Saturday, March 31, 2012

AIPLA - Comments on the America Invents Act

The American Intellectual Property Law Association (AIPLA) is the largest organization of IP lawyers in the US. When I joined the "P" in AIPLA stood for patents and it was the largest organization of patent attorneys. Shortly, after AIPLA realized some members handled other intellectual property matters such as copyrights, trademark, trade secrets, and unfair competition and changed the meaning of "P" to property, leaving the acronym intact, but diluting the patent focus.

Anyway, the AIPLA's website, publications, email alerts, and conferences keep members abreast on changes in the law. Because it is still very much a group of patent attorneys, the AIPLA has focused on the proposed rules and fees to implement the America Invents Act (AIA). The AIPLA has many members who focus on patent law, and presents fair, balanced, and workable comments. It may not be fun to read AIPLA comments, but it is still worth the time if you want an early look at what may be the final PTO rules and fees.

I have listed links to AIPLA comments on the proposed rules and fees to implement the AIA:

Fee setting authority

Statute of limitations for Office discipline

Changes to the inventor's oath or declaration

Preissuance submissions of prior art by third parties

Citation of patent owners' written statements regard claim scope and estoppel on ex parte reexamination requests by third parties

Supplemental examination and revised reexamination fees

Copyright © 2012 Robert Moll. All rights reserved.

Friday, March 30, 2012

Professor Lemley - Fixing the Patent Office

I read Professor Lemley's paper Fixing the Patent Office and want to highlight several things tonight.

Professor Lemley states the PTO has issued many dubious software, electronic commerce, and Internet patents over the last two decades. He doesn't quantify this observation, but I think the patent community would mostly agree. Professor Lemley states a natural reaction is the PTO needs to award patents only when deserved. However, he pragmatically notes most bad patents merely protect technologies that fail in the marketplace, protect against non-existent competitors, are not infringed, licensed, or the subject of negotiation or assertion in court. In short, their issuance has no social cost.

As Professor Lemley states it, "The problem, then, is not that the Patent Office issues large number of bad patents. Rather, it is that the Patent Office issues a small but worrisome number of economically significant bad patents and those patents enjoy a strong, but undeserved, presumption of validity."

Having framed the problem this way, Professor Lemley states his solution: "The Patent Office should focus its examination resources on important patents and pay little attention to the rest."

Before turning to discuss that proposed solution, Professor Lemley asserts what probably won't fix the PTO:

Preventing fee diversion. For the last two decades Congress has diverted 10-20% of the PTO fees to general revenue. Yet in the last several years fee diversion did stop, while the backlog of pending applications grew. My comment is last year the backlog was slightly reduced.

Giving the PTO the authority to set own fees. The PTO may be in the best one to decide fees, but it is unclear which fees should be increased or decreased. For example, examining all applications more intensely is wasteful. Being stricter on allowances reduces the patent maintenance fees that make up for low filing fees. Raising filing fees raises costs on startups at the outset. Increasing a maintenance fee even by a factor of ten ($40,000) won't discourage patent trolls given the potential rewards of patent litigation.

Rejecting bad patents. The vast majority of bad patents are not litigated or licensed so rejecting them is wasteful. Applicants dissatisfied with a rejection can file requests for continued examination (note 53% of pending applications are RCEs) and/or continuations.

Retaining patent examiners. The PTO has a high rate of turn-over, and the median examiner has only been at the PTO for three years. The problem is junior examiners appear to be better at rejecting bad patents than senior examiners.

Outsourcing search. The thinking is examiners are not particularly good at finding relevant prior art so let's outsource this time-consuming task. However, research show examiners rely almost entirely on their own prior art search not the prior art submitted by others.

Next, Professor Lemley asserts what might work:

Second pair of eyes (SPER). Professor Lemley reminds after State Street the PTO initiated SPER to help deal with the flood of business method patents. He notes, however, SPER is asymmetric - two examiners must agree to allow a case while it takes only one examiner to reject a case. This led to 16% allowance rates in contrast to 72% on average. Professor Lemley finds it interesting that the PTO recently shut down SPER program on business methods applications. My comment is SPER over all technology areas would be very expensive, if not wasteful.

Changing examiner incentives. Research indicates much of the problem may be examiner's behavior due to incentives. This section seemed a bit muddled about how and what incentives should change. My experience over the past two decades is the quantity of cases processed sometimes appears to be more important to the PTO than the quality of examination. Whatever the change to incentives, you can count on the examiner's union to resist changes to how the examiners are evaluated and patent attorneys to resist any changes that make it more difficult to get patents.

Tiered review. Professor Lemley now presents his solution that the PTO should focus on important patents and pay little attention to the others, but it is difficult to know which patents are likely to be important. Professor Lemley concedes the government would find it difficult to know, but patent applicants and competitors have better information about the likely value of an invention. Thus, he proposes applicants "gold plate" their patents by paying for an intense search and examination process that would merit a strong presumption of validity. My comment here is (1) startup may be excluded from gold-plating; and (2) the tiered review appears to conflict with the Supreme Court's i4i v. Microsoft decision that the clear and convincing standard for invalidity applies to all US patents.

Oppositions and adversarial evaluations. I agree with Professor Lemley's expectation that the new post-grant and inter partes review will help fix the Patent Office's tendency to issue bad patents at times, but note this addresses bad patents rather than fixes the Patent Office, which to me is about the original examination. Also it will be interesting if the public input reduces the PTO fees for post-grant procedures.

Professor Lemley concludes that (1) reform proposals can never eliminate bad patents because examination is an imperfect process; (2) we will continue to rely on litigation as the primary means for weeding out bad patents; (3) courts should modulate the presumption of validity to match the facts; and (4) clear and convincing must be earned by patent owners.

Despite enjoying Professor Lemley's paper in the end I could only find agreement with Professor Lemley on conclusion (1). With regard to conclusion (2), if reexamination is not the primary means for weeding out bad patents I think it is becoming the best way to attack dubious patents. AIPLA economic survey data shows it's much less expensive than patent litigation even if you factor in the proposed increase in PTO fees. PTO statistics indicate it is effective in eliminating invalid patents as we saw in Oracle v. Google. Further, timely reexamination may result in stays of expensive litigation. With regard to (3) and (4), I don't see how "modulating" the standard of proving invalidity and concluding nothing was earned in the examination is not merely a litigator's delight plus runs counter to i4i v. Microsoft as mentioned earlier.

Copyright © 2012 Robert Moll. All rights reserved.

Thursday, March 29, 2012

Oracle v. Google - Joint Statement Reveals A Weakened Patent Case

In August 2010, Oracle sued Google for infringement of Java patents and copyrights obtained from the Sun acquisition. Judge Alsup has set the matter for trial on April 16. Because the trial is scheduled for eight weeks, Judge Alsup has ordered Oracle and Google submit proposals to streamline the trial. In response, Oracle and Google filed the following joint statement of trial streamlining proposals in court yesterday.

I think the consensus is Google's primary risk is it may be required to pay major damages (e.g., hundreds of millions) for copyright infringement. The risk of paying major damages for patent infringement is less likely for the following reasons:

Google is faced with only two patents at trial. It used to be faced with seven US patents, but Google aggressively filed for reexamination of the patents. Only two Oracle patents survived for the trial: U.S. Reissue No. 38,104 (the '104 reissue patent) and U.S. Patent No. 6,061,520 (the '520 patent). My previous post: Patent Reexamination Has Arrived - Oracle v. Google gives details.

Google has limited past damages. Google was able to prove that Oracle and Sun had not marked any practice products so limited damage to those after Oracle gave Google notice under 35 USC 287. My previous post: Failure to Patent Mark - Losing Easy Money gives additional details.

Google is negotiating for a low ball amount for future damages. Google proposes to pay Oracle $2.7 million and 0.5% of Android revenues for the '104 reissue patent expiring in December 2012 and $80,000 and 0.015% for the '520 patent expiring in 2018. Since Google gives away Android free to handset manufacturers, revenue for this proposal may be based on Google ads and third party applications. I am not certain from the joint statement how Google intends the revenue be established, and why Oracle should accept the independent damages expert's royalty (0.015%) and unadjusted damages of a mere $80,000 for the '520 patent.

Google may win the judge's favor in agreeing to drop its invalidity defense to the '520 patent. Google had to prove invalidity by clear and convincing evidence so giving it up may not mean much: "Judge Alsup I am giving up this (difficult) defense and streamlining my case for trial, so please side with me...."

Google has preserved the defense of non-infringement. Oracle has to prove infringement by a preponderance of the evidence and this is often a potent defense for defendants.

Google is not engaging Oracle with its damage proposals. In my opinion, Oracle may be right to rebuff Google's "low ball" and go to trial. The proposed damages appear to be too low. I think everybody knows it, but this is positional bargaining 101.

Copyright © 2012 Robert Moll. All rights reserved.

Wednesday, March 28, 2012

Rating Startup Risk in the Crowdfunding Directory - Patents Already?

The JOBS Act appears likely to pass Congress and to be signed into law by President Obama. If so, it may just "jumpstart our business strength" by increasing the funding of worthy startups that may not pass muster with VCs and angels today. See CNET's Rafe Needleman's Reporters' Roundtable: JOBS Act makes crowdfunding the law which gives various opinions on the likely impact of the JOBS Act.

What's this have to do with patents? In a related article, EquityNet claims crowdfunding patent, Mr.  Needleman tells us the change in the law is likely to flush out patents and EquityNet already claims it has a related patent (See U.S. Patent Nos. 7,698,188 and 7,908,194) that evaluates startup risk and matches potential investors with startups. EquityNet CEO Judd Hollas expects that without his patented rating of risk the crowdfunding directory of startups will be "a disorganized mess of results." Sounds like business method patents and I expect that the U.S. Supreme Court's Bilski Section 101 decision will come into play to "organize the mess of patents."

Thanks to Alan Cooper for sending the EquityNet claims crowdfunding patent article!

Copyright © 2012 Robert Moll. All rights reserved.

Tuesday, March 27, 2012

SEO by the Sea - Web Search Patents & Articles

In the 1990's I attended a dinner where a computer scientist (unnamed) gave a presentation about the Internet. The thrust of his presentation was he had brought the Internet to the USA. As he described his role, it became apparent he had little to do with it. Instead, it sounded like he was instructed step-by-step how to connect his computer located in the Bay Area to the Web. After I left the dinner, I couldn't stop laughing as my friend mimicked his self-inflating presentation: how he, and he alone, had brought the Internet to the US. Later I read Weaving the Web, and learned about the origin of the Web and the inventor actually responsible for the original design and destiny of the Web, Tim Berners-Lee. In reading that book, O'Reilly's HTTP: The Definitive Guide, Professor Comer's The Internet Book, Castro's HTML 4, and Steven's TCP/IP Illustrated, as well as building my web site, and working with clients on web applications, my interest grew. It's difficult to not take it for granted now, but I still find something so cool about all the world's computers connected in a Web.

Given my interest when Google led me to Bill Slawski's SEO by the Sea blog, I felt compelled to visit it, and see why a SEO blog would be flagged by Google patent alerts. It was surprising in a good way. It's a large and highly organized collection of  literature on search engines and SEO. Mr. Slawski's blog notes he has spent the last six years gathering, reviewing, and discussing patent filings, white papers, and academic literature on search engines, how web pages are ranked, and how a web site and/or blog operator can optimize or at least avoid being penalized by the search engine operators. It's worth a look if you have an interest in how Web search, patents, and SEO intersect.

Copyright © 2012 Robert Moll. All rights reserved.

Monday, March 26, 2012

Predicting Patent Litigation - Top Ranked Patent Paper Today

Professor Chien's Predicting Patent Litigation 2011 is the top ranked academic paper focusing on patent law today. I will give some highlights, but recommend reading her paper, which helps one predict what patents are likely to be asserted in patent litigation.

Professor Chien initially points out that patent infringement lawsuits are disruptive, unpredictable, and expensive. Professor Chien also notes that patent litigation is practically uninsurable and companies are driven to rapidly purchase large patent portfolios to have a defense against other company's patents, which, of course, is no help to ward off patent assertion entities, which we affectionately refer to as patent trolls.

Information technology (IT) companies in Silicon Valley have a patent clearance problem. The large scale purchases of mobile phone patents has only exacerbated the problem. RPX asserts 250,000 US patents relate to smartphones today. Even if that estimate is off by a factor of ten, that is still 25,000 patents to review and assess whether they pose an obstacle. Who has the time and money for such a review?  Professor Lemley states people's response is to ignore patents (See Professor Lemley's Ignoring Patents) .... until the patent owner's letter arrives. Yet, since only 1% of issued patents are ever litigated awaiting that arrival doesn't appear irrational to all that many companies. 

Nonetheless, Professor Chien states uncertainty about what patent is likely to be asserted can be reduced by identifying the riskiest patents. And litigated patents have markedly different characteristics than non-litigated patents that can be readily observed before a lawsuit is filed.

Litigated patents have more:
  • Claims
  • Backward citations (applicants submit large IDSs to "bullet proof" the patent)
  • Foreign counterpart (a signal of the owner's estimate of value of the invention)
  • Patent family members (e.g., continuations, divisionals, and CIP)
  • Forward citations (examiner cites the patent in subsequent filed applications with different inventorship)
  • Maintenance fees (another signal of owner's estimate of value)
The litigated patent owners are more 
  • A small entity
  • Domestic based
  • Owner by assignment of the patent
  • The assignment involved a change in size (i.e., large entity to small entity)
  • Patents were used as collateral
  • Requested ex parte reexamination of the patent (If you are not getting the patent ready for litigation, why spend the money?)
I would emphasize the track record of the patent owner can trump many of these characteristics in predicting whether a given patent will be litigated.

Copyright © 2012 Robert Moll. All rights reserved.

Sunday, March 25, 2012

European Patent Filings Increase in 2011

Despite the debt crisis and economic uncertainty, companies have reversed the slow down in European patent filings in 2008-2009 and increased filings in the European Patent Office (EPO) to record levels in 2011.

The EPO allows an applicant to file a single patent application which designates up to 38 countries at the front of the process, and get national patents in one or more of the designated countries after the application is accepted by the examiner as patentable.

This EPO Annual report 2011 - Statistics and trends gives further details of total European patent filings in 2011, and the residence of applicants by EPO member states and by non-EPO member states.

The desire to defer the expense of the European patent filing is the reason for the increase in PCT filings and decrease in direct EP filings.

See the details in Patent requests in Europe reach record in 2011 - Japan Today.

Thanks to Alan Cooper for sending this article!

Copyright © 2012 Robert Moll. All rights reserved.

Saturday, March 24, 2012

AOL Looks to Sell or License More Than 800 Patents

AOL was my first ISP in the 1990s. It was a painful relationship that lasted 2-3 weeks. It might have been shorter, but I was working late in the office many nights so didn't feel the full frustration of working with the snail like dial-up speeds. As a web page slowly loaded one night, I wondered what to do then realized I have time to make a cup of espresso before this loads. But I returned to find not the page, but a lost connection and the need to dial-up again, but wait now the dial-up line is busy....

Not breaking this corporate mold AOL noticed although business is in decline it has over 800 patents. It floats the idea they will yield $1B in licensing income. Does this sound far-fetched? Not in this environment! I expect they will be quickly purchased and/or licensed and the only question is the value and the buyer.

Here are the details: AOL Said to Hire Evercore to Find Patent-Portfolio Buyer

Copyright © 2012 Robert Moll. All rights reserved.

Friday, March 23, 2012

Facebook Buys 750 IBM Patents - Call to Arms

Facebook is reported to have acquired 750 IBM patents, which may result in some counterclaims being filed in the Yahoo v. Facebook patent suit. Facebook also reported it owns 503 pending applications, which may result in additional counterclaims upon issuance.

Here are several related articles and blog posts:

Facebook Is Said To Buy 750 IBM Patents To Boost Defenses - Bloomberg

Facebook Buys 750 patents From IBM - Reuters

Facebook Gobbles Up Patents from IBM - New York Times

Copyright © 2012 Robert Moll. All rights reserved.

Thursday, March 22, 2012

Mayo v. Prometheus - Supreme Court Patent Eligibility - Links to Articles

In my opinion, the Supreme Court's Mayo Collaborative Services v. Prometheus Laboratories decision will raise questions of eligibility for some medical diagnostic patents. Thus, I am supplementing my March 20th post with links to recent articles:

Mayo Collaborative Services v. Prometheus Laboratories, Inc. - This aggregates much of the information of this case, including links to the Supreme Court opinion, the Federal Circuit opinion below, and the related legal briefs, documents and amicus briefs.

Mayo Collaborative Services v. Prometheus Laboratories -- What the Supreme Court Said - Patent Docs

The Supreme Court's Bad Precedent for Innovation - Xconomy - Fenwick & West's Robert Sachs

Mayo v. Prometheus: Natural Process + Known Elements = Normally No Patent - Patently-O

Scholarship Cited by Supreme Court in Mayo v. Prometheus - Patently-O

Life After Bilski - Stanford Law Review - Professor Lemley et al.

Copyright © 2012 Robert Moll. All rights reserved.

Wednesday, March 21, 2012

Yahoo v. Facebook Patent Lawsuit - The Pundits Arrive!

The Yahoo v. Facebook patent infringement case continues to get news coverage. Here's some interesting news articles that discuss (i.e., speculate, surmise, and predict) what is expected to devolve in that case:

Are Yahoo's patents strong enough to topple Facebook? - Ars Technica

Ten things Oracle v. Google tells us about the judge presiding over Yahoo v. Facebook - FOSS speculated how Yahoo v. Facebook might play out based on the assignment of the case to Judge Alsup but then the case was reassigned to Judge White.... Oh well it was a nice recap of Oracle v. Google.

Copyright © 2012 Robert Moll. All rights reserved.

Tuesday, March 20, 2012

Mayo v. Prometheus - Supreme Court Holds Medical Diagnostic Claim An Ineligible Law of Nature

Today, in Mayo v. Prometheus, the Supreme Court held Prometheus' method claims to help doctors treat disease ineligible for patent protection, because the claims merely recited a law of nature. Justice Breyer stated Section 101 defines patentable subject matter: Whoever invents ... any new and useful process ... may obtain a patent but contains an exception for a law of nature. Thus, Einstein could not have patented his discovery of the law E = mc^2 nor Newton have patented the law of gravity.

The Supreme Court held claim 1 of US Patent No. 6,355,623 was representative:

A method of optimizing therapeutic efficacy for treatment of an immune-mediated gastrointestinal disorder, comprising:

(a) administering a drug providing 6-thioguanine to a subject having said immune-mediated gastrointestinal disorder; and

(b) determining the level of 6-thioguanine in said subject having said immune-mediated gastrointestinal disorder, wherein the level of 6-thioguanine less than about 230 pmol per 8x108 red blood cells indicates a need to increase the amount of said drug subsequently administered to said subject and wherein the level of 6-thioguanine greater than about 400 pmol per 8x108 red blood cells indicates a need to decrease the amount of said drug subsequently administered to said subject.

The Court stated claim 1 tells doctors administering the drug to test for the metabolite level in the blood, and increase or decrease the dosage based on the test. The Court said these steps (e.g., administering, testing) were all conventional and added nothing to a law of nature.

Justice Breyer expressed concern that patent protection of a law of nature in this situation would inhibit further discovery by improperly tying up the future use of the law of nature. Even though patents rewarding those who discover new law of nature might encourage their discovery, the Court noted those natural laws are the basic tools of scientific and technological work.

In contrast to Myspace v. Graphon, the Supreme Court rejected the theory that sections 102, 103 and 112 could filter out unpatentable subject matter and asserted to shift the patent-eligibility requirement to Sections 102, 103 and 112 risked greater legal uncertainty.

Copyright © 2012 Robert Moll. All rights reserved.

Monday, March 19, 2012

PTO America Invents Act Roadshow - Videos and Slides

The PTO America Invents Act (AIA) team recently finished its roadshow on the proposed PTO rules. It visited Alexandria, Boston, Chicago, Dallas, Fort Lauderdale, Salt Lake City, and Sunnyvale, California on the dates below. If you didn't attend, the PTO has given links to videos of the programs as presented in Alexandria, VA and Sunnyvale, CA as well as links to slides in all the cities:

AIA Roadshow Videos
AIA Roadshow Slides
Copyright © 2012 Robert Moll. All rights reserved.

Saturday, March 17, 2012

The Yahoo Patent Offensive - Precipitating Factors?

Today, the CNET article Fred Amoroso: Is this the man behind Yahoo's patent offensive? discusses factors that may have precipitated Yahoo's patent infringement lawsuit against Facebook in March 2012:
  • Hiring former Rovi CEO Mr. Amoroso who is reputed to be patent savvy to join the Yahoo board in February 2012
  • Yahoo's declining business model
  • Yahoo's prior success in signing up Google for a $270M patent license 
  • Yahoo's relative patent strength over Facebook. Yahoo owns 1,029 patents in contrast to Facebook's 12 patents (The PTO search page indicates Facebook owns 21 patents)
Copyright © 2012 Robert Moll. All rights reserved.

Friday, March 16, 2012

Marine Polymer v. Hemcon - Federal Circuit Limits Intervening Rights to Amended Claims

In Marine Polymer Tech. v. Hemcon, the Federal Circuit held claims must be amended or new to trigger intervening rights during reexamination. Intervening rights are derived from 35 USC 252 and 307(b) which indicate following reexamination a patent owner cannot claim damages for pre-reexamination infringement if the claims were amended and not substantially identical to the original claims.

In this case, Marine Polymer's arguments narrowed the scope of the claims, but stopped short of amending them. The Federal Circuit rejected Hemcon's request for intervening rights based on this, because (1) the PTO confirmed the original claims were patentable; (2) Sections 252 and 307(b) state intervening rights follow reexamination only as to amended or new claims; (3) the PTO is unlikely to consider a patent claim to be narrowed based on an argument; and (4) if claims require amendment for allowance, the examiner would require it.

Although the intervening rights vote was split 6 to 4, the majority appears to have it right. The public and patent owners need to know when intervening rights can be raised as a defense. Too much money changes hands to have it any other way. Thus, the statute requires a claim be new or amended to trigger intervening rights. If we accept any narrowing argument can raise intervening rights, I expect requests for intervening rights in many cases, i.e., whenever an argument is raised for patentability. Of course, examiners should interpret claims as broad as is reasonably consistent with the specification and require an amendment when necessary to distinguish a claim over the prior art rather than settle for arguments that have no correspondence to the claim language.

Copyright © 2012 Robert Moll. All rights reserved.

Thursday, March 15, 2012

Ex Parte Adelman - Board Reverses Patent Eligibility Rejections Because Claims Indefinite

In the post on Myspace v. Graphon Corp. I noted the Federal Circuit invalidated claims as not novel (35 USC 102) and obvious (35 USC 103) and sidestepped what some consider a threshold concern: Are the claims directed to subject matter that is eligible for patent protection (35 USC 101)? The Federal Circuit seemed to justify the avoidance of addressing the section 101 defense by noting the law is currently a "murky morass"

The Board of Patent Appeals also recently decided patent eligibility is not a threshold concern. In Ex Parte Adelman the Board reversed the examiner's rejections under 35 USC 101, because the examiner failed to address the critical lack of a concrete definition of the invention. Go Daddy Group appealed claims relating to a system for designating membership in an online business community. Claim 1 recites, among other things, "means for designating a plurality of members" and "means for providing a ... membership designator." The Board stated it wastes resources to consider whether claims are eligible for patent protection or overcome the prior art, when the claims cannot be reasonably understood without resort to speculation. The Board stated the claims were indefinite under 35 USC 112, because the specification failed to disclose algorithm(s) supporting the recited functions in claim 1.

Thus, the "new" threshold concern may be that applicants particularly point out and distinctly claim the invention as required by section 112. See Aristocrat Techs. Australia Party Ltd. v. Int’l Game Tech., 521 F.3d 1328, 1337 (Fed. Cir. 2008); Finisar Corp. v. DirecTV Group, Inc., 523 F.3d 1323, 1340-41 (Fed. Cir. 2008).

Copyright © 2012 Robert Moll. All rights reserved.

Wednesday, March 14, 2012

Patent Reexamination Has Arrived for Both Parties - Oracle v. Google

Judge Alsup has ordered the Oracle v. Google trial start on April 16. As noted in my blog post on March 12, reexamination has reduced both Oracle's patent case and the advantage of having Mr. Boies as the trial lawyer.

As I stated, Oracle has agreed to withdraw three patents if  they remain rejected when the trial starts. That's about one month for Oracle to get the "final" rejections withdrawn. It's possible but difficult to achieve. Of course, Oracle could appeal the final rejection to the Board of Patent Appeals, but this seems unlikely. Thus, Oracle's lawsuit is based on just two patents and its copyright infringement claim.

Judge Alsup seems to be tough on Oracle at times, but the start date is what Oracle wanted. Further, Judge Alsup believes that streamlining the trial is good for both parties. Thus, Judge Alsup ordered:

"Google is hereby encouraged to withdraw its invalidity defenses that have failed in the reexamination ... to further streamline the trial on the two patents remaining in suit."

Reexamination has become a two-edged sword in this case. If you are a patent owner and suffer rejection of all infringed claims before trial you won't be able to turn that around. And if you are a defendant and you lose on invalidity in reexamination, you will be forced to drop invalidity defenses at trial.

Copyright © 2012 Robert Moll. All rights reserved.

Tuesday, March 13, 2012

Yahoo! Sues Facebook for Patent Infringement!

Yahoo is suing Facebook for infringement of ten patents just before its IPO. I don't see this lawsuit as a show stopper and submit it's typical when a tech company prepares for an IPO. Thus, the case is likely to proceed as follows: (1) Facebook licenses the patents; (2) Facebook challenges the patents in the PTO (requests reexamination) and requests a stay of the court case; and/or (3) Facebook defends itself in federal district court. Yahoo only hopes this tactic that resulted in 2.7M shares before Google's IPO works again.

Here's links to articles with details below:

Yahoo sues Facebook over patents -- USA Today

Yahoo sues Facebook in patent battle - San Jose Mercury News

Yahoo Sues Facebook for Patent Infringement, Which Social Network Calls "Puzzling" (Including Filing) - (WSJ)

Yahoo sues Facebook for infringing 10 patent - Reuters

Yahoo sues Facebook in a patent row - BBC News

Thanks to Alan Cooper for notifying of this development last night.

Copyright © 2012 Robert Moll. All rights reserved.

Monday, March 12, 2012

Patent Reexamination Has Arrived - Oracle v. Google

Reexamination has nearly knocked out Oracle's patent case against Google. It crystallized on March 1 when Judge Alsup stated "Oracle should state a clear answer to the following question: given that the examiners have issued final rejections on patents ’720, ’702, ’476, and ’205, and Oracle has only withdrawn the ’476 patent, but still wishes to go to trial on patents ’720, ’702, ’205, ’520, and ’104, and Oracle still wishes to have an instruction that those patents must be presumed valid and can only be found invalid by clear and convincing evidence, would it be better to postpone trial until after final decisions by the PTO on administrative appeal? Also please answer: to avoid this problem, will Oracle irrevocably withdraw with prejudice patents ’720, ’702, and ’205?" In short, does Oracle want to delay the trial for the results of reexamination or nearly drop the entire patent case?

Oracle's reply?  If the case goes to trial this spring, Oracle will withdraw from the litigation with prejudice each claim of the '720, '205, and '702 patents asserted against Google that remains rejected at the time of trial, and proceed with the copyright case, the '520 patent, and '104 patent, and any asserted claims of the other three patents that are confirmed by the PTO.

It is no longer sufficient to hire the best trial lawyer and go from there. Oracle engaged David Boies, an amazing trial lawyer. After graduating Magna cum laude at Yale Law School, Mr. Boies became a partner at Cravath Swaine & Moore and later founded his own firm and successfully handled many notable cases. For example, Mr. Boies was the key attorney assisting the late Thomas Barr in his stunningly successful defense of IBM in the Department of Justice's 13-year antitrust case. The DoJ learned from this and hired Mr. Boies in the United States v. Microsoft case. Again, Mr. Boies won, and Bill Gates claimed during trial that Mr. Boies was "out to destroy Microsoft" after observing his devastating use of Microsoft emails to impeach Microsoft witnesses. When he defended CBS in a $120M libel suit by General Westmoreland, the general abandoned his case during the trial. Although Mr. Boies lost in representing Al Gore following the 2000 presidential elections in Bush v. Gore, his engagement on this high stakes matter and others reveal he was (and is) considered one of the premier trial lawyers in the country.

Oracle v. Google tells us the outcome of reexamination can be pivotal to the patent case. Despite Oracle's  wise decision to engage Mr. Boies, it did not halt the effects of reexamination. Oracle's patent case was greatly contracted and Mr. Boies has much less to work with at trial. Yes, patent reexamination has arrived.

Copyright © 2012 Robert Moll. All rights reserved.

Friday, March 9, 2012

Bankruptcy Judge Bars Apple's Patent Suit Against Kodak

Today, the media gave lots of coverage to the bankruptcy judge's ruling to bar Apple's patent infringement suit against Kodak. It's appears to be an act of mercy, but could complicate assessing the value of Kodak patents since Apple may have a legitimate claim for joint ownership. Here's links to articles giving the details below:

Copyright © 2012 Robert Moll. All rights reserved.

Thursday, March 8, 2012

Contingent Fee Representation - Patent Litigation Will Never Be the Same

Professor Kayton once explained to us that whether a patent is litigated has nothing to do with whether it is strong or weak, but is based on the expected return = probability of success in patent litigation multiplied by the total amount produced if the litigation is successful. Thus, if the damages for patent infringement is $100M and the probability of the holding the infringer liable is 25%, it is rationale to spend up to $25M to enforce the  patent. Of course, not many companies are prepared to spend that much money.

However, some attorneys realized they could make enormous sums as long as one could stomach the risk and venture their time to take cases on contingency: If I lose, you don't owe a thing (i.e., costs and legal fees); on the other hand, if I win, you pay me a percentage, for example, 35% of the damages.

Contingent fee representation changed things. Now a range of patent owners had access to the courts as long as they could convince an attorney to handle their case. Success stories drove attorneys to take cases on contingency. In 1998, I met one of the early successful contingent fee litigators, Gerald Hosier, who represented Lemelson in the 1980s and 1990s. As we sat in the conference room, Mr. Hosier received call after call interrupting our meeting (presumably the calls wasn't staged for our benefit) from Silicon Valley companies who had decided it made sense to settle rather than risk paying for infringement of  Lemelson's complex labyrinth of patents (e.g., assembly line manufacturing, bar coding, and local oxidation of silicon, so-called LOCOS).

Mr. Hosier was wealthy when we met that day, and Silicon Valley was his third "gig." He had reached a settlement with the Japanese companies in the 1980s then the US auto industry. Mr. Hosier appeared on the cover of the American Lawyer tramping through the snow with his huskies in Aspen Colorado. Yes, he had a Gulfstream jet and had earned more than the Cravath Swaine & Moore law firm one year. Yet something was missing as Mr. Hosier gleefully recounted how Mr. Lemelson conceived LOCOS while watching a space capsule re-enter earth's atmosphere. It was impossible to believe. I decided coming out of that meeting I should help clients understand the nature of the Lemelson patents, but before I could write the opinions, nearly all of the companies had settled and returned to business.

Also see Schwartz The Rise of Contingent Fee Representation in Patent Litigation.

Copyright © 2012 Robert Moll. All rights reserved.

Wednesday, March 7, 2012

PTO's Proposed Fees Will Deter Use of America Invents Act Procedures

The PTO has proposed major increases in fees to implement the America Invents Act (AIA). The argument is the PTO fees should match the service provided. But this can lead to surprising results. For example, Harold Wegner suggested a patent that has hundreds of claims will be effectively insulated from challenge because the PTO proposes to charge half a million in PTO fees. We need to return to reason. The user based system only needs to work at the aggregate level. We don't make litigants pay the true cost of litigating in federal district court, and it doesn't make sense to hold users of the AIA contested procedures to this standard either. If we raise the PTO fees as proposed, smaller companies will not use them because they are no longer affordable. And we don't need a patent system that can be only accessed by the largest companies. Startups should also have access to ex parte reexamination, post grant review, and inter partes review to challenge doubtful patents and implement Congress' objective to give all of us an inexpensive alternative to litigation.

Also see America Intellectual Property Law Associate (AIPLA) comments on the proposed fee increase.

Copyright © 2012 Robert Moll. All rights reserved.

Myspace v. Graphon - Federal Circuit Sidesteps Patent Eligibility under 35 USC 101

In the 2010 Bilski decision, the Supreme Court attempted to state a test for what is patent-eligible under 35 USC 101. The Supreme Court rejected that certain categories of subject matter such as business methods or software would be automatically ineligible and that the Federal Circuit's machine-or-transformation test should be the exclusive test. Instead the Supreme Court looking to its own precedent stated laws of nature, natural phenomena, and abstract ideas would be unpatentable.

Since that time the Federal Circuit has struggled to develop a working test for what is an unpatentable abstract idea. Part of the problem is a patent claim is an abstraction of an embodiment of the invention. And the Supreme Court abstract idea test is the ultimate penalty if the abstraction is too great (i.e., the claim is too broad).

In Myspace, Inc. v. Graphon Corp., the Federal Circuit assessed the validity of a software patent relating to creating, modifying, and storing database records over a computer network. The Federal Circuit made several candid and surprising statements: (1) it conceded section 101 is a murky morass that should be avoided when possible; (2) the USPTO may become the source of a workable test (note the Supreme Court implied that the Federal Circuit would further develop the law); (3) patent eligibility was not a threshold question (Bilski states otherwise); and (4) courts should initially evaluate a patent under section 102 (novelty), section 103 (obviousness) and section 112 (written description and enablement) to avoid "the swamp of verbiage that is section 101." Note sidestepping the section 101 defense didn't help as the Federal Circuit then held the patent invalid under sections 102 and 103.

Also see Donald Chisum's Weeds and Seeds in the Supreme Court's Business Method Patents: New Directions for Regulating Patent Scope on this topic.

Copyright © 2012 Robert Moll. All rights reserved.

Monday, March 5, 2012

PTO Publishes Proposed Rules for Inter Partes Review, Post Grant Review, etc.

In February 2012, the USPTO announced publication of its proposed rules for contested cases, including inter partes review, post grant review, the transitional program for covered business methods, and derivation to implement the America Invents Act (AIA). See the details in the links below:

Publication opens a sixty-day comment period on the proposed rules. Director Kappos encouraged the patent community to comment on the rules and attend an AIA roadshow where the PTO will discuss proposed rules and receive public feedback.  

See the Leahy-Smith America Invents Act Implementation web page for details and the AIA Roadshow schedule in 2012.

Copyright © 2012 Robert Moll. All rights reserved.

Sunday, March 4, 2012

Apple Waterproofing the iPhone?

I realized how much I loved my iPhone the day it got wet. I felt stupid as it failed to turn on, but then thought surely this has happened to others let's Google how to dry it. I got it dry but ... it still didn't work. No surprise on this as I grew up in my Dad's electronic shop. Later driving to the AT&T store I partly convinced myself it was "broken" anyway as it had a mere 16 GB of memory and a decent music collection requires at least 32 GB.

So this article Patently Flash: Will the iPhone ever be Waterproof? caught my attention tonight. Framed in terms only a geek would love, US Application No. 2012/0048589 A2, Inhibiting Moisture Intrusion in a Very Small Form Factor Consumer Electronic Product reveals Apple has invented a package for waterproofing an iPod shuffle which can be applied to other devices ... to the iPhone.

Copyright © 2012 Robert Moll. All rights reserved.

Saturday, March 3, 2012

Apple Patents Secure Microsoft Investment and Continued Development of Mac Office

Recently, Apple joined the $500B club. However, in 1997, Microsoft was the dominant company and Apple was nearly out of business. Local press discussed whether Sun or Oracle might acquire Apple. Then Microsoft invested $150M in Apple and agreed to continue Mac Office. Microsoft's surprising agreement was pivotal for Apple. What was behind that event? The following article states it was Steve Job's skillful negotiations and use of the Apple patents.

Steve Jobs used patents to pressure Bill Gates into 1997 investment in Apple.

Copyright © 2012 Robert Moll. All rights reserved.

Friday, March 2, 2012

Intellectual Ventures and Patent Aggregators - Mr. Rosoff's Article

After I posted Intellectual Ventures and Patent Aggregators on February 29, I read Matt Rosoff's REVEALED: How Giant Patent Troll Intellectual Ventures Does Business. At first I thought nice summary of the Giants Among Us article, but now Mr. Rosoff's article seems too negative:
  1. Read the title: ... Giant Patent Troll Intellectual Ventures .... The author doesn't waste any time before branding Intellectual Ventures a giant patent troll.  
  2. The author states Intellectual Ventures "does very little inventing," but according to many articles IV is busy inventing in many technology areas.   
  3. He states IV uses more than 1,200 shell companies. This makes IV sound sneaky but it's legal. So why can't IV use shell companies to reduce its purchase costs?   
  4. He asserts about half its patents originated outside the U.S. and IV exploits the disparities in IP valuations between the US and the rest of the world. Don't inport/export businesses exploit disparities in valuations between the US and the rest of the world?
  5. Mr. Rosoff states big companies invest in IV then use its patents for defense. Boo hoo some company pays for patent rights then has the audacity to file a counterclaim when it is sued. Sounds like self-defense to me.
  6.  He notes IV's activities are compared to "privateering" in the Giant article, a now-abolished kind of warfare where countries would encourage private sailors to attack enemies ships and auction off the proceeds. This appears to refer to IV's willingness to license its patents to third parties who do the "dirty work of licensing and suing." But why is licensing and suing "dirty work?" This "dirty work" argument sounds truly lame.
  7. Mr. Rosoff concludes IV's business is referred to as "an ugly business, but also perfectly legal." So there you have it: "Giant Patent Troll" labeling at the front end and "ugly business" at the rear end. 
  8. It's this negative slant that makes the siren song for more government regulation such a clunker. 
  9. After the REVEALED article was published, Intellectual Ventures pointed Mr. Rosoff to the Intellectual Ventures corporate blog for the other side and in my opinion some necessary balance.     
Copyright © 2012 Robert Moll. All rights reserved.

Thursday, March 1, 2012

Law Review Circulations Drop?

In the last two decades the information explosion has driven many of us to move from paper to data storage so we can keep information organized, searchable, and distributable to others. This concept is not recent, but appears missed in the recent Wall Street Journal article, Law Review Circulation: A New Low.

There  Professor Davies calls out law reviews for exaggerating their paid circulations and noting they dropped in 2011. The article does not discuss why the drop. Instead it gives a chart showing the drop is across the board for the top ranked law schools starting with Harvard Law. In particular, Professor Davies notes "The Harvard Law Review remains the top journal, but its paid circulation has declined from more than 10,000 during much of the 1960s and '70s to about 5,000 in the 1990s to 1,896 last year."

My initial reaction? Oh too bad as law reviews have impacted the development of the law and influenced courts for decades. And too bad we have become a nation of non-readers. I am not so sure of my initial reactions, however, as the drop appears to coincide with the time frame law review papers became free at websites like Social Science Research Network - see download ranking among top law schools and could be downloaded, searched and emailed to clients and colleagues with a few mouse clicks.

Copyright © 2012 Robert Moll. All rights reserved.