Let’s consider three inventors who asserted patents against big companies and won. What does it take for a patent owner to succeed?
The three selected inventors and their inventions are as follows:
- Robert Kearns, intermittent windshield wiper
- Peter Roberts, ratchet wrench
- Jerome Lemelson, bar codes and robotics
That was then—most of that action occurred in the 1980s and ’90s—this is now.
Would those inventors, or others like them, fare as well today?
Probably not. At least not to the same extent.
Let’s take a quick look at the three inventors and their stories. Then we’ll fast-forward to the present day. Finally, let’s chart a path forward.
I. Kearns, intermittent windshield wiper
Robert Kearns (1927-2005), inventor of the intermittent windshield wiper, received pretty rough treatment from the Big 3 automakers, who were still the only game in town in Detroit, where he worked and invented. Kearns’s story is told in detail in an article titled Flash of Genius in the January 11, 1993 issue of the New Yorker. Greg Kinnear played Kearns in the acclaimed movie by the same title.
Kearns, a Ph.D. engineer who earned more than 30 patents and $30 million, died an accomplished and frustrated man, reported the Washington Post (Feb. 26, 2005).
The “flash of genius” doctrine, by the way, came from a U.S. Supreme Court case called Cuno Engineering v. Automatic Devices (1941), and it was applied until the Patent Act of 1952 declared that “patentability shall not be negatived by the manner in which the invention was made.” The Court acknowledged the new standard in Graham v. Deere (1966), though some would say that the Court still remains skeptical of inventions and patents.
II. Roberts, ratchet wrench
Peter Roberts (1945—), the Sears Roebuck clerk who invented the ratchet wrench, originally sold his patent to his employer for $10,000, then rescinded the agreement, and ultimately collected an $8.5 million settlement after years of litigation. “Inventor Settles with Sears,” Chicago Tribune (Sept. 17, 1989). For more of the story, see “Wrench in the Wheels of Justice,” Washington Post (July 6, 1986).
III. Lemelson, bar codes and robotics
Jerome Lemelson (1923-1997), an engineer and inventor named on 600 patents, may be the most controversial independent inventor of all time. He began filing patent applications in the 1950s—many of them based on thin disclosures resembling science fiction—and some of them remained pending for decades before issuing as “submarine” patents with a new life of 17 years under the patent laws of that era. He pursued some cases to judgment and collected billions of dollars in license fees and settlements. His patent attorney Gerald Hosier was declared by Forbes to be the highest paid lawyer in the country in 2000 with an annual income of $40 million. Hosier and Lemelson were much hated in corporate America and other countries. They were perhaps the first to be branded patent “trolls.”
A positive view of Lemelson may be found on the website of the Foundation he founded. Less friendly assessments of his life and accomplishments are easy to find, for example, “Great Inventor or Big Fraud,” L.A. Times (Aug. 21, 2005).
IV. What’s in store for independent inventors today?
If life was difficult (and ultimately profitable) for Kearns, Roberts, and Lemelson, it is no easier (and no more profitable) for independent inventors today.
Inventors were heroes in the post-war era of the 1950s and ’60s, and the U.S. Patent and Trademark Office was a kinder, gentler place. Patent filing fees were lower, and examiners worked with applicants with an eye toward issuance—in contrast to today’s inexorable grind toward final rejections—which are not truly final, but rather an invitation to pay additional fees to start the process over again in Requests for Continued Examinaton (RCEs). The latter phenomenon is discussed in a 2010 article by Professor Dennis Crouch in his popular blog Patently-O.
Courts have never been overly friendly towards patents or independent inventors, but in 1982 the creation of the U.S. Court of Appeals for the Federal Circuit provided an instant jump-start for a languishing patent system. The Federal Circuit was created to restore respect for patents and competitiveness for U.S. industry.
Starting on October 1, 1982, patents instantly gained new respect and value, and this trend accelerated and continued at least into the 1990s and perhaps the new millennium. Someday, we will look back and identify the peak, which probably has already occurred, see PWC 2015 study of patent litigation.
Some of the factors making life more difficult for independent inventors, in addition to Patent Office woes, are a new public hostility to inventors and patents. The hostility has been fomented by companies that have been targets of patent infringement lawsuits. It has been picked up and amplified by the media, and it has found its way into the three branches of government, all of which are significant shapers of the patent system. For example, the Supreme Court has taken up an ever larger number of patent cases, and in general the Court has made it harder for patent owners to sustain validity, prove infringement, and collect damages. In any event, to assert a patent is to be branded a troll.
Local patent rules adopted by the most active federal district courts make it harder, slower, and more expensive for patent owners to get to trial, imposing multiple burdens and hurdles, such as “Markman” claim construction exercises and hearings, which can be crippling or fatal to patent owners.
New post-grant procedures under the America Invents Act make it easy for accused infringers to delay district court infringement cases in favor of relatively low-cost, high-speed, and patent-unfriendly proceedings such as Inter Partes Review (IPR) in the Patent Office. For a patent owner pursuing an infringer, the pot of gold keeps getting farther and farther away.
But are patents still valuable? Apparently so! Marvell Technology has agreed to pay $750 million as a reduced settlement to Carnegie Mellon University for infringement of two hard disk drive patents. A “substantial share” of the settlement—after deducting millions for attorney fees and costs—reportedly will be paid to the two professorial inventors. See Reuters story (Feb. 17, 2016).
Bear in mind the fact that the real money is in practicing a patent, not in collecting damages or royalties. See Tip 3 in my article Seven Tips for General Counsel.
Patents remain critically important and valuable for companies that rely on innovation and improvement to gain and maintain market leadership. Organizations working in niche fields—take hard disk drives as an example—can make the most profitable use of patents. Independent inventors—who almost by definition tend to lack substantial financial backing—might find themselves left out in the cold. For more on the who, what, why and when of patents, see my recent series on the 4 W’s of patent. In short, companies that patent timely inventions within their wheelhouse to practice the same for profit, are the most likely to make money on their patent portfolios.