Two-Minute Survey: The Impact of Patent Reform

Patent

Please take a couple of minutes to complete this survey on the impact of the proposed patent reform measures:

Background: Patent reform measures have been passed in both the House and Senate that would, inter alia:

  • eliminate a patent applicant’s ability to swear-behind prior art based upon prior invention;
  • grant rights to the first-inventor-to-file a patent application;
  • create an additional post-grant opposition program;
  • eliminate the one-year grace period for third-party disclosures;
  • provide the PTO with some additional ability to set its own fees and to spend the fees collected;
  • make it easier for corporate patent owners to file applications associated with non-cooperative inventors;
  • eliminate best mode failure as a litigation defense; and
  • eliminate the incentive to sue for false patent marking.

Supporters of the reforms have made various announcements regarding the impact of the patent reform measure as proposed. These statements include: “Through patent reform, we can cut the red tape that stops too many inventors and entrepreneurs from quickly turning new ideas into thriving businesses.” And that the reforms “are expected to create 200,000 new jobs;” “will simplify patent law;” “will streamline the patent system;” and “represent the first major overhaul of the U.S. patent system in 60 years.”

Link to the Survey: http://www.surveymonkey.com/s/YGP3JR9

If the software method is not patentable, then neither is the “computer readable medium”

Patent, ,

CyberSource Corp. v. Retail Decisions, Inc. — F.3d — (Fed. Cir. 2011)

In an important decision, the Court of Appeals for the Federal Circuit has rendered many broadly written software patents invalid under 35 U.S.C. § 101 as interpreted by Bilski v. Kappos, 130 S. Ct. 3218 (2010). Most patent decisions involve questions of whether an invention is obvious under 35 U.S.C. § 103(a) or sufficiently described under 35 U.S.C. § 112. Section 101 asks a slightly different question – whether the patented invention is the type of innovation that properly fits within our patent system. In language virtually unchanged for over 200 years, Section 101 indicates that a patent should be awarded to the inventor of “any new and useful process, machine, manufacture, or composition of matter, or any new and useful improvement thereof.” Over the years, courts have repeatedly held that Section 101 bars the patenting of ‘laws of nature, physical phenomena, and abstract ideas.’

CyberSource’s patented invention is simple: when validating online credit card purchases, use IP address information (such as IP addresses) as a check against fraud. Thus, the patented method might raise a red flag if someone attempts to make a large internet purchase through an IP address that had previously been used for a fraudulent transaction.

In the lawsuit, CyberSource only asserted two claims: Claim 3 is the method of fraud detection roughly described above and Claim 2 is directed to a “computer readable medium containing program instructions” for causing a computer to perform the method. Claim 2 is written in “Beauregard” form. See In re Beauregard, 53 F.3d 1583 (Fed. Cir. 1995).

The claimed method is written as follows:

3. A method for verifying the validity of a credit card transaction over the Internet comprising the steps of:

a) obtaining information about other transactions that have utilized an Internet address that is identified with the credit card transaction;

b) constructing a map of credit card numbers based upon the other transactions and;

c) utilizing the map of credit card numbers to determine if the credit card transaction is valid.

Machine-or-Transformation: As written, the claim does not require the use of any machine and it does not require the transformation of any article into a different state or thing. Here, the court repeated its stance that mere data gathering steps such as “obtaining information” cannot be sufficient to “make an otherwise nonstatutory claim statutory.” And, although the patent is designed to facilitate transactions over the internet, nothing in the claim actually requires that the internet be used. Finally, data structures such as the claimed “information” and “map of credit card numbers” will not be considered technical because they could be simply written down using pencil and paper. Thus, at the outset the claim fails the Machine-or-Transformation test that the Supreme Court identified as an important clue of patentability under 35 U.S.C. § 101.

Because the machine-or-transformation test offers only a legal clue to patentability, the court went on to consider additional indicia that led to the conclusion that the claim does not qualify for patenting under Section 101. In particular, the court focused on prior case law holding that mental processes standing alone are not patentable. CyberSource’s claimed method is such a mental process because it can be “performed … by a human using a pen and paper.” Thus, the claim is invalid.

Beauregard Claims: CyberSource’s claim 2 comes in a different form. However, the court interpreted it as “nothing more than a computer readable medium containing program instructions for executing the method of claim 3.” The most natural implementation of the invention is using software and the claimed “computer readable medium” is the storage device that holds the software.

The claim:

2. A computer readable medium containing program instructions for detecting fraud in a credit card transaction between a consumer and a merchant over the Internet, wherein execution of the program instructions by one or more processors of a computer system causes the one or more processors to carry out the steps of:

a) obtaining credit card information relating to the transactions from the consumer; and

b) verifying the credit card information based upon values of plurality of parameters, in combination with information that identifies the consumer, and that may provide an indication whether the credit card transaction is fraudulent, wherein each value among the plurality of parameters is weighted in the verifying step according to an importance, as determined by the merchant, of that value to the credit card transaction, so as to provide the merchant with a quantifiable indication of whether the credit card transaction is fraudulent,

wherein execution of the program instructions by one or more processors of a computer system causes that one or more processors to carry out the further steps of;

[a] obtaining information about other transactions that have utilized an Internet address that is identified with the credit card transaction;

[b] constructing a map of credit card numbers based upon the other transactions; and

[c] utilizing the map of credit card numbers to determine if the credit card transaction is valid.

Claim Form Versus the Underlying Invention: CyberSource argued that the claim is patent eligible per se because it is directed to a man-made article of manufacture – “a computer readable medium.” The court rejected that technical distinction. Instead, for patent eligibility purposes, the court directed focus away from the claim’s literal statutory category and instead focus on the “underlying invention.”

Regardless of what statutory category (“process, ma-chine, manufacture, or composition of matter,” 35 U.S.C. § 101) a claim’s language is crafted to literally invoke, we look to the underlying invention for patent-eligibility purposes. Here, it is clear that the invention underlying both claims 2 and 3 is a method for detecting credit card fraud, not a manufacture for storing computer-readable information. This case is thus similar to In re Abele, 684 F.2d 902 (CCPA 1982). In Abele, claim 5 of the patent at issue recited “[a] method of displaying data” comprising the steps of “calculating the difference” between two numbers and “displaying the value.” Id. at 908. The court concluded that claim 5 was not directed to patent-eligible subject matter because it claimed an abstract idea. Id. However, claim 7 was argued to be different because it recited an “[a]pparatus for displaying data” comprising “means for calculating the differences” between two numbers and “means for displaying the value.” Id. at 909 (emphases added). Though claim 7 literally invoked an “[a]pparatus,” the court treated it as a method claim for the purpose of its § 101 analysis. Due to its “broad” and “functionally-defined” nature, the court found that treating claim 7 as an apparatus claim would “exalt form over substance since the claim is really to the method or series of functions itself.” Id. (citation omitted). Accordingly, the court placed “the burden . . . on the applicant to demonstrate that the claims [were] truly drawn to [a] specific apparatus distinct from other apparatus[es] capable of performing the identical functions.” Id. (citation omitted).

Here, the patentee was unable to provide suitable reasoning why the computer readable medium invention was fundamentally different from the method claim.

Pen, Paper, Computer: Following precedent set by Benson and Abele, the court here held that an unpatentable mental process remains unpatentable even when restricted to use on a computer.

Abele made clear that the basic character of a process claim drawn to an abstract idea is not changed by claiming only its performance by computers, or by claiming the process embodied in program instructions on a computer readable medium. Thus, merely claiming a software implementation of a purely mental process that could otherwise be performed without the use of a computer does not satisfy the machine prong of the machine-or-transformation test.

That purely mental processes can be unpatentable, even when performed by a computer, was precisely the holding of the Supreme Court in Gottschalk v. Benson.

Holding: Invalidity affirmed. Neither the method nor the computer readable medium qualify as patentable subject matter.

Can You Believe: U.S. Patent No. 8,000,000

Patent

Second Sight Medical Products is receiving some publicity for being awarded U.S. Patent No. 8,000,000. The patent claims a “visual prosthesis” that uses a camera that then sends a stimulating impulse to neural tissue in a subject’s eye.  Although Second Sight gets the patent, the research was at least partially paid by the U.S. Government. 

Patent2011001

Patent No. 7,000,000 issued in 2006; 6,000,000 in 1999; 5,000,000 in 1991; 4,000,000 in 1976; 3,000,000 in 1961; 2,000,000 in 1935; and 1,000,000 in 1911.

 

Recent Scholarship: Did Phillips Change Anything?

Patent

By Jason Rantanen

In a recent post discussing Retractable Technologies v. Becton, Dickinson and Company, Dennis commented that the court continues to struggle with claim construction – a seemingly surprising observation given that the Federal Circuit "clarified" its claim construction jurisprudence just over six years ago in Phillips v. AWH Corp. 

A new study by R. Polk Wagner and Lee Petherbridge confirms what many suspected: that Phillips did not lead to a new world of simple, straightforward, and predictable claim construction.  In Did Phillips Change Anything?: Empirical Analysis of the Federal Circuit’s Claim Construction Jurisprudence, Wagner and Petherbridge report the results of an empirical study that indicates that the court has made little jurisprudential progress since Phillips.  More importantly, they suggest, the same split in judicial methodological approach to claim construction that forced the Phillips opinion survived the court’s decision and likely still persists.  These findings and others lead them to their normative conclusion: that "Phillips stands forth as an unfortunate example of poor decision-making by the court, and one that negatively impacts its overall role in the patent system." Wagner and Petherbridge, abstract.

The paper is forthcoming in Intellectual Property and the Common Law (Cambridge U. Press, 2012, S. Balganesh, ed.), and a copy of the draft is available at http://papers.ssrn.com/sol3/papers.cfm?abstract_id=1909028.

Google’s Purchase of Motorola Mobility

Patent

Although much more than just a patent deal, Google’s purchase of Motorola Mobility is also clearly driven by Google’s perceived need to establish a strong portfolio of patent rights in an attempt to ward-off patent attacks by competitors in the fiercely competitive and growing smart-phone market.

Motorola Mobility was formerly the famous Mobile Devices division of Motorola, Inc. In January 2011, the company was spun-off from its parent. The company’s devices have been lagging in the market, but its patent rights have always been strong and plentiful. Recently, Motorola Mobility has become deeply involved in patent infringement litigation with suits pending versus competitors such as Microsoft, Apple, and TiVo in addition to more than two-dozen pending suits as defendants against non-practising patent holders.

Motorola Mobility holds over 24,000 patents and pending patent applications worldwide. In the US market alone, the company holds around 5,000 patents and 1,500 pending patent applications. The bulk of these patents were assigned to Mobility during the split from Motorola. However, the unit has continued to apply-for and obtain patents since the split. Motorola Mobility also owns a number of subsidiary companies that also hold their own patents, such as General Instrument, Inc.

Some pending US litigation:

  • Motorola Mobility v. TiVo (E.D. Tex.): Mobility asserts that TiVo is infringing a number of “fundamental” DVR patents that General Instrument obtained when it purchased Imedia. These include U.S. Patent Nos. 5,949,948, 6,304,714, and 6,356,708.
  • Motorola Mobility v. Microsoft (W.D. Wisc. and ITC): In three separate lawsuits, Mobility asserts that Microsoft’s XBox infringes a number of its patents, including U.S. Patents Nos. 6,980,596; 7,162,094; 5,319,712; 5,357,571; 6,686,931; 5,311,516; 6,069,896; 6,992,580; 7,106,358; 6,686,931; 7,088,220; and 5,738,583.
  • Motorola Mobility v. Apple (S.D. Florida): Mobility asserts that Apple’s iPhone 4 infringes a number of its wireless device and software patents, including U.S. Patents Nos. 5,710,987; 5,754,119; 5,958,006; 6,008,737; 6,101,531; 6,377,161; and 5,455,599. In a separate lawsuit, Apple accuses Mobility of infringing its patent Nos. 5,481,721; 5,566,337; 5,915,131; 5,929,852; 5,946,647; 5,969,705; 6,275,983; 6,343,263; and 6,424,354.

Interpreting the Scope of Patent Assignments Beyond Family Members

Patent

MHL TEK v. Nissan, Hyundai, KIA, Porsche, Subaru, Audi, Volkswagen and BMW (Fed. Cir. 2011)

MHL purported to obtain its patents from Animatronics and the inventors who themselves own MHL.  However, Animatronics had already assigned a number of patent rights to a third-party, McLaughlin Electronics. The basic standing question for the case is whether the McLaughlin assignment encompassed the patents-in-suit.  If so, then the later assignment to MHL was ineffective and the plaintiff had no standing to sue.

The McLaughlin assignment purported to assign “the inventions and discoveries set forth in [a different patent] application.”  The parties all admitted that the assignment language was broad enough to encompass more than just the single application listed in the assignment.  In considering the language of the assignment, the appellate court broadly held that the assignment was also not limited to “family member” applications linked by a priority claim.  Rather, the test given by the assignment is simply whether the patent “claims inventions and discoveries set forth in the [original] application.”  Here, the court focused on the claims of the patent-in-suit (the ‘516 patent) because “the claims of the patent define the invention” and basically conducted a written-description analysis to determine whether at least one of those claims were described in the specification of the original application.  The court considered claim 1 of the ‘516 patent and found that its subject matter was fully disclosed by the originally assigned patent.  Without explanation, the court then held that this single claim relationship was sufficient to render the entire patent within the assignment agreement. Thus, the functional interpretation of the assignment language was that the assignment encompassed any patent that included at least one claim that was reasonably described by the original specification.

The court also held that two continuations of the originally assigned application had also been transferred to McLaughlin through the assignment.

Finally, the court walked through a “carve-out” in the assignment that retained ownership for Animatronics for patents that “concern” certain identified “proprietary inventions.”  Taking a technical view of the carve-out provision, the Federal Circuit looked at each patent claim of the asserted patents to determine whether any patent claims covered a proprietary invention as defined in the assignment. Although the court identified some similarity, the court could not find any claims whose scope could be said to cover one of the defined proprietary inventions.  And therefore, the appellate panel affirmed that rights to those patents had been previously assigned by Animatronics and that MHL had no standing to sue on those patents.

 

Patently-O Bits & Bytes by Lawrence Higgins

Patent

Is the color red functional for shoe outsoles?

  • Judge Victor Marrero recently decided the famous Louboutin red outsole trademark case and decided that the color red is functional for shoe soles. Lanham 2(e) (5) states that "no trademark…shall be refused registration…unless it– comprises any matter that, as a whole, is functional." This was a difficult case to decide, counsel for both sides made great arguments. I think the Judge had a difficult job, and basically looked at the impact the case would have on trademark law and the market. Judge Marrero stated "if Louboutin owns Chinese Red for the outsole of that another designer high fashion women's shoes, another designer can just as well stake out a claim for exclusive use of another shade of red or even Louboutin's color, for the insole…" Judge Marrero seems to think that the flood gates would open and individuals would want to trademark a color for all types and aspects of shoes. In theory Judge Marrero is 100% correct, however, I am not sure if I agree with Judge Marrero since the trademark was granted in 2008 and I have not seen any other shoe maker using colored outsoles. I am sure Louboutin will appeal the decision to cancel the red outsole trademark if the decision is finalized on August 17, 2011. [Opinion]

Mark Cuban—My Suggestion on Patent Law

  • Mark Cuban is the outspoken owner of the NBA champion Dallas Mavericks and he wanted to express his view of the patent system. Mark suggests that the solution to the patent system is to end all software patents and all process patents. He believes that software has enough protection because it is copyrightable and process patents have no purpose at all. Some benefits of eliminating process and software patents that Mark proposes are: reducing court room costs, improving the efficiency of the Patent Office, ending the current patent arms race, and creating jobs. [Link]

Will Gene Patents Impede Whole Genome Sequencing?

  • Professor Chris Holman of UMKC law school and Holman's Biotech IP Blog is in the process of finalizing an article entitled "Will Gene Patents Impede Whole Genome Sequencing?: Deconstructing the Myth That 20% of the Human Genome Is Patented". In the article Professor Holman points out that many people believe that over 20% of the genome is patented and that these patents preclude researchers from studying or even looking at the patented genes. However, Holman calls this a misperception and there is no reason to believe that 20% of human genes are off-limits. Holman states that a vast majority of human gene patents were drafted in a manner that would not encompass whole genome sequencing. [Link]

Patent Jobs:

  • Gifford, Krass, Anderson, Sprinkle & Citkowski is seeking a partner for its Ann Arbor, MI office. [Link]
  • Morris & Kamlay is seeking a patent attorney with a technology/science background to work in their Washington, D.C. office. [Link]
  • Rutan & Tucker is searching for 2 patent agents with 2-4 years of experience and a science background. [Link]
  • The American Intellectual Property Law Association (AIPLA) is seeking an individual to fill its Deputy Executive Director -International & Regulatory position. [Link]
  • Kraft Foods is searching for a patent attorney with a minimum 5 years of experience. [Link]
  • Los Alamos National Security is seeking a patent attorney with a minimum of 8 years of experience. [Link]

Upcoming Events:

  • The 2nd European Pharmaceutical Regulatory Law Forum will be held in Brussels, Belgium September 21-22nd. The forum will focus on recent developments affecting the pharma industry in Europe and will discuss the impact of US developments on European companies. (Patently-O readers can register with code PO 10 for a 10% discount) [Link]
  • American Conference Institute's Life Sciences Business Development & Acquisitions in Emerging Markets conference is scheduled for September 26-27 in New York, NY. (Patently-O readers can register with code PO 200 for a discount) [Link]
  • Boston University School of Law and the Kauffman Foundation will be holding a Workshop on Innovation and Patent Harmonization at Boston University School of Management on September 30-October 1. The workshop will cover the effect of harmonization in both advanced countries, such as the US, and in developing nations, with a particular focus on China. Anyone interested in attending, please RSVP to Elizabeth Aggot at eaa@bu.edu. [Link]
  • American Conference Institute's 12th Annual Maximizing Pharmaceutical Patent Life Cycles will take place in New York on October 4th-5th. The conference is one of the leading sources of information and analysis on the patent life cycle management. (Patently-O readers can register with code PO 200 for a discount) [Link]
  • C5 will be holding the 21st annual Forum on Biotech Patenting in London on October 5th-6th. The 2011 London Biotech Patenting Forum will focus on the latest legal developments affecting biotech companies and how to implement successful methods and strategies for drafting and filing patent applications in multiple jurisdictions. (Patently-O readers can save 100 pounds by using discount code PO 100) [Link]
  • American Conference Institute will be holding a FDA Boot Camp Device Edition conference on October 25th-October 26th in Chicago. (Patently-O readers can register with code PO 200 for a discount) [Link]
  • IPMI is holding the IP Law & Management Institute on November 6th – 8th at the Rancho Las Palmas in Palm Springs, CA. Hailed as "One of the few programs geared to experienced in-house IP Counsel", the Institute is a CLE-accredited program designed to provide time-starved Heads of IP with the Opportunity to meet and network with their peers, learn from the best practices and validate solutions and services. [Link]

Contact Lawrence.Higgins@patentlyo.com with leads for future Bits and Bytes.

Patently-O Bits & Bytes by Lawrence Higgins

Patent

Is the color red functional for shoe outsoles?

  • Judge Victor Marrero recently decided the famous Louboutin red outsole trademark case and decided that the color red is functional for shoe soles. Lanham 2(e) (5) states that "no trademark…shall be refused registration…unless it– comprises any matter that, as a whole, is functional." This was a difficult case to decide, counsel for both sides made great arguments. I think the Judge had a difficult job, and basically looked at the impact the case would have on trademark law and the market. Judge Marrero stated "if Louboutin owns Chinese Red for the outsole of that another designer high fashion women's shoes, another designer can just as well stake out a claim for exclusive use of another shade of red or even Louboutin's color, for the insole…" Judge Marrero seems to think that the flood gates would open and individuals would want to trademark a color for all types and aspects of shoes. In theory Judge Marrero is 100% correct, however, I am not sure if I agree with Judge Marrero since the trademark was granted in 2008 and I have not seen any other shoe maker using colored outsoles. I am sure Louboutin will appeal the decision to cancel the red outsole trademark if the decision is finalized on August 17, 2011. [Opinion]

Mark Cuban—My Suggestion on Patent Law

  • Mark Cuban is the outspoken owner of the NBA champion Dallas Mavericks and he wanted to express his view of the patent system. Mark suggests that the solution to the patent system is to end all software patents and all process patents. He believes that software has enough protection because it is copyrightable and process patents have no purpose at all. Some benefits of eliminating process and software patents that Mark proposes are: reducing court room costs, improving the efficiency of the Patent Office, ending the current patent arms race, and creating jobs. [Link]

Will Gene Patents Impede Whole Genome Sequencing?

  • Professor Chris Holman of UMKC law school and Holman's Biotech IP Blog is in the process of finalizing an article entitled "Will Gene Patents Impede Whole Genome Sequencing?: Deconstructing the Myth That 20% of the Human Genome Is Patented". In the article Professor Holman points out that many people believe that over 20% of the genome is patented and that these patents preclude researchers from studying or even looking at the patented genes. However, Holman calls this a misperception and there is no reason to believe that 20% of human genes are off-limits. Holman states that a vast majority of human gene patents were drafted in a manner that would not encompass whole genome sequencing. [Link]

Patent Jobs:

  • Gifford, Krass, Anderson, Sprinkle & Citkowski is seeking a partner for its Ann Arbor, MI office. [Link]
  • Morris & Kamlay is seeking a patent attorney with a technology/science background to work in their Washington, D.C. office. [Link]
  • Rutan & Tucker is searching for 2 patent agents with 2-4 years of experience and a science background. [Link]
  • The American Intellectual Property Law Association (AIPLA) is seeking an individual to fill its Deputy Executive Director -International & Regulatory position. [Link]
  • Kraft Foods is searching for a patent attorney with a minimum 5 years of experience. [Link]
  • Los Alamos National Security is seeking a patent attorney with a minimum of 8 years of experience. [Link]

Upcoming Events:

  • The 2nd European Pharmaceutical Regulatory Law Forum will be held in Brussels, Belgium September 21-22nd. The forum will focus on recent developments affecting the pharma industry in Europe and will discuss the impact of US developments on European companies. (Patently-O readers can register with code PO 10 for a 10% discount) [Link]
  • American Conference Institute's Life Sciences Business Development & Acquisitions in Emerging Markets conference is scheduled for September 26-27 in New York, NY. (Patently-O readers can register with code PO 200 for a discount) [Link]
  • Boston University School of Law and the Kauffman Foundation will be holding a Workshop on Innovation and Patent Harmonization at Boston University School of Management on September 30-October 1. The workshop will cover the effect of harmonization in both advanced countries, such as the US, and in developing nations, with a particular focus on China. Anyone interested in attending, please RSVP to Elizabeth Aggot at eaa@bu.edu. [Link]
  • American Conference Institute's 12th Annual Maximizing Pharmaceutical Patent Life Cycles will take place in New York on October 4th-5th. The conference is one of the leading sources of information and analysis on the patent life cycle management. (Patently-O readers can register with code PO 200 for a discount) [Link]
  • C5 will be holding the 21st annual Forum on Biotech Patenting in London on October 5th-6th. The 2011 London Biotech Patenting Forum will focus on the latest legal developments affecting biotech companies and how to implement successful methods and strategies for drafting and filing patent applications in multiple jurisdictions. (Patently-O readers can save 100 pounds by using discount code PO 100) [Link]
  • American Conference Institute will be holding a FDA Boot Camp Device Edition conference on October 25th-October 26th in Chicago. (Patently-O readers can register with code PO 200 for a discount) [Link]
  • IPMI is holding the IP Law & Management Institute on November 6th – 8th at the Rancho Las Palmas in Palm Springs, CA. Hailed as "One of the few programs geared to experienced in-house IP Counsel", the Institute is a CLE-accredited program designed to provide time-starved Heads of IP with the Opportunity to meet and network with their peers, learn from the best practices and validate solutions and services. [Link]

Contact Lawrence.Higgins@patentlyo.com with leads for future Bits and Bytes.

Patently-O Bits & Bytes by Lawrence Higgins

Patent

Is the color red functional for shoe outsoles?

  • Judge Victor Marrero recently decided the famous Louboutin red outsole trademark case and decided that the color red is functional for shoe soles. Lanham 2(e) (5) states that "no trademark…shall be refused registration…unless it– comprises any matter that, as a whole, is functional." This was a difficult case to decide, counsel for both sides made great arguments. I think the Judge had a difficult job, and basically looked at the impact the case would have on trademark law and the market. Judge Marrero stated "if Louboutin owns Chinese Red for the outsole of that another designer high fashion women's shoes, another designer can just as well stake out a claim for exclusive use of another shade of red or even Louboutin's color, for the insole…" Judge Marrero seems to think that the flood gates would open and individuals would want to trademark a color for all types and aspects of shoes. In theory Judge Marrero is 100% correct, however, I am not sure if I agree with Judge Marrero since the trademark was granted in 2008 and I have not seen any other shoe maker using colored outsoles. I am sure Louboutin will appeal the decision to cancel the red outsole trademark if the decision is finalized on August 17, 2011. [Opinion]

Mark Cuban—My Suggestion on Patent Law

  • Mark Cuban is the outspoken owner of the NBA champion Dallas Mavericks and he wanted to express his view of the patent system. Mark suggests that the solution to the patent system is to end all software patents and all process patents. He believes that software has enough protection because it is copyrightable and process patents have no purpose at all. Some benefits of eliminating process and software patents that Mark proposes are: reducing court room costs, improving the efficiency of the Patent Office, ending the current patent arms race, and creating jobs. [Link]

Will Gene Patents Impede Whole Genome Sequencing?

  • Professor Chris Holman of UMKC law school and Holman's Biotech IP Blog is in the process of finalizing an article entitled "Will Gene Patents Impede Whole Genome Sequencing?: Deconstructing the Myth That 20% of the Human Genome Is Patented". In the article Professor Holman points out that many people believe that over 20% of the genome is patented and that these patents preclude researchers from studying or even looking at the patented genes. However, Holman calls this a misperception and there is no reason to believe that 20% of human genes are off-limits. Holman states that a vast majority of human gene patents were drafted in a manner that would not encompass whole genome sequencing. [Link]

Patent Jobs:

  • Gifford, Krass, Anderson, Sprinkle & Citkowski is seeking a partner for its Ann Arbor, MI office. [Link]
  • Morris & Kamlay is seeking a patent attorney with a technology/science background to work in their Washington, D.C. office. [Link]
  • Rutan & Tucker is searching for 2 patent agents with 2-4 years of experience and a science background. [Link]
  • The American Intellectual Property Law Association (AIPLA) is seeking an individual to fill its Deputy Executive Director -International & Regulatory position. [Link]
  • Kraft Foods is searching for a patent attorney with a minimum 5 years of experience. [Link]
  • Los Alamos National Security is seeking a patent attorney with a minimum of 8 years of experience. [Link]

Upcoming Events:

  • The 2nd European Pharmaceutical Regulatory Law Forum will be held in Brussels, Belgium September 21-22nd. The forum will focus on recent developments affecting the pharma industry in Europe and will discuss the impact of US developments on European companies. (Patently-O readers can register with code PO 10 for a 10% discount) [Link]
  • American Conference Institute's Life Sciences Business Development & Acquisitions in Emerging Markets conference is scheduled for September 26-27 in New York, NY. (Patently-O readers can register with code PO 200 for a discount) [Link]
  • Boston University School of Law and the Kauffman Foundation will be holding a Workshop on Innovation and Patent Harmonization at Boston University School of Management on September 30-October 1. The workshop will cover the effect of harmonization in both advanced countries, such as the US, and in developing nations, with a particular focus on China. Anyone interested in attending, please RSVP to Elizabeth Aggot at eaa@bu.edu. [Link]
  • American Conference Institute's 12th Annual Maximizing Pharmaceutical Patent Life Cycles will take place in New York on October 4th-5th. The conference is one of the leading sources of information and analysis on the patent life cycle management. (Patently-O readers can register with code PO 200 for a discount) [Link]
  • C5 will be holding the 21st annual Forum on Biotech Patenting in London on October 5th-6th. The 2011 London Biotech Patenting Forum will focus on the latest legal developments affecting biotech companies and how to implement successful methods and strategies for drafting and filing patent applications in multiple jurisdictions. (Patently-O readers can save 100 pounds by using discount code PO 100) [Link]
  • American Conference Institute will be holding a FDA Boot Camp Device Edition conference on October 25th-October 26th in Chicago. (Patently-O readers can register with code PO 200 for a discount) [Link]
  • IPMI is holding the IP Law & Management Institute on November 6th – 8th at the Rancho Las Palmas in Palm Springs, CA. Hailed as "One of the few programs geared to experienced in-house IP Counsel", the Institute is a CLE-accredited program designed to provide time-starved Heads of IP with the Opportunity to meet and network with their peers, learn from the best practices and validate solutions and services. [Link]

Contact Lawrence.Higgins@patentlyo.com with leads for future Bits and Bytes.

USPTO’s Future Budget

Patent

Fee-Retention Unlikely: The Senate and House of Representatives have each passed patent reform measures, and the two bills are remarkably similar. The arguably greatest difference between the two is that the Senate Bill (S. 23) includes a substantial guarantee that the USPTO will be able to actually spend the money that it collects in user-fees. The House Bill (H.R. 1249) does not include that guarantee. At this point, it appears most likely that the House Bill will be accepted in the Senate and that the PTO will be left without any budgetary protections from the congressional appropriations process.

Revenue is Revenue: Without the statutory limit, federal appropriators do not care that the USPTO is fee-funded and not taxpayer-funded. Rather, patent office fees, corporate income taxes, capital gains taxes, and personal income taxes all go into the same category of “government revenue” that can then be allocated as Congress and the President see fit.

Prior Cuts: In April 2011, a mid-year appropriations bill stripped approximately $100 million of USPTO collected fees and diverted that money to other federal programs – an approximate 10% cut in funding for the remainder of FY2011.

More Cuts on their Way?: As FY2012 approaches, it is likely that the USPTO will again feel the pinch from the most recent debt ceiling compromise and the resulting Budget Control Act of 2011. The new statute does not identify where cuts will occur, but does indicate that $21 billion will be cut from the FY2012 budget (that begins October 1, 2011) with additional cuts coming as early as December 2011. In all likelihood, some of the cuts will come from the USPTO.

Cutting from a Larger Pie: The silver lining for the USPTO is that the FY2012 budget proposed by President Obama includes a $600 million increase in spending for the USPTO – raising the budget to $2.7 billion. A 10% cut by appropriators from the budgeted amount would still leave the PTO with a $300 million increase from FY2011. It is not clear, however, that the appropriations process will use the budget proposal as the baseline.

Spending its Fees: Although Congress does not normally allow the USPTO to spend all of the fees that it collects, the USPTO is generally bound to never spend more than it collects. In other words, the PTO’s actual spending is bound by the amount that it collects in fees. The only way that the agency will be able to collect its budgeted $2.7 billion is through significant fee increases. Currently, the PTO does not generally have the authority to increase fees. However, the House Bill does provide the PTO with authority to set fees in order to meet its budgeted spending.

Correcting Patents at the District Court

Patent, ,

CBT v. Return Path and Cisco (Fed. Cir. 2011)

CBT’s Patent No 6,587,550 covers a system of charging an “advertising fee in return for allowing” e-mail from an authorized sender to pass through an ISP.  Return Path’s Bonded Sender program (developed by Cisco) is very similar, except that the program has no advertising fee but rather charges an annual license fee.

On summary judgment, the N.D. Georgia District Court held the asserted claim 13 invalid as indefinite based upon what the court characterized as a “drafting error” made during prosecution.  The claim reads as follows:

13. An apparatus for determining whether a sending party sending an electronic mail communication directed to an intended receiving party is an authorized sending party, the apparatus comprising:

a computer in communication with a network, the computer being programmed to detect analyze the electronic mail communication sent by the sending party to determine whether or not the sending party is an authorized sending party or an unauthorized sending party, and

wherein authorized sending parties are parties for whom an agreement to pay an advertising fee in return for allowing an electronic mail communication sent by the sending party to be forwarded over the network to an electronic mail address associated with the intended receiving party has been made.

The claim indicates that the computer is programmed to “detect analyze the electronic mail” and the district court could not determine the meaning of “detect analyze” and therefore held the claim indefinite under 35 U.S.C. § 112.

On appeal, the Federal Circuit has reversed — holding that there is an obvious and correctable drafting error in the claim and that the district court has the power and obligation to correct that error in the claim construction process.

Correcting Drafting Errors in Court: The common law allows district courts to correct obvious errors in patent claims. However, that correction can only apply where “the correction is not subject to reasonable debate based on consideration of the claim language and the specification and (2) the prosecution history does not suggest a different interpretation of the claims.” Novo Industries L.P. v. Micro Molds Corp., 350 F.3d 1348, 1354 (Fed. Cir. 2003). Here, the court goes on to hold that this correction process must be done as part of the claim construction and must take into account how the correction impacts the scope of the claim.

As a claim construction issue, the Federal Circuit reviewed the District Court’s analysis de novo and held that the error was not problematic. In particular, because “detect” and “analyze” are such synonyms in this context that the particular correction made did not make much of a difference, but that the best correction is to add an “and” between the two limiting words.

Certificates of Correction: The patentee could have corrected this by filing a request for a certificate of correction with the USPTO. The chart below shows the number of certificates of correction issued by the USPTO each year since 1995. I include an estimate for the rest of 2011.

Peripheral Disclosure

Patent,

By Jason Rantanen

This week I will be attending the Intellectual Property Scholars Conference, where I will be enjoying many other IP scholars' work, some of which I will discuss in subsequent posts, and presenting my own work in progress entitled Peripheral Disclosure.  In this Essay, I argue that that the disclosure function of patents has been greatly undervalued, not because patents succeed at forcing inventors to disclose useful information about their inventions in the patent document, but because patents free inventors to voluntarily share information about their inventions in forms other than the patent itself while retaining the ability to monetize their inventions.  

The abstract is below.  For those who are interested, a copy of the paper is available on SSRN here (it's currently a relatively short piece).  As this project is very much a work in progress, all comments are appreciated.

Peripheral Disclosure

The requirement that inventors disclose their inventions in return for a patent is one of the primary justifications for the patent system. Yet that justification has been subject to substantial criticism, and with good reason. Conventional disclosure scholarship focuses on inventor’s disclosure within the patent itself, a document that often fails to provide meaningful information to others. As a result, conventional disclosure theory has largely been relegated to the category of a straw man that scholars address perfunctorily when criticizing the patent system.

This Essay rejects the idea that patents serve little to no disclosure function, not by demonstrating that patents themselves convey useful information, but by pointing to other information exchanges that would not occur but for the existence of a patent system, a concept I call "peripheral disclosure." This information plays a critical role in encouraging prospective technological invention. In essence, I argue that the greatest benefit of patents is not in the information they contain, but rather in the numerous peripheral disclosures they permit, from scientific papers about new inventions to marketing materials containing technical content to the informational benefits of self-disclosing inventions. Without patents, none of these disclosures – all of which may provide crucial information to future inventors – would be possible.

Update: DePaul law student Daniel Rogna will be live-blogging IPSC at http://ebookisms.com/category/ipsc/. This is a terrific conference to follow, as it is frequently a forum where  significant new scholarship is revealed, such as last year's Lemley, Cotropia, Sampat piece on applicant submitted prior art.

BPAI Backlog: Only Growth

BPAI, Patent

PatentlyO102

As Congress considers adding additional burden to the Board of Patent Appeals, the Board’s backlog of pending cases continues its dramatic rise. The process-flow of the Board appears to be fairly steady-state.  Each month, the Board receives about 1,150 cases and disposes of (decides or remands) about half (575) of those cases. The other half goes to the backlog.

Operating at this rate, it will take 3 1/2 years for the BPAI to dispose of the cases already in its docket. Thus, assuming that the BPAI takes appeals in-turn, an appeal docketed today will not be decided until the year 2015.

A note on the data: The chart is compiled from the BPAI’s own reports that are available online. [Link]  A case is only considered part of the BPAI backlog once it receives an “appeal number.” Appeal numbers are assigned only after briefing is complete.  The large “jump” in the reported backlog in early 2009 is due largely to a clerical change that identified a large number of briefed appeals that had not been given appeal numbers.

Inquiry: Does anyone have a nice memo or chart that they use to help in choosing the best after-final practice? (dcrouch@gmail.com)

Patent Statistics [Updated]

Patent

[Updated August 09, 2011 with data from all utility applications filed in ]

PatentlyO103I created a dataset of all 22,000 published patent applications that were filed in February 2006 (5 1/2 years ago).  Of those applications, about 54% have resulted in at least one patent being issued (either in original form or as a continuation or divisional); 29% are finally abandoned and have no pending child applications;* and the remaining 17% are still pending in some form.

Patent practitioners will be happy to note that all of the original still-pending applications have received at least one office action on the merits. In 79% of those pending applications, the patent applicants have also filed a request for continued examination (RCE).

For abandoned applications, the vast majority go through at least two rounds of prosecution on the merits.

Notes: * There are likely a small number of continuations that have been filed but that have not been made public yet and that therefore would not show up in this result.

 

Patently-O Bits & Bytes by Lawrence Higgins

Patent,

Google and the smartphone war!

  • Google is upset with Microsoft, Oracle, and Apple in respect to the Nortel and Novell patent purchases. Google is claiming that the companies listed above and some other companies are trying to make it more expensive for phone manufactures to license Android phones. Google claims that these companies are seeking a $15 dollar licensing fee for every Android device. With more than 550,000 Android devices activated every day; these companies receive millions of dollars in licensing fees on a daily basis. Google states that these companies do not want to compete, by building new features, but instead fight through patent litigation. [Link]

The USPTO wants your input!

  • If the Leahy-Smith Act is enacted, the USPTO will need to undertake a series of rulemakings to implement the Act. Because several provisions of the Act require implementation within a period of one year from enactment, expeditious rulemaking proceedings will be required. Given this tight time frame, preliminary input from our stakeholders and the public on implementation of the key provisions would facilitate this process even before the legislation has been enacted. The USPTO has posted their views of the Act, and would like input on the following topic areas in the Act; Patents, BPAI, Fees and Budgetary Issues, Congressionally-Directed Studies and Reports, and Miscellaneous. [Link]

Is re-examination unfair?

  • Former Senator Birch Bayh recently wrote an article (and a letter to Kappos) discussing his concerns with the re-examination process. Senator Bayh co-authored the U.S. Patent and Trademark Laws Act (Bayh-Dole Act) that was enacted by congress in 1990. Senator Bayh is concerned about large companies using the re-examination process as an unfounded tactic to attack smaller companies. Senator Bayh stated that "when Senator Bob Dole and I joined to pass ground-breaking legislation on patents, the U.S. Patent and Trademark Laws Act, we never intended for it to allow malicious attacks on patents or to create an incredibly uneven playing field for small inventors." Senator Bayh concern is particularly directed to the Lockwood case, in which Lockwood sued a law firm because he felt like they requested a sham re-examination. The court ruled that, the federal patent law preempted any action in state courts. [Link] [Kappos Reply] [Case summary]

Patent Jobs:

  • Panduit is seeking a patent attorney with 2 years of experience and a background in electrical engineering. [Link]
  • Gibson & Dernier is seeking a patent associate to work at their Woodbridge, New Jersey office. [Link]
  • Choate, Hall & Stewart is looking for an attorney or patent agent with an engineering background and 2 years of experience. [Link]
  • Sandia National Laboratories is searching for a patent & licensing attorney with 3-7 years of experience. [Link]
  • Monsanto is seeking an assistant general counsel with 3 years of experience and a background in the life sciences. [Link]
  • Verenium is searching for a patent agent with a background in life sciences and at least 5 years of experience. [Link]
  • Amin Talati is seeking a patent attorney with 10+ years of experience and a background in the life sciences. [Link]
  • The Marbury Law Group is searching for a patent attorney with an electrical background and 2-8 years of experience. [Link]
  • Qualcomm is seeking a patent research librarian with a MLS and 3 years of experience. [Link]

Upcoming Events:

  • The 2nd European Pharmaceutical Regulatory Law Forum will be held in Brussels, Belgium September 21-22nd. The forum will focus on recent developments affecting the pharma industry in Europe and will discuss the impact of US developments on European companies. (Patently-O readers can register with code PO 10 for a 10% discount) [Link]
  • American Conference Institute's Life Sciences Business Development & Acquisitions in Emerging Markets conference is scheduled for September 26-27 in New York, NY. (Patently-O readers can register with code PO 200 for a discount) [Link]
  • C5 will be holding the 21st annual Forum on Biotech Patenting in London on October 5th-6th. The 2011 London Biotech Patenting Forum will focus on the latest legal developments affecting biotech companies and how to implement successful methods and strategies for drafting and filing patent applications in multiple jurisdictions. (Patently-O readers can save 100 pounds by using discount code PO 100) [Link]
  • IPMI is holding the IP Law & Management Institute on November 6th – 8th at the Rancho Las Palmas in Palm Springs, CA. Hailed as "One of the few programs geared to experienced in-house IP Counsel", the Institute is a CLE-accredited program designed to provide time-starved Heads of IP with the Opportunity to meet and network with their peers, learn from the best practices and validate solutions and services. [Link]

Contact Lawrence.Higgins@patentlyo.com with leads for future Bits and Bytes.

Patently-O Bits & Bytes by Lawrence Higgins

Patent,

Google and the smartphone war!

  • Google is upset with Microsoft, Oracle, and Apple in respect to the Nortel and Novell patent purchases. Google is claiming that the companies listed above and some other companies are trying to make it more expensive for phone manufactures to license Android phones. Google claims that these companies are seeking a $15 dollar licensing fee for every Android device. With more than 550,000 Android devices activated every day; these companies receive millions of dollars in licensing fees on a daily basis. Google states that these companies do not want to compete, by building new features, but instead fight through patent litigation. [Link]

The USPTO wants your input!

  • If the Leahy-Smith Act is enacted, the USPTO will need to undertake a series of rulemakings to implement the Act. Because several provisions of the Act require implementation within a period of one year from enactment, expeditious rulemaking proceedings will be required. Given this tight time frame, preliminary input from our stakeholders and the public on implementation of the key provisions would facilitate this process even before the legislation has been enacted. The USPTO has posted their views of the Act, and would like input on the following topic areas in the Act; Patents, BPAI, Fees and Budgetary Issues, Congressionally-Directed Studies and Reports, and Miscellaneous. [Link]

Is re-examination unfair?

  • Former Senator Birch Bayh recently wrote an article (and a letter to Kappos) discussing his concerns with the re-examination process. Senator Bayh co-authored the U.S. Patent and Trademark Laws Act (Bayh-Dole Act) that was enacted by congress in 1990. Senator Bayh is concerned about large companies using the re-examination process as an unfounded tactic to attack smaller companies. Senator Bayh stated that "when Senator Bob Dole and I joined to pass ground-breaking legislation on patents, the U.S. Patent and Trademark Laws Act, we never intended for it to allow malicious attacks on patents or to create an incredibly uneven playing field for small inventors." Senator Bayh concern is particularly directed to the Lockwood case, in which Lockwood sued a law firm because he felt like they requested a sham re-examination. The court ruled that, the federal patent law preempted any action in state courts. [Link] [Kappos Reply] [Case summary]

Patent Jobs:

  • Panduit is seeking a patent attorney with 2 years of experience and a background in electrical engineering. [Link]
  • Gibson & Dernier is seeking a patent associate to work at their Woodbridge, New Jersey office. [Link]
  • Choate, Hall & Stewart is looking for an attorney or patent agent with an engineering background and 2 years of experience. [Link]
  • Sandia National Laboratories is searching for a patent & licensing attorney with 3-7 years of experience. [Link]
  • Monsanto is seeking an assistant general counsel with 3 years of experience and a background in the life sciences. [Link]
  • Verenium is searching for a patent agent with a background in life sciences and at least 5 years of experience. [Link]
  • Amin Talati is seeking a patent attorney with 10+ years of experience and a background in the life sciences. [Link]
  • The Marbury Law Group is searching for a patent attorney with an electrical background and 2-8 years of experience. [Link]
  • Qualcomm is seeking a patent research librarian with a MLS and 3 years of experience. [Link]

Upcoming Events:

  • The 2nd European Pharmaceutical Regulatory Law Forum will be held in Brussels, Belgium September 21-22nd. The forum will focus on recent developments affecting the pharma industry in Europe and will discuss the impact of US developments on European companies. (Patently-O readers can register with code PO 10 for a 10% discount) [Link]
  • American Conference Institute's Life Sciences Business Development & Acquisitions in Emerging Markets conference is scheduled for September 26-27 in New York, NY. (Patently-O readers can register with code PO 200 for a discount) [Link]
  • C5 will be holding the 21st annual Forum on Biotech Patenting in London on October 5th-6th. The 2011 London Biotech Patenting Forum will focus on the latest legal developments affecting biotech companies and how to implement successful methods and strategies for drafting and filing patent applications in multiple jurisdictions. (Patently-O readers can save 100 pounds by using discount code PO 100) [Link]
  • IPMI is holding the IP Law & Management Institute on November 6th – 8th at the Rancho Las Palmas in Palm Springs, CA. Hailed as "One of the few programs geared to experienced in-house IP Counsel", the Institute is a CLE-accredited program designed to provide time-starved Heads of IP with the Opportunity to meet and network with their peers, learn from the best practices and validate solutions and services. [Link]

Contact Lawrence.Higgins@patentlyo.com with leads for future Bits and Bytes.

Patently-O Bits & Bytes by Lawrence Higgins

Patent,

Google and the smartphone war!

  • Google is upset with Microsoft, Oracle, and Apple in respect to the Nortel and Novell patent purchases. Google is claiming that the companies listed above and some other companies are trying to make it more expensive for phone manufactures to license Android phones. Google claims that these companies are seeking a $15 dollar licensing fee for every Android device. With more than 550,000 Android devices activated every day; these companies receive millions of dollars in licensing fees on a daily basis. Google states that these companies do not want to compete, by building new features, but instead fight through patent litigation. [Link]

The USPTO wants your input!

  • If the Leahy-Smith Act is enacted, the USPTO will need to undertake a series of rulemakings to implement the Act. Because several provisions of the Act require implementation within a period of one year from enactment, expeditious rulemaking proceedings will be required. Given this tight time frame, preliminary input from our stakeholders and the public on implementation of the key provisions would facilitate this process even before the legislation has been enacted. The USPTO has posted their views of the Act, and would like input on the following topic areas in the Act; Patents, BPAI, Fees and Budgetary Issues, Congressionally-Directed Studies and Reports, and Miscellaneous. [Link]

Is re-examination unfair?

  • Former Senator Birch Bayh recently wrote an article (and a letter to Kappos) discussing his concerns with the re-examination process. Senator Bayh co-authored the U.S. Patent and Trademark Laws Act (Bayh-Dole Act) that was enacted by congress in 1990. Senator Bayh is concerned about large companies using the re-examination process as an unfounded tactic to attack smaller companies. Senator Bayh stated that "when Senator Bob Dole and I joined to pass ground-breaking legislation on patents, the U.S. Patent and Trademark Laws Act, we never intended for it to allow malicious attacks on patents or to create an incredibly uneven playing field for small inventors." Senator Bayh concern is particularly directed to the Lockwood case, in which Lockwood sued a law firm because he felt like they requested a sham re-examination. The court ruled that, the federal patent law preempted any action in state courts. [Link]
    [Kappos Reply]
    [Case summary]

Patent Jobs:

  • Panduit is seeking a patent attorney with 2 years of experience and a background in electrical engineering. [Link]
  • Gibson & Dernier is seeking a patent associate to work at their Woodbridge, New Jersey office. [Link]
  • Choate, Hall & Stewart is looking for an attorney or patent agent with an engineering background and 2 years of experience. [Link]
  • Sandia National Laboratories is searching for a patent & licensing attorney with 3-7 years of experience. [Link]
  • Monsanto is seeking an assistant general counsel with 3 years of experience and a background in the life sciences. [Link]
  • Verenium is searching for a patent agent with a background in life sciences and at least 5 years of experience. [Link]
  • Amin Talati is seeking a patent attorney with 10+ years of experience and a background in the life sciences. [Link]
  • The Marbury Law Group is searching for a patent attorney with an electrical background and 2-8 years of experience. [Link]
  • Qualcomm is seeking a patent research librarian with a MLS and 3 years of experience. [Link]

Upcoming Events:

  • The 2nd European Pharmaceutical Regulatory Law Forum will be held in Brussels, Belgium September 21-22nd. The forum will focus on recent developments affecting the pharma industry in Europe and will discuss the impact of US developments on European companies. (Patently-O readers can register with code PO 10 for a 10% discount) [Link]
  • American Conference Institute's Life Sciences Business Development & Acquisitions in Emerging Markets conference is scheduled for September 26-27 in New York, NY. (Patently-O readers can register with code PO 200 for a discount) [Link]
  • C5 will be holding the 21st annual Forum on Biotech Patenting in London on October 5th-6th. The 2011 London Biotech Patenting Forum will focus on the latest legal developments affecting biotech companies and how to implement successful methods and strategies for drafting and filing patent applications in multiple jurisdictions. (Patently-O readers can save 100 pounds by using discount code PO 100) [Link]
  • IPMI is holding the IP Law & Management Institute on November 6th – 8th at the Rancho Las Palmas in Palm Springs, CA. Hailed as "One of the few programs geared to experienced in-house IP Counsel", the Institute is a CLE-accredited program designed to provide time-starved Heads of IP with the Opportunity to meet and network with their peers, learn from the best practices and validate solutions and services. [Link]

Contact Lawrence.Higgins@patentlyo.com with leads for future Bits and Bytes.

Guest Post: What We Said (and Didn’t Say) in the Berkeley Patent Study

Patent

Guest Post by Robert Merges, Pam Samuelson, and Ted Sichelman

In 2008, along with Stuart Graham (now Chief Economist at the USPTO) and Robert Barr (Executive Director of the Berkeley Center for Law &Technology), we conducted the most comprehensive survey to date on startup companies and patenting in the United States. Funded by the Ewing Marion Kauffman Foundation, our survey reported results on the drivers of patenting, the role of patenting in startup financing and the innovation process, and a number of other important areas. We have described initial results from the survey (here) and in a follow-up article (here). We also posted a three-part series on Patently-O on the survey (here, here, and here).

Since the publication of our articles, a number of commentators have drawn bold—and somewhat contradictory—inferences from our results. Former Chief Judge of the Federal Circuit, Paul Michel, and CEO of Tessera, Hank Nothhaft, stated in a New York Times op-ed that, "[A]ccording to our analysis of the data in the Berkeley Patent Survey, each issued patent is associated with 3 to 10 new jobs." Yet, Harold Wegner, a patent lawyer at Foley & Lardner who authors a popular e-mail distribution, contends that the USPTO's position that "prompt patent grants will stimulate innovation" and thus "create American jobs" is "in direct conflict" with the Berkeley Patent Study. According to Mr. Wegner, "the Berkeley Study questions showed that for many high technology areas patent grants played no role or a minimal role in stimulating innovation." From this inference, he concludes, that "A fortiori, prompt patent grants would be irrelevant" to stimulating innovation and, hence, creating American jobs. And, finally, Ronald Katznelson, an independent inventor active in the patent reform debates, states bluntly: "The Berkeley study is typical of other flawed 'scholarship' on patents by academics. They ask the wrong questions of the wrong people and draw wrong and counterfactual inferences. … The question that startup CEOs should have been asked is 'who are your investors and can we interview them for their reasons to invest in your startup?'"

We're writing this post because, as authors of the study, we feel obligated to dispel these and similar misunderstandings with four basic observations:

  1. Our results solely concern U.S. startups. The vast majority of patents are filed and owned by established companies. More than half of all patents are awarded to foreign companies. Because U.S. startups use and are affected by the patent system in ways quite different from established and foreign entities, it is impossible solely from our data to draw conclusions about the general role of patents on innovation or jobs.
  2. Even limiting the issue of jobs to those of U.S. startups, there is no principled way to determine from our data whether or not additional patents lead to additional jobs, much less the number of jobs created by each patent. Granted, we reported the average number of employees, including the percentage of engineers, at our respondent companies. But to reason that these positions were the direct result of the respondents' patent portfolios would be to ignore a host of other potential factors (e.g., first-mover advantage, other IP protection, management team quality, etc.) leading to those jobs. And there is no sound way using our data to remove these other potential effects so as to calculate the impact of patents on jobs.
  3. It is misguided to conclude from our results that "for many high technology areas [executives reported that] patent grants played no role or a minimal role in stimulating innovation," that "prompt patent grants would be irrelevant" to stimulating innovation. First, as we said earlier, our study only applies to U.S. startup companies. Second, many executives—particularly those in the biotechnology and medical device industries—reported that patents provide strong or moderate incentives to innovate. In the very least, prompt patent grants for these companies would not be "irrelevant" to stimulating innovation. Last, our responses on the role of patents in the innovation process relates to the patent system as it is currently constituted. It could very well be the case that faster patent grants would significantly increase the role patents play in promoting innovation.
  4. Ron Katznelson's contention that our study is typical of "flawed" academic scholarship—namely, because we failed to ask "who are your investors and can we interview them for their reasons to invest in your startup?"—overlooks several critical aspects of the study. First, before drafting the survey questions, we interviewed a number of investors informally and asked them "for their reasons to invest" in startups. (Unfortunately, our limited funding for this study did not allow us to conduct a large-scale survey of investors, but we hope to do so in the future.) Second, our survey specifically asked executives at startups to indicate whether their potential investors considered patents important to their investments. In this regard, our advisory board for the study included prominent venture capital firm partners, who worked closely with us in formulating the survey questions. As we explained at length in one of our articles (here), startups in all sectors we surveyed reported that patents were considered important by a sizable percentage of venture capital firms and other types of investors with whom they negotiated.

In the vein of our last observation, we hope that others will indeed read our articles (here and here, plus for background on the survey, see here) in detail and only report and rely upon the conclusions we draw in those publications. To make further inferences, especially without access to the underlying data in the study—which we cannot make publicly available due to confidentiality restrictions—will almost invariably lead to conclusions that are simply not supported by our data set.

In sum, we are grateful for the extended discussion and use of our study results—but, as the researchers who conducted the study—we hope that our results will not be stretched to unsupportable ends.

Robert Merges is the Wilson Sonsini Goodrich & Rosati Professor of Law at the University of California, Berkeley, School of Law. Pamela Samuelson is the Richard M. Sherman Distinguished Professor of Law at the University of California, Berkeley, School of Law. Ted Sichelman is an Associate Professor at the University of San Diego School of Law. Neither Stuart Graham nor Robert Barr played any role in the drafting this post.

The Impact of Patent Reform on Filing Strategy (I)

Patent, Patent Prosecution

The new law defining prior art would become effective 18–months from the date of enactment of H.R. 1249.  Patent applications filed after that date would be bound by the new first-to-file rules. The major exception is that old invention-date rules will also apply to any application having a claim having a proper priority filing date of prior to the change-over. 

That date will likely be a filing bonanza, much like the what occurred in the lead-up to the June 8, 1995 change in patent term as shown in the chart below.

PatentlyO100

Applicants who beat the 1995 deadline were granted given either a patent term of 17 years from issuance or else 20 years from filing, whichever was longer as calculated at issuance. In that scenario, there were very good reasons to file before the deadline.

When the new deadline comes, I suspect that the current regime will look more favorable than the new because of the new limits on swearing-behind prior art based upon a prior invention date and claiming a grace period for third-party disclosures. One reason an applicant might delay is because of the new “micro-entity” status that offers lower fees, but even then the best course of action would be to file a provisional application early followed by non-provisional at the lower fee.

Are there reasons why a patent applicant would choose to delay filing an application until after the new deadline?

Scholarship Roundup: Crouch and Merges, Operating Efficiently Post-Bilski by Ordering Patent Doctrine Decision-Making

Patent

By Jason Rantanen

Earlier this week I mentioned a recent article by Dennis Crouch and Robert P. Merges, entitled Operating Efficiently Post-Bilski by Ordering Patent Doctrine Decision-Making, 25 Berkeley Tech. L.J. 1673 (2010), as proposing that patent litigation might be streamlined by deciding cheaper and easier issues early in the litigation process.

In the article, Professors Crouch and Merges suggest that the best way to proceed post-Bilski is not to attempt to cut through its complexity, but rather to avoid it.  They propose this be done by reordering litigation so that claim validity is first tested against one of the less controversial and complex requirements for patentability before reaching the complex issue of subject matter patentability – in essence, applying a "chain theory" of patentability, where PTO and courtroom analysis should start with the easiest and cheapest links to test and terminate once a patent is held invalid.

A full copy of the article can be obtained here:  Download Crouch and Merges – Post Bilski Ordering.