Professor Osenga - Saving Functional Claiming: The Mismatch of § 112 Reform in the § 101 Reform Debate

Professor Osenga's article Saving Functional Claiming: The Mismatch of § 112 Reform in the § 101 Reform Debate  discusses the state of US patent law reform. It also states linking 35 USC 112 as "part" of the 35 USC 101 patent eligibility reform effort is not a good idea especially for software related inventions.

Copyright © 2020 Robert Moll. All rights reserved.

IP Watchdog: What Mattered in 2017: Industry Insiders Reflect Biggest Moments in IP

IP Watchdog: What Mattered in 2017: Industry Insiders Reflect Biggest Moments in IP does a nice job of using industry experts to highlight the key events in patent law in 2017.

Copyright © 2017 Robert Moll. All rights reserved.

Professor Richard Epstein - The Supreme Court Tackles Patent Reform

In The Supreme Court Tackles Patent Reform, NYU Professor Richard Epstein discusses the Oil States case currently being reviewed by the U.S. Supreme Court and raises some interesting constitutional arguments against AIA inter partes review (IPR).

Because IPRs have been effective at invalidating U.S. patents based on written prior art, the article is worth reading whether you do or don't like patents. I agree the case could be significant. As Professor Epstein states in the article, "Oil States Energy Services, LLC v. Greene’s Energy Group, LLC is the most important intellectual property case to come before the Supreme Court in many years. It challenges some of the innovative dispute resolution provisions of the 2011 American Invents Act (AIA) the most significant legislative reform of patent law since the Patent Act of 1952. Oil States assumes its vast significance because its outcome will determine, perhaps for decades, the litigation framework for all future patent disputes."

Copyright © 2017 Robert Moll. All rights reserved.

IP Watchdog - The Four Consequential Patent Trends of 2016 - Brief Comment

In the IP Watchdog article, The Four Consequential Patent Trends of 2016, Steve Brachmann highlights some key trends in the US patent system today.

The article notes that the FTC Report - Patent Assertion Entity and the decline in patent litigation in 2016 discredit the patent troll narrative, but the media is still lagging on the truth. It notes China and the US have patent systems moving in opposite directions given China's decision to open the door to software and business method patenting, and the Federal Circuit has frustrated patent owners on issues arising from the PTAB trials.

My brief comment is Congress might considering addressing these trends in 2017:

Congress may or may not need more patent reform, but it shouldn't amend any patent law based on the false patent troll narrative. For example, Congress should read the FTC report which among other things, debunks the "patent troll" label as prejudicial. Journalists often have tight deadlines that run counter to rigorous fact investigation. The lobbyists and other hired guns help special interests rather than illuminate journalists. We need laws that strengthen the US economy not certain big tech companies.

Instead of being surprised how China is moving forward with software and business method patenting, Congress should amend the language of 35 USC 101 to clarify the patent-eligible standard for software inventions. Allowance of US software applications should not rest on a patent eligibility test that arguably nobody fully understands. Patentability of software related inventions should return to primarily an examination of prior art.

Practitioners can invalidate patents in the USPTO at lower cost than in court, but the Patent Trial and Appeal Board (PTAB) rules currently tilt the procedure in favor of patent challengers. This is a large topic, but one example is PTAB accords claims the broadest reasonable interpretation, a standard premised on an ability to amend claims, but implements rules that make it nearly impossible to amend claims. Congress should level the playing field of the PTAB trials.

Large entities have successful pushed for a weaker US patent system that permits efficient infringement. Thus, a small entity cannot reliably stop misappropriation of its inventions. But a weaker patent system does not discriminate. Large entities that worked so hard to weaken patents are now more vulnerable to free riders who have no real reason to stop infringing.

Copyright © 2016 Robert Moll. All rights reserved.

WSJ - Patent Litigation Up in 2015, Despite Efforts to Rein it In

In the Wall Street Journal article Patent Litigation Up in 2015, Despite Efforts to Rein it In, Ashby Jone's refers to a RPX report as supporting that non-practicing entities (NPEs) lawsuits seeking to monetize patents are flourishing in 2015 despite Congress' patent reform efforts and the Supreme Court decision making it more difficult to get a software patent in Alice.

The article is interesting, but doesn't explain why patent infringement lawsuits filed vary in 2013-2015:

2015: NPEs filed 3,604 lawsuits

2014: NPEs filed 2,891 lawsuits

2013: NPEs filed 3,733 lawsuits

Despite lots of activity, Congress didn't pass any significant patent reform in 2013-2015. Further, although the Supreme Court's heightened standard for software patent eligibility in Alice might explain why less software patent owners would want to file a lawsuit in 2014, it doesn't explain the rise in lawsuits in 2015.

Copyright © 2016 Robert Moll. All rights reserved.

Harvard and NYU Business School - The Bright Side of Patents

In The Bright Side of Patents, Joan Farre-Mensa of Harvard Business School and Deepak Hegde and Alexander Ljungqvist of NYU's School of Business investigate and conclude patents help startups. I would add this is my experience working with startups over two decades. I have seen startups mainly fail for lack of sales, but if you are a technology leader and have even moderate commercial success the world is ready to copy you. We have seen it too many times. Patents can help a startup acquire a sustainable competitive advantage. So if trade secret is not an option, you should definitely think about it.

From the Abstract: "Motivated by concerns that the patent system is hindering innovation, particularly for small inventors, this study investigates the bright side of patents. We examine whether patents help startups grow and succeed using detailed micro data on all patent applications filed by startups at the U.S. Patent and Trademark Office (USPTO) since 2001 and approved or rejected before 2014. We leverage the fact that patent applications are assigned quasi-randomly to USPTO examiners and instrument for the probability that an application is approved with individual examiners’ historical approval rates. We find that patent approvals help startups create jobs, grow their sales, innovate, and reward their investors. Exogenous delays in the patent examination process significantly reduce firm growth, job creation, and innovation, even when a firm’s patent application is eventually approved. Our results suggest that patents act as a catalyst that sets startups on a growth path by facilitating their access to capital. Proposals for patent reform should consider these benefits of patents alongside their potential costs."

Copyright © 2016 Robert Moll. All rights reserved.

WSJ - Senate Tees Up Bipartisan Bill Aimed at Patent Litigation

Today, I suggest reading the WSJ article Senate Tees Up Bipartisan Bill Aimed at Patent Litigation:

"Last year, the House of Representative cast a vote in support of patent reform, specifically for measures intended to clamp down on a flood of patent lawsuits. Corporate defendants, academics and others thought plaintiffs were abusing the court system, filing 'nuisance' lawsuits that were likely to trigger quick settlements. But the Senate's effort to play ball with the House died amid a flurry of finger-pointing. Earlier this year, the House reintroduced its bill — the Innovation Act — and Wednesday afternoon, the Senate offered up a companion to the House bill that seems to have bipartisan support among some influential senators. The bill was introduced by Sens. Charles Schumer (D., N.Y.); John Cornyn (R., Texas);Senate Judiciary Chairman Charles Grassley (R., Iowa) and that committee’s ranking Democrat, Patrick Leahy (D., Vt).

This bipartisan bill shifts the legal burden back onto those who would abuse the patent system in order to make a quick buck at the expense of businesses that are playing by the rules," said Sen. Schumer, in a statement. 'I'm hopeful we can move quickly and in a bipartisan way to get this bill passed in committee and on the Senate floor this summer.'"

The article gives a summary of the Innovation Act that loses me on several points. The article never talks the dramatic decrease in patent infringement lawsuits last year. Is this carelessness or related to the sources of the article? It fails to talk about the defendants overwhelming success in the America Invents Act (AIA) trials. Defendants have had a long losing streak there, and the Innovation Act seeks to remove the estoppel provisions. Why isn't this discussed? The article exaggerates support for patent reform in 2014. It didn't die because of "finger pointing" in Congress. It died because it changed decades of how we conduct patent litigation. Congress hit a snag because it tried to pass laws that would weaken patent owner rights. Each party pays its own attorney fees unless it's an exceptional case in the USA to encourages patent owners to come to court if they cannot settle a patent infringement case. However, the Bill proposes mandatory attorney fee shifting for losers in patent litigation. Mandatory fee shifting would reduce patent troll lawsuits, but would also discourage patent owners with legitimate claims. It proposes to tilt the playing field further in favor of big companies who can shift all their legal fees on small companies who make the mistake of suing for patent infringement and losing the case.

I don't know if patent reform will pass this year. What seems more certain to me is tech lobbyists will push for patent reform (even reviving what failed) and present it as in the public interest and protecting us from those patent trolls. It's getting impossible to not conclude it's really about lowering costs of doing business (e.g., paying patent licenses) of big tech in the USA.

Copyright © 2015 Robert Moll. All rights reserved.

Congresswoman Kaptur - The Innovation Act is Bad News for America's Patent System

Today, I suggest reading Congresswoman Marcy Kaptur's article in IP Watchdog: The Innovation Act is Bad News for America’s Patent System. Ms. Kaptur states certain ways this proposed Act would weaken US patent owners rights. I agree this Act is not what is needed today.

Copyright © 2015 Robert Moll. All rights reserved.

Professor Robin Feldman and Reseach Fellow Evan Frondorf - Patent Demands and Initial Public Offerings - A Comment

In a study Patent Demands and Initial Public Offerings, forthcoming in the Stanford Technology Law Review, Professor Robin Feldman and Research Fellow Evan Frondorf of UC Hastings law school state a "significant majority of information technology companies received patent demands near their IPO and "almost all of that activity originated from patent NPEs." Sounds like a problem, right?

In this study the authors checked with lawyers at recently public companies about exposure to patent demands as their company developed. Mr. Frondorf explains "Patent trolls thrive on extracting settlements from startup companies that don't have the time or money to litigate, even if the claims are dubious. An IPO is new leverage that can be used against a company that wants to avoid the negative effects that pending litigation might have on its offering price or public reputation. The results are consistent with monetizers issuing demands based on the economics of patent litigation, rather than on the legitimacy of the claims. It's more evidence of the need for comprehensive patent reform."

I appreciate the research of Professor Feldman, but I am not seeing that a study revealing patent demands occur before IPOs is more evidence supporting the need for comprehensive patent reform being considered by Congress.

Patent demands made before IPOs is not a new tactic, but a long standing strategy of patent owners. As a patent lawyer at Wilson Sonsini Goodrich & Rosati from 1993 - 1998, I saw a number of tech companies get hit with patent demands and even patent lawsuits before going public. That does not prove, however, whether the patent claim is legitimate or not. Patents owners simply show up when they have the most leverage to get paid. Whether the patent owner practices the invention is not relevant to whether or not a patent is valid or infringed.

I also question the suggestion that companies near an IPO have no time or money to fight illegitimate patent claims. Many tech companies have pending patent litigation or threatened lawsuits but have the resources to handle that as well as go public. How many of them withdraw from going public because the patent lawsuit drained their resources? I would venture rarely if ever. A patent lawsuit may be resolved before the IPO, but it is not required. Instead, the risk of that patent lawsuit is disclosed in the prospectus. Whether or not it settles is up to the parties. One notable example is Yahoo's online advertising patent lawsuit before Google's IPO. Google disclosed the risk in the prospectus, and settled with Yahoo, then went public, and life went on. Sure Google had to pay a chunk of stock, but a number of observers believed Yahoo had a legitimate claim. Google had the legal talent, financial resources and considerable momentum in the search engine space that enabled it to settle that patent case on its own terms.

If a company is successful to the point of going public, it usually also has smart management, a viable business, legal talent, and the financial resources to settle or fight the patent demands before, during, and after the IPO. Further, the AIA trials give a relatively low cost way to deal with dubious patent demands today. Just before a company goes public is not when it's vulnerable to illegitimate patent demands. Higher vulnerability occurs at a much earlier stage, but as the study notes "almost no companies received demands near another important funding moment-- obtaining the first round of venture capital funding." Another vulnerable time for a startup to receive a patent demand is when seeking a first round of funding, since investors do not want to invest in that situation, but of course you have exceptions.

Copyright © 2015 Robert Moll. All rights reserved.

USPTO - Deputy Director Michelle Lee - Initiatives in 2015

Deputy Director Michelle Lee recently visited the Brookings Institution to talk about the USPTO's plans for 2015. For details see the USPTO video and Patent Quality Initiative.

Deputy Director Lee stated: "I've seen firsthand from the business side the importance that patents play, the exclusionary right they give, the protections they give innovators, businesspeople, and startups at the very early stages. If you're entering a market that is highly competitive, you need to have the assurance that you will have protection as you go up against some very steep and oftentimes well-funded competition. So for the USPTO to issue those patents promptly and accurately is critically important so that people invest in these developments."

This is absolutely right! Startups need great patents to penetrate markets. I would add that proposals to reform US patent law to defeat "patent trolls" should be viewed with the skepticism reserved for any other self-serving corporate lobbying. Why do large companies want to weaken US patents? To reduce patent license costs. You just say no to many efforts to license a patent, then knock down the audacious few who seek to enforce patent rights in court with favorable laws passed by Congress.

Copyright © 2015 Robert Moll. All rights reserved.

WSJ - Patent Reform Bill Arises Again in Congress

Tonight, I suggest reading the Wall Street Journal article Patent Reform Bill Arises Again in Congress, discussing Congress' latest effort to change US patent law to address patent litigation abuse.

If you want details, here's Innovation Act 2015, which I will refer to as the Bill. If you want a brief account of Congress' latest patent reform, here's the key changes with brief comments:

1. Attorney Fee Awards - Current law permits the recovery of attorney fees to the prevailing party in an exceptional case, while the new law would require an award attorney fees to the prevailing party unless a judge finds that (1) the legal position and litigation conduct of the non-prevailing party was reasonably justified in law and fact; or (2) special circumstances (e.g., severe hardship to inventor) make attorney fee awards unjust. If the patent owner cannot pay the attorney fees, the court can make "the interested parties" (e.g., investors) pay the attorney fees.

My comment - This is a major change from the American rule where each party pays its own attorney fees. It will reduce patent litigation by smaller companies as they will now have to bear the risk of paying all of the attorneys if they lose and a court decides the legal position was unjustified and cannot establish special circumstances. No doubt many defendants may want this, but the Supreme Court's Highmark and Octane decisions adequately protect the "poor defendants" who hope to reduce patent litigation to just a "sport of kings."

2. Complaints Need Claim Charts - When a patent owners sues for patent infringement, the complaint will need to include a claim chart showing how the claim(s) read on the accused product or process except if it cannot be reasonably known before filing the complaint. Form 18 governing the content of complaints is eliminated, but not if you are pharmaceutical company.

My comment - this higher pleading standard will eliminate some patent infringement suits, because preparing a claim chart makes one stare at the infringement case. If you can't do a claim chart, maybe the case should not be filed. Placing the initial cost of a claim chart on the patent owner is better than asking a court to take on a poorly researched case that wastes court resources and defendant's money. Not sure eliminating Form 18 is useful. The Judicial Conference already says it plans to eliminate Form 18 in 2015 and why give pharmaceuticals "a free pass" on Form 18?

3. PTAB Claim Construction - The Bill proposes to replace the Patent Trial and Appeal Board (PTAB)'s broadest reasonable interpretation (BRI) for claims in inter partes review, post-grant review, and covered business methods with the court's narrower interpretation of claims.

My comment - This will help patents survive invalidity challenges in the USPTO, and better corresponds to the reality that patent owners rarely succeed on motions to amend claims.

4. Limit Discovery - This has a couple of parts: (1) claim construction must happen before much discovery occurs; and (2) only large companies or posting a bond will get discovery of non-core documents.

My comment - Claim construction before significant discovery sounds right, but saying a large company gets discovery without posting a bond only increases their advantages over a smaller company, and may raise disputes on whether certain requested discovery is "core" or "non-core."

5. Willful Infringement  - The Bill would require demand letters identify the patent, the patent owner, accused product, and importantly how the product infringes at least one claim of the patent.

My comment - This imposes another claim chart into the process of patent enforcement, which of course helps defendants avoid treble damages by merely showing a claim chart did not accompany the demand letter.

6. Transparency of Ownership - This penalizes a patent owner who fails to update the USPTO within 90 days on changes of ownership with no enhanced damages, or attorney fees and an award of attorney fees to the defendant who spent money researching the ownership information.

My comment - Patent ownership should be transparent during enforcement, but the consequences of missing the 90 day window sounds draconian. Paying the attorney fees to find out the actual ownership should suffice.

7. Stay of Customer Suits - Courts may stay (suspend) a patent infringement suit of a customer lawsuits when the manufacturer of the product challenges the patent.

 My comment - Why would anyone sue a customer?

Copyright © 2015 Robert Moll. All rights reserved.

Forbes - Real Patent Reform Should Strengthen Property Rights, Not Weaken Them

Tonight, I suggest reading Carly Fiorina's article: Real Patent Reform Should Strengthen Property Rights, Not Weaken Them.

Copyright © 2014 Robert Moll. All rights reserved.

Joe Mullin - How the Patent Trolls Won in Congress - A Brief Comment

In How the patent trolls won in Congress, Joe Mullin reports that "trial lawyers and pharma companies teamed up to stop change to patent laws." This account of what stopped patent reform strains credibility.

The article revolves around anti-patent people who felt surprised and frustrated that patent reform did not pass this year. It stops short of exploring why people opposed the reform due to obstacles it raised for small businesses enforcing their patent rights. Instead it focuses on frustrated lobbyists who recount bitter disappointment on a done deal thwarted and multiple unnamed sources who blame Senator Reid as caving to special interests.

What's the evidence for this amazing claim that trial lawyers influenced Senator Reid? The article notes securities litigators met to raise funds for Senator Reid's campaign in 2010. How does this relate to patent reform in 2014? We are supposed to see Senator Reid as beholden to trial lawyers of all types now and forever. Why big pharma is to blame is not articulated.

I guess when you fail as a lobbyist, you go into damage control, casting blame on somebody (make that anybody) to avoid the perception that you failed. After all you don't want to "lose your reputation" as being effective at tailoring the law to meet your client's objectives since it could eliminate your next lucrative lobbying job.

Copyright © 2014 Robert Moll. All rights reserved.

Congress' Patent Reform Stalls for Lack of Consensus

Congressional patent reform has stalled for lack of consensus. More specifically, on May 21, 2014, Senator Patrick Leahy (D-Vt.), Chairman, Senate Judiciary Committee, stated the following:

"We have been working for almost a year with countless stakeholders on legislation to address the problem of patent trolls who are misusing the patent system. This is a real problem facing businesses in Vermont and across the country.

Unfortunately, there has been no agreement on how to combat the scourge of patent trolls on our economy without burdening the companies and universities who rely on the patent system every day to protect their inventions.  We have heard repeated concerns that the House-passed bill went beyond the scope of addressing patent trolls, and would have severe unintended consequences on legitimate patent holders who employ thousands of Americans.

I have said all along that we needed broad bipartisan support to get a bill through the Senate. Regrettably, competing companies on both sides of this issue refused to come to agreement on how to achieve that goal.

Because there is not sufficient support behind any comprehensive deal, I am taking the patent bill off the Senate Judiciary Committee agenda.  If the stakeholders are able to reach a more targeted agreement that focuses on the problem of patent trolls, there will be a path for passage this year and I will bring it immediately to the Committee.

We can all agree that patent trolls abuse the current patent system.  I hope we are able to return to this issue this year."

In my opinion, the proposed patent reform raised real obstacles (e.g., attorney fee shifting) for legitimate licensing and enforcement of patents. The goal of the legislation was purportedly to deal with patent trolls, but it would have impacted the patent rights of small businesses and startups. Hopefully, Congress will spend the time to study a tricky problem leading to laws that precisely target patent trolls rather than harm the sector of the American economy that creates jobs.

Copyright © 2014 Robert Moll. All rights reserved.

Professor Feldman - Patent Trolling: Why Bio & Pharmaceuticals Are at Risk

In the study, Patent Trolling: Why Bio & Pharmaceuticals Are At Risk, Professor Feldman and Harvard Fellow Dr. Nicholson Price discuss patent trolls- also referred to as non-practicing entities, patent assertion entities, and patent monetizers- moving into the biotech, pharmaceutical, and life science industries.

The authors state highlights include:

"With the Association of University Technology Managers revisiting its policy against selling to NPEs, the authors considered whether universities could provide an extensive pool of ammunition for NPEs to launch against current products.

To supplement increasing anecdotal evidence that patent trolling is moving into bio and pharma, the authors examined the life science holdings of five major universities.We skimmed the patent holdings for four of the of five university systems with the highest number of patents issued in fiscal year 2011: the University of California system, the University of Texas system, MIT, and CalTech. We added as a wild-card the University of Southern Florida, the school among the top 10 in 2011 patent grants which had the lowest ratio of license revenues to research expenditures.

The study identified dozens of patents that could be deployed against current bio and pharm industries, following the patterns that NPEs have used against other industries. These include patents on drug formulas, methods of treatments, research methods, dosage forms, and others.

In deciding whether to undertake the study, the authors agonized over whether the potential for harm outweighed the potential benefit. After all, if reform efforts are not undertaken, the work could simply provide a handy road map for those who would follow.

Life sciences trolling is predictable and in its infancy, however. The study is intended to sound a warning bell."

Even if you are not the biotech or life science industries, the study gives insight into patent troll strategies.

Copyright © 2014 Robert Moll. All rights reserved.

Ashby Jones of WSJ - Law 2014: Patents Likely to Keep Top Billing in the News

Mr. Ashby Jones predicts what patent issues (e.g., US patent reform legislation, the Supreme Court case on software patent eligibility, Alice v. CLS Bank, and rise of the Patent Trial and Appeal Board) are likely in 2014 in the WSJ article Law 2014: Patents Likely to Keep Top Billing in the News.

Copyright © 2014 Robert Moll. All rights reserved.

US Senate Hearing - Protecting Small Businesses and Promoting Innovation by Limiting Patent Troll Abuse

Today, the Senate Judiciary Committee conducted a hearing Protecting Small Businesses and Promoting Innovation by Limiting Patent Troll Abuse.

I am still wading through the witness testimony but it appears worth reading if you are interested about the Senate's patent reform effort. Here is the witness testimony:

John Dwyer, CEO New England Federal Credit Union

Dana Rao, Adobe System's VP and Associate General Counsel of IP and Litigation

Philip Johnson, Johnson & Johnson's Chief IP Counsel

Steve Bossone, PhD, Biotech scientist

Harry Wolin, AMD's Senior VP, GC, and Secretary

Todd Dickinson, AIPLA's Executive Director and former Director USPTO, etc.

Copyright © 2013 Robert Moll. All rights reserved.

Nest Faces Incumbent Dirty Tricks, Patent Lawsuits & More

In Nest Labs CEO advice: Startup? More like lawyer up, Tony Fadell says startups challenging the incumbents need to prepare not just for competition but dirty tricks:

"They will throw everything under the sun at you, and a lot of it is not cool. In addition to patent lawsuits, they'll trash your products on review sites. Nest Labs has been able to track some one-star reviews back to the facilities of its competitors, and he values having a lawyer who can fight the patent suits."

Yes, but what's an even dirtier trick? Maybe the Goodlatte Innovation Act (HR 3309) that purports to stop patent trolls, but will no doubt intimidate some small companies into not enforcing legitimate patent rights to avoid the risk of paying incumbent's legal bills. Nothing like the threat of shifting your legal bill to send a startup on its way!

How will Goodlatte shift incumbent legal fees to small companies? It proposes mandatory attorney fee shifting in every single case when a court concludes the loser's conduct or claim was not reasonably justified. Each time a defendant wins, the patent owner will face a motion for attorney fees. This is a huge change from 35 USC 285 that requires each party bear its expenses, including attorney fees except in exceptional cases.

Congress appears to be rushing the Goodlatte's bill to passage before smaller entities can oppose it and/or before the Supreme Court can decide two cases on the award of attorney fees in patent cases: Highmark Inc. v. Allcare Management Systems, Inc. and Octane Fitness v. Icon Health and Fitness. It might be smart to hear how the Supreme Court would guide this topic instead of rushing forward to change 35 USC 285.

Copyright © 2013 Robert Moll. All rights reserved.

Joe Mullin - Lawmakers blast patent trolls, but split on parts of a key bill

In Lawmakers blast patent trolls, but split on parts of a key bill, Joe Mullin tells us "Rep. Brent Farenthold (R-TX) was incredulous that Whataburger, the Texas-based chain of hamburger joints, had been targeted by a patent suit. 'They make hamburgers!' sputtered Farenthold. 'They don't play in the intellectual property game ... You know there's a problem when I can't get Wi-Fi and the prices at my grocery store are going up, because they're tagged by frivolous lawsuits." Sounds like Rep. Farenthold is voting yes on the bill, and I would too if I didn't have Wi-Fi and rising grocery prices due to frivolous patent cases.

Copyright © 2013 Robert Moll. All rights reserved.