Introduction: The Patent System Is Broken – Or Is It?

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The patent system is broken. How many times have we heard that?

This is a widely held belief that is relentlessly propagated, but as usual, there are two sides of the story.

The real problem has more to do with the patent applicants than the examiners and the legal system.

Part of our DNA as Americans is the story of the independent inventor toiling away in the garage. Our unwavering belief in the underdog is enshrined in the US Constitution:

The Congress shall have power … To promote the progress of science and useful arts, by securing for limited times to authors and inventors the exclusive right to their respective writings and discoveries…

This mandate in the Constitution is not going to go away, and the patent system will always be in place. It is our job to make the best of the system we have.

What is actually wrong with the system?

Several years ago, there were some big players who entered the patent system and began widespread enforcement on an industrial scale. And the patent community responded.

Because of the enormous cost of litigation, patent enforcement quickly took the form of patent extortion. Any sane business person would pay the extortion, although they would grumble loudly and lobby Congress.

The patent extortion lawsuits had an interesting artifact:

Patent attorneys started to write horribly convoluted and twisted patent applications that nobody could understand. In fact, they brought it to a whole new level.

These types of patents were great fodder for Big Law, as one side of the firm would get paid tens of thousands to write the terrible patents, while the other side would get paid millions to enforce them.

This practice has spawned the widespread belief that patents should be written in some form of “legalese”, and inventors often say that they cannot even figure out if their invention is in the patent application.

An entire generation of patent attorneys were trained under this style, and most still practice it. These attorneys generate patents that will be a scourge on the system for years to come.

The attorney/client relationship harms the patent process more than it helps.

The attorney/client and attorney/inventor relationships creates all kinds of strange, unintended side effects, most of which the client does not see or comprehend. One of the problems that clients never fully appreciate is the huge liability a patent attorney faces when giving any type of business advice – and that liability is amplified by the huge economic leverage of patents.

These problems put the attorney and client squarely opposed rather than aligned, and the client is left on their own for navigating the system.

The attorney’s business is selling patents, and they often come across as respected, revered, or even feared by startup CEOs and inventors. Consequently, the attorney can easily hustle their client into filing the wrong patents at the wrong time with complete disregard to what is the business need of the client.

The client is left to fend for themselves, and often makes terrible business decisions because they do not have the experience or expertise.

This insidious process continues today, but…

There is a better way.

Patents should be understandable and easy to read.

It takes far more effort to write a clear, clean, direct, and comprehendible patent application than a giant, incomprehensible “pile of words”.

Understandable and readable patents get better examination from the USPTO, which means those patents are much more “legitimate” than those that are poorly written. Examiners find the best prior art, and feel confident allowing a case when they understand the invention.

Understandable and readable patents get better treatment when used to negotiate in a business context, such as when negotiating with an infringer. When the patent is pushed across the table to an infringer, the infringer should read it, understand it, and say, “Oh no. I see how we infringe.”

Understandable and readable patents get better results when challenged, either in court or through the reexamination process, including Inter Partes Reexamination. Well written patents withstand reexamination, and the judges and juries – normal laypersons – render better decisions when they understand the patents.

Patents need to have real business value.

Patents should align with the business they are designed to protect. They need to capture the business’s competitive advantage, period. When they don’t accomplish this, the patents have no meaningful value.

Patents are a way of defending an investment in a company, as well as multiplying that investment. Patents can be used for keeping competitors at bay, managing supply chains, enforcing employment agreements, and even dictating how open source software can be used and distributed. Not only that, patents can be used to license technologies into other verticals, spin out new companies, offload older technologies, franchise businesses to other sectors or locations, or – the holy grail – get incorporated into an industry standard.

With a strong patent portfolio, a company is better positioned for long term success – as well as acquisition.

Patents have value only when the risks are removed.

Every business idea – and every patent – has two fundamental risks: a technology risk and a market risk. The technology risk is whether or not the idea will work, and the market or business risk is whether nor not someone will pay for the product or service.

Until the two risks are removed, a patent only has speculative value, much like an out-of-the-money stock option. The value only comes from the possibility that the product will work and someone will buy it.

When the product actually works and people pay for it, the product – and its patent – have real economic value.

It is easy to get patents on inventions that work. These fulfill the technology risk.

It is much more difficult to curate inventions that overcome both the technology and the market risks.

Many people look to their technology to find patentable ideas, but they are looking at only half of the risk and half of the equation.

The real value comes only when the business finds their customer’s pain point and gives the customers solutions that they cannot live without.

For example, Apple famously has several patents on a “slide-to-unlock” feature of its iPhone. These patents are not technically challenging to implement and are actually kind of gimmicky. However, the slide-to-unlock feature addresses a very strong customer pain point: how to unlock a phone that does not have any buttons?

The business or market value of this feature is tremendous, much more than many of the “technical” features of the iPhone. These patents were so valuable from a business standpoint that they were asserted against Samsung. Of all the hundreds or possibly thousands of patents that Apple could have enforced against Samsung, Apple chose the slide-to-unlock patents. This is probably the highest validation of patents that address a customer value as opposed to a highly technical advancement.

How to get an investment-grade patent.

Investment grade patents are curated in two steps. The first is saying “No” to many inventions. Far too many patents are written for the wrong reasons. An invention may be “cool” and exciting, but if it does not directly relate to products produced by the company, it is not worth pursuing.

The second step is designing the patent application to have direct commercial value. This is about capturing the customer value of the invention in the patent, and doing so in the context of the business landscape. It also takes constant vigilance throughout the patent process to nurture the application so that it aligns with the business.