In This Issue Return to LES Home Oh Canada! LES Annual Meeting Takes A Global View President's Message: Obvious Change Power Networking Hits The Mark Licensing Foundation Graduate Student Business Plan Competition Healthcare Sector: Decision Making Confirmed By Neuroeconomics CEMC Activities Annual Meeting Vancouver Atlanta Recap: On The Road In Atlanta: Supreme Court To NASCAR A Traveler’s Guide To LES Local Chapters Kansas City Here I Come Chicago, It’s My Kind of Town The Heart of Rock ‘N Roll is in Cleveland Chapter Launch, LES Québec LES E-vent Resource Center—Have You Tried It? Sponsorship Program Enhances Meetings And Education Book Review Are You Ready To Be A Deviant? Slate Of Officers And Trustees For 2007 Introducing The LES Certified Licensing Professional The Grandfathered CLP— Limited Time Offer! LES On The Go LES Calendar of Events		President's Message Obvious Change Allen Baum The forces of change in the business of licensing continue to press ahead. Unfortunately, a by-product of change is uncertainty and unintended consequences. We’ve seen a lot of change this year, and with it—increased uncertainty concerning the intellectual assets we license. In late April, the Supreme Court jolted the American patent system on the issue of obviousness and some say added a new layer of uncertainty in KSR v. Teleflex. A requirement for obtaining a valid patent is that the invention represents enough of a departure from what was previously known that it would not have been obvious to one working in the relevant business. It’s worth pointing out that our membership is divided on whether this decision is good or bad. The bottom line is that the Court made the test much more subjective and gives courts and the patent office broad discretion in determining what constitutes enough of a leap from what was known to merit the award of a patent. The decision also makes it easier to challenge issued patents. The popular press is taking notice as seen in these excerpts from a recent article written by Drake Bennett of The Boston Globe (May 6, 2007): [The Supreme Court] argued that the current patent regime threatened to stifle the sort of creativity that the Founding Fathers had originally created the system to foster. Courts, Kennedy wrote, have been upholding patents for technologies or designs that didn’t need them, that would have been developed "in the ordinary course" of events. In doing so, they have allowed bogus inven tions to steal business from legitimate ones, and discouraged true innovation. To correct this, the Supreme Court made it more difficult for patent applicants to claim that they’ve actually invented something, while also making it easier for older patents to be challenged. Odd as it may seem, the question of what deserves a patent and what does not turns on how courts define that one term: "obvious." The discussion might sound comical if so much didn’t rest on its outcome—without a clear definition of what’s obvious, at least to someone with a little expertise in a particular field, there can be no objective definition of what constitutes an invention, and without that the patent regime would make no sense. As lawyers often put it, obviousness is "the final gatekeeper" of the patent system. But obviousness, over the years, has proven a somewhat fickle gatekeeper, and courts have had a difficult time nailing it down. The danger, according to David Frazier, "is that you lose that objective standard, and uncertainty goes way up." The patent system needs reliability, he argues. Inventors and researchers are less likely to put in the requisite thought and effort if they’re unsure of what they need to aim for, and patent-holders are unlikely to invest in bringing a new invention to market if they don’t know whether their patent will hold up. Ultimately, however, Frazier worries that obviousness, as a legal standard, is particularly subject to what psychologists call "hindsight bias." By the time a patent dispute makes its way into the courts, it can be very difficult to get an accurate sense of what was and wasn’t obvious at the moment of invention. The more important and vital to our lives an invention is, the more likely we are to think it would have been obvious to come up with it in the first place. What does this decision mean to us as licensing professionals? For those that feel they are unfairly "held up" by patent owners seeking royalties they don’t deserve, this decision provides additional negotiating leverage. For those investing large sums of money to bring new products to market, it increases the uncertainty associated with any potential payout. This decision comes at a time when Congress is considering legislation that will provide for post-grant opposition of patents as well as limitations on damages and other changes. The Patent Office is also expected to issue new rules substantially curtailing a patent applicant’s number of "bites at the apple" in seeking patent protection. So we are left with change, and more uncertainty. What will the unintended consequenc es be? Will we inadvertently destroy the incentive to develop new medications in an effort to protect inexpensive Internet phone calls? Whatever the unintended consequences are, I suspect they will largely be determined by YOU and other LES members because we ARE the real world reality where the rubber of esoteric patent law hits the road to commercializing innovation.
Copyright© 2007 Licensing Executives Society (U.S.A. and Canada), Inc.