America Invents Act - On Sale Bar, 35 USC 102

Prior to the America Invents Act (AIA), the on sale bar has been a frequent way inventors lose U.S. patent rights. Basically, US patent law gave an inventor one year to file a US patent after the first offer for sale of an invention ready for patenting. Thus, it tackles inventors that are commercializing the invention too early before they file the patent application. See the U.S. Supreme Court's landmark decision Pfaff v. Wells Electronics, Inc. in 1998.

The AIA makes dramatic changes to 35 USC 102 that may increase loss of U.S. patent rights since the scope of the one year grace period is uncertain, a prior sale no longer needs to be "in this country" (USA), and in particular it is unclear how the grace period is narrowed with respect to non-public sales.

We don't have court decisions, however, the USPTO has published the Examination Guidelines For Implementing The First Inventor To File Provisions Of The Leahy-Smith America Invents Act (Examination Guidelines) and other USPTO educational materials that can guide our analysis of the new grace period.

The starting point for understanding the new grace period is the statutory language:

35 U.S.C. 102(a)(1) states "a person shall be entitled to a patent unless the claimed invention was ... on sale, or otherwise available to the public before the effective filing date of the claimed invention. Thus, 102(a)(1) tells us generally of activities that will result in denial of patent protection."

35 USC 102(b)(1) states, however, that "a disclosure made 1 year or less before the effective filing date of a claimed invention shall not be prior art to the claimed invention under subsection (a)(1) if

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

(B) the subject matter disclosed had, before such disclosure, been publicly disclosed by the inventor or a joint inventor or another who obtained the subject matter disclosed directly or indirectly from the inventor or a joint inventor. Thus, 102(b)(1) tells us of the circumstances where the 102(a)(1) activities will be excused for one year."

The USPTO educational materials states to understand the exceptions of 35 USC 102(b), we must define three terms: disclosure, inventor, and one year or less. An inventor and one year or less are defined consistent with pre-AIA law. The term disclosure is defined in a new way to include evidence that the claimed invention was on sale.

Interpreting how the on sale bar requires (or doesn't) require "disclosure" is likely to be a litigation hot spot. The Examination Guidelines stated that "a number of comments suggested that public availability should be a requirement for “on sale” activities under AIA 35 U.S.C. 102(a)(1), and that non-public uses and non-public sales or offers for sale do not qualify as prior art under the AIA. The comments suggesting that public availability should be a requirement for 'on sale' activities under AIA 35 U.S.C. 102(a)(1) gave the following reasons: (1) The catch-all phrase 'otherwise available to the public' in AIA 35 U.S.C. 102(a)(1) and case law cited in the legislative history of the AIA supports the view that 'available to the public' should be read as informing the meaning of all of the listed categories of prior art in AIA 35 U.S.C. 102(a)(1); (2) the removal of derivation under pre-AIA 35 U.S.C. 102(f) and prior invention under pre-AIA 35 U.S.C. 102(g) as prior art indicates that the AIA intended to do away with 'secret' prior art; (3) public availability is the intent of AIA, and for the Office to construe the statute otherwise would erode the availability of patent protection in the United States, and weaken the economy; (4) interpreting the 'on sale' provision to require public availability is good public policy in that it would lower litigation costs by simplifying discovery, and would reduce unexpected prior art pitfalls for inventors who are not well-versed in the law."

Okay, that is one interpretation of the statute. But other comments "suggested that the legislative history of the AIA is insufficient to compel the conclusion that Congress intended to overturn pre-AIA case law holding that an inventor's non-public sale before the critical date is a patent-barring 'on sale' activity as to that inventor. One comment suggested that commercial uses that are not accessible to the public are nonetheless disqualifying prior art because Metallizing Engineering and other pre-AIA case law interpreting 'public use' and 'on sale' continue to apply under the AIA, and do not require public availability. The comment further suggested that commercial uses that are accessible to the public, even if such accessibility is not widespread, are disqualifying prior art to all parties. Another comment suggested that Metallizing Engineering and other forfeiture doctrines should be preserved because they serve important public policies. Another comment suggested that if the Office does adopt the position that Metallizing Engineering is overruled, and that any sale under AIA 35 U.S.C. 102(a)(1) must be public, the Office should promulgate a rule requiring that any secret commercial use of the claimed invention more than one year prior to the effective filing date be disclosed to the Office. Another comment indicated that sales between joint ventures and sales kept secret from the 'trade' should still be considered prior art under AIA 35 U.S.C. 102(a)(1)."

Here is how the USPTO responded: "A patent is precluded under AIA 35 U.S.C. 102(a)(1) if 'the claimed invention was patented, described in a printed publication, or in public use, on sale, or otherwise available to the public before the effective filing date of the claimed invention.' AIA 35 U.S.C. 102(a)(1) contains the additional residual clause 'or otherwise available to the public.' Residual clauses such as 'or otherwise' or 'or other' are generally viewed as modifying the preceding phrase or phrases. Therefore, the Office views the 'or otherwise available to the public' residual clause of the AIA's 35 U.S.C. 102(a)(1) as indicating that secret sale or use activity does not qualify as prior art."

This suggests a secret sale prior to filing an application needs no grace period because it is not prior art. However, this seems to allow for secret commercialization of the invention more than one year before filing the application, which is contrary to many decades of case law.

The USPTO says its "interpretation of AIA 35 U.S.C. 102(a)(1) also ensures that the AIA grace period can extend to all of the documents and activities enumerated in AIA 35 U.S.C. 102(a)(1) that would otherwise defeat patentability. In addition, this interpretation avoids the very odd potential result that the applicant who had made his invention accessible to the public for up to a year before filing an application could still obtain a patent, but the inventor who merely used his invention in secret one day before he filed an application could not obtain a patent."

If the goal is prompt disclosure to the public of the claimed invention I am not sure this is odd. Further, the USPTO's concern that a secret sale one day before the filing date bars a valid patent from issuing seems misplaced since the USPTO says a secret sale is not prior art requiring an exception to the general rule barring pre-filing activity.

Copyright © 2013 Robert Moll. All rights reserved.

USPTO Upgrades US Patent Database from TIFF to PDF Images

On August 23, the USPTO notified it upgraded the US patent database to use PDF rather than TIFF images. Most web browsers support PDF rather than TIFF so this is good news for searchers who want to use another database beside Free Patents Online (FPO) and Google patents.

Here's details of the USPTO notice:

"The USPTO has upgraded the USPTO Full Text and Image Database. It now uses PDF images instead of TIFF images which provides several new benefits including the ability to print full documents. Patent images may be viewed, printed and saved using a standard PDF-equipped browser. A separate TIFF plug-in is no longer required. In addition to the standard page-by-page viewing, users may now also click on a “Full Document” button to retrieve all the patent images at once."

Here's the procedure for downloading a full PDF copy of a U.S. patent:

1. Click on Full Text Images
2. Type the US Patent Number (e.g., 8,082,299) in the patent field
3. Click on the View Patent button
4. Click on the Full Pages button and see displayed PDF copy of US Patent No. 8,082,299 B2, Client-Side Caching of Pages with Changing Content

Copyright © 2013 Robert Moll. All rights reserved.

Manus Cooney - GAO Report Finds No NPE Patent Litigation Crisis & Patent System Has No Negative Impact on Innovation

On August 22, I posted GAO's Study - Assessing Factors That Affect Patent Infringement Litigation Could Help Improve Patent Quality. The GAO study contradicts reports of a non-practicing entity (NPE) patent litigation crisis:

• NPEs account for 20% of patent litigation; operational companies or practicing entities (e.g., Apple, Google, and Samsung) account for 80%
• Software patents account for 89% of patent litigation
• Patent lawsuits only slightly increased from 2000 to 2010
• The America Invents Act (AIA) requiring a separate suit for each defendant rather than allowing joinder of multiple defendants drives the 1/3 increase in post-AIA lawsuits since the AIA passed

Today, Manus Cooney's GAO Report Finds No NPE Patent Litigation Crisis in IP Watchdog gave some highlights of the GAO Report noting: "Just when Congress is gearing up to consider a package of patent reform initiatives aimed at dealing with abusive patent litigation, the U.S. General Accountability Office has released a much anticipated study of the 'consequences of litigation' by non-practicing entities as mandated by Section 34 of The America Invents Act (AIA). Given that Section 34’s language and directives could best be described as unenthusiastic towards licensing and the enforcement of patents, an objective reader of the GAO study cannot help but conclude that the GAO did not conduct or produce the sort of scornful report on the state of our patent system that large IT companies and patent-skeptics had hoped for. While the report is not a vindication for NPEs (far from it), it did not give patent critics what they hoped to get (i.e. an independent agency’s finding that patent litigation is exploding and that this increase in litigation is having a negative impact on innovation).  Quite the contrary."

Mr. Cooney sounds like a voice in the wilderness. But maybe he is right -- and the entire NPE patent litigation crisis is the handiwork of corporate lobbyists, not to say the US patent system is perfect, to steamroll more US patent law reform.
 
Copyright © 2013 Robert Moll. All rights reserved.

GAO's Study - Assessing Factors That Affect Patent Infringement Litigation Could Help Improve Patent Quality

On August 22, 2013, the U.S. Government Accountability Office (GAO) released a study entitled Assessing Factors That Affect Patent Infringement Litigation Could Help Improve Patent Quality.

Here's the highlights of the GAO study:

"From 2000 to 2010, the number of patent infringement lawsuits in the federal courts fluctuated slightly, and from 2010 to 2011, the number of such lawsuits increased by about a third. Some stakeholders GAO interviewed said that the increase in 2011 was most likely influenced by the anticipation of changes in the 2011 Leahy-Smith America Invents Act (AIA), which made several significant changes to the U.S. patent system, including limiting the number of defendants in a lawsuit, causing some plaintiffs that would have previously filed a single lawsuit with multiple defendants to break the lawsuit into multiple lawsuits. In addition, GAO's detailed analysis of a representative sample of 500 lawsuits from 2007 to 2011 shows that the number of overall defendants in patent infringement lawsuits increased by about 129 percent over this period. These data also show that companies that make products brought most of the lawsuits and that nonpracticing entities (NPE) brought about a fifth of all lawsuits. GAO's analysis of these data also found that lawsuits involving software-related patents accounted for about 89 percent of the increase in defendants over this period.

Stakeholders knowledgeable in patent litigation identified three key factors that likely contributed to many recent patent infringement lawsuits. First, several stakeholders GAO interviewed said that many such lawsuits are related to the prevalence of patents with unclear property rights; for example, several of these stakeholders noted that software-related patents often had overly broad or unclear claims or both. Second, some stakeholders said that the potential for large monetary awards from the courts, even for ideas that make only small contributions to a product, can be an incentive for patent owners to file infringement lawsuits. Third, several stakeholders said that the recognition by companies that patents are a more valuable asset than once assumed may have contributed to recent patent infringement lawsuits.

The judicial system is implementing new initiatives to improve the handling of patent cases in the federal courts, including (1) a patent pilot program, to encourage the enhancement of expertise in patent cases among district court judges, and (2) new rules in some federal court districts that are designed to reduce the time and expense of patent infringement litigation. Recent court decisions may also affect how monetary awards are calculated, among other things. Several stakeholders said that it is too early to tell what effect these initiatives will have on patent litigation.

The U.S. Patent and Trademark Office (PTO) has taken several recent actions that are likely to affect patent quality and litigation in the future, including agency initiatives and changes required by AIA. For example, in November 2011, PTO began working with the software industry to develop more uniform terminology for software-related patents. PTO officials said that they generally try to adapt to developments in patent law and industry to improve patent quality. However, the agency does not currently use information on patent litigation in initiating such actions; some PTO staff said that the types of patents involved in infringement litigation could be linked to PTO's internal data on the patent examination process, and a 2003 National Academies study showed that such analysis could be used to improve patent quality and examination by exposing patterns in the examination of patents that end up in court.

Why GAO Did This Study

Legal commentators, technology companies, Congress, and others have raised questions about patent infringement lawsuits by entities that own patents but do not make products. Such entities may include universities licensing patents developed by university research, companies focused on licensing patents they developed, or companies that buy patents from others for the purposes of asserting the patents for profit.

Section 34 of AIA mandated that GAO conduct a study on the consequences of patent litigation by NPEs. This report examines (1) the volume and characteristics of recent patent litigation activity; (2) views of stakeholders knowledgeable in patent litigation on key factors that have contributed to recent patent litigation; (3) what developments in the judicial system may affect patent litigation; and (4) what actions, if any, PTO has recently taken that may affect patent litigation in the future. GAO reviewed relevant laws, analyzed patent infringement litigation data from 2000 to 2011, and interviewed officials from PTO and knowledgeable stakeholders, including representatives of companies involved in patent litigation.

What GAO Recommends

GAO recommends that PTO consider examining trends in patent infringement litigation and consider linking this information to internal patent examination data to improve patent quality and examination. PTO commented on a draft of this report and agreed with key findings and this recommendation.

For more information, contact Frank Rusco at (202) 512-3841 or ruscof@gao.gov."

Copyright © 2013 Robert Moll. All rights reserved.

Professor Richard Epstein's Trolling for "Patent Trolls"

NYU Law School Professor Richard Epstein's article Trolling for "Patent Trolls" is a refreshing contrast to the recycled articles attacking patent assertion entities (PAEs).

The White House Task Force report (see post on White House plan) claims the patent system is seriously flawed and in need of prompt corrective action, but the article notes the report has quite the shaky foundation: (1) claiming only those practicing an invention can license or enforce patent rights; (2) relying on Bessen, Ford and Meurer's incomplete economic study; (3) assuming litigation abuse is a one-way street; (4) failing to recognize inventors opposed the America Invents Act that was so strongly supported by large corporations; and (5) assuming the high cost of patent litigation should not be addressed by changes to civil procedure (e.g., limiting discovery) affecting both parties.

Professor Epstein concludes the "President should back off his one-sided critique and work to create a more balanced and nuanced reform agenda of the patent system." Sage advice, but I am not sure the President and Congress are listening as it is time to do something (almost anything) to "kill the patent troll beast."

Copyright © 2013 Robert Moll. All rights reserved.

Use of Copyrighted Articles in Prosecuting Patent Applications is Fair Use

In American Institute of Physics v. Schwegman Lundberg & Woessner, the District Court of Minnesota recommended granting of summary judgment that use of copyrighted articles to prosecute patent applications is a fair use. Note fair use is a defense to a charge of copyright infringement. Section 107 of the 1976 Copyright Act, states four factors to consider if fair use exists: (1) the purpose of the accused use; (2) the nature of the copyrighted work; (3) the proportion of the whole work used; and (4) the effect of the use on the potential market for the copyrighted work.

The court stated the law firm’s purpose in copying the articles was to meet legal requirements of disclosing non-patent prior art to the USPTO. This contrasts with the copyright owner's primary purpose to publish research and discoveries to the scientific community. Although the whole work was used, the court found no evidence the use impacted the current or potential market of the copyrighted works. The court's opinion appears well reasoned, but the publisher may have too much at stake to not appeal. Because we don't know if this matter is resolved, patent attorneys may want to limit printing and copying of non-patent literature.

Copyright © 2013 Robert Moll. All rights reserved.

Bill Gates - American Inventor

Many would credit Steve Wozniak and Steve Jobs with bringing desktop computers to the world, but Bill Gates also deserves credit in establishing the PC industry. He has been such a fixture that I was initially surprised when he stepped back from his full-time role at Microsoft to establish the Bill and Melinda Gates Foundation. Sure it might help solve pressing issues like malaria, tuberculosis, and clean water in developing countries, but I was concerned if Microsoft would be the same after he stepped away in 2006. Well history shows when he resigned as Microsoft's CEO in 1999 Microsoft was a $600 billion company and today it is $270 billion. But then I realized who can criticize his desire to help others? Certainly it appears to be the right decision since the Gates Foundation has made real progress in addressing these problems.

Less known is Mr. Gates has also been inventor since leaving his day-to-day role at Microsoft, mostly working with friends at Intellectual Ventures. I find that hard to criticize, but one article has spun this as Bill Gates still helping known patent trolls obtain more patents. Does anyone think he is interested in helping a patent troll get more patents in his "spare" time? Couldn't we give him the benefit of a doubt that he is engaging in creative thinking on how to help the world in this context? For some the answer is yes and no, because they see every bit of news as supporting their presumptions.

Copyright © 2013 Robert Moll. All rights reserved.

ITC Excludes Samsung Products Infringing Apple Patents on August 9, 2013

On August 9, 2013, the ITC issued an order to exclude and a cease and desist order on the further importation, sale, and distribution of certain Samsung products because they infringe U.S. Patent No. 7,912,501, entitled, Audio I/O headset plug and plug detection circuitry, U.S. Patent No. 7,479,949 B2, entitled, Touch screen device, method, and graphical user interface for determining commands by applying heuristics.

It was not a complete sweep for Apple given the ITC found no infringement of Design Patent No. D618678 that relates to the appearance of the iPhone, Design Patent No. D558757 that relates to the appearance of the iPod Touch and iPad, and US Reissue Patent No. RE41922, entitled, Method and apparatus for providing translucent images on a computer display. The ITC also found U.S. Patent No. 7,789,697, entitled, Plug detection mechanisms invalid as anticipated by the prior art.

The order is stayed for 60 days pending President Obama's review. That review is likely to be politically charged in view of the Obama Administration's veto of Samsung exclusion order last week. Perhaps the prior Administrations were wise to not interfere with ITC over the last three decades. Now that the Obama Administration has taken on the rarified role of "second guessing" the ITC, others may be justified in guessing whether or not this has anything to do with Samsung's status as a foreign company.

Copyright © 2013 Robert Moll. All rights reserved.

US Design Patents - Increasing Value Today

Here's an interesting article that focuses on the increasing value of U.S. design patents in the mobile computing patent wars: Apple-Samsung dispute raises profile of design patent litigation.

Note Morgan Chu mentioned in the article is one of the most highly respected trial lawyers in the US today.

Copyright © 2013 Robert Moll. All rights reserved.

Innovatio's Wi-Fi Patent - Are We Infringing Tonight?

Some might say this case is not about innovation. That's right it's Innovatio! It's late so just a pointer: Chicago Lawyer article Wi-Fi case sheds light on patent trolls. Is it time to intervene and/or indemnify the countless Wi-Fi users?

Copyright © 2013 Robert Moll. All rights reserved.

Obama Administration Vetoes ITC's Ban of Older Apple iPhones and iPads

Today, the Obama Administration vetoed the International Trade Commission's (ITC) ban of Apple's infringement of Samsung's standard essential patent.

As background in June 2013, the ITC ordered a ban of AT& T's model of Apple's iPhone 3, iPhone 3GS, iPhone 4, the iPad 3G, and iPad 2 based on infringement of Samsung's U.S. Patent No. 7,706,348. Apple was faced with the ITC ban, an appeal to the Federal Circuit, or a request for the President to veto the ban. The last time a President vetoed an ITC order was in the 1980's so it seemed an appeal to the Federal Circuit was the likely next step.

However, U.S. Trade Representative Michael Froman decided to veto the ITC ban expressing the "concern that a ban on Apple's products would abuse Samsung's right to the essential patent, which involves encoding and decoding information on a CDMA cell phone network." Mr. Froman warned the ITC should carefully examine if a ban based on a standard essential patent serves the public interest before granting it. This is an unexpected setback for Samsung which now must seek a remedy in federal court.

For further details see Mr. Froman's letter explaining the decision and Older iPhones won't be banned as Obama Administration vetoes ITC decision.

Updated August 5: Obama administration may have overturned the ITC ban due to reasons presented in ITC commissioner Dean Pinkert's dissent. See CNN Money How the ITC forced a veto in the Samsung-Apple patent case. Also see FOSS Patents One ITC chief found Samsung to fail to offer Apple FRAND licensing terms to its UMTS patents.

Copyright © 2013 Robert Moll. All rights reserved.

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.

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.

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.

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.

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.

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.

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.

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: http://www.uspto.gov/patents/process/search/index.jsp"

The USPTO requests any questions or comments be emailed to GPSN@uspto.gov.

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.

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.

Raymond Niro's Why Bash Individual Inventor-Owned or Controlled Companies?

Raymond Niro's Why Bash Individual Inventor-Owned or Controlled Companies - Patent Troll on IP Watchdog is a fascinating account of the context for the first use of the term "patent troll."

Part of the story was familiar: Mr. Niro's client sues Intel for patent infringement then later adds a defamation claim in response to Intel calling it a patent extortionist in a newspaper which led Intel's Peter Detkin and his team to rename his client a patent troll.

Part of the story was less familiar: Intel fails in its attempt to use a corporate shell in a bankruptcy avoidance proceeding not to recover an asset (i.e., the patent) sold for less than fair market value for the creditors' sake, but to knock it out of the patent infringement suit filed against Intel.

Mr. Niro's makes a provocative claim that West Coast tech companies are funding the spate of academic papers bashing individual inventor owned or controlled companies as patent trolls. It seems possible, but I would like to see the evidence supporting this claim. In my mind academic papers should reflect what is best for the public not what is best for a well-funded special interest group, but as a lawyer I am not going to cast stones at companies funding others to advocate for certain legal viewpoints. At the same time, if an author receives funding, it seems fair to ask for disclosure of any funding source (no, naming a shell entity funding won't suffice) so readers can assess the nature of the article.

Copyright © 2013 Robert Moll. All rights reserved.

Patents And Trademarks Encourage New Technology (PATENT) Jobs Act to End Sequestration for USPTO in Fiscal Year 2013 and Exempt the USPTO from Sequestration in Fiscal Years 2014-2021

Here's a bit of good news for US patent applicants. Local Congressman Mike Honda (D-San Jose), Congresswoman Zoe Lofgren (D-San Jose) and Congresswoman Anna G. Eshoo (D-Palo Alto) have introduced the Patents And Trademarks Encourage New Technology (PATENT) Jobs Act that will end sequestration for the United States Patent and Trademark Office (USPTO) in Fiscal Year 2013 and exempt the USPTO from sequestration in Fiscal Years 2014-2021.

The PATENT Jobs Act would enable USPTO to access fees sequestered in Fiscal Year 2013, which would be otherwise untouchable. Budget sequestration is important to patent applicants because these federal budget cuts are expected to remove $150 million from the USPTO's fiscal budget in 2013. The bill is a response to a California delegation letter to the Commerce, Justice, and Science Appropriations Subcommittee asking for a fix to the problem of sequestration.

Apparently, sequestration has slowed the rate of patent grants in the last two months. At least Professor Crouch says, "With the sequester, the USPTO has slowed its operation somewhat over the past two months. As a result, fewer patents issued per week in May/June 2013 than in prior months. That Professor Crouch also predicted the Office is still on track to issue a record number of patents in 2013 -- an approximate 5% increase over 2012 shouldn't be taken as the gospel or obscure that sequestration has slowed the grant rate. Of course this matters because in May 2013, the USPTO patent dashboard stated that it had 596,159 patent applications in backlog that have not been examined. The bill sponsors state startups and innovators experience "a costly two-year wait for a patent to be issued."

Sequestration has delayed opening of the USPTO satellite offices. Congressman Mike Honda states without passage of the PATENT Jobs Act "the budget reduction effectively stops the agency from opening new, highly anticipated regional patent offices across the country, including the satellite office in Silicon Valley."

Congressman Mike Honda also said, "USPTO is funded entirely by fees paid to the agency, making it fundamentally different than other government spending. Congress intended for these fees to be used solely to carry out USPTO’s operations, not the government at large. Our bill will prevent the application of sequestration to USPTO fee revenue so that the Silicon Valley office can open as scheduled and USPTO can continue the progress that has been made on reducing the patent application backlog, which is vital for ensuring America’s economic competitiveness."

Congresswoman Zoe Lofgren noted, "It is very short-sighted to hold back the new products and cutting edge technologies that can grow our economy. Our bill is very simple and reaffirms a long held belief that inventors who pay fees should receive speedy services and patents for their inventions. The services and speed these new offices offer can make the difference for products to go from the drawing board to the marketplace faster, benefiting all of us with the growth and job creation that come with it."

Congresswoman Anna Eshoo said, "The U.S. Patent Office has been crucial to economic growth and innovation in America. Sequestering this self-funded agency is illogical and sets it up to fail. These cuts will exacerbate the patent backlog and stifle efforts to connect Silicon Valley innovators with a satellite patent office. Our legislation will enable USPTO to implement reforms and programs years in the making so that the agency can continue to foster the wealth of knowledge and innovation across America."

Congress should pass the PATENT Jobs Act to allow the USPTO to move forward without delay on establishing the permanent facility of the satellite office in Silicon Valley. During discussions leading up to passage of the America Invents Act (AIA) Congress emphasized how important it would be for the USPTO to keep its user fees to support its operations. I enjoy watching our local Congress act on this problem so let's see where it goes.

Copyright © 2013 Robert Moll. All rights reserved. 

Limelight Networks, Inc. v. Akamai Technologies, Inc. - US Supreme Court Calls for Solicitor General's Views on Petition for Certiorari on Joint Infringement Standard

Today, the U.S. Supreme Court issued a call for the views of the Solicitor General (CVSG) on whether or not to grant the petition for certiorari to consider the issue of joint infringement in Limelight Networks, Inc. v. Akamai Technologies, Inc. 

As background this case involves U.S. Patent No. 6,108,703 (the '703 patent), which relates to storing web pages at the content provider (web site) and storing their embedded objects at another domain closer to the client. This is one of inventor Daniel Lewins' contributions to the Web: store popular web pages at the web site so hits can be tracked, but store their embedded objects at domains closer to the browsers to reduce page latency.

Claim 19 of the '703 patent recites a content delivery service, comprising:

• replicating a set of page objects across a wide area network of content servers managed by a domain other than a content provider domain;
• for a given page normally served from the content provider domain, tagging the embedded objects of the page so that requests for the page objects resolve to the domain instead of the content provider domain;
• responsive to a request for the given page received at the content provider domain, serving the given page from the content provider domain; and
• serving at least one embedded object of the given page from a given content server in the domain instead of from the content provider domain.

Joint infringement arose in this case because direct infringement under 35 U.S.C. § 271(a) requires a single entity perform all of steps of the process claim. Limelight performed all the steps of claim 19 except for the step of "tagging the embedded objects of the page so that requests for the page objects resolve to the domain instead of the content provider domain," which it encouraged customers perform.

Perhaps Limelight thought given the law that it might escape infringement, because no single entity performed all of the steps as required for direct infringement under 35 U.S.C. § 271(a). In the past, liability for inducement of infringement 35 U.S.C. § 271(b) required a direct infringer. Nonetheless, Akamai successfully argued before the Federal Circuit that inducement did not require a direct infringer as long as a single entity induces the infringement such that all of the steps are performed by multiple entities.

So now the parties frame the issues this way: patent owners Akamai and MIT state the issue is whether a party may be liable for patent infringement under 35 U.S.C. § 271(a) or § 271(b) when two or more entities perform all of the steps of a process claim. Accused infringer Limelight Networks states the issue is whether the Federal Circuit erred in holding that a defendant may be held liable for inducing patent infringement under 35 U.S.C. § 271(b) even though no one has committed direct infringement under § 271(a).

The SCOTUS blog has more information at Limelight Networks, Inc. Akamai Technologies, Inc. and Akamai Technologies, Inc. v. Limelight Networks, Inc. regarding the proceedings, orders, and parties briefs. Also see Lisa McElroy of the SCOTUS blog for details on what a CVSG means in a non-US government case: "CVSG" in plain English

It's too early to say if the Supreme Court will hear this case, but if so, it will impact the value of US patents relating to distributed computing (e.g., cloud computing).

Copyright © 2013 Robert Moll. All rights reserved.

FTC Plan to Investigate Patent Trolls Confirmed

On June 20, The NY Times published an article F.T.C. Head Seeks End to Misuse of Patents confirming the FTC is planning to investigate patent assertion entities or pejoratively "patent trolls."

FTC chairwoman Edith Ramirez's stated: A Federal Trade Commission investigation into the practices of "patent trolls" is necessary because there is little real evidence about the costs and benefits of a rising tide of patent litigation. This insight strikes at the assumption that the rising tide of PAE lawsuits is damaging the economy.

Ms. Ramirez noted "Despite the rapid growth in the number of lawsuits filed by those patent-focused companies, regulators have little more than anecdotal evidence of how patent trolls affect business innovation and whether the patent-enforcement companies help to produce benefits that small companies could not enjoy on their own. We have a role to play in advancing a greater understanding of the impact of P.A.E. activity and using our enforcement authority where appropriate to curb anticompetitive and deceptive conduct."

Although this is framed as an investigation, PAE's should be prepared to articulate how they actually level the playing field for small entities and in the end benefit America. If they cannot, well life can be tough. On the other hand, if they do a good job stating the value, it could be FTC investigation will inform the American public that not all PAE are alike nor deserving of the same treatment.

Copyright © 2013 Robert Moll. All rights reserved.