Innovation in the US Patent System [Fourth Branch]
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Innovation in the US Patent System [Fourth Branch]


Over the last few decades, the Patent and Trademark Office has dramatically increased the number of patents it has issued. At the same time, patent litigation has increased dramatically. Alex Blumberg of our Planet Money team and NPR’s Laura Sydell have this report on a patent system that’s been turned on its head. When you talk about the patent system among techies in Silicon Valley, there’s usually an audible groan. If I say patent system what do you say? I think it’s just a way for lawyers to make money. Josh Malone, inventor of Bunch O Balloons — a device that allows you to fill one hundred water balloons in a minute — had some trouble enforcing a patent for his invention. Josh invented the product and ran a very successful Kickstarter campaign in 2014. It was very easy to copy and it was quickly copied by a company named Telebrands, who started immediately selling a copycat product and, within the first year of them selling the copycat product they made 40 million dollars, just off of their own infringing product. Even though the Patent Office gave Josh a patent for the invention, he found himself having to defend the patent again and again in the PTAB — a court within the Patent Office. Josh Malone actually has six issued patents that I’m aware of and they all relate to the Bunch O Balloons, and Telebrands has filed eight petitions for what’s called post-grant review at the PTAB. If your product’s worth tens of millions of dollars, you have to have the resources to fight it because the patent’s just not straightforward to enforce. Josh ended up in the middle of a broader public debate about what patents should be granted and how those patents are to be enforced. Innovators like Josh need patents. They need them in the way that everyone sees every week on the show Shark Tank — where the venture capitalist asks the inventor, the very first question: “Do you have a patent?” And sometimes they say, “No.” And the response is, “Are you insane? You just went on national television and gave away your idea. There’s no way we’re going to invest now in you thousands if not millions of dollars.” There are huge problems when patents get issued by mistake because it prevents the entire public from exercising their knowledge over the invention or using their knowledge over the invention. So, this is a big debate that’s currently going on in patent law, in patent economics, and patent policy, of how do we tailor property rights in patents that actually do promote innovation? 70 percent of my revenue is going to litigation. Why has Josh encountered so many problems with enforcing a patent for Bunch O Balloons and how has that affected his work?

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