IP News & Transactions

USPTO Performance and Accountability Report

The United States Patent & Trademark Office has just released the 2008 Performance and Accountability Report, which is the annual report explaining the activities of the Office during fiscal year 2008.  The report makes fairly clear that the USPTO is in need of help: as of the end of FY2008 there are 1,208,076 patent applications still pending at the Office.  This represents a 439% increase over the number of pending applications left over at the end of FY1997 (275,295).  Unfortunately, as patent applications continue to pile up the US patent system is plunging further and further into irrelevance, and that is not a good thing for our economy or for the future of innovation.  Hopefully, the Obama administration can pay some attention – at some point – to the care and feeding of the USPTO.

Small Business Patents and Their Importance

An excellent report recently released by the SBA Office of Advocacy (www.sba.gov/advo) discusses in detail the importance of small business innovation in the context of patent disclosure and development.  The report details the findings of a review of the patent development practices of 1,293 small firms.  2 findings were of particular note:

 

1)      Even adjusted for differences in size relative to larger companies, smaller firms with patent development strategies disclosed more patents per employee than larger companies within comparable industries.

2)      Most significantly, patents associated with smaller firms reflected a higher patent “quality,” when measured by citation impact, patent originality, and patent generality. On this point, the report states that these findings “…suggest[ ] that the patents of small firms in general are likely to be more technologically important than those of large firms…” Bad news for IBM, I suppose…

 

In short, the report provides an excellent basis for understanding why small and mid-size companies should actively pursue IP asset development and management strategies.

 

The report may be found in full at http://www.sba.gov/advo/research/rs335tot.pdf.

The Russians Are Coming…After Google!

An interesting article at PC Pro details a new lawsuit filed in Russia against Google. The lawsuit, filed by Russian search company Era Vodoleya (which means “The Age of Aquarius” in Russian…very 70’s!), alleges that Google’s search technologies infringe on several Russian patents held by Era Vodoleya relating to contextual advertising.  According to PC Pro, the plaintiff seeks approximately $2.2B in damages related to infringement by Google on the subject patents.

 

For multinational companies, this type of situation is a bit of a nightmare – as the patents and business at issue will be subject to the jurisdiction of the Russian judiciary system, there is a very high risk that Google would experience the “home-town effect” if it chooses to go to court – a euphemistic way of saying that as a large, corporate, non-Russian business, the courts there will find some way to hold Google liable for IP infringement, despite the objective merits of the lawsuit.  Perhaps for Google, this will be less of a “legal situation,” and more of a “business situation” – knowing that their chances of prevailing in a Russian court are slim, they would seek to negotiate some sort of license quickly with Era Vodoleya.  Barring that outcome, Google could decide to simply reduce or curtail its business in Russia, particularly if the value of the business to Google in Russia is comparable or less than the cost of settling with Era Vodoleya.  No matter what, your author does believe that this matter will sort itself out without a great deal of litigation.

 

That being said, for IP professionals who work for multinational firms, this situation is an interesting cautionary tale about exactly what protection your IP portfolio provides – and the protection it does not provide.

 

The PC pro article may be found at

http://www.pcpro.co.uk/news/234978/google-faces-massive-russian-lawsuit.html.

Bilski and the Value of Patents

As most IP professionals know, the Bilski decision has been recently issued by the CAFC.  Not surprisingly, there is no small amount of comment on the expected impact of the decision on patent jurisprudence.  (Provided below is a link to the actual decision.)

 

At the risk of piling on in terms of additional comment regarding Bilski, your author offers some random thoughts about what Bilski will mean to patent development and monetization, as follows:

 

1)      The decision raises the bar in terms of the threshold requirements for gaining a business method patent – or perhaps ANY type of patent - from the USPTO.  Bilski in some ways is an echo of the KSR case – through these cases, the CAFC is clearly signaling to the PTO that it is appropriate for patent applications to be scrutinized more closely, and rejected more often.

2)      It does not take much imagination to expect that in the wake of Bilski, at least in regard to business method patents, there will be a large wave of requests for reexamination, and potential invalidation. (It would seem logical that Google, Amazon, and a host of other internet companies holding business method patents are thinking about this possibility.)  Bilski also suggests that in the context of existing patent infringement litigation, courts will be more willing to grant reexamination requests, irrespective of what stage of litigation a patent infringement case may be.

3)      In terms of secondary market effect, your author has now heard (anecdotally) that bidders for patents are using the Bilski case as additional leverage to drive the prices of patents down, insofar as the buyer may “assume the risk” of buying an imperfect asset because of the risk of future reexamination.  This point would make sense in the context of business method patents; however, some buyers are apparently trying this tactic as to ANY patent, on the basis that ALL patents are now subject to higher reexam risk because of Bilski.

 

The text of the CAFC Bilski opinion may be found at http://www.cafc.uscourts.gov/opinions/07-1130.pdf.