The IP Business Congress kicked off officially with a discussion titled IP 2015, which will examine what the IP landscape might look like in, not surprisingly, four years time. Read below for a brief synopsis of the comments from various members of the panel, including Eric Schulman of Google, Teresa Stanek-Rea of the USPTO, Paul Ryan with Acacia, and Chief Judge Rader. Of course, while business leaders congregate on the West Coast, political leaders are conspiring to eliminate the one good aspect of patent reform.
Eric Schulman, Director of Patents for Google spoke about technological improvements facilitating IP research. He mentioned Google’s involvement in machine translation for the European Patent Office, wondering how much research has been “missed” by creating information “silos.” One innovation Schulman envisions is the ability to automatically provide examiners with relevant information about an application from public work, in particular of the inventor and the patent owner. In Q&A, Schulman spoke about alternative licensing models such as the Open Innovation Network (community cross-licensing) and Allied Security Trust (lower cost licensing).
Hank Nothaft, author of Great Again, spoke passionately about the need to foster small business growth, and the threats the patent reform bill poses. He mentioned that small business is responsible for all net new job creation, but today’s playing field is titled against VC backed startups. According to Nothaft, the number of VC backed IPOs has dropped sharply, but is rebounding after reaching single digits in 2008 and 2009. This has a significant effect because 92% of small business job creation occurs after IPO. When asked whether small or large companies should be the focus when it comes to patent reform, Nothaft explained that larger companies increasingly off-shore jobs while small companies are primarily responsible for growing the middle class. Nothaft’s ideal patent reform would simply fully fund the patent office.
Paul Ryan of Acacia spoke about the emergence of IP as an asset class (saying we’re in the 2nd inning of this phenomenon). He suspects that we will soon see IP analysts at every Wall Street firm (something Ian McClure says he’s already seeing). During Q&A, Ryan spoke about Acacia and RPX as “intermediaries” who can facilitate licensing and reduce the burden on the court system. About litigation, Ryan said those who don’t want to take risks, should go to trial. He pointed out that it’s disingenuous for companies to refuse to settle, let their lawyers handle the litigation and then complain about the process when they lose.
Teresa Stanek-Rea gave the PTO party-line about patent reform, saying first “inventor” to file and post-grant procedures are critical to improving the process, but equally important is securing funding to carry out these goals. During Q&A, Rea mentioned the initiative to hire experienced IP practitioners as examiners. About 25% of patent examiners telework, but Rea wants that number to increase.
Rea was asked what problems will patent reform solve, she answered that first-to-file will make worksharing (presumably between countries) easier. Nothaft disagrees with Rea’s views on first-to-file, saying there is a fundamental mis-understanding of how small businesses view strategic patent filing. The change to first-to-file will undermine the “miracle” of the US patent system (a comment that was followed with applause from a plurality of the audience).
Rea’s answer to a question about treatment of small companies centered around the 50% fee reduction, which honestly is meaningless when the most significant cost of patent prosecution is the attorney’s fee. She also gave the typical party line regarding interferences and disparate success rates. This is a bit like saying, here’s a game that you don’t usually win, so we’re going to help you by taking it away (guaranteeing that you can’t win).
Chief Judge Rader stole the show by proclaiming that, by 2015, “to preserve the patent system, the Federal Circuit will overrule the Supreme Court.” In all seriousness, he mentioned using his leadership role with the CAFC to encourage more en banc consideration, to get his associate judges more trial experience, and to expose his court to the world (and vice-versa) by holding panels in Europe and Asia. During Q&A, Judge Rader encouraged companies to file more amicus briefs to explain what the practical business implications would be of the court’s decision. Rader also suggested challenging ourselves on better valuation of technology. He blamed the failure to do this on use of “rules of thumb” (i.e. the new overruled 25% rule) and overestimating the value of small components (entire market value rule). He suggested IP owners want and deserve to know precisely the value of their improvements.
Rader was challenged on this comment by an audience member, who observed that uncertainty in litigation outcome is the biggest impediment to proper IP valuation.
Wim van der Eijk gave the EPO’s perspective on the evolving IP marketplace. He mentioned that Europe is seeing more applications from China, receiving more applications in languages they don’t understand (highlighting importance of good translation tools).
Meanwhile, Patent Docs is reporting a leaked private agreement that suggests lawmakers will eliminate the portions of the patent reform bill that would have prevented Congress from diverting PTO fees into other uses.