For at least the past 30 years, patent policy wonks have been summarizing policy positions on patent protection into three camps with separate logic and proposals for each camp. Fundamentally these camps each have rather big demands and the logic of their demands seems divorced from the reality of patent investment by most companies, large and small. The small inventor camp, demands injunctions to halt manufacturing and sales with minimal or no chance for evidence or a defense by the manufacturer or retailer. The software and finance camp see innovation as best protected by more innovation (a shark that keeps moving) and patents as nuisances. The telecom and pharma camp see patents as essential long-term investments to be collected en-mass. Most of these camps are driven by the nature of innovation in their space. And while together they may constitute a decent percentage of any country’s GDP, none of their proposed solutions or logic apply writ-large to patent use by industry.
The logic (economic argument) of the small inventors is that large retailers only respect injunctions and otherwise can smother a small product manufacturer/seller in normal patent litigation (examples cited are popsockets, water balloon fillers, and other consumer products). Of course, these inventors seem to disregard that these large retailers can play the injunction game too and can easily access a patent or two to get their own injunction against the small inventor. Who loses in that scenario (the retailer with 10,000 products vs. the online site selling one product)?
The logic of the software companies and finance industry is that innovation in user interfaces, consumer trends, trader demands, and products accelerates so quickly that by the time a patent grants in two years or so, the industry is on to the next packaged finance product (e.g., synthetic derivative) or social interaction interface (e.g., TikTok). Thus, the main experience in these industries is that their cutting edge innovation is held up or subject to suits based on poorly written patents on older technology applied in a forward-looking manner. Halting future innovation is not the intent of the patent monopoly at all really. Of course, this industry could operate without patents. Finance has lobbied to make it hard for finance-related patents to be “eligible”, while tech companies have gotten mechanisms to challenge these “forward-looking, vague” patents. They have largely been successful in their arguments (or economic clout) and so other stakeholders are fighting to erode their successes.
Finally, the telecom and pharma industries are natural monopolies even without patents due to their high upfront costs and low cost, high margin thereafter. These industries file hundreds of patents worldwide around each product in order to extend their natural monopoly and make licensing plays in their highly regulated industries. The policy economists who cite these industries for their IP licensing dynamics or their need for patent protection ignore that they are a special case as far as patentable industries go.
For the vast majority of hardware technologies, such as semiconductors (firmware, packaging, IC design), industrial controls, medical devices, space, aviation, ship systems, routers, and vehicles, the economics of IP protection are quite different from the special cases above. The products in this broad base of industries are bought with expected lifetimes of 10-20 years and at high per-unit costs, by less customers, and with medium competition. Innovation in a system such as a vehicle can take numerous routes (more digitalization, more horsepower, more efficient) which means competition is not singly focused and the ultimate sales pitch can vary. Contrast this with telecom or pharma where a single parameter is optimized, like bandwidth. So innovation can be achieved by many players and protected without serious impediments to other firms to innovate elsewhere with the same product.
So what strategies and needs are present in these industries? Well for small and medium businesses, patents are filed about 6 months or less in advance of a product release and serve as landmines for competitors immediately after filing to prevent catchup innovation along the same lines for the beginning life of the product. Even if no patent ever issues, the filing itself serves as a sword (“patent pending”) that can force competitor redesigns along less efficient paths. Furthermore, the filings and patents on the product portfolio provide an alternate asset base besides plant property and equipment (PPE) which dominates these industries. Older, discontinued products can be licensed; or current products can be licensed to foreign distributors. Ultimately, the vast majority of patents issued in the first 200 years of the US patent system went to technologies and uses like these.
The larger companies in these industries use the same strategies as the SMEs but with larger portfolios, larger R&D budgets, and more cohesive portfolios for product spaces. The DuPonts and Craftsmans have thousands of products and protection for each one at various stages. They also intentionally build out product lines together with patents and spin off or sell older ones together with their patents. Unlike the tech industry or even consumer electronics (e.g., Apple), these changes occur on the scale of 3-5 years. This long-term investment in product lines also means that patent law suits (without injunctions) are worthwhile and fast enough.
So this broad industrial base cares about a few other aspects of the patent system even if they do not have a cohesive voice in the policy space. They care about: reasonable federal court access and timelines, worldwide publication and filing dates for defensive purposes, clear assignment history and records for licensing and distributors, and skilled examiners to prevent bad patents and to quickly resolve issues to reach a patent. These are not particularly big or controversial concerns but service could certainly be improved here without major conflict with the special interests noted above.
In summary (TLDR), the patent policy debate has been dominated by three groups, all of which differ drastically from the core users of the patent system. One group (tech/finance) has been successful in setting up a way to challenge bad patents without upsetting the old balance too much. Other policy demands from the camps tend to upset the balance too much. Now the focus should be on modernizing our US patent system to serve the traditional industrial base and remain competitive with other countries that continue to focus on this industrial base (e.g., Germany). Below are some changes that would improve US competitiveness:
Modernize the filing system and national stage process at the United States Patent and Trademark Office (USPTO)
Modernize the assignment record system at the USPTO so that sorting, matching, and searching are easier for licensees
Create a program to retain or attract Examiners with legal skills and experience
Allow for early publication with a target/requested week, within a month of a complete filing, and optionally for provisional applications.
More patent training for court clerks and judges
Accelerated Federal Court proceedings for resolving inventorship disputes