New US patent law explained

In the United States we have devised a special system to trademark, copyright or patent ideas concepts or plans. Within said system there have been a number of challenges to the procedures and/ or claims against such copyrights (http://www.guardian.co.uk/music/2013/jun/14/happy-birthday-lawsuit-copyright-warner).  So what does that mean for your business? What are the new rules for patents and why should you worry about it?

Over the last few years there have been an increasing number of pop up companies that litigate towards larger patent carrying companies. These pop up companies attempt to sue the larger company in order to gain some kind of pay-out. For example, if there was a feature such as “buy it now” and it was a clickable feature on your webpage. Wait that sounds a bit like a common domain feature that most people would use right? (http://www.dailyfinance.com/2010/07/14/ebay-xprt-patent-lawsuit-payment-technology/) As it turns out a small company called XPRT Ventures claims to own the “buy it now” feature and has sued EBAY along with its partners over what they call a patent infringement. The lawsuit has a total collectable value of $3.8 billion dollars.

While I would like to state very clearly that I have no idea who invented the “buy it now” feature, I would submit to you that over the years many of these lawsuits have been settled blindly after measuring the cost/ benefit analysis of the lawsuit. If you are unfamiliar with a basic cost/ benefit analysis I can help. For example, if you are a larger corporation worth billions of dollars and hold many patents, trademarks, etc. and someone sues you over a process that you had patented with an infringement lawsuit, you would at that point gather all the information for the suit and measure the amount of money it would cost you to fight the suit. Then you would have to make a decision based on the cost of the lawsuit if it goes to trial (legal fees, etc.) versus the cost to settle the suit before it gets to court with some kind of monetary agreement.

Entrepreneur Mark Cuban has even suggested that “dumbass patents are crushing (small) businesses.” (http://techcrunch.com/2013/01/31/mark-cubans-awesome-justification-for-endowing-a-chair-for-eliminating-stupid-patents/) While normally suggestions by eccentric billionaires are not acknowledged, recently (September 2011) the Leahy-Smith America Invents Act (AIA) attempted to update the patent laws. The most significant change being the modification of a first-to-file system to a first inventor to file system.

“In place (of the old system) will be the new requirement that you have to make your disclosure in a patent filing. Once this understanding is established, inventors will be far more likely to base their patent applications on written documents that will support truly valid patent rights. The new system will require inventors to sit-down and figure out what it is exactly that they want to patent. For $175 they will be able to place a Provisional application on file at the US Patent Office, reserving their right to file a better and more elaborate “story” within the following year. Once the final patent application is filed by the end of that year, the “story” will be frozen. Therefore inventors should understand that they had better get it right, and they only have a year to do so.” (http://coldfusionnow.org/the-us-new-patent-law-march-16-2013/)

Proponents of the new law assert that the law will protect the system (legal) from being overrun with frivolous lawsuits from pop-up companies (patent trolls) that attempt to bleed money from corporations. “Venture capitalists, the people who invest in fledgling tech companies that stand to be trolled, tend to be pretty quiet on this issue when they’re not being vague. Few dare to speak up against patent trolling firms openly because they fear companies in their portfolio will be spotlighted and slapped with lawsuits. Intellectual Ventures (IV) is among the most feared companies when it comes to patent litigation, though the company has repeatedly pushed back against the “patent troll” label. Instead IV describes itself as “a privately-held invention capital company,” though that’s not how I or many others in the Valley would describe them. According to its Web site, the company has raised $6 billion to date and gained more than $3 billion in cumulative licensing revenues. Its investors include leading tech companies such as Apple, Adobe, Google, Microsoft, and Cisco, several venture funds, and universities such as Brown, Cornell, Northwestern and Stanford.” (http://www.washingtonpost.com/blogs/innovations/wp/2013/06/18/why-silicon-valley-likes-obamas-patent-troll-offensive/)