SAN DIEGO--It's been very clear for a long time that the American patent system is deeply flawed.
According to information provided on stage at DemoFall 09 here Wednesday by a company called Article One Partners, as much as 45 percent of all litigated patents are eventually found to be invalid. But the U.S. Patent Office is obviously overwhelmed by the sheer workload it faces, and its investigators' inability to keep up with the research that would help them reject many applications.
There are some solutions in the works, including, a nonprofit system that would spread out the investigative work to a wide ecosystem of subject-matter experts. But clearly, some believe there's money to be made by putting some of this work--at least when it comes to invalidating patent applications or even approved ones--in the hands of a large community.
That's where Article One feels it can make a difference in stopping patent trolls from trying to make fortunes by suing companies for infringement.
The company's model is to farm out potentially invalidating research to a community of "advisers," all of whom can get paid for doing research that makes a difference in investigating applications or existing patents. The company has had its system in beta for about a year and it said that a third of the research done by its advisers has resulted in invalidating evidence.
Now, Article One is formally launching its service, and attacking what it said is a $1 billion market in fighting potentially invalid patents.
It aims to incentivize its advisers by paying them as much as $50,000 to do research and write up sophisticated studies. And this can be deeply valuable work, the company argued. For example, it said, even though RIM paid out more than $600 million to settle an infringement lawsuit, the patents in question were subsequently found to be invalid.
But again, because official patent investigators have only so much mental bandwidth, it is simply not possible for them to come up with the evidence themselves that can help out companies like RIM.
So, in a case like that, a company would put in a request for research on Article One, at which point the advisers can respond with supporting evidence. And the company said it is paying out as much as 5 percent of its profits to the advisers, who are paid if their work helps to invalidate a patent.
If it works on a broad scale, this seems like an extremely important addition to the patent landscape, though certainly not the only one. But as is abundantly clear, the system is broken and needs as much help as it can get, regardless of whether it's nonprofit or profit-based. And given how valuable such work is to large companies, there's definitely a lot of money at stake.