Guest Post: Rein in the Big Bank Bail-Out

Guest post by the Honorable Paul Michel, former Chief Judge of the Court of Appeals for the Federal Circuit

Last month the House of Representatives passed the America Invents Act (H.R.1249), as the Senate had earlier, with the goal of streamlining patent law. Massive lobbying by Wall Street banks, however, produced not streamlining, but protection for financial firms who infringe other firms’ valid patents – so-called “business method patents”. Instead of simplicity and speed, this provision adds complexity and delay.

“Business method patents”, like all other patents, preserve the Constitutional right to exclusive use of one’s invention for a limited period. If another uses it without the owner’s permission, courts will enforce patent rights once violation of a valid patent is proven. The bill will make getting justice more difficult.

Of course not all business method patents are valid. Under present law, however, procedures are available to banks in both the courts and the patent office to invalidate patents that should not have been granted. They are often used and frequently successful.

This feature of the bill, Section 18, however, adds a special new procedure in the patent office that favors financial firms in several unjustified ways. First, it allows patents to be invalidated even though properly granted under the laws applicable at the time, even when they have been upheld by the courts or after re-examination in the Patent Office. Second, it allows lawsuits to be stalled for years while the patent office reviews the old patents under the new laws. It does so by skewing the standards courts normally apply in deciding whether to freeze (“stay”) the lawsuit until the patent office completes all reviews. Further, it creates an automatic right of appeal if the stay is denied, guaranteeing further delay and burdening the appeals court with reviewing trial court orders not normally appealable.

No other industry is so protected, no other type of patent so degraded. That is not equal justice under law, but special interest legislation at its worst. Favoritism for financial firms will encourage other industries likewise to seek legislative exemption from normal rules and equal justice. That will further fragment patent law, expanding complexity and delay just when simplicity and expedition are needed to spur recovery and create jobs.

Furthermore, Section 18 is not even a necessary measure, since a recent Supreme Court decision already establishes a standard to identify those methods patents that were improperly granted.

It is important that the U.S. patent system and the businesses and jobs it supports be protected from overzealous advocates who would try to use Section 18 beyond even the banks’ specially requested favors. There are three ways of accomplishing this. First, the Senate could and should simply remove Section 18 from the bill. If the banks are too powerful for that to be achieved, then the Senate should amend Section 18 to restrict it explicitly as described above – to abstract business concepts applying particularly to the operations of financial institutions (which by definition would preserve their special-interest “private legislation”). If the banks are too powerful for even that to happen, then the Senate should make it clear in legislative history that Section 18 in fact is intended to have such a narrow focus, and the U.S. Patent Office should implement Section 18 in a manner consistent with that narrow focus – or otherwise be faced with a great number of challenges to validly issued patents that, according to the banks, were not their targets. This would add a great many new proceedings to the Patent Office’s workload, placing considerable weight on a system already under heavy stress. And the challenges to valid patents could lower the value of U.S. inventions, and threaten your business, your patents and your job.

In the bill, Section 18 provides an exemption for “technological” inventions, but nowhere in the bill is that word defined. Instead, the bill directs that the Patent Office is to decide by regulation what “technological” means. But that flies in the face of settled law that the Patent Office lacks legal authority to issue substantive regulations. The competence of the office to make such legislative judgments may also be questioned. Here, again, if Section 18 is not removed altogether the Senate should at least fill in the gaps by clarifying this term and confining the “business method patents” provision to the narrow special interests – banks and financial services companies – that were accommodated here.

A similar provision in Section 14 categorically invalidates all so-called “tax strategy patents,” favoring a few businesses as no others – this time lawyers and accountants providing tax services. Again, it is unnecessary because court decisions already identify which of this class of patents are invalid as obvious. These favored firms are legislatively immunized even when they plainly infringe patents the courts and the patent office have found valid or would under normal rules, just because Congress says so. That is not rule of law, but rule of lobbyists, again leading to favoritism to a select group of firms.

Again, this provision could cover far more than intended, and be argued to apply to all patents that refer to taxes regardless of how limited they may otherwise be. A new computer application to calculate taxes could be blocked from patenting although the patent would be directed to the machine, not the tax strategy. And although patents are exempted where the tax avoidance strategy is “severable,” the term has no clear meaning in this context.

While this would not be an appropriate reading, it behooves the Senate to restrict the “tax strategy” provision with simple modifications to spell out an appropriately narrow definition. Otherwise, as with business method patents, years of litigation over tax strategy patents could follow, creating uncertainty and threatening jobs just when everyone agrees we need more certainty to promote growth. And it will increase delays just when everyone agrees we must reduce them.

Before Congress finalizes the patent reform bill, its best course is to strip out all special interest sections that bail out big banks, Wall Street investment firms, and tax lawyers and accountants. Failing that, amendments as described above are important, or at least legislative history that explains the narrow applicability of Section 18. Without these, the harms can easily outweigh the benefits of this complex 150-page bill. In that event, I say better to reject the current bill and start over.

Notes:

  • Image by Libby Levi.

96 thoughts on “Guest Post: Rein in the Big Bank Bail-Out

  1. Statutes cannot retroactively affect established legal rights

    Do you mean like the proposed statute that would eliminate all false marking cases – even ones affecting established rights?

  2. I never thought this would happen to me, but after I closed up the cash register at the McDonald’s, I decided to stay a bit later and continue perfecting my new hamburger recipe. As it turned out, I wasn’t the only one still in the store …

  3. The Supremes ask the opinion of the Justice Dept. all the time. As well, Congress has the constitutional power to require officers of the US to appear before it and testify. So, if it wants the opinion of Justice, it can ask.

    As as to who asks, it appears that any congressman can raise the issue of constitutionality of pending legislation. See this colloquy between Conyers and Bush’s attorney general over the Patriot Act.

    link to commdocs.house.gov

  4. “I mean if you are a banker why should you be treated any differently than if you were not a banker with respect to the validity and or enforceability of any patent rights.”

    Because “banking” has nothing to do with the Useful Arts which are the realm of patents?

    Just throwing that one out there.

    “In short this clause clearly violates the Equal Protection Clause as found in the Fifth Amendment Due Process Clause. ”

    Really Ken? Does that section that currently gives special protections from business method patents that were already being used violate the equal protection clause as found in the due process clause? Also, wasn’t the equal protection clause in the 14th amendment?

    I thought you were a lawlyer.

    “Congress does not now nor has it ever had the power to treat different groups of people arbitrarily and capriciously.”

    Lulz. HAHAHAHAHAHAHAHAHAHAHAHAHAHAHHAHHAHAHAHAHAHAHAHAHAHAHAHAHAHAHAHAHHAHAHAHAHAHAHAHAHAHAHAHAHAHAHAHAHAHAHAHA.

    Did someone mention laws regarding slavery/women’s rights?

  5. “What if I invent a hedging process where you could be guaranteed to only pay a $10.00 a month heating bill all year round. And let’s say you live in the northern states where you get $800.00 per month heating bills during winter. ”

    I think you missed the point of Bilski’s invention AI. Hedging processes don’t save people money. It was, for instance, to charge people 100$ a month no matter what, though they probably never got a bill for 800$ in one month before that. The point of the invention was not to save people money, it was to make the payments not fluctuate as much so that, for example, family budgeting would be easier.

    People that come up with and use “methods of hedging” that allow people to pay 10$ per mo. that used to get 800$ bills in one mo during winter go to jail.

  6. And that’s talking about in respected journals, discounting the widespread publication I’ve gone through the trouble to make available to all on these interwebs.

    Uh, Penthouse is not a “respected journal,” 6.

  7. What makes you think I’m not published?

    I most certainly am.

    And that’s talking about in respected journals, discounting the widespread publication I’ve gone through the trouble to make available to all on these interwebs.

  8. Manifesto? It was a response to your paper you cited.

    Note also that the economic ignoramous that wrote the article doesn’t even know what an “opportunity cost” is (i.e. the lose that results when you choose one opportunity instead of a different opportunity to persue) and misuses the term the way people who don’t know jack about econ use it (i.e. to mean a missed opportunity).

    I just noticed that I’d forgotten to mention that. My bad. That in and of itself makes it quite clear the author doesn’t know jack about econ because you pretty much learn that in econ 101 and it isn’t too hard to grasp. If he didn’t learn that, then most likely he never took 101 or anything after it and hasn’t bothered to teach himself.

  9. Wow, what a dxpshxt. Businesses require profits. Nothing more, nothing less. Just like employees require paychecks.

    And nice use of kkk there for the party that opposed the kkk.

  10. The banks should pay like anyone else. If I want to start a bank with a group of patents then if there strong enough the customers will switch banks to mine. Whats wrong with that its free market capitalism no need for adverse favoritism.

  11. Well this goes right along with my inchoate attack on the patent act on First Amendment grounds. What you have here is a law that is no rationally related to any legitimate purpose that results in people being treated different based upon their exercise of their free associational rights. I mean if you are a banker why should you be treated any differently than if you were not a banker with respect to the validity and or enforceability of any patent rights. In short this clause clearly violates the Equal Protection Clause as found in the Fifth Amendment Due Process Clause. Moreover, this legislation has no rational relation to any legitimate legislative purpose. Congress does not now nor has it ever had the power to treat different groups of people arbitrarily and capriciously. Any provision in the patent act that operates in this fashion has no legitimate purpose. It will fall.

  12. “You have a right to be a greedy axxhxle whose already rich and wants more money.”

    Now we have an unadulteraded glimpse into the twisted psyche. This is what years of poverty minded indoctrination can do, guess which one of “Rich Dad, Poor Dad” Mooney grew up with…

  13. Mooney like to talk about crxck pipes – they are what he knows most about, because it sure isn’t business, or patent for that matter.

  14. debunked and worthless

    Like pretty much everything you’ve been saying, like a bitter, petty partisan h@ck…

  15. This reform does the reverse of everything it claims to improve.Were groutesqly adding to complexity and expense of everything destroying inventors incentive to create and dealing nothing with the indegency of top inventors truning the legal playing field upside down in favor of thefts and injustice disgusting!

  16. I’ve got some words of criticism.

    By making such comments as “…court decisions already identify which of this class of patents are invalid as obvious…”, and “…a recent Supreme Court decision already establishes a standard to identify those methods patents that were improperly granted…”, Paul Michel is clearly of the opinion that current patent jurisprudence furthers his stated goal of “…more certainty to promote growth…”.

    Such an opinion is unsupportable. Patent jurisprudence is incoherent and is anything but predictable, and in no way promotes the laudable goal of certainty.

    The Federal Circuit Court of Appeals, under Paul Michel’s tenure as Chief Justice, is largely responsible for this failure, as it was (and remains) a primary source of this inadequate patent jurisprudence.

    Efforts by particular industry representatives to ensure more certainty in their particular areas of interest are one way in which those representatives address the failure of existing jurisprudence.

    How many times have we read in decisions statements to the effect that if a litigant is unsatisfied with an outcome, that they can lobby Congress for a change in the legislation.

    The chickens have come home to roost.

    Paul Michel is now complaining about a solution to a problem that he had a significant role in creating.

  17. “Malcolm Mooney said… Not so sure about that. I definitely would stand in line if you invented a process of dousing yourself with gasoline and lighting yourself on fire to protest a ban on business method patents. I might even camp out overnight for tickets.”

    I only replied to this to highlight for the record what a v iolent and irrational mindset you have. Do you really h ate patents, inventors, and capitalism so much you would delight in seeing someone burned alive for holding such beliefs?

    Malcolm you would fit right in at old Salem. Or be a welcome member of modern Al Q aida.

  18. “Maybe you should invent a method of putting down a crxck pipe.”

    Imagination does not require mind altering drugs. However bringing ideas to reality does require patents for would be entrepreneurs. Its because people like you want to ban or block Actual Inventors from earning patents for their original and pioneering inventions that slashes dreams and often results in people turning to crack.

    I would rather see a nation of young inner city kids learning to create new methods and processes they can build businesses around, make money off of, and quickly earn patents on, rather than see them turn to selling crack. You Mooney obviously don’t give a crack. You are a racist, hypocrite, liberal anti patent bagger.

  19. AI: What if I invent a process where you could have your your tax paper work converted to an ATM card, bring said card to my new tax prep business/office, put the card in the ATM machine and instantly get a cash refund guaranteed?!?!?!?! No waiting, no checks, no loans. Just quick easy cash! There would be people lined up around the block! Even you Mooney, providing you actually work and don’t live off the government.

    Not so sure about that. I definitely would stand in line if you invented a process of dousing yourself with gasoline and lighting yourself on fire to protest a ban on business method patents. I might even camp out overnight for tickets.

    There would be people lined up around the block to come to be heat bill slashing business. Even you Mooney, providing you pay bills and don’t live off your momma. I would have to hire lots of people to work in my business. More jobs! And I would need to spend lots of money to run the business. More money to more business that’s will create more jobs!

    Maybe you should invent a method of putting down a crxck pipe.

  20. We know who is FVB
    We know my trademark was abandoned on the same day
    2,974,448.76 was paid to him for My property.
    So now that I know he has sold my Property. Keeping my other in limbo..
    Now was he dumb enough to give someone else my Money for my property that he sold.
    Can’t wait

  21. “On the other hand, there can be no question that the PTO and the courts and businesses will operate for effectively if patents on methods of avoiding taxes and methods of hedging or any other method of manipulating money are eradicated.”

    Except there are serious and legitimate questions. For example,

    What if I invent a process where you could have your your tax paper work converted to an ATM card, bring said card to my new tax prep business/office, put the card in the ATM machine and instantly get a cash refund guaranteed?!?!?!?! No waiting, no checks, no loans. Just quick easy cash! There would be people lined up around the block! Even you Mooney, providing you actually work and don’t live off the government.

    I would have to hire lots of people to work in my business. More jobs! And I would need to spend lots of money to run the business. More money to more business that’s will create more jobs!

    You see, patents like this, business method patents, create a domino effect of more jobs.

    But if H and R Bloch can legally steal my idea then I won’t be able to create the jobs, and apparently that makes you very happy.

    Now lets look at case two, hedging….

    What if I invent a hedging process where you could be guaranteed to only pay a $10.00 a month heating bill all year round. And let’s say you live in the northern states where you get $800.00 per month heating bills during winter.

    There would be people lined up around the block to come to be heat bill slashing business. Even you Mooney, providing you pay bills and don’t live off your momma.

    I would have to hire lots of people to work in my business. More jobs! And I would need to spend lots of money to run the business. More money to more business that’s will create more jobs!

    You see, patents like this, business method patents, create a domino effect of more jobs.

    But if Gas Utilities can legally steal/block my idea then I won’t be able to create the jobs, and apparently that makes you very happy.

    I tell you what would make me happy, if extreme comm ie, left leaning liberals like you just left the country.

    God Bless Capitalism!!

    God Bless America!!!!

  22. Malcolm: “Businesses require customers, dxpshxt.

    And it’s the lack of customers that’s the problem right now”

    Wow this thread has brought out the true anti patent/capitalism stripes of 6 and Mooney.

    Look, you are wrong. What businesses actually require is a product or service that meets a need, and cant’t be bought anywhere else.

    If an entrepreneur can do that there will be a line of customers at their door the first day they open.

    However it is very difficult to provide such a product or service without a patent, especially a business method patent.

    For example, if I invent a faster, cheaper, system for making, selling, and serving more delicious hamburgers, how long do you think it would take before McDonald’s takes that idea and uses it ?

    I will tell ya. one day! As soon as McDonald’s saw the long lines they would send someone over to check it out and discover there is no patent on it and bam, they will legally steal it.

    So tell me Malcolm why shouldn’t such a hardworking, innovative, entrepreneur and Actual Inventor have the right to a patent for his/her invention?

    It’s obvious such an invention would immediately create many new jobs. And if we had a nation of Actual Inventors being rewarded with patents for such inventions, yes it would be bye bye recession!

    As it stands now we have crack pots like you angry because someone is selling hamburger to folks that are hungry, and employing people to make them.

    Not to mention the IQ 6 examiner who would reject such a patent on 101 as being an application of an abstract idea, even though you can bet there is no such legal definition or even an example how such an abstract idea would preempt.

    And thats the real problem in America! If we could just get rid of all the IQ 6 and Moonies, maybe send them to North Korea or Cuba or something, then America could get rolling again!

    God Bless The patent System

    God Bless The USA!

  23. businesses require REAL measures in order to put money in the game – like tax breaks and a robust patent system to name two.

    Businesses require customers, dxpshxt.

    And it’s the lack of customers that’s the problem right now. If you think that more tax breaks for businesses and more patents are going to create more customers, you’re a a hopeless idjit. There is zero evidence that issuing more patents will stimulate the economy and there is plenty of evidence right in front of your fxxxing face that tax cuts don’t stimulate the economy (I’m assuming yo are more than 20 years old and weren’t in a coma during the past ten years). All that happens when cut taxes on the rich is that the rich get richer and everybody else gets poorer. Let me know if you need the data in graph form.

    On the other hand, there can be no question that the PTO and the courts and businesses will operate for effectively if patents on methods of avoiding taxes and methods of hedging or any other method of manipulating money are eradicated.

    Bottom line is your Republikkkan script is just that: a script. As an economic theory, it’s debunked and worthless. You have a right to be a greedy axxhxle whose already rich and wants more money. But just admit it. Don’t pretend that the measures you propose are going to help the average American because they aren’t.

  24. At least the author is published. Maybe someday you can cite one of your useless manifestos 6.

  25. “This author is maddening. He just throws nonsense out and expects it to have some meaning.

    Not that I want to encourage your lengthy and unreadable manifestos, by suggesting I might have read it, but it seems that in view of your above point, the author would resonate quite well with, um, a reader like you…

  26. Why not suspend application of 35 USC 103 and 35 USC 101 for all patent applications (and patents derived therefrom) between now and, say, 2015

    I’m not sure why I’m even responding to this ridiculous piece of shxt example posited by an even bigger piece of shxt, but just one serious flaw is that businesses know that if something is “suspended” then it will eventually be reinstated, then what happens?

    You example is like police offering temporary immunity for people to come in and admit to crimes. Eventually they will be prosecuted, but just not until 2015. Only an 1diot like you would take that deal.

    Unlike you Mooney, who think the world can run on fantasy (e.g., your love of “stimulus” and the role you fancifully imagine it has in repairing economies), businesses require REAL measures in order to put money in the game – like tax breaks and a robust patent system to name two. We already know you you have given up on money because, sadly, you haven’t been able to figure out the nuances of how money or prosperity really works (all you know about money you learned from your blue collar dad yelling at the TV). You don’t really understand what economic incentives are and how and why they work. You don’t believe in incentives because they don’t involve “doing” anything, they involve NOT doing something, e.g. NOT inhibiting business.

  27. Crony capitalism

    That’s another name for the democratic / liberal / socialist / corrupt approach to politics / business…

  28. 6 has no definition of business method.

    6 has no definition of abstract idea.

    6 has no example of how application of an abstract idea would prevent another business from using said abstract idea.

    6 has absolutely nothing.

    I don’t even think he has a real job.

    End of the book on 6

  29. Spoken like a true GOV’T worker that would not make it one day in the public sector.

    The major problem with your post 6 is that you failed to take into account the fact that , every new patent issued to a new entrepreneur creates at least one new job. Thats a fact no one on this blog has been ever been able to refute, to this day.

    Second, you have never learned that the purpose of the patent system is to help stimulate and maintain a robust economy.

    The main reason “Actual Inventors” like myself invent and file for patents is to make money. It’s all about the commerce. Never forget that.

  30. I meant you can search comment by comment, start about two weeks ago and work your way back.

    :)

    Bottom line, define it however congress or the courts want to define it. But MM came up with a pretty good definition.

  31. I am not the one that needs help here….

    Already dealt with this

    You missed with the first pitch, you missed with the “softball,” you have now missed with the tee-ball. Three strikes – you’re out.

    I cannot sink lower for you and your “logic.”

    Pick yourself off the ground and wipe those tears from your eyes. There is no crying in baseball.

  32. How do you extend (hopefully with some small smidgen of logic)

    Already dealt with this in my previous comment. Is there anything else I can help you with?

  33. I’m sure I’ll be sorry I asked.

    No, we are sure sorry you asked. Five second I will never get back and the shear collateral dum-bing down that must have rubbed off from reading the interchange between you and Ned.

  34. latest??

    Searching on this website, the most recent hit with “Malcolm and “business method” is nine months ago – and that does not include a definition.

    Much before that and Malcolm was on a self-imposed exile due to the Bilski decision reinforcing the Diehr viewpoint.

    6,

    If you don’t have an answer, just come on out and say so. Deflecting to MM is just saying the same thing, only making yourself look foolish at the same time.

  35. I will defer to MM’s latest definition. If you don’t know it, sorry. But, I have good news, you can look it up!

  36. I have a tee-ball, maybe you can hit this one:

    No one has mentioned anything about taking out or amending portions of the existing law in any way, shape or form.

    How do you extend (hopefully with some small smidgen of logic) in an area not even remotely approached (except by you – which doesn’t count)?

    Swing for the fence bigboy (and don’t cry too hard when you miss and fall down).

  37. Since when is simply conjuring up the notion of eliminating sections of law necessary to obtain patents even remotely “hypothetical but logical extension”?

    Right. Because once the proposed law is passed the issue of whether it should be repealed and why (e.g., because it is “anti-patent” and therefore “anti-business”) will never, ever be raised.

    Do you have another softball?

  38. Since when is simply conjuring up the notion of eliminating sections of law necessary to obtain patents even remotely “hypothetical but logical extension“?

    You are either a liar or have one seriously warped sense of logic.

    Or both.

  39. I do know what a strawman is.

    Assuming the unambiguous premise of another person’s argument and asking one to consider the hypothetical but logical extension of that premise is not an example of “attacking a strawman”.

    If the patent system “in its robust form” (which evidently means unrestricted) “spurs business”, then lift some of those restrictions and watch business take off.

    Or do you think that is not what will happen?

    Put another way, is it possible that granting patents on methods of avoiding taxes has a net detrimental effect on businesses who provide tax evasion strategies to the public, and in addition has a net detrimental effect on the Federal budget and (assuming that the txxbxgger obsession with the fake deficit “crisis”) is correct, a net detrimental effect on the economy as a whole?

  40. I would ask the Justice Dept. for an opinion on the constitutionality of Section 18

    Seriously…?

    On what authority would the opinion of the Justice Dept. matter with concerns of constitutionality? (multiple levels of goofiness here: wrong branch of govnerment, advisory actions…)

    Ned, there are times when I wonder if you understand the very simplest notions of law.

  41. “If I were the Congress, I would ask the Justice Dept. for an opinion on the constitutionality of Section 18. While it is masked in procedure, it may be broad enought to affect the validity of issued patents based on legislation.”

    So something is unconstitutional because it is substantive rather than procedural? Or is it a “taking”?

    I’m sure I’ll be sorry I asked.

  42. If I were the Congress, I would ask the Justice Dept. for an opinion on the constitutionality of Section 18. While it is masked in procedure, it may be broad enought to affect the validity of issued patents based on legislation.

    This should concern us all.

  43. Yes, but why not?

    Maybe because it is an obvious strawman…?

    You do know what a strawman is (you use them often enough).

  44. Yes, but why not? Mr. Smith suggested in no uncertain terms that patents were awesome means for spurring business. Why not make them easier to obtain, then? Anybody with a novel idea should get one! How could that not be an awesome stimulus for the economy??????

  45. I wonder why no serious person is proposing this, Mr. Smith?

    Maybe because it is an obvious strawman…? – No one, not even the illustrious Mr. Smith mentioned anything about suspending portions of the existing law.

  46. The line between obvious and non-obvious is not at all clear, and so castigating those who seek a patent that is ruled “obvious” and praising as innovative and yada-yada those whose invention gets the non-obvious imprimatur can be dangerous. You often don’t know which side of the line you are on until you make the investment in a patent application and ask for a ruling. Once you have made that investment, it gets hard to walk away from it.

  47. “Why not suspend application of 35 USC 103 and 35 USC 101 for all patent applications (and patents derived therefrom) between now and, say, 2015?”

    I was going to say just that. But I’m guessing his religion somehow bizarrely distinguishes between patents for obvious inventions and in non-obvious ones on economical grounds.

  48. “Please recall Carter v. ALK Holdings*, Paul. You were on the panel that upheld SANCTIONS against attorneys because they argued that inventors have a constitutional right to a patent.”

    I loled.

    “Please explain to the court of public opinion why you should not be sanctioned for making the same assertion you have sanctioned others for making?”

    Well, he isn’t in court.

    “Welcome to the e-fray, or are you ping?”

    Oh come on, the chief judge isn’t ping.

  49. Adam Smith : the power that the patent system in its robust form has over spurring business

    LOL.

    Why not suspend application of 35 USC 103 and 35 USC 101 for all patent applications (and patents derived therefrom) between now and, say, 2015?

    Surely that will “spur business” like nothing else!!!!!! GOODBYE RECESSION!!!

    I wonder why no serious person is proposing this, Mr. Smith?

    Maybe your premise is a complete piece of shxt.

  50. Honorable Paul asserts: “’Business method patents’, like all other patents, preserve the Constitutional right to exclusive use of one’s invention for a limited period.”

    I am appalled . . . APPALLED, I tell you, that the ex-top dude on the CAFC asserts that there is a “Constitutional right” to patent protection for business methods or ANYTHING.

    Please recall Carter v. ALK Holdings*, Paul. You were on the panel that upheld SANCTIONS against attorneys because they argued that inventors have a constitutional right to a patent.

    “There is no basis for inferring that Article I, Section 8, Clause 8 provides rights to inventors without congressional action, and we long ago made clear, in the context of the Copyright Clause, that it does not. . . The Constitution’s acknowledgement [sic] that inventors possess rights to their inventions does not confer constitutional protection over those rights any more than it does for other types of intellectual property. ”

    Now that you are turning political and polemical, you will not be heard to argue that there is a Constitutional right to exclusive use. Please explain to the court of public opinion why you should not be sanctioned for making the same assertion you have sanctioned others for making?

    BTW, this is not a tirade against retired jurists becoming political and polemical. No other group of people is better qualified to take sides on legal issues. Welcome to the e-fray, or are you ping?

    * Carter v. Alk Holdings Inc. (doing Bus. As Acme Sec.), 605 F.3d 1319 (Fed. Cir., 2010)

  51. I think it is wonderful that Judge Michel decided to weigh in on this issue. He points out much of the special interest legislation in this Bill. However, there are other provision designed just to favor large corporations and others designed just to favor Universities. The elimination of any commercially feasible grace period favors large corporations at the expense of startups and individual inventors. Making the requirements for provisionals more stringent is another example of favor large corporations at the expense of startups and individual inventors.
    The only part of this Bill worth saving is the ending of fee diversion.

  52. The only part of this Bill worth saving is the ending of fee diversion.

    You mean the Senate part of the bill, right? – Cause it aint there in the House version.

  53. I think it is wonderful that Judge Michel decided to weigh in on this issue. He points out much of the special interest legislation in this Bill. However, there are other provision designed just to favor large corporations and others designed just to favor Universities. The elimination of any commercially feasible grace period favors large corporations at the expense of startups and individual inventors. Making the requirements for provisionals more stringent is another example of favor large corporations at the expense of startups and individual inventors.
    The only part of this Bill worth saving is the ending of fee diversion.

  54. I’m rather interested in the Congressional delegation to the PTO of authority to construe statutory terms. Isn’t that a core role of the Judiciary? Is such a thing permitted under the US Constitution?

  55. Yes, Sec. 18, “Transitional Program for Covered Business-Method Patents” was another surprise last minute compromise special interest amendment. Yes, provisions only for specific technologies are generally a bad idea. Worse, there are only some explanatory remarks reported in the Congressional Record as to some (difficult and badly needed) terminology definitions made on the Senate floor on the day of the S.23 passage. That will leave PTO and litigation disputes over the actual scope of coverage of this new reexam, to the extent it gets used.
    But this is not the sky falling, re the likely extent of its actual usage.
    Sec. 18 will provide, for a only limited term of only 4 years, a limited subject matter version of the “Post-grant review” reexamination in the same Bill, only for NON-TECHNICAL business methods, but not limited to a post-grant time period, and with special District Court litigation stay and interlocutory appeal provisions, etc. [I suspect the good judge is upset about the interlocutory appeals to the CAFC, because he already was before in another context.]
    This will be an expensive reexamination proceeding with dangerous estoppels for losing. There is also a requirement that the petitioner must be someone charged with infringement or subject to a lawsuit on the subject business method patent. So, as usual, the media hype and the actual likely usage of this provision seems way overblown.
    Futhermore, part of the incentive for this legislative provision is the perception that a big part of the “patent troll problem” is troll-co acquisitions of many of these extremely broad business method patents with claims not limited to any structure or software, not well examined in the PTO pre-grant, issued pre-Bilski, and not subject to any attack for their lack of 112 enablement in either present reexamination.

  56. Interesting use of language by the Honorable. “If the banks are too powerful for that to be achieved, then the Senate should … If the banks are too powerful for even that to happen…”.

  57. Good post in the main. Funny how the little brains of the blog always want to disparage the art units they don’t understand and aggrandize their own art units. Dog eat dog in action.

  58. Yknow I resent Wall Street as much as anyone. I’m disgusted by their lobbying efforts and crony capitalism of which this is another example. I’m also skeptical of business method patents. But not so skeptical that I think a categorical exclusion, done not after policy deliberation but at the behest of a special interest is a good idea, at all. Its just another exemption from market forces for a sector that seems to operate without most of them anyway.

    I’m also somewhat skeptical of software patents mostly because of the inadequacy of the prior art at the PTO especially during the 80s and 90s. But an exclusion at the behest of “tech” companies would be equally disgusting if only less so because big “tech” isn’t the recipient of too much governmental largesse already.

    Thank you for your wise commentary Judge Michel.

  59. This is just another example of our elected leaders naively weakening our patent system to provide advantages for big business and foreign competitors. Small business provides the majority of all new jobs in America – but this bill is anti-small business in that high tech small business has relied on a strong patent system. As a patent lawyer I believe this will just make more work for the patent lawyers but is just plain bad for business.

  60. What Michel says here further supports my view that the oxymoronic America Invents Act is an utter sham. There’s no real “reform” in the AIA. A completely tainted and corrupt piece of legislation, just like Obamacare.

  61. Nothing like fundamental fairness and equal protection under the law as “trivial.”

    For all the posturing that Malcolm does, the support here for the obvious pandering of the Big Banks screams volumes.

  62. Patent attorneys mostly talk to each other. If a few hundred patent attorneys in the state of New York and their clients called Senator Chuck Schumer’s office and complained forcefully about section 18 of the patent reform bill, the good Senator would beat a hasty retreat.

  63. The only interesting thing in your missionary pamphlet:

    “One telling example involves an invention by Flavio Alterthum, a Brazilian professor, and two American academics. Working at the University of Florida at Gainesville, they invented a genetically altered microbe which digests the bio-waste of the sugar harvest to efficiently produce ethanol. The U.S. Patent Office awarded the invention United States Patent 5,000,000.2″

    Apparently US patent 5000000 was to microbes. A nice piece of trivia.

    “The Brazilian co-inventor returned to Brazil and attempted to
    interest local sugar companies in development of the process, but in the absence of local patent protection at the time he got no response.”

    Apparently the inventor of these microbes then went on to try to interest local sugar companies in Brazil in development of “the process” as opposed to the microbes (i.e. the alleged invention) and got a cold shoulder. Surprise surprise. I wonder if, at the time, they were concerned that such microbes might become patentable and they’d find themselves on the business end of a patent suit that they couldn’t afford?

    And, perhaps more importantly, what goes unsaid is what they did with their sugar crops in Brazil. Did they use a better ethanol production method instead of going with the poor poor inventor? Or perhaps start using the inventionlol in secrit?

    Or maybe the “invention” was actually microbes and methods of making/transforming microbes. Kind of like in the poorly drafted:

    “5. A method for the production of ethanol, said method comprising transforming an Escherichia coli with Zymomonas mobilis genes coding for pyruvate decarboxylase and alcohol dehydrogenase wherein said genes are expressed by the transformed Escherichia coli at sufficient levels to result in the production of ethanol as a fermentation product when said Escherichia coli is grown in an appropriate medium.”

    A method comprising transforming a microbe with genes. Wow. Single step method claim much? Not to even mention that it appears to me like an attempt to claim the natural phenomena that the transformation of Escherichia coli by Zymomonas mobilis genes coding for pyruvate decarboxylase and alcohol dehydrogenase wherein said genes are expressed by the transformed Escherichia coli at sufficient levels will result in the production of ethanol as a fermentation product when said Escherichia coli is grown in an appropriate medium to me. Although that might not actually happen in nature, and we might have to investigate the abstract idea of that happening.

    Maybe those farmers in Brazil were simply poed about his poor claim drafting/attempts to claim a natural phenom/abstract idea.

    “Without any effective means under the
    then-existing Ecuadorean patent system to go after the thieves and stop their infringement of the invention, the firm had to consider abandoning Ecuador. One of Ecuador’s growing export industries suffered a severe and unnecessary blow.”

    Orly? Because a firm CONSIDERED leaving Ecuador the export industry suffered an unnecessary blow? What blow was that?

    Is the author of this paper as st upid as he sounds? Or perhaps more?

    “In both cases, the value added would be done outside Costa Rica, even though individuals capable of advancing the inventions were available on campus or in local firms.”

    What “value added”? The end/suppression of HIV? Hmmm, seems like we still have that and it isn’t very easy to suppress as I understand it. Did the blight end in Costa Rica? Yes/No? What is the value that was supposedly “done” outside of Costa Rica?

    This author is maddening. He just throws nonsense out and expects it to have some meaning. Could he please follow at least one of his examples through to explain specifically how lack of IP did something or other? ANYTHING? Even I can give better examples than this guy does. And he bothered to write a paper.

    “usually unnoticed opportunity losses”

    Ahhh, his point emerges! Lack of IP led to unnoticed opportunity loses! Wa wa.

    link to youtube.com

    You know what else led to unnoticed opportunity loses? My not wearing any pants a minute ago. But you know what else? It opened up some opportunities to go to the bathroom quickly and easily a minute ago.

    I can’t be bothered to read the rest of this article. If there is some saving grace to it later on, then feel free to point it out to me.

    Bonus! How to handle uncooperative applicants:

    link to youtube.com

  64. “I think you are up too late 6″

    Actually too early. I woke up after I fell asleep early early. Now it’s about time to go back to bed.

    “why not just read the article instead of plodding along like a patent Luddite”

    Because his link was broken and I was too lazy to find his missionary pamphlets for him.

    “Sherwood cites lack of investor willingness as the primary reason the endeavor failed”

    Well, they never got the business off the ground, so they didn’t really have a chance to fail properly did they?

    I note that my uncle’s company does fine getting investors without patents, or not getting them, depending mostly on how well their presentation goes. Although I don’t pretend that this is the case for every single start up.

    Btw, your link is broken because you put ()’s around it.

  65. The difference is between the record labels making billions on CD’s and other physical media and making barely a billion on digital sales of the same songs buying selling on this new little thing we like to call the interwebs.

    The difference sir, is the difference between movie makers making bank on 20$ videos/cd’s and then making jack squat when everyone moves over to netflix thanks to fiberoptics and sawwweeeet pc’s.

    The difference sir, is the difference between a plant hiring 50 people to move parts around a factory and in the same plant buying a newly developed automation system to do that same job and firing all 50 employees.

    The difference, sir, is making a widget x that does the same thing as widgets y and z do all in one and for a cheaper price.

    These are practical examples of the arts marching forward destroying economic activity of yesterday. The “difference” in language is between creating jobs and people spending money to buy things and in making publications of inventions.

    I doubt if more than a handful of the patents I’ve issued have made an economic difference besides giving me and the patent attorney a job. However, more patents I’ve issued provided a decent disclosure of an invention that is useful to those of ordinary skill.

    Of course, there are lots of innovations that create jobs as well. For instance, coffee joulies look promising and have created american jobs. But on the whole, innovation isn’t going to be blowing up our economy or putting people back to work in such a fashion as to significantly increase employment while rendering much more important factors like credit and taxes not the dominant factors in the economic equation.

    Btw, did you guys know about Connectify? It’s just a bit of software to tell your computer to be a wifi hotspot if you have the right hardware in your comp. I wonder if, in 10 years, people will still have stand alone wifi routers in their house? Or, will that just be another feature of your standard pc? Will the people that make stand alone wifi routers for in home use be happy about that? Will that change create jobs and economic activity? Maybe, but only through providing more wifi connectivity, not through making jobs for people making wifi home routers.

  66. I think you are up too late 6, why not just read the article instead of plodding along like a patent Luddite. Sherwood cites several examples of invention based endeavors that failed because of weak patent protection. I don’t understand why the link doesn’t work. You can google, for example, “patents propel sherwood” and access the article directly from Google at the exact same link location. I suggest you read the entire article, if you can, and then get back to me about who can think and who can’t.

    It’s really quite simple, in most of the failure stories, Sherwood cites lack of investor willingness as the primary reason the endeavor failed. This would be particularly true in poorer developing countries where the likelihood of a poor individual inventor self-funding his commercialization efforts is slim. So, patent Luddites like 6 and Mooney would cast America backward toward the status of developing country.

    Economic development isn’t just a nice thing, IT’S THE ONLY THING.

  67. “If the econ is helped out as a side effect in some limited situations then so be it.

    Cripes, another m0r0n that doesn’t understand his job. I knew we shouln’d have hired this guy.

    Another charity hire that just doesn’t get it…

  68. “to advance the useful arts sir. Not to help the economy out”

    What, exactly, is the difference m0r0n?

  69. “”When I visited Managua, Nicaragua, for the Inter-American Development Bank several years ago, I learned about the “melon saver”. A farmer there had just made this invention. It’s a small cheap plastic platform that looks like an over-sized golf tee with extra legs for stability. It’s placed under melons as they ripen in the fields to prevent rot and improve crop yields. The fellow obtained a patent in Nicaragua and in the United States. That gave him the impetus to mass produce the little stands and offer them to melon farmers. A marvelous invention that emerged from a very poor country. ”

    And he totally could not have made and sold melon savers in the US and Nicaragua without a patent! It’s just unimaginable!

    “This is a success story, but one of the few. There are abundant examples of creative individuals in developing countries who have made inventions only to fail in their efforts to bring them to commercial usefulness because of the weak intellectual property system of their country.” ~ Robert Sherwood”

    Well by all means Robert Sherwood, give us examples of these failures and how their failure was specifically tied to weak IP. Also be sure to note for us how many of those inventions did not in fact end up in the market made by someone else.

    Why give us the examples of successful people but not of the ones that illustrate your point Adam? I’m starting to think you’re not the real Adam Smith. That fellow could think.

    Btw, your link is broken.

  70. I work at the office to advance the useful arts sir. Not to help the economy out or to advance that ol’ time patent religion. If the econ is helped out as a side effect in some limited situations then so be it. If some mo rons fall to the cult of the ol’ time patent religion then so be it. If the econ doesn’t, or if the patent system as a whole is a drag on the system then trust me, I simply don’t care. We’re making a sht ton of enabling publications over here that wouldn’t otherwise be made. That’s called advancing the useful arts.

    It would be nice if the courts and congress would make it so that people actually want to read patents rather than avoid them like the plague. But, apparently they just don’t care to much about the primary purpose of the patent system and would rather overly punish people for willful infringement instead.

  71. Looking to patent law as a means to “spur recovery and create jobs” is ridiculous.

    In case Mooney, or anyone else, needs anymore convincing that the above statement is a piece of worthless crxp. Here is another story.

    “When I visited Managua, Nicaragua, for the Inter-American Development Bank several years ago, I learned about the “melon saver”. A farmer there had just made this invention. It’s a small cheap plastic platform that looks like an over-sized golf tee with extra legs for stability. It’s placed under melons as they ripen in the fields to prevent rot and improve crop yields. The fellow obtained a patent in Nicaragua and in the United States. That gave him the impetus to mass produce the little stands and offer them to melon farmers. A marvelous invention that emerged from a very poor country.

    This is a success story, but one of the few. There are abundant examples of creative individuals in developing countries who have made inventions only to fail in their efforts to bring them to commercial usefulness because of the weak intellectual property system of their country.” ~ Robert Sherwood

    from “HUMAN CREATIVITY FOR ECONOMIC DEVELOPMENT: PATENTS PROPEL TECHNOLOGY*” Akron Law Review 33:3
    (link to uakron.edu)

  72. Especially people like you who supposedly work for the church. I guess you don’t know where your bread is buttered you m0r0n.

  73. Looking to patent law as a means to “spur recovery and create jobs” is ridiculous.

    You’re right Mooney, it is far better to look directly at the amazing results patent law has in ordering markets and allocating precious economic resource to such an exent that entire markets have emerged literally overnight.

    “The benefits of formulating a drug as a nanoparticulate drug can be numerous, not only as far as the consumer is concerned, but the developer and manufacturer also can obtain certain exclusivities based on Food and Drug Administration (“FDA”) law as well as other proprietary rights under U.S. patent laws. These recent success stories may be only the beginning of what promises to become many future success stories in the field of nanotech based drugs.” (emphasis added)

    (link to foley.com)

  74. “Anyone who doesn’t realize the power that the patent system in its robust form has over spurring business (and thinks government handsouts can solve a nation’s economic woes – as Mooney has unabashedly proven time and time again), belongs in the dustbin with last year’s txmpons.”

    So anyone who doesn’t have that ol’ time patent religion belongs in the dustbin with last year’s stuff?

    Idk brosky, let’s see some evidence before you state with firm conviction that your faith is the one true belief.

  75. Looking to patent law as a means to “spur recovery and create jobs” is ridiculous. Might as well get on your soap box and complain about how “tort reform” is the most important thing ever. You just end up sounding like a shill for some greedy wankers.

    Look no further to be convinced that Mooney is just another crusty left wing shill. Anyone who doesn’t realize the power that the patent system in its robust form has over spurring business (and thinks government handsouts can solve a nation’s economic woes – as Mooney has unabashedly proven time and time again), belongs in the dustbin with last year’s txmpons.

    I think the venerable Judge Michel, who when rarely he speaks usually has something meaningful to say (unlike Mooney), said it all in the last sentence.

  76. I know Paul Michel. Paul Michel is my friend. Son, you’re no Paul Michel. You don’t even merit calling him by his first name.

  77. Dah Chief Judge: no other type of patent so degraded

    No other type of patent is so pointless.

    A similar provision in Section 14 categorically invalidates all so-called “tax strategy patents,”

    Awesome. Excellent idea.

    More, please.

    Of all the complaints about banks and investment firms being given “special” treatment, Judge Michel’s complaints have got to be the most trivial that I’ve heard yet. I mean, I despise all the big banks and the greedy “financial firms” that rip people off and beg for bailouts, but these laws are great. Anything that gets helps reduce the number of these types of patents and patent applications is great for every other patentee, and by that I mean those patentees who are promoting progress in the arts that benefit from patents.

    That will further fragment patent law, expanding complexity and delay just when simplicity and expedition are needed to spur recovery and create jobs.

    Looking to patent law as a means to “spur recovery and create jobs” is ridiculous. Might as well get on your soap box and complain about how “tort reform” is the most important thing ever. You just end up sounding like a shill for some greedy wankers.

  78. Chief Judge, aka public nuisance no. 1, Paul, I’d first like to say that I much admire you, and the work that you’ve done over the years. I find you to be a sensible man in the vast majority of your cases that I’ve read, and generally in all the interviews and times I’ve heard you in person.

    That said, I find your position taken here to be, ahem, a little too overboard, beyond what the situation warrants.

    As you are aware, Bilski allowed business method patents that do not conflict with the judicial exceptions. And they did so largely through a misconstruction of a statute meant to protect people from business method patents issued because of your court making a “mistake”. A mistake that your court explicitly acknowledged awhile later. Specifically, Scalia’s misinterpretation ruined a perfectly good decision returning nearly complete balance and harmony to patent law in terms of 101. Although his misinterpretation at least had the side effect of helping to clarify the law on judicial exceptions which is of course a good thing, your court having made a tiny mistake derailed more than a century of good law.

    That is to say, succinctly, business methods were on the chopping block and narrowly escaped the executioner’s swing because of an explicitly acknowledged mistake by your court. And this was only a year or so ago.

    Now is the time for congress to decide to allow Bilski to stand, to modify it’s position on business methods, previously largely regarded as being unpatentable in toto, or to abolish them. And in effect, clean up the mess the Federal Circuit made.

    They are already being generous, nearly certainly overly so, with business method patents by tacitly agreeing to allow Bilski to stand.

    For you to come here and say that congress’s actions, overly generous as they are, are totally unfair protectionism of the “financial firms” is nearly completely outrageous. Their generosity to would be “inventors” of subject matter wholly outside of what would traditionally be regarded as the Useful Arts should be accepted with a huge smile on your face and a welcoming pat on the back. Not a dour look as if the milk, freely and too generously given, were terribly sour and an article decrying how terribly unfair it is.

    I myself would just about be willing to accept the current proposals in the pending legislation if only to put the business method issue nearly wholly behind us. The most egregious of them are dealt with by Bilski and the judicial exceptions when properly applied and the few around the edges that survive are not such an evil as to be totally unacceptable. A few provisions here and there to keep a close eye on such patents is hardly something to blow smoke about.

    On a different note, you should have seen this coming. The alternative to this fracturing of patent law into individual art areas is to create wholly new patent laws for things like software and business methods and consider them completely invalid under the existing patent law. These are actions long overdue.

    Sincerely,
    6

    P.S. Wasn’t there a section that specifically grants the PTO substantive rulemaking authority where congress explicitly gives it to them? It’s been so long since I looked at Tafas I don’t remember the two sections that were most at play. I had thought that one, which necessarily wasn’t much use in Tafas, explicitly gave that power to the PTO where congress explicitly delegated its authority. I don’t really care if there is or there isn’t, but if there is it might make yet another part of your article look silly.

    P.P.S. Thanks for reading, hope I wasn’t too harsh!

  79. Perhaps I have misunderstood the judge or the legislation?

    Or, of course, perhaps this is just evidence of judge Michel’s point, that it’s not entirely clear how this provision is supposed to or will work in regard to merely calculating owed taxes.

  80. Judge Michel is so correct about HR 1249 being riddled with special-interest provisions, mostly for financial service providers. I already wrote both my senators asking them to strip these provisions during reconciliation. I’m sure they will be falling over themselves to honor my request, right?

    Also, I am slightly ponderous of this assertion by his Honor:

    A new computer application to calculate taxes could be blocked from patenting although the patent would be directed to the machine, not the tax strategy.

    That may be debatable, no? Especially since section 14 seems to try not to touch tax preparation software specifically?

    (c) Exclusions- This section does not apply to that part of an invention that–

    (1) is a method, apparatus, technology, computer program product, or system, that is used solely for preparing a tax or information return or other tax filing, including one that records, transmits, transfers, or organizes data related to such filing; or

    (2) is a method, apparatus, technology, computer program product, or system used solely for financial management, to the extent that it is severable from any tax strategy or does not limit the use of any tax strategy by any taxpayer or tax advisor”

    Perhaps I have misunderstood the judge or the legislation?

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