Patent Shills want to make patents “incontestable”

by Stephan Kinsella on December 30, 2010

I’ve tangled in the past with two patent lawyers who are shills for the patent system, Dale Halling (see Shughart’s Defense of IP) and Gene Quinn (see here and Gene Quinn the Patent Watchdog). They are now supporting making issued patents “incontestable” (see Halling’s endorsement of Quinn’s “idea” below). This is monstrous.

As it stands now, patents that are issued have a “presumption of validity”. (See my discussion of this in Supreme Court Prepares to Chop Down “Clear and Convincing” Standard for Proving Patent Invalidity.) This makes it difficult enough to challenge in court even patents that “should not” have been granted. It’s why I proposed, in “Reducing the Cost of IP Law,” that the patent law be revised to “Remove the presumption of validity that issued patents enjoy.” The presumption should be eliminated. Yet these twits want to be “incontestable.”

Making Patents Incontestable

This is one the best ideas I have heard for improving our patent system.  It was proposed by Gene Quinn of IPWatchdog.  The idea is that after a certain period of time a patent becomes incontestable, meaning it cannot be challenged on validity grounds.  This idea is similar to the idea of incontestability for trademarks or quite title suits for real property.  Quite title suits recognize that having endless open questions about the title to property reduces its economic value and results in under-investment and under-productivity for that asset.  The same is true for patents.

Incontestability could be part of a package that strengthens inter parties reexamination to allow appeals to the CAFC.  Here is the way I envision it working.  Five years from publication a patent would become incontestable.  This would eliminate the defenses of lack of novelty, obviousness, on-sale bar, inequitable conduct, inventorship, best mode, utility, and statutory subject matter issues.  This would increase the value of the property right.  The evidence associated with these issues is often years old when raised in an infringement suit and not reliable.  All these issues would have to be open for inter parties reexamination.  However, there would have to be safeguards that inter parties reexamination is not just a fishing expedition to increase your competitor’s costs.  As a result, all PTO (Patent Office) and court fees would have to be paid by the challenger.  If a challenge to a patent is unsuccessful the challenger will have to pay the patent holder’s attorney’s fees.  The reverse is not true.  The patent holder has already paid to have the invention examined by the patent office.  This would eliminate a lot of the costs and discover associated with patent lawsuits, which should result in faster, less expensive litigation.  Justice delay is justice denied.

How would this affect the defenses of latches, equitable estoppel, and patent misuse.  Latches should be limited to the statutory timeframes in 35 USC 286.  Equitable estoppel is not appropriate in patent law.  No one should be able to argue that they relied on the patent holder’s representations that are not in writing.  We have many areas of law where agreements (representations) have to be in writing to be enforceable and this should be one of them.  Patent misuse as it pertains to antitrust violations should not be a defense.  All antitrust attacks on patents are based on a misunderstanding (misrepresentation) that patents are a monopoly not a property right.  Exercising a legal property right should never result in an antitrust violation.

Critics may argue that it could be years before a company is confronted with a patent and the potentially infringing company may not even have existed when the five year incontestability period expired.  This may be true, but we do not want companies creating me-too products or reinventing the wheel.  If the company is building on the patent to create a new invention, then they should do their homework and determine if they are likely to infringe a patent.  It is a waste of resources for companies to reinvent a patented invention.  No longer should we reward purposeful ignorance.

Incontestability for patents is based on the same reasons we have for incontestability in trademarks and quite title suits for real property.  It would reduce the number of issues in litigation, making patent litigation quicker and less expensive.

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David Koepsell December 31, 2010 at 2:08 am

Quinn and Halling are the Tweedledum and Tweedle-dumber of patent proponents, and always good for a laugh. Halling insists (in nearly post-modern fashion) that a monopoly is not a monopoly, and Quinn, the self-purported “student of history” never seems to have progressed past Schoolhouse Rock. Nonetheless, let’s grant their crazy analogy just for a moment, and extend the same sort of notion of “quiet title” we grant to land. So, in most states, title by adverse possession kicks in at 20 years. Seems about right for extending to patents, doesn’t it? At the 20 year mark, as the patent is expiring, I’m willing to say that any claims to it are then incontestable. :-)

Stephan Kinsella December 31, 2010 at 10:56 am

Right. Why don’t they use their “reasoning” to argue that if you are using a given idea, method, design, apparatus for some period of time (say, anytime before someone else patents it, or, say, for 3 years after a patent is issued, without the patentee suing them), then they have an “incontestable” right to keep using this idea? — I.e., why not argue for some kind of independent inventor/prior user/laches type rights? Because they are ignorant, disingenuous, biased patent shills, that’s why.

David Koepsell January 2, 2011 at 11:23 am

Truedat. Being honest would merely undercut their real agenda: creating more business for the IP-Industrial complex, as opposed to creating useful production and economic activity.

Dale Halling December 31, 2010 at 10:20 am

Exactly what I would expect from someone who does not understand that the source of property rights is the productive effort of the individual, not the group think of scarcity. This lack of understanding leads to the idea that property rights are physical object instead of understanding that it is a bundle of rights the creator/owner has with the item.

You think you are supporting freedom, but actually you are just a useful idiot for tyranny.

Stephan Kinsella December 31, 2010 at 10:57 am

Halling is another typical engineer who is totally out of his depth on normative/policy matters. How embarrassing and pathetic.

David Koepsell January 2, 2011 at 11:20 am

Of course scarcity is the issue, Dale, which is why no IP rights can attach to non-fixed, ephemeral labors (like a dance performance, song, speech, or any service). Property is based ontologically on fixity and thus scarceness since the world of things, as opposed to abstracta and occurants, is necessarily rivalrous and scarce. Your theories fly well in France, but nowhere else. Attempts to turn non-rivalrous entities and occurants into some form of property are theoretically flawed, pragmatically useless, and ethically-challenged.

Stephan Kinsella January 2, 2011 at 11:38 am

“the source of property rights is the productive effort of the individual, not the group think of scarcity”

This is so confused it’s hard to know where to begin. The big mystery is why some mere engineer with an inept understanding of any normative reasoning wants to embarrass himself by weighing in like some fumbling, groping amateur. Typical of the blind, arrogant, stupid, scientistic hubris of engineers.

There is no “source” of property rights. It is positivistic to think of it in these terms.

Property rights arise in response to the phenomenon of scarcity. Civilized people prefer peace and cooperation to conflict and strife and violence. Thus they have various grundnorms which if followed consistently and intermixed with a bit of economic literacy leads them to realize the necessity (to implement their grundnorms of peace and prosperity and cooperation) of the assignment of objective, fair property rights in the things that can be contested–that is, rivalrous, or scarce, resources or means of action.

So of course “productive effort” plays a role in acquiring property, and in transforming it to generate wealth. But that does not mean there are property rights in things other than scarce resources. But to impugn the “group think of scarcity” is to betray the typical ignoramus engineer approach: it is nonsense. What “group think”? And why impugn the significance of rivalrousness? It is an important economic concept (no offense, engineers) for a reason; scarcity is the reason we can have conflict, and the only reason there need to be property rights.

Halling is just a buffoon, like Quinn.

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