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John D. Trudel of The Trudel Group has been a leader in the fight to help save our patent system. His columns in Electronic Design and Upside are widely read.
The Trudel Group works the "Business Side" of technology. Our belief is that it is not the creation of technology that makes money, but the application. Our practice is based on business innovation, which has three dimensions -- technology, market, and implementation.
by John D. Trudel
(Electronic Design, October 2, 1995)
Life has irony, dear readers. In my wanderings I stumbled upon a hidden, serious, and very frightening issue. This may be the most important column I'll ever write. As easy as it is to loathe lawyers, not all are bad. I hope some good ones will want to take up a difficult challenge, and take on a superior adversary -- our own government. At its core, high technology business needs legal protection. Since 1790, innovators have depended on the U.S. patent system to protect the unique value they created. This protection is now absolutely essential.
"Knowledge has become the key economic resource and the dominant, if not the only, source of competitive advantage." (Peter Drucker, Atlantic Monthly, November 1994) Firms like Microsoft, Intel, and Motorola derive most of their market value from intellectual property. Without patent protection, Silicon Valley and the Venture Capital community could not exist.
I recently learned something astonishing. The Clinton administration has made promises to Japan that will end life as we know it for knowledge-based business in the U.S. An official from the U.S. patent office told me some startling things. The administration promised the Japanese that we will make U.S. patent filings public information after 18 months. If that sticks, effective January 1,1996, all your competitors can get them.
The worst news is hidden. Embedded in the middle of the official's talk was the phrase "reexamination rights." Alarm bells went off in my mind, though he brushed by that topic. Did that mean that any U.S. firm fortunate enough to have patents will be subject to endlessly defending them against reexamination by the Japanese keiretsus?
Guarded in public, the official admitted that my worst fears were valid when we spoke privately. He likened the event to Japan's World War II surrender on the U.S.S. Missouri. Some were gleefully calling Tokyo on their cellular phones to report, "The U.S. has given us its patent system."
How could I find proof that this happened? Why hasn't someone blown the whistle? Why didn't the press report this? It took months and many details are still unclear but I got most of the squalid tale. It will take several columns to tell this story, so please have patience.
The proof is contained in one paragraph (on page 26) in the voluminous 1994 Commissioner's Report to Congress, "Working for our Customers." Free copies can be obtained by calling the patent office at (703) 305-8600. The sell-out occurred inletters of agreement between Secretary of Commerce Ron H. Brown and Japanese Ambassador Takahazu Kuriyana dated August 16, 1994.
I urge you to get a copy of this document while it is still available. I think that Brown has sold out the U.S. patent system, and it's almost too late to stop it. My next column will discuss how Brown and his pet Patent Commissioner, Bruce A. Lehman, pulled this off, and why this is not yet front page news. Lehman is now giving road shows telling patent lawyers that this is a minor change in the U.S. system to harmonize it with international practices. The official story is that we have put one over on those stupid Japanese, who gave us concessions in exchange for nothing.
Lehman lies. The unholy combination of NAFTA, GATT, first-to-invent, opening files after 18 months, and the new meaning of reexamination is poisonous.
If Brown's plan succeeds, patent protection in the U.S. will be exorbitantly expensive and much less meaningful.
Trudel to Form
by John D. Trudel
( ELECTRONIC DESIGN OCTOBER 24, 1996 )
Please get a copy of my last column (Electronic Design, Oct. 2, p. 64H) for
part one of this story. It talks about secret promises that the Clinton
Administration has made to Japan which compromise the U.S. patent system.
They have serious consequences for knowledge-based business in the U.S. I
also made reference to the only public document I have been able to find
that contains proof that these promises were made. You should get a copy.
Why isn't this front page news? For many reasons. The first is that patent office insiders, including my source, are fearful. They won't blow the whistle. Secretary of Commerce Ron Brown's Patent Commissioner, Bruce A. Lehman, is very well connected. Like Brown, a former lobbyist, Lehman is the Secretary's tool to use patent law for policy. He also has what has been described as a "trademark temper." In Washington, crossing him can be very career limiting.
The second reason is that Secretary of Commerce Ron Brown's sell out was superbly managed. The press said little, and nothing at all that I can find about it broadened re-examination. A few inventor groups voiced shock that "a treaty of this nature should be signed without any warning." (New York Times, Aug. 17,1994) Lehman hammered them. They "had an ax to grind," and were "misled, unsophisticated, and don't have access to the right information."
The third reason is that Brown's cabal has members outside the government who can cover-up what really happened. The slam dunk that closed press interest came when Harold C. Wegner, a professor of law at George Washington University, and an authority on international patent law, defended Lehman by saying, "He got something for nothing. It's a brilliant trade."
Major effort is being devoted to position Brown's deal as accomplished fact. Lehman is out on the road convincing patent lawyers that this is only a minor technical accommodation to harmonize U.S. law with international practice. Damage has already been done, but Congress must pass laws for Brown's promises to be come binding. If so, there is still time to learn exactly what happened, expose the consequences, and block Brown's sell out. Bills are underway, but in a few weeks, it may be too late.
My contention is that the unholy combination of NAFTA, GATT, first-to-invent, opening files after 18 months, and the new meaning of reexamination is poisonous. Experts are confused, so check the business implications carefully.
What you should do is to circulate these two columns, and the relevant page of Lehman's report that admits Brown's secret promises, to your management. In the end, your CEO should ask your firm's top patent counsel "How can this harm my business?" This issue is much bigger than my little column. Washington can create fog far beyond my humble powers to penetrate. I have talked to a number of experts inside and outside the patent office. I am convinced that this secret deal is devastating, but must confess that I can't prove all that I do know.
I doubt that any outsiders know the dirty details, and welcome any
information you have. It may take a Congressional investigation to learn
exactly what Brown and Lehman did. We may never sort it all out. It is rare
for officials at this level to be convicted of anything. In any case, the
official story -- that we put one over on those stupid Japanese who
gave us major concessions in exchange for nothing -- is obvious nonsense.
Trudel to Form
by John D. Trudel
(ELECTRONIC DESIGN November 20, 1995)
Please get copies of my last two columns (ELECTRONIC DESIGN, Oct. 2 and Oct. 24) for the first parts of this story. The Clinton Administration has made promises to Japan that severely compromise the U.S. patent system. This has serious consequences for all knowledge-based business in the U.S.
Major damage has already been done. Since the 1700s, the term of U.S. patents has been 17 years after they were granted. That changed this past June. The new rules say that patents are valid for 20 years after the filing date. Brown said that this was to comply with NAFTA and GATT, but that is a lie. We could have complied without reducing the term of our patents.
Major patents take from six to ten years or longer to issue. The major revenue from a killer technology (like the CD-ROM, X86, VCR, or Windows) comes a decade or more after first product introduction. Therefore, that single change can significantly alter your patent protection. But HR 359 can undo this damage.
My first column on this topic gave proof. There are four bills now in Congress -- HR 1732, HR 1733, and HR 2235 -- that will complete U.S. Secretary of Commerce Ron Brown's patent sell out. And HR 1669 literally sells off the U.S. patent office. But there is a bill that may undo the damage -- HR 359. Reportedly, the biggest problem in Congress for those trying to block this is "a lack of grass roots input from the districts." If you care, contact your Congressional representative. Mention that the issue is high-wage U.S. jobs.
Small groups of inventors have been trying to oppose Brown's steamroller. For information, contact The Alliance for American Innovation, 1100 Connecticut Avenue, N.W., Suite 1200, Washington, DC 20036-4104; (202) 293-1414. There are also some World Wide Web sites devoted to this topic.
These groups were ecstatic when my columns started running, as the press has been closed to them. Much economic clout is employed and one does not cross the Japanese lightly. The mainstream press and engineering professional associations are strangely silent.
In my view, Brown's surrogate, Bruce A. Lehman, is in charge of the cover-up. He says that these are just "minor changes" to bring U.S. law into line with international practice.
Some patent lawyers know much, but that is like having foxes guard a henhouse. If Brown's promises pass into law, some lawyers stand to reap windfall profits from the increased level of legal contention over patents. I asked four patent lawyers what they thought about this situation. Two were unconcerned, one was alarmed, and the fourth conceded that this 'proposed" legislation needed to be studied for its business implications.
Brown also promised to make patent filings public information after 18 months. In that case, you might as well just mail your filings (and possibly their defense) to your competitors. If your patent never issues, your competitors get a free ride. One source reports that the Japanese have staffed over 15,000 engineers to start reading our patent filings as soon as they are made public.
Brown also promised the Japanese "broadened reexamination." Expect to have your patent filings jammed up. Expect to spend much more on lawyers, since you will, in effect, be in protracted litigation with firms with deep pockets who are only risking their legal fees.
Unless you contact Congress now, the future is dimmer. Brown and Lehman
are systematically destroying our patent system, and are close to succeeding.
Trudel to Form
by John D. Trudel
(ELECTRONIC DESIGN, December 16, 1995)
The Clinton Administration has made promises to Japan that severely compromise the U.S. patent system. My last three columns (ELECTRONIC DESIGN, Oct. 2, Oct. 24, Nov. 20) provided the details. The first reveals the perpetrator, Commerce Secretary Ron Brown, and tells where to find proof. The second talks about the cover-up by Brown's associate, Bruce Lehman. The third discusses some of the consequences for knowledge-based business in the U.S.
Damage has already been done. Changes in laws effective last June leave us with greatly weakened patent protection. Without exaggeration, I believe that if all of Brown's promises are allowed to pass into law, it will be the end of life as we know it for high-tech business.
There is not much time left. The only hope of blocking Brown's sell out of our patent system is through Congress. Your representatives need to be told of the danger to society, business, and your family's welfare posed by HR 1732, HR 1733, HR 1659, HR 2235, and Brown's promises.
I don't know Brown or Lehman, but I disapprove of their actions. Allowing lobbyists in high government positions is legal, but dumb. It's like having your generals on the enemy's payroll.
I felt honor-bound to expose Brown's arrangement. That cat is now out of the bag. Interestingly, no one denies the agreements that I reported between Ron Brown and the Japanese. The original tactic was stealth, but now the party line is, "Yes, we did it, but it is wonderful for you." I have received some focused personal attacks, but the tone is that I am paranoid for distrusting Mr. Brown's deal or ignorant for failing to recognize its wonderfulness. The magic buzzword is "harmonization."
It is impossible to tell enough in this column. The most concise and clear description of what has happened and what to do that I have seen is Dr. David L. Hill's recent testimony to Congress (203-259-7789). This spans some 15 pages plus attachments. Ronald J. Riley (rjriley@tir.com) also gave testimony of what life would be like if Brown succeeds. For more information, contact
Steven Shore, President, Alliance for American Innovation, 1100 Connecticut
Ave., NW, Suite 1200, Washington, DC 20036-4101;
(202) 293-1414; fax (202) 467-5591.
There is a flood of propaganda for the other side. I am told that the Japanese government maintains an office in Washington just to coordinate lobbying on the U.S. patent system. Lobbyist funding is in excess of $100,000 per month, and many U.S. IP lawyers are going along with the program. The lawyers will get more fees if Brown's sell-out succeeds.
All of this is more than I can deal with. In fact, it has almost shut down my business. If I wrote entirely on this topic for the next year, I still would not be able to cover the major issues. I suggest that you become well informed.
Perhaps I was naive in thinking that CEO's will embrace this issue today. Most are too distant from products and patents. In a few years, IP assets will be one of the key determinants of corporate valuation, but right now only a few leading firms (Motorola, Intel, etc.) are on top of this. For each of these companies, there are many copycat firms delighted to disarm our patent system. So for most companies, changes in patent law are only an engineering issue -- because a weakened patent system lowers the value that engineering can deliver. (Mini-survey: Seven out of seven VPs of Engineering were very concerned over this issue.)
This issue is extremely important. I have done what I can, but I must disengage. I can only hope that my feeble words have raised alarm and parted some of the fog. I leave it to you -- along with your management, lawyers, and elected officials -- to finish this story. This poses a chance for us all -- executives, managers, workers, professionals, and lawyers -- to rally and work together. As in 1776, we can either hang together or we will most assuredly all hang separately. If you tell the local press in simple words and hit Congress hard and smart, you can win. If you delay or hold back, Brown's cabal will prevail.
Subject: ED Trudel-to-form 11/20/95
To: jtrudel@trudelgroup.com
Dear John,
Your articles of 10/2, 10/24, 11/20 in Electronic Design are cross-haired right on the point !!
The US is selling out. ... Selling out on all its solo and small-business inventors. The problem is that the larger majority of our populace (engineers included) do not understand how it is happening and have no inkling of how it will harm them in the long run. Large US corporations are in a don't-care mode because they have to lay-open their patent applications in Europe & Japan at the 18-month date anyway.
The only way I see to turn this around is to find out who is paying off our government officials, and how much, to sell out on their countrymen. When Lehman took office he swore at a public meeting that he would not destroy the basic contract between the inventor & the US government: the exchange of monopoly-like rights (limited to 17 years) for the right to convert the inventor's trade secret into a public disclosure.
One year later he announces he has cut this super deal with the Japanese: they give us 2 extra months to translate applications into Japanese & in exchange we give away the whole store: the 17 year enforcement period, the inventor's rights to his/her trade secrets, and the Patent Office's control over reexamination proceedings. So what led him to this sudden turn around?
I suspect most of our congress people couldn't care less. Most do not understand the patent system or why it is vital to our nation's economic well being. You can still convince a lot of them that there is little difference between a potato chip and a computer chip. So when someone (I wonder who?) came along with this sales slogan about "world harmonization" of patent systems, they all lined up on the the politically correct queue and sang along.
After all what's good for "Harmony" (Who is this Harmony person anyway?) has to be good for the USA. (Oh shush. Never you mind who dreamed up "Harmony". The name says it all. Harmony is obviously good for us all. Lights up. Strike up the band with a patriotic song. You chorus people over there, start singing in harmony to clutter up the background and drown out those people who dare to question.)
The small inventor is left out alone in the snow listening to all this good cheer. He or she has to figure out how to raise thousands or even millions of dollars to get his/her venture off the ground (to pay for marketing, manufacturing, product development and legal costs) all before the sand in the 18-month hour glass runs out and the wicked witch at our new & improved US PTO gives away the details of the invention for free to all our in-harmony friends around the world.
FYI - I was, but am no longer a practicing engineer. 10 years ago I defected, went to law school & became one of those ruthless patent attorneys who sell their souls to the highest bidder. Nonetheless I am appalled by what our government is doing now. These are solely my personal views & do not reflect in any way the views of my law firm or any of its clients.
Gideon Gimlan
Fliesler, Dubb, Meyer & Lovejoy
(408) 748-7300, ggg@fdml.com
by John D. Trudel, Contributing Editor
Young people ask the best questions. "Why is the sky blue?"
A staffer to a newly-elected member of Congress asked, "Why are people trying to destroy the U.S. patent system?" The Great Patent Sell Out is back with a vengeance. The Patent Wars, which I have written about in these pages, have flared up again. Like a video-game monster, you keep shooting it and it keeps coming back. A new bill, H.R. 400, is being rushed through Congress. U.S. Rep. Dana Rohrabacher calls it the "Steal American Technology Act" because it legalizes technology theft and industrial espionage.
The societal issue is high-wage U.S. jobs for you and your kids. If you weaken patent protection, jobs move offshore faster, and wages fall. The business issue here is profit margins. Why innovate if anyone can steal from you? But if you don't innovate, your products become commodities with razor-thin margins. To prevent this, write Congress now!
I spent an hour trying to educate this young person about products, innovation, and international business. By the end I felt very old and tired. She kept asking why those pushing for a sell out persisted. My cynical answer, "Money," just did not compute for her.
I reflected on our conversation. I dimly remembered that those selling out our system once had used rallying cries like "world harmonization" and "submarine patents." Still, these PR fictions were long ago crisped into cinders under the glaring light of testimony.
Why does the onslaught persist? The timing is bad. Bloodhounds are hot on the trail of foreign "donations." Each week sees a major new scandal, and criminal investigations are starting.
H.R. 400 is a cookie-cutter copy of last year's H.R. 3460, which was disowned by those it claimed to benefit. HR 3460 never even made it to a vote, and the authors were not reelected.
Still, Bruce Lehman, Assistant Secretary of Commerce and Honorable Commissioner of Patents, remains. Lehman signed the original letters of agreement with Japan to sell out our patent system. He is a politically correct icon, well defended, and far enough down in the bureaucracy that Congress does not have a good shot at him. He knows this and exploits it.
Lehman's discreet Japanese fund raising has so far escaped the notoriety of the Indonesian and Chinese funds that flowed in down the hall. Compared to Whitewater, Donorgate, and other such odoriferous events, his money is relatively "clean"
If H.R. 400 passes, Lehman stands to gain personally. If the Patent Office is privatized (critics say "piratized") he would run it, and "gifts" to patent office officials, like him, would be legalized. Let's see—if I could run a private tollgate through which all U.S. technology must flow, could I make a lot of money? Yes, I probably could. Lehman also is on record, strangely, as viewing his job as the "regulation" of technology.
A new global survey from ACMF (Association of Management Consulting Firms) says that 88% of clients indicate that growth is more important than cost cutting. How can you grow? If a U.S. firm, return to innovation. If a foreign firm, seek cheap access to U.S. technology. That dynamic makes Mr. Lehman a dangerous individual. Perhaps he is why the sell out persists?
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