Last October, Tesla Motors (NASDAQ:
) founder Elon Musk said that his other firm, SpaceX (a space
transport company), does not have any interest in holding
patents. "We have essentially no patents in SpaceX," Musk told
. "Our primary long-term competition is in China-if we published
patents, it would be farcical, because the Chinese would just use
them as a recipe book."
While that may be true, Musk could still end up in a
"Simply eliminating one area of IP protection is risky
because, regardless of whether or not you participate in the
patent system, you are subject to its obligation," Cheryl Milone,
a former patent attorney and founder and CEO of
Article One Partners
(a patent validation community), told Benzinga. "You could still
be hit with a patent infringement lawsuit."
Instead of swearing off patents entirely, Milone suggests that
entrepreneurs find a balance within the system.
"Any trade secret has the potential to walk out the door as an
employee does," she said. "The key commercial features of
companies' products or services need to be evaluated individually
and there needs to be a balance of patents and trade
Milone also spoke about the
prior user rights defense
of the AIA (America Invents Act).
"In the AIA (America Invents Act) there is something called
the prior user right, where if a company is using something and
is accused of infringing, they can say, 'Hey, we were using it,'"
said Milone. "'We kept it as a trade secret.'"
This should feasibly allow inventors to continue using their
creation in the same way, even after a patent is granted to
While the AIA was designed to bring long-awaited changes to
the patent system, Milone said it ultimately was not what
everyone wanted "at a robust enough level."
"But it was what could be accomplished and agreed to," she
said. "The focus of it is improving patent quality. It's giving
the Patent Office higher fees and more access to the public to
have the Patent Office do a better job of processing
"If a patent is asserted against you and you think the patent
shouldn't have been granted, you can go back to the Patent
Office, have them take a second look at something called
Milone said that this has given the Patent Office an edge in
improving patent quality. "That's a tremendous improvement in
where we were," she added.
Looking ahead, Milone said to watch for the SHIELD (Saving
High-Tech Innovators from Egregious Legal Disputes) Act.
"It creates a 'loser pays' approach for patent litigation,"
Milone explained. "I think it's a great discussion. I think there
are ways that can be improved, but I support it.
"If someone files a complaint for patent infringement and they
don't even identify the product in what's called a 'nuisance
suit,' the judge has the ability to apply Rule 11 sanctions and
make the economics more equitable. There are a number of tools in
the judiciary's toolbox that can be applied and should be applied
more aggressively because what we really want to promote is the
proper use of the system and not a misuse of it for nuisance
Not everyone agrees.
Alexander Poltorak, the chairman and CEO of General Patent
Corporation, wrote a scathing op-ed about the SHIELD Act for
"Congressmen DeFazio and Chaffetz may want to give a more
accurate name to their new bill: the 'Shield the Infringer Act,'"
Louis Bedigian is the Senior Tech Analyst and Features Writer
of Benzinga. You can reach him at 248-636-1322 or
email@example.com. Follow him
(c) 2013 Benzinga.com. Benzinga does not provide investment
advice. All rights reserved.
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