IP News & Transactions

IP Matters – Even In A Down Economy!

An article found in the online edition of Black Enterprise provides an excellent discussion of why the business of intellectual property development continues to thrive even with the current slowdown in the world economy.  The article highlights the growing importance of IP assets to companies of every size, and discusses why smart companies are doubling their efforts to develop and utilize their IP assets even as their traditional businesses slow down.  (For those new to IP asset development, the article provides an excellent overview of the current state of global IP law and transactions.) 

The article may be found at http://www.blackenterprise.com/yb/ybopen.asp?section=ybaa&story_id=118487485&ID=blackenterprise.

New Kids on The Block (Big Kids…)

A blog entry recently posted by Larry Dignan of ZDNet discusses the latest and greatest entrant into the world of IP transactions.  Verizon, Google, Cisco, Ericsson and HP have formed a company with the innocuous name of “The Allied Security Trust,” with the purpose of purchasing existing patents to grant the company’s owners non-exclusive licenses to the purchased patents.  Allied would then turn around and sell the patents in hopes of generating revenue for the company.

 

Putting aside concerns about concentrating patent “power” in the hands of a few large tech giants, this development is relevant if for no other reason than Allied presenting itself as another large, well-monetized player in the world of patent transactions.  And we were just getting used to Intellectual Ventures…

 

Larry’s blog entry, and subsequent discussion, may be found at http://blogs.zdnet.com/BTL/?p=9209.

How An Auto Accident Could Change Patent Law

A recent article by Bloomberg News takes an interesting look at the machinations of the U.S. District Court for the Eastern District of Texas.  Specifically, the article discusses a recent decision by the Eastern District’s Judge T. John Ward to deny a change of venue motion by Volkswagen AG to move a case involving an auto accident wrongful death claim to the Eastern District.  Volkswagen has appealed Judge Ward’s decision to a Federal Court of Appeals in New Orleans, and a decision is now pending at the appellate level. 

 

Court observers are watching the case fairly closely to see whether a reversal of Judge Ward’s ruling could spell the beginning of a sea change as to the Eastern District’s dominance in adjudicating patent disputes, insofar as the Eastern District has been statistically stingy when it comes to granting change of venue motions to patent infringement defendants.  The Bloomberg article notes that while the national average for granted change in venue motions is approximately 48 percent, the Eastern District grants such motions at a rate of approximately 29 percent.  (The article also notes that patent infringement plaintiffs who go to trial with Judge Ward presiding win about 70 percent of the time, compared with national average of 23.5 percent.)

 

The article may be found at http://www.bloomberg.com/apps/news?pid=20601087&sid=aigxeYacQ3ls&refer=home.

China Patent Filings – Off the Chart!

China’s State Intellectual Property Office – or SIPO – recently reported that in 2007, nearly 700,000 patent applications were filed in China for the year.  This is an astounding amount of patent applications, easily making China the leading jurisdiction for patent filings in 2007.

SIPO also reported that in the specific area of design patents, of the 270,000 filed there, only 5% of these filings were made by non-Chinese companies.  This is slightly amazing, insofar as non-Chinese companies frequently complain about design infringement within China – yet apparently these same companies have done little to protect their designs under Chinese patent law.

Aside from the idea that China is beginning to find a path to technological leadership in the world (at least as measured by the number of filed patents), it’s also worth noting that as China is a member of the Patent Cooperation Treaty (PCT), it is more likely than not that many of these Chinese patent applications will find their way to the USPTO for United States examination.  If the PTO thinks it’s overwhelmed now, just wait…

Further info on patent developments in China may be found at http://www.ipfrontline.com/depts/article.asp?id=19059&deptid=5.

Clean Water Technology Patents – Next Stop for Compulsory Patent Licenses?

With the overall increase in world population, and the rising living standards in countries monikered as “emerging economies,” it should be no surprise that there is increasing demand for the simplest of all human needs – clean drinking water.  Most of us are aware of the global challenges presented by a lack of potable water, with these issues gaining increased attention by both the press and national governments.  (For an in-depth review of global water policy issues, the United Nations maintains an excellent web resource at http://www.un.org/issues/m-water.html.)

A very unscientific review of the USPTO database by your author revealed approximately 500 issued patents and patent applications relating to the narrow subject of water purification.  Considering all the technologies potentially relevant to the production and distribution of clean water – including those relating to non-water technologies, such as pipeline distribution and chemical distillation – the number of patents arguably relevant to the provision of clean water is potentially quite large.

Which brings us to the point of this note – is it possible that consumers of clean water would have to bear the cost of royalty payments for patented technologies that provide clean water?

There seems to be little online discussion regarding this point; but one has to wonder whether this is a possibility.  After all, most everyone agrees that demand for clean water will only increase over time; and most agree that our current approaches to providing clean water (collection of precipitation; groundwater) will, at some point, fail to provide an adequate amount of potable water for a global population that is living longer and demanding greater accommodation in terms of basic living needs.  The combination of all of these factors seems to suggest that clean water production technologies will be necessary to increase water availability, and as such these technologies, if patented, may become the subject of IP licensing programs.

This brings us to the question of compulsory licensing.  As discussed in a previous post, compulsory licenses are provisions within the patent laws of most nations that effectively allow a country to “issue” a license to patented technology with little or no royalty return to the patent holder, typically for reasons of public health and welfare.  Most of the activity surrounding compulsory licenses to date has been in relation to patents relating to pharmaceutical therapies, such as drugs intended to control HIV infection.  However, it does not seem to be much of a stretch to believe that governments who are responsible for providing for their citizens’ most basic needs may at some point begin to issue compulsory licenses for patents relating to clean water technologies.  Not much has been said or written on this topic, but your author does suspect this will become an important emerging issue in global IP law and management.

The State of the CAFC

On May 15 of this year, Judge Paul Michel of the CAFC provided a presentation regarding the "State of the Court" - that is, how things are currently going with the CAFC, the court most responsible for the direction of judicial decisions affecting patent law in the United States.  The presentation provides an interesting look into the operation and priorities of the CAFC; it may be found at http://www.cafc.uscourts.gov/pdf/State%20of%20the%20Court%205-08.pdf.

In Re Comiskey/In Re Nuijten – The Problem with Thoughts and Signals

For IP professionals who are responsible for overseeing development of their enterprise’s IP assets, in the realm of patent development the question often arises as to whether a particular idea or innovation is worthy of a patent application.  Aside from the basic prosecution questions of prior art and non-obviousness, a more fundamental question must be addressed: does the subject matter qualify under the relevant patent laws as a subject of patentability? 

One might conclude that the answer to this question is a fairly straightforward exercise; after all, the United States Patent Act provides patent protection for any “…process, machine, manufacture, or composition of matter…”  35 USC Section 101.   Patent case law within the United States (until recently) espoused a relatively broad view of what these words were intended to mean, with one court going so far as saying that “...anything under the sun that is made by man…”  is the subject of patentability.  (Diamond v. Chakrabarty, 447 U.S. 303, 309 (1980) (citing S. Rep. No. 1979, 82d Cong., 2d Sess., 5 (1952))).

Such exuberance put aside, the reality is that the courts have attempted – with questionable success – to maintain a consistent watchfulness over the metes and bounds of what constitutes patentable subject matter.  And one of the key limits that the courts have tried to maintain is the notion that a patent should not issue unless the innovation has some colorable connection to a tangible product or process.  Put another way, the idea cannot be a description of an abstract concept; it must be reduced to some sort of embodiment in a physically-tangible item.  There really is no rhyme or reason as to why this requirement must be followed under United States patent law, except for the fact that the PTO and courts must find some place to “draw the line” when it comes to granting patent applications – without this “tangibility” requirement, the PTO would arguably have to issue patents for abstract ideas of every kind and sort.

As noted above, for a period of time the Federal courts did seem to broadly construe these subject matter requirements – but most observers have concluded that this trend seems to be coming to a close for the time being.  The Bilski case (discussed in prior posts) reflects this apparently-emerging trend; but this is not the only recent case that reflects this trend.  Two CAFC cases decided in late 2007 speak to this trend.

In In Re Comiskey (499 F.3d 1365, 2007), the CAFC concurred that Comiskey’s proposed patent – a “method for mandatory arbitration” between parties – did not constitute proper subject matter for a patent, as it was purely a mental process without connection to any tangible process or machine. 

In In Re Nuijten (500 F.3d 1346, 2007), the CAFC rejected a patent application for an innovation that would allow a party to “watermark” a radio signal with an additional signal that was imperceptible to the recipient of the signal, but which could be analyzed by appropriate receiving software.  The CAFC found that the signal on its own was not suitable as a subject for patent, as the signal by itself did not have a sufficient connection to a tangible item.

There remains a great deal of controversy over these two cases - not so much that the cases as decided were right or wrong, but that the cases have contributed to greater inconsistency among existing CAFC decisions on the topic of subject matter patentability.  It seems more and more likely that at some point, the Supreme Court will need to weigh in to resolve the existing contradictions in case law on the “subject” of subject matter patentability.

For an excellent overview of the the Comiskey and Nuijten cases, take a look at http://www.mofo.com/news/updates/files/13227.html. 

“Worksharing” Versus Patent Reform – Are We Missing the Point?

Clearly, one of the most significant current topics within the United States IP community is the subject of “patent reform” – that is, proposed changes to the existing patent laws and regulations, intending to address a number of real – or imagined – flaws in the existing patent system.  Of the sundry ills called out by those in favor of broad patent reform, the increasing volume of patent filings with the USPTO is often cited as a key reason why reform is needed.  And certainly there are reforms being proposed that ostensibly try to address the increase in patent applications by more or less culling the number of applications – limitations on the number of patent claims, as well as the filing of “applicant quality submissions” (which I believe is code for “certification of disclosure of all prior art”) are both among the ideas that are under consideration as part of comprehensive patent reform.  The gist behind these 2 proposals seems to be that by reducing the number of patent applications, we will see improved “quality” in remaining patent applications.

To be sure, the IP community does face a challenge created by the increase in patent applications.  But do the two proposals described above really improve our patent filing system, or do they actually staunch disclosure of innovation?

An interesting series of articles by IP Frontline contributing author Harold Wegner suggests that patent reform currently under consideration within the United States misses the point when it comes to addressing the workload issues for the PTO caused by the current increase in patent applications.  Mr. Wegner discusses the idea of “worksharing” among patent granting authorities throughout the world as a way to alleviate the work burden that now exists at the USPTO.  In simplest terms, “worksharing” would involve the various patent offices of countries throughout the world working as a unified body to review patent applications, with the result being the granting of patent rights that would be valid on a worldwide basis.  Mr. Wegner’s articles discuss in excellent detail the existing challenges that a “worksharing” solution would have to solve – and he provides compelling ideas on how to solve these challenges to make “worksharing” viable.

Mr. Wegner’s ideas on “worksharing” to improve the patent filing system are compelling and creative – and perhaps a better approach to the problem of “patent reform” than those currently under consideration.

Mr. Wenger’s articles may be found at http://www.ipfrontline.com/depts/article.asp?id=16559&deptid=4 and http://www.ipfrontline.com/depts/article.asp?id=17966&deptid=5.

Why Does the ACLU Care About Patents?

As part of the Bilski case now pending before the CAFC, numerous parties have provided amicus briefs to the court relating to the questions posed in the case.  Most of these briefs have been submitted by the “usual suspects” – industry groups, the AIPLA, and the like.  However, one of the more interesting amicus briefs has been submitted by the American Civil Liberties Union (ACLU). The ACLU’s entry into the Bilski fray is predicated on the idea that Bilski involves “fundamental issues under the First Amendment” – that is, that granting the patent sought by Bilski would in effect be a violation of the freedom of speech as guaranteed by the First Amendment.  The ACLU’s rationale for this argument rests in the nature of the idea that Bilski intends to patent, which is a method of transaction between at least two parties relating to commodities pricing.  The ACLU argues that since the Bilski method is at its core a conversation between two parties to a transaction, that granting of the patent would be a restraint on free speech between the parties.

To be sure, current U.S. constitutional law makes fairly clear that the “freedom of speech” as posited by the First Amendment is not an absolute right – case law generally recognizes that “commercial” speech, as opposed to “political” speech, can be subject to any number of restrictions that are deemed reasonable by the government.  So it may well be that the ACLU’s argument in Bilski ends up being more of a quixotic adventure than anything else.  But the argument is nonetheless interesting, and perhaps demonstrates the broadening of interest in intellectual property matters for even those groups who would seem to have no obvious interest.  The brief may be found at http://www.aclu.org/pdfs/freespeech/in_re_bilski_aclu_amicus.pdf.

Banking & Financial Services - New Venues for IP Licensing, or Death by Bilski?

Traditionally, intellectual property development and management has been considered the bastion of “high-tech” companies – examples abound of firms in the semiconductor, telecom and pharmaceutical industries that maintain robust IP development and licensing programs.  While this remains more or less true today, increasingly firms outside of the traditional high-tech rubric are developing IP development and management programs of their own.  This is most apparent in the fields of banking and financial services.

Patent filings related to banking and financial services are nothing new; indeed, the CAFC’s opinion in State Street Bank v. Signature Financial Group (149 F.3d 1368 (Fed. Cir. 1998), which heralded the beginnings of business method patents, was based upon a patent filing disclosing a method to monitor and record financial information flows.  However, even with State Street, patent filings related to banking and financial management have remained at relatively low levels.  To some extent, this can be attributed to financial institutions’ traditional reliance on trade secret laws to protect their proprietary business processes.  But with the growing importance of intellectual property to all companies, financial institutions are becoming more and more attuned to the importance of patent filings, as well as other forms of registered IP rights.  An interesting article found at http://www.banktech.com/feed/showArticle.jhtml?articleID=206904966 discusses this trend.

The irony of this development is that just as financial institutions are gearing up to be more active in regard to patent filings, business method patents are at risk due to the Bilski case, now pending before the CAFC.  (For more information on the Bilski case, please refer to the prior post on this blog regarding Bilski.)  As such, Bilski may indeed be one of the most far-reaching CAFC rulings in some time, and certainly will be of interest to not just patent attorneys and agents, but also to a wide swath of industries looking to develop their own IP development and management programs.