Intellectual Property Directions

One of the biggest knocks on the the patent system is that it has evolved into a system that inhibits innovation rather than fostering it as the Constitution intended. Consider the dual edge sword of performing a prior art search. If you don’t do one, you may invest in developing a product only to be shut down when it infringes someone’s patent; if you do one, find a potentially applicable patent but proceed anyway, you could be found liable for treble damages for willful infringement. A formal opinion from a patent attorney was almost a mandatory “insurance” policy against these treble damages.

I recently attended an “Executive Briefing” at the local office of Foley & Lardner on the topic of last year’s Seagate decision - a decision that seems to have brought some relief to companies building products similar to a patented product.

Before Seagate it seemed the only way to prove that you were not acting with disregard for others’ rights was to pay significant sums of money to a patent attorney to get a thick document telling you why you likely would not be infringing. That was a document you could point to as proof you fulfilled your “duty of care.” For a small company you might be kissing your year’s profit goodbye.

In the Seagate decision, the rules changed. Now there is a two-step test.

Step 1: the patentee (not the infringer) must show that you acted despite an “objectively high likelihood” that you were infringing a valid patent. If you and your attorney can point to reasonably plausible defenses then there is no “objectively high likelihood” and you’re off the hook for willfulness.

Step 2: the patentee (again, not the infringer) must demonstrate that the objectively high risk was obvious to or demonstrably known by the infringer.

So what does that mean to most of us? Although not yet tested in the courts it would appear to me that a heart-to-heart discussion with your attorney about any potentially blocking patents you turn up would allow you to determine if there are “reasonable”, “plausible” or “non-frivolous” arguments to support non-infringement or invalidity. That discussion is likely to cost less than the opinions of pre-Seagate. Of course, discuss this strategy with your attorney.

What’s your opinion on opinions?

It doesn’t happen often - in fact, I don’t know that Intellectual Property has ever before been the “star” of a major motion picture - so in case you’ve missed the hype I thought I’d point out that Flash of Genius, a film based on the true story of college professor and part-time inventor Robert Kearns’ long battle with the U.S. automobile industry, will be opening in theatres on October 3rd. If you go see it, let me know what you think.

I have no idea whether the film is worth seeing, but it should be interesting to see how Hollywood sees this IP battle. Based on the studio synopsis - “Flash of Genius tells the tale of one man whose fight to receive recognition for his ingenuity would come at a heavy price. But this determined engineer refused to be silenced, and he took on the corporate titans in a battle that nobody thought he could win.” - it’s clear they really only care about the David vs. Goliath aspect. 

For you viewing pleasure, here’s a link to the trailer.

From Waste to Gold - the New York Times reports how the waste grease from restaurants has now become worth stealing.

Dennis Crouch writes in his PatentlyO blog that:

James Bessen and Michael J. Meurer have authored a new book presenting a careful empirical analysis of whether patent rights encourage innovation. Their conclusion: for the most part, today’s patent system does not achieve its stated goal.

The book, Patent Failure: How Judges, Bureaucrats, and Lawyers Put Innovators at Risk, has not yet been released but seems sure to stir up the patent reform pot once again. I’ll read it when it is available and post my comments then. If you want to read it yourself you can pre-order it from Amazon.