Wednesday, July 31, 2013

Ultramercial v. Hulu and WildTangent - The Software Patent Eligibility Controversy

Companies vulnerable to infringement of software patents want a world in which software related inventions are ineligible for patent protection. Some people assert software patents are a drain on the U.S. economy, but software companies simply want to eliminate the uncertain cost of third party patent licenses.

Recently it appeared we might get there. In CLS Bank International v. Alice Corporation, the Federal Circuit stated claims relating to a software related invention ineligible for a patent. Groklaw reported "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."

Groklaw didn't seem to notice the 135-page opinion had six different views on software patent eligibility, no majority view was reached, and no legal precedent was obtain. However, the USPTO recognized it, and stated the standard for determining eligibility of software related inventions would be unchanged.

Groklaw painted a picture of a frustrated Judge Rader very upset with the "holding" in CLS Bank, but ignored Judge Rader would have other opportunities to speak on patent eligibility of software related inventions. The opportunity came within weeks. See Chief Judge Rader's opinion in favor of the eligibility of software related inventions in Ultramercial v. Hulu and WildTangent.

Ultramercial v. Hulu and WildTangent is a test in favor of software patent eligibility, but it won't stop courts from issuing conflicting and confusing decisions in the future, because too much money trades hands based on how we define software patent eligibility.

The software industry would benefit from a bright line test on software patent eligibility, but subsequent court and PTAB attempts to define whether a claim covers abstract (i.e., patent ineligible) subject matter seem subjective, unpredictable, and irreconcilable. So the software industry runs ahead of the law. And it will happen again, because code reaches into many things. As Marc Andreseen stated, "software eats the world." And that pervasiveness makes it that much more difficult to agree on the scope of patent protection.

Copyright © 2013 Robert Moll. All rights reserved.

Monday, July 29, 2013

Not All Non-Practicing Entities Are Patent Trolls - The Wright Brothers

UCLA professor Kal Raustiala and NYU professor Christopher Jon Sprigman's article How to Know a Patent Troll When You See One? You Can't is right-- it is difficult to distinguish whether a non-practicing entity (NPE) is a patent troll. But it is important to try given some important innovators in American history such as the Wright Brothers were NPEs. See CNET's slideshow presentation: How the Wright brothers won the race to invent the airplane (pictures).

Copyright © 2013 Robert Moll. All rights reserved.

Saturday, July 27, 2013

USPTO Confirms Validity of U.S. Patent No. 6,314,420, Which Vringo Asserts Against Google

On July 24, 2013, the USPTO issued a Notice of Intent to Issue Ex Parte Reexamination Certificate confirming the validity of all claims of U.S. Patent No. 6,314,420 (the '420 patent) that were challenged by Google. Despite the great results many are getting sometimes ex parte reexamination may not work as expected and could bolster the validity of the challenged patent.

For details see Vringo announces that USPTO confirms validity of the '420 patent asserted in litigation with AOL, Google, et al.

If you want to see the reexamination papers, please click on USPTO PAIR, select the control number button, and enter the control number: 90/009,991.

Some tend to place considerable importance on such reexamination decisions. In USPTO Checkmates Google Over Vringo Patents Seeking Alpha claims Google is in trouble. Really did it lose it's rights to appeal? What is at stake? You say a billion dollars? You may remember the jury upheld the validity of the '420 patent as well as another US Patent No. 6,775,664, and awarded the former owner I/P Engine $30.5 million based on a reasonable royalty of 3.5%. Why the relatively high royalty rate but modest damages given Google's scale? I discussed this in Vringo v. Google - Laches Dashing Expectations - From $493M to $31M. Let me say if unreasonable delay in bringing a patent infringement suit prejudices a defendant, a court can rule no damages accrued before the suit was filed.

Seeking Alpha claims Larry Page settled with Yahoo on the Adword related patents in 2004, but somehow bought the wrong patents. This is a silly argument. Most think Google was smart to license the Yahoo patents right before its IPO. Based on this ex parte reexamination decision, Seeking Alpha suggests Google should quickly buyout Vringo at $5-7/share before others realize Vringo is worth way more. It's funny, you disclose you are long and you will say quite a bit to "help out" your hope. Vringo's shares may have jumped this week because of the USPTO notice, but I expect the shares may settle back down as investors realize this ex parte reexamination decision hasn't resolved this dispute.

Copyright © 2013 Robert Moll. All rights reserved.

Thursday, July 25, 2013

FTC Finalizes Settlement in Google & Motorola Mobility Case

On July 23, the Federal Trade Commission (FTC) approved its Final Order settling allegations that Google had reneged on its commitments to license its standard-essential patents (SEPs) held by its subsidiary Motorola Mobility on fair, reasonable, and non-discriminatory (FRAND) terms and instead pursued or threatened to pursue injunctions and exclusion orders against companies making smart phones, laptop and tablet computers, and gaming consoles.

After considering the twenty-five public comments, the FTC modified certain provisions in the Final Order, including those pertaining to the arbitration to resolve disputes over FRAND terms. The FTC also explained certain provisions in a letter sent to the commenters on July 23.

The FTC noted the proposed Consent Order resolved its concerns regarding Google pursuit of injunctions and exclusion orders based on infringement of SEPs subject to FRAND terms, and established a process to allow implementers of Google's SEPs to obtain a license on FRAND terms and a neutral third party to set those terms.

Copyright © 2013 Robert Moll. All rights reserved.

Wednesday, July 24, 2013

Congress Introduces Yet Another Anti-troll Bill - Expanding Post Grant Review for Business Method Patents

In Supermarkets' solution to patent trolls: fight it out at the USPTO, Joe Mullin reports that Congressman Darrell Issa (R-CA) and Judy Chu (D-CA) introduced a bill to the House on July 22 that proposes to expand the types of business method patents eligible for post grant review (PGR). The Issa-Chu bill sounds similar to an earlier proposed bill by Senator Schumer (D-NY).

Noting the benefits of the bill, CCIA patent counsel Matt Levy notes that the cost of post grant review is currently about $100,000, which is a bargain compared to the $2 million or more that might be spent to defend against a US patent in federal court. Mr. Levy suggests it could be even more of a bargain as "if a troll is targeting 20 or 30 companies they can each chip in." Of course the downside to this "even better bargain" is 20 or 30 companies would be subject to an estoppel if the PGR request to invalidate or narrow the essential patent claims is unsuccessful.

Copyright © 2013 Robert Moll. All rights reserved.

In re Adler - What's Required to Establish the Board Has Set Forth a New Ground of Rejection

In re Adler should remind that the Federal Circuit will require strict compliance with the USPTO rules and regulations to support the argument the Board has raised a new ground of rejection requiring a rehearing or reopening of prosecution.

The appellants were looking to reverse the Board's decision that upheld an examiner's rejection of all of the claims of U.S. Application No. 10/097,096 (the '096 application) as obvious over several references.

To understand the rejections let's review representative claim 57:

57.  A method for displaying in-vivo information, the method comprising:
receiving at a data processor data generated by a swallowable in-vivo device traversing a GI tract, the data comprising a set of in-vivo images of the GI tract;
the data processor comparing values of the received images to a reference value of blood and to a reference value of healthy tissue;
the data processor causing to be displayed the images as a color video; and
the data processor further, based on the comparison, causing to be displayed an indication of the position in the GI tract of a change in the level of red color content, the change correlating to the presence of blood.

As to claim 57, the examiner found Meron disclosed a capsule that moves through the GI tract to generate a map of the GI tract but conceded Meron didn't disclose detecting the presence of blood.

On the other hand, the examiner found that Hirata taught factors of esophageal variceal rupture by use of image processing with a video endoscope. Hirata was also held to teach "bleeders" and "non-bleeders" were compared "in terms of endoscopic findings and the image processing data, especially variceal color tone and red color sign." The red color signs were classified by degree, with a minor degree indicating a reference of healthy tissue and a major degree indicating a reference of blood.

Thus, the examiner stated it would have been obvious to one of ordinary skill in the art at the time the invention was made to incorporate a processor for the colorimetric analysis of video endoscopic data, as taught by Hirata, in order to determine the presence of blood. The examiner reasoned that it would have been obvious because Hirata provides the specifics to complete Meron's disclosure that it is capable of determining the presence of blood.

Adler argued to the Federal Circuit that the Board relied upon a new ground of rejection not relied upon by the examiner, it should be entitled to reopen prosecution or to request a rehearing. 37 C.F.R. § 41.50(b).

The Federal Circuit disagreed. It stated the thrust of the Board’s rejection changes when it finds facts not found by the examiner regarding the differences between the prior art and the claimed invention, and these facts are the principal evidence upon which the Board’s rejection was based. The ultimate criterion of whether a rejection is considered new in a Board decision is whether applicants had fair opportunity to react to the thrust of the rejection.

Adler failed to meet the USPTO rules: (1) it didn't point to specific facts found by the Board but not by the examiner; (2) it didn't show how any such facts formed the basis of the Board’s rejection; and (3) it had a fair opportunity to respond, and in fact did respond to the thrust of the examiner’s basis for rejecting the claims before the Board.

The Federal Circuit noted Adler's case differed from those cited by Adler where the Board made new factual findings that the applicants did not have an opportunity to address the rejection. It also noted a Board’s explanation may go into more detail than the examiner but this does not amount to a new ground of rejection. See In re Jung, 637 F.3d 1356, 1365 (Fed. Cir. 2011).

Thus, the Federal Circuit affirmed the Board did not rely on new grounds for rejection.

Copyright © 2013 Robert Moll. All rights reserved.

Monday, July 22, 2013

Judge Posner's Patent Trolls - Chicken Little the Sky is Falling?

In Patent Trolls--Posner, Judge Posner tells us the big problem with the US patent system is patent trolls.

Judge Posner informs "a patent troll buys patents (sometimes thousands) with the aim not of making the patented product or process or licensing it to others to make but of finding companies or individual inventors that the troll can claim with more or less plausibility are infringing one or more of his inventory of patents. The troll demands a license fee from every such allegedly infringing company or inventor. If the target of the demand refuses, the troll may drop the matter or may sue the refuser for patent infringement, hoping that if the threat is plausible this will induce a favorable settlement. If the target refuses to settle, the troll, to maintain the credibility of its threats, may litigate the suit to judgment. The troll does not practice the patent; but, in its own terminology, 'asserts' it."

He concludes it is extremely difficult to discern any possible social benefits from trolls and extremely easy to discern substantial social costs. But what I find extremely difficult to discern is whether many patent owners can avoid the label "patent troll." It appears many could be labeled a patent troll if (1) they don't practice the invention and (2) go to court to enforce their patent rights.

To get rid of these patent trolls, Judge Posner tells us we need a rule that would bar enforcement of any patent that is not reduced to practice within a specified time after the patent is granted but there is no legal authority (e.g., Constitution, Congress, and court decisions) to support his idea, which would favor established corporations rather than startups.

Judge Posner's current crusade against patent assertion entities is burying years of his legal scholarship, but perhaps he deserves credit: he didn't delete reader comments that skewer his post.

Copyright © 2013 Robert Moll. All rights reserved.

Tuesday, July 9, 2013

USPTO Stops Search for a Permanent Facility for the Silicon Valley Satellite Office

Today, the San Jose Mercury News reports the USPTO has stopped the search for a permanent facility for the Silicon Valley satellite office due to budget uncertainties generated by sequestration. For details Permanent home for Silicon Valley patent Office put on hold.

Updated July 20, 2013: USPTO Director's Forum: A Blog from USPTO's Leadership - An Update on Our Dallas, Denver, and Silicon Valley Offices and Silicon Valley Business Journal Patent Office confirms ... we're still on indefinite hold.

Copyright © 2013 Robert Moll. All rights reserved.

Monday, July 8, 2013

USPTO News - Release of the Global Patent Search Network (GPSN) with Access to Chinese Patent Documentation

Tonight, the USPTO announced the "Global Patent Search Network (GPSN) is now available via the USPTO website enabling users to access Chinese patent documentation to conduct prior art searches. Users can search Chinese patent documents in English or the Chinese language. Patent documents are available in full text Chinese and English machine translations. Also available are full document images of Chinese patents which are considered the authoritative Chinese patent document.
The GPSN provides users with access to a new searchable foreign patent collection including machine translations that allow quick analysis of relevant prior art.
Users can search documents including published applications, granted patents and utility models from 2008 to 2011. This collection will be periodically updated to include additional years of coverage.
Although Chinese patent documentation is the first foreign collection to be part of GPSN, the USPTO anticipates expanding the network with collections from other foreign IP Offices.
For more information and access to a GPSN Quick Reference Guide and FAQs, please visit our website at:"
The USPTO requests any questions or comments be emailed to

This is a bit of good news, but I think the utility is limited because the documents are limited to just 2008 - 2011. No reasonable searcher would accept such a constraint in a patent search. For computers I think we need to go back to WW II up to the present.

Copyright © 2013 Robert Moll. All rights reserved.

Wednesday, July 3, 2013

Doug Engelbart - Legendary Computer Pioneer and American Inventor Passes Away at 88

On July 2, Doug Engelbart, American inventor and computing pioneer, passed away of kidney failure at 88 in Atherton, California. Mr. Engelbart invented many features of the modern computer interface, including the mouse, windowing, text editing, bitmap screens, video conferencing, hypertext, networking, collaboration software, and the graphical user interface. He was awarded a number of US patents including one on the computer mouse that SRI licensed to Apple for about $40,000. Working in relative obscurity at SRI he contributed much to the modern computer interface.

See NY Times Computer Visionary Who Invented the Mouse and GigaOm Doug Engelbart, America inventor and computing legend, has passed away.

Copyright © 2013 Robert Moll. All rights reserved.