Sunday, August 16, 2009

Lerner says patent reform is "cold war"; IPBiz says "doughnuts!"

The Milwaukee Journal-Sentinel quoted "Innovation and Its Discontents" co-author Josh Lerner:

"I see it as a cold war between pharmaceuticals and the IT industry," said Josh Lerner, a professor at the Harvard Business School.

While the "cold war" analogy to the 1950's is a simple, if inapplicable, image, IPBiz goes back further. The first patent act was passed in 1790, and one year later one had a tax on whiskey, which led to the "whiskey rebellion" in 1794. The "whiskey tax" was a big guy/little guy issue, and the current patent reform debate has a significant big guy/little guy dimension, which Lerner chooses to overlook in viewing this as a battle among big guys. Wikipedia writes of the whiskey tax of 1791:

Congress designed the tax so smaller distillers would pay by the gallon, while larger distillers (who could produce in volume) could take advantage of a flat fee. The net result was to affect smaller producers more than larger ones. George Washington, the president at the time, was one such large producer of whiskey.

The details of the proposed patent reform favor the big guys. As to "first to file," larger companies have more resources than smaller ones to file numerous applications, which will be the winning strategy in "first to file." While some reformers point out that "little guys" lose most patent interferences, the reformers don't point out that little guys will basically lose all the time in "first to file." As to oppositions, larger companies have more resources to implement, and pursue, costly opposition proceedings, which do not foreclose later, and more costly, litigations. As to damages, current proposals of the IT industry would harm prospects of the little guy inventors.

As to "special interests," the IT industry, strongly pushing for the reform, supported current President Obama.

Underneath much of patent reform is the assertion that there is a serious patent quality issue, and that persistent patent applicants can get basically anything allowed if they keep trying. Although this bad behavior is attributed to "patent trolls," and the like, one of the greatest mis-directions of the patent reform debate is in ignoring the reality that the IT folks, otherwise pushing reform, are the major guilty parties in persistence in obtaining questionable patents. This could be termed the great doughnut hoax. [See
Demise of the (anti-)Doughnut campaign: a parable of patent reform?
Here, the larger produces of doughnuts want to make life difficult for the smaller producers; they don't want to eliminate the doughnut.

Elsewhere in the Journal Sentinel article, there was text getting to what the important issue in "patent reform" should be:

Hank Nothhaft, chief executive of chipmaker Tessera Technologies in San Jose, says the bill fails to address the core issues: how to better fund the U.S. Patent and Trademark Office, improve the quality of patents and shorten the amount of time it takes to get one.

"It's like fiddling while Rome is burning," said Nothhaft, a prominent advocate for reform.

Hans Sauer, associate general counsel at the Biotechnology Industry Organization, a trade group for pharmaceutical and environmental companies, shares the sentiment.

"Patent reform is curiously unconcerned with fixing the Patent Office and making sure it can issue quality patents in the shortest amount of time," Sauer said.

As Deming would say, if there is a problem in "examination of patents," one should expend resources to fix "examination of patents," not waste resources on "inspection of examination of patents" (eg, oppositions).



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