Bullshit Patents

I wrote last year:

Despite never having built a working product, Theranos accumulated hundreds of patents. These patents are now the only thing of value left but the patents aren’t valuable because of breakthrough science, the patents are valuable because they can be used to force people who do breakthrough science to cough up part of their return.

Now, just as I predicted, some of these bullshit patents are being used to prevent a company that is working on Covid-19 tests. The logic is evil but impeccable. Sue a firm when time is of the essence. Moreover, you won’t be surprised that just about everyone involved is scraped from the bottom of the barrel. Theranos sold the patents which were bought by a patent troll owned by Softbank, the firm bankrolling the notorious WeWork disaster, and the law firm involved, Irell & Manella, once took a monkey for a client (literally, although PETA paid) in an infamously stupid copyright infringement dispute.

Mike Masnick who broke the story names the guilty and writes:

Honestly, I’m used to all sorts of awfulness, but this one piles awfulness upon awfulness, and takes it to a level of pure evil….I wonder how they sleep at night.

….I understand the need for zealous representation of a client in court, but this seems even more despicable than your every day patent trolling, and people should associate these lawyers names with the truly despicable behavior on display here. Similarly, it should be a reminder of why its a good thing that the Supreme Court decided a decade and a half ago that injunctions are often inappropriate in patent cases.

I do hope a sensible judge punishes this abuse.

Hat tip; Michael Pettengill.

Comments

Here's another bullshit patent (I like this term BTW):

"A medical device manufacturer has threatened to sue a group of volunteers in Italy that 3D printed a valve used for life-saving coronavirus treatments. The valve typically costs about $11,000 from the medical device manufacturer, but the volunteers were able to print replicas for about $1"

Cost disease prevents people from fighting real disease.

https://www.theverge.com/2020/3/17/21184308/coronavirus-italy-medical-company-threatens-sue-3d-print-valves-treatments

$11,000 vs $1 is a really good example of what patent holders are willing and able to extract, even in something like medicine, where "saving lives" is a presumed priority.

@anonymous - do you think your dentist, your general physician, your brain surgeon or even your psychiatrist is working for free? Have you hung around real doctors and how they think of patients, like a piece of meat (and rightly so, otherwise it would be tough to do their jobs)?

In many ways, your doctor is no different from your car mechanic. Don't blame patents on this (and btw, most companies do not do 'patent reviews' to see if they're infringing anybody's patent, and that includes non-troll patents, they just go out and design, build and sell their product and deal with patent law suits, either real or troll, later, which undercuts AlexT's OP but I digress).

What a terrible argument. Was that a troll?

I absolutely do not want a doctor or dentist who make sales their top priority!

If it comes from Ray Lopez, it is almost certainly a troll. Ray's only goal here is to be noticed.

Sometimes I think Ray is a straussian socialist, demonstrating exactly what we get in late-stage capitalism.

From a supposed 75 year old Reagan voting moderate Republican Boomer to an adherent of late stage capitalism theory.

The mask slipped a bit too much on that one. For the curious:

https://www.reddit.com/r/LateStageCapitalism/

I heard of a thing and made a joke. Therefore another one of our characters thinks he knows everything.

Tea leaves, coffee grounds, and comments are all fodder for Mystics and Mad Men.

Wikipedia:

"According to a 2017 article in The Atlantic, the term "late capitalism" is again in vogue to describe modern business culture, although with a semantic change or an ironic twist. "Late capitalism" has become a catch-all term for various phenomena that express capitalism's distortions of human life, and it is often used in critique and satire."

Ray, I can't see your point. The meaning evaporates as I reach the end of your comment like hand sanitizer after 30 seconds. Let me simplify the argument we have so far for you:

Homo economicus sees a part for $1 and another for $11,000. They both perform the same function. Which one does he choose?

a) The $1 part because all things being equal it is cheaper
b) The $11,000 because he is an American and captive to his employer provided healthcare plan
c) But the doctors do it too!!

Theatrical stupidity aside, we all recognize that fostering intellectual advancement requires rewards, and that if you had your way, neither part, nor the lifesaving machine, would exist.

Put another way, why didn't the volunteers just invent a machine that works better and saves more lives?

Oh I get that, but be honest, would 1,099,900% profit margin on a medical device really have been in your priors as fair compensation?

(11,000 - 1) / 1 *100 right?

I think that if we say a million percent profit margin is okay, because *any* profit margin is okay, we really have lost our way in late-stage capitalism.

At that point late-stage capitalism becomes joking, not-joking.

Many countries have compulsory patent licensing terms during emergencies, and, indeed, some countries deny patentability. In times of war, for example, the US didn't really worry during WWII about violating German chemical patents.

In the US, there are many laws that modify what you might consider property rights during times of national emergency.

If you want to see what they are, visit this Brennan Center website, and if you like the work they do, please make a contribution: https://www.brennancenter.org/our-work/research-reports/guide-emergency-powers-and-their-use

Historical ignorance aside, if we had your way, the 19th century American economy wouldn't exist. When America stole British factory plans and said to hell with British royalties and well, British royalty, it surpassed the world in production.

And Britain never invented anything ever again. China also stole a bunch of American ideas and America never invented anything again. Oh wait none of that happened did it, Tom T.? Read a history book sometime you'd be surprised about facts and stuff.

In the medical field, drugs and devices are bought at absurdly high prices because of government taxpayer payments, or regulations that involve private taxation by way of insurance premiums that are high to cover mandated payments of high patent rents.

After all, most people can't afford the high rents if they must pay for it themselves. I grew up in Indiana where Eli Lilly had a huge presence for making the purest animal insulin, and then developed the volume manufacturing for non-animal derived insulin which had to be priced against Lily's excellent animal derived insulin, which had to compete with many competitors using older equipment and processes to get 99% of Lily's quality. The company stock tanked, and Wall Street deemed the investment a huge mistake.

The patents on the equipment and processes for that substitute are long expired, and animal processing had been killed off - Lily bbeing forced to push forward cut the demand for clean pancreas from slaughter houses, so the raw materials no longer exist. But the analogues which have been developed require those 90s era insulin producing factories be shutdown so only the patented analogues are on the market with high rents extracted from public and private tax assessors (insurers).

Yes, the insulin analogues are superior, but not that superior because insulin pumps from the 90s can meter insulin from the 90s for those needing tight control. The cost of an insulin pump is $50, and is thus a commodity, so it's the software that gets the license in the US. The price of the software should merely be to cost of a few programmers, and maybe $10 million to run human trials, in India, Israel, Poland, with data submitted to the FDA for approval of an improved "generic", spread over a hundred thousand sales at $100 for software, $50 for hardware, $50 for monitoring and reporting to FDA. The sterile supplies are less than $50 a month, and insulin or analog should be $50-100 a month worst case. Comparable in cost to the 90s for a better product and result. Everything for treating diabetes is a commodity like wheat, corn, sorghum, pork bellies, except for the monopoly power gained to extract increasing rents from taxpayers.

"b) The $11,000 because he is an American and captive to his employer provided healthcare plan"

This happened in Italy.

I thought the sarcasm was blindingly obvious.

It isn't patents that require dentists charge $5000 for a dental implant, $500 for office, equipment, sterile supplies, office and nursing staff, and doctor compensations, plus $4500 for the license to install a $10 screw, sold by a sterile screw machine manufacturer for $40?

The alternative is a crown or bridge that requires two or more dentist visits, that take longer, plus molds sent to a dental tech who must create a mold, hand craft it, cast parts, then hand craft the part to remove flash and sprue, then occasionally do rework if the dentist can't fit it, at a price of about $1500.

Dental implants should be cheaper than bridges, or root canals to save a stub for a crown, because labor costs are much lower, but implants cost more IN THE USA because of patent rent seeking.

Just like cataract lenses cost hundreds to thousands until a doctor in India treating poor Indian farmers started manufacturing them for a $1, selling them for $10 to others to help fund cataract surgery for the poor for $50 or so.

The pricing of medical devices and drugs in the US is not based on (labor) cost, but on the price of substitutes plus a premium because the alternative is inferior. Of course, any alternative that just predates the current product is bought and shutdown, so only labor intensive inferior substitutes remain, eg, frequent medical care, hospital stays, eventual transplant, as the alternative to a Hep C drug cure that costs $100 but priced at $100,000 until other patent rent seekers get their product on the market and charge only $90,000. Given the price is only paid because of government rules and tax funding, the marketers seek payments from government to treat all prisoners, a population with high rate of Hep C, but no money, because a million in cash is revenue that's still mostly profit that would never be seen, unless the government imported it from India or China at cost.

Costs are always, ultimately, labor costs, when interest on savings is zero. The cost of capital is the labor cost to build the factory, plus a small amount paid to savers for financing the labor costs. Amazon, Google, Tesla gets the cash for next to nothing from savers. Amazon from cash flow retained earning that get expensed within a year, or in the case of Tesla, selling new
shares to savers, like corporations did back before circa 1970.

@mulp - actually it is patents that the USA has high health care costs. Not that patents are bad, but since the rest of the world has 'compulsory licensing' schemes like Bill mentions upstream (and not just in times of emergency as Bill mentions, but all the time), the patent owners have to get all their worldwide revenues from just the USA. Coupled with some "grey market goods" case law from the US Sup. Ct that held it's legal to import stuff sold cheaper outside the USA and resell in in the USA, undercutting prices in the USA, it makes for expensive US healthcare due to higher R&D costs (patents) in the USA. As well as Baumol's cost disease of course.

Bonus trivia: I'm in the 1%. Do you seriously think I care what you, Ray Lopez hater, think of me? Haha! Dream on. Call me what you want, I'm still going to be ahead of 99% of you (that Irish billionaire kid who sponsors prizes here and Peter Thiel being exceptions of course).

When it comes to medical devices, it's going to be hard to distinguish between Corona profiteering and standard procedure

Tim Draper, early investor on Theranos, keeps defending the fraud ( https://theoutline.com/post/7157/one-of-theranos-first-investors-has-learned-approximately-nothing-from-its-implosion?zd=1&zi=t2vxd6lz ) and keeps giving awful opinion on health issues ( https://twitter.com/TimDraper/status/1238856466183798785 )

This guy instead of giving away the bullshit patents, preferred to sell them.

Draper is an infamous turd. Huge turd.

I've met him. Took a shower in hand sanitizer afterwards. Nothing about that guy is to be trusted.

The negatives of capitalism. :-)

Not strictly capitalism but a certain approach to law. Much like the financialization of the economy, the IP-ization of the economy looks like another bad move. In broad strokes, it's onerous on innocent parties, difficult to enforce, rewards accrue more to legal than inventors, ideas are really both non-rival and non-excludable, current IP regime is non welfare maximizing, extremely limited cases where IP makes sense, hurt economic growth and real production, etc.

Oh please. For every patent troll there's a patent innovator. Most big companies don't mind trolls, it's like a slip-and-fall nuisance suit for a grocery chain. The fault of patent trolls is with courts, which should adopt the "English Rule" and force American plaintiffs who lose to pay the defendants legal fees. That would stop patent trolling overnight.

Let's see if this comment goes through or whether I've been banned from this site... for trolling. (but my trolls are often informative and factual! honest!)

Why an "oh please"? Alex isn't against patents just bullshit ones and not against patent holders but patent abusers. You both agree that the responsibility is with the courts. It seems you two are actually in violent agreement.

Yes I agree LR. AlexT seems reasonable. I think the solution might be getting rid of the patent bar who have a vested interest in muddying the waters (not unlike tort lawyers), and proposals such as 'laid-open unexamined patent applications', similar to what's done in copyright law now (you only register when you need to sue), and faster, streamlined patent courts (subsidized by the state), as well as possibly even state appointed patent lawyers for small entities (patent litigation is expensive) as well as a dozen other ideas too numerous to mention, is the solution to fixing our broken patent system. But that's a rant that I doubt America will ever discuss rationally, most people don't know or care about the difference between a patent, a trademark and a copyright.

For what it's worth, my understanding is that the patent troll in question is claiming that they filed the lawsuit a while ago and didn't realize that the company they were suing was using the technology for conronavirus response. Furthermore, they're saying that as soon as they found out they owned something that could be useful they opened up the license for free use by anyone who wanted it. Who knows if they're full of crap but it seems more likely than not to me that they're more or less telling the truth.

As a side note, the idea of just assuming the worst about people in a case like this speaks to a lack of critical thinking that seems to be emblematic of a larger problem with humanity / the internet these days. My initial response upon reading the headline was that it seemed absurd that a company could be both that evil and doing something that's so obviously not in their own best interest, given that the world was so likely to find out about it. Frustrating to see the internet just take something like that and run with it without even pausing to wonder whether there might be more to the story.

The complaint was filed on March 9. They knew what they were doing, but didn't expect the blowback.

As Brazil's President Captain Bolsonaro pointed out, panicking will not help anyone.

But some social distancing from his staff sure would.

Actually, his staff was infected here in the United States at the Conservative Political Action Conference. Trump's clumsy fascist Administration dropped the ball.

Eh? Are you saying that Bolsonaro's fascist Administration is top notch?

Actually, President Captain Bolsonaro's Administration is not fascist. It is a top-notch non-fascist Administration.

Legally, an injunction must be in the public interest so hopefully some leniency will enter that way for now. Hard to imagine a judge or jury punishing this too hard later.

Legally, it's almost impossible for a non-operating company to get an injunction nowadays, medical related or otherwise. The law changed a few years ago.

So the lesson is that the government should only grant good patents? Who could oppose that?

I think the more specific lesson is that the US patent office should go back to it's previous practice of requiring novelty in patents. That would fix 80%+ of the patent troll issue.

@JWatts - you mean non-obviousness (35 USC 103) not novelty (35 USC 102) but point well taken. Thanks for the patent thought BTW, it's rare anybody even knows half of what you know on patents.

The aia dictates that novelty and also no obviousness are required in order to get a patent

You have no idea what you are talking about.

Why do think these are not good patents? Just because Theranos product didn't work (and they lied about that fact), doesn't mean they didn't solve some problems along the way.... there were lots of good people working there.

Yes exactly .. I'd like to know if theranos patents are fake or actually claim real scientific advancement.

Those who say patents are anticompetitive (E.g. Google who have gutted patent protection by installing installing Michelle Lee as commissioner during the Obama admin and supporting pseudoscholarship at Stanford law and elsewhere) tend to be big fans of getting monopolies thru network effects.

Why don't Tyler and Alex decry Google and Facebook and VCs for suppressing competition thru network effects?!!

Should the bottom line not be "I hope Congress gets a clue and fixes our patent law."?

Just imagine such vehemence related to the person who advocated that sick people go to work. Because this, broadcast March 4 on the show with the highest cable ratings in the U.S., was bullshit advice. "So if, you know, we have thousands or hundreds of thousands of people that get better, just by, you know, sitting around and even going to work, some of them go to work, but they get better and then, when you do have a death like you had in the state of Washington, like you had one in California, I believe you had one in New York, you know, all of a sudden it seems like 3 or 4 percent, which is a very high number, as opposed to a fraction of 1 percent."

It costs money to defend a BS patent; and firms sometimes get together and jointly sue the "patent" holder. There are also potential antitrust damages (treble damages and attorneys fees) for fraudulently obtained patents.

Here is a good summary of using the antitrust laws to go after patent abuse: https://www.jonesday.com/en/insights/2016/03/antitrust-counterplaintiff-may-recover-attorneys-fees-for-defending-infringement-of-fraudulently-obtained-patent

There is a market for going after this, and lawyers get paid for doing so.

Does the loser in a patent infringement case usually pay the winner's attorney's fees? If not, it's clear why patent trolls are still in business. The goal isn't to defend the patent in court but simply to drown the other party in enough paperwork to extort a settlement out of them. The principle is no different from SLAPP suits or bogus personal injury claims.

For some reason I am not getting through to give you some links, but there are many tools lawyers use to get rid of frivolous suits. Look up frivolous suits and sanctions. I would attach links but I do not seem to get through.

Looks like Labrador doesn't want this to be about Covid-19 https://www.businesswire.com/news/home/20200316005955/en/Labrador-Diagnostics-Grant-Royalty-free-Licenses-COVID-19-Testing

interesting

"Two days after the lawsuit was filed on March 11, 2020, the defendants issued a press release announcing that they were developing tests for COVID-19. Labrador had no prior knowledge of these activities by the defendants."

Ah yes, from the "sue first and ask questions later" school of legal philosophy.

Here's something related to copyright and will test the limits there:

"A musician and lawyer has used an algorithm to generate every possible melody in an attempt to end music copyright lawsuit claims."

I'm waiting for someone to do the same with trademarks. There are only so many English words and only so many kinds of economic activities. We are bound to have namespace collisions.

https://www.independent.co.uk/life-style/gadgets-and-tech/news/music-copyright-algorithm-lawsuit-damien-riehl-a9364536.html

Trademarks are different and operate on the use it or lose it principle. If you fail to develop a track record of using your trademark in the marketplace and defending it against infringement, it falls back into the public domain.

Wish that applied to patents. Then patent trolls be gone.

Repeatedly calling something "bullshit" is not a compelling argument.

Saying something is not a compelling argument is not a compelling argument.

Alex, gave arguments. He just also used the perjorative bullshit in respect to the behavior of the patent trolls

I see nothing but conclusory statements in the linked-to article and this blog post. There is no such thing as a "bullshit patent". Either the patent was issued after proper review or it wasn't and either the firm now owning the patent owns it or it doesn't.

Now, the underlying lawsuit may or may not be frivolous (the underlying technology that is allegedly being used is not thesame as the subject of the patent issued), but nothing presented here gives evidence one way or the other.

Realistically, if Alex and the firm being sued for infringement are so confident that the patent is "bullshit" the solution is simple-- just go ahead and continue to make use of the underlying technology. Meanwhile, a motion to dismiss the infringement suit isn't that difficult or expensive. And, if the court isn't convinced that the motion to dismiss is warranted and issues an injunction, that's a pretty good indication that this suit is not frivolous.

People without full knowledge of the facts should not be making inflammatory and conclusory statements such as the ones presented in this blog post.

The 1-Click patent was a fully approved patent but still complete bullshit.

https://en.wikipedia.org/wiki/1-Click

"Either the patent was issued after proper review or it wasn't and either the firm now owning the patent owns it or it doesn't."

Or a patent could be improperly issued after an improper review. Many patents fail the test of non-obviousness such as the 1-Click patent referenced by JWatts. Given that this is a government enforced monopoly, patent applications need to be thoroughly reviewed and pass a very high bar. Or it encourages a litigious environment run by aggressively litigious players which hurts businesses who then take less chances in fear of the next lawsuit.

Here's a "Stupid Patent of the Month" column for more frivolous patents that make it through somehow:

https://www.eff.org/issues/stupid-patent-month

"Meanwhile, a motion to dismiss the infringement suit isn't that difficult or expensive."

That is not true at all. According to the AIPLA in 2012 [1]:

"For a claim that could be worth less than a $1 million, median legal costs are $650,000. When $1 million to $25 million is considered "at risk," total litigation costs can hit $2.5 million. For a claim over $25 million, median legal costs are $5 million."

Updated 2017 numbers are here [2]. Half a million may not be expensive to you but it will be ruinous for many small to medium sized businesses. The courts move very slow and the lawyers bill by the minute it is absolutely a burden.

[1] https://www.cnet.com/news/how-much-is-that-patent-lawsuit-going-to-cost-you/
[2] https://www.patentattorney.com/aipla-survey-of-costs-of-patent-litigation-and-inter-partes-review/

I know it’s not a popular view but just like the gentleman in Tennessee who drove around the state picking up all the pandemic related supplies so he could black market them, sometimes there’s a place for street justice. People always ask me what will happen when one person or company owns the only clean water. It’s a problem the people will handle. Sometimes with violence.

In economies like ecologies, a parasitic or predatory life form is possible and exists. Defenses against parasites and predators also evolve in both systems but usually after the parasites and predators evolved a new attack. Patent trolls are a somewhat new evolution of our legal parasites but they are as economically destructive as the ambulance chaser that we still have.

Unlike the blood-sucking ticks of nature, the patent trolls have no significant risk of being killed when they are detected, which allows them to overpopulate and do significant damage to the host economy. We need to add some real risk to the patent trolls of losing real money equal to the amounts they want to gain with their threatened legal actions and if they don't have the money they are disbarred forever.

Perhaps we need "equality under the law" where lawyers are liable for "known or should have known" their patents weren't applicable and liable for false patents that didn't pass the "obviousness to a practitioner of the Art" or weren't reduced to practice (ie science fiction like the one-drop blood tests and all the patents they had). We no longer have Einstein working at the patent office as far too many obvious patents are allowed.

We can also make the class action parasites liable for knowing the law and the science behind their claims.

>they are as economically destructive as the ambulance chaser that we still have.

I respectively disagree. 1) venture capitol loves to see patents because they reduce their risk if the company doesn't work out, which can happen for many reasons other than technology; 2) there is no particular reason to think that our most innovative people should spend effort enforcing patents vs. solving new problems -- gains from trade and all that.

You get rid of patent trolls by not granting them monopolies on ideas in the first place. All patents are bullshit.

I do hope a sensible judge punishes this abuse.

This will be dealt with extrajudicially if things get real bad (e.g. SHTF scenario).

Personal experience of feynman with patents
https://www.youtube.com/watch?v=rc9gwPB78lk

Preliminary Injunctions are bad instruments as currently practiced. It allows the the plaintiff to collect monopoly profits during the injunction. Generally, the enjoined is okay with the arrangement as they can be made whole if they are found not to have infringed on the IP. There is often a "bond" posted during the injunction by the plaintiff for that reason.

So who gets hurt? The consumers! the consumers do not get made whole from the lower prices that would have resulted if the injunction did not take place.

We should reform preliminary injunctions so that the plaintiff would have to make the consumer whole from the excess rents that they extracted from them.

Classy outfit, that Fortress.

Doesn't this miss the point of why these patents were granted in the first place? How much do we pay patent inspectors who could have rejected the Theranos patents compared to patent troll lawyers?

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