In “The Still-Starved Patent Office,” from the December IP Today, patent attorney Joseph Hosteny argues against PTO “fee diversion” and also takes a few swipes at Patent Reform and victims of patent suits.
As noted in Troll Tracker [Why People Hate Lawyers, Hosteny's patent law firm, Niro, Scavone, is a well-known patent plaintiffs firm, and they do not like being called "patent trolls", even though Hosteny has written in defense of so-called "patent trolls," as I note in Patent Trolls and Empirical Thinking. As noted there, I had previously criticized Hosteny's argument that the patent system is necessary for there to be invention and innovation (a common refrain of the patent bar--surprise).
Anyway, in this article, Hosteny says that patents are needed for their to be innovation. He provides no evidence, however, but just quotes a 1921 New York Times editorial, which stated: "Inventions are the main builders of American manufactures. Nine-tenths of our industries have sprung from patents. They are the great makers of employment, the creators of new channels for labor." Wow, I guess that settles it. Hosteny correctly observes that "New inventions generate new businesses and jobs." From this, he concludes, by quoting that irrefutable authority, the 1921 New York Times editorial, to bolster his assertion that because inventions are good, "inventions creating the benefits need[] protection.” Or as the NY Times wrote, “One would expect that the Patent Office, judge and recorder of all these business breeders and wealth makers, would be encouraged, supported liberally by Congress.” Hear hear! Support patents, liberally, whatever the cost! Cost is no object! In fact, let’s set up a tax-funded innovation prize–! For we can never have enough invention!
What really caught my eye in this piece were Hosteny’s comments about “whiners”. First, he praises the importance of various innovations of “the late eighteenth and early twentieth centuries” such as “Otis’s elevator, the typewriter, the linotype, the washing machine, the zipper, the radio, the automobile and the airplane. Skyscrapers, modern printing and publishing, aviation, communications, and travel were made possible or greatly enhanced by these inventions.” True. And today’s “economy has a new engine, because of new inventions: the transistor, the integrated circuit, the computer, followed by the PC, the computer network, modern rockets and space satellites, composite materials for aircraft, artificial knees, and antibiotics.”
But then he curiously writes, “And despite the whining we hear these days, would any of us want to return to the early twentieth century, the age of World War I and the influenza epidemic that killed twenty to forty million people after World War I? Of course not.” [emphasis added] Whining? What is he talking about, I wondered. Critics of IP? It is not clear. But no, as we find out later, he’s apparently talking about victims of patent lawsuits, such as RIM (Blackberry). But also note his slippery reasoning here: if you are a whiner (complain about being bankrupted by trolls, maybe?), you are in favor of “returning” to the wars and influenza epidemics of the early twentieth century! Wow. I’m feeling guilty already.
Anyway, later in the article, when he complains about the PTO not being funded sufficiently due to fee diversion from Congress–this is the real problem, he maintains–he argues that “those in the media and in Congress, with some exceptions, do not appear to be listening. They spend time on fads, like the Patent Reform Act and listening to CEOs – like Jim Balsillie of RIM — whine, and continue to ignore underlying problems that have existed for years, problems that will bedevil and undermine any “reforms†Congress may enact.” [emphasis added] Note again his sneering use of “whine”–in this case, to describe the CEO of RIM, who apparently is “whining” when he complains about almost being put of out business, and having to pay almost a billion dollars in what amount to patent extortion. Jesus. So not only do the patent sharks want to resist reform to temper the abuses of the patent system; not only do they want to continue to extract billions of dollars from peaceful companies; the victims should not even complain–or “whine”. Wow.
One more comments. Changes to the PTO rules (currently enjoined) would have allowed patent office examiners to request the applicant provide an “examination support document,†which would force the applicant to “to describe the prior art and its applicability to the claims.” Now Hosteny maintains that the PTO is requiring this to shift work to the applicants, since, because of fee diversion, the PTO is overburdened. In my view, the examination support document is a great idea: patent lawyers and applicants hate to have to write down their views on paper, because they can be trapped by the statements later, e.g., in litigation. They want to keep all their options open, to be able to sue as many people as possible, to be able to have flexibility to make up whatever argument they need to defend the patent’s validity. But not, it’s too much to ask someone requesting a government monopoly to go on the record and state plainly whether and why they “deserve” the patent monopoly grant. They should get it without being “prejudiced”. It’s so unfair to make the applicant have to pay attorneys to read all those prior art documents, analyze them, and provide a coherent explanation of why the invention is sufficiently new in view of this prior art. No–the PTO should have to do it (though it’s not possible to do it right); or courts, in litigation; or the defendants who are being sued, who will have a big incentive to research the prior art (after all, if hundreds of millions of dollars are at stake, what’s a few hundred K spent analyzing patent docs). No, don’t impede the grant of patents–the lifeblood of invention! Shift the cost to the victims.
Anyway, what I thought funny about Hosteny’s comments here were this one: “Furthermore, an examination support document would provide more grist for those who maliciously plead inequitable conduct, and would also give the infringers and the CAFC even more ways to argue that the prosecution history limits the issued claims. Applicants will still get to pay the user fees, naturally. That’s chutzpah. Only a government agency could get away with this scheme. Any business trying this stunt would sink faster than the Titanic, and would deserve to disappear beneath the waves.”
Wow. Where do I start. First, re the complaint about “those who maliciously plead inequitable conduct”–what happens is, if you are sued for patent infringement, one defense you have is that the patent applicant engaged in “inequitable conduct” in obtaining the patent (withheld prior art, etc.). This is a common defense. Obvious, it’s disliked by patent plaintiffs attorneys, since they are so often on the receiving end of it. How unfair, if you sue someone, they should not “maliciously” fight back! They should just lie down and take it–after all, innovation in our society is at stake, good good, man (as well as 8 Ferrarris and 2 houses in Aspen!).
And giving “infringers and the CAFC even more ways to argue that the prosecution history limits the issued claims.” Horrors!
Then this: “Applicants will still get to pay the user fees, naturally. That’s chutzpah.” Wait–what’s chutzpah? Those applying for government privilege are not forced to do it.
“Only a government agency could get away with this scheme. Any business trying this stunt would sink faster than the Titanic, and would deserve to disappear beneath the waves.” Ummm, I hate to point this out, but no private business could issue these kind of monopolies.
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On the other side of the equation, the USSR did not have any patent laws, and it was not noted as being a powerhouse of invention or innovation. Can anyone point to a modern economy which doesn’t have any patent protection, so we can look at some evidence?
Nick, it’s a little hard to have false property rights in the USSR because all rights were claimed by the state and the state alone. The USSR didn’t allow slavery either because everyone was a slave to the state only. IMHO, people need to stop looking at patent like a property and instead look at it as massive micro regulations that control how people use inventions. They don’t incentivise innovation, but rather just force the market to center around invention controls instead in invention
Anyhow, there is still lots on anecdotal evidence against patent. Like when Intel and IBM lost their huge patent interface causes in the courts. Almost immediately, an explosion of business commerce and innovation in the PC space followed. In fact, to this day engineers will tell you how inferior the IBM design was, and how inferior the segmented 16 bit, non zero addressed, low register x86 was…. but none the less it took over the marketplace. In fact, to me, the story of silicon valley is a story of outright rebellion against patent time and time again.
Also, India only had patents on process – not on invented medicines. Yet, their R&D in their pharmaceutical seemed to exceed that of the USA in many cases. Someone on Mises wrote a long paper about pharmaceutical R&D and how it thrived before patent in wide number of European countries and the USA (ironically) who didn’t respect early European patents.
David, do you know which article it might’ve been?
Nick-
Do you have any analysis behind your comment? In other words, what is your causal connection between no patents and Soviet lack of innovation. Your comment reads something like “the USSR had a lot of snow, therefore snow stifles innovation.”
I would think that the lack of property rights in capital altogether is more of a cause, not a lack of property rights of an idea.
I work in the software industry where the obsolescence of an invention occurs before you can be awarded a patent, and also the inventions are infinitely copiable in a short amount of time. As an author on a pending patent that was immediately copied by our competitors, I can tell you that there is still an incentive for innovation. There are profits to be made by arriving first to market.
I worked for a large plastics manufacturer. Not that they made stuff with plastic, they made the plastic itself.
A thing-maker would come to them with the specifications for the engineering plastic needed to make the thing: Strength, resistance to fracturing, temperature, color, melting point, viscosity, etc etc etc.
The company “edge” was not on patents or anything else. In fact, it was well known that anything the company produced would be duplicated, and cheaper, by some other plastics maker in some other part of the world, in about one year.
But because “we” could make the plastic to the customer’s specs faster than anyone else, during that one year lead time we made great ghastly gobs of money. Then, when the year was up, the customer would go to their cheaper alternative and free up the manufacturing capacity for yet another “we need it now” customer.
Patents? Pointless wastes of time and expense. Direct innovation and speed to market is what made the money. Great chemists, effective infrastructure, world-wide delivery capability. The other plastic makers were content to make their profits going to the cheap commodity route, and more power to them.
Nick doesn’t have arguments. He has CP talking points.
I am someone who prefers evidence to supposition. When I talk about the superiority of Insurance schemes over government services, I can point to a Sydney example- such as the St. John’s Ambulance Service, which you can pay for cheaply before you need it, or which can exact steep charges if you call them without being an existing member.
When we talk about the law and Insurance schemes, we can point to the history of Somalia, which had clan insurance schemes- didn’t this site feature a book on that very subject?
So can an anti-patentist point to a successful example that we can all look at and admire? If you can, that would be a much stronger argument!
Curt Howland had an interesting example, but it is irrelevant to my case. I have a design for a new button, but I am not in the button business, so how would I get any profit out of my idea? If we don’t have patents, why should I bother?
If you can answer that, you’ll win your case.
Here’s an answer: because you don’t deserve any guarantees in life.
Vanmind, that is an evasion.
I have a real idea for a new type of button. Currently, I can get a provisional patent, and then go to different companies to see if one of them is interested in this idea (I am not in the button business, so I don’t have a patron to approach.). A company might be interested in a product if they can patent it, and take a risk on it.
What would happen in a patentless world?
the USSR did not have any patent laws, and it was not noted as being a powerhouse of invention or innovation.
You mean Tetris never existed?
“nick gray” wrote: “Curt Howland had an interesting example, but it is irrelevant to my case. I have a design for a new button, but I am not in the button business, so how would I get any profit out of my idea? If we don’t have patents, why should I bother?
If you can answer that, you’ll win your case.”
The answer is: don’t we have enough buttons? Who cares?
Who cares?
Have you never had to sow on a button, and thought, “This is the 21st Century! Isn’t there a better way?”
I did, some years back, and I’ve come up with a combination of a pin and a button, a curved pin that is normally housed in the body of the button, but which can be reconfigured so that the body becomes a handle whilst you’re removing it from one area of your clothes, and resticking it in an area where it is needed. I hope that if buttons become easy to move around clothing, they will become fashion accessories, but I do have a new design that I believe will fill a need, and carve out a new niche. I think lots of people will want this new button, if I can be persuaded to release the design. How are you going to persuade me?
Stephan Kinsella wrote:
“The answer is: don’t we have enough buttons? Who cares?”
yeah, nice answer from a “patent attorney”….
Now why don’t you leave your nice ergonomic computer keyboard and laser mouse and go back to the first model – a clumsy inconvinient one plus a mechanical mouse, if you don’t care…
Didn’t we have enough of those already ?
How bout punch cards ? Never used ones ?
But seriously, dude, you have a severe judgement problem
I am wondering why your employer still keeps you around….
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