Yuletide Patents: Reconstruction to the Long Depression (1860's to 1900's)

One of the reasons that I find IP Law so fascinating is the depth and breadth history that patent records provide.  Patents provide an alternative, focused history into the mindset of inventors and designers. Problem solvers and money makers have used the patent system for hundreds of years to disclose to the world their version of a better mousetrap. The patent office is a near perfect record of the changes that have taken place in design, manufacturing and technology.

This is the start of a series looking at holiday patents through the years.A trip through the patent office records will find patents on various weapons, vehicles, rocket ships and toys. The diligent observer will also find technologies directed to freeing man from the onerous chores that have plagued the human condition since time immemorial.

Of course, one of the plagues beset  heavily on the shoulders of mankind is Christmas decorations. Untold families have been torn asunder by arguments concerning the de-tangling of lights, proper Christmas tree display orientation angles and proper ornament positioning.

The following patents show that the issues around Christmas, the quest for easier decorations, for simpler trees, for time saving autonomous devices, has changed little in the last 150 years.


The featured patent at the top of the post is the earliest patent I could find which used the term Christmas.  Patent No. 18,238 was filed in 1868; and concerns a design patent on a particular figure for a Christmas tree ornament.

Slightly more recent, from 1881, Patent No. 237,026 describes a paper Christmas Tree decoration. As industry and commerce stalled during the Long Depression, the inventor, Mr. Kanuff probably hoped that his Christmas decorations would help life spirits as well the balance of his bank account.











Of course, nothing goes better with paper draped over a wooden, rapidly drying, vertical piece of kindling than an open flame. This is why Mr. Schroeder's idea, patented in 1903, for a "Candle holders for Christmas Trees" was likely a big hit.
















Possibly as a result of uncontrollable fires resulting from placing candles in Christmas tress, enterprising inventors sought to do away with the tawdry notion of an actual tree. Why fell a potential hazard when you can construct a safe tree with the tools of science. For example patent 255,902 describes an "Imitation Christmas tree"













Of course, no Yuletide celebration would be complete without the accompaniment of music. The modern era is complete with Ipads and Spotifys, belting out the latest Christmas versions of your favorite artists.

 Engineers of the later 19th Century had solved the problem of stored music, a perfect accompaniment to the roaring fire which is quickly engulfing your candle lit Christmas tree.

Reed Organs had been around for some time. However Mr. Metzger found useful improvements in the art of delivering canned Christmas music. All the elements are there of the modern electronic system of music. A recordable medium, a software instruction set, and a hardware amplification device.






Patent Office records provide a wonderful source of inspiration for designers and inventors. The technology illustrated in these patents still exists, only in more refined forms. Anyone who loves graphic or industrial design owes it to themselves to take a trip through the patent office records.

Jordan Garner

IP in the age of self-replication technologies

During a recent business trip to Asia, I had the opportunity to discuss the Bowman case with many colleagues and clients.

For the unaware; in Bowman, the US Supreme Court held that chemical giant Monsanto's patent rights in its Ready Round-Up seeds could not be exhausted through the first sale doctrine. A farmer, Bowman, tried the circumvent the patent license on a genetically modified soybean plant by purchasing the seeds from a plant grown from Round up seeds AS opposed to Monsanto directly.

The Supreme Court held that each time the plant produced a new seed, or that seed grew into a new plant which in turn produced new seeds, that event was a new infringement of the patent. The reasoning was that the plant "manufactured" new seeds. By harvesting the seeds, you were essentially harvesting the seed technology, in violation of the patent.

Many commentators have pointed out that the Court's reasoning was highly specific, only applicable to the particular facts at issue. However, I am not convinced.

A reasonable argument could be made that any self-replicating technology, be it biological, informational or mechanical is the functional equivalent to a seed.

For example, computer viruses have the peculiar nature of replicating themselves. Is a software agent which is able to package a copy of itself into a compressed format for transport (i.e. a seed) any different from a biological entity which is able to produce a small portable package containing its build and execution code base (DNA)?

In both instances, the technology has all the features of a seed; storage, portability and self-replication. A single computer virus is capable of replicating itself infinite times. So are seeds.

This opens the door to all manner of self replicating technologies.  For example, imagine a patentable custom-made virus or bacteria designed to infect a person with the goal of generating a specific medicine to treat a chronic illness. Once in the body the organism replicates and continues to provide live saving medicine. Excellent. However, what if the patient decides he doesn't want the treatment? It is possible that even after a course of antibiotics, or anti-viral, the organisms could continue to live on in the subject.

Is that patient now infringing? If not, why not? How is a patient who schemes to contract this patentable virus from a friend, not the same as Bowman?

Autonomous technology is a fascinating field which holds significant promise to reshape the very basic tenants of society, economics and health.  However, it is too easy to try to fit essentially identical technologies into different classes based on how we intuit them. Seeds are different from computer viruses, which are different from designer organisms. The principals underlying all these technologies are highly correlated. We would all be better off if we formulated a framework now, then doing it piecemeal later.

Twitter:JordangarnerEsq

Girls be illin?: Don't waste your start-up capital on non-essential legal fights

Story: Goldieblox, a toy company marketing engineering toys to girls, used the Beastie Boys famous / infamous song "Girls" in a parody music video to promote their start-up project. The music video went viral on youtube, spawning mostly ardent praise and affection.

The Cerberus Legal dogs of Universal Music sent Goldieblox a pleasant letter (by Cerberus legal dog standards) asking them to take down the video. The letter claimed that the parody video was outside the scope of the fair use exception to copyright use, and constituted an impermissible use of the underlying work.

The legal counsel for GoldieBlox filed a declaratory judgment action seeking a finding on non-infringement under the parody provision of fair use.  This could be a educational case about how a "letter" is never really a letter, but an invitation to bring a DJ action.

A lot of digital ink has been split regarding the merits of the parties positions. If you are in favor of the permissible parody argument, then the Electronic Frontier Foundation (eff) has a great rundown of the law and their interpretation.

The point being missed here is one of resource allocation. It is argued that any press is good press. If that is true, then this entire episode is a net benefit to Goldieblox and their start-up ambitions.

However, from a business point of view, getting into a law suit with a major entertainment company is a huge hassle. Aside from your own legal costs, which could have been better spent on non-legal blog based marketing, you run the potential risk that you might lose and owe someone, or some mega corporation, lots of money. That outcome is unlikely here (even if GoldieBlox loses, they will likely have minimal damages), but that is besides the point.

A cursory level of diligence would have shown that not only do the Beastie Boys not like "Girls" (they refuse to play it anymore), they are actually quite litigious. As such, perhaps their IP, regardless of your use, was not the best media to use.

For the legal costs involved in filing and arguing a Declaratory judgement action, you could have hired a band or a composer to generate a all new song. The point here isn't that the Beastie Boys are right to argue about fair use, it is that a start up generally should avoid potentially bruising legal fights.  IP counsel should always be mindful of not only the legal arguments, but the overall business position.

Start-up resources should never we wasted on non-essential legal fights. If you need access to a particular piece of technology or code in order for your idea to function, then roll the dice, take the risk. If you want to make a music video parody of a famous song, think about the necessity to the bottom line.

Jordan Garner

No Patents on Perpetual Motion Machines

In this house we obey the laws of thermodynamics!!!

It is always good to revisit the basic, core concepts to reconfirm that you have a firm grasp of the complex. This is true across endeavors. Great cooks sometimes need to remember how to boil an egg. Likewise, software designers sometimes create simple apps using the bare bones code base.

The same is true for patent law.  Recently on the internet, there was a discussion about a supposed "perpetual motion" machine developed by a German tinkerer. A brief article concerning the inventor is here.  One of the points being bandied about in the discussion of a supposedly limitless energy system was that "because it is not a perpetual motion machine, it can be patented".  This is a misinterpretation of U.S. Patent Law.

U.S. Patent law allows for the patenting of "everything under the sun, made by man".  This restriction means that naturally occurring items, as well as purely theoretical constructs are not patenable. For example E=MC2 is not a patentable formula, since it describes a fundamental property of physics. A practicable application of this equation, say a nuclear reactor, would be patentable.  However, recent US case law has held that any preemption of a natural law  that is, a patent that claims all the applications of E=MC2, is also not patentable.

The point here is that natural laws are not defined by Congress, or the Courts. Furthermore, natural laws and laws of nature are only rough approximations of how we believe the world to work.  These laws might be subject to boundary conditions and localized modifications given the right arrangement of energy inputs and conditions. As such, it is possible that the "laws of nature" that you can't patent today, will be different from the laws of nature you can't patent 100 years from now.

This is all to say that you could get a patent on a perpetual motion machine. Merely calling it a perpetual motion machine is not the problem in getting a patent. There is no rule that says per se perpetual-motion, Faster Than Light and teleportation devices are not patentable.

The difficulty is in demonstrating to the patent office that it works. This is called the enablement requirement. If you show up to the patent office with a patent application that describes the mechanism of action as a perpetual motion machine, then you are going to need some extraordinary evidence to back that claim up. If you show the world a device that apparently accepts no input but continued to do work, then you will get a patent, so long as others can reproduce your results. What you can't do, is claim on paper to have a device that goes against our current understanding of science and expect to be granted a patent.

 In fact that Patent Office does not even require you to advance a theory as to why the device works in the first place in order to get a patent. A patent is simply a contract between an inventor and some territorial organization (e.g. The United States of America or France). This agreement states, explicitly, that as the inventor of  a improvement in a technical field, you are granted a limited monopoly to make, use and sell that improvement. In exchange for this monopoly, granted and enforced by the government, you must disclose the invention to the public (i.e. the world) in sufficient detail such that any one skilled in that technology can make and use the invention without resorting to undue experimentation.

 If you have a perpetual motion machine, and you can satisfy this requirement, then you will get a patent on it. The underling laws of physics that you are bending breaking or modifying are of no consequence.

Swiss-style Basic Income and IP

To the ill-informed, "Basic Income" is a social security system in which the government regularly gives each citizen a sum of money — with no conditions. No questions asked, no obligations. 

There is a referendum in Switzerland, which if passed would give each adult resident the equivalent of 2750.00 dollars a month. You can read the proponents thoughts here.  In short, the theory is, without the necessity to obtain income necessary to live, people could make more resumed choices about their careers. They could made different choices about how they spend their time. As a result, you might have a more efficient economy. 

Obviously, there are people, including economists, who think this is a terrible idea. The argument against Basic Income is that the whole system will collapse in a morass of lack of motivation to actually work. People will move their expenses down to the level of the Basic Income and then forego employment. Opting instead, it is argued, to just sit around all day. 

I take no position on which one of these outcomes is likely (or the likeliness of this idea gaining traction in the US). Wikipedia has a good run-down on the pros and cons.  However, I do take a position on the economic outcome of people sitting around. I tend to lean on the side of "that's great". 

Why? Because people freed from the restraints of taking ANY job to make ends meet, will naturally gravitate towards their hobbies. When people focus a lot on their hobbies, they tend to turn those hobbies into occupations. We see that with the craft "everything" movement. A zest for baking becomes a bake shop, a thirst for brewing your own beer becomes a craft brewery. A love of reading has become self-published media empires (Ed. a bit close to home....).

Freeing everyone from the constraints of occupation would lead to some people just sitting around. It would also lead to an explosion of new businesses financed by the Basic Income. 

Some of these new businesses would create new works of intellectual property. New artistic, musical, literary works; new software platforms; new devices and new methods could all spring from Basic Income. These works could be licensed world-wide; generating taxable revenue to feed back into the Basic Income system. 

Many Venture Capital organizations have an "Entrepreneur in Chief" position - a person paid to basically think stuff up. We are constantly being told that America needs more "innovation" and "entrepreneurship" and that IP is a step in the wrong direction. Basic Income matched with IP might allow the America to realize the dream of being a "Start-up" Nation where everyone is paid to "think stuff up."

Product Design IP in the age of 3D Printers

Dieter Rams designed Coffee Maker

Intellectual property protection for industrial design and industrial designers has always been a fraught process. The nature IP does not lend itself easily to the tasks Industrial Designers might put to them. However, new technology might begin to change how Industrial Designers see Intellectual Property protection.

IP Limits

Conventionally, industrial design is protected through a design patent.  Design patents allows the designer to get protection on their purely ornamental design for 14 years from filing.  Unfortunately, this means that if the product has a functional component (enhanced ergonomics etc.) then the designer relinquishes that functionality, or they are forced to obtain the more expensive and time consuming utility patent. A utility patent covers the function of a device , process, compound or article of manufacturer. For example, a designer could hold a patent on the manufacture of a particular item. While this might successfully deter large scale copying, it does not prevent wide spread dissemination of the construction methods and processes.

Copyright protects artistic and literary works for 70 years, plus the life of the author. Text and audio-visual works are the primary focus of copyright. Once you move beyond the artistic realm into the functional, Courts have held that copyrights no longer apply.  However, the age of 3D printing might be about to change the rules of the game.

Charles Eames Design Patent 

3D Printing

For the uninitiated, a 3D printer is a device that builds an object, usually out of some resin, layers at a time. It is the electronic opposite of a very fine mandolin slicer. MakerBot, and companies like them are pioneering a way to have an "internet of things." The eventual goal would be a repository of templates for the production of all manner of goods, ready to be downloaded and printed, the way one might download a song and burn it to a CD [ed. do kids ever do that any more ?].

 The software used in 3D printers vary from device to device. However, they all use some form of stereolithography file to instruct the device on how to lay down layers of material. Once all the layers have been deposited, you should have a reasonable copy of object described by the file.

It should be apparent that 3D printing allows for the production of many useful things, it also allows for the re-production of industrial design elements without authorization from the original creators. Where 3D printing has created a problem, it might also offer a solution.

IP Incorporation into Designs



Since the procedures for manufacturing the item begins with a digital file. It is possible to encapsulate the design within the boundaries of Copyright law. If the software file, the instruction set for making a particular design is complete (that is, it does not require additional tooling, or minimal machining) then the software encapsulates the design.

It might still hold true that the tangible representation of the software (i.e. a chair or lamp) is not covered by copyright, the software code that executes the 3D printer is a valid piece of IP.  Therefore, the nexus of IP infringement of the design would occur when the digital file is copied (i.e. on a file share network). Thus, developing code for the 3D designs will become as important as the conceptual prototypes. Court are well positioned to hear arguments on the illicit trade and sale of pirated software. This presents an opportunity for Industrial designers and software coders to collaborate on clever implementations of the software to render the designs with minimal post processing. The closer the code is to representing the object, the stronger the case for infringement. Once the code base of a portfolio has been engineered, a simple licensing program [not in bitcoins!!!] (think Itunes) could offer people the world over the chance to download an use a particular firm's designs.

Alternatively, or additionally, a designer could include a structural trademark element. For instance, the design of a chair could,  incorporate a logo. In this instance, merely printing the object does not create a cause of action. However, once an unscrupulous manufacturer attempts to sell the copied design, they are engaged in trademark infringement.

There are likely more elegant solutions than these two for the potential problems posed by 3D printing. However, these solutions show that IP in 3D printing can be maintained and creators can be protected.

Jordan Garner

Terrors of the Patent Office [ Halloween Patents]

Nothing gets the inventive process moving like a commercial holiday. Unlike Christmas, Halloween lacks a committed religious lobby arguing that the festival has become too commercialized. Gaelic Druids, engaging in their Samhain Festivities, would probably be in awe of the variety and sophistication of modern creepy faced gourd lanterns. (a particularly creepy turnip Samhain lantern seen at left)

A quick search of the patent office provides several excellent updates of this apparently ancient tradition of making disturbing faces on otherwise inedible tubers. (Yes, I find turnips inedible...)

Everyone likes a menacingly happy Jack-O-Lantern. That's why, in 1907,  JC Tyndall of  St. Louis decided to file and get a patent (No. 848,938 on a "Toy Lantern"). Tyndall realized that the weak point of any Pumpkin light was the cap, and the susceptibility of the entire enterprise ending in a pumpkin scented conflagration. therefore, his pumpkin lantern includes a candle retainer, and an interlocking cap and gimbals mechanism for easy transport. the Specification does not detail why the eyebrows are so disturbingly curved.

In the continued vein of creepy faced pumpkin products, we move onto B. Wilmsen's particularly threatening Jack-O-Lantern patent issued in 1934. (No. 94,935 on a "Pumpkin Lantern").Tyndall had actually technology. Wilmsen make up for his lack of technical sophistication in this design patent with existential pumpkin-faced dread. His products nearly vertical optical orbs scream "infringe me if you dare!"

Lastly, we have an epileptic seizure inducing pumpkin Lantern. The psychedelic 1960's produced some interesting and mind altering experiences.  None of these hold an electronic candle to a double faced Janus-like Pumpkin invented by R.R. Authier of Oaks Bluff Mass and issued as Pat. No. 3,250,910. (Ed: Martha's vineyards for those who don't know).This specialty lantern has dual faces, one scary and one comical. In addition, it contains selectively operated light sources of differing colors. Lastly, these lights can blink or strobe, producing the red flashing eyes of a haunted monstrosity, in pumpkin form.


Always remember to check the patent office for particularly excellent holiday ideas.

Historical Patent Trolls: James Beaumont Neilson Edition

James, massive Troll and Fit model for Scrooge 

It is often argued, with copious amounts of digital ink, that patents are a net drain on innovation and our economy.

I tend to push back against this position, mainly out of enlightened self-interest.  I work in the IP field, if we did away with it at the whim of a subset of libertarian minded technocrats, I would have a hard time finding gainful employment. Or, at least a hard time finding employment which affords me the opportunity to opine on various sundry matters of a historical / philosophical sort. 

However, the impetus to push back against the characterization of this, or any time period, as a particularly unique moment in human history is fueled by those same historical pursuits.

The arguments against non-practicing entities (Trolls) stem from the proponent's perceived enlightened self-interest.  The core position of the patent detractor is a belief that the system as it stands (and has stood for 200 years) benefits the lazy at the expense of the industrious. The arguments are premised on a belief that the worker, the programmer, the system builder is innovating, advancing commerce and technology, creating jobs. In contrast, the dilettante inventor, the thinker, the small time experimenter with her one-off patent, is holding progress hostage to her insatiable appetite for licensing fees and royalty payments. Better, the argument goes, to scrap the patent system than for some to pay for technology which they use but do not place much value upon. 

This argument is usually presented in the context of software, as though the concept of non-practicing entities and expensive legal battles over the scope and value of patent rights came into being with the advent of the internet.

In fact, this exact line of thinking was espoused almost 200 years ago by an association of Iron works industrialists who were desperately seeking a way to avoid paying for technology leashed to "extortion-level" licensing fees.  

A brief aside regarding British ironworks in the 1820's. When one has spent all day acquiring iron ore from the heart of some lonely mountain and that same someone wishes to turn that iron into rail lines, rifles and other fine instruments of the Imperium, one needs to smelt the iron.  Traditionally, that was done by blowing (blast) cold air over coke (a purified form of coal that has been roasted) and iron inserted into this (blast) furnace. 

Enter Mr. James Beaumont Neilson. Neilson, manager and engineer of the Glasgow Gasworks, discovered that if you raise the temperature of the air you are injecting into the furnace ( to around 300F), you need far less coke.  Additionally, and most importantly, depending on the temperatures levels and coal type, you could switch from expensive fancy coke, to the normal everyday-get-a-lump-in-your-stocking coal as your fuel (something of which the British Isles had plenty). 

Neilson proceeded to obtain a series of patents in Great Britain, Scotland, and Ireland in 1828-29 on this hot blast technology.  Neilson then set about licensing this technology. By 1835, hot blast furnace technology was in every ironwork in Scotland, save one. The license fee was set at the low price of 1 pound per ton of iron produced. This licensing scheme was considered by Neilson to be of a low enough price that people would not circumvent the license and become wanton infringers.  

Neilson was wrong. Almost immediately, Scottish Iron Masters formed an association, which bound the members under penalty of 1000 pounds, to resist:

 "by every method which a majority should recommend, any practical acknowledgment of the validity of  Neilson's patent." 

At the same time, several English Ironmasters were making use of the hot blast technology while refusing to take out licenses.  Neilson eventually won judgments against the English Iron Masters, but spent the next 9 years battling the Sottish Association, Harford Coal, Household Coal, and finally Baird Ironworks.  

Baird initially took a license, determined later that it was 'extortion of the highest sort' and ceased payment. The resulting litigation, Neilson v. Baird, turned into a spectacle. The jury trial lasted 9 days, with more than 100 witnesses called. Estimated attorney costs were multiples of the typical costs for patent infringement in the mid-19th century.  The witnesses spanned the range from businessmen to what modern Patent litigators would classify as testifying experts on enablement, inventorship, validity and damages issues.

When the testimony was compiled, the full picture of Neilson's technology and the scope of infringement was painted. In the 10 years that Baird used the hot furnace they has seen an increase in net profits of more than 260,000 pounds  (more than approx 180,000,000 in USD). The jury sided with Neilson and awarded damages of 11,000 pounds, roughly 10 million dollars in modern sums. He had asked for 20,000 pounds). 

According to modern interpretations, Neilson was a troll of the highest order. He never once claimed to be in the business of iron smelting, only in the allied field of gas works. He had a broad based licensing program that went, sometimes aggressively, after an entire industry. Lastly, he was not shy about litigating his patents and seeking damages from those he accused of infringement.

However, Neilson is widely considered a celebrated inventor, the father of the Hot Blast Furnace, and major contributor to the industrial revolution. If one seeks to modify the patent system, one must account for the Neilsons as well as the standard trolls. What separates their actions in the minds of the public? What anti-patent troll statute would have allowed Neilson to prevail, while barring those egregious abusers of the patent system? I am not sure I have seen a good answer. 

Jordan Garner

  

Infringement frequency pushback

As a quick post, the following chart is presented from Google's fantastic Ngram viewer.

First, a bit of information regarding Ngram. The viewer is one of those Google 20% projects (i.e. not a core google product) that came out of the Google's massive data trove generated when it optically scanned libraries worth of print books. This scanning was itself not without controversy. See here.

The viewer allows you to search for the frequency of a word, or phrase, and see how that phrase has changed over time.  This allows for hours spent traveling down the internet time sink looking for interesting word / data combinations.

However, I think (and IP nerds agree) that the interesting output is related to the frequency of IP terms in written english. A look at the graph above demonstrates that for all the recent talk about Patents being a drain on industry, the frequency of discussion has remained relatively flat since the 1800s. Time bias being what it is, you see a peak in the late 1940's (probably a combination of medical advances and post WWII electronic / solid state electronic development.) and then a precipitous drop off to a nadir in the 1970's.  For 30 something developers or businessmen, it looks like there has been a terrible rise in patent usage.  However, even in 2009, with Trolls in full swing, the rate of  the usage of patent terms has yet to return to the nominal historical average.

More interesting, copyrights, long the bane of innovators, has been on a steady historical march, with no signs of slowing.

What is slowing is the march of IP infringement references.
     In the above chart, the concept of a "trade secret" seams to occur far more than any of the traditional Federal IP rights. There appears to be a high burst in the mid-80s to the 2000. (Potentially the rise of Japan and China? Topics for another day).

Patent, copyright and trademark infringement references hit their peak in 2000 and have been decreasing ever since.

It should be noted that these are references to the specific terms in published works. It does not include online media (which might be siphoning off the results post 2000)).  However, it would be odd, and a post in its own right to not have some correlation to the prevalence of a term in print and its prevalence in all media.

Anyone who is selling the concept that IP rights, their enforcement, or position in the mind-space of our society needs to justify those claims in light of the charts above.

Scammers Part 3 "Astro Boy" edition

Reporting on scams has become something of a tradition around here. In order to pull off a good con, the scam artist needs to know something about the psychology of its mark.

 It does the con-artist no good to offer to split a giant pile of bacon with a vegan (however delicious that concepts sounds). 
So to, do IP scammers know their audience. 

While not a new scam, the following letter was recently received in our offices: 

From: Osamu Tezuka Makoto [mailto:osatemakoto@gmail.com]

Sent: July 30, 2013 1:11 PM

To: Firm

Subject: Legal Rep

Dear Attorney,

We are a media publishing company in Japan. We have a breach of intellectual property agreement matter in your jurisdiction, we can forward you the agreement and 5195842743_2305>

Yours Sincerely,

Osamu Tezuka Makoto

Tezuka Production Company

4-32-11, Takadanobaba

Shinjuku-ku, Tokyo 169-075

Japan

Tel: +81333716411

Email: osatemakoto@gmail.com

http://tezukaosamu.net/jp

After some further digging the "client" told us that :

"We are  the owner of rights in a collection of animated characters including Astro Boy.  Springer Publishing of New York City failed to make a required payment upon termination of an intellectual property agreement between the us ."  

On its face, it seams like a golden opportunity  You, sitting in your office, business development book out to the "how to attract clients" chapter, gets this e-mail. You think, "sweet!" all that networking is paying off. Not only with new clients, but internationally famous IP clients. You do some due diligence, both the company, the IP and the opposing party seem legit.  Or do they. Why would a production company trading in a famous brand like Astro Boy communicate with a gmail address. Why would they contact you out of the blue, with no preface or introduction. Why call you "attorney"? 

The details of how this scam plays out differ from mark to mark, but the concept is pretty simple. Tezuka and Sterling (even though these are real valid companies) are setups, honey pots. You are supposed to Google them, see they are real, and rub your hands together in expectation of easy and significant billings. 

In reality, the contact info above, and the contact info they give you for the point of contact at "Sterling" are to the same entity. Once you negotiate a settlement, with a hefty retainer for your trouble, the money gets transferred to your firms' bank-account by a very slow validating banking institution. 

Because the client and the opposing counsel are the same entity, they know when the "money" was transferred  You, the successful hard litigating, hard negotiating lawyer, soon gets a call from the grateful client asking you to forward the money, minus your fees, of course. 

Now, some attorneys will wait until the check has fully cleared before sending on the money. Some will resist, until the client mentions that there are other people who owe them money, and they would like to retain you for future matters.  Either way, some lawyers will send a check, secure in the knowledge that the money in is the bank. 

The problem is, that the money isn't in the bank.  That slow moving bank transfer suddenly shows up as a cancelled check. Now the firm is out some hundreds of thousands of dollars. When you call Sterling and Tezuka, neither of them have ever heard of you. They have their own lawyers, who are you? You have to go to the Executive Committee and explain why you gave away the farm for some magic beans.  

You, my friend, have been scammed. Something for nothing is usually that...

Tax Policy for NPE ('Patent Trolls") [Wonky]

'In this world nothing can be said to be certain, except death and taxes." - Benjamin Franklin (noted scientist, inventor, philanderer  founding father, and fit model for currency).

The current debate around NPE (non-practicing entities, i.e. Patent Trolls) had me thinking about the law of unintended consequences and taxes. (Yes, I know, boring).  

I think everyone can agree that the ultimate goal of the AIA changes to the patent law were driven, in no small measure, by companies wishing to eliminate the threat of Patent Troll suits. For a general counsel with the ear of the legislature, this sounds like a perfectly reasonable use of power and influence. For the solo inventor who honestly believes that MegaCorp has ripped him off, it looks like corruption of the highest order. 

Resolving these two conflicting visions is nearly impossible. For MegaCorp, it honestly believes that Solo inventor is just a crook who is hassling their highly successful venture. For Solo inventor, he has invested time, but more importantly, money in acquiring a patent and MegaCorp is reaping all the benefit.  Furthermore, to Solo, it looks like the law has been changed to favor one party over the other. 

While the AIA might cut down on NPE suits, it will likely have inadvertent effects that we are barely aware. As such, I tend to not agree with wholesale legal changes as a way to eliminate 'bad' actors. When profit is the motive, very bright people will expend effort to find the loophole.  The problem with the AIA is that it targets the result of NPE actions (suits directed against major tech companies) instead of the goal of NPEs (Profit!). 

I would have advocated using tax policy to target the goal, not the result. 

On MegaCorp's side, Tax policy could be changed to make a new taxable income category for reasonable royalties as assessed by a court for infringement of a non-practiced patent.   Currently the tax rate for recovery in settlement and and reasonable royalty recovery by judgement are the same (~35% and taxed as income).  However, a change is the way that the IRS treats recovery from settlement vs recovery from litigation would lead NPE's to maximize their profit through the most efficient way possible.  If the tax rate for reasonable royalty (of a Non-practiced patent were sufficiently high, it would alter the calculus of going after MegaCorp, especially given that attorney fees are not tax deductible. Likewise, tax policy could be used to reduce the windfall that a true NPE could recover based on a past damages.

While this might drive NPE's into settlements instead of broadside litigations (which is what most GC's are really worried about), it would still leave Solo inventor holding the bag on his out of pocket patent fees.  

One way to lesson the impact to Solo is to use tax policy to unburden him of some of the cost in acquiring the patent.  This system would work as thus: The IRS would allow, given the size, income and subject matter, a tax credit for money spent acquiring a patent. This could be as simple as acquiring a tax credit for application fees, or it could be as complex as some formula for a tax credit that takes into account the amount of money that was spent in prosecution. 

These are obviously rough sketches of a goal oriented solution to the NPE problem, while trying to make sure that honest small inventors are not thrown out with the NPE bathwater. 


Jordan Garner 

BitCoin and Licensing Fees

This post assumes you are aware of what BitCoin is and why someone might think it is a good idea to ask for payment of license agreements revenue in it. 

For those who don't know, Bitcoin is a peer-to-peer, anonymous digital currency.

Huh?

Exactly, the concept of Bitcons, how they are made, who has them, and what they are doing with them, are all beyond the scope of this post. I direct you to the Wikipedia site.

For the purposes of this discussion, all you need to know is that Bitcoins are a digital exchange medium. Think of it like an electronic commodity, cyber-gold, if you will. The goal is to have (by whom
?, why? Again, complicated) anonymous commercial transactions over the internet. This would free people from the prying eyes of repressive regimes, allow greater freedom of commerce internationally, and allow people to skip out on paying taxes.

You read (ha! all 2 of you) this blog for IP information, not Libertarian Economic Theory; so what's the point? Well, the point is that we are rapidly converging on a world in which small entities (single person firms, small skill based collectives) are all global companies. Each App creator, Web designer, even self-published author, has the ability to distribute and obtain revenue from a global audience.

One way in which small businesses can gain revenue is by licensing or otherwise monetizing their IP. The most common way this is done is by signing a contract that specifies a certain amount of money, either up front or on per - purchase - basis in exchange for access to the IP. While licensing your tech out for BitCoins in a up-front paid up license, is... a position; licensing your IP for a set number of Bit Coins in the future, or sales in made in Bit Coins, is not advisable.

"Why?", you howl, "I was about to license my tech, for anonymous tax-free Cyber-Space money!"
Well, the problem with anonymous tax free Cyber-Space Money is the chart below.

This chart shows the exchange rate of Bitcoin to US Dollar over a 1 week span. I think the reason not to use Bitcoin as the unit of value in your agreements is pretty obvious. If you had licensed your tech, for 1 BitCoin = 149.00 USD for use in certain Apps, and those apps went on sale on the 6th of April, then you would have made a bad call. (*note, Bitcoin has recovered some market value from the lows put forward, but the volatility remains.)

While initially each sale of your tech was netting you 150USD, by April 10th each sale was netting you 250.00. Huzzah. Then, April 11th rolls around. Devastation!  You are now netting 75USD per tech sale. This is a 50% reduction of your originally agreed upon license fee. Did you lose a war? Zombie Plague? Nope, just the random volatility of the commodities market.

The reason why you don't do this is the same reason why you don't license your IP for the "sale price value" of a Condo in Dubai in 2034. While there are arguments to be made for the upside, there are clearly reasons why such as speculative agreement is not the best way to maximize your IP value.

The way to maximize your IP value through licensing is to license your tech (or art, or published works) in the currency of a regime that places a strong value on IP rights, and a stable currency. Secondly, your agreements should be constructed to provide you with a fair market value of the IP, not speculative upside seeking. A stable license agreement for the duration of a copyright (Life + 75 years, i.e. see Jackson, Michael) is a great way to provide multi-generational economic stability.  Gambling that on an electronic currency is not the best use of your assets.

Jordan Garner

Architectural Plans and IP

The house to the left, deigned by famed Architect Richard Neutra, and immortalized by photographer Julius Shulman is not for sale. 

However, in the future you could get your very own copy of that house or another house, directly from the work shop of Richard Neutra. 

A new partnership between, Dion Neutra (Richard's son),  and the Neutra Office and California Architecture Conservancy,  allows for individuals to license the right to build their very own Neutra-designed home. Dion Neutra and the Neutra Office will even supervise the construction. 

Of course, the price is "upon request" but is supposedly line with existing custom architectural plans. 

I was once told that if you have to ask the price of something, you can't afford it. That is likely the case here, and that's unfortunate. 

It is really unfortunate that existing plans, already created and merely stuffed into a portfolio somewhere, are being priced as though they were new works of commission. The benefit for Dion is that the plans represent the sunk IP development cost of Richard Neutra not Dion Neutra. Attempting to extract that cost now, on a per copy basis, is a great way to ensure that those with the money to afford it, will resort to hiring a living architect. It is a little like saying every time you wanted to hear a song from your favorite artist, you had to pay to go to a concert. 

One goal of IP to place the maximal level of control over a work in the hands of its creator. However, a competing goal is to maximize the value of the work. In this circumstance, it is clear (maybe not to them) that it is the desire of the Conservancy is to minimize the wide scale reproduction of Neutra design homes, at the expense of well...nothing.

Pricing the plans such the "brand" value of the Richard Neutra is maintained (i.e. expensive), does nothing to advance the state of modern architecture, nor does it maximize the inherent IP value of Richard Neutra's work. 

One of the problems in American Housing stock is that the places in which people who appreciate Neutra style homes (i.e. Modern, yuppie types) live, are the same places that have pretty well developed housing stock. It is generally not possible (economically, or otherwise) to move into, say Scarsdale, and build a Neutra home from scratch. You would likely need to tear down an existing house and build a Neutra home over the bones of that. Once you have spent a significant amount of money tearing down a perfectly good home, odds are, you are going to replace it with something highly customized to your needs. Odds are, a Neutra Home, is not highly customized to that affluent individual's particular needs. 

Instead of pricing it in a way that only a very few people will avail themselves of the opportunity, Conservancy should be pricing the plans to hit the urban / upscale suburb market. By making the plans available for a small fee, the range of potential builders increases dramatically. 

I am not advocating forcing IP owners to license their works at cut rate prices. However, it makes sense to sell the plans to modern, aspirational housing, to actual aspiring artistic people. These people generally do not pay for custom architectural plans, because they are expensive. Here, Neutra has no cost, so the profit margins, at any price, are wide.  


Jordan Garner - 

The Case of the Missing Flying Machine...Patent

60 Minutes and the Atlantic , recently reported that the original copy of the patent awarded to the Wright Bros( for a "Flying Machine" ) is currently missing. As you can see below, the current format of patents has changed very little in the 106 years since the Wright Bros received their notice of allowance. 

In fact,  many of the issues surrounding the Wright Patent are relevant to conversations we are still having today.  

It took the patent office nearly 3 years to grant a patent on something so innovative as a FLYING MACHINE. While the concept of actual controlled flight was not a physical impossibility in 1903, it was clearly considered an engineering problem of supreme difficulty. Everyone who has seen the sepia-toned films of various failed flying machines ( here) could reasonably say that the below patent was "obvious". Yet, the patent office did believe that there was prior art that diminished the novelty and non-obviousness.  Any patent attorney or inventor can relate to the frustration of having the patent office take 3 years to issue a patent on truly innovative technology. 

Of greater importance to current state of Patent Opinion and Policy, is the fact that as soon as the Wright Bros got their patent, they engaged in a series of brutal and drawn out patent litigations against their competitors.  At the time, opponents of the Wright Bros claimed that enforcement of the patent monopoly was a hindrance to the development of aerial technology.  Furthermore, distinguished inventors such as Alexander Graham Bell (himself an avid patent-er) called for the reform of the patent system to limit the "abuse" of men like the Wrights. 

Sound familiar. 

Anti-software advocates like to stress their opposition to only a certain class of patents, arguing that mechanical and pharmaceutics don't need patent reform. They argue that the actions of software companies and non-practicing entities are somehow new. That the system was never designed to handle these sorts of "abuses." That technology can not progress unless they are unshackled from the rules. 

 However, the Wright Patent Wars serves as a lesson. In spite of all the dread supposedly to come to american aeronautical progress, American companies still lead the world in aviation. Additionally, the chief target of Wright's Patent wrath, the aviation company founded by Glen Curtis, is still in operation.  The Wrights and their company "The Wright Company", after the expiration of their monopolies, were passed by nimbler, more innovative companies. Eventually, Wright Company  merged,  2 decades after the Wright Patent Wars - into a  new company with their old rival Curtis. Together they formed a small aeronautics company. The Curtis-Wright Company doesn't dominate the international aerospace market. 

The larger point is that the world moved on. The patents, documented for all time (although missing) serve as a official record of innovation at a glance, but only at a glance. Patents or not - innovation constantly moves on. 

Off hiatus, and the End Of IP

I have been on hiatus from Claimed Elements for a little while (which is official-ese for "I had other more pressing things to do").  However, much like the leaves change, so does my desire to blog.

A lot of this change in desire has come from some recent developments in the "End all IP" Troika of economists, open source software mavens, and Pacific Rim Software Pirates.

Recently, a study produced by the St. Louis Fed ( Paper can be found here) makes a strenuous call for the abolition of patents.  In brief, the authors conclude that there is no benefit to innovation by adopting a patent system. Let me state 1) that the St. Louis Fed has better things to do than opine on Patent Law. 2) They really should have better things to do than opine on Patent Law (Like calling for an increase in marginal lending practices so as to allow people easier debt servicing (oh, you don't like it when Patent Lawyers go all "economist speak", well turnabout is fair play.")

Obviously, I disagree, and not just because I like getting a paycheck.  There is a major fallacy lurking at the heart of the study.

Comparison.

Now, I grant you that Patent law has gotten a bit out of hand (something I call the Locust Syndrome, but more on that another time), but there is absolutely no way to determine if a system with or without patents produces more innovation.

Why. Because we don't have a second, alternative reality Earth to use as a control.  The authors focus (as most anti-IP people do) on Software Patents.  The problem is that they can not point to another first world, industrialized nation with the infrastructure and educational system necessary to produce sophisticated software code. We can't say that in 1520, the rate of innovation was better or worse than the rate of innovation today. The circumstances of innovation and progress are the end result of  historical accidents, low hanging fruit, and economic factors.

To paraphrase Neal Stephenson "in the early 21st century, America only did three things well, make movies, make music and write the best code."

The author's have not provided an example of a country that is producing superior, or more innovative software compared to what is developed by companies taking advantage of the U.S. Patent system.  The reason is obvious, in an fully integrated world, it is impossible to tell what effect the Patent system has on developments country A vs country B. Without a control group, we are merely grabbing at strawmen to explain why our version of reality is the right one.

So lets all take off our sandwich boards and calm down.

Jordan Garner (Jgarner@leasonellis.com)
www.leasonellis.com

Res Ipsa Loquiterminator

Res Ipsa Loquiterminator:
         
         French for "I have been replaced by a computer" is a phrase that you are going to hear more and more in law firms. Not really, since I can't imagine anyone at a law firm using such a sweet portmanteau. (Credit given to my good friend M.Cabrera Esq. for coining the term)


Regardless, what you will hear is younger associates griping about how they are unable to make their hours in light of the rapid adoption of Predictive Coding in document production.  If you want to know why computers are going to start eating your lunch, you can check here.  


For those with an aversion to clicking on the Wall Street Journal, it basically summarizes two recent civil cases where predictive coding (that is, computer sorting of documents for discovery based on relevancy of content) were allowed.  Importantly, these permissions were given over the objection of opposing counsel. So the gates are wide open to our new robot masters. 


Super, what does this mean for budding IP attorneys?  Well, document discovery in IP litigation (especially in the pharma area ) was/is pointlessly time consuming. While it will probably still be necessary for some IP specialists (read: doc reviewers with a scientific background) to review large reams of data, it is likely that the time of the 4 and 5 room discovery teams is coming to a close. This means even less demand for specific practice area qualifications (the Maw grinds slow and exceedingly fine) .  While this won't happen over night, it most likely will happen in the next few years. 


I am reminded of a document review in which I participated, where most of my time was spent sifting through bills of sales looking to see if the technology in question was "on sale" prior to the 1 year date.  Most of the documents I was looking at were internal order forms.  I quickly realized these were pointless, even though they had some of the "core" keywords plastered all over them.  


I imagine that predictive coding will allow case managers to make broad sweeps of this type of relevant (but not really relevant) data prior to bumping things up a step in the food chain.


It occurs to me that another place where Cybercoders (wouldn't that make a great Kids TV show...no) could come in handy is the new Inter-Partes Procedures instituted in the AIA. Limited discovery is now allowed.  Normally, this "limited" discovery would be limited by the cost and time involved.  However, with the use of Cybercoders, you could access huge amounts of data for minimal cost. I would wager that more and more Re-Exams are going to employ predictive coding as part of there opening gambits.  


Where I think human IP-based doc coders will still have the edge is searching for "best mode".  It is incredibly difficult for a computer to determine if a lab notebook or result table is disclosing the best mode for carrying out the disclosure.  Furthermore, IP coders are probably still going to be tasked with searching for deficiencies of enablement, or documents that purport to show that the invention failed to clear a statutory bar.  


Unfortunately for Human IP Coders,  Congress Passed the AIA with a specific section that minimizes the importance of both "Best Mode" and "Enabling Disclosures" in invalidating a patent.  Never fear, when tireless thinking machines drop the ball, Congress can recover that fumble and spike it on your career.  

Patenting Deliciousness

This is not a picture of patented deliciousness. Original photographer found here. 

The Internet is reporting that Oklahoma State University (Go Cowboys!) is attempting to patent a "cut" of steak.  While general reporting has focused on the fact that this new improvement in the Steak-y Arts will be called "The Vegas Strip" ( which does sound delicious) no one is focusing on the fact that the Inventors pretty much opened themselves up to a Sec. 103 Rejection based on the interview.  

For those who don't know (and why you would be reading a patent blog without knowing about patents...) merely filing a patent on something is no guarantee that you will actually get a patent on that thing. A lot of  digital ink has been used to decry the patent system as innovation restricting.  However, these garment rending positions are usually taken by people who have less than a common familiarity with the workings of the patent system. Once you apply for a patent, that application (helpfully called a "Patent Application") is examined by a Patent Examiner, and is not automatically turned into a patent.  

It is that Patent Examiner's job to determine if your patent application meets certain legal and procedural hurdles.  In this case, hopefully the patent application for Vegas Strip is given to a Patent Examiner who is an expert in Tastiness (I have a PhD in Tastiness from Finger-licking University, but I don't like to brag). According to OSU, the patent is not for the steak itself, but for the series of cuts used to make the steak.  For those of you aware, OSU just gave away that the patent is to a "Method" and not a "thing".  So the Tasty Expert Patent Examiner would look at this method of steak cutting a see if it has been done before, or if it is obvious (Sec. 103) in light of previous steak cuttings methods.  

The spokesperson for OSU's Steak Patenting Initiative (I just make up the initiative part), when asked how the method works said: 

"If i told you, it would be a hint to where this muscle is," he said. "A knowledgeable person would say, 'Aha!'"

Well, if that doesn't sound like "it would have been obvious to one skilled in the art" I don't know what is.   So, what's the point.  Well, one point is to not give interviews about your specious patent applications. 

A second, better point, is to not freak out every time someone says that they filed for a patent on the color blue, or a user interface, or some stupid Facebook integration program.  Merely filing the patent does not get you from A to B.  The patent office has plenty of mechanisms for weeding out bad, and obvious ideas, and does a pretty good job at it.  I think we can all sleep safely knowing that Oklahoma will not corner the market on deliciousness. 

Jordan Garner, Leason Ellis, Patents

Market Forces

No, this post is not about the excellent Tech-futuristic thriller by Richard K. Morgan (although it is awesome and can be found here)

In light of the continuing mess at Dewey ( if you are unaware, see here, here and here) it is probably helpful to think about price discovery schemes for associate compensation in the current job market.

If you weren't aware, the job market for associates (new and old alike) is going through what economists call a "Market Clearing".  This is just fancy way of saying that the supply is currently outstripping demand, and either the supply will need to contract, or the price for the supply will have to come down.

If you have spent anytime talking to the management of larger law firms, you know that there is no such thing as a permanent decline in salary for associates. The reputation deficit that comes from such a move is considered to be far more damaging than the price savings. Now, this does not mean that it doesn't happen.  In the dark days of '08-'10, many a law firm took the "lowered tier" option of differential associate payments and tried to spin them as some sort of revolution in Associate salary / price discovery.

 However, most associates are not in a position where they are given the option of voluntary wage cuts in exchange for continued employment. The end result is that the price discovery is impossible in the legal market, and the only way to get the market clearing effect is to reduce the supply of associates, often through forced attrition.

However, there is an alternative:

The alternative would be to allow the associates who are performing at an acceptable level to continue to work at the firm, but at a greatly reduced salary.

It would be possible to retain two associates for the price of 1. Basically, offering two similarly situated associates the ability to "share" their salary and maintain employment.  For high-year associates, it is possible to still obtain a 6-figure income on that 1/2 share. This allows the human capital developed by the firm to still be utilized, and the associate to avoid the stigma of a growing employment gap on their resume.  Unfortunately, the current practice of picking one associate and dismissing the other does nothing to help discover the true price of the associate and results in a wasted investment for the firm.

Either way, the lack of utilization of human capital (in the form of associates) is something that the legal profession is going to have to come to grips with.

Jordan