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Posts Tagged ‘patent’


There has been a lot of discussion about whether the Venture Capital Model is dying. Some suggest that there is just too much money in venture capital other suggest that it is just a cyclical downturn. However, the evidence does not support this.  Click here to see the video

 

There is a great post in IPBiz, “Mentioning Innovation with Mentioning Patents“, how CBS Sunday Morning had a whole show about the lack of innovation but never discussed patents or inventors.

One of my colleagues is always pointing out the people who use the word innovation discuss it in a disembodied way.  They never discuss inventors or patents.  Specifically, he states:

Say yes to inventors. Say no to “ignore-&-evasion”.

The full-truth word is “invention”, not inno-evasion.

He makes excellent points – at least on how the word innovation has been perverted.

 
Patent Quality Nonsense

There has been a constant drumbeat of propaganda suggesting that the U.S. is issuing low quality patents.  The academic papers supporting this propaganda compare the issue rates of patents that were filed in the U.S. and in the EPO (European Patent Office) or JPO (Japanese patent office).  While a number of papers have pointed out  the methodolical problems with  these academic papers (see Patent Quality Myth ), the bigger question is whether they selected the correct metric in the first place.  This post suggests that other metrics are more appropriate measures of patent quality and do not suffer from imposing other countries’ goals on the U.S. patent system.  These metrics show that U.S. patent quality has been steadily increasing for over a fifty years and shows that perhaps the U.S. system is becoming an elitist system – much like Europe and Japan have practiced for years.

 
Larry Kudlow is Wrong!

Larry Kudlow is predicting a strong V shaped economic recovery in 2010.  His reasons for this prediction are a steep positive yield curve and the rising stock market.  While Mr. Kudlow is a top notch economist and I appreciate his optimism, here is why I believe he is wrong.

Yield Curve

A steep positive yield curve is not necessarily a good predictor of the strength of the economy.  As seen in the chart below, the yield curve was positive and above the 80 year average throughout the 1930s and this did not portend strong economic growth.

(Source: http://seekingalpha.com/article/23870-an-80-year-yield-curve-history-and-its-implications (12/24/09), An 80-Year Yield Curve and its Implications, Shaw, Richard, “Seeking Alpha.”

In the 1970s, the yield curve was positive and above the 80 year average for much of the decade and this did not portend strong economic growth.  The 60s saw the yield curve below the 80 year average and negative twice, which did not signal weak economic growth. 

 

Jacob Schmookler, who conducted the most extensive econometric study of patents, estimated the mean value of a patent as $80,000.00 in 1966.[1]  Adjusting for inflation this would place the mean value of an issued patent at $506,000.00.  This estimate seems reasonable based on other data points.  For instance, Intel’s venture capital arm around 2000 would increase the valuation of any start-up they invested in by $1 million for each issued patent.  Of course, not all patents are created equal and the very illiquid market for patents means that the value of any particular patent will vary significantly.  If there were a strong secondary market for patents, we would not only have a better understanding of the value of an issued patent but also less variation.  For more on how to create a strong secondary market for patents see Jump Starting a Secondary Market for Patents. (http://hallingblog.com/2009/11/16/jump-starting-a-secondary-market-for-patents/)


[1] Schmookler, Jacob, Invention and Economic Growth, Harvard University Press, Cambridge Massachusetts, p. 55, 1966.

 

We know that in all areas of economics where it has been tested private property rights encourage economic activity.  We also know that when the government establishes incentives, it always results in more of the incentivized activity.  We also know that countries with the strongest patent laws have the most innovation and the greatest technology diffusion and vice versa those countries with weak or non-existent patent laws have little or no innovation and little technology innovation.  Despite this Mr. Kinsella and the anti-patent crowd ask us to believe that patents do not follow the normal rules of economics and logic.  As Thomas Paine pointed out in his book The Age of Reason, extraordinary claims require extraordinary evidence.  Mr. Kinsella and the anti-patent crowd have provided no evidence that patents harm innovation.

 

 This post is the Introduction to my book, which should be available on Amazon.com in December of 2009.

This book started as a project based on my observations.  I deal with technology start-up entrepreneurs everyday as a patent attorney.  I noticed a difference between the sort of projects my clients were undertaking since the technology downturn of 2000-2001 and the 90s.  Clients, in the 90s, would come into my office with plans to build businesses that were disruptive or revolutionary.  The technologies underlying these companies held the potential to completely redefine a market.  Some of these of these ideas would increase the available bandwidth by 10x for minimal costs or allow data searches that were 10-100x faster than existing technologies.  It was extremely exciting talking with these entrepreneurs.  Their energy was infectious and the potential implications of their work was mesmerizing.  The technology downturn of 2000-2001 forced a reevaluation of these aggressive business plans.  I expected that after a couple years of the technology market taking a breath, I would again be working with companies trying to change the world. 

 

The term patent trolls is usually applied to companies that enforce patents that they are not practicing.  These Non-Practicing Entities (NPEs) include companies specifically organized for this purpose such as Intellectual Ventures.  However, it also includes Universities and divisions of most large corporations such as IBM.  Many of these corporations complain about NPEs.  However, any consistent definition of a NPE (troll) would include these hypocrites.

 

A patent is an attempt to create a “barrier to entry” from a business perspective.  Other barriers to entry include advertising, control of key resources, economies of scale, exclusive supplier agreements, etc.  An effective patent strategy will focus on the product’s or company’s unique selling points.  The goal is to focus the claims of the patent(s) on the technology that provides the unique selling points.  This will result in a patent(s) that provides the strongest barriers to entry and make it easy to spot competitors that are infringing your patent(s).

 

Most companies that generate enough patents to justify an in-house patent counsel have a Patent Review Committee. The Patent Review Committee determines if an invention described in an “Invention Disclosure Form” is worthy of obtaining patent protection. The committee is usually made up of a business/marketing person, one or more technical people, and one or more patent attorneys. An inventor usually makes a short presentation to the committee based on the Invention Disclosure Form. Here are the top five reasons why Patent Review Committees result in second rate patent portfolios, hurt innovation, and increase legal costs.

 

An interesting article in Reason discusses what effect nationalizing our health care system will have on medical innovation.  Specifically, it states that if the U.S. nationalizes its health care medical innovation will stop.  Freezing our medical technology will effect the health care of people throughout the world.

 
Innovation – Wake-Up Call

There are number of indications that the U.S. is losing its technological edge.  In the second quarter of 2008, there were no public offerings of Silicon Valley venture capital-backed companies, a phenomenon not seen since 1978.  U.S. venture capital firms are investing more of their funds overseas.  Many U.S. trained, foreign national, scientists and engineers are leaving the U.S. and returning to their home countries.  In 2001 (the most recent year for which data are available), US industry spent more on tort litigation than on research.[1]

 

In order to obtain a patent your invention has to be useful (35 USC 101), novel (35 USC 102), and non-obvious (35 USC 103).  The goal of this post is to explain the non-obviousness requirement in terms that are clear to engineers and scientists.

 

In order to obtain a patent your invention has to be useful (35 USC 101), novel (35 USC 102), and non-obvious (35 USC 103).  The goal of this post is to explain the novelty requirement in terms that are clear to engineers and scientists.

 

Given a Voice on Patent Reform by AIPR,

Inventors Send a Clear Message

Researchers, Engineers and Patent Professionals Fear that

Weaker Patents Will Make America Less Competitive

New York, NY, June 4, 2009 – A non-profit organization, American Innovators for Patent Reform (AIPR), has been formed to give a voice to American innovators – inventors, scientists, engineers, researchers, small companies, investors, patent owners and intellectual property service providers – in the ongoing debate on patent reform.

 

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