Proving Anticipation-by-Inherency: It is Hard

Patent

By Dennis Crouch

Motorola Mobility v. ITC and Microsoft (Fed. Cir. 2013)

In a short opinion, the Federal Circuit has affirmed the ITC’s judgment that Motorola infringes Microsoft’s Patent No. 6,370,566 covering a mobile device having a “personal information manager.”

The most interesting part of the decision comes from the court’s analysis of the Apple Newton MessagePad device. Motorola had argued that the Newton anticipated the ‘566 patent. The ITC found that, while it was “plausible” that the Newton contained the claimed synchronization feature, that Motorola had failed to fully prove that limitation was practiced by the Newton. In particular, the ITC concluded that the “inference of a possibility” did not rise to the level of clear and convincing evidence. On appeal, the Federal Circuit affirmed – finding that “substantial evidence supports the Commission’s conclusion that Motorola did not present clear and convincing evidence that the operating system necessarily required any additional capacity that would qualify it as a component ‘to synchronize.’ Inherency requires more than probabilities or possibilities.”

The bad trick here is that Motorola pursued anticipation-by-inherency rather than proving that the Newton was actually used in an anticipating manner. As the Federal Circuit wrote, “inherency requires more than probabilities or possibilities” but instead requires that the limitation in question be a necessary consequence of using a device for its intended purposes. As Janice Mueller writes in her treatise: Stated another way, [inherency occurs when the] practice of the prior art reference would inevitably have resulted in the claimed invention.” Bottom line here is that anticipation-by-inherency can be quite difficult to prove well beyond the already difficult hurdle of clear-and-convincing evidence.

The ITC issued an exclusion order that blocks importation of foreign-manufactured Motorola phones that infringe the ‘566 patents. It is unclear to me at this point which phones and Android operating systems are covered by the exclusion order.

= = = =

The ‘566 patent stems from a 1997 application and claims:

1. A mobile device, comprising:

an object store; [i.e., a section of memory used to store records]

an application program configured to maintain objects on the object store;

a user input mechanism configured to receive user input information;

a synchronization component configured to synchronize individual objects stored on the object store with remote objects stored on a remote object store;

a communications component configured to communicate with a remote device containing the remote object store; and

wherein the application program is further configured to generate a meeting object and an electronic mail scheduling request object based on the user input information.

 

 

 

Question 1 on my short-answer patent law final

Patent

What is your best short-answer to this exam question? (See the 20-word limit).

  1. Alice’s patent covers a new flat panel television made with cobalt-ion-trixles (a truly new compound). In her initial patent application, Alice did not disclose a WiFi transmitter/receiver as part of the television. However, during patent prosecution she added a claim directed to the television that includes both the cobalt-ion-trixles and a WiFi transmitter – arguing that the new WiFi limitation is okay because WiFi is so well known in the art. Assuming that WiFi is truly well known in the art, what is the most likely argument against patent validity? (20 words).

US Government Suggests that Supreme Court Reject Federal Circuit’s Divided Infringement Jurisprudence

Patent, ,

By Dennis Crouch

Limelight Networks, Inc. v. Akamai Technologies, Inc. (Supreme Court 2013)

Akamai is the licensee of MIT’s patents for that solve some problems associated with distributing large amount of data to individual servers and endpoints in a large computer network (such as the Internet). The ideas therein are used by Limelight to distribute video content on behalf of many of the largest content providers in the world. However, the Akamai/MIT patent has a problem in that several steps of the claimed method are performed by Limelight but others are performed by its customers. Prior Federal Circuit cases would have found Limelight not liable in this situation because no single entity (or its agents) performed each and every step of the claimed invention. The Federal Circuit rejected that rule in its en banc decision in this case – holding instead that Limelight could be held liable under 35 U.S.C. § 271(b) for practicing several of the steps itself and inducing others to perform the remaining steps.

Limelight has petitioned the Supreme Court for a writ of certiorari, asking the following question:

Whether the Federal Circuit erred in holding that a defendant may be held liable for inducing patent infringement under 35 U.S.C. § 271(b) even though no one has committed direct infringement under § 271(a).

The question presented by Limelight is somewhat misleading because the Federal Circuit left-open for another day whether Limelight’s activity could be considered direct infringement under § 271(a). Adamai/MIT re-wrote the question:

Whether the Federal Circuit correctly held that a determination of induced infringement under § 271(b) does not require a predicate finding that a single entity was liable for infringement under § 271(a), under circumstances where all of the steps of a method claim are performed, but the inducer performs some steps itself and induces another to perform the remaining steps?

The Supreme Court then asked the US Solicitor General to provide comments on behalf of the US Government. In a brief signed both by the US Solicitor General Donald Verrilli and USPTO Solicitor Nathan Kelley, the US Government has supported the petition for writ of certiorari and sughested that the court reverse the Federal Circuit Decision.

The US Government position is typically seen as the most important and predictive brief on whether the Supreme Court will hear a particular case.

The government writes:

The Court should grant the petition … hold that a party cannot be liable for inducement under 35 U.S.C. 271(b) if no party has directly infringed the patent.

In its brief, the Government recognizes that, if the court follows its proposal, that the law “will likely permit vendors such as Limelight to avoid liability altogether.” The brief goes on to indicate that the “statutory gap is unfortunate, but reflects the better reading of the current statutory language in light of establish background principles of vicarious liability.”

The basic statutory argument is that 271(b) creates liability against someone who “actively induces infringement.” And, the implication that the word infringement in the statute means infringement under 271(a).

SCOTUS Blog has the briefs: http://www.scotusblog.com/case-files/cases/limelight-networks-inc-v-akamai-technologies-inc/

Director Michelle Lee: A Rough Start

Patent

By Dennis Crouch

First, let me give my endorsement: I admire Director Michelle Lee and believe that she will be an excellent Deputy Director of the USPTO as well as Acting Director. She is extremely well qualified both in terms of education and experience; she is well respected in the highest levels of governments as well as by business leaders and on-the-ground innovators; and she is ready to work hard to improve the Patent Office and the US Patent System.

That said, Director Lee has not begun her tenure well – seemingly because of her willingness to go along with plans set forth by those in the White House in terms of both (1) the questionable process of her appointment and (2) an initial secret and private roundtable discussion.

Improper Appointment: Yesterday, we discussed the appointment of Director Lee as Deputy Director without proper statutory authority. In particular, the statute is fairly clear that no Deputy Director can be appointed in the absence of a Director. 35 U.S.C. § 3(b)(1). Further, an odd feature of the appointment was the caveat that she will not be titled “Acting Director” of the Agency even though she will be “Acting as Director” and even though the same statute provides that the Deputy Director should fill that role in the absence or incapacity of a Director.

The limits on the Directorship appointments are not merely statutory. Rather, they are in place to maintain an important check on executive authority. Special authority flows from the PTO Director because the Director is appointed by the President and approved by the Senate. See U.S. Constitution Article II, Section 2, Clause 2 (requiring “Advice and Consent of the Senate”).

Now, the reality here is that these critiques are largely academic in that: (1) if put up for a vote in the Senate, Director Lee would very likely be approved based upon her qualifications that I discussed above; (2) any legal challenge to her nomination will likely be moot because a Senate-Approved Director is likely to be in office within a few months – well before pleadings would be complete on any challenge to Director Lee’s legal authority. However, the comparisons to Dwight Schrute and his role as assistant to the regional manager.

Secret Exclusionary Meeting: Within hours of her announcement as Deputy Director, Director Lee and White House Patent Reform Coordinator Colleen Chien spearheaded a roundtable discussion with a select group of invited guests put forward by the heavily Democratic leaning “Business Forward” community. Business Forward does not lobby, but instead “mak[es] it easier for … business leaders from across America to advise Washington on how to create jobs and accelerate our economic recovery.” The meeting was designated as “off the record” by the PTO and barred press (including Patently-O) from attending as well as leaders from the IPO and the AIPLA. USPTO Spokesman indicated that the meeting was a “normal” and usual event: “Yesterday’s meeting with a group of seasoned patent litigators was part of a normal series of discussions USPTO has facilitated to solicit views on patent reform proposals from various segments of our user community. As legislation moves on to the Senate, we expect to continue to host such normal meetings with various parts of the IP community.”

Now, I do not have a problem with the PTO Director and White House having private meetings, but it does look bad that Director Lee’s first information-gathering discussion is with a private hand-selected group of operatives whose result will likely work to set her vision for patent reforms in ways that cannot be rebutted. Directors Kappos and Rea both pushed strongly for public discussion and my hope is that Director Lee will continue that important trend.

Michelle Lee, Acting as Director but not “Acting Director”

Patent

By Dennis Crouch

When Michelle Lee joined the USPTO in 2012, she took an interesting title – Director of the Silicon Valley Patent Office. With the resignation of both David Kappos (USPTO Director) and Theresa Rea (USPTO Deputy Director), Lee is the only remaining titled “Director” within the USPTO. There has been a growing expectation that she would soon shift from her West-Coast focus and take over operations of the full USPTO. Although the position of USPTO Director requires Senate confirmation, the Director of Commerce has the ability to shift the personnel who effectively control that position.

This morning, the Commerce Department announced that Michelle Lee will be the new Deputy Under Secretary of Commerce for Intellectual Property effective, January 13, 2014. Because there is no current USPTO Director she will be in charge until a new Director is nominated by the President and approved by the Senate.

Director Michelle Lee has a strong background in intellectual property, beginning with her multiple degrees from MIT in computer science and electrical engineering and a J.D. from Stanford Law School where she was a law review editor. Prior to law school, she worked in MIT’s Artificial Intelligence labs and also in HP’s research labs. She clerked both in the Northern District of California and for Judge Paul Michel at the Federal Circuit. She then worked for a decade in top Silicon Valley law firms, including Fenwick & West and Keker & Van Nest and then joined Google where she worked for a decade as head of their patent team and deputy general counsel. In the past, Lee has worked closely with Colleen Chien who is now spearheading the White House patent initiatives. Lee is seen as an effective manager and a visionary willing to take on major challenges. Like Kappos, I have always found Lee to be open and ready to hear and respond to reasoned input. There is some trepidation (or enthusiasm, depending upon your perspective) that she will strongly advocate Google’s anti-patent stance. I suspect, however, that the result will be pushing for higher quality examination that better ensures clarity.

Congratulations to Michelle Lee!

Lee’s appointment does have a genuine statutory problem. In particular, the statute requires that a Deputy Director be appointed by the Secretary of Commerce “upon nomination by the [USPTO] Director.” 35 U.S.C. § 3. Because there is no Director, there could be no such nomination. One reason why there is no Director is that position requires Senate approval (as required by the Constitution), and the President’s approach here appears to be an attempted end-run around that process. The DoC press release includes the following statement: “Upon assuming her role as USPTO Deputy Director, Lee will perform the functions and duties of the USPTO Director, a position that is currently vacant. In accordance with statutory law, she will assume the title of ‘Acting Director’ once President Obama nominates a Director.” The final sentence of this is unclear to me, but the PTO confirmed that their statement is correct, she will only be acting as director but not officially Acting Director. This is apparently an attempt to avoid the statutory and Constitutional requirements mentioned above. I think it has the complete opposite result because the statute requires that the Deputy Director “act in the capacity of the Director in the event of the absence or incapacity of the Director.” Noted patent attorney Hal Wegner comments: “Why would a person of heretofore spotless reputation and noted achievement accept an appointment in violation of the strict statutory wording that the appointment is only ‘upon nomination by the Director,’ 35 USC § 3(b)(1), at a time when there is no Director.” USPTO’s chief communications officer Todd Elmer clarified to me that PTO’s Commissioner of Patents Peggy Focarino apparently nominated Michelle Lee who was then selected by the Secretary of Commerce. Since Focarino has been handling all the duties of the director, then the PTO has reasoned that Focarino has the power to nominate under the statute.

John Cabeca will take-over as director of the SV patent office.

Chisum on Patents: Abstract Ideas

Patent,

Don Chisum on the CLS Bank case:

The Supreme Court often intervenes to resolve splits among the various courts of appeal. Here a split exists within a circuit that the circuit itself is unable to resolve. The circuit judges’ varying interpretations of a body of recent and not-so-recent Supreme Court precedent riddled with fuzzy language and inconsistent results caused the split. Now, the Court has the opportunity (and the obligation) to clean up a mess that is, to a major extent, of its own making.

Read Chisum’s full write-up on the law of “abstract ideas” post-Bilski. /wp-content/uploads/2013/12/Supreme-Court-on-Computer-Software-Patents-1.pdf

Supreme Court: The Right to a Jury Trial on Obviousness

Obviousness, Patent, , , , ,

By Dennis Crouch

Soverain v. Newegg (on petition for writ of certiorari)

After a trial on the merits, Judge Davis (E.D.Tex.) found that the accused infringer (Newegg) had presented insufficient evidence of obviousness and refused to let that issue go to the jury. Instead, the judge awarded a directed verdict for the patentee (Soverain) that the asserted claims were not invalid as obvious. The jury went on to find Newegg liable for infringement and awarded $2.5 million in damages and also found the patent not anticipated. Following trial, the district court denied Newegg's motion for new trial on obviousness grounds. On appeal, the Federal Circuit took the almost unprecedented stance of reversing the non-obviousness decision. One reason for the rarity of a full-reversal (rather than vacatur) is largely explained by the substantial factual foundation that serves as the basis of an obviousness decision. In its opinion, the Federal Circuit couched its discussion in terms of questions of law – following the Supreme Court's lead from KSR International Co., v. Teleflex, Inc., 550 U.S. 398 (2007). In that case, the Supreme Court was able to make the legal conclusion that the asserted claims were obvious because the factual underpinnings of obviousness were seemingly not in material dispute.

In its petition for writ of certiorari, Soverain focuses on the Seventh Amendment right to a jury trial and argues that the Federal Circuit's approach effectively and improperly redefines obviousness as a pure question of law.

Question Presented:

Whether the Federal Circuit's effective redefinition of obviousness as a pure question of law, allowing it to resolve disputed factual questions in the first instance on appeal, violates the Seventh Amendment and this Court's precedent.

Here, Sovarain points to a number of factual issues that the Federal Circuit identified as questions of law, including assessing credibility of the witnesses, resolving conflict between witness testimony resolving the teaching of prior art references.

The Seventh Amendment provides that:

In Suits at common law, where the value in controversy shall exceed twenty dollars, the right of trial by jury shall be preserved…

The Seventh Amendment "preserve[s]" the "common law" right to jury trial and, as a consequence, presents an oddball test that roughly asks whether the cause of action at issue was (or is analogous to) a common law cause of action that was tried before an English jury back in in 1791 and then whether the particular trial decision in question is one that was (or would have been) decided by a jury. See Markman v. Westview Instruments, Inc., 517 U.S. 370 (1996).

The Supreme Court has indicated that patent infringement lawsuits where the patentee is seeking damages are cases at law protected by the Seventh Amendment right to a jury trial. However, as far as I know, the Supreme Court has never held that the right to a jury particularly to an obviousness challenge or to the underlying factual conclusions that serve as the basis for an obviousness decision. 1800's cases do suggest that the factual underpinnings to the "invention" requirement are subject to a jury determination. See, for example, Battin v. Taggert, 58 U.S. (17 How.) 74 (1854); and Turrill v. Michigan S. & N. Ind. R.R. Co., 68 U.S. (1 Wall.) 491 (1864) ("[T]here was an important question of fact which should have been left to the jury, whether … any of the prior movable pressblocks … were substantially the same as the machine of the patentee."). However, the 1952 Patent Act expressly eliminated the doctrine of invention in favor of the new doctrine of obviousness. In its last foray into this area, the Supreme Court recognized in Markman that claim construction included both questions of fact and questions of law, but ultimately determined that no fundamental right to a jury trial existed for that doctrine.

An interesting inside issue here is that Judge Newman has been a strong proponent of the right to a jury trial on obviousness. See Newell Cos. v. Kenney Manufacturing Co., 864 F.2d 757 (Fed.Cir. 1988) (J. Newman dissenting from holding that ultimate question of obviousness may be decided by judge over party's objection). However, it was Newman who found Soverain's patent obvious in the present case. In the 1988 Newell case, the majority held that the patentee has no right to a jury trial on obviousness unless the factual underpinnings are in dispute.

The defendant was, of course, entitled to have a jury summoned in this case, but that right was subject to the condition, fundamental in the conduct of civil actions, that the court may withdraw a case from the jury and direct a verdict, according to the law if the evidence is uncontradicted and raises only a question of law.

Of course, Judge Nies did not walk through the weeds of history (as required by the Supreme Court) to arrive at this answer but instead only looked to the "fundamental notion" that there is no right to a jury decision regarding a question of law. See also, In re Lockwood, 50 F.3d 966 (Fed. Cir. 1995) (Nies, C.J. writing in dissent) (arguing that a patent is a public right created by Congress and "[a] constitutional jury right to determine validity of a patent does not attach to this public grant") (mandamus vacated without opinion by the Supreme Court).

Focusing back, the Soverain petition does not ask the Supreme Court to overrule Newell, but rather to merely limit courts ability to unilaterally expand take would-be factual question and then make those factual conclusions under the guise of legal determinations. Soverain writes:

The Federal Circuit's decision to take for itself questions this Court has reserved for the trier of fact has significant consequences that threaten the stability and predictability of the patent system. This decision shifts the boundary between the ultimate legal question of obviousness and the underlying factual questions. It thus paves the way for district courts and other panels to decide factual questions and undermines the role that the jury and procedural safeguards play in ensuring that hindsight bias does not skew the analysis of obviousness. By downplaying the factual component of obviousness, the Federal Circuit's decision also erodes the clear and convincing evidence standard for proving invalidity, which this Court reaffirmed in Microsoft Corp. v. i4i Limited Partnership, 131 S. Ct. 2238 (2011).

I also see this case as asking for clarification of the KSR decision in terms of what elements of the "common sense" analysis should be considered determinations rightfully before a jury. I suspect that the brief strategically avoided that issue because the Federal Circuit is a much riper target for review than a recent unanimous and popular Supreme Court opinions.

In an amicus brief supporting the petition, Professor Eileen Herlihy argues that the Federal Circuit systematically gets Seventh Amendment questions wrong and needs to be set straight by the Supreme Court. Herlihy has written two articles on how the Seventh Amendment should be applied to patent cases.

 

Is Software Patentable?: Supreme Court to Decide

Patent, ,

By Dennis Crouch

50-years on, we still don’t have the answer as to whether computer programs are patentable.

The Supreme Court has granted a writ of certiorari in the software patent case of ALICE CORPORATION PTY. LTD. V. CLS BANK INTERNATIONAL, ET AL., Docket No. 13-298 (Supreme Court 2013). The Australian patent holder Alice Corp presented the following question:

Issue: Whether claims to computer-implemented inventions – including claims to systems and machines, processes, and items of manufacture – are directed to patent-eligible subject matter within the meaning of 35 U.S.C. § 101 as interpreted by this Court.

In a highly fractured en banc decision, the Federal Circuit determined that Alice Corp’s claims lacked eligibility. Because none of the opinions in the decision carried a majority, the result was that the Federal Circuit only added confusion to the area.

Alice Corp’s Patent No. 7,725,375 covers software for managing the risk associated with an online transaction essentially by using an electronic escrow service. Claim 26 recites how the system would work:

26. A data processing system to enable the exchange of an obligation between parties, the system comprising:

a communications controller,

a first party device, coupled to said communications controller,

a data storage unit having stored therein (a) information about a first account for a first party, independent from a second account maintained by a first exchange institution, and (b) information about a third account for a second party, independent from a fourth account maintained by a second exchange institution; and

a computer, coupled to said data storage unit and said communications controller, that is configured to (a) receive a transaction from said first party device via said communications controller; (b) electronically adjust said first account and said third account in order to effect an exchange obligation arising from said transaction between said first party and said second party after ensuring that said first party and/or said second party have adequate value in said first account and/or said third account, respectively; and (c) generate an instruction to said first exchange institution and/or said second exchange institution to adjust said second account and/or said fourth account in accordance with the adjustment of said first account and/or said third account, wherein said instruction being an irrevocable, time invariant obligation placed on said first exchange institution and/or said second exchange institution.

The patent also claims “a computer program” for accomplishing the same result.

Capturing the Consumer Surplus through Downstream licensing and Infringement Lawsuits

Patent

by Dennis Crouch

Downstream users have been increasingly subject to patent infringement lawsuits even when the product manufacturer would seemingly have been a more natural and focused target. Many assign nefarious intent to these downstream user lawsuits, but it turns out there is a good faith economic reason why the lawsuits make sense for a patentee. The basic insight here is that lawsuits against parties further downstream in the market chain allow the patentee to capture a portion of the economic consumer surplus that is not available at manufacturer-level lawsuits.

A U.S. patent provides its owner with the right to exclude others from making, using, selling offering-to-sell, importing or exporting the patented invention. 35 U.S.C. § 271. The statute is broad enough to allow a patentee to target any point along the supply chain.* However, the rules on exhaustion and multiple recovery prevent a patentee from collecting duplicative royalties at from different points along the supply chain.

In a market economy, consumers typically purchase goods when the prices of those goods are less than what the consumers are willing to pay. Consumer surplus is defined as the difference between that highest price that they would be willing to pay and the price that they actually did pay. Because of pricing difficulties for producers and market competition, almost all goods and services are associated with some consumer surplus. This consumer surplus is a spillover benefit that simply cannot be fully captured by the manufacturer. Each step along a supply chain also typically involves consumer surplus, with the result being that the end-user places a substantially higher value on the good than did the original manufacturer.

This notion of consumer surplus ties back into the patent laws at the point of collecting damages. Under the patent laws, a patentee is due at least “a reasonable royalty for the use made of the invention by the infringer.” And, because downstream users place a higher value on the goods than do upstream manufacturers and distributers, it makes sense that the reasonable royalty award will also be relatively higher.

A typical patent scenario might involve a software developer who made check-processing software that was then sold through a vender to banks around the country. The developer, vender, and banks are all potentially liable for infringement and the patentee wanting to enforce its patent would then need to choose whom to sue for infringement. Here, the banks likely paid the vender significantly less than the actual value they receive from using the software. Similarly, a successful vender would have paid the software developer significantly less than the resale price. These differences in valuation offer fuel for the ‘hypothetical negotiation’ that serves as the fundamental basis for reasonable royalty damages. Simply stated, a party who values the invention more would tend to pay more for use of the invention.

A difficulty with customer-lawsuits is the large number of lawsuits and negotiations. Rather than dealing with a single manufacturer that may result in a single large payout, the patentee is working through dozens or even hundreds or thousands of customers who each pay their bit. In addition, patentees whose preference is to stop infringing use rather than collect royalties will likely prefer to cut focus on the manufacturer level as a better chokepoint.

Now, taking a step back toward reality: It is unlikely that these differences in valuation are driving the current preference for customer lawsuits. Rather, the settlement value of most of the customer lawsuits are driven by the cost-of-defense rather than the merits of the patent at issue or its value to the user. This means that my reasonable royalty calculation from above, even if mathematically correct, is largely irrelevant in the current climate. I should note that there are at least several legitimate criticisms to my analysis and underlying assumptions above, but I’ll save those for a later post.

DC

= = = = =

* With method-of-use claims, the end users end users are the only likely direct infringers, but even there, the suppliers may be liable for inducement or contributory infringement. (Recent cases tightening the mens rea requirement limit this somewhat).

 

Next Step in Patent Reform

Patent

By Dennis Crouch

With the passage of the Goodlatte Innovation Act (H.R. 3309), attention now moves to the Senate to consider a a roughly parallel bill. Several amendments passed during today’s debate and we’ll address those in a later post.

In the Senate, Senators Leahy (D-VT), Lee (R-UT), Whitehouse (D-RI), and Klobuchar (D-MN) have proposed the Patent Transparency and Improvements Act of 2013 (S. 1720). In a prior essay, I called the Leahy-Lee proposal “more measured and limited” than the Goodlatte bill and “much more narrowly focused on egregious patent enforcement abuses.”

One important element coming through this process is a clear lack of leadership from the PTO. Although former director David Kappos testified against the Goodlatte proposal, his golden air of credibility and executive authority has shifted since joining the Cravath firm. The PTO has been without a Senate-approved director February 1, 2013 and any new (yet unnamed) PTO director is weeks or months away.

Legislative update.

Patent

Chairman Goodlatte is pushing for a vote today in the House on the Innovation Act. Ranking Member Conyers is pushing back. Update: A few minutes ago, the House passed Rep. Goodlatte’s Innovation Act with a strong bi-partisan vote of 325 – 91.

Constitutional Challenge to Administrative Patent Review – Part IV

Patent, ,

By Dennis Crouch

Although the parties are ostensibly focused on whether WARF’s “replicating in vitro cell culture of human embryonic stem cells” constitutes patentable subject matter, the Federal Circuit is instead directing its attention to the issue of whether the patent challenger – Consumer Watchdog – has standing to file its patent appeal.

Consumer Watchdog v. Wisconsin Alumni Research Foundation (WARF) (Fed. Cir. 2013)

The Patent Act allows any party to file a post-grant administrative challenge and, if “dissatisfied” the results of the change, to appeal an adverse PTO ruling. Despite the statutory promise of appeal-rights, in Part I, I raised a concern as to whether a third-party challenger who loses at the PTO would necessarily have Article III standing. Within days, of that posting, the Federal Circuit ordered that Consumer Watchdog and WARF brief the issue of whether Consumer Watchdog has standing under Article III.

In Monday’s oral arguments, the court focused entirely on the issue of standing and would hear no arguments regarding the substantive appeal. Dan Ravicher (for Consumer Watchdog) and Kara Stoll (for WARF) both handled themselves very well, but Ravicher noted that the PTO should be at the table since Consumer Watchdog’s complaint is with the PTO for wrongfully issuing the patent and then wrongfully confirming patentability in the reexamination. Chief Judge Rader, Judge Prost and newly enrobed Judge Hughes participated fully in the questioning, although each of indicated some difficulty buying into Ravicher’s argument that Congress created a potential injury-in-fact with its “dissatisfied” language and that the injury was realized when the PTO rejected Watchdog’s case.

However, following Ravicher’s suggestion, the Court has now requested that “the United States Patent and Trademark Office and the United States” provide briefs in the case and particularly brief “whether Consumer Watchdog has standing to pursue its appeal to this court.” Recognizing the recent tension in briefing between the USPTO and the DOJ, the court wrote that “The PTO and the United States may submit a joint brief, if they so choose.”

Although the court does not explicitly welcome other amicus briefs, I am confident that several will be forthcoming. Briefs are due January 6, 2014.

Federal Circuit’s Most Frequently Cited Cases in 2013

Patent

The following list comes from a search of 264 patent-related opinions by the Federal Circuit issued this year. The following are the most frequently cited cases found therein:

  1. Cybor Corp. v. FAS Technologies, Inc., 138 F.3d 1448 (Fed. Cir. 1998).
  2. Phillips v. Awh Corp., 415 F.3d 1303 (Fed. Cir. 2005).
  3. KSR International Co. v. Teleflex Inc., 550 U.S. 398 (2007).
  4. Graham v. John Deere Co., 383 U.S. 1 (1966).
  5. Vitronics Corp. v. Conceptronic, Inc., 90 F.3d 1576 (Fed. Cir. 1996).
  6. Anderson v. Liberty Lobby, Inc, 477 U.S. 242 (1986).
  7. In re Robert J. Gartside, 203 F.3d 1305 (Fed. Cir. 2000).
  8. Markman v. Westview Instruments, 517 U.S. 370 (1996).
  9. Microsoft Corp. v. i4i Ltd. Partnership, 564 U.S. ___ , 131 S.Ct. 2238 (2011).
  10. Omega Engineering, Inc v. Raytek Corp., 334 F.3d 1314 (Fed. Cir. 2003).
  11. Eurand, Inc. v. Mylan Pharms. Inc. (In re Cyclobenzaprine Hydrochloride Extended-Release Capsule Patent Litig.), 676 F.3d 1063 (Fed. Cir. 2012).
  12. Markman v. Westview Instruments, Inc., 52 F.3d 967 (Fed. Cir. 1995).

At some point this term, the Federal Circuit will decide Lighting Ballast Control v. Philips Electronics and that decision is expected to serve as a replacement for Cybor.

After Final Consideration Pilot (AFCP) Extended

Patent

The USPTO has extended the After Final Consideration Pilot 2.0 (AFCP 2.0) program that basically gives examiners credit for considering responses filed after a final rejection.

To be eligible for consideration under AFCP 2.0, you must file a response under 37 CFR §1.116, which includes a request for consideration under the pilot (Form PTO/SB/434) and an amendment to at least one independent claim that does not broaden the scope of the independent claim in any aspect. . . . If you are considering filing a response to a final rejection under 37 CFR 1.116 that you believe will lead to allowance of your application with only limited further searching and/or consideration by the examiner, you should consider requesting consideration of the response under AFCP 2.0.

The program was scheduled to end on December 14, 2013, but has been extended until September 30, 2014.

Virtual Designs

Patent,

Guest Post by Mark D. Janis, Robert A. Lucas Chair of Law at the Indiana University Maurer School of Law and Jason Du Mont, Microsoft IP Fellow at the Indiana University Maurer School of Law

While design patents for generated images are commonly portrayed as the newest thing in design patent law, they've actually been around for some time. The USPTO implemented a relevant set of guidelines almost 20 years ago, and today well over 3500 design patents on generated images have been granted.

Nevertheless, scholars have paid relatively little attention to many of the core legal questions these design patents present, and no one has systematically studied how the PTO examines applications that claim these designs. In our recent article, Virtual Designs*, available here, we attempt to fill this vacuum. We analyze the core questions of design patent doctrine, and we provide the first rigorous empirical look at patenting in this sector.

Among the findings are three key points:

  1. Virtual designs are eligible designs "for an article of manufacture" (35 USC § 171).

    Virtual designs are akin to surface treatments. While some design patents protect the shapes of articles of manufacture, others protect surface treatments for articles of manufacture (wallpaper patterns, textile prints, etc.). Surface treatments are eligible subject matter, and always have been, starting with the first design patent provisions in 1842.

    Like other surface treatments, virtual designs (e.g., icons on a phone GUI) are eligible subject matter independent of the appearance of the associated article of manufacture (e.g., the phone).This is not a terribly exotic legal proposition. It's merely a manifestation of the concept thata protectable design may reside in some part of the article; it need not extend to the entirety of the article. Standard design patent claiming practice permits applicants to implement this concept by rendering the unclaimed portions of the article in broken lines.

    While virtual designs may be transient, design patent law has previously dealt with this question, too. The CCPA reversed the PTO's rejection in In re Hruby, involving a design for a spray pattern for a water fountain. The design patent eligibility analysis should not turn on whether the design is too ephemeral, whether the subject matter is a water spray pattern or a virtual design.

  2. Virtual designs equilibrate around the prosecution norms of other design patent sectors

    We studied all available design patents granted for virtual designs and their prosecution histories. We adapted empirical techniques developed for studying utility patents, and extended the traditional proxies used by economists for measuring the quality and private value of utility patents.

    Our analysis indicates that virtual designs are at least on par with design patents from other sectors when assessed by these traditional measures. And, if anything, an argument can be made that they might actually be more heavily scrutinized than others. They not only garner more rejections, but they also receive more prior art citations from examiners, and greater numbers of forward self-citations.

  3. Virtual designs will present a handful of doctrinal challenges

    We expect that design patents for virtual designs will present some challenges for existing rules of design patent anticipation, obviousness, infringement, and remedies. Ultimately, we propose a series of guidelines that seek to account for the transferability of the design among different mediums, and for the need to provide adequate public notice and room to engage in non-traditional, expressive uses of designs.

* We use virtual designs as a generic term that covers everything from GUIs to isolated icons and arrows grouped in classes D14/485 to 495 by the USPTO.

** Read the full article here: http://ssrn.com/abstract=2265733.

Patently-O Bits & Bytes by Lawrence Higgins

Patent

Jury Orders Newegg To Pay $2.3 Million To TQP Development

  • The online retailer Newegg has lost a patent case centering on Web encryption, after a Texas jury rejected its argument that a claim from the company TQP Development was invalid. The jury ordered Newegg to pay $2.3 million. Newegg's Chief Legal Officer Lee Cheng stated that "the company does not agree with the verdict and they fully intend to take the case up on appeal and vindicate our rights." [Link]

No Patent Trolls in Nebraska!

  • Nebraska's Attorney General Jon Bruning wants to start a task force to end, what he calls patent scams. Bruning, states that, he "plans to call for a coalition of states, like with the tobacco cases," referring to the partnership of state attorneys general that collected billions from cigarette makers in the 1990s as compensation for health-care costs related to treating smokers. [Link] [Link]

Teaching Fellow for Stanford Law School LLM Program in Law, Science and Technology

  • The Teaching Fellow for the Stanford Law School LLM Program in Law, Science and Technology will work with candidates in the LLM specialization in Law, Science and Technology. The fellow will assume significant academic, advising and administrative responsibilities. He or she will be responsible for organizing and teaching two quarters of a colloquium addressing current issues and scholarship in intellectual property, cyberlaw, bioethics, and related fields.  The fellow will also organize and facilitate informal workshops, outside speakers, and academic and social events; be responsible for day-to-day administrative management of the LLM program; advise and counsel LLM candidates on academic and personal issues; respond to inquiries from prospective LLM applicants; and interact with our faculty in support of the LLM program goals and needs. The fellow will work with the Executive Director of International Graduate Programs, and under the supervision of the Faculty Director of the Law, Science and Technology program. The fellow will also fully participate in the admissions process, working under the guidance of the Associate Dean for Admissions to admit the new class. Although this is a full time position, the fellow should have a reasonable amount of time to conduct his or her own research, and will have ready access to affiliated faculty for that purpose.

    Candidates for this position are expected to have strong academic records and references.  Professional experience in the area is also valuable. This position is intended primarily for people who expect to pursue an academic career in a field that is reasonably related to the specialization and who hold a JD, JSD or LLM from a U.S. law school.  Applicants are expected to commit to this position in one year increments, starting in August 2014, with a two-year commitment preferred.

    Those interested should apply by letter, summarizing their complete educational qualifications and experience, as well as any other information that might help us in making selections. Each applicant should also send us an official law school transcript, a resume, copies of any publications, and three letters of recommendation (at least two from law professors) commenting on the applicant's suitability for the position in terms of teaching ability, analytic capability, interpersonal skills, and writing ability.

    Apply by January 15, 2014! Your application package should be sent to: aarroyo@stanford.edu

Upcoming Events:

  • IQPC is hosting its Patent Infringement Litigation Summit on December 9th and 10th in San Francisco. The Summit will bring together in-house counsel from major companies, law firm attorneys and representatives from other vendors to facilitate strategy and information sharing among these key stakeholders. [Link]
  • American Conference Institute is holding its Advanced Forum on Modern Patent Litigation Practice on December 10-11, 2013 in New York, NY. The American Conference Institute's (ACI's) Advanced Forum on Patent Litigation is the only event that advises all litigators, be they in-house or outside counsel, of the changing landscape of patent litigation caused by recent legislation, government agency guidelines, and court determinations. This conference will not only serve as the standard for Patent Litigation Conferences going forward, but also as an annual meeting place for the "who's who" of the industry. [Link]
  • IBC Legal is hosting the 5th annual International Patent Litigation conference on 10th & 11th December 2013 in London. Register with 10% discount at: [Link]
  • Momentum Event Group is hosting its conference IP Counsel Exchange for Biosimilar Applicants & Sponsors on January 23-24 in New York. Register with discount code PJ10. [Link]
  • IBC Legal will hold its 22nd annual Biotech $ Pharmaceutical Patenting Conference February 25 & 26 in Munich, Germany. The keynote speaker will be Heli Pihlajamaa, Director of Patent Law at the European Patent Office. [Link]
  • Momentum Event Group is hosting its conference The IP Counsel Summit on Post-Grant Patent Challenges on February 27-28 in Paola Alto, CA. Register with discount code PJ10. [Link]
  • The Chisum Patent Academy is now accepting registrations for their 2014 Advanced Patent Law seminars, to be held
    • March 5-7, 2014: Cincinnati, Ohio
    • August 13-15, 2014: Seattle , Washington
    • August 18-20, 2014: Seattle, Washington

The Academy applies for 18 CLE credits in each state where seminars are held. [Link]

Constitutional Challenge to Administrative Patent Challenges – Part III

Patent, ,

By Dennis Crouch

Consumer Watchdog v. Wisconsin Alumni Research Foundation (WARF) (Fed. Cir. 2013)

A major limitation on judicial power comes from the doctrine of standing. A U.S. court has no power to hear a dispute between parties unless the plaintiff has or imminently will suffer injury-in-fact caused by the challenged action of the defendant that is redressable by a favorable court decision. This limitation has been derived from Article III of the U.S. Constitution that states "The Judicial Power shall extend to all Cases . . .[and] to Controversies . . ." To be clear, this limitation on power is placed on Article III courts at the district, appellate, and supreme court level. However, the limitation has not been applied to adjudicative processes that take place within administrative agencies since the government's authority to perform those activities is not seated in Article III. The conflicting approach to standing between these two adjudicative regimes regularly comes into conflict when parties appeal adverse agency decisions to an Article III court. The general rule for resolving this conflict is Constitutional supremacy – i.e., an Article III court cannot hear a case unless the standing requirement is met.

In the patent world, this issue is most focused in the area of post-issuance administrative patent challenges, particularly including inter partes review, post-grant review, covered-business-method review, and inter partes reexamination. In those regimes, any third party can administratively challenge a patent. Under the statute, the third-party then has a right to appeal an adverse decision to the Court of Appeals for the Federal Circuit. One question on appeal in the Consumer Watchdog case is whether there is standing for the appeal. Here, Consumer Watchdog is a public interest group that has not claimed any direct impact due to the WARF stem-cell patent, but certainly had standing to file its inter partes reexamination. I discussed this issue in some detail here:

The parties have now briefed the issue of standing and the court holds oral arguments on Monday, December 2.

Consumer Watchdog's brief does a nice job of drawing a parallel between the post-issuance challenges and Freedom-of-Information-Act (FOIA) requests. In each case, the relevant statute has no standing requirement but authorizes appeal to Federal Courts.

The Supreme Court has described FOIA as a "judicially enforceable public right" (EPA v. Mink, 410 U.S. 73, 80 (1973)) and made clear that no injury is required of a person who seeks to enforce that right. NLRB v. Robbins Tire & Rubber Co., 437 U.S. 214, 221 (1978).

The essential idea here that the statute goes a long way toward creating standing by (1) creating a right to petition and then (2) granting a right to appeal to unsuccessful petitioners. And then, the injury-in-fact or "concrete injury" is completed at least when the PTO finds against the petitioner. At that point, the only party with a right of appeal is the petitioner. This particularization before getting to court helps to distinguish the present case from the leading Supreme Court case of Lujan where a statute provided that "any person" could file suit in federal court.

Idea of a patent challenge as a "judicially enforceable public right" also has precedential support. See Lear v. Adkins, 395 U.S. 653 (1969)

Consumer Watchdog also makes an important point here, that the PTO should be a party to the appeal and that the Federal Circuit should at least invite briefing from the US Government on the issue of standing.

For its part WARF relies heavily on Lujan:

To satisfy Article III standing, Watchdog, a nonprofit taxpayer and consumer-rights organization, must establish an injury in fact—i.e., an actual and imminent, concrete and particularized invasion of a legally protected interest—caused by WARF. Lujan v. Defenders of Wildlife, 504 U.S. 555, 560 (1992). But Watchdog does not and has not claimed to make, use, or sell the patented invention; has not and could not be threatened with suit; and has not named another real party in interest, either in this appeal or before the PTO. Watchdog therefore cannot establish standing, and Watchdog's appeal should be dismissed.

The result then is that WARF here is inherently arguing that the statute providing for a right to appeal is unconstitutionally broad. The question then is the extent that this crumbles the regime even further. [Updated to clarify that WARF does not explicitly argue the statute is unconstitutional.]

IP Law Professors Rise-Up Against Patent Assertion Entities

Patent, , , ,

By Dennis Crouch

A group of sixty US intellectual property law professors have signed a letter to Congress supporting anti-troll patent reform legislation. This effort was driven by Professor Love of Santa Clara and is also signed by Professors Bessen, Goldman, Ghosh, Lemley, Meurer, Samuelson, Sprigman, and others. [Download ProfessorsLetterOnTrolls].

A key introductory line from the letter:

Despite our differences, we all share concern that an increasing number of patent owners are taking advantage of weaknesses in the system to exploit their rights in ways that on net deter, rather than encourage, the development of new technology.

The basic argument is that patent litigation is expensive and frontloaded in such a way that "creates an opportunity for abuse" because early-state settlement is focused more on the cost of litigation rather than the value of the patent or its underlying technology. And, it is the recent "rise of patent assertion entities" that has "disrupted [the] delicate balance" of the patent system.

The professors propose the following six general reforms:

  1. To discourage weak claims of patent infringement brought at least in part for nuisance value, we recommend an increase in the frequency of attorneys' fee awards to accused patent infringers who choose to fight, rather than settle, and ultimately defeat the infringement allegations levelled against them.
  2. To reduce the size and front-loaded nature of patent litigation costs, we recommend limitations on the scope of discovery in patent cases prior to the issuance of a claim construction order, particularly with respect to the discovery of electronic materials like software source code, emails, and other electronic communications.
  3. To further protect innocent retailers and end-users that are particularly vulnerable to litigation cost hold-up, we recommend that courts begin to stay suits filed against parties that simply sell or use allegedly infringing technology until after the conclusion of parallel litigation between the patentee and the technology's manufacturer.
  4. To facilitate the early adjudication of patent infringement suits, we recommend that patentees be required to plead their infringement allegations with greater specificity.
  5. [To increase transparency and confidence in the market for patent licensing, we recommend that Congress require] patentees … to disclose and keep up-to-date the identity of parties with an ownership stake or other direct financial interest in their patent rights.
  6. [To increase transparency and confidence in the market for patent licensing, we recommend that] Congress consider additional legislation designed to deter fraudulent, misleading, or otherwise abusive patent licensing demands made outside of court.

Without a doubt, there is merit to the professors' case, although I bristle at the letter's broad-brush statements and overt stance that is pro-large-corporate-entity. I have a few thoughts regarding the specific suggestions:

(1): Anti-plaintiff fee shifting will have the obvious impact of altering the availability of contingency-fee counsel which may be the motivation of the suggestion. One problem is that almost every patent in litigation is amenable to a good-faith challenge on either invalidity or non-infringement grounds. Predicting winners and losers is a difficult prospect and this gives me little faith that the fee-shifting proposal will primarily target low-quality claims but instead will target risk-averse plaintiffs. The professors' suggestion here to reward non-settlement does not provide me with any confidence that overall litigation costs will be reduced. On the other hand, this proposal (especially if focused on invalidating patents) could serve as something like a bounty for attorneys to challenge bad patents and, as a consequence, would lessen the free-rider problem associated with a single company challenging a patent that is also being asserted against competitors.

(2) & (4): I agree that there is plenty room for reducing discovery costs and for raising pleading requirements without substantially harming patentee rights. However, one problem for both software and method patents is that some forms of infringement are difficult to truly pin-down absent discovery. Some work must be done on any particular proposals to ensure that the result is not a clear pathway unactionable infringement.

(3) Regarding customer lawsuits, we have a difficulty in line drawing because, for the most part, these are not simply customer lawsuits. Rather, the patents being asserted cover particular methods or systems that take advantage of a particular device on-the-market (such as a wireless router or flat-panel television). In this situation, the differences are such that the manufacturer and retailer typically refuse to honor their implied warrantee that the good is "free of the rightful claim … of infringement or the like." UCC 2-312(3). And so, the question is whether these use cases will fit within the definition. One reason for the downstream lawsuits is that downstreamers typically value the technology more than upstreamers with the result of greater damage award. (We know the downstreamers valued it more because they purchased it from the upstreamers). Since the exhaustion doctrine only allows a patentee to recoup at one point in the stream-of-commerce, it makes sense that they would focus on the highest valued user.

= = = = =

Text of the letter:

To Members of the United States Congress:

We, the undersigned, are 60 professors from 26 states and the District of Columbia who teach and write about intellectual property law and policy. We write to you today to express our support for ongoing efforts to pass patent reform legislation that, we believe, will improve our nation's patent system and accelerate the pace of innovation in our country.

As a group we hold a diversity of views on the ideal structure and scope of our nation's intellectual property laws. Despite our differences, we all share concern that an increasing number of patent owners are taking advantage of weaknesses in the system to exploit their rights in ways that on net deter, rather than encourage, the development of new technology.

Several trends, each unmistakable and well supported by empirical evidence, fuel our concern. First, the cost of defending against patent infringement allegations is high and rising. The American Intellectual Property Law Association estimates that the median cost of litigating a moderately-sized patent suit is now $2.6 million, an amount that has increased over 70% since 2001. These and other surveys suggest that the expense of defending even a low-stakes patent suit will generally exceed $600,000. Moreover, the bulk of these expenses are incurred during the discovery phase of litigation, before the party accused of infringement has an opportunity to test the merits of the claims made against it in front of a judge or jury.

The magnitude and front-loaded nature of patent litigation expenses creates an opportunity for abuse. Patent holders can file suit and quickly impose large discovery costs on their opponents regardless of the validity of their patent rights and the merits of their infringement allegations. Companies accused of infringement, thus, have a strong incentive to fold and settle patent suits early, even when they believe the claims against them are meritless.

Historically, this problem has largely been a self-correcting one. In suits between product-producing technology companies, the party accused of infringement can file a counterclaim and impose a roughly equal amount of discovery costs on the plaintiff. The costs, though high, are symmetrical and, as a result, tend to encourage technology companies to compete in the marketplace with their products and prices, rather than in the courtroom with their patents.

In recent years, however, a second trend – the rise of "patent assertion entities" (PAEs) – has disrupted this delicate balance, making the high cost of patent litigation even more problematic. PAEs are businesses that do not make or sell products, but rather specialize in enforcing patent rights. Because PAEs do not make or sell any products of their own, they cannot be countersued for infringement. As a result, PAEs can use the high cost of patent litigation to their advantage. They can sue, threaten to impose large discovery costs that overwhelmingly fall on the accused infringer, and thereby extract settlements from their targets that primarily reflect a desire to avoid the cost of fighting, rather than the chance and consequences of actually losing the suit.

To be sure, PAEs can in theory play a beneficial role in the market for innovation and some undoubtedly do. However, empirical evidence strongly suggests that many PAEs have a net negative impact on innovation. Technology companies – which, themselves, are innovators – spend tens of billions of dollars every year litigating and settling lawsuits filed by PAEs, funds that these tech companies might otherwise spend on additional research and design. Surveys also reveal that a large percentage of these suits settle for less than the cost of fighting, and multiple empirical studies conclude that PAEs lose about nine out of every ten times when their claims are actually adjudicated on their merits before a judge or jury.

The impact of these suits is made more troubling by the fact that PAE activity appears to be on the rise. Empirical studies suggest that at least 40%, and perhaps as high as 59% or more, of all companies sued for patent infringement in recent years were sued by PAEs. PAE suits were relatively rare more than a decade ago, and they remain relatively rare today elsewhere in the world.

More worrisome than these bare statistics is the fact that PAEs are increasingly targeting not large tech firms, but rather small business well outside the tech sector. Studies suggest that the majority of companies targeted by PAEs in recent years earn less than $10 million in annual revenue.

When PAEs target the numerous small companies downstream in the supply chain, rather than large technology manufacturers upstream, they benefit in two ways. First, for every product manufacturer, there may be dozens or hundreds of retailers who sell the product, and hundreds or thousands of customers who purchase and use the technology. Patent law allows patent owners to sue makers, sellers, or users. Suing sellers or users means more individual targets; some PAEs have sued hundreds of individual companies. And, more targets means more lawyers, more case filings, more discovery, and thus more litigation costs overall to induce a larger total settlement amount.

Second, compared to large manufacturers, small companies like retailers are less familiar with patent law, are less familiar with the accused technology, have smaller litigation budgets, and thus are more likely to settle instead of fight. In fact, many small businesses fear patent litigation to such an extent that they are willing to pay to settle vague infringement allegations made in lawyers' letters sent from unknown companies. Like spammers, some patent owners have indiscriminately sent thousands of demand letters to small businesses, with little or no intent of actually filing suit but instead with hopes that at least a few will pay to avoid the risk.

This egregious practice in particular, but also all abusive patent enforcement to some extent, thrives due to a lack of reliable information about patent rights. Brazen patent owners have been known to assert patents they actually do not own or, conversely, to go to great lengths to hide the fact that they actually do own patents being used in abusive ways. Some patent owners have also sought double recovery by accusing companies selling or using products made by manufacturers that already paid to license the asserted patent. Still others have threatened or initiated litigation without first disclosing any specific information about how, if at all, their targets arguably infringe the asserted patents.

In short, high litigation costs and a widespread lack of transparency in the patent system together make abusive patent enforcement a common occurrence both in and outside the technology sector. As a result, billions of dollars that might otherwise be used to hire and retain employees, to improve existing products, and to launch new products are, instead, diverted to socially wasteful litigation.

Accordingly, we believe that the U.S. patent system would benefit from at least the following six reforms, which together will help reduce the cost of patent litigation and expose abusive practices without degrading inventors' ability to protect genuine, valuable innovations:

  1. To discourage weak claims of patent infringement brought at least in part for nuisance value, we recommend an increase in the frequency of attorneys' fee awards to accused patent infringers who choose to fight, rather than settle, and ultimately defeat the infringement allegations levelled against them.
  2. To reduce the size and front-loaded nature of patent litigation costs, we recommend limitations on the scope of discovery in patent cases prior to the issuance of a claim construction order, particularly with respect to the discovery of electronic materials like software source code, emails, and other electronic communications.
  3. To further protect innocent retailers and end-users that are particularly vulnerable to litigation cost hold-up, we recommend that courts begin to stay suits filed against parties that simply sell or use allegedly infringing technology until after the conclusion of parallel litigation between the patentee and the technology's manufacturer.
  4. To facilitate the early adjudication of patent infringement suits, we recommend that patentees be required to plead their infringement allegations with greater specificity.

And finally, to increase transparency and confidence in the market for patent licensing, we recommend:

  1. that patentees be required to disclose and keep up-to-date the identity of parties with an ownership stake or other direct financial interest in their patent rights, and
  2. that Congress consider additional legislation designed to deter fraudulent, misleading, or otherwise abusive patent licensing demands made outside of court.

In closing, we also wish to stress that as scholars and researchers we have no direct financial stake in the outcome of legislative efforts to reform our patent laws. We do not write on behalf of any specific industry or trade association. Rather, we are motivated solely by our own convictions informed by years of study and research that the above proposals will on net advance the best interests of our country as a whole. We urge you to enact them.

Sincerely,

John R. Allison (Texas); Clark D. Asay (Penn State); Jonathan Askin (Brooklyn); Gaia Bernstein (Seton Hall); James E. Bessen (BU); Jeremy W. Bock (Memphis); Annemarie Bridy (Idaho); Irene Calboli (Marquette); Michael A. Carrier (Rutgers); Bernard Chao (Denver); Andrew Chin (UNC); Ralph D. Clifford (UMass); Jorge L. Contreras (American); Rebecca Curtin (Suffolk); Samuel F. Ernst (Chapman); Robin Feldman (Hastings); William T. Gallagher (Golden Gate); Jon M. Garon (Northern Kentucky); Shubha Ghosh (Wisconsin); Eric Goldman (Santa Clara); Leah Chan Grinvald (Suffolk); Debora J. Halbert (Hawaii); Bronwyn H. Hall (Berkeley); Yaniv Heled (Georgia State); Christian Helmers (Santa Clara School of Business); Sapna Kumar (Houston); Mary LaFrance (UNLV); Peter Lee (Davis); Mark A. Lemley (Stanford); Yvette Joy Liebesman (SLU); Lee Ann W. Lockridge (LSU); Brian J. Love (Santa Clara); Glynn S. Lunney, Jr. (Tulane); Phil Malone (Stanford); Mark P. McKenna (Notre Dame); Michael J. Meurer (BU); Joseph Scott Miller (Georgia); Fiona M. Scott Morton (Yale); Lateef Mtima (Howard); Ira Steven Nathenson (St. Thomas); Laura Lee Norris (Santa Clara); Tyler T. Ochoa (Santa Clara); Sean A. Pager (Michigan State); Cheryl B. Preston (BYU); Jorge R. Roig (Charleston); Jacob H. Rooksby (Duquesne); Brian Rowe (Seattle); Matthew Sag (Loyola Chicago); Pamela Samuelson (Berkeley); Jason Schultz (NYU); Christopher B. Seaman (W&L); Carl Shapiro (Berkeley); Lea Shaver (Indiana); Jessica Silbey (Suffolk); Christopher Jon Sprigman (NYU); Madhavi Sunder (Davis); Toshiko Takenaka (Washington); Sarah Tran (SMU); Jennifer M. Urban (Berkeley); Samson Vermont (Charlotte)