When Patent Benchmarking Misses the Mark

Law.com blogger-extraordinaire, Rees Morrison at Law Department Management, has written about a July 31, 2005 article in the New York Times where Microsof General Counsel Brad Smith explained why the company had increased its annual target for patent applications from 2,000 to 3,000. Apparently, benchmark studies had shown the software giant that other information technology companies filed about two patents for every $1 million they spent on research and development. Since Microsoft spends $6-7.5 billion annually on R&D, in order to match its peers’ benchmark metrics, it would need to increase its filings by 50 percent. "Here is a clear instance of the value of benchmarks: a law department decisively acts on what it concluded from comparative figures," he concludes.

Rees, I'm with you on benchmarking, but number of patents filed simply misses the mark. It's what the patents cover that really matters. And, as any patent attorney can tell you, a business can rapidly destroy a lot of wealth by trying to exclude others from making, using, selling, or importing a product that nobody wants.

In my (law firm) business, we call this legal strategy "just get me a patent." Clients usually try to justify this hair-brained approach by telling themselves that even if only X% of the inventions come to fruition, we’ll still be able to generate $Y million in licensing revenue. But if they are less financially sophisticated, they'll just tell themselves that the next time they get sued, they’ll be able to just dip into their massively deep patent portfolio and pull out a killer whale to throw back at their accusers.

The process typically starts of with vim, vigor, and dollar signs in everyone’s eyes, and a few high-priced consultants running brainstorming seminars that produce hundreds, if not thousands, of one-line invention records. Since the existing legal staff is way too lean (i.e., busy) to handle them all, these diamonds in the rough get sent to outside counsel with instructions to "work out the details" with the inventors. However, once the brainstorming sessions are over with, and the inventors get back to their budgeted projects (with a documented return on investment), they start saying things to outside counsel like “I’ve never really worked on one of those before” and “Gee, the attorneys usually figure out the implementation details.”

So the attorneys do the best that they can with what they have. The start by making lots of “black box” drawings depicting the inventions. You know the kind, flowcharts with lots of arrows and clouds, imaginary screenshots, and all the VISIO icons that you could never name. Then, they add lots of boilerplate language about how an ordinary programmer could make this all come true with just a “computer” and an “input/output device.” In fact, by the time the inventors review these little assembly-line masterpieces, they are gushing about the innate creativity that they never knew they had.

Ah, but now, the bills start to come in and management starts asking questions. The shareholders expect sound fiscal controls! So the first things that get cut are prior art investigations to see if any of these ideas have patentable merit. "After all," says management, "our engineers and scientists are at the forefront of technology. They would know if a similar invention had ever been made or described before." Yeah, right . . . .

When it quickly becomes apparent that the legal staff can’t begin to even read all of these new patent applications, much less gauge their value, the client brings in another group of contract consultants -- “quality control counsel.” Their job, as best I could ever tell, is to second-guess the attorney who drafted the application about whether they captured the true "essence" of the inventor’s idea. Since there were never any written specifications on how the applications were supposed to be drafted, and the bills don’t get paid until it “passes quality control,” the whole thing now gets to be rewritten in the latest genre of the quality control counsel. (I can’t tell you how many times an application that was rewritten to get past the quality control attorney was later rejected by the inventor.)

Of course, once a few applications are filed, everybody is happy because they met their benchmark numbers. But then the applications are examined and, sure enough, the inventors didn’t not know about all of the prior art in technical fields where they never worked. Even worse, there is not enough detail in any of the applications to try and narrow the scope of protection around all of this “unexpected” prior art.

So now we move into the next phase where the attorneys file new applications that are combinations of material from the old applications. When that doesn't quite work, they combine the combination applications, and combine the combination combination applications, until there is only one "Mother-of-All-Patent-Applications" left that is so narrow that it is virtually impossible to infringe.

That’s when somebody suggests another brainstorming session . . .