Wednesday, October 10, 2012

Patents and what's wrong with the system

Patents to be valid need to fulfil a number of criteria:
  • applicable topic (although this is being pushed further and further, nearly everything seems to be patentable today).
  • Full disclosure of the invention.
  • No prior art.
  • Not obvious to somebody in the field.
IANAL, and I'm sure there are other criteria, and legal scholars would probably phrase it differently.

Now the Patent Office in the US (which finances itself as they like to boast) and other countries issue invalid patents (obviously trivial/prior art) by the wagon load day by day. And they leave the private citizen (or to be more precise companies but these are usually owned by private citizens) the bag, to invalid in court.

Let's be realistic, there are a number of categories of patents that should be done away for the good of the community, but the patent system would get way more tolerable if all these invalid patents would go away.

Let's think about this from a business perspective:
  • Costs to file a patent (not the R&D just the patent filing) are say around $10000. (It basically depends upon jurisdiction, and if you use an external patent attorney, or happen to have such legal experts on staff, ...)
  • Costs to defend against an invalid patent: As a number of patent trials have shown, these can go easily over a million, and that's when you win.
  • This means depending for how much you are being shaken down, it makes economically sense to pay, and not defend against even a trivial invalid patent.
So what can one do? The problem is that the patent office mostly rubberstamps any patent that is not obviously wrong on formal grounds. The fees to the patent office are the same no matter if the patent is valid or invalid, so it's the easiest way out for the patent office to grant a patent. If they don't they end up potentially in a paperwork "war" with the inventors. If they grant it, they can cause huge economic damages if it's invalid, but that's of no relevance to their bottom line.

So basically, invalid patents need to hurt the patent office. It's as simple like that.

Ideas that come to mind are increasing fees so that rejected trivial patents are more expensive, so that the patent office has an incentive to look for invalidity. That would be the carrot so to say.

Another idea would be for the patent office to pay the legal defence costs if a patent is found invalid. That would be the stick.

E.g. if the current Apple/Samsung verdict in California will stand on appeal, the patent office would have to pay Apple's legal bill, because the Samsung patents have been found invalid, and by issuing these patents in the first place, the patent office caused the damage to Apple, in this case.

Especially the US patent office is proud to be not using tax money, see we are not like other government agencies, we are like a good working private sector company. If that's so they should also take responsibility for damages they cause, especially if they cannot document that they did due diligence on the patents issued.

(It's easy to be profitable if you can print your own money, which what's the patent office does by taking the fees, without much service in return. And I don't think that they can consider themselves a net positive institution without taking into account the damages that they cause to the economy, at least the specific ones where invalid patents cause legal costs, the general costs to the economy by hindering innovation are to hard to account correctly.)

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