Tuesday, January 06, 2015

Is the US Patent System Broken?

          by Chuck Black

Two recent stories, one of which relates directly to the space industry, illustrate the legal difficulties involved with commercializing new innovations under the US patent law system while a third article, posted on the Canadian based Ridout and Maybee law firm website, argues that US patent law makes Canada "a more attractive jurisdiction for initial patent filings."

In the US, landing a spacecraft on a surface ship might just be subject to patent protection. Artwork c/o Dmitry Vishnevsky.

Taken together, they illustrate the complexity and confusion surrounding current legal thought in the area.

The first story, the January 5th, 2015 Wired article, "Our System Is So Broken, Almost No Patented Discoveries Ever Get Used," discusses the US patent system and how the current patent process is "a market so constricted by high transaction costs and legal risks that it excludes the vast majority of small and mid-sized businesses and prevents literally 95 percent of all patented discoveries from ever being put to use to create new products and services, new jobs, and new economic growth."

According to the article:
If we’re honest with ourselves, we must admit that the patent system today has lost much of its original democratic character. Sure, anyone with a good inventive idea (and at least $20,000 for legal and other fees) can get a patent. But what can you do with that patent? More than likely, you won’t be able to put it to good use unless you have the multi-million-dollar resources required to launch a startup, secure a licensing deal with a big corporation or, if necessary, litigate to stop an infringer. 
Perhaps the most effective example of this state of affairs is the recent lawsuit between Space Exploration Technologies (SpaceX), which will attempt to soft land a Falcon-9R first stage on an ocean going platform during its next launch attempt, and Blue Origin LLC, which was issued a patent on the processes related to just that sort of activity a few years back and seeks claims against SpaceX for infringing on its patent.

Part of the supporting documentation for the Blue Origin filed U.S. Patent Application No. 12/815,306, entitled “Sea Landing of Space Launch Vehicles and Associated Systems and Methods” with a priority date of June 15, 2009 which became US Patent No. 8,678,321 in March of 2014.

According to the January 5th, 2015 IP in Space post, "Intervening Rights: How the Blue Origin SpaceX Patent Dispute May Evolve," the eventual result of the lawsuit may depend less on the fact of the case and more on the deep pockets of SpaceX, which would likely end up insulated from any claims relating to activities undertaken before the patent case can be decided:
SpaceX has several first stage cores on hand at any given time and its factory is built to produce up to forty annually, representing substantial preparation, stock on hand and investment. SpaceX has also invested a considerable amount to bring its reusable Falcon 9 program to fruition, monies that will likely take a significant amount of time to recoup (before any potential Blue Origin claims would be supported by the court)...
In essence, any successful claim against SpaceX will be mitigated by the size of the investment SpaceX made in the program before the claim can be resolved in court. This is something a smaller and less well financed company could not reproduce and goes a long way towards explaining why larger companies have an advantage in patent litigation.

The 1998 paper "Re-entry and Terminal Guidance for Vertical-Landing TSTO (Two-Stage to Orbit)" which is readily available online and contains many of the core concepts relating to US Patent No. 8,678,321 from March of 2014, but predates it by 16 years. Graphic c/o Aerospace Research Central.

However, the core of the SpaceX defence against the Blue Origin lawsuit isn't the amount of money its spent on the program; it's the counter claim that Blue Origin’s patent “treads on technology that existed way before Blue Origin filed for the patent application,” and should therefore be struck down.

As outlined in the September 24th, 2014 Space News article, "SpaceX Bringing the Right Stuff to Patent Slog with Blue Origin, Expert Says," the SpaceX defence references a variety of publications to bolster this point, including the paper “Re-entry and Terminal Guidance for Vertical-Landing TSTO (Two-Stage to Orbit),” which was published in 1998 by the American Institute of Aeronautics and Astronautics (AIAA).

Why does this point to a problem with the US system?

That's simple. The US system makes the attempt to focus on the rights of the first to invent rather than the first to file a claim. In the case of Blue Origin, while it was certainly the first to file for the patent, any indication that someone else had actually made the invention would certainly invalidate any patent protection claimed by Blue Origin. 

And this is what SpaceX is attempting to do. It's just a shame that the company needs so much cash for lawyers and inventory to keep the wheels on the bus in motion until the claim is settled.

But if you really want to get confused over the way the US system works, a Canadian law firm is offering an alternative. The undated article on the Ridout and Maybee law firm website, "Upcoming Changes to US Patent Law Make Canada a More Attractive Jurisdiction for Initial Patent Filings," suggests that recent changes in US patent law have changed the system from one which protects the "first to invent" to one which protects the "first to file," at least in the case of a foreign filing claim, from places like Canada.

All of which makes it even more confusing for small firms and inventors to compete with larger companies. Maybe Blue Origin should have filed its patent in Canada?

1 comment:

  1. Yes, all confusing and not fair to the little inventors. However, Blue Origin would still have no luck in Canada. The 1998 paper is not just of value due to the "first to invent" issue, but also "prior art". Even in Canada, to be eligible for patenting, it must show novelty: http://en.wikipedia.org/wiki/Canadian_patent_law#Novelty

    Specifically, "if a third party document or device previously publicly disclosed the invention anywhere in the world, then a subsequently applied-for Canadian patent application for that invention is lacking in novelty and is invalid."

    The difference between "first to invent" and "first to file" only shows up when a prior inventor kept it a secret. Arguably this makes sense since the "first to invent" system creates a potential hazard in which you invented something, did due diligence work to see if anybody developed it prior, and only when you later get sued can you find out that somebody did but kept it secret. Not very fair to you.

    Also, the value of the patent system to the public (when there is one) is to reveal the technology publicly, and the tradeoff is a temporary monopoly on the technology. A "first to invent" system allows you to avoid patenting but still have the effective monopoly because if anybody else tries to built it (or patent it) you can then patent it or challenge theirs. "First to file" does the tradeoff better; if you don't patent and keep it a secret, somebody else can invent it (or reverse engineer yours) and then file, blocking you out. You can stop them by publishing how it works freely, thus providing prior art so nobody can patent it. Or you can patent, which makes it public, but with the limited monopoly for you. Hence it makes secrets riskier instead of safe, thus benefiting the public more by revealing the technology one way or another.


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