USPTO - After Final Consideration Pilot (AFCP) 2.0 to Reduce RCEs

The USPTO has a growing backlog of requests for continued examinations (RCEs). Professor Crouch's article USPTO Takes Action to Reduce RCE Backlog has a chart showing consistent growth from about 20,000 RCEs in March 2009 to 110,000 RCEs in March 2013.

As Professor Crouch noted, the USPTO is interested in reducing the RCE backlog so decided to return to the prior practice of giving examiners the same credit for examining RCEs as original applications. This will help, but the USPTO recognizes it will take more than that.

Thus, recently the USPTO published a Notice on After Final Consideration Pilot Program 2.0 (AFCP 2.0), which is also intended to tackle the RCE backlog. AFCP 2.0 basically allots time for the examiner to consider responses filed after a final rejection. AFCP 2.0 is effective May 19, 2013 to September 30, 2013.

To participate the AFCP 2.0 papers must reply to a final rejection and include (1) a transmittal form (e.g., PTO/SB/434) that requests AFCP 2.0 consideration; (2) an amendment to an independent claim that does not broaden its scope; (3) a statement applicant can interview the case with the examiner; and (4) use of the Electronic Filing System (EFS). Other PTO fees (e.g., an extension or extra claim fees) for the response must still be paid, but AFCP 2.0 request doesn't entail another PTO fee.

Upon receipt of the AFCP 2.0 submission, the examiner will verify if it's complete. If incomplete, the submission is handled according to after final practice, 37 CFR 1.116. If the examiner determines the AFCP 2.0 submission is complete, but doesn't result in allowance, the examiner will request an interview. The examiner will use the AFCP 2.0 time allotted (e.g., three hours) to review the response and interview. The AFCP 2.0 may help reduce the RCE backlog, but not if examiners hold the responses typically require further search or consideration that exceeds the allotted time. Further, allotting three hours to review a response, search the prior art, determine patentability, and interview the case may prove insufficient for examination of complex subject matter.

Copyright © 2013 Robert Moll. All rights reserved.

Judge Richard Posner and Former Chief Judge Paul Michel Clash - Is the Patent System Working or Broken?

Today, we hear the US patent system is broken, but there are also arguments that it just needs to be recalibrated. On May 14, 2013, The Federalist Society had a panel discussion with Court of Appeals for the Seventh Circuit judge Richard Posner, former Federal Circuit judge Arthur J. Gajarsa, former Federal Circuit Chief judge Paul R. Michel, and Court of Appeals for the DC Circuit judge Douglas H. Ginsburg:  Is the Patent System Working or Broken A Discussion with Four Distinguished Federal Judges. This discussion had lots of interesting contrasting viewpoints. The video runs one hour and 26 minutes.

Copyright © 2013 Robert Moll. All rights reserved.

Alcatel-Lucent v. Newegg - Comment on Joe Mullin's Article Newegg nukes "corporate troll" Alcatel in third patent appeal win this year

In Newegg nukes "corporate troll" Alcatel in third patent appeal win this year Joe Mullin reports that Alcatel-Lucent had e-commerce on the ropes in 2011 given favorable settlements with Amazon, Intuit, Kmart, Lands End, Overstock.com, Sears, QVC, and Zappos for infringement of US Patent No. 5,649,131. However, things changed as a jury invalidated the '131 patent and the Federal Circuit affirmed the judgment.

Newegg's chief legal officer Lee Cheng appears to have earned Mr. Mullin's respect. Mr. Cheng now laments having insufficient patent troll lawsuits to generate favorable law. Most may not think reducing lawsuits is bad news, but would agree it is good news when a bogus patent is invalidated. But invalidating the '131 patent may not "nuke" Alcatel-Lucent given it owns 27,000 patents, many of which were acquired from Bell Labs.

I am uncertain why Alcatel-Lucent is a "corporate patent troll." Mr. Mullin notes: "Even though Alcatel-Lucent has billions in revenue from real businesses, when it comes to patent battles Cheng doesn't see them as being so different. Since Alcatel is asserting patents in markets it's nowhere near actually participating in he sees them as a kind of "corporate troll. 'It's an operating company that happens to hold a patent,' said Cheng. 'But it does nothing at all to bring the benefit of that patent to society.'" So one cannot license a patent and leave manufacturing to a licensee without being a troll?

I like to hear why you are right, not why the other party is bad. Mudslinging makes me suspect the merits of the case are lacking. It reminds me when a senior associate insisted I read his legal brief not so much for input but for my admiration: you know, young lawyer here's how we do it around here. I recall it didn't dwell on the merits but argued: (1) Your honor I appreciate your fine record; (2) the other party is a bad actor; (3) you hold a big stick your honor and I respect you for that; and (4) now without delay may it please you to stick the other party with the full measure of your judicial wrath! Yes, let me see you swing that big stick so the other party understands. Yes, all this in a civil case. It was embarrassing to read as I think he expected a compliment. But what could I say? Good job ... the other party will get the big stick for sure!

Also see Professor Michael Risch's article in Wired Don't Blame the Trolls for the Patent Problem.

Copyright © 2013 Robert Moll. All rights reserved.

Richard Hill Don't Turn My Company Into A Patent Troll!

Mr. Richard Hill, Chairman and interim CEO of Tessera Technologies, a designer of semiconductor technologies wrote an article in Forbes Don't Turn My Company Into A Patent Troll that does a nice job of explaining why non-practicing entities who seek to license US patents should not be lumped together with the bad actors, i.e., the so-called patent trolls.

It is not a matter of politeness to refer to a company like Tessera as a NPE rather than a patent troll. As Mr. Hill notes he is defending against a Board takeover with Starboard Value LP which seeks to defund company R&D and focus on seeking contingency fee patent litigation dollars. He calls this "cutting down the apple tree to harvest the apples."

I haven't met Mr. Hill nor do I have any involvement with Tessera, but he appears to be headed in the right direction and I wish Tessera well in its effort to continue to innovate and license its innovation in the semiconductor industry.

Copyright © 2013 Robert Moll. All rights reserved.

Yale Law School - Patent Troll Panel April 2013

Today, Lisa Larrimore Ouellette's article on Patently-O: Patent Troll Panel at Yale Law School raises some interesting points that came up at Yale Law School. I appreciated whether you refer to patent-assertion entities (PAEs), non-practicing entities (NPEs), or patent trolls, we must focus on bad behavior and a patent system that sometimes issues patents that enable bad behavior not on whether the patent owner practices the invention.

Copyright © 2013 Robert Moll. All rights reserved.

Introduction to Standards - SSO, FRAND, SEP, Hold-Ups, and Royalty-Stacking

Courts have increasingly been asked to resolve disputes that relate to patents that read on industry standards. A commentator (see Economist article below) notes in the 1990's the US had only two FRAND disputes, while since 2008 the US had 17 FRAND disputes.

How patents relate to standards can be confusing. First, standards are set by committee, very technical, and once adopted taken for granted. Even well known standards such as the protocols for Wi-Fi can be quite technical for many and run thousands of pages. After you digest the technical details of the standard, you have thousands of patents that are declared essential to the standard but unsurprisingly use different terminology. Further, you have quirky terms surrounding the standards such as SSOs (standard setting organizations), FRAND (Fair, Reasonable and Non-Discriminatory) terms, SEP (Standard Essential Patents), and funny concepts like hold-up (Reach for the sky!), and royalty-stacking.

We can't blame the confusion on academics as we have had lots of informative articles on legal aspects of standards. See e.g., Stanford professor Mark Lemley and Cal professor Carl Shapiro's A Simple Approach to Setting Reasonable Royalties for Standard-Essential Patents.

If you need an introduction, I recommend The Economist article Standard procedure - If companies cannot agree on "reasonable" patent royalties, courts must decide. How? It should make standards less mystifying. The article also describes how federal district court judge Robart set the FRAND royalty rates that Microsoft should pay Google for licensing the Motorola Mobility patents relating to IEEE 802.11 (Wi-Fi) and H.264 (Advanced Video Coding).

Copyright © 2013 Robert Moll. All rights reserved.

CAFC - CLS Bank v. Alice - Software Patent Eligibility?

On May 10, the Federal Circuit delivered its 135-page opinion in CLS Bank v. Alice Corp. denying patent eligibility to Alice's software related patent claims. 6 out of 10 judges have a different view on software patent eligibility. Despite what the media says, it provides no legal precedent.

IP Watchdog reports in Federal Circuit Nightmare in CLS Bank v. Alice Corporation to not knowing what to say and being flabbergasted by the Federal Circuit's lengthy opinion. Groklaw gleefully reports "The Federal Circuit. OMG. We've worked hard for so many years to get to this point, I almost can't believe it. And I suppose it's possible it could be appealed, but this is proof of what I've always told you, that education is never a waste. Judge Rader is very upset, I gather. He has written a dissent. But he didn't prevail. And I'm sure he gave it his best effort. OMG."

Chief Judge Rader and Judge Moore wrote in dissent: "Let’s be clear: if all of these claims, including the system claims, are not patent-eligible, this case is the death of hundreds of thousands of patents, including all business method, financial system, and software patents as well as many computer implemented and telecommunications patents."

I don't see this as the end, because of the lack of unanimity, which may lead to the US Supreme Court hearing this case. Even if, I don't expect the controversy to end until (1) we don't have a US patent system; and (2) patent attorneys, software inventors, and judges agree to quit thinking about it.

See Michael Barclay's CLS Bank v. Alice Corp.: Abstractness Seems to Be a Problem With No Easy Solution, professor Dennis Crouch's CLS Bank v. Alice Corp: Court Finds Many Software Patents Ineligible, and Joe Mullin's On key software decision, top patent court grinds to a stalemate - Ten judges, seven opinions, 135 pages, zero legal precedent.

Copyright © 2013 Robert Moll. All rights reserved.

Schumer Bill to Expand Post-Grant Review Beyond Business Methods Patents Used in Financial Products and Services

On May 2, U.S. Senator Charles Schumer introduced a small but important senate bill (S. 866) that would expand post-grant review (PGR) to a patent claiming a method or apparatus for performing data processing or other operations used in the practice, administration, or management of an enterprise, product, or service. Currently, the transitional business method patent review is limited to business methods used in financial products and services. This bill would allow a PGR challenge to all business method patents under 35 USC 101, 102, 103, and/or 112. Senator Schumer's press release gives details. This bill would make business method patent review a permanent law.

Copyright © 2013 Robert Moll. All rights reserved.

Subcommittee on Courts, Intellectual Property and the Internet - Hearing on Abusive Patent Litigation

In recent years, patents have become the subject of many Congressional bills. Because the House Judiciary Committee introduces many of the bills, it is a good place to look if you want an early sense where US patent law reform may go next.

Here is a recent hearing from the Subcommittee on Courts, Intellectual Property and the Internet on April 16, 2013: Abusive Patent Litigation: The Issues Impacting American Competitiveness and Job Creation at the International Trade Commission and Beyond.

If you review the statement of the Judiciary Committee Chairman Bob Goodlatte and the statements of the witnesses it suggests reasons why the SHIELD Act finds some support despite its apparent flaws.

Copyright © 2013 Robert Moll. All rights reserved.

America Invents Act - Professor Abrams and Wagner's Poisoning the Next Apple: How the America Invents Act Harms Inventors

Is the America Invents Act a misnomer? It's beginning to look that way with respect to small entities. In a Stanford Law Review article, Poisoning the Next Apple: How the America Invents Act Harms Inventors, David Abrams and R. Polk Wagner of University of Pennsylvania Law School state: "The America Invents Act, the most significant patent law reform effort in two generations, has a dark side: It seems likely to decrease the patenting behavior of small inventors, a category which occupies special significance in American innovation history."

Mr. Abrams and Wagner note: "In this paper we empirically predict the effects of the major change in the law: a shift in the patent priority rules from the United States’ traditional “first-to-invent” system to the predominant “first-to-file” system.

While there has been some theoretical work on this topic, we use the Canadian experience with a similar change as a natural experiment to shed the first empirical light on the question. Our analysis uses a difference-in-difference framework to estimate the impact of the Canadian law change on small inventors. Using data on all patents granted by the Canadian Intellectual Property Office and the US Patent and Trademark Office, we find a significant drop in the fraction of patents granted to small inventors in Canada coincident with the implementation of first-to-file. We also find no measurable changes in patent quality and perform several additional analyses to rule out alternative explanations.

While the net welfare impact that can be expected from a shift to first-to-file is unclear, our results do reveal that, contrary to the conventional wisdom, the March 2013 implementation of a first-to-file rule in the U.S. is likely to result in reduced patenting behavior by individual inventors."

Although the America Invents Act was presented by Congress as reform that would lead to the "promised land," the article paints a different picture of the likely impact of the America Invents Act: a smaller fraction of US patents granted to small entities.

I also expect the America Invents Act one-year grace period will reduce the number of US patents granted to small entities. Small entities will engage in activities that may be later viewed as on sale or public use prior to the filing date. Arguing the activities are experimental may fail or prove expensive to establish. To understand why the one-year grace period has been narrowed, it should be helpful to review part of 35 USC 102, which sets forth the conditions for patentability, novelty and loss of right to the patent:

(a) NOVELTY; PRIOR ART.--A person shall be entitled to a patent unless--

(1) the claimed invention was patented, described in a printed publication, or in public use, on sale, or otherwise available to the public before the effective filing date of the claimed invention; or

(2) the claimed invention was described in a patent issued under section 151, or in an application for patent published or deemed published under section 122(b), in which the patent or application, as the case may be, names another inventor and was effectively filed before the effective filing date of the claimed invention.

(b) EXCEPTIONS.--

(1) DISCLOSURES MADE 1 YEAR OR LESS BEFORE THE EFFECTIVE FILING DATE OF THE CLAIMED INVENTION.--A disclosure made 1 year or less before the effective filing date of a claimed invention shall not be prior art to the claimed invention under subsection (a)(1) if--

(A) the disclosure was made by the inventor or joint inventor or by another who obtained the subject matter disclosed directly or indirectly from the inventor or a joint inventor; or

(B) the subject matter disclosed had, before such disclosure, been publicly disclosed by the inventor or a joint inventor or another who obtained the subject matter disclosed directly or indirectly from the inventor or a joint inventor.

Some suggest inventor disclosure triggers a one-year grace period that shields against an inventor's subsequent public use or offer for sale of the invention. I am uncertain how a court will ultimately interpret 35 USC 102, but note even this favorable interpretation does not answer whether or not third party public use or sales would be shielded. What if a subsequent sale or use pertains to subject matter that overlaps the inventor's disclosure? In the past, the Federal Circuit has not equated the different categories of prior art in 35 USC 102. Thus, "public use" and "on-sale" are not the same thing and do not require "disclosure." Is it better to disclose all the details of the invention when making an offer for sale or use before the filing date? That's a decision to forego trade secret at a time patent protection is in doubt. Will the Federal Circuit equate the different categories to help broaden this seemingly narrow grace period of the America Invents Act? Court decisions may not arrive for years. Until we get answers, the safer approach is to treat the one-year grace period as only shielding direct and indirect inventor disclosures.

Copyright © 2013 Robert Moll. All rights reserved.

America Invents Act - USPTO Guidance on First-Inventor-to-File - Videos & Slides

On March 15, 2013, the USPTO published videos and slides regarding the first-inventor-to-file system that help explain the extensive changes to 35 USC 102, especially with respect to the narrowing of the one-year grace period and the various activities that constitute prior art today. Understanding these topics is crucial in seeking a US patent. Here is the USPTO's guidance on the first-inventor-to-file system:

"The First Inventor to File (FITF) provisions transition the U.S. to a first-inventor-to-file system from a first-to-invent system. The FITF provision includes a 1-year grace period. Specifically, prior art disclosures made publicly available one year or less before the effective filing date can be overcome by applicant showing (1) the prior art disclosure was by another who obtained the disclosed subject matter from the applicant (a deriver), see 102(b)(1)(A), or (2) the applicant or a derived publicly disclosed the subject matter before the date of the prior art disclosure, see 102(b)(1)(B).

The effective filing date for a claimed invention in an application now includes the filing date of a prior foreign application if applicant is entitled to foreign priority and thus, in this situation, the 1-year grace period will be measured from the foreign priority date claimed.

A prior disclosure of the invention which is publicly available more than one year before the effective filing date of an application continues to be a statutory bar.

Prior public use or sale is no longer limited to the U.S.

For prior art purposes, U.S. patents and patent application publications are available as prior art as of any foreign priority date, provided that the subject matter being relied upon is disclosed in the foreign priority application.

Applicants can now rely on common ownership or joint research agreement provisions to overcome rejections under 35 U.S.C. 102.

In addition, derivation proceedings are established in place of interference proceedings for FITF applications and patents.

The FITF provisions take effect on March 16, 2013. 35 U.S.C. 102 and 103 in effect before March 16, 2013 will apply to applications filed before March 16, 2013, and continuations and divisionals of such applications. 

 35 U.S.C. 102 and 103 in effect on March 16, 2013, will apply to any application that ever contains a claim that has an effective filing date on or after March 16, 2013.

35 U.S.C. 102(g) in effect before March 16, 2013, will apply if the application ever contains a claim that has an effective filing date before March 16, 2013.

Examiner Training

• First-Inventor-to-File Follow up Video (March 2103)
• First-Inventor-to-File Follow up Video Slides (March 2013)
• First-Inventor-to-File Live Overview Training Slides (March 2013)
• First-Inventor-to-File Introductory Video (March 2013)
• First-Inventor-to-File Introductory Video Slides (March 2013)
• First-Inventor-to-File Statutory Framework

Final Rules and Guidance

• Public Forum (March 15, 2013)
  • Recorded Webcast
  • Presentation Materials
• First-Inventor-to-File Rules Correction (78 Fed. Reg. 16182, March 14, 2013)(corrected pages)
• First-Inventor-to-File Final Rules (78 Fed. Reg. 11024, February 14, 2013)
• First-Inventor-to-File Final Guidance (78 Fed. Reg. 11059, February 14, 2013)

Proposed Rules and Guidance

• Roundtable (September 6, 2012)
  • Recorded Webcast
  • Presentation Materials
• First-Inventor-to-File Proposed Rules (77 Fed. Reg. 43742, July 26, 2012)
• First-Inventor-to-File Proposed Examination Guidelines (77 Fed. Reg. 43759, July 26, 2012)
• 18 Months Implementation Timeline

Frequently Asked Questions

• First-Inventor-to-File FAQs."

Copyright © 2013 Robert Moll. All rights reserved.

Microsoft v. Motorola - Judge Robart's FRAND Rate Setting Decision & Commentators

Last week Judge Robart of the US District Court for the Western District of Washington released Findings of Facts and Conclusions of Law setting the FRAND rate for Microsoft's infringement of two Motorola Mobility patents. The decision highlights the court's authority in setting FRAND royalty rates.

FOSS Patents and Groklaw have extensively commented on Judge Robart's 207-page findings: Mr. Mueller of FOSS Patents chortles Google lost: A closer look at the 207-page, landmark FRAND rate-setting decision in Microsoft v. Motorola. I don't share his joy, but agree Microsoft appears to have won given Motorola initially sought $4 billion and was awarded less than $1.8 million per year.

In a First, Seattle Judge Sets RAND Rate in MS v. Motorola, Groklaw denies the loss arguing that Judge Robart is in Microsoft's home court in Seattle and favors Microsoft in setting the RAND rate for a couple of Motorola SEPs, followed Motorola Mobility's methodology, and feels confident the decision will be appealed.

The detailed methodology will take time to study, but I will comment that in my observation Federal district court judges are more honorable than to simply rule in favor of the local company. And arguing the local party had the home court advantage when your company loses won't persuade many judges to reverse on appeal. A stronger argument may be the judge forced Motorola to accept rates in patent pools it hasn't joined instead of following the relevant standard's body negotiation structure.

Although I appreciate Groklaw's coverage of IP issues, its article stretches a long way in an attempt to rebut Florian Mueller stating it would take 7,000 years at this RAND rate for Google to recoup its price paid for the Motorola patents (Note the SEC papers do not break out the patents separate from the technology so talking about the price paid for the Motorola patents is fiction). Referring back to Groklaw, PJ notes: "Google isn't in the 'let's sue and get a lot of money from royalties on patents' business. That's more a Microsoft strategy. Probably because no one wants Microsoft's products. Google does make money, though, buckets of it, because people like Google's products. I believe that would indicate that Google knows how to make money. Nor did they, or anyone but Florian, ever imagine that they'd get repaid the purchase price by royalties on only two of the many patents that came with the Motorola purchase. That wasn't the plan. It was, from what I read, defensive in nature."

Sure Google makes great products and lots of money. And I agree that the fate of these two patents is not indicative of the strength of the Motorola portfolio, but no one wants Microsoft's products? Most everyone I know uses Apple, Google, and Microsoft products. Most have gotten value and had problems with each company's products at times. To say probably no one wants Microsoft products and suggest its strategy is to make up for it by licensing patents is not persuasive. How did Bill Gates gain and maintain his wealth? Was it by licensing patents or selling products? Beside this case is not about Microsoft's patent licensing; it's about Google's patent licensing effort.

Copyright © 2013 Robert Moll. All rights reserved.

USPTO - E-Office Action Delay on April 24-25

Today, the USPTO notified the e-Office Action program wasn't able to automatically send emails so was sending them manually. Still my experience with the Electronic Business Center is it has given great service.

Here's the USPTO notice describing the problem and interim remedy:

Due to a system issue, the e-Office Action process is currently experiencing a problem with sending emails to external email addresses. Automatic Email notifications have been delayed for e-Office Action participants on 4/24 and 4/25 – emails are currently being sent manually. We are working to resolve this problem and anticipate the e-Office Action program will be working again shortly. In the meantime, please go to the Outgoing Correspondence tab in Private PAIR to check if you have new correspondence from the Office. We will keep you informed with follow-up announcements. We apologize for the inconvenience.

Here are the step-by-step instructions to access your new correspondence:

1. Log into Private PAIR

2. Under the Search for Customer Number section, select the View Outgoing Correspondence radio button, select “7 days” from the “for the past” drop-down list

3. Leave the selection for Select Customer Number drop-down list at the default option, “All”

4. A list of new Office correspondence will be available for the last 7 days, including today's [sic, today]

Updated on April 26: The USPTO says e-Office Action problem is resolved.

Copyright © 2013 Robert Moll. All rights reserved.

FTC - Public Comments on Patent Assertion Entity Activities Workshop

The FTC has published 63 public comments on patent assertion entities: Public Comments of the FTC's Patent Assertion Entity Activities Workshop. Some interesting comments and lots of "patent troll slinging."

Copyright © 2013 Robert Moll. All rights reserved.

USPTO - Public Comments on Improving Patent Applications

On January 15, 2013, the USPTO published a Request for Comments on Preparation of Patent Applications seeking public comments with regard to the Partnership for Enhancement of Quality of Software-Related Patents by March 15, 2013. Later the USPTO extended the deadline to April 15, 2013.

Public Comments on Preparation of Patent Applications

Copyright © 2013 Robert Moll. All rights reserved.

America Invents Act - Diversion of USPTO Fees Again?

Politics can be a revolving door of jargon. This year sequestration popped out the door. What's that you ask? It refers to the mandatory 5% federal budget cuts being implemented this fiscal year.

Now sequestration is at the PTO's door. In Welcome Back Fee Diversion: USPTO Likely to Begin Sending Collected Fees Back to Treasury and USPTO Budget Cuts Professor Dennis Crouch reports the USPTO says it faces "substantial budget uncertainty" in sequestration. Based on this and statements by the head of the USPTO employee union, Professor Crouch says "reading between the lines, the answer is: yes, the PTO will be cutting its spending and turning-over user-fees to the treasury rather than using that money to examine patents or trademarks."

However, it's unclear how sequestration leads to Congress diverting PTO fee to unrelated programs. 35 USC 42 of the America Invents Act (AIA) states any collected fees may only be used for expenses of the Office relating to the processing of patent applications and to cover administrative costs. It also requires if fee collections exceed the amount appropriated to the Office in a given fiscal year, the excess fees shall be deposited in the Patent and Trademark Fee Reserve Fund. Beside the language of 35 USC 42, Congress would have a tricky PR job if it diverts PTO user fees, while stating it supports the patent system. This makes fee diversion seem unlikely while the USPTO implements budget cuts.

Even if sequestration leads to fee diversion, it is unclear it will impact the operation of the USPTO. Professor Crouch notes sequestration is a miniscule part of the USPTO's budget (e.g, $2B in FY 2010 to $3B in FY 2013). Small impact or big, sequestration should not open the door to fee diversion.

Copyright © 2013 Robert Moll. All rights reserved.

USPTO in Silicon Valley - Sunnyvale, San Jose, Santa Clara, or Mountain View?

Joshua Sisco updates on the progress of the U.S. Patent and Trademark Office in Silicon Valley: Patent Lawyers Have High Hopes for PTO's Valley Branch

Copyright © 2013 Robert Moll. All rights reserved.

Micron Suspends Hiring Students at University of Illinois To Teach Your University Can't Sue Us!

In December 2011, the University of Illinois at Urbana-Champaign (UIUC) filed a patent infringement suit against Micron. You might think this is typical news, but this case has taken a strange twist. Apparently, Micron's hiring coordinator decided that she had enough of this lawsuit (after all 16 months is a long time) and wrote the following to UIUC:

Because Micron remains a defendant in a patent infringement lawsuit that UIUC filed against Micron in Federal court in Illinois on December 5, 2011, effective immediately, Micron will no longer recruit UIUC students for open positions at any of Micron's world-wide facilities.

. . . . [T]he Micron Foundation has endowed chairs at the College of Engineering and has sponsored student scholarship and professor research. However, because UIUC's suit imposes costs and risks on Micron that are inconsistent with collaborative relationships among Micron, UIUC, and its students, Micron must regrettably indefinitely suspend its recruitment of UIUC students and likewise suspend participation in other joint activities.

Professor Dennis Crouch of Patently-O focuses on UIUC's attempt to enjoin Micron in the following article: Although "without tact", Micron's retaliatory decision to stop hiring University of Illinois Graduates is not Illegal. Professor Crouch relates Micron's behavior to his own experience: "I have a policy that I don't hire anyone who sues me. I think [sic, I] would actually take that personally. So does Micron." But the students did not sue Micron so I am uncertain how Professor Crouch's policy is relevant here. Is eliminating a career opportunity for all students at University of Illinois being used to coerce the University to drop the lawsuit? If so, it is surprising and the loss of talent and PR costs may be greater than the benefits of pushing this patent lawsuit to a settlement.

Copyright © 2013 Robert Moll. All rights reserved.

Sara Jeruss, Robin Feldman, and Thomas Ewing - The America Invents Act 500 Expanded: Effects of Patent Monetization Entities

Today, Robin Feldman, Professor of Law at UC Hastings Law School, informed me that she and co-authors, Sara Jeruss and Thomas Ewing, released an expanded study on patent monetizers: The America Invents Act 500 Expanded: Effects of Patent Monetization Entities. One interesting finding is patent monetizers filed 56% of patent infringement lawsuits in 2012. I am still reading it but want to pass it along now. Here is a reformatted version of their abstract of the study:

"Public attention is increasingly focused on patent monetization entities. Known colloquially as “patent trolls” or more neutrally as “NPEs,” these entities derive income from licensing or litigating, rather than producing a product.

In 2011, Congress directed the nonpartisan GAO to study the consequences of patent litigation by NPEs. We provided data for that study, producing and coding a random sample consisting of 100 of cases filed each year over five years from 2007-2011. 500 cases is a small sample. Thus, we have expanded that study to examine all patent litigations filed across four years, 2007-2008 and 2011-2012. This involved analyzing 13,000 cases and 30,000 patents asserted.

We also traced the transfer history of the patents. Our analysis confirms what we saw in the smaller sample: patent infringement litigation by patent monetization entities has risen dramatically. Most striking, as of 2012, litigation by patent monetization entities now represents a majority of the patent litigations filed in the United States. This is a sharp rise from 2007, when patent monetization entities filed only 24%. In addition, of the parties who filed the greatest number of patent litigations in the years we studied, 9 out of 10 are patent monetization entities, and only one is an operating company.

Among other interesting results, our analysis revealed another problem previously unrecognized. Mechanisms for notifying the public when patents have been asserted in litigation are woefully inadequate. Despite federal legislation, the system was not operative for more than two-thirds of the patents asserted."

Also see: Press release and a video of Professor Feldman summarizing the study

Copyright © 2013 Robert Moll. All rights reserved.

America Invents Act - USPTO Rules of Professional Conduct Effective May 3, 2013

Today, the Federal Register published the Rules of Professional Conduct for practice before the USPTO, which will be effective on May 3, 2013. See the Rules and related commentary (here).

The USPTO said it's: "Designed to make life easier for the more than 41,000 practitioners who interact with our agency, they are based upon the American Bar Association’s Model Rules of Professional Conduct. The ethics rules are the first major update since 1985 and reflect the rules in place in 49 states and the District of Columbia. We spent a great deal of time reaching out to stakeholders in the IP community to balance the need of applicants as well as practitioners. Additionally, I am proud to say that the latest rulemaking eliminated the annual practitioner maintenance fee."

Note if you are practicing in California, it has not adopted the Model Rules. See California's Professional Rules of Conduct here.

Copyright © 2013 Robert Moll. All rights reserved.

Microsoft Lists All Patents on the Web - The Knowledge Trap

On March 28, 2013, Brad Smith, Microsoft's GC and Executive VP, Legal and Corporate Affairs, mentioned in Enhancing Transparency: Putting Microsoft's Patents on the Web that Microsoft has published information (e.g., patent number, title, and country) regarding all Microsoft owned patents on the Web. The actual content of the patent will be available through the US patent databases (e.g., USPTO, Google Patent Search, and Free Patents Online).

From Mr. Smith's post: "Today, we launched a “Patent Tracker” tool that provides a list of all of the patents Microsoft owns. Through the Patent Tracker, users can obtain the list in two forms: (1) an online list that is searchable by patent number, patent title, country and whether the patent is held by Microsoft or a subsidiary, and (2) a CSV file containing the entire list that is downloadable and searchable in Microsoft Excel. We took this approach so that people can come to our site if they want to run a quick search, but can also download the information if they want to perform deeper analysis. Above is a video providing additional information about the need for transparency and how to use the Patent Tracker.

We take this step today because we believe that all stakeholders of the U.S. patent system – private companies, the U.S. Patent and Trademark Office, Congress and the courts – share responsibility for taking steps to improve its operation. Sensible improvements to the patent system, such as increasing transparency on patent ownership, will yield tangible outcomes that enhance American competitiveness, create jobs and foster growth in nearly every sector of the U.S. economy.

We urge other companies to join us in making available information about which patents they own. By doing so, they will help increase transparency, facilitate licensing, and help ensure that the patent system continues to fulfill its role in promoting and encouraging innovation."

Joff Wild of Intellectual Asset Management states Microsoft's aim to bring greater transparency to their holdings should be welcomed. And in my opinion, downloading a list with numbers, titles, and countries of 41,000 patents shouldn't translate into being imputed with knowledge of any given patent. However, what's logically next? If you review a relevant patent on the list as it may generate the need for a patent license or a opinion that the patent is not infringed or invalid. And if infringement is later found and the opinion is held incompetent, that knowledge increases the risk of willful infringement and  increased damages. This is suggested since In re Seagate Technology held establishing willful infringement requires the patent owner show (1) the infringer acted despite an objectively high likelihood its action constituted infringement; and (2) the risk was known or so obvious it should have been known.

Copyright © 2013 Robert Moll. All rights reserved.

America Invents Act - Making the Simple Act of Filing a Continuation Complex

A continuation is a patent application that is entitled to the benefit of the filing date of a prior application. The specification and drawings are the same but the claims are different. A continuation allows one to seek different claims to protect different aspects of the invention. Before the America Invents Act, filing a continuation was also relatively inexpensive. One simply copied the specification, added a sentence claiming priority, drafted claims, completed an application transmittal, calculated USPTO fees, and uploaded the application papers at the USPTO.

The America Invents Act has increased the expense of continuation applications filed after September 16, 2012 in that it requires an application data sheet (ADS) form, which was formerly optional, just to claim domestic or foreign priority. See 37 CFR 1.76 and 1.78. Adding to the chore if you file after the application is filed, the ADS form will not permit adding an application number, an attorney docket reference, or the title. You must apparently grab a typewriter or handwrite that information. But you still are not done, because the ADS requires filing an AIA power of attorney with no data field for the application number. Acting in a representative capacity under 37 CFR 1.34 is not an option in the form. What application does the power of attorney refer to? It refers to a statement under 37 CFR 3.73(c) for the application number. But this requires completing the statement, which requires gathering the notice of recordations in the chain of title. USPTO forms should save time, not generate the need to complete more forms! Further, the USPTO should amend 37 CFR 1.76 and 1.78 to be more consistent with Congressional law. There a claim to priority is only required to be contained in an application. These rules requiring priority claims be made in an "optional ADS form" generate filling out additional forms with little benefit to applicants.

Copyright © 2013 Robert Moll. All rights reserved.

Google's Open Patent Non-Assertion Pledge - Dipping a Toe in the Water?

Today, I am hearing that Google has a patent pledge (legal terms here) to decrease patent threats to the open source software community. In short, Google pledges not to file a patent infringement suit against a provider or user of open source software (OSS) unless it is sued first. Since the OSS community is unlikely to sue Google for patent infringement, I don't see this is an escape clause. See Google's explanation about the pledge (here).

IBM pledged 500 patents and Sun 1,600 patents to OSS so what's on Google's list? The pledge list (here) says four US patents, four US published applications, and two PCT applications. A published application can generate pre-issuance royalties if a US patent issues, a claim proceeds from publication to issuance unchanged, and an infringer is given actual notice, but a PCT application gives no royalty rights only the right to file later. So does Google file foreign patent applications via the PCT applications or stop at the PCT stage to save some cash? Even if we call it ten patents the pledge involves less than 0.06% of Google's patent portfolio assuming it owns about 17,000 US patents. FOSS says this is a PR stunt (here) but maybe it's the start of a bigger pledge and this is "dipping the toe in the water."

Copyright © 2013 Robert Moll. All rights reserved.

America Invents Act - Inter Partes Review Available Upon Issuance - Eliminating the Nine Month Dead Zone

The USPTO revised the final rules of practice with respect to inter partes review petitions challenging first-to-invent patents and reissue patents on March 25, 2013. The rules implement the amendment to 35 U.S.C. 311(c) that eliminated "dead zones" by allowing inter partes review challenges to first-to-invent patents and reissues during the first nine months after issuance.

As stated by the USPTO: "Under the AIA, as originally enacted, a petition for inter partes review could only be filed after the later of either: (1) The date that is nine months after the issuance of an original patent or reissued patent; or (2) if a post-grant review is instituted, the date of the termination of such post-grant review. Notably, inter partes reviews were available only for patents that had been issued for at least nine months. Additionally, post-grant reviews were not available for first- to-invent patents and reissued patents where the original patent was no longer eligible for post-grant review (35 U.S.C. 325(f)). See sections 6(d) and (f)(2) of the AIA. That created two nine-month "dead zones,'' namely first-to-invent patents and reissued patents could not be challenged in an inter partes proceeding before the Office during the first nine months after issuance."

For further details see the USPTO release (here).

Copyright © 2013 Robert Moll. All rights reserved.

Written Comments on USPTO's Proposals for Recording Ownership During Application Pendency and Patent Term

The USPTO recently proposed to increase transparency regarding ownership of US patent applications and US patents. The drivers of the initiative (e.g., patent trolls use of shell corporations) seem unclear, but it does sound like a good idea-- after all we should be able to efficiently determine who owns a given application or a patent. However, the benefit of identifying "the real-party-in-interest" at all stages will cost something on every application filed as patent attorneys and staff charge to maintain ownership records from the filing date to the end of the patent term. "Dangnabbit, I thought you would do it for free!"

Hopefully, the USPTO will not implement rules to increase transparency until it addresses the costs and other problems raised in some of the written comments from AIPLA, IPO, DOJ, American Antitrust Institute, Article One Partners, Coalition for Patent Fairness, HP, Intellectual Ventures, and Novartis, plus individuals: Professor Colleen Chien, Professor Robin Feldman, Professor Arti Rai, and patent attorney Alan Minsk.

For details see the following written comments made in response to the Notice of Roundtable on Proposed Requirements for Recordation of Real-Party-in-Interest Information Throughout Application Pendency and Patent Term.

Copyright © 2013 Robert Moll. All rights reserved.