What is Atlantic’s role in the patent system?
Atlantic is a patent licensing company based in Dublin, Ireland. We acquire patents covering some of the world’s most cutting-edge technologies. With over 25 years of experience, our team has developed expertise in all aspects of patent licensing, including engineering, finance and legal. Our investments in technology have placed significant recoveries in the hands of inventors, enabling them to continue innovating. This is critical, as many inventors lack the resources or expertise needed to obtain value created by their patents. If they decide to go down that road alone, they could face countersuits and retribution from companies with more resources and influence. Our business performs an essential role in the innovation ecosystem; we are uniquely structured to challenge these large companies and to insist that they act reasonably, respect innovation and pay a fair price for the technologies that they use.
What is the current state of the patent industry?
In 2022, China led the world in patent filings, with the United States in distant second place, and Japan, Korea and Europe rounding out the top five. China’s patent leadership is echoed in its economic growth, which has far outpaced that of the United States over the past 20 years. Given that the United States has chosen to move towards a system that erodes intellectual asset holders' rights, it is unsurprising that four of the top five patent assignees from 2022 are headquartered in Asia. At the company level, Samsung continues to lead the world in patent applications. US companies like IBM have fallen further behind Korean rivals, which could be a result of is ill-conceived membership of the LOT network. This organisation was set up to undermine and devalue patents by pivoting towards open source, where patents are unenforceable and innovators are not rewarded for their work. This primarily benefits large tech companies that leverage their size and not their ability to innovate.
What do you think has been the cause of the erosion of patent holders’ rights in the United States?
Without a robust patent enforcement system that rewards innovators and holds infringers accountable, infringement becomes rampant. Trust in the patent system erodes, patent filings fall and the dissemination and adoption of the latest technology ceases, undermining the economy. Take efficient infringement for example: when a company uses an innovator's technologies without taking a licence (because the cost of litigation will prohibit that inventor from enforcing its rights), the only punishment the infringer faces is to pay approximately the same royalty that would have been paid upfront if a licence had been taken. The former head of patent licensing at Apple, Boris Teksler, said that efficient infringement could almost be viewed as a “fiduciary responsibility”. This is representative of Big Tech's attitude to intangible assets and innovators. Until infringers can be restricted from using other people’s patented technologies without a licence, efficient infringement will remain the standard operating procedure of Big Tech.
How have attitudes towards IP monetisation shifted throughout the course of your career?
When I started in this business 25 years ago, there was a much greater appreciation and respect for patent holders’ rights and the role of inventors in our economy. In recent years, we have seen Big Tech successfully lobbying the federal government to weaken the US patent system, making enforcement more difficult. For example, the 2011 Leahy Smith America Invents Act and the weakening of discretionary denials of inter partes reviews have hindered innovators' ability to enforce their patent rights. The PTAB has also been detrimental to innovators seeking compensation for stolen ideas. Underfunded examiners are issuing patents and PTAB judges are revoking them – all from the same office. Many observers publicly state that the PTAB appears to have a mandate to invalidate most patents. This has resulted in an overall devaluation and a substantial amount of inventors’ money and time being spent trying to protect their patents rather than on innovation. This is not what the Founding Fathers envisioned when they established the basis for the US patent system in Article 1 of the Constitution. We should encourage innovation and technological advancement and provide inventors with an incentive to share their ideas while having the opportunity to profit from them.
How can the US patent system become more competitive?
The first and most crucial step would be to overturn Ebay Inc v MercExchange LLC, which denies injunctions to companies and innovators who do not make products. Recently-retired Federal Circuit Judge Kathleen O’Malley put it best when she said: “If the only threat that you have is the possibility of paying the same royalty that you should have been paying from the very beginning, then what good is the IP protection?” Judge O’Malley observed that settling IP cases when injunctions are unavailable is very difficult. The second meaningful change should be to address Section 101 patent eligibility. Patentees are currently in a situation where patentable subject matter requires a best-guess approach. Clarity and guidance need to come from Congress. Fortunately, some people in the US government still understand the tremendous economic growth that a healthy patent system creates. Senators Thom Tillis (R-NC) and Chris Coons (D- DE) introduced the Patent Eligibility Restoration Act, which would set out what patentable subject matter is and give some badly needed clarity for patent examiners and judges.
How can patent holders mitigate risk?
Patent holders can diversify their coverage to jurisdictions with stronger enforcement procedures. The European UPC, which allows the owners of unitary and European patents to enforce their rights in EU member states, offers many of the benefits of the old US system. The UPC covers 17 EU countries, including Germany, France and Italy, and it offers the prospect of permanent injunctions against infringers, regardless of the products that the patent holder manufactures. These advantages make it a popular jurisdiction for plaintiffs, to the extent that some analysts predict it will overtake the United States as the jurisdiction of choice for patent disputes. Other countries such as China, Japan and recently Brazil are also becoming attractive options for patent litigation, given the prospect of injunctions.
What do you hope will happen in the patent system over the next 12 months?
We would like to see the enactment of the Patent Eligibility Restoration Act 2023, as this would significantly reduce uncertainty surrounding patent-matter eligibility. Given that the bill is bipartisan, this is a realistic possibility. In Europe, we expect to see the development of jurisprudence in the UPC followed by a fast uptake, particularly by smaller companies. In addition, Ireland has indicated that a referendum will be held within the next 12 months on its participation in the UPC. It is essential that this happens as quickly as possible so it can become a popular venue. If Ireland votes to participate, it would be the only English-speaking common law jurisdiction in the UPC, and the country already hosts many large technology companies.
What do you see as the emerging technologies of the future?
Several key technologies are converging, and in the next five to 10 years, this will yield technological advancement and generational economic growth. As we have started to see, AI and machine learning are rapidly evolving, with applications ranging from healthcare diagnostics to autonomous vehicles. In addition, while in its formative stages, quantum computing promises to reshape data processing. This would potentially render current encryption methods obsolete and drive breakthroughs in material science and medicine. Working with matter on an atomic or molecular scale, nanotechnology is set to revolutionise these fields, as well as to have a significant impact on energy storage. In networking and telecoms, the rollout of 5G and the development of 6G technologies is enhancing connectivity speeds, reducing latencies and enabling a new era of IoT devices and smart cities. Meanwhile, augmented and virtual realities are blending the digital and physical worlds, and transforming the entertainment, education and training sectors.
How do you think the latest innovation cycle will differ from other periods of innovation?
The current process, from conception to the marketplace, will become much faster. The development of new technologies will be significantly accelerated by leveraging the power of AI and cloud computing, so companies will no longer have to build prototypes for testing – instead they will be able to use AI to examine all possible permutations and possibilities. Wireless technologies, 5G and Wi-Fi 6 have enabled enormous gains in AI and are essential to the next technology boom. In this kind of environment, patents become even more critical. With such rapidly changing technologies, infringement will be even more rampant. It must be possible for companies to protect their ideas, which means expedited trials and the availability of injunctions. To maintain a vibrant leading economy, we must give innovators the tools to protect their intellectual property and stand up to companies with better resources.
How do you see Atlantic’s future in these emerging areas?
We will remain vital to the innovation ecosystem in these new and exciting technologies. Given the difficulty of monetising patents, we will work with young companies to help build portfolios with protection and assertion value in mind. We will also continue to create a market for innovators who wish to monetise their intellectual assets. Our principal goal is to put the money back into the hands of the inventors, regardless of who they are, so that they can continue to innovate and fuel the economy.
Jerry Padian is a senior executive with more than 25 years of experience in developing, acquiring, financing and licensing leading technologies. He began his career in the IP industry in 1998 when he co-founded Realtime Data, an inventor-owned research and development company. Mr Padian previously worked as a lawyer at New York-based Weil, Gotshal & Manges. He earned a BS in economics from Fordham University and a JD from Fordham Law School.