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Who’s a Patent Troll? You’ll be Surprised by the Answer

Dean Kamen

Dean Kamen (DEKA Research and Development Corp.)

Nobody likes patent trolls, the “non-practicing entities” accused of filing lawsuits with questionable infringement claims aimed at extorting settlements from companies just trying to do business. A conference today in Washington, D.C. sponsored by Innovation Alliance — a group promoting a strong U.S. patent system — featured a panelist who would under some definitions be considered a patent troll, but is probably the very model of innovation the patent system is supposed to encourage.

That panelist was Dean Kamen, the inventor of multiple medical devices, notably a wearable infusion pump used in chemotherapy, neonatology, and endocrinology, as well as an insulin pump for people with diabetes. At age 30, he told the audience, Kamen realized he enjoyed inventing more than building a big business, and sold his medical device company to Baxter International.

And invent he did. Kamen’ later founded DEKA Research and Development that creates radical new technologies centered around fluid management, mobility, power, and water. Some of DEKA’s inventions include a prosthetic arm for upper arm amputations, home dialysis machine, and simple water purification system. All told, Kamen holds 440 patents in the U.S. and overseas.

The system that issues Kamen and other inventors these patents grants inventors an exclusive license to develop and market products derived from these patents for a period of time as a reward and incentive for innovation. But as the General Accountability Office noted in a study released in August, Kamen’s company would be considered a non-practicing entity since it does not build the products it invents.

DEKA’s business model is built around licensing of his inventions. In a panel that included Qualcomm founder Irwin Jacobs and moderated by PBS Newshour anchor Judy Woodruff, Kamen said DEKA’s product is patents for technologies that are so radical and disruptive that companies are willing to pay handsomely for the ideas, even to keep competitors from gaining them.

Thus Kamen freely admits he’s a troll — “Trolls R Us” as he told the audience. That definition of non-practicing entities, GAO notes, would also include research universities that generate discoveries in their labs, then license their development to businesses, some of them founded by the scientists who made the discoveries  — as often described in Science & Enterprise.

Jacobs described how patents made possible Qualcomm’s development of code division multiple access or CDMA technology that underlies much of the cell phone service in the U.S. Patents offered Qualcomm breathing room to develop and demonstrate CDMA despite many skeptics including, as Jacobs noted, some so-called experts who said “CDMA violated the laws of physics.”

Patent wars, old and new

Other panels at the Innovation Alliance conference discussed other findings from the GAO study. GAO found the number of patent suits jumped by one-third from 2010 to 2011, which the report attributed to anticipated changes in patent law due to go in effect as a result of the America Invents Act, the patent reform law that started going into effect in 2011.  The agency’s investigators sampled 500 lawsuits from 2007 through 2011, and found 80 percent of the suits were filed by operating companies, not the non-practicing entities or “trolls” usually blamed for the increasing litigation.

George Mason University law professor Adam Mossof said GAO found many studies of patent legislation were characterized as “non-random and non-generalizable,” another way of saying based largely on anecdotes or on proprietary data. Mossof, who studies  patent history, also pointed out that the current concern with patent wars over smartphones, is nothing new.  Patent wars — with those very words used to describe the legal battles — were waged over sewing machines, telephone, radio, computers, lasers, stents, and even disposable diapers.  The rate of patent suits has stayed remarkable stable over more than two centuries, Mossof noted, at about 1.5 percent of the number of patents issued.

America Invents Act status

The conference included reports on implementation of the America Invents Act. Robert Budens, president of the Patent Office Professionals Association and a current patent examiner at the U.S. Patent and Trademark Office , reported that USPTO completed most of the training for its examiners, and tools to evaluate patent applications are being developed. However, said Budens, other than design patents, few cases under the America Invents Act have are yet reaching examiners.

One provision in the new law gives USPTO authority to set its own fee schedules and keep more of its revenues to upgrade its computer systems and hire more examiners to reduce  its long backlogs. As Paul Michel, former Chief Judge of the Court of Appeals for the Federal Circuit — the appellate court for patent cases — noted, the arbitrary budget cuts known as the sequestor changed all that. Instead of fully funding USPTO, Congress impounded much of the agency’s fee revenues, forcing the cancellation of needed technology upgrades and imposing a hiring freeze. “Way to go Congress,” Judge Michel remarked.

Dean Kamen, Irwin Jacobs, Judy Woodruff

Dean Kamen, left, Irwin Jacobs, and moderator Judy Woodruff at Innovation Alliance conference (A. Kotok)

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