Patently-O Bits and Bytes No. 12

  • Picture1Anti-DataTreasury Provision: Although DataTreasury is not named in the Patent Reform Act of 2007, it is clear that Section 14 of the Senate Bill is primarily directed at that single patent holder. The bill would excuse “financial institutions” from charges that their check imaging methods constitute patent infringement. DataTreasury has sued a number of banks, including City National, Wells Fargo, BOA, US Bank, Wachovia, Suntrust, BB&T, Bancorp South, Compass, Frost National, First Tennessee, HSBC, Harris, National City, Zions First National Bank, Bank of NY, Bank of TOkyo, Comerica, Deutsche Bank, First Citizens, Keycorp, LaSalle, M&T, PNC, and others. The cases are at least partially stayed pending reexamination of a DataTreasury patent. The core issue here is that DataTreasury claims that its patent is necessarily infringed when a bank follows the Federal “Check 21” procedure for electronically processing checks.  See patents 5,910,988 and 6,032,137. [Washington Post Fills in Details].
  • Takings: The DataTreasury bill raises takings concerns, and it appears that the Government agrees. According to reports, the Congressional Budget Office has calculated that the “taking” of DataTreasury’s right to sue is worth about one billion dollars.
  • What happens when patent attorneys blog: I left my firm to teach; Michael Smith left his firm and joined another [now partner at Siebman Reynolds]; so did Peter Zura [Now partner at KattenMuchin]; so did Matt Buchanan [now of counsel at Dunlap Codding]; David Donoghue joined DLA Piper; Bill Heinze joined GE; John Welch joined Lowrie Lando; and the Troll Tracker is still in hiding. (Note — Nipper, Sorocco, Albainy-Jeneiand others are still rock-solid in their firms).
  • Valentines Day: Americans spend an average of $100+ for Valentines day — this year you might consider giving it away.
  • Delay in the Senate: IPO reports a strong likelihood that no action will take place in the Senate until April 2008. In the meantime, the Reform Act is in secret revision in Senator Leahy’s office.


32 thoughts on “Patently-O Bits and Bytes No. 12

  1. 31

    I had a huge post about this mess to post but something in it spam doesn’t like so suffice to say:

    Learn to properly channel your patriotism or don’t claim to be American, you disgrace us Ordinary.

  2. 30

    I’ll tell you why Ordinary, because we are happy with our everday lives. That was not what the poll citing 2/3 of people being unhappy was about. I’m hard pressed to believe that Jay drew such an off the mark parallel between overall happiness (which if it is low it’s because materialism is inherently not fulfilling to human beings) and with being happy with a government that may have made a huge mistake. And by huge, I mean one that cost over a billion. Or in this case, one that cost over 500 billion a year iirc.

    Just remember Ordinary, when you die, and I’m still paying for this war that never needed to be fought, the only one between us that will care about it in the least will be me. Lets not even get into the lack of environmental laws that our children’s children will be the ones paying the most dearly for.

  3. 27
    A Sunday Reflection – give thanks, stop to smell the Roses and count our myriad blessings Jaoi(TM) says:

    I’m told that Jay Leno wrote this and put our constant b i t c hing it into perspective…

    “The Newsweek poll alleges that 67 percent of Americans are unhappy with the direction the country is headed, and 69 percent of the country is unhappy with the performance of the President. In essence, 2/3’s of the citizenry just ain’t happy and want a change.

    So being the knuckle dragger I am, I started thinking, ”What are we so unhappy about?”
    Is it that we have electricity and running water 24 hours a day, 7 days a week?

    Is our unhappiness the result of having air conditioning in the summer and heating in the winter?

    Could it be that 95.4 percent of these unhappy folks have a job?

    Maybe it is the ability to walk into a grocery store at any time, and see more food in moments than Darfur has seen in the last year?

    Maybe it is the ability to drive from the Pacific Ocean to the Atlantic Ocean without having to present identification papers as we move through each state?

    Or possibly the hundreds of clean and safe motels we would find along the way that can provide temporary shelter?

    I guess having thousands of restaurants with varying cuisine from around the world is just not good enough.

    Or could it be that when we wreck our car, emergency workers show up and provides services to help all, and even send a helicopter to take you to the hospital.

    Perhaps you are one of the 70 percent of Americans who own a home. You may be upset with knowing that in the unfortunate case of a fire, a group of trained firefighters will appear in moments and use top notch equipment to extinguish the flames thus saving you, your family and your belongings.

    Or if, while at home watching one of your many flat screen TVs, a burglar or prowler intrudes, an officer equipped with a gun and a bullet-proof vest will come to defend you and your family against attack or loss.

    This all in the backdrop of a neighborhood free of bombs or militias raping and pillaging the residents. Neighborhoods where 90 percent of teenagers own cell phones and computers.

    How about the complete religious, social and political freedoms we enjoy that are the envy of everyone in the world?

    Maybe that is what has 67 percent of you folks unhappy.

    Fact is, we are the largest group of ungrateful, spoiled brats the world has ever seen. No wonder the world loves the U.S., yet has a great disdain for its citizens . They see us for what we are. The most blessed people in the world who do nothing but complain about what we don’t have , and what we h a t e about the country instead of thanking the good Lord we live here.

    I know, I know. What about the President who took us into war and has no plan to get us out? The President who has a measly 31 percent approval rating? Is this the same President who guided the nation in the dark days after 9/11? The President that cut taxes to bring an economy out of recession? Could this be the same guy who has been called every name in the book for succeeding in keeping all the spoiled ungrateful brats safe from terrorist attacks?

    The Commander-In Chief of an all-volunteer army that is out there defending you and me? Did you hear how bad the President is on the news or talk show? Did this news affect you so much, make you so unhappy you couldn’t take a look around for yourself and see all the good things and be glad?

    Think about it…are you upset at the President because he actually caused you personal pain OR is it because the “Media” told you he was failing to kiss your sorry ungrateful behind every day.

    Make no mistake about it. The troops in Iraq and Afghanistan have volunteered to serve, and in many cases may have died for your freedom. There is currently no draft in this country. They didn’t have to go.

    They are able to refuse to go and end up with either a ”general” discharge, an ”other than honorable” discharge or, worst case scenario, a ”dishonorable” discharge after a few days in the brig.

    So why then the flat-out discontentment in the minds of 69 percent of Americans? Say what you want, but I blame it on the media. If it bleeds, it leads; and they specialize in bad news. Everybody will watch a car crash with blood and guts. How many will watch kids selling lemonade at the corner? The media knows this and media outlets are for-profit corporations. They offer what sells, and when criticized, try to defend their actions by “justifying” them in one way or another. Just ask why they tried to allow a murderer like O.J. Simpson to write a book about “how he didn’t kill his wife, but if he did he would have done it this way”…Insane!

    Stop buying the negativism you are fed everyday by the media. Shut off the TV, burn Newsweek, and use the New York Times for the bottom of your bird cage. Then start being grateful for all we have as a country. THERE IS EXPONENTIALLY MORE GOOD THAN BAD.


  4. 26

    Dear Mr. Curtis Sobel,

    I completely sympathize with your concerns, and in a perfect world under The Constitution of the United States of America (alone), I would agree with you (but not under the Bill of Rights).

    I believe your position presupposes each of our three branches of government do not make mistakes, are always honest and (for one example) always act independently of big organized business interests. In truth, however, to a shockingly significant extent:

    (A) Congress is wittingly and unwittingly unduly influenced by organized big business interests,
    (B) Executive agencies are wittingly and unwittingly unduly influenced by organized big business interests, and
    (C) America’s courts, even our beloved Federal Circuit and Supreme Court, are wittingly and unwittingly unduly influenced by organized big business interests [see endnote 1] both directly and indirectly.

    With all due respect, Mr. Sorbel, given this sorry sickening situation, We the American People must to be able to redress one branch of government from another, although in our modern sophisticated world, and its many ingeniously insidious overt and covert means of corruption, it is harder than ever to effectively redress growing endemic problems in our three branches of government.

    Please correct me if you think I’m wrong, but I believe under the First Amendment in the Bill of Rights the Founding Fathers broadly intended to allow We the People to redress one branch of government from another:

    “First Amendment: Congress shall make no law respecting an establishment of religion, or prohibiting the free exercise thereof; or abridging the freedom of speech, or of the press; or the right of the people peaceably to assemble, and to petition the Government for a redress of grievances.”

    Interestingly, it is an open question to many Americans as to whether the Founding Fathers intended to allow We the People the ultimate redress when they gave us the Second Amendment:

    “Second Amendment: A well regulated Militia, being necessary to the security of a free State, the right of the people to keep and bear Arms, shall not be infringed.” [see endnote 2]

    Be that however as it may, use of the Internet has amplified the ABILITY TO CORRUPT in unforeseen ways. While I, Jaoi(TM) take my First Amendment rights as seriously as Carlton Heston takes the Second Amendment rights, CORPORATIONS DO NOT HAVE THE SAME FIRST AMENDMENT RIGHTS as We the People – this is a fact, and it is not in dispute.

    My schedule permitting, I will try to elaborate over the forthcoming days and weeks on Patently-O.

    Endnote 1:
    (a) The Supreme Court eBay decision, for example, which stole the power of a patent injunction from self-employed inventors but not from other inventors, was patently inconsistent with our Constitution (a patent without the power to stop infringement is almost useless, akin to a revolver without bullets).

    (b) By making patent validity, in essence, “flexible”, the Supreme Court’s KSR decision, invited judges to render result-oriented patent decisions at whim — their own personal whim or big business influence whim or media stirred up whim-of-the-day.

    Endnote 2:
    The Second Amendment is set for Oral Argument on March 11th in D.C. v Heller
    link to
    Whether the Second Amendment forbids the District of Columbia from banning private possession of handguns while allowing possession of rifles and shotguns.

  5. 25

    As an attorney who practices in both the federal and state courts, I expect that when the judiciary branch of our government decides my case, after both sides have had a full and fair chance to present their evidence and make their arguments, that the decision of the courts will not be subverted by one party’s attempt to obtain relief from either the legislative or executive branch or our government. I find it reprehensible that the legislative branch due to lobbying or other irrelevant interest would overturn the finding of the judiciary arm of our government undermines the very basis of an independent judiciary that our founding fathers based the creation of separate arms of the government upon. Regardless of the nature of a litigated matter, the relief sought or the cause prosecuted, an aggrieved party should not be permitted to seek redress from a senator or other member of the legislative branch of our government simply because they did not prevail in the courts. Each of the division of our government has an end point, the judiciary in appeal to the highest court among them. If a litigant cannot rely upon the fact that there exists an end point to litigation if a litigant’s cause can be subverted simply by one party’s recourse to another body in the government, here the legislative branch, then the founding father’s creation of the separate branches of government is meaningles. Many speak to the strict construction of the constitution. The attempt by the banks to seek redress in the legislative branch of our government for an adverse result in the judiciary branch is the antithesis of said strict construction.

  6. 21

    “having patentability of all original claims confirmed and having a bunch of additional claims allowed, merits a “more than intact” characterization, don’t you think?”


    You are right. I stand corrected. I said “reasonably intact” since I noticed on the reexam certificate that claim 1 had been amended. I just checked the actual amendment and it turns out that it was to correct a typo. So yes, both patents emerged with not only all claims intact, but with additional claims allowed.

  7. 19

    Mark Nowotarski wrote “The reexam certificates for Ballard’s ‘988 and ‘137 patents issued on October 23, 2007 and December 25, 2007 (Christmas!?) respectively. It looks like they emerged relatively intact.”

    Mark, what does “relatively intact” mean? I may not be impartial here, but having patentability of all original claims confirmed and having a bunch of additional claims allowed, merits a “more than intact” characterization, don’t you think?

    As far as the Senate bill is concerned, why isn’t the patent bar up in arms over this? Have any of the senators been informed of the Bill introduced by Senator Sessions when they effectively agreed to interfere with ongoing litigation? Where are their priorities? Shame on you, gentlemen (and gentle ladies)!

  8. 18

    Go get them Claudio… The banks knowingly infringed on your patents, thinking they had the money to outlast you in a legal battle. They have spent about 700 million, so far, fighting Datatreasury and they are losing. So, are the banks going to be able to buy their way out of this By spending more money on lobbying, donations & contributions? What they have done, and are still doing, is not right… They should do the right thing and take their punishment like a man.

  9. 17

    The reexam certificates for Ballard’s ‘988 and ‘137 patents issued on October 23, 2007 and December 25, 2007 (Christmas!?) respectively. It looks like they emerged relatively intact. When will the litigation resume? Doesn’t this amendment create a certain amount of urgency?

  10. 16

    “Thanks for the update. Are the courts finding a lot of takings under the “legimate state interest”? I wouldn’t expect that they would.”


    After Kelo v City of New London where a bare majority of SCOTUS had the gall to stand our 5th Amendment on its head as to what constitutes a “taking” for “public purposes” don’t necessarily expect any rationality on what constitutes a “legitimate state interest.” Fortunately, many state Supreme Courts, includind ours in Ohio (in Norwood v. Horney) dumped Kelo on its ear (and thankfully so), so there is hope.

  11. 15

    What’s the rationale behind the exempting check imaging patents with an effective date prior to September 30, 1996? The filing date for Ballard’s ‘590 patent is August 27, 1997 so I can see why the effective date is before Ballard’s filing date. I was just wondering what made September 30, 1996 special.

  12. 14

    As Judge Gideon J. Tucker so tersely put it: “Nobody’s life, liberty or property is safe while Congress is in session.”

  13. 11

    “Under Agins, a regulatory taking can arise if the law ‘does not substantially advance a legitimate state interest’ – although there still would need to be some significant economic harm.”

    Thanks for the update. Are the courts finding a lot of takings under the “legimate state interest”? I wouldn’t expect that they would.

  14. 10

    “DataTreasury claims that its patent is necessarily infringed when a bank follows the Federal “Check 21” procedure”

    How did a patented process become part of a standard without the patent issues being resolved at the time?

    If there is a problem or concern with the Data Treasury patents, a targeted legislative provision like this is not the appropriate response.

  15. 9

    A “regulatory taking” does NOT necessarily require a deprivation of all economically viable use. For example, the Agins case is still good law and has been cited by circuit courts recently. Under Agins, a regulatory taking can arise if the law “does not substantially advance a legitimate state
    interest” – although there still would need to be some significant economic harm.

  16. 8

    If it’s a regulatory taking, I think you have to deprive them of substantially all economically viable use to get a taking. If so, I’m sure the claims are broad enough to read on other commercial activities and thus there would be some economic use left, that is, suing people practicing these other activities.

    Typically, you want broad claims to read on lots of infringers. Here, the broad claims might leave the patentee with some economic use and thus defeat takings. How ironic that seeking broader patent protection might cause the patentee to lose a billion dollars.

  17. 7

    Dennis, agree that the check-imaging thing might raise a takings issue, but it is hardly clear cut. First, although this seems to have Datatreasury in mind, you probably still end up in regulatory takings land. Second, there is Zoltek Corp. v. United States, 442 F.3d 1345 (Fed. Cir. 2006) to deal with. I wouldn’t bank the $1 billion just yet.

  18. 6

    Con Law question: if Congress amended to Act to require all money recovered by DataTreasury, or like plaintiffs in infringement suits, to be applied to reduce the federal deficit, then that’d seem to be a due process “taking,” so why is there no taking issue from legislating away an existing cause of action?

  19. 5

    “According to reports, the Congressional Budget Office has calculated that the ‘taking’ of DataTreasury’s right to sue is worth about one billion dollars.”

    Obviously, we will be paying for the taking (should it occur) through taxes or debt service. But no worries, I’m sure the banking industry will lower our current charges (rather than pocket the difference) so we don’t end up paying for the patents twice. (And yes, it’s better to have a big brother than a free market.)


  20. 4

    WSJ Oct 4, 2007 “Bank Bill’s Senate Champion Has Ties to Industry”

    … not surprised the act is undergoing “modification”

  21. 3

    Tip your hat to the good senators? How about asking the key question? Why is the Senate feeling inclined to subvert the court system and place a $1 billion payment squarely on the heads of the taxpayers? The court case (if you follow it) is deciding that Datatreasury is asking for damages that amount to a part of the savings that the banks have enjoyed as a result of implementing technology patented previously by Datatreasury.

    So the banks can save billions, and on top of that the bill is sent to us taxpayers? Ask yourself whose pocket the “honorable” Senator Sessions is in. At least the White House and the Commerce Department have raised objections, which shows me that they haven’t been bought off

    Bravo indeed.

  22. 1

    “Years later, this evolving technology became standard practice in the banking industry, and its importance became
    particularly noted in the days after September 11, 2001…”

    I tip my hat at the good Senators for connecting patent reform to 9/11. Bravo.

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