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Why FRAND Commitments are Not (usually) Contracts

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Guest Post by Professor Jorge L. Contreras

There has been a fair amount of controversy recently over commitments that patent holders make to license patents on terms that are “fair, reasonable and non-discriminatory” (FRAND).  As I have previously written here and here, FRAND commitments generally arise when a patent holder wishes to assure the marketplace that it will not seek to block implementation of a common technology platform or product interoperability standard.  Making such a public commitment encourages widespread adoption of these technologies, which is often beneficial for both the patent holder and the market.  As such, it is important that these commitments be enforced.

The dominant theory that several U.S. courts and commentators have adopted to justify the enforcement of FRAND commitments is common law contract.  The argument goes like this:  the patent holder makes a promise to a standards-development organization (SDO) that it will license its essential patents to others on FRAND terms.  The SDO accepts this promise as consideration for permitting the patent holder to participate in the relevant standardization effort.  Hence, the common law elements of offer, acceptance and consideration are all present.  Then, after the relevant standard is adopted and a vendor incorporates it into a product, the vendor can insist that the patent holder grant it a patent license on FRAND terms.  Even if the vendor was not a member of the SDO, it can seek to enforce the patent holder’s promise as a third party beneficiary.  This line of reasoning was accepted by the federal district courts in Microsoft v. Motorola (W.D. Wash. 2012) and Apple v. Motorola (D. Wis. 2012), by the Federal Trade Commission in its settlement with Google/Motorola, and by several commentators.

Nevertheless, as I discuss in a forthcoming article, common law contract is a poor fit for the enforcement of most FRAND commitments, and relying too heavily on it is likely to have unwelcome results.  Contract law fails as a general-purpose FRAND enforcement theory on several grounds.  First, the simplified offer-acceptance-consideration model laid out above does not reflect the actual manner in which most FRAND commitments are made.  Most of these commitments are not set forth in an agreement between the patent holder and the SDO.  Rather, they are contained in SDO policies, bylaws and other types of statements.  In addition, many of these policies (including those adopted by leading SDOs such as IEEE) do not actually require the patent holder to commit to license its patents on FRAND terms, but only to disclose to the SDO the terms on which it will, or on which it intends to, license its essential patents.  Moreover, FRAND commitments are typically a sentence or two in length, and fail to set forth any of the relevant details of the promised license agreement, whether they be royalty rates, grant-back requirements, terms on which the license may be suspended or terminated, and the like.  As such, whatever “contract” is formed is likely void for want of detail, a mere “agreement to agree”.  Finally, the attempt to extend third party beneficiary rights to every product vendor in the world, whether or not it competed in the relevant business, or even existed, when the promise was made, stretches this venerable doctrine beyond any sensible boundaries.  As a result, except perhaps in a few cases in which standards are developed by small groups of firms that have actual contractual arrangements amongst themselves, common law contract is a poor choice as a general enforcement mechanism for FRAND commitments.

At least one Administrative Law Judge at the International Trade Commission has recently come to the same conclusion in the ITC’s case against Interdigital (337-TA-868, June 18, 2014), expressly ruling that the FRAND policy adopted by the European telecom SDO ETSI “is not a contract”, and merely “contains rules to guide the parties in their interactions with the organization, other members and third parties.”  I couldn’t agree more.

I am not arguing, of course, that FRAND commitments should not be enforced.  I feel quite the opposite, and have argued that these promises form an important subset of a larger category of “patent pledges” that ought to be enforced for the benefit of the market.  However, there are many more sound and coherent theories for enforcing patent pledges, and FRAND commitments in particular, than common law contract.  These include various antitrust and competition law approaches, which have been advanced by the FTC and others, as well as my personal favorite, a modified variant of promissory estoppel that I call “market reliance”.  The market reliance theory is grounded in the fact that patent pledges are promises, whether or not they fulfill the requirements of common law contract, and promises ought to be enforced.  The theory overcomes the requirement that specific and actual reliance be proved in promissory estoppel cases by introducing a presumption of reliance based on the “fraud on the market” theory used in Federal securities law.

But whichever theory eventually prevails for the enforcement of FRAND commitments and other patent pledges, it seems fairly clear that common law contract is useful, at most, in a small subset of these cases.

Abstract Idea: I know it when I see it

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Eclipse IP v. McKinley Equipment (C.D. Cal. 2014) EclipseIP101

In a interesting and somewhat darkly-comic opinion, Judge Wu has dismissed EclipseIP’s infringement lawsuit on the pleadings – finding that the patentee has no case because the asserted claims lack eligible subject matter under 35 U.S.C. §101.  In the process of invalidating the claims, Judge Wu also offers some criticisms of the law.  Most pointedly, Judge Wu describes the Supreme Court’s test as offering pure unstructured judicial authority

First, describing the two-step process from Alice Corp, Judge Wu writes:

[T]he two-step test may be more like a one step test evocative of Justice Stewart’s most famous phrase. See Jacobellis v. State of Ohio, 378 U.S. 184, 197 (1964) (Stewart, J. concurring) (“I shall not today attempt further to define the kinds of material I understand to be embraced within that shorthand description; and perhaps I could never succeed in intelligibly doing so. But I know it when I see it . . . .); cf. Alice, 134 S.Ct. at 2357 (“In any event, we need not labor to delimit the precise contours of the ‘abstract ideas’ category in this case.”).

This sort of test is obviously problematic – and especially in the context of patent examination where the discretion is handed to patent examiners.  Judge Wu also goes on to caution against overzealous use of the preemption argument — presenting two reasons: First, the reality is that every patent provides some amount of preclusive impact — that is the point of the exclusive rights offered under the law and Constitution.  Second, we should recognize that the effort in working around patent rights is an important innovative process and patents should not be eliminated under Section 101 simply because it is a cheaper alternative than to invent around.

But the patent law does not privilege the leisure of an infringer over the labors of an inventor. Patents should not be casually discarded as failing § 101 just because the infringer would prefer to avoid the work required to develop non-infringing uses of the abstract idea.

Despite his caution, Judge Wu found that the law still supports invalidity here.

The patents at issue are the creation of inventor Scott Horstemeyer, who is also a patent attorney and founding partner of the Thomas|Horstemeyer firm.  Horstemeyer’s asserted patents claim priority back to a 2003 filing and are related to a method of sending & receiving messages. Patent Nos. 7,064,681, 7,113,110, and 7,119,716.

Asserted claim 1 of the ‘716 patent is here:

1. A method for communications in connection with a computer-based notification system, comprising the steps of: initiating a notification communication to a personal communications device associated with a party; receiving a response communication from the party’s personal communications device, indicating that the party has received the notification communication and is now occupied with a task associated with the notification communication; and refraining from sending any further notification communications to the party’s personal communications device, until detection of one or more events that indicate that the party is no longer occupied with the task and can perform another task associated with another notification communication.

The abstract idea categorized from this claim is as follows: “asking someone if they are available to perform a task and then either waiting for them to complete
it or contacting the next person.”  Further, folks will recognize that the steps can be performed by someone talking on the telephone.

Tying the case to Morse, Judge Wu sees the claims here as likewise not limited to any “specific machinery or parts of machinery described in the foregoing specification.” As a result, the claims cannot “overcome the abstractness problem” and are invalid under 35 U.S.C. 101.

Alice Corp. and Patent Claiming: A Simple Example

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By Howard Skaist[1]

In the wake of Alice Corp (“Alice”), many practitioners, including myself, are thinking about its implications, in particular, with respect to drafting patent claims. Of note, especially, is the Court’s statement, recited more than once in Alice, that “this Court has long “warn[ed] …. against” interpreting section 101 “in ways that make patent eligibility ‘depend simply on the draftsman’s art.’”  See 573 U.S. ____ (2014); slip opinion at 16. I would like to test that notion and, potentially, its general boundaries with a simple example.

Let’s consider, as an example, the early days of computers and the creation of VisiCalc.  If today’s law applied then, e.g., Alice, would a patent claim covering VisiCalc have been statutory? I would be inclined to say, even today, that it depends a lot on the particular claim, but we also have the Supreme Court’s position on the matter, mentioned above. So, to what extent does the answer depend on the particular claim?

Here is one possible claim to VisiCalc:

  1.  A method comprising:  implementing a spreadsheet on a computer.

One issue worthy of mention here is that cases getting to the Court are ones in which the claims do not appear on their face to appropriately flush out the subject matter considered innovative, at least if we can rely on the opinions without taking the trouble to look at other claims of the particular patents.   However, most skilled practitioners tend to make sure that a spectrum of claims are included, at least for considerations related to section 103.  As shall be seen, this may also be the best practice for addressing 101 issues.

The claim above, thus, is in line with claims previously adjudicated before the Court.  That is, the claim on its face does not appear to communicate details about the innovation itself. Rather, this claim would likely be held non-statutory under the approach in Alice.  Applying the analysis, spreadsheets constitute a way to organize human activity that is of longstanding use.  Thus, it would seem that, following Bilski and Alice, a spreadsheet may potentially be deemed an abstract idea or a fundamental concept.  Thus, it is, if anything, a building block for human ingenuity and, on policy grounds, section 101 exceptions to statutory subject matter are potentially implicated.

Again, then, following the approach in Alice, the aspect of the claim calling out implementation on a computer likewise does not constitute a sufficiently meaningful addition, whether analyzed element by element or as a whole.  It might be argued that computer implementation is faster than performing spreadsheet calculations on paper, but merely being faster is not sufficient, generally, to pass muster here.

It is important to realize, however, that when technology is implemented, rarely does it just result in being faster and nothing more.  Usually, the implementation provides other advantages.  Here, referring to this simple example as an illustration, VisiCalc made a type of functionality possible that had not existed before.  Therefore, if that aspect were particularly claimed, perhaps such a claim would be deemed statutory under the analysis in Alice.

For example, consider the following two claims, recognizing that this example is not intended to illustrate the best claims possible, but is just a simple example to test the Court’s recent pronouncement.

  1.  A method comprising:

generating and displaying a matrix of cells comprising an electronic spreadsheet on a computer, said electronic spreadsheet to implement on said computer one or more user-specified mathematical operations in which one or more operands for said one or more user-specified mathematical operations are to be entered in particular cells of said matrix and results of performing said one or more user-specified mathematical operations on said one or more operands are to be displayed in other particular cells of said matrix; and

displaying on said computer, in said particular cells and in said particular other cells, after said one or more operands are entered, said one or more operands and said results of performing said one or more user-specified mathematical operations on said one or more operands, respectively.

  1. The method of claim 1, wherein said results of performing said one or more user-specified mathematical operations on said one or more operands comprise one or more operands of one or more other user-specified mathematical operations either with or without displaying said one or more operands of said one or more other user-specified mathematical operations in cells of said matrix.

Several arguments are available that one, if not both, of these claims is statutory.  To turn the issue around, we should, perhaps, ask the following:  If we ignore the conventional hardware elements of the claim, is the implementation, as claimed, more than merely conventional?

This question, of course, as framed, clearly is not the same question presented under section 103. Thus, while the Court may be criticized for making considerations under 101 more similar to considerations under 103 than had previously been the case, the analysis is still different.

To be even more explicit, we may ask:  is an innovation being claimed (even if it may in light of prior art later be determined to be an obvious one)? 

Here, the answer is quite arguably, yes!

Most everyone is familiar with the functioning of VisiCalc and Excel.  Certainly, at the time Apple introduced VisiCalc, it was an innovation over what had been done previously with conventional spreadsheets of the time.

Perhaps I am overly optimistic and not everyone will agree that claim 2 at least is statutory.  However, these claims call out an improvement over existing processes involving spreadsheets. See 573 U.S. ____ (2014); slip opinion at 13 (discussing that the claims in Diehr improved on an existing process).  A user is able to link together in a spreadsheet format, complex calculations and display the results in a manner so that any change in “operands” is able to be rippled across the spreadsheet and displayed immediately.  This is an improvement over use of a paper spreadsheet and provides a new functionality that previously did not exist.  I am not arguing that this is necessarily patentable, since that is judged relative to particular prior art, only that it is at least statutory because it is not merely conventional.

If it were generally agreed that the first example is likely non-statutory under the Court’s recent pronouncement and the second example is likely statutory[2], then what does that tell us in terms of claim drafting? One thing it demonstrates is that including limitations directed to innovative aspects of particular implementations may provide a claim drafting safe harbor, so to speak, for this area. Where this is done correctly, it would seem that claims of value to a client should ultimately stand up as statutory.  As was mentioned, most practitioners tend to make sure that a spectrum of claims are included.  This is good practice, now, to address, not just 102 and 103, but also 101.

If we compare the two example claims above, what is the difference?  Why, from a policy perspective should one be statutory and the other not, since they are both directed to what is meant to be the same core subject matter?  It appears that section 101 imposes a statutory requirement of proper form.  That is, from a formal perspective, it is necessary that innovative aspects of the invention, as implemented or intended to be implemented, be on the face of the claim for the claim to be statutory.[3]

Recall that we started with the notion that “this Court has long “warn[ed] …. against” interpreting section 101 “in ways that make patent eligibility ‘depend simply on the draftsman’s art.’”  The ironic twist here seems to be that, if section 101 imposes a statutory requirement of proper form, then the prevailing situation would seem quite the opposite of the Court’s stated view.  That is, that patent eligibility indeed depends on the draftsman’s art and our example appears to confirm as much.

Several points are therefore addressed with this example.

  1. Take care when evaluating inventions for meeting statutory subject matter – rarely are things as simple as they look.
  2. Great care is needed in drafting claims in general but particularly in this area because otherwise there may have been a statutory invention inadvertently left unclaimed.
  3. The policy view that patent-eligibility should not turn on the draftsman’s art is not the full story.

[1] Howard Skaist founded Berkeley Law & Technology Group (BLTG) in 2003 after having been employed as the Director of Patents for Intel Corp.  BLTG has a total of twelve patent lawyers and handles all aspects of intellectual property law practice, including patent law.  Mr. Skaist has also been an adjunct professor at Boalt Hall Law School in Berkeley, CA, at Willamette School of Law in Salem, OR, at Lewis and Clark Law School in Portland, OR, and at Albany Law School.

[2] A separate twist is raised by Sotomayor’s concurrence (also expressly by Judge Mayer recently in I/P Engine v. AOL). Would the second example get over those hurdles?  I would say probably not.  It appears difficult here to argue that the problem solved is technical in nature rather than being directed to organizing human activity.  Thus, three justices would probably say that the second example is also non-statutory.

[3] Of course, one would expect that this would also be true to meet section 103.  However, perhaps a difference is that, for purposes of section 103, dissection is not permitted, at least not yet.  While Alice looks at the claim as a whole as well as the claim elements, it was clear as far back as Flook, that some amount of dissection was permissible.  Alice has made that even clearer, following Mayo, by permitting an element by element analysis.

Federal Circuit Orders District Court to Stay Litigation to Await Conclusion of Later-Filed Post-Issuance Review (CBM) Proceeding

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By Dennis Crouch

VirtualAgility Inc., v. Salesforce.com, Dell, Dr. Pepper, et al. (Fed. Cir. 2014)

The America-Invents-Act (AIA) created set of new and powerful administrative proceedings that allow third parties to challenge issued patents. These include post-grant review (PGR), covered business method review (CBM), and inter partes review (IPR). Congress maintained the less-powerful but still important third-party requested ex parte reexamination. In the coming months, the Federal Circuit will be challenged with reviewing various aspects of the new proceedings. Perhaps most importantly, the court will be challenged with determining how much deference and leeway to give the USPTO in developing its own procedures and interpretation of the law.

Apart from the agency deference issue, a second major issue whose steam continues to build involves the rising number of conflicts between federal courts and the patent office. Traditionally, post-issuance challenges have been handled by the courts, but the new procedures have shifted the balance of power. It turns out that most patents involved in post-issuance administrative challenges are also involved in parallel challenges in federal district court. These parallel proceedings will often have somewhat different results, and many remain confused over the potential result of such a conflict. In the extreme, the issue raises constitutional questions of separation of powers between the executive (the PTO) and the courts.

One solution to the conflict is to have the decision-makers take turns and apply principles of estoppel, preclusion, and comity to resolve the delayed process in a way that avoids conflict with the first-decided case. The PTO has generally refused to stay its proceedings and many district court judges have difficulty ordering stays – especially in cases such as this where the review request is filed several months after the infringement lawsuit. It is important to recognize that post-issuance review requests are limited by law to only challenge issues that can also be challenged in court. Thus, for a judge, the post-issuance review request serves as a transparent statement that the defendant does not trust the judge or jury to make the call.

The Timeline Here: In January 2013, VA sued the defendants in the Eastern District of Texas, alleging infringement of its U.S. Patent No. 8,095,413. Five months later (May 2013) one of the defendants (Salesforce.Com) filed a covered business method review (CBM) petition alleging that that the claim of the patent were all invalid under Sections 101, 102, and 103 of the Patent Act. In November 2013, the PTAB partially granted the CBM petition and ordered review of the claims under Sections 101 and 102 (but not 103) and setting a July 2014 PTAB trial date with a final decision expected by November 2014. At that point, the district court was made-aware of the PTAB’s late-start but rapid progress. However, the district court refused to stay the litigation pending outcome of the PTAB case and continued moving forward with claim construction hearing set for April 2014 and trial also set for November 2014.

One aspect of the new CBM process is that the statute allows for interlocutory appeal of a district court’s decision to grant or deny a stay of litigation pending CBM review. Thus, after the district court refused to grant the stay, Salesforce appealed. The Federal Circuit quickly granted a stay of the district court litigation pending appeal and has now ordered that the district court to stay its proceedings pending the CBM review. The majority decision here is written by Judge Moore and joined by Judge Chen. Judge Newman wrote in dissent arguing that the decision here removes the discretion given to district courts.

The statute provides four factors that a district court must consider when determining whether or not to grant a stay of a late-filed CBM review.

[T]he court shall decide whether to enter a stay based on—

(A) whether a stay, or the denial thereof, will simplify the issues in question and streamline the trial;

(B) whether discovery is complete and whether a trial date has been set;

(C) whether a stay, or the denial thereof, would unduly prejudice the nonmoving party or present a clear tactical advantage for the moving party; and

(D) whether a stay, or the denial thereof, will reduce the burden of litigation on the parties and on the court.

AIA §18(b)(1). Regarding appeals, the statute indicates that the Federal Circuit’s “shall review the district court’s decision to ensure consistent application of established precedent, and such review may be de novo.” AIA §18(b)(2). Thus, Judge Newman’s call for deference is likely misplaced. For its part, the majority refused to determine whether any deference is required and instead held that reversal was warranted even under an abuse of discretion standard.

The result here provides a strong suggestion to district courts that they should stay litigation once the PTAB has indicated that it will review the identical claims being litigated in court.

Federal Circuit Sends Patent Case to Eighth Circuit

Patent,

By Dennis Crouch

US Water Services, Inc. v. ChemTreat (Fed. Cir. 2014)

The Federal Circuit has determined that it lacks subject-matter appellate jurisdiction over the patent infringement appeal and has thus transferred the case to its sister-court, the Court of Appeals for the Eighth Circuit.

The unusual outcome stems from the parties pleading posture that began pre-AIA. Under the law when the case was filed, the Federal Circuit has subject-matter appellate jurisdiction over cases that “arise under” federal patent law. Arising-under jurisdiction is a term of art that follows the “well-pled complaint rule” which requires the patent law question appear on the face of the plaintiff’s original complaint as outlined in the Supreme Court’s 2002 decision on point. Holmes Grp., Inc. v. Vornado Air Circulation Sys., Inc., 534 U.S. 826 (2002).

Here, the original complaint was filed by USWS against ChemTreat for trade secret misappropriation under Minnesota law. In a counter claim, ChemTreat alleged invalidity and non-infringement of one of USWS’s issued patents. The parties then settled the trade secret claim and the district court subsequently granted ChemTreat’s motion for summary judgment of non-infringement. USWS now appeals that noninfringement determination. Since the patent issue was first raised in the responsive pleading (rather than in the complaint), the case cannot be said to arise under the federal patent laws. The result then is that the Federal Circuit has no subject matter appellate jurisdiction over the appeal.

As the patentee with a technical argument on appeal, the USWS was looking for Federal Circuit jurisdiction. It raised two arguments on the appeal (1) that it consented to the counterclaim filing; and (2) that the counterclaim joined additional parties (the patent owners since USWS was merely the exclusive licensee) and thus should be seen as the equivalent to a complaint under the well-pled-complaint rule. In its decision here, the Federal Circuit rejected both of those arguments, finding instead that the rule is hard and inflexible. See also Wawrzynski v. H.J. Heinz Co., 728 F.3d 1374 (Fed. Cir. 2013).

tl;dr: patent issue was first raised in a counterclaim so the case did not arise under the US patent laws.

If the same lawsuit had been more recently filed, it is possible but still unlikely that the Federal Circuit would have subject matter appellate jurisdiction based upon the AIA amendments made in 2011. In particular, the Federal Circuit jurisdiction now additionally extends to cases where the patent law issue is raised only in a “compulsory counterclaim.” Although not expressly decided it does not appear that the patent issue here should be seen as compulsory under the rules of civil procedure but instead merely supplemental. As such, even the broader appellate subject matter jurisdiction rules of the AIA would not permit the Federal Circuit to hear the case.

= = = = =

The decision here was based upon appellate subject matter jurisdiction and did not reach the merits of the underlying appeal. Those underlying merits focused on whether the district court held declaratory judgment jurisdiction since (according to USWS), USWS never threatened patent infringement and the challenged patent was so different from ChemTreat’s activities that it would be silly to fear such an action.

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Guest Post: The Rise of The End User in Patent Litigation (and Attorney Fee Shifting)

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Professor Bernstein’s current scholarship focuses on the role of end users in the patent system.  Because end users are fast becoming major stakeholders in the operation of the patent system, I asked her to write a few words about how she conceives of these players. – Jason

Guest Post by Gaia Bernstein, Professor of Law, Seton Hall University School of Law

We usually think of two players in the patent system: the patentee and its competitor.  Increasingly, however, end users – who are neither patentees nor competitors – are playing a significant role in the patent system.  The attention of the press has recently turned to patent assertion entities who are suing vast numbers of customers using patented technologies in their everyday businesses.  For example, one patent assertion entity has sued individual podcasters, including the Comedian Adam Carolla. End users were also principal players in some of the recent patent cases before the Supreme Court. In Bowman v. Monsanto, Monsanto sued a farmer for re-using its patented seed technology. End users also appear as patent challengers: in Association for Molecular Pathology v. Myriad Genetics, patients and physicians sued to invalidate breast cancer gene patents. And patients and drug stores repeatedly challenge pay-for-delay agreements between patentees and competitors, claiming they undermine patients’ interests in access to generic drugs.  This is only the beginning: end users are likely to become even more prevalent in patent litigation, as 3D printers become more popular, making it more likely that an individual or a small business will make an infringing item that will expose them to patent liability.

All of this begs the questions what is an “end user” and how well is patent law suited to deal with this new player?  In The Rise of The End User in Patent Litigation, forthcoming in the Boston College Law Review, I define end users as people and companies that use a patented technology for personal consumption or in their business.  I emphasize that they are strictly users.  Even if they incorporate the patented technology into a product or service they offer their customers, they do not make or sell the technology standing by itself.  I explain that end users differ from competitors in three respects.  First, end users usually lack technological sophistication – they are generally not technological companies and do not produce and supply the allegedly infringing technology. Second, end users usually become involved in the patent conflict relatively late in the life of the patent, after the patented technology enters the market and achieves widespread adoption.  Third, end users are typically one-time players. In most cases the technology is ancillary to their business and they do not have a long-term stake.

Patent litigation is exorbitantly expensive. It is all the more expensive for end users who lack the technological expertise to challenge validity and infringement claims and cannot rely on in-house technological expertise. Because end users are often one-time players, they prefer to avoid the expense of patent litigation and settle even strong cases, making them a particularly lucrative target for patent owners. Unfortunately, even the most recent substantive patent law legislation, the America Invents Act (“AIA”) fails to address the growing role of end users. I show that while the AIA attempts to address the needs of small entities, mainly by adding and changing procedures to challenge patents in the patent office, thus providing a cheaper and faster forum for contesting validity, those same novel procedures are largely unsuitable for end users because they permit expansive challenges mostly early in the life of the patent before end users are likely to be involved in the patent dispute. The procedures that allow challenges later in the life of the patent limit the grounds available for challenging the patent. Thus, unlike even small competitors of the patent holder, end users are unlikely to benefit from the enhanced patent office proceedings put in place in the AIA.  The effect of this is to leave them without the very same tools that were implemented to protect small entities.

Ultimately, the rise of the end user is a complex phenomenon that needs to be addressed by a series of reforms, which I am addressing in other works in progress.  Here, however, I focus on the role that fee shifting of attorney fees and litigation expenses to the prevailing party can play in end user cases because a modest change could contribute toward leveling the footing of end users in all type of end user-patentee disputes.

Fee shifting in patent litigation has been a hot topic this year. Recently, the Supreme Court decided two fee shifting cases: Highmark v. Allcare and Octane Fitness v. ICON Health & Fitness. In Octane Fitness, the Court lowered the standard for awarding fee shifting in patent litigation. Congress is also considering multiple bills advocating different versions of fee shifting. The problem is that although some of the congressional bills address PAE’s suits against customers, neither these bills nor the Supreme Court decisions address the broader role that end users are now playing in our patent system. In the article, I argue that the case for fee shifting is strong where end users are implicated particularly because of the great inequality in technological sophistication between end users and patentees and because end users frequently represent many other parties who are not before the court. For these reasons, end user status should be considered as a factor that weighs in favor of fee shifting, particularly when the end user fits the paradigmatic form of a classic end user.

There is more in the article than I can write about here. If you are interested, please take a look at the full version. http://papers.ssrn.com/sol3/papers.cfm?abstract_id=2440914.

Struggling with Nautilus: Patent Claims Through the Eyes of Non-Lawyer Technologists

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By Dennis Crouch

This post goes on a tangent from the recent decision in Q.I. Press Controls v. Michelle K. Lee, USPTO Chief (Fed. Cir. 2014).

Quad/Tech’s Patent No. 6,867,423 covers a visual inspection system for identifying errors in printing press operation – such as paper misalignment or poor color. The invention basically has a digital camera with a ring non-strobe LED’s surrounding the lens. The camera is pointed toward the printing press operation. The prior art included cameras with ring-LED lighting as well as the use of cameras to monitor printing press activity. However, none of the prior art references combine both of these features. In the bulk of the claims, the “printing press” element is found only something akin to a field-of-use limitation found in the claim preamble. Thus, claim 1 is directed to “[a] visual inspection system configured to be in optical communication with a substrate of a printing press, said visual inspection system comprising: . . .” However, claims 61-72 refer more expressly to the printing press linkage within the body of the claim.

The court’s opinion (as we cover in a separate post) focuses on obviousness and written description. Here, I write about indefiniteness as it relates to these preamble limitations.

Is it a Technical or a Legal Document?: A usual rule of patent claim construction is that limitations found in the preamble of a claim – especially field-of-use limitations – do not limit claim scope. However, sometimes preamble terms are limiting as the Court explained in Pitney Bowes:

If the claim preamble, when read in the context of the entire claim, recites limitations of the claim, or, if the claim preamble is ‘necessary to give life, meaning, and vitality’ to the claim, then the claim preamble should be construed as if in the balance of the claim.

Pitney Bowes, Inc. v. Hewlett-Packard Co., 182 F.3d 1298, 1305 (Fed. Cir. 1999); M.P.E.P. 2111.02. Many claim construction questions involve drawing quite fine-lines of involving coverage scope. Preamble-limitations are different because we are often talking about importing an entire limitation into the coverage that was not previously there. By examining the body of court decisions, it is possible to elucidate a set of factors helpful in determining whether a particular preamble-limitation should be scope-limiting. But this is a pretty tricky issue and I don’t think that we should assume that inventors and technology developers would understand the particular circumstances of when certain preamble-limitations are limiting. Rather, those legal-technicality questions are typically the province of patent attorneys who work with the substance of the law on a daily basis.

It turns out this is important following the Supreme Court’s recent indefiniteness decision in Nautilus. In Nautilus, the Supreme Court provided a clear statement that patent claims are technical-in-nature and designed to be read by persons-having-ordinary-skill-in-the-art. For camera technology, someone of skill in the art might be a camera designer and in the indefiniteness context the indefiniteness question is whether the claim scope would be reasonably certain to the camera designer (after considering the intrinsic evidence).

Tying this back to the issue of preamble-limitations: An ordinary camera designer would not be familiar with the law of preamble-limitations and how they would apply in this case. And, this leaves us with a several of potential results. Perhaps (1) a claim is invalid as indefinite when its scope depends upon and substantially changes according to the particularities of the preamble-limitation doctrine. (2) An alternative tact is to assume that the Supreme Court’s PHOSITA has been advised by a skilled patent attorney and thus understands the law.

Kelley Drye Misses First Step in Collecting $14 Million Fee from Client

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By Dennis Crouch and David Hricik

Kelley Drye & Warren, LLP v. Orbusneich Med. Co. Ltd., BVI, 2014 WL 1814204 (Conn. Super. Ct. Apr. 4, 2014). KDW Decision

In this case, the law firm of Kelley Drye (KDW) has sued Orbus to collect the $14,000,000 that it claims to be owed as part of its alternative fee arrangement for handling litigation on behalf of its then-client, Orbus, against Boston Scientific.

The basics: Orbus hired KDW to litigate its patent infringement and related common law claims against Boston Scientific. Orbus was advised that the suit would go quickly on the rocket docket of the Eastern District of Virginia. The fee-setup was a hybrid-contingency-fee arrangement with a guaranteed payout of $375,000 for pre-trial work and another $325,000 for the trial, if necessary. In the event of a settlement, the agreement called for KDW to then receive the full hourly rate for their work plus a “success fee” based on the settlement amount.

The case was filed in the Eastern District, but then was transferred to Massachusetts. Then, Boston Scientific moved for reexam and the suit was stayed. Thus, things were in a ditch:

At this point the exchange of correspondence between the parties (Defendants’ Exhibits B, C & D) make clear that: (1) the U.S. litigation begun by KDW on behalf of Orbus was stayed for possibly several more years; (2) no leverage whatsoever of the kind envisioned in Attorney Moore’s engagement letter (Plaintiff’s Ex. 2) had been brought to bear on Boston Scientific; (3) the settlement value of the U.S. litigation had minimal or no cash value at all; and (4) Orbus’ patents had possibly been placed in jeopardy by the continuing reexaminations. In reviewing the results obtained by counsel when determining the reasonableness of fees charged, the court cannot find on these facts that KDW added substantial value to Orbus’ legal interests as of July of 2012, after three years of litigation and millions of dollars of time expended.

Orbus then turned to replacement counsel. Their strategy had Orbus file a number of European actions, including ones in Germany, UK, Ireland, and the Netherlands. KDW was not much involved.

In 2013, Orbus and Boston Scientific came to a settlement resulting in a one-time payment to Orbus and a worldwide patent license for Boston Scientific. KDW then added-up its fees thus far in the litigation ($2.8 million) and added on its success fee bonus before sending its $14 million bill to Orbus.

When the (now former) client balked, KDW filed suit. In this decision, the trial court rejected KDW’s argument that it was entitled to pre-judgment relief, apparently in the form of some sort of state law attachment of Orbus’ assets. The question the court had to decide was whether KDW was likely to prevail on the merits.

Attorney fee arrangements are treated somewhat differently from ordinary commercial contracts – here the court indicated in can only enforce attorney fee arrangements to the extent that they are reasonable. All state professional responsibility rules prohibit the collection of unreasonable fees. Regarding reasonableness, a major question is whether the attorney exerted substantial effort and/or added substantial value.

Here, the European cases began after the US case was stayed. That fact aided Orbus’s argument that KDW added no value to the European cases. In addition, Orbus argued that the terms of the fee arrangement do not extend to those cases. And, if it had to pay KDW for the European monies then Orbus would effectively be paying “twice for the same legal service” since its European attorneys must also be paid.

Based upon these facts, the trial court stated:

[T]he court is unable to find even a reasonable suspicion that KDW would prevail on the merits at trial, and that the trier of fact would find the superseding contingent fee agreement enforceable in the full amount of $14,560,000.00.

At this point, the court has denied preliminary relief, but KDW still has the opportunity to prove its case at the trial.

Funk Brothers v Kalo – Eligibility or Unobviousness?

Obviousness, Patent, , ,

Guest post by Paul Cole, European Patent Attorney, Partner, Lucas & Co; Visiting Professor, Bournemouth University, UK.

New patent eligibility guidance issued by the USPTO (Andrew Hirshfeld, 4th March) will be the subject of a discussion forum this Friday 9th May.

Since the Kalo case, 333 U.S. 127 (1948) has been discussed in recent Supreme Court opinions including Chakrabarty, Myriad, and Mayo and is proposed to form the subject of an example forming part of that guidance, reflection on the true legal basis of the opinion is timely. Despite dicta in Chakrabarty and Myriad it is arguable that when viewed in its timeframe Funk concerned unobviousness not eligibility. If that view is correct, then the Kalo fact pattern should not be used as an eligibility example under current law.

The Kalo appeal was from a lengthy and careful opinion by Judge Walter C. Lindley in the Court of Appeals for the 7th circuit, 161 F.2d 981 (1947). At first instance the claimed subject matter which related to a composite culture of mutually non-inhibitive bacteria for inoculation of leguminous plants was held to be a product of nature and hence not patent-eligible. Judge Lindley reversed this finding in the following terms:

The mistake of the District Court, we think, lay in its conclusion that this did not amount to patentable invention within the meaning of the statute. Though the court recognized the value of Bond’s work, it thought that he had merely discovered a law of nature, whereas in fact the evidence is clear that what he discovered was that certain existing bacteria do not possess the mutually inhibitive characteristics which had previously prevented a successful commercial composite inoculant and that those uninhibitive species may be successfully combined. It was this contribution of noninhibitive strains which successfully combine that brought about a new patentable composition. This was application of scientific knowledge to things existing in nature and the utilization of them in a desirable composite product which had not been previously achieved but which he did achieve and of which the public now has the benefit.

We think this is clearly within the decisive definitions of patentable invention… Bond taught the method by which the composite is to be made and claims the product composed by that method, namely, a composite inoculant, comprised of different species of bacteria in sufficient numbers of each species. The noninhibitive property of bacteria was not previously known and when Bond discovered it and taught a successful composition of noninhibitive strains in combination of elements in one inoculant operating successfully on several different groups of legumes, he did much more than discover a law of nature. He made a new and different composition, one contributing utility and economy to the manufacture and distribution of commercial inoculants.”

A reader of Lindley is bound to wonder why such a conventional and straightforward opinion should have been selected for certiorari. An explanation of the significance of new effect in established patent law can be found as long ago as 1822 in Evans v Eaton 20 U.S. 356 (1822) and its evidential nature was explained by Justice Bradley in Webster Loom v Higgins
105 US 580 (1881), subsequently approved e.g. by Justice Brown in Carnegie Steel v Cambria Iron Co 185 US 402 (1902):

It may be laid down as a general rule, though perhaps not an invariable one, that if a new combination and arrangement of known elements produce a new and beneficial result, never attained before, it is evidence of invention.

The majority opinion of the Supreme Court Kalo decision was authored by Justice William O. Douglas.

His starting position was that a law of nature cannot be monopolised and he recognised the existence of the relevant non-inhibitory bacterial strains as an example of such a law. He went on to hold that invention must come from the application of the law of nature to a new and useful end and that the aggregation of select strains of the several species into one product was an application of the newly discovered natural principle. He acknowledged that there was advantage in the combination because the farmer need not buy six different packages for six different crops. He could buy one package and use it for any or all of his crops. The packages of mixed inoculants held advantages for dealers and manufacturers by reducing inventory problems, and the claimed subject-matter provided an important commercial advance.

Against this strong evidential background what was the basis for his reversal? A key to his reasoning may be found in his earlier opinion in Cuno Engineering Corp. v. Automatic Devices Corp., 314 U.S. 84 (1941) that (as the law then stood) novelty and utility were necessary but not sufficient requirements for patentability. In addition the claimed subject-matter had to reach the level of inventive genius that the Constitution authorized Congress to reward.

Several reasons supported the conclusion that the Kalo invention did not meet the standard of inventive genius. Each of the species of root nodule bacteria contained in the package infected the same group of leguminous plants that it always infected. No species acquired a different use. The combination of species produced no new bacteria, no change in the six species of bacteria, and no enlargement of the range of their utility. Each species had the same effect it always had. The bacteria performed in their natural way. Their use in combination did not improve in any way their natural function. They served the ends nature originally provided, and acted quite independently of any effort of the patentee. The claimed inoculant was not the product of invention unless invention borrowed from the discovery of the natural principle itself. It was hardly more than an advance in the packaging of the inoculants. Packaging was a simple step once the discovery had been made and all that remained were the advantages of the mixed inoculants themselves which were not enough.

The Funk opinion, amongst others, was relied on in Chakrabarty for the proposition that laws of nature, physical phenomena, and abstract ideas are not patent-eligible. As to the patentability of the Chakrabarty microorganism it was distinguished on the facts.

In Myriad Justice Thomas treated Funk as a patent-eligibility case, observing that the Bond composition fell squarely within the law of nature exception because the patent holder did not alter the bacteria in any way. Arguably such a position is inconsistent with the finding of Justice Douglas that the claimed product was an application of the principle discovered by Bond and hence implicitly patent-eligible. Classification of Funk as an unobviousness opinion accords with the reasoning of Justice Douglas whereas classification as an eligibility opinion is difficult to reconcile with his reasoning, especially against the background of his explicit reference to Cuno.

The USPTO example takes the position that the bacteria in Funk were not changed in any way, but that position is factually untrue. The naturally occurring bacteria have been the subject of a selection process to identify those strains that do not interfere, and the non-interfering strains have been cultivated and mixed. The claimed composition does not occur in nature, is produced by human intervention and has new utility. It is far from clear that the decision that was reached in 1948 would have been reached under the law as it exists post-1952 since the “flash of genius” test was rejected by Congress in favour of § 103.

For the above reasons it is submitted that the wiser course would be to delete Example D from the USPTO guidance.

Guest Post by Prof. Sichelman: Stop Bashing Academics: Why Mark Lemley, Peter Menell, and Rob Merges are Highly Qualified to Teach and Write about Patent Law

Patent, , , , , , ,

Guest Post by Prof. Ted Sichelman, University of San Diego, School of Law

Recently, Hal Wegner has been circulating and commenting upon the qualifications of patent law professors. For example, he lists whether patent law professors at the Top Ten IP programs as ranked by US News & World Report are licensed to practice at the USPTO, have an “understanding” of international/comparative patent law, or clerked at the Federal Circuit (see below). According to Wegner, these “credentials” are “particularly” and “uniquely” valuable (in some cases, “essential”) for professors to make “optimum” patent policy reform proposals, especially those concerning PTO practice and international harmonization.

(To provide some background, I provided Wegner a list of names of all professors in the U.S. who currently teach and write about patent law at US News ranked and unranked IP programs, with the understanding that he would circulate the list to his readers. After I sent Wegner my list, without my input, he annotated it (along with other names) with various credentials and provided commentary and alternative lists, such as the one reproduced below. Because I believe Wegner’s analysis is flawed—and given my initial participation—I feel personally obligated to respond.)

NaplesNotably absent on Wegner’s list above are any professors from Stanford, Berkeley, and George Washington (GW), the top ranked IP programs in the nation. (The same holds true for many other schools, both in and outside of the top 10. I focus on the top three schools to underscore the problems with Wegner’s approach.) Rather than effectively denigrate these programs, Wegner should have recognized the transformative role that these schools have played historically (for GW) and more recently (for all three schools) in elevating patent law to a prominent place in the academy and developing unparalleled educational opportunities for future patent professionals and scholars.

Importantly, an unintended implication of Wegner’s discussion is that patent law professors without the stated qualifications—particularly, a patent bar registration number—are unfit to teach and write about patent law more generally. For instance, on his e-mail blog, Greg Aharonian recently circulated the comments of an anonymous patent lawyer who referred to Stanford’s Mark Lemley as “one of a small army of law school academics that have built very successful . . . careers studying intellectual property law, especially patent law, albeit without ever actually having practiced before a patent office, done research, or even studied science or engineering.”

These sorts of criticisms are misguided. First, many patent law professors have extensive patent litigation experience, including on-going experience as “of counsel” lawyers, experts, and consultants. Although having patent prosecution experience is clearly beneficial for teaching and writing about patent law, patent litigation is as well and should not have been disregarded. For instance, Wegner and Aharonian presumably know well that Mark Lemley is a partner at a top-tier IP litigation boutique, Durie Tangri, and spends numerous hours on real-world matters. In fact, he has argued or is scheduled to argue three Federal Circuit patent cases so far this year, has argued before the Federal Circuit eleven times (in addition to four arguments in the regional circuits), and has represented another ten parties on briefs in the court. Additionally, he has been counsel for a party in the Supreme Court twice in patent cases (both patentees, incidentally). Lemley has been the lead author or co-author on 40 amicus briefs in the Supreme Court and the courts of appeals. And if that were not enough, his articles have been cited nine times in Supreme Court opinions and 145 times by courts overall. Finally, he’s conducted extensive empirical analyses of USPTO and judicial practice in many academic papers. (Ah, I forgot to mention that he’s represented parties in 85 cases in the district courts, too.)

So Lemley clearly is highly qualified (in fact, uniquely qualified) to write about and teach patent law. Nonetheless, Lemley often is maligned by practitioners because of a proposal he made (along with now Federal Circuit Judge Kimberly Moore) about a decade ago to restrict continuation practice. Yet, regardless of whether you agree with his views—and I often disagree with him—he’s clearly well-situated to write about and suggest reforms concerning PTO practice, the Federal Circuit, the Supreme Court, and the Patent Act more generally. In this regard, Lemley has written over 125 articles, many of them offering outstanding suggestions to reform the patent system, such as his idea for “gold-plated” patents. Lemley should not be unfairly singled out for one unpopular proposal or simplistic mischaracterizations of his views.

In a response to e-mails Wegner received asking why patent litigation was not listed in his chart, including one of my own, he responded that while patent litigation “may well be the best practice background for a patent academic . . . . no patent faculty seeking to make an optimum contribution to patent policy or harmonization can do so without  someone on the faculty having expertise in international/comparative and Agency practice.” Wegner’s position is too sweeping. Although it is certainly useful to have faculty members who have prosecution experience—and Wegner’s criterion of simply having a patent bar number is in any event not too indicative of such experience—it isn’t necessary to have such experience to make outstanding policy proposals, even when it comes to PTO practice. Indeed, only a few judges at the Federal Circuit itself would meet such criteria. It seems hard to fathom that Wegner believes that the Federal Circuit cannot make an “optimum” contribution to patent policy, including practices at the PTO, given their lack of such credentials. The same should hold true for academics. And to go one step further—as does the anonymous lawyer’s blanket assertion on Aharonian’s e-mail blog that a professor cannot sucessfully “study,” write about, or presumably teach patent law without having worked as a patent prosecutor or an engineer—is simply preposterous.

Second, many patent law professors, such as UC Berkeley’s Peter Menell and Rob Merges (also absent on Wegner’s chart)—in addition to having extensive prior and on-going experience as experts and consultants in patent litigation matters—have spent numerous hours writing casebooks and patent law practice guides. Rob Merges and John Duffy’s Patent Law and Policy is the leading patent law casebook, and contains extensive commentary from its authors. Merges is also co-founder and Senior Policy Advisor of Ovidian LLC, a Berkeley-based consulting and informatics company specializing in assessing and valuing patent portfolios. That experience is invaluable for the next generation of patent law professionals working in the emerging patent “marketplace.” Finally, because Berkeley—like GW and Stanford—offers separate courses in patent prosecution and patent litigation taught by prominent practitioners, it is hard to see how its students are not getting broad, deep, and practical exposure to patent law.

After co-founding the Berkeley Center for Law & Technology (BCLT) in 1995, Peter Menell soon began working with a team of top patent and other IP litigators to provide an annual four-day intensive training program on IP law and case management for federal judges, as well as numerous other national and regional events. That work led to the development of the Patent Case Management Judicial Guide, a comprehensive treatise that has been referred to as “the bible” for judges and litigators. Menell has also worked with district courts on the development and revision of patent local rules and filed amicus briefs in important IP cases. He also served as one of the PTO’s inaugural Edison scholars. His empirical research on patent claim construction with Jonas Anderson, a former BCLT Fellow—in which they reviewed every claim construction order issued by the Federal Circuit since 2000—was cited numerous times in the Federal Circuit’s recent en banc Lighting Ballast decision. Any comprehensive evaluation of patent law programs would value these qualifications.

The same holds true for professors who write about specific topics in patent law, but do not teach it. For instance, Berkeley’s Pam Samuelson is a world-renowned copyright expert and a winner of the “genius” grant from the John D. & Catherine T. MacArthur Foundation. She occasionally writes about software patents, including for her column in the Communications for the Association for Computing Machinery (ACM) journal, which is mainly read by software and computer science professionals. As Professor Samuelson’s work shows, one need not be an expert on every nuance of the patent system, especially the nitty-gritty of prosecution, to make sound reform proposals.

Other academics are permanent and full-time but not on the “tenure-track.” For example, BCLT Executive Director Robert Barr—who directs the Berkeley IP program and organizes numerous IP events there—is former chief patent counsel at Cisco, is licensed to practice before the PTO, and has long been a leader in the Silicon Valley and national patent law community. Along with John Whealan—former Solicitor at the PTO and another highly-regarded national leader in patent law who directs GW’s IP program—Wegner left Barr off the list.

Finally, many patent law professors have significant industry experience. For example, blog commenters on a recent Patently-O post of mine referred to me as “ivory tower” and as having “a lack of ‘real world’ experience.” In fact, before becoming a law professor, in addition to practicing patent litigation for four years, I founded three tech companies, raising nearly $5 million in financing, including being CEO of Unified Dispatch, a software company that makes innovative speech recognition systems for ground transportation companies. At Unified Dispatch, I designed and oversaw most of the company’s software products, which included writing detailed specifications and managing programmers and other engineers, and was the lead inventor on several patent applications and one patent. As part of that process, I also managed our outside patent counsel for several years during prosecution. Before attending law school, I earned an M.S. in Physics. Since becoming a patent law professor, I’ve consulted and served as an expert on an-going basis in patent litigation matters and related projects. So not only is the “ivory tower” label is inaccurate, it also misapprehends the often close ties between academia and practice.

The same sorts of backgrounds and relevant experience hold true for many other academics who teach and write about patent law. For example, Donald Chisum—yes, the author of the leading patent law treatise—is not registered to practice before the USPTO (he majored in philosophy). Granted, practicing before the PTO is helpful to writing about PTO practice, but would anyone doubt that Chisum is sufficiently knowledgeable to do as much?

I commend Hal Wegner’s efforts in calling attention to the patent law programs and scholars (which is why I assisted him in the process). There are clearly limitations to the US News ranking system, and I agree it’s valuable to see the credentials of those teaching at patent law programs across the country. However, it was irresponsible for him to omit the founders and leaders of many of the most important IP programs on his list of academics with “practical experience” in “key areas” merely because they don’t have a patent bar reg #, don’t have a deep understanding of comparative patent law, didn’t clerk for the Federal Circuit, or aren’t technically “tenure-track.” Patent litigation, industry experience, and other credentials are just as relevant.

Even more troubling is Wegner’s assertion that having someone on the faculty with one of his criteria is “essential” for making “optimum” policy proposals. And most troubling is that Wegner provides fodder for commenters such as those on Aharonian’s e-mail blog that professors without such credentials cannot successfully write about or apparently teach patent law more generally, not to mention commenters on this blog calling professors like me “ivory tower,” when it is simply not the case. Wegner and the commenters should do their homework. Otherwise, their “analysis” remains at best misguided and at worst scapegoating.

Berkeley and Stanford serve—and, historically, GW has served (and soon again will serve)—as model programs for training patent practitioners, scholars, and judges. The same holds true for many law schools I have omitted in this short blog post. Rather than denigrate these schools, Wegner would have done better to highlight the tremendous value offered to students and the patent law community more generally from this talented and highly qualified group of scholars.

Patent Grant Numbers

Patent

The USPTO broke a new record in March 2014 — issuing more than 6,000 utility patents in a single week. Overall, 2014 appears slightly behind the record issuance numbers for 2013, but well above the prior record set in 2012. The projected number of issued design patents (<21,000) is significantly down from its 2008 high of 25,000.

Scholarship: What Patent Attorney Fee Awards Really Look Like

Attorney Fees, Fee Shifting, Patent

By Dennis Crouch

The debate over attorney fee shifting continues both in Congress and in cases before the Supreme Court. In an interesting new article, Saurabh Vishnubhakat compiles fee award statistics for the past decade. The study reports that prevailing plaintiffs are more likely to receive a fee award, but that the median award of prevailing defendants is much higher.

Sources:

Micro Entity Status: Who is Filing for Micro Entity Status?

Patent

By Dennis Crouch

The name “micro entity” suggests something quite small. In the patent law world, this generally means that the inventor / applicant income level over the past several years is less than around $150,000 and that the inventor is not a frequent applicant. A patent applicant who qualifies will receive a 75% discount on patent office fees. That discount is designed to make it easier for small entities to access the patent system and thus encourage innovation amongst this group of potentially highly-innovative but not yet financially successful individuals. The micro entity rules include a major loophole as well – university owned patent applicants can also qualify for the fee-reduction. My alma-mater (Princeton University) has an $18 billion endowment and is far from being micro in any non-astronomic sense of the word. Still, under the rules, Princeton-owned applications would qualify for micro entity status. See also, Dennis Crouch, Micro Entity Early Stats, Patently-O (2014).

I looked through the records of 60 recently issued patents that claim micro entity status. The results are interesting: 17% are assigned to Universities; 1% to Companies; and the remaining 82% have no assignee or are assigned to an individual. (Note, the one patent in the group assigned to an individual involves a co-invented patent that is assigned to one of the co-inventors.) I had expected a higher percentage of university-owned patents in this group.

The process for seeking Micro Entity status is quite simply and appears to merely involve signing a one-page form. (SB-15A and SB-15B). Some caution should be applied since there is some precedent for finding patents unenforceable based upon improperly paying a small-entity fee when a large-entity fee was actually due.

I should note here that all of the patents in my sample were filed prior to the March 2013 institution of micro-entity fees. Thus, these patents began paying small-entity fees and then converted over to micro-entity status prior to issuance.

Patent Case Filings: Slow Start in 2014

Patent

The chart above comes from LexMachina [Link] and shows the number of lawsuits filed each month for the past several years. You’ll note that the number of case filings in January 2014 is the lowest since October 2011. The rise in filings since 2011 is largely (if not completely) explained by the joinder provisions of the AIA that block a patentee from filing suit against multiple unrelated parties in a single lawsuit.

This week Steve Morsa sued Facebook on his match-engine-marketing patents. See U.S. Patent Nos. 7,904,337 and 8,341,020; Adidas sued UnderArmor for infringing twelve of its patents covering location-aware fitness devices. See U.S. Patent Nos. 7,292,867 and 7,805,149; and Dyson sued Euro-Pro for infringing its U.S. Design Patent No. D668,010 that appears to cover the Dyson Digital cordless vacuum.

Mullin on Spangenberg

Patent

Joe Mullin is probably the country’s leading out-of-the-beltway journalist who regularly covers patent law issues. He writes for ArsTechnica and tends to take favor defendants (accused infringers) in his stories, although not as much as his colleague Timothy B. Lee.

Mullin’s recent story on the Newegg patent trial and Erich Spangenberg is a really interesting read.

http://arstechnica.com/tech-policy/2013/11/newegg-on-trial-mystery-company-tqp-re-writes-the-history-of-encryption/