts.

"One of the problems with such heightened pleading standard is that accused infringers might be able to successfully challenge a patent infringement lawsuit on the sufficiency of the pleadings without ever having to address the merits of the case."

That's a "problem" for plaintiffs who can't follow the rules but otherwise it's not a problem for anybody.

HR 3309 is already through the House Judiciary Committee and on the fast track.

HR 3309, like the previous "SHIELD Act",is supposed to stop "patent trolls". But it's much broader. It makes "loser pays winner's legal costs" the standard. For a small entity to sue a big company with expensive lawyers becomes financial suicide. The SHIELD act had something similar, but it exempted the original patent holder, someone manufacturing the invention, and universities. HR 3309 doesn't do any of that. It allows big infringers to crush small companies and inventors beneath their boots.

This bill is a triumph of effective lobbying by the American Association of Advertising Agencies and the Direct Marketing Association (the junk-mail lobby). This is a surprising source of opposition to patent enforcement, but there's a specific reason for their interest. There are four patents related to targeted advertising which cause advertising agencies problems. To get rid of those patents, the advertising industry has convinced other ad-supported companies to support a huge change in patent law. The changes all favor big companies over little ones by making litigation more expensive.

The A4s (what the American Association of Advertising Agencies calls itself) has a list on their web site of patents they are concerned about:

6,628,314 and 6,771,290 (relates to targeted advertising),
5,251,294 ("Accessing, assembling, and using bodies of information" - rather vague),
5,930,474 (store locators)

These are all "business method patents". That's the source of the push behind this bill. Other companies have signed on, but the ones behind it are all involved heavily in online and mobile advertising.

This bill isn't about "bad patents". There's nothing in this bill about increasing patent quality by raising the "obviousness" bar. That's because of opposition from the pharmaceutical industry, where many drugs are "me-too" drugs, very similar to existing drugs. (Ref: http://community.seattletimes.nwsource.com/archive/?date=20020416&slug=clarinex16) As the A4s wrote in their letter to the FTC (http://www.ftc.gov/os/comments/pae/pae-0035.pdf)

"What seems like a bizarre and wasteful tactic in the high-tech industry can be a basic good practice in the pharmaceutical industry."

I'll leave it to the people in this forum to hash out that issue. I'm in computing and robotics, not biotech or pharma.

The patent troll industry exists because, in the last decade, it's become much tougher for inventors to enforce patent rights. Four changes in law did this:

(2006) "eBay v. MercExchange " The patent holder can't get an injunction against infringement any more, except in extreme cases. This destroyed the concept of a patent as property that only the patent holder could use.

(2007) "In re Seagate" The patent holder can't get triple damages unless there is "reckless infringement", which means the worst that can happen to an infringer is that they have to pay a royalty, the same royalty they might have negotiated. So infringement by a big company is risk-free.

(2007) MedImmune, Inc. v. Genentech, Inc. If a patent holder writes to an infringer asking them to pay royalties, they can be sued for a judgement that the patent is invalid, in a court of the infringer's choosing. So, as a patent holder, you have to file suit before you can negotiate. This is why "patent trolling" became necessary.

(2011) The "America Invents Act" The "America Invents Act" added "post-grant opposition" proceedings, so now infringers can harass patent owners and stall infringement claims in multiple forums. Note that one of the "features" of HR 3309 is to limit estoppel so that similar issues can be raised once in a post-grant opposition and then re-raised in an infringement case. This makes it clear it's all about raising the cost of enforcing a patent by wearing down the patent holder.)

The people who read this board probably know all that, but rarely does someone put all four of those items on one page. Because of those changes, enforcing a single patent is no longer financially feasible in most cases. A big patent portfolio is needed. You either have to be a big patent holder like IBM or Google, or you have to deal with a company that aggregates patents to monetize them. This created the "patent troll" industry.

One effect of all this anti-patent effort is a shortage of new ideas. The Silicon Valley venture capital community, which had been profitable since the 1970s, has been losing money as a group since 2001. Most "new ideas" presented to VCs today are rather banal. (I've heard a pitch for a social network for cats. It didn't get funded.) VCs complain about this. Everyone seems to want to do a "app". Without strong intellectual property laws, what matters is time to market and promotion, not innovation.

I'm in contact with a staffer at House Judiciary and am trying to get in some amendments to narrow this thing. More on that later. If you have a lobbyist in Washington, I'd like to hear from you.

John Nagle "nagle@animats.com"

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