SHOULD AN INVENTOR BE REQUIRED TO “WORK” THE PATENT? Heather Hildreth Department of Engineering & Society STS 2160 December 30, 12 mandated the working of the patent grant. The Current U.S. Patent Law American Patent Act of 1790, provided what are A patent, in the United States, is an now referred to as exclusive right to make, use, or sell an “importation patents,” invention or allow others to do so. An which gave Americans inventor is awarded a patent in the U.S. monopoly rights to import patent system if his invention is new, foreign technology, without useful, and non-obvious. Generally, the any obligation to protect patent’s survival is not foreign contingent on whether Working the patent is not inventors’ or not the inventor puts explicitly required in current rights. his patent to use or U.S. patent law, but it is a major allows others to do so. While working the The requirement of part of legislation in other patent is not “working” the patent or countries. explicitly required compulsory licensing, in current U.S. however, is a fundamental aspect to many patent law, some argue that parts of it are other patent systems; for example, many still alive today in some of the laws. European countries have such a Paraphrasing Barnett (2010, n.p.), the requirement, and Wood and Davé note working requirement shows up in the that an inventor’s failure to work the Bayh-Dole march-in provisions, which patent in a certain amount of time is allow the government to grant a grounds for a compulsory license in compulsory license if a federally funded China, Japan, and India (n.d., n.p.). invention is not worked in a certain Working the patent and amount of time; and in the maintenance compulsory licensing are an important fees required by a patentee every 5 years, part of the history of patent regulations. which are supposed to encourage the Halewood 1997, p. 251 summarizes the patentee to make use of his patent. significance: The earliest discovered Glossary patent legislation, the “Working” the patent: Putting the patent to use by Venetian Patent Act of practicing the patented skill; either by making 1474, required the active (manufacturing), using, or selling the invention exploitation of patents; Compulsory Licensing: A license granted by the government otherwise, they were to someone other than the patentee allowing him to make, cancelled by the Venetian use, or sell the invention state. Likewise, the English Non-Practicing Entity (NPE): A patentee that does not Statute of Monopolies, 1623 practice his invention by making, using, or selling it Patent Troll: An NPE that seeks out others infringing on its patent with the intention of working out a licensing arrangement or taking the possibly infringing party to court
However, these regulations are hardly around to technology companiessufficient in preventing the consequences demanding money to license thesethat come from the lack of that patents” (n.p.).requirement. Whether NPEs are good or bad, they are on the rise in the states. ColleenNon-Practicing Entities (NPEs) Chien (2010) found that the percentage ofand other Consequences from infringement suits involving NPEs rose from 22% in 2000-2001 to 36% in 2006-this Lack of Requirement 2008, counting defendants, or from 10% to 20% counting cases (n.p.).NPEs Since patentees are not required towork the patent in the U.S., there aremany non-practicing entities (NPEs) thatown many patent rights, but do notpractice the patented skill, keeping theusefulness of the invention from thepublic. Many NPEs are not purposelytrying to keep the public from a usefulinvention; paraphrasing Papst (2010),smaller inventors, companies, anduniversities do not have the resources tosuccessfully manufacture their invention,and bigger companies sometimes choose The rise in Patents; Patent Pools andto abandon a field in order to compete in Clearinghousesa different market (p.10). However, many NPEs purposefully How is a small company to know itdo not practice the invention in favor of is infringing on a patentwhen thepreying on possible infringers, who may corresponding invention isn’t publiclynot even know they are infringing. These practiced? Not only is there a rise in NPEs,NPEs have earned the label of “Patent but there is a rise in patents in general,Troll” in the U.S. Consider Nathan according to the USPTO’s U.S. PatentMyrhvold’s company Intellectual Statistics Chart. Due to the rise of patents,Ventures, exposed fairly recently in particularly software patents, Lee andPlanet Money’s Program “When Patents Mulligan (2012) estimate that, in theAttack” (2011).Accoding to the program, widget industry alone, “in which 30,000Myrhvoldstates that that “It [IntellectualVentures] gathers patents together into ahuge warehouse of inventions that Glossarycompanies can use if they want. Its sort Patent Pool: an agreement amongof like a department store for patents” patentees to license patent rights to one(n.p.). The program then notes that some another and third partiesconsider it a troll because “Intellectual Patent Clearinghouse: an agency that,Ventures has amassed one of the largest with a patentee’s permission, sets licensepatent portfolios in existence and is going terms to others who would then be permitted to use the patent
firms had one patent apiece and couldreview one patent per hour, each firm Consequences from Requiringwould need to hire around 15 full-time Inventors to Work the Patentpatent attorneys, for a total discovery costof almost a billion billable hours” (p. 7). Since many countries in EuropeMost small companies do not have the have a requirement to work the patent, ittime or resources to check if they are would be beneficial to compare theinfringing. While this is a problem due activity of NPEs in Europe with that of themore to the amount of patents than the NPEs in the U.S. Summarizing the findingsnumber of NPEs, requiring inventors to of Fusco (2012), while NPEs exist inwork the patent would result in more Europe, their role is significantly less thaninvalid patents and thus fewer patents on those in the U.S., and as a result, they dowhich a practicing party could infringe. not get nearly the same amount of mediaAdditionally, the Shield Act (2012) helps attention. It is important to note thatto protect companies while an NPE caninvolved in software Requiring the inventor to legally sit on its rightspatent cases in suitsagainst NPEs work the patent results in in the U.S., those in Europe must licenseby requiring less NPEs. patent rights to others;unsuccessful so, not only are thereplaintiffs to pay for the litigation costs of less NPEs in Europe than in the U.S., thedefendants. ones that do exist allow society to benefit In order to further secure from their invention because it isthemselves against infringement suits, ultimately being “worked” by someone.companies sometimes create patent pools Citing Papst, 2010, p.14:and patent clearinghouses. A patent pool,as defined by Nielson and Samardzija That said, in general(2007), “is an agreement or contractual there seems to be a strongarrangement between two or more focus on quality patentspatentees to license their patent rights to among European NPEs. Theone another and third parties” (530), and goal for most is not toa patent clearinghouse “administers the threaten infringers andrights of several patent owners. Authority collect litigation avoidanceby the patent owner is granted to the fees, but instead toagency to set license terms to others who participate in the success ofwould then be permitted to use the a valuable technologypatent” (532). Nielson and Samardzija covered by patents thatnote that the problem with patent pools is they own or administer onthat “To be effective, however, patent licence.pools must typically serve a cleartechnological platform. Unfortunately, It is clear, then, that requiring anthis is often missing” (531) and that the inventor to work the patent, i.e., practiceproblem with patent clearinghouses is it, will lead to less NPEs. Thisthat “an entire industry must agree to consequence explains why opinion on aparticipate, which requires government requirement to work the patent is highlyintervention”(532).
GlossaryNatural Rights Theory: The view thatinventors deserve a significant reward for stresses the rights of the inventor, whileinvention the bargain theory stresses the benefits toBargain Theory: The view that society society that come from the invention.deserves to benefit from an invention correlative to opinion on the benefit of Opposed to Requiring a Working NPEs and patent trolls. of the Patent The Two Patent Protection Those that are opposed to Theories requiring inventors to work the patent are most likely to believe in the natural Everyone can agree that the rights theory because an inventor should ultimate goal of the patent system is “To be able to decide what he does with his promote the Progress of Science and intellectual property; he isn’t obligated to useful Arts,” as stated in Article I, Section disclose the invention in the first place, so 8, Clause 8 of The Constitution, but there he shouldn’t be obligated to practice it. are disagreements over how to best reach Supporters of the natural rights theory, that goal. Summarizing Chapter 1 of for the same reasons, are against Intellectual Property-Patents, compulsory licensing, as it should not be Trademarks, and Copyrights in a Nutshell the government who decides who has by Miller and Davis access to the rights (2012), there are The debate on requiring patentees of a patent. two basic theories as to work their invention boils down Additionally, those to how to promote to a debate on the role of NPEs, and opposed are also innovation. The most likely to ultimately, to the two theories of believe that NPEs “natural rights” patent policy. theory is the view do not negatively that in order to affect the patent encourage inventors to invent, they system, and that there should be more of deserve the rights of any product that is a focus toward reforming other aspects of the result of their hard labor; that is, they patent policy instead of a focus toward deserve to be the ones to get rich off of reducing NPEs. their invention, especially after diligent Summarizing Geradin (2011), and laborious research and development. NPEs should be seen as neither good nor Supporters of the natural rights theory bad, and can in fact increase innovation believe that without significant rewards by becoming a competitor in the patent granted to the patentee, inventors would business- that is, by getting to certain be less motivated to work towards claims or inventions first. He finds that inventions. The “bargain” theory is the more investigation should be done on the view that inventions are only beneficial if effects of NPEs on the economy and society benefits, so in patent system before NPEs “purchase patents from labeling them as bad. order to encourage those who do not have the inventors to disclose Schwartz (2012) goes resources or expertise to take so far as to say that their invention, they are their patented technologies to offered a fair reward. NPEs are good, claiming market” –Schwartz (2012) “They purchase patents The natural rights theory
from those who do not have the resources defendant, who many times is… withoutor expertise to take their patented enough resources to fight”(n.p.).technologies to market such Quoting the abstract of “NPE lawsuits areas individual inventors… “The Private and Social Costs associated with half aThus, NPEs create of Patent Trolls” from Bessen trillion dollars of lostopportunities, perhaps the and Meureur (2011): wealth to defendantsonly opportunities, for non- from 1990 throughmanufacturing patentees to NPE lawsuits are 2010” –Bessen andmonetize their patents” associated with half a Mesurer (2011)(n.p.). trillion dollars of lost Summarizing Barnett wealth to defendants(2010), NPEs like research universities from 1990 through 2010,should not be discouraged by a mostly from technologyrequirement to work the patent, and he companies. Moreover, verybelieves that if there were to be such a little of this loss representsrequirement, universities should be a transfer to smallexcluded. inventors. Instead, it implies reduced innovationIn Favor of Requiring a Working incentives.of the Patent It should be noted that some see this Those in favor of requiring study as controversial; paraphrasing thepatentees to work their invention are findings of Schwartz (2012), that numbermost likely to support the bargain theory, is more like $6.7 billion, and morebecause the bargain theory stresses the research is needed to compare that to thebenefits of invention to society, and cost of litigation between practicingworking the invention ensures that entities.society is able to see it (and possibly use Believing that requiring anit) in some form other than a published inventor would solve this problem,patent document. In support of the Posner (2012) notes that making “abargain theory, Yosick (2001) believes patent contingent on producing thethat compulsory licensing “would product or process…within a specifiedpromote the public interest without time” would “reduce the troll problem, bydetrimentally affecting the incentive to clearing out patents that are obtained toinvent and to disclose inventions” (1277). extort license fees” (n.p.). Those in favor will also seek to ridthe patent system of what they see as Finding a Solutionpatent trolls, as they believe that theinventor should not sit on his invention, Figuring out whether working thenor profit from unreasonable licensing patent and compulsory licensing shouldfees. Gene Quinn (2010) blogs that patent be a part of U.S. patent legislation comestrolls are “patent vampires” who down to figuring out the role of NPEs and“increasingly instituting a strategy of sue ultimately picking one of the two patenteveryone you can…This just shifts the policy theories. Those that favor theburden of due diligence onto the natural rights theory will want to allow
the inventor to do as he wishes with hispatent rights, and those that favor the References Citedbenefits to society will want to encourageinventors to make their invention Barnett, G. 2010, August 30. Fair Use,available in some form for use to the Commons, and Researchpublic. It is evident that creating such a Innovations.[Web log comment].requirement would reduce the number of Retrieved fromNPEs and their patents, and most can http://rtei.org/blog/2010/08/30/agree that at least some NPEs prey on patent-fair-use-commons-and-small companies by charging licensing research-inventions/.fees at the threat of suing. For those thatbelieve NPEs help small inventors by Bessen, J., Meurer, M., & Ford, L. 2011,buying their patents, what good is that September 19. The Private andpatent if it merely changes ownership and Social Costs of Patent Trolls.does not end up being practiced? Boston Univ. School of Law, Law A solution should appeal to both and Economics Research Paper No.theories, and also agree with any 11-45. Retrieved fromcontracts to which the U.S. is bound; for http://www.bu.edu/law/faculty/sexample, the Agreement on Trade Related cholarship/workingpapers/2011.hAspects of Intellectual Property Rights, or tml.TRIPS. Perhaps the right solution is torequire a patentee to either work the Chien, C. 2009, April 28. Of Trolls, Davids,patent or license it within 2 years of Goliaths, and Kings: Narratives andinventing; if he or she fails to do so, then Evidence in the Litigation of High-the government can take control of Tech Patents.North Carolina Lawlicensing it (compulsory licensing) or put Review, Vol. 87; Santa Clara Univ.it directly into the public domain. The Legal Studies Research Paper No.licensing fees must be fair and reasonable 09-13.according to the appropriate industry,and if they are not, they can be grounds to Fusco, S. 2012, October 4. Markets andbring the patentee to court. In order to Patents Enforcement: Aavoid patentees bribing other parties to Comparative investigationof Non-pay licensing fees on his patent, another Practicing Entities in the US andrequirement could be added that requires Europe. Downloaded fromthe party paying licensing fees to work http://papers.ssrn.com/sol3/papethose patent rights. Some may argue that rs.cfm?abstract_id=2156756.this solution puts undeserved burdenonto the inventor, but the system Geradin, D., Farrar, A., & Padilla, A. 2011,emphasizes due diligence in obtaining a June. Elves or Trolls? The role ofpatent; shouldn’t it emphasize the same nonpracticing patent owners in thediligence in ensuring the utility of the innovation economy. Industrialpatent is maximized? This solution allows and Corporate Change, Vol. 21,the inventor to benefit from his patent by Issue 1. 73-94. Retrieved fromgiving him ample time to put it to use or http://icc.oxfordjournals.org/contlicense it to someone while ensuring that ent/21/1/73.full.the invention does in fact get worked.
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