Senators Tillis and Leahy Propose to Improve U.S. Patent Quality

Senators Tillis, a Republican, and Leahy, a Democrat, have introduced legislation in Congress designed to improve patent quality at the USPTO.  The bipartisan nature of the legislation, hopefully, means it will be quickly adopted. [I am an optimist.] Senator Tillis’ press release states:

This legislation would evaluate prior and current initiatives and pilot programs relating to the quality of patents. It would evaluate the need for greater clarity in terms of what constitutes patent quality, the setting of patent quality metrics, and how the quality of work product performed by patent examiners is measured within the office. The bill would evaluate the need for recording examiner interviews via audio files or automated transcriptions, how the assignment of patent applications to examiners is undertaken, and the creation of a group that looks at real-world circumstances and uses that information to perform targeted review of certain patent applications. Furthermore, the bill would also study any evidence of fraud in the patent application process and suggest avenues to address such fraud.  

“If the United States is going to continue to be the world’s leading innovation economy, then we have to first make sure our patent system is strong and instills confidence,” said Senator Tillis. “We only have strong patents when those patents are of the highest quality and meet all the requirements of patentability. I’m proud to introduce this measure with my good friend Senator Leahy to improve the quality of patent examinations and ensure that the USPTO issues strong patents. This legislation is a step further in continuing our work to strengthen our intellectual property rights.” 

“I am proud to cosponsor this commonsense legislation with Ranking Member Tillis,” said Senator Leahy. “This bill follows up on our hearing last year on patent quality, which put a spotlight on the fact that many U.S. patents represent brilliant inventions and drive our economy.  Unfortunately though, some are issued by mistake and can cause great expense for unsuspecting Americans and small businesses.  I look forward to advancing legislative solutions that will help make sure that the patents that are issued are valid and to continuing my work supporting American creators and innovators.” 

Background:

For decades there has not been a major change to the time afforded to patent examiners for the examination of patent application, yet the nature of the technology from which these patent applications are derived and the complexity of this technology have only increased. In addition, the proliferation of prior art, which patent examiners must search for and review in order to make patentability determinations, has only increased and it has done so at a rapid pace. This complexity can and does lead to the necessity for patent examiners to raise more complex prior art rejections. And because of this patent examiners must be afforded the necessary amount of time so as to generate quality work products. 

This bill would require that not later than 1 year after the date of enactment of this Act the Comptroller General of the U.S. submit to the Senate Committee on the Judiciary and House the Committee on the Judiciary a report detailing this evaluation on patent examination improvement. Not later than 1 year after the date on which the Comptroller General of the U.S. submits their report the USPTO Director shall develop guidance for patent examiners focused on patent examination improvement. Finally, not later than 2 years after the date of enactment of this Act the USPTO Director, after soliciting public comment, shall submit to Congress a report that includes how the Office will improve the technical training of patent examiners with respect to emerging areas of technology, the status of office IT systems, a 5-year IT modernization plan, an accounting of the use by the office of advanced data science analytics and a 5-year modernization plan regarding advanced data science analytics, and finally how the result of the application of advanced data science analytics can be regularly shared with the public.

IPwe's Forthcoming NFTs Patent Marketplace

IPwe is attempting to create a marketplace for patents through the utilization of blockchain technology, specifically NFTs. I heard a somewhat similar idea floated about five or so years ago concerning blockchain.  It is an interesting proposal, and we will have to see how it works out.  I am excited that folks are moving forward with the idea; however, I do think there are numerous issues that need to be worked out.  I am working on a forthcoming co-authored paper exploring some related issues. Here is the IPwe press release:

IPwe today announced plans to begin representing patents as non-fungible tokens (NFTs) or digital assets by working with IBM (NYSE: IBM) to create the infrastructure for representing patents as NFTs and storing the records on a blockchain network. The tokenization of intellectual property (IP) will help position patents to be more easily sold, traded, commercialized or otherwise monetized and bring new liquidity to this asset class for investors and innovators.

IPwe, working with IBM, was the first to create a patent marketplace on the blockchain.

Tokenization provides greater transparency and can also make related transactions simpler and more cost-efficient. By representing IP in this way, it can be licensed, sold and commercialized. Organizations can also more easily view the IP as an asset on their balance sheet. While NFTs have been used to represent digital art, sports memorabilia and even iconic Tweets, the early adoption of IP-based NFTs could usher in a transformation of how IP is treated by inventors and enterprises.   

"The IPwe Platform is designed to transform the patent asset class by increasing transparency and promoting engagement, which we believe will encourage innovation," said IPwe CEO Erich Spangenberg. "The use of NFTs to represent patents will help create completely new ways to interact with IP. This is expected to benefit not only large enterprises that have significant intellectual property, but it will bring new opportunities to small and medium enterprises and even individual IP owners. We believe it will usher in new offerings by financial services firms and corporations to promote the evolution of a new patent asset class." 

These NFTs will be stored and shared on the IPwe Platform, hosted on IBM Cloud and powered by IBM Blockchain. The IPwe Platform also enables the Global Patent Marketplace, which allows owners and other members of the patent ecosystem to engage and transact, buy, license, finance, sell, research and commercialize patents. IPwe, working with IBM, was the first to create a patent marketplace on the blockchain. The introduction of NFTs will only help accelerate the opportunity for IP, which has been notoriously difficult to manage, value and transact, to be treated as a liquid asset. 

IPwe will soon begin trials of its NFTs on the company's Global Patent Marketplace. 

According to IPwe, many enterprises, governments, universities and small and medium enterprises (SMEs) around the world are already using their technology, including the IPwe Platform and the IPwe Registry and Global Patent Marketplace. For SMEs in particular, representing patents as digital assets is especially powerful because it allows IP to be treated as collateral or assurance of an organization's value, also allowing it to be more easily leveraged when seeking funding. The IPwe Registry collects current, active and historical patent records in a single freely accessible registry with enhanced search enabled by IBM AI. A broader ecosystem including financial institutions, insurers, enterprises and other patent stakeholders are planned in the coming months to support the use and exchange of tokenized patents using these new technologies.

IBM and IPwe have worked together for the last three years applying IBM's deep expertise in blockchain and artificial intelligence to the IPwe Platform to help protect ownership information; generate patent and portfolio analytics; facilitate transactions; reporting and advancements of the next intelligent generation of patent pooling - an agreement among multiple patent holders to jointly license their IP. 

"IBM has a long history of leadership in intellectual property and the application of AI and blockchain in business. Our work with IPwe is another example of our collaboration with leading innovators to drive outcomes powered by blockchain capabilities and digital assets that have the potential to transform entire industries," said Jason Kelley, General Manager, Global Strategic Partnerships, IBM Services. "As businesses increasingly look to transform how they work with intelligent workflows, blockchain technology is a critical tool to increase transparency and reduce barriers."

To learn more about participating in the NFT trials on the IPwe Platform anticipated to start in Q2, or joining the ecosystem please visit here. 

IPwe anticipates tokenized IP on the platform to be commercially available in Q4 2021. 

Kerrigan on The Financing of Intangible Assets

In an ambitious and relatively short book (290 pages) titled, "The Financing of Intangible Assets: TMT Finance and Emerging Technologies" (LexisNexis), editor and author Charles Kerrigan of CMS law provides a treatment of financing of intangible assets in the technology, media and telecom sectors.  The book has wide breadth and selective depth in its coverage of the subject matter.  Moreover, it is a practical book which discusses mitigating risk and anticipating potential issues, including focusing on potential problems that may arise with new and emerging technology.  The book first opens with five chapters that provide an overview of various relevant agreements and the role of players in the field.  The second part covers security and regulation, such as “Taking Security over Intellectual Property Rights,” and “Restrictions on Assignment, Floating Charges.”  The next ten chapters cover financing in various industries, including Software, Telecoms, Gambling, Music, Biotech and Healthtech, Publishing, Advertising and Adtech, Technology, TV Broadcast Media and Media Technology, and Film.  The next ten chapters ambitiously highlight specific countries’ law concerning the subject matter, which are each authored by practitioners from those respective countries, or Mr. Kerrigan in collaboration with law firms in the geographic area.  Finally, the book ends with ten chapters generally dedicated to an area of new technology involving finance, such as Digital Money, Blockchain and Artificial Intelligence.  This book is helpful as a resource for those who desire an overview of the field and those who need a relatively detailed treatment of a specific area.  It is a welcome addition to the resources concerning the topic.

US State of Wyoming Ready to Charter "Blockchain" Banks

US State of Wyoming enacted a law concerning the creation of special purpose depository institutions which concern digital assets.  The legislature’s findings in the new law state: 

(a) The legislature finds the following: 

(i) The rapid innovation of blockchain technology, including the growing use of virtual currency and other digital assets, has resulted in many blockchain innovators being unable to access secure and reliable banking services, hampering development of blockchain services and products in the marketplace; 

(ii) Federally insured financial institutions are not generally permitted to manage accounts in virtual currency or hold other digital assets; 

(iii) Blockchain innovators have greater compliance challenges with federal customer identification, anti-money laundering and beneficial ownership because of the complex nature of these obligations and the unfamiliarity of regulators with blockchain innovators' businesses;

(iv) These intricate obligations have resulted in many financial institutions in Wyoming and across the United States refusing to provide banking services to blockchain innovators and also refusing to accept deposits in United States currency obtained from the sale of virtual currency or other digital assets; 

(v) Compliance with applicable federal and state laws is critical to ensuring the future growth and reputation of the blockchain and technology industries as a whole; 

(vi) Most financial institutions today do not have the requisite expertise or familiarity with the challenges facing blockchain innovators which is required to provide secure and reliable banking services to these innovators; 

(vii) A new type of Wyoming financial institution that has expertise with customer identification, anti-money laundering and beneficial ownership requirements could seamlessly integrate these requirements into its operating model; and

(viii) Authorizing special purpose depository institutions to be chartered in Wyoming will provide a necessary and valuable service to blockchain innovators, emphasize Wyoming's partnership with the technology and financial industry and safely grow this state's developing financial sector.

The full bill is available, here.  More information concerning the law is available, here. 

KODAK BACK: Plugging Leaks in the Marketplace for Digital Photos

Kodak recently announced the release of KODAKOne and KODAKCoin.  KOKDAKOne is essentially a licensing and tracking platform for digital photographs.  Kodak states:  

Utilizing blockchain technology, the KODAKOne platform provides continual web crawling to monitor and protect the IP of the images registered in the KODAKOne system. Where unlicensed usage of images is detected, the KODAKOne platform can efficiently manage the post-licensing process to reward photographers.

Kodak also states that “KODAKCoin allows participating photographers to take part in a new economy for photography, receive payment for licensing their work immediately upon sale, and sell their work confidently on a secure blockchain platform.”  We may be moving closer to a system of “pay first use later” instead of a “use first pay later” system with changes in technology and regulation.  Additionally, the prospect of less “leakage” in the system of intellectual property that may actually benefit innovation and other values such as free speech may be at risk.  It will be interesting to see if less leakage and perhaps more payment to some creators will lead to more creativity and innovation.  That's the goal, right?  Kodak’s stock tripled on the announcement of the programs.