Archive for the ‘Patent Reform’ Category

White House Executive Action on Patent System

February 20, 2014

ObamaToday, the White House released a FACT SHEET on executive action to strengthen the patent system and foster innovation.  A number of new initiatives are listed in the fact sheet by the administration:

  1. Promoting transparency with the proposed convoluted rule to identify the attributable owner of a patent or application.  It is questionable whether the PTO has the authority to make such a rule, as the courts have held that the PTO does not have substantive rule-making authority.
  2. The PTO has begun further training of patent examiners to help them better understand and examine applications that include functional claims, i.e., parts that are defined a function they perform instead of their structure.  The PTO also plans to launch a program to include glossaries in patent specifications to promote clarity.
  3. The PTO is launching an online toolkit to provide the public with information on patent litigation suits that are pending, as well as on specific patents.  This is intended to aid the public in understanding the risks and benefits of litigation.
  4. The PTO plans to expand the use of academic scholars to produce studies and collect data on patent issues, as well as to continue to expand the use of round table discussions with various members of the patent community.
  5. The White House proposes to strengthen enforcement of ITC exclusion orders.
  6. The White House proposes to continue to strengthen the Patents for Humanity program.
  7. The PTO is announcing a new initiative to use crowd sourcing for prior art to aid examiners.  Presumably, this would be similar to the peer-to-patent system.
  8. The PTO is requesting that technologists, engineers, and experts volunteer their time to aid in training patent examiners to stay up-to-date with the latest technologies.
  9. The PTO plans to increase its pro bono and pro se programs.

Finally, the administration is renewing the call to pass meaningful legislation to combat the problem of patent trolls.

On one hand, it is good to see that the White House recognizes that innovation and the patent system are vital to our economy and recognizes the importance of patents.  Past administrations ignored patents and appointed PTO leadership that knew nothing about the patent system.

On the other hand, the Obama Administration is seeking to make what should be a nonpartisan system political.  For one thing, what is the hold up on naming a new PTO director?  If the president is serious about the PTO, why not give the agency a permanent leader?  This seems to be more of his go-it-alone approach to governing.  A new director would require Senate confirmation.  It is hard to understand why that would be difficult (especially given the “nuclear” option that now only requires a majority vote).  The president seems to think that he is above dealing with Congress and so doesn’t even want to go through confirmation of a new PTO leader.

HT:  Hal Wegner.

Innovation Act Passes House

December 6, 2013

Yesterday, the House of Representatives passed the Innovation Act, H.R. 3309, by a vote of 325-91.  The bill now heads to the Senate where a similar bill, the Patent Transparency and Improvements Act, S. 1720, is currently pending.

Prior to passage by the House, several amendments were made to H.R. 3309.

The use of demand letters or notice to potential infringers has often been used to later establish claims of willful infringement.  Once the potential infringer is put on notice of the patent, continued infringement is alleged to be willful.  One amendment seeks to provide significantly greater requirements for such letters. A claimant seeking to establish willful infringement may not rely on evidence of pre-suit notification of infringement unless that notification identifies with particularity the asserted patent, identifies the product or process accused, identifies the ultimate parent entity of the claimant, and explains with particularity, to the extent possible following a reasonable investigation or inquiry, how the product or process infringes one or more claims of the patent.

The requirement to identify the “ultimate parent entity of the claimant” was added.

The provision to repeal 35 U.S.C. § 145 was deleted.  Section 145 permits applicants who are dissatisfied with a final PTO decision on the merits of a patent application to sue the PTO in district court to obtain the patent.  This section has nothing to do with patent trolls and should be taken up and debated in a separate bill.

A requirement for an economic study of the impact of the legislation on individuals and small businesses owned by women, veterans and minorities was also added.

Not surprisingly, this legislation is controversial.  Industry groups are lining up for and against the legislation.  One specific problem is that the PTO has not weighed in.  This is also not surprising given that the agency has been leaderless since David Kappos stepped down in January.  Acting Director Teresa Stanek Rea has also left the PTO last month.  Kappos testified against passage of the bill, but seems to carry much less weight since leaving the Office.

The PTO no longer has a Director or a Deputy Director.  What is the Administration waiting for to nominate new leaders for these positions?  Margaret (Peggy) Focarino has been delegated to undertake the leadership positions that have been vacated.

Patent News Update

September 27, 2013

There have been a number of patent-related news items making their rounds recently.

PTO to Stay Open in Event of Government Shut Down

Hal Wegner shared a memo from Acting PTO Director Teresa Rae to PTO employees that the agency will use its reserve funds to remain open for at least several weeks in the event of a government shut-down on Tuesday.

Dear Colleagues,

As you know, the Obama administration is working diligently with Congress to try to ensure that the federal government remains open and continues to do its work on behalf of the American people. However, I wanted to inform you that even in the event of a government shutdown on October 1, 2013, the United States Patent and Trademark Office will remain open, using prior year reserve fee collections to operate as usual for at least a few weeks. We continue to assess our fee collections compared to our operating requirements to determine how long we would be able to operate during a government shutdown; we will update you as more definitive information becomes available.

Because the USPTO maintains sufficient carryover funding from prior fiscal years, our agency can and will stay open for business for a period of time using these available reserves. During that time we will all continue to conduct our duties and serve our Nation, by processing the patent and trademark applications that drive our country’s innovative economy. Should we exhaust these reserve funds before the government shutdown comes to an end, USPTO would have to shut down at that time, although a very small staff would continue to work to accept new applications and maintain IT infrastructure, among other functions.

I realize you likely have many more questions. As new information becomes available, we will inform you promptly and thoroughly. Your respective business unit managers will also be reaching out to you to provide further clarification, as needed.

I thank you for your hard work, and the continuing dedication you demonstrate to the American people.

Sincerely,

Terry Rea

Congress Continues to Seek More Patent Reform

Patently-O has provided analysis and review of a patent reform bill discussion draft introduced by House Judiciary Chair Bob Goodlatte (R-VA).  The purpose of the bill, according to Rep. Goodlatte is to end “[a]busive patent litigation” specifically by “patent trolls.”

The bill would repeal the right of a civil action against the PTO to obtain a patent, substantially narrow the estoppel provisions of post-grant review, require the PTO to construe patent claims as a court would during post-grant and inter partes proceedings, codify obviousness-type double patenting, expand the scope of covered business methods for review, eliminate patent term extension after the filing of an RCE, and overturn the Supreme Court decision that patent malpractice suits belong in state court.

Other provisions in Rep. Goodlatte’s bill are similar to other bills seeking to reduce patent litigation abuse and patent troll tactics.  The bill would raise patent infringement pleading requirements, require the award of attorneys’ fees to prevailing parties (and against all interested parties), limit discovery prior to a court’s claim construction ruling, require companies asserting patents to disclose all interested parties, require courts to stay infringement suits against customers until suits against manufacturers are resolved, and protect creditor-licensees from foreign bankruptcies by IP owners.

Supreme Court Patent Cases

The Supreme Court’s October 2013 Term begins Monday, October 7.  The Court is scheduled to hear oral arguments in Medtronic v. Boston Scientific Corp. on November 5.  The question that Court will consider in that case is whether a declaratory judgment plaintiff has the burden to prove non-infringement against a patent owner.  The Federal Circuit ruled that the DJ plaintiff does bear the burden of proof.

The Court is considering or will consider petitions in a number of other patent cases as well.

Akamai v. Limelight.  The Court issued a CVSG order in this case in June where it asked for the views of the Solicitor General as to whether it should hear this case.  Akamai concerns multi-party infringement where more than one party completes all of the steps required in a patent claim.  The issues relate to both direct infringement and indirect infringement (inducement or contributory infringement).

Alice v. CLS Bank.  An en banc Federal Circuit could not garner a majority to determine whether the computer-related claims in this case were patent eligible subject matter.  A plurality of the court affirmed the district court’s holding that they were not.

WildTangent v. Ultramercial.  The Federal Circuit has twice held that the internet monetization claims in this case do constitute patent eligible subject matter.  The Supreme Court had earlier asked the Federal Circuit to reconsider its opinion in light of the Mayo v. Prometheus decision.

GAO Report Finds Patent Trolls are Not the Problem With Litigation

August 26, 2013

Last week, the General Accounting Office (GAO) provided a report that was requested by Congress on patent litigation in the US.

The report found that the number of patent lawsuits was fairly steady from 2000 to 2010 and increased by about a third in 2011.  Most stakeholders opined that this increase was due to the impending passage of the America Invents Act that significantly changed the patent system, including the fact that multiple defendants could no longer be easily joined into a single lawsuit.

The number of defendants in such lawsuits increased by 129% from 2007 to 2011.  Only about 19% of the lawsuits were brought by non-practicing entities (patent trolls), but about 89% of the increase in defendants were involved in lawsuits encompassing software-related patents.

While Congress had anticipated that reports such as this would confirm its hysteria related to patent trolls, this turned out not to be the case at all.  The increase in litigation by patent trolls (called Patent Monetization Entities) was considered to be not statistically significant.

GAO FIG

The question remains of where these non-practicing entities get their patents.  The report indicates that it is as would be expected.  They acquired the patents from a variety of sellers, including universities, individual inventors, failed companies, or operating companies.  Some acquired their own patents from the PTO with minimal R&D efforts, some previously produced patented products but now simply asserted the patents, and some sued on behalf of individual inventors who lack the resources to bring their own lawsuits.

Instead, the report seemed to focus on patent quality.  The PTO needs to pay more attention to trends in patent litigation, including the increase in software-related litigation where the claims seem to be overly broad and difficult to determine the scope.  Terminology in many patents is unclear and many entities do not understand what a patent claims.

The report also noted several other reasons for increasing patent litigation.  There is a perception that damage awards can also be disproportionately high compared to the actual contribution of the patent to a product as a whole.  Companies are also beginning to understand that patents are more valuable than previously thought.

PTO Initiatives

The report credited several PTO initiatives to address perceived problems with patent quality.  First, the PTO has implemented guidelines and training to assist examiners with understanding claim definiteness.  The PTO is working to implement more consistent terminology in software-related patents.  Updates to the patent classification system, including attempts to harmonize with Europe should improve patent searching and planning.  New PTO initiatives should provide greater transparency in patent ownership.  These are in addition to the PTO’s attempts to improve patent quality by testing and review.  New post-grant review procedures under the AIA should also aid in patent quality.

Conclusion

The report concludes that, while the focus of patent litigation discussion has been on non-practicing entities, this focus is not necessarily appropriate.  The real increase is in lawsuits involving software-related patents. regardless of who is asserting the patents, whether practicing or non-practicing.

Critics of the report are, of course, dismissing it as not addressing the issues that Congress requested.  Hopefully, the report will be used by Congress as it debates (or not) some of the bills regarding patent litigation that are currently pending in that body.  Some of these bills seek to shift fees, limit discovery, or similar items.

The AIA was passed as a bellweather tremendous change and improvement in the patent system.  The AIA, however, does little to address the real issues surrounding the patent system:  patent quality and patent pendency.  These issues require improvements at the PTO.  The agency has done what it can, but it really needs additional resources.  As long as Congress continues to steal or sequester money from the PTO, improvement there will be difficult.

What is a Business Method Patent?

April 1, 2013

The America Invents Act set up a transitional program for reexamination of business method patents.  These patents can be challenged on prior art grounds of novelty and non-obviousness, but also on grounds that they are not directed to patentable subject matter.  So, what exactly is a business method patent?

Section 18 of the America Invents Act is a special transition program for challenging business method patents. The section defines “business method patents” as

a patent that claims a method or corresponding apparatus for performing data processing or other operations used in the practice, administration, or management of a financial product or service, except that the term does not include patents for technological inventions.

The law directed the PTO to issue regulations as to what a “technological invention” is. The PTO has proposed a definition:

whether the claimed subject matter as a whole recites a technological feature that is novel and unobvious over the prior art; and solves a technical problem using a technical solution.

This determination is to be made on a case-by-case basis. The PTO supports this definition by reference to the legislative history of the AIA. Unfortunately, this does not help very much. What is a “technical problem”?  What is a “technical solution”?

Versata v. USPTO

Given these extremely broad and imprecise definitions, it comes as no surprise that it will need to be settled by the courts.  IP360 (subscription service) is reporting that Versata Software, Inc. has sued the PTO and is arguing that the PTO’s definition suggests that any patent related to money falls within the program.  The statute, by contrast, indicates that only patents related to “financial products or services” should be covered by the program.

Versata’s competitor, SAP America Inc., filed a petition in September to have Versata’s U.S. Patent No. 6,553,350 reviewed.  A $391 million infringement verdict had been awarded to Versata based on SAP’s infringement of the patent.

In January, the Patent Trial and Appeal Board rejected Versata’s arguments.  “We do not interpret the statute as requiring the literal recitation of the terms ‘financial products or services.  The term ‘financial’ is an adjective that simply means relating to monetary matters.”  The Board has set an April 17 hearing date for the case.

Do the claims of the ’350 patent fall within the definition set forth in the statute?  Several representative claims from the patent:

1. A method for determining a price of a product offered to a purchasing organization comprising: identifying one or more organizational groups, Within a hierarchy of organizational groups, of which the purchasing organization is a member, wherein pricing information is (i) stored in a data source and (II) associated with one or more of the organizational groups; retrieving from the data source the pricing information applicable to the one or more identified organizational groups; identifying one or more product groups, within a hierarchy of product groups, of which the product is a member, wherein pricing information is (i) stored in a data source and (ii) associated with one or more of the product groups; retrieving from the data source the pricing information applicable to the one or more identified product groups; sorting the retrieved pricing information applicable to the one or more identified organizational groups and the one or more identified product groups according to pricing types, the hierarchy of product groups and the hierarchy of organizational groups; and eliminating any of the pricing information that is less restrictive for the same pricing type; and determining the price of the product using the sorted pricing information that is not eliminated.

29. An apparatus for determining a price of a product offered to a purchasing organization comprising: a processor; a memory coupled to the processor, wherein the memory includes computer program instructions capable of: retrieving from a data source pricing information that is (i) applicable to the purchasing organization and (ii) from one or more identified organizational groups, within a hierarchy of organizational groups, of which the purchasing organization is a member; retrieving from the data source pricing information that is (i) applicable to the product and (ii) from one or more identified product groups, within a hierarchy of product groups, of which the product is a member; and receiving the price of the product determined using pricing information applicable to the one or more identified organizational groups and the one or more identified product groups according to the hierarchy of product groups and the hierarchy of organizational groups.

Beware of Public Disclosure

March 18, 2013

The United States patent system is now officially First-to-File.

A new website was brought to my attention of the weekend:  First to Disclose.  The website indicates that it is a “community-powered” site that was created by members of the Brooklyn Law Incubator & Policy Clinic at Brooklyn Law School.  The purpose of the website is stated as follows:

[to] provide[] inventors of all kinds an easy-to-use, fast and effective method by which to publicly disclose their inventions. Under certain circumstances, such disclosures can help secure the inventor’s patent rights.

The site suggests that such disclosure will keep larger inventors or companies from winning the race to the Patent Office by permitting smaller inventors to disclose their inventions on the site.  This disclosure will even start the one year grace period permitted under US law.

As I have previously warned, DO NOT RELY ON THE PUBLIC DISCLOSURE PROVISIONS OF THE AIA.  If you are merely trying to keep another party from getting a patent, then by all means disclose your invention.  If you want to get your own patent, there are simply too many risks associated with public disclosure prior to filing a patent application.

Foreign rights may be irrevocably lost.  This is not a change under the AIA, but should continue to be a significant consideration.  Public disclosure does NOT protect obvious variants of the invention.  If a third party files or discloses an obvious variant of your invention before you file your application, you will not be able to get a patent on the invention.  This point can hardly be stressed enough.

The best advice I can give for the new regime is:  file early and file often.

America Invents Act – Secret Prior Art

March 11, 2013

When the America Invents Act is fully implemented on Saturday, the scope of prior art will be greatly expanded, even beyond prior art in the rest of the world.

In Europe and the majority of the rest of the world, the universe of “prior art” that may be used to show that an invention is obvious or does not possess inventive step is closed as of the filing date of the application.  This means that anything that has published or any public activity or disclosure that would render the invention obvious is known as of the filing date.  And the EPO only uses European applications in this regard.  The America Invents Act, by contrast, will use applications filed anywhere in the world.

Patent applications are generally published 18 months after their earliest priority date.  This means that there is an 18 month delay between the time that an application is filed and the time its contents become available and known to the public.  During this intervening time, the application is held by the patent office in secrecy.

Once a patent application is published or issues, it becomes prior art as of its filing date.  Thus, an application that was secret for 18 months suddenly becomes prior art as of 18 months ago.  This can be a problem for patent applications filed during the 18 month interval when the application is kept secret.

In most countries, the application is only prior art for novelty or anticipation purposes.  It is only prior art if the published application contains disclosure that it identical and anticipates the later-filed application.  In the US, by contrast, the published application can also be prior art for obviousness purposes, such as when combined with another reference.  This is the problem of “secret prior art.”

Under the America Invents Act, the secret prior art may only be disqualified if it is the inventor’s own disclosure or a disclosure from someone who obtained the subject matter from the inventor.  This is the reduction of the grace period which currently applies to any inventor and third party activity, but will be reduced by the America Invents Act to only inventor activity during the year prior to patent application filing.  Thus, the America Invents Act expands secret prior art beyond current US law which is already more extensive than other countries.

If one of the avowed reasons for the change in law is to harmonize US law with other countries, this amendment actually moves US law farther away rather than closer to them.

What Grace Period? Another Reason to File by March 16

February 25, 2013

The deadline for the transition of the US patent system from first-to-invent to first-to-file is fast approaching.  This change is significant and will result in applicants not being permitted to swear behind or prove prior invention of prior art references cited against applications filed after March 16 with claims that don’t have support in an earlier application.

There is, however, another significant reason to file by March 16.  The grace period is being significantly curtailed.

In the US, applicants have typically had a year to file a patent application after first public use or sale.  They could also pre-date prior art used in obviousness rejections that relied on prior art dated within a year of their application’s filing date.  This is changing.

Disclosure v. Public Use or Sale

While the PTO and a number of others argue that applicants will retain the ability to publicly use or disclose their inventions or offer them for sale for a year prior to filing a patent application, until the courts (read:  Federal Circuit) rule on the difference between a disclosure and a public use or sale, it would be risky for applicants to rely on the grace period.  The new law seems to literally protect disclosures, but not public uses or sales.  The courts (including the Supreme Court) have previously ruled that there is a difference between these activities.

Third Party Disclosures/Derivations

Perhaps just as importantly, the PTO has issued guidelines that indicate that there is no grace period for third party disclosures that pre-date an application’s filing that are obvious variants of the claimed invention.  There are several implications of this issue.

First, as seems to be intended by Congress, applicants cannot file patent applications that are obvious variations of inventions on which third parties have already filed.  Under current law (pre-March 16), if the applicant could prove an earlier invention date, it does not matter if the invention is obvious in light of the third party’s prior filing.

Second, this is a significant limitation of the grace period.  Under the letter of the new law, applicants can still publicly disclose their inventions and then file an application within a year.  Their own disclosures are not prior art.  If a third party sees that disclosure, however, and files a patent application that is not exactly what was disclosed by the applicant, but is instead an obvious variation of that disclosure, there is no grace period for the third party’s filing.  The applicant’s claims will be rejected as being obvious over the third party’s earlier filing.

It does not matter whether the third party “derived” the invention from the inventor or not.  Derivation protection only applies for identical disclosures.

What to Do

Until this situation is resolved and clarified (and perhaps even after depending on the results), applicants would do well to assume there is no longer an effective grace period in the US.  They should at least file a provisional application prior to any public use, sale, or disclosure.

HT:  Hal Wegner has been writing on this issue.

Obama Says AIA Only Went About Halfway on Patent Reform

February 19, 2013

ObamaLast week, President Obama appeared on Google + Hangout to review topics he covered in his State of the Union address.  One big topic that he addressed was the need for more patent reform.

Specifically, he castigated patent trolls.  They don’t actually produce anything, but are “just trying to essentially leverage and hijack somebody else’s idea and see if they can extort some money out of them.”

He called on Congress to pass additional patent reform legislation.  The AIA “only went about halfway to where we need to go.”  He called for involvement from more stakeholders to build consensus on “smarter” patent laws.

The president also addressed internet issues such as privacy and civil liberties and also called for high schools to become more “high tech.”  He did recognize the need for IP laws to promote innovation.

PTO Proposes New Fee Schedule

September 5, 2012

Utilizing its new power to set its own fees, the PTO has proposed a new fee schedule for implementation in 2013:  http://www.uspto.gov/aia_implementation/Proposed_Fee_Schedule.pdf

The proposed schedule shows significant fee increases.  The current filing, search, examination fee for utility applications would increase from $1,250/625 (380+620+250) to $1,600/800 (280+600+720), a 28% increase. 

Excess independent claim fees will shoot up from $250/125 to $420/210 (68%).

Requests for Continued Examination increase from $930/465 to $1,200/600 for the first and $1,700/850 for subsequent requests.

Fees for appeals will increase dramatically.  The PTO proposes to eliminate the fee for filing an appeal brief, but replace it with a $2,000/1,000 fee for “Forwarding Appeal to Board.”  The total fee would increase from $1,240/620 to $3,000/1,500 (142%).

The PTO bases its fee propoals on the amount of time and work required by PTO personnel.  Explain the huge maintenance fee increases from $8,710/4,355 to $12,600/6,300 (45%).

The only fee the PTO proposes to reduce is the issue fee from $1,740/870 to $960/480 for utility patents.  The PTO has also proposed eliminating the current publication fee.

The proposal also includes a new $120 annual fee for registered patent attorneys and agents.

The details are available at the link above.  Additional analysis comparing the current with the proposed fees is available here.

Comments on the proposed fee schedule will be accepted through early November.


Follow

Get every new post delivered to your Inbox.

Join 56 other followers