Further Weakening the Patent System to Support Big Tech Profit Margins

I have been intermittently consulting with Alphabet (Google) and its subsidiaries for nearly a decade to assist with their patent and IP issues. Unfortunately, Google’s philosophy towards third-party patents and IP has become passive-aggressive hostility over that time. So when I saw Google’s blog on patents, I was surprised because the words don’t reflect my interactions with their IP team over the years.

To try and interpret what they meant, I put Google’s Patent Blog from April 22, 2022, into Google Translate.

https://blog.google/outreach-initiatives/public-policy/reforming-the-patent-system-to-support-american-innovation/

This is what came out.

++++++++++++++++++

Further Weakening the Patent System to Support Big Tech Profit Margins

April 28, 2022 (Translated July 14, 2022)

By: Google Employee, Darth Sidious IP Lawyer

Since Google was first accused of patent infringement, we have worked to undermine the United States Patent System to prevent paying out licensing fees to deserving inventors. The patent system has never been that healthy, given that litigation is the marketplace, but we paid significant cash in patent damages in the late aughts. We had profits to protect, and a patent war was happening, so we sprang into action to weaken the patent system!

First, we created a public relations group that convinced early-stage venture capital (VC) investors to believe that patents stifled innovation because patent trolls are litigating patents. Then, through working with VCs and their investment companies, we convinced the Bush and Obama Administration that patents were undermining innovation (even though it was not), and we quietly lobbied for the enactment of the Inter Partes Review (IPR a/k/a the “Patent Death Squad”) system to “weed out bad patents.” Or, said differently, to give Big Tech a “Get out of paying licensing fees for free” card.

We paid researchers across the globe, such as Collen Chien, James Bessen, Michael Meurer, and Alexander Galetovic, to write papers that create ongoing discussion (confusion) and indecisiveness on the correct remedies for financial IP disagreements. When professionals say things like “IP is hard to value,” that is precisely how we’d like it to be. The intersection of IP and Finance should be a black box where pricing discovery and good faith licensing are obfuscated by an overwhelming amount of information asymmetry we own and use to our benefit.

Next, we formed the LOT Network , a safe place for efficient infringers to talk shop about how to invalidate patents that threaten its Member’s profit margins. We have successfully wrapped ourselves in the cloak of victimhood by bringing a false sense of IP security to hundreds of small businesses through the LOT Network. We work in broad daylight, conspiratorial collaboration with our infringing peers to find anything possible that could be deemed “prior art” or “obviousness” to invalidate the hard work of patent holders that are non-LOT Network members.

We invested heavily by purchasing Motorola in 2012 to say we have a 42,000 patent portfolio, but the truth is we are culling our patent portfolio as much as we can. If we have to, we pay fair value (not fair market value) to license 3rd party patents, almost always after the threat of litigation or settlement after litigation has forced us to become a defendant.

Consider Alphabet is in the top three of global patent litigation defendants and top three of US IPR Petitioners[1] (not including our invalidating partners like Unified Patents). That means we’ve been credibly accused of patent theft numerous times. Despite that, we claim innocence and will always defend ourselves with “That Patent Never Existed in the First Place!” We are proud of our abilities to invalidate patented inventions unless they are our own, and then we value our patents significantly higher than inventions from 3rd parties.

“Not Invented Here” is the motto of the entire Tech Industry! Why would we be any different? And while we admit that Google’s IP group is an active market participant in patent transactions and licensing, we actively suppress our transaction information from third parties to control the pricing. Information asymmetry is critical to providing us with efficiency for infringing (allegedly).

But we are concerned that the off-balance sheet liability of more vital patents being asserted against us will cut deeply into our profit margins. We might start losing patent litigation cases regularly (again), so we will bemoan patent quality even though the American Invents Act (AIA) has made it so only the best patents are litigated. And we will cite another study by Professor Chien that further undermines the US patent system, but the truth is that great patents will always exist, and asserted patents in litigation have never been stronger. That is why we need a new round of reasons to invalidate more patents!

A more truthful interpretation of the rise in patent litigation is higher outrage by patent holders at the blatant abuse of the patent system by Google and our peers. But don’t say that out loud because we would rather you try to litigate patents against us (because we will prevail because we have more money) than provide good faith monetary licenses to third-party patent holders requesting a license or sale.

Reversing the rising tide of patent litigation against us

Don’t ask us to buy or license your patents. Seriously. Smart small company patent holders with evidence of use that Google is infringing on their patents are best served to sue us first. We will not license your patents on a good faith request. Sue us first, and maybe we will settle? It is the standard operating procedure for Big Tech companies with a market cap above $15B to say no to every reasonable request for a patent license. So, again, why would we be any different?

Google is a resourceful company with a strong record of fighting overreaching patent claims, and we treat all third-party patent holders with the same disdain: You are all Patent Trolls unless you join the LOT Network. Then, once you promise not to sue our infringing peers or us, we may (or more likely may not) license your patents, but we will NEVER let anyone know that we do that. Fortunately, with enough lobbying dollars and help from the USPTO to further weaken patent rights, our ability to infringe on patents with difficult litigation recourse will continue indefinitely. ?

Undermining the Patent Office

Each year, the PTO approves more than half of the more than 600,000 patent applications it receives, working to balance incentives for investment and freedom to innovate. Evaluating those applications is a monumental task, and in recent years the agency has not had the tools it needs to do its job right. Technology can help, and the PTO is working on AI solutions to streamline the process.

While there is significantly more Google could do, we choose to do the bare minimum because Profits. Nevertheless, we’ll pay lip service to the hard-working USPTO employees whose granted patents we’ll continue to invalidate for years and decades. Keeping the examiners under-resourced is precisely how we hope it stays. Our primary goal is to undermine patent holders' ability to protect technology confidently. We face the cost and hassle of defending infringement claims against patents that we think should never have been granted in the first place. By invalidating patents after they are granted, it is most fair for Google, and our LOT Network infringing peers, to assume all patents are invalid until proven otherwise.

Making Small Companies Patent Trolls

29 patent holders are credibly accusing Alphabet of infringing patents through the court system and we have petitioned 522 patents for invalidation[2] . Behind those undisputable figures are rafts of patent holders seeking a license or sale to us. We do not disclose how often third parties seek licenses nor how often we take them. Further, we do not disclose pricing when we strike an IP agreement, and we never want that information to become public. Ever. Because if it did, it would cause a whole host of issues. So we keep everything private and force all patent holders seeking a license to accuse us of infringement via litigation before we will settle. It is an unwritten rule. ?

Strengthening the Executioner of Patents

Former USPTO Director, David Kappos, may have introduced the idea of IPRs, but Google’s former head of IP, Michelle Lee, became the USPTO Director when the IPR system became pejoratively known as the Patent Death Squad. Thanks to Google’s amazing lobbying team, Obama’s placement of Director Lee came when IPR’s created intense uncertainty for small patent holders, patent trolls, and their funders. Exactly as Google wants it!

Hold Out Forever on SEPs

Standard Essential Patents (SEPs) are the hottest topic in the patent community because of FRAND (Fair and Reasonable and Non-Discriminatory). That is why you rarely, if ever, hear us talking about it. But trust us, we are thinking about it constantly! We hire outside counsel (to maintain privilege) to hire subject matter experts to help us figure out what an appropriate “Offer LTE SEP Licensing Rate” should be for mobile devices. But we will never make a good faith “Offer” in public discourse because that would violate our unwritten secrecy clause. Sure, the major SEP holders (e.g., Qualcomm, Ericsson, Nokia, Huawei, InterDigital, etc.) have published their “Ask” rate for SEP licenses, but the implementers would instead not give an “Offer” because we might be held to it! So instead, we hold out and let our more prominent rival phone manufacturers fight it out in the international courts while we pretend it is not our business (even though it is).

?Preserving Google’s Fat Profit Margins through IP Manipulation

?A series of actions will continue to help us crush non-LOT Network businesses and individual inventors: ?

• We will continue to lobby Congress to weaken patent rights for our shareholders' benefit and at the US Constitution's expense. By working with our lobby arm, we’ve helped the Commerce Department’s Strategic Plan to include more robust methods of killing patents before they are granted.
• In the judiciary, we praise the Supreme Court for denying American Axle & Manufacturing Inc. v. Neapco Holdings LLC and allowing further confusion on subject matter eligibility. Confusion is an essential component to helping us maintain our operating margins.
• Finally, before Congress, there is bipartisan legislation that would help reduce abusive patent litigation. Never mind that we could help end abusive patent litigation if we stop “holding out,”, but that is beside the point. Our trailing-twelve-month net income was $74.5 Billion as of March 31, 2022. We are offering a pittance of money to the PTO as higher application fees because (in reality) we are strangling the US Patent office to be more ineffectual than it currently is. After all, we are driven to make profits and ~$75B net income is not enough. WE NEED MORE MONEY!

?

With changes like these, we are optimistic that Google’s market capitalization can reach $3 TRILLION by the end of 2023. Our ability to do that depends on us not paying appropriate licensing fees to patent holders who seek licenses. With the Governments help and smart public relations, we expect this gravy train to last well into the future at the expense of everyone else!

Long Live the Empire! ?

(This is Satire. I hope it is effective.)

[1] RPX Insights

[2] Ibid