Diana Ross may be fretting, but the Supremes are betting!
Specifically, they are betting that their recent decision on patent protection won’t stifle innovation (as some critics have argued), but actually will increase the relevancy of intellectual property in the economy.
The Supremes have recently issued four rulings which would seem to significantly narrow the ability of patent holders to obtain license fees from those they accuse of patent infringement. The most sweeping was KSR vs. Teleflex, where The Supremes raised the bar for the standard of “non-obviousness.”
One might assume that startups should be fretting. Certainly, for holders of dubious patents bought in COSTCO-sized shopping carts, this development could not be good. Large corporate patent owners may also be fretting as their relentless arguments against limits on patent protection (arguments which would make Thomas Jefferson somersault in his grave), may have hit their first speed bumps in recent memory.
But for holders of “good” patents — non-obvious, novel, and useful patents which are built on a solid foundation of disclosed prior art and well crafted claims — just the opposite is true. The Supremes didn’t declare war on patent protection, but only on impatent protection (pun intended). Startups can still innovate and prevail!
A little bit of personal experience here: Several Blueprint companies leverage corporate IP spinouts (where IP was developed in a large tech company, then either assigned or licensed on an exclusive, non-royalty-bearing basis). Other portfolio companies carefully develop and seek protection for their inventions. This news is particularly relevant, because several companies in our portfolio — including AirTight, Platform Solutions Inc (PSI) and Visto — are currently in some form of patent dispute, in some cases with very large patent holders like IBM, Microsoft, etc.
Without comment on any particular litigation, conflicts emerge when “blocking patents” — commonly developed by large companies to erect “picket fences” around existing IP — are assailed by fundamental patents developed by entrepreneurial inventors.
The recent Supremes decision is good news for IP-rich venture-backed companies. On one hand, it validates the need of investors to be very careful in extracting or creating high quality patents with broad claims that can withstand re-exam.
Note to VCs: pay particular attention to the requisite entrepreneur’s slide: “Strong Patent Position – 75 patents in process and 2 granted!!!”
On the other hand, it reduces the legal arguments that large companies might use to squash entrepreneurial innovation. At the very least it should reduce the amount of litigation expenses which sometimes threaten the livelihood of startups.
The changing patent landscape will clear the field of some of the patent tourists, but those with strong patents they can now feel emboldened. Companies like PSI, Visto, and AirTight are likely to prevail more easily (or at least with less expense) against titans that until recently were crying wolf at the slightest touch of their picket fences.
Thanks to the Supremes, some new lyrics for Diana’s fretting: Stop! In the name of infringement! Before you break the law!