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    Patent Reform Makes a Comeback

    Patent Reform Makes a Comeback

    Innovation over litigation

    Last year, the push for patent reform hit a roadblock in Congress when then-Senate Majority Leader Harry Reid refused to bring the Patent Abuse Reduction Act to the floor for a vote. In the war between industry advocates and trial lawyers, Reid chose the trial lawyers, and the patent trolls were off the hook.

    The new Republican majority is looking to break that pattern of obstruction.

    A new iteration of patent reform legislation is currently making its way through the Senate. A bill introduced on Wednesday would target firms that make their money not via innovation, but by filing bogus lawsuits against the innovators under the guise of protecting intellectual property. The bill, which is a product of negotiations between both parties, would place restrictions on “demand letters” sent by firms, end the practice of using shell corporations to hide who owns (or “owns”) a patent, and shift the responsibility for paying court costs if the suit is not “objectively reasonable.”

    Patent reform is one of those unicorn-type issues that has bipartisan support, even if its backers sometimes disagree on the specifics.

    Via The Hill:

    Sen. Charles Schumer (D-N.Y.), who was involved in negotiations over the new legislation, said the bill “shifts the legal burden back onto those who would abuse the patent system in order to make a quick buck.”

    “I’m hopeful we can move quickly and in a bipartisan way to get this bill passed in committee and on the Senate floor this summer,” he said. A hearing on the bill is already in the works.

    The other lawmakers involved in drafting the bill were Sen. John Cornyn (R-Texas), Judiciary Committee Chairman Chuck Grassley (R-

    Iowa) and ranking member Patrick Leahy (D-Vt.). The bill also has the support of other panel members, including Sens. Orrin Hatch (R-Utah), Mike Lee (R-Utah) and Amy Klobuchar (D-Minn.).

    “As I look at the assembled people on the platform today, this is as close as you get to legislative shock and awe,” Cornyn said about the bipartisan co-sponsors.

    The bill is backed by many powerful economic and trade organizations, but is still the target of attacks from trial lawyers and others who stand to profit from patent trolling.

    This isn’t the first time Congress has attempted to stop patent trolls in their tracks—but firms have found their way around regulations:

    The 2011 law prohibited patent holders from filing dozens of suits at once. But otherwise, it did not do much about trolls. The major Silicon Valley companies, who are major targets of patent trolls, were dissatisfied.

    Since then, patent suits have risen sharply. And there were new tactics by some of the most aggressive firms. They began filing demand letters with nontech companies, including retailers, hotels and restaurants. The allegations included the claim that some feature on their websites, usually involving software they bought from a technology supplier, violated some patent.

    “Those stories resonated,” said Aaron Cooper, a lawyer at Covington & Burling and a former chief counsel for intellectual property in the Senate Judiciary Committee. “Now, it wasn’t just companies in Silicon Valley. It was companies in every state.”

    James Bessen, a patent expert at Boston University Law School, said, “The litigation problem got worse, and it spread into mainstream America. That’s why we’re seeing this now, only four years after we had major patent reform legislation.”

    The patent trolls are just as inventive as the people they target; I don’t expect this bill to be a poison pill, but it does stand to close loopholes. We’ll keep you updated as the bill moves through Congress.


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    MouseTheLuckyDog | May 4, 2015 at 11:52 pm

    Sadly, this will probably break more then it fixes.
    SCOTUS has done more to fix patents with Bilski, Prometheus and Alice. along with the forced retirement of Rader.

    The best thing that COngress could do is modify the patent process so that it simplifies the process for good patents, but weeds out more p[atents, especially really bad patents.

      Bruce Hayden in reply to MouseTheLuckyDog. | May 6, 2015 at 5:02 am

      I will respectfully disagree, esp. when it comes to Alice. It has essentially put into serious question most software patent applications. Entire art units are issuing essentially no patents right now, having to reject all of them as being drawn to nonstatutory subject matter. Except that the Supreme Court again failed to explain what it meant by “abstract”, and failed to explain why billions, if not trillions, of dollars of R&D shouldn’t be patentable, because it is closer (according to the Supreme Court) to mathematical equations and laws of nature than electrical circuitry. And they completely ignored the question we asked about black boxes – how does their ruling handle the situation where a patent claims functionality in a black box, which could be implemented in custom circuitry, by a processor executing code in memory, etc?

      The drafters of the 1952 patent act which gave us the current version of 35 USC 101 (statutory subject matter) would have been appalled at the Alice decision. How do we know that? Because one of them, Judge Giles Rich, made this clear, in any number of decisions he authored in this area, both for the CCPA and then the Federal Circuit. The intent was to make essentially anything under the sun patentable. And, yes, the Supreme Court has picked that up – but then ignored it, when stuck on the Benson line of cases, decided by Justices born in the 19th Century, when software was still young, and computers were found in large glass rooms. The laws of nature/mathematical equation/algorithm/abstract idea exception(s) is judge made law, mostly devoid of statutory basis. Sure, E=MCC shouldn’t be patentable, since it is a law of nature. BUT, is the software project that cost many millions to develop closer to that, or to other inventions, and, esp. to the electronics that can often be used to solve the same problems? It would have been nice if even one Justice had had a scientific/engineering background or degree. But, none do, and, as a result, we got the Alice decision a year ago.

        jhkrischel in reply to Bruce Hayden. | May 6, 2015 at 7:43 pm

        As a technical guy, let me make clear that software should be protected by copyright (you can’t steal my source code and use it directly), not patent (you can’t implement some function in code, or some defined public API). The insanity around technological patent wars between giants comes most directly from *not* implementing it this way.

        If anything, Alice is moving in the right direction, but not fast or firmly enough. There should be no software patents, ever. There should be no business process patents, ever. These are clearly abstract ideas, and the vast amount (if not 100%) of the effort that goes into software is about *implementation*, not invention.

        I think one of the larger, more philosophical problems we run into here, is the issue of independent discovery, though – as the world’s population has grown, and access to the tools of technology has increased, it’s hard to justify using patent law to punish someone who honestly and independently invented the same thing. One could almost make the claim that the fact of independent invention should immediately invalidate a patent as “obvious”, but again, the population growth means what might have never occurred in the 1900s, is actually quite common in the 2000s.

      Bruce Hayden in reply to MouseTheLuckyDog. | May 6, 2015 at 5:08 am

      Everyone wants what you want with the patent office. BUT, the reality is that it is unlikely. Why? Too many people have too much skin in the game. Too many stake holders. You have unionized government employees examining the patent applications. You have huge companies (e.g. traditionally IBM) that make billions on their patent portfolios, while others (e.g. Google) spend many millions on licensing technology that they did not invent. You have venture capitalists who use patents and patent applications as security when providing money to start ups. And, this isn’t just national – the U.S. has entered into patent treaties with most of the countries in the world.

    Estragon | May 5, 2015 at 1:43 am

    The first thing we should ALWAYS remember is that the reason the United States essentially created effective intellectual property law in the first place was to bring MORE inventions and literature and art into the public domain by giving the inventors/authors/artists a defined period of exclusive rights.

    The most egregious case of abuse of the principle is Disney, whose campaign contributions have extended the copyright on cartoons almost indefinitely. The artist died almost 50 years ago. It’s a perversion of the constitutional protection.

      Bruce Hayden in reply to Estragon. | May 6, 2015 at 4:19 am

      Can’t deny that. Know one of the guys who wrote it – the Mickey Mouse/Sony Bono Copyright Term Extension Act (or something like that). And, even he, I think, is at times embarrassed.

      The theory that I have always used against it, is that that extension did not increase the incentive to create, since we are talking the net present value of 20 years of extension 80 or so years down the road, which is a percent or two (haven’t done the calculations in a decade or so). BUT, those who already owned copyrights to valuable creative works (like Disney) got a freeby of all that new copyright term (and corresponding royalties) so many decades after creation (actually, they should probably net the millions in additional royalties against the lobbying cost of passing the legislation).

    PersonFromPorlock | May 5, 2015 at 6:48 pm

    As a frustrated ‘garage inventor’, let me make a few observations:

    1. For most Americans, there is no patent system: we just don’t have ten or twenty thousand dollars lying around to finance an application for a patent that may never issue, and that in any case amounts to a license to try to outspend General Motors in court.

    2. The patent laws as they’re written are almost certainly unconstitutional, in that they completely fail “To promote the Progress of Science and useful Arts, by securing for limited Times to … Inventors the exclusive Right to their … Discoveries” for almost all Americans.

    3. Here is a suggestion: issue a patent immediately an application is made, and publish the application on line, on an official website that takes comments. At that point, the inventor is free to sell or assign the patent to anyone who wants it: in the real world, Internet kibitzers will immediately chime in with ‘it won’t work’ and ‘it’s been done’ comments, and any sensible would-be buyer or licensee will sit tight until the chorus has had its say. After a year or two, the patent will have been thoroughly vetted for originality and workability: genuine inventions will survive, old and impractical ones will fall by the wayside. The surviving patents will have economic value, the useless ones will become scrap paper.

    Nothing in this process would keep a company from patenting an invention for its own internal use.

    Making issuance the first step in determining the validity of a patent turns things on their head, but also speeds them up and lowers costs, while subjecting the invention to no less searching an examination on its way to market than it presently gets. The object of patent law is to secure rights to the invention to the inventor, and that can expeditiously be done in advance of determining if those rights are actually worth anything.

      Bruce Hayden in reply to PersonFromPorlock. | May 6, 2015 at 4:42 am

      1. I feel your pain. Though if you are paying that $20k for most inventions, you are getting ripped off. You are most likely paying for fancy offices and overhead. I think that $10k for most applications, and maybe that again during prosecution, is probably more reasonable.

      That said, I think that you need to ask yourself very carefully why you want a patent. For some, it is ego. And, you can hopefully put a price tag on that. For many though, if you don’t have a good business plan, it doesn’t make sense. For some though, it does, and those are primarily, in my mind, people who are either using their patents and patent applications as essentially collateral to raise money (e.g. from venture capitalists, etc.) or expect that the people that they are selling their invention to might think of ripping them off. But note that everyone seems to think that they will be able to do that, selling their invention to industry, and most can’t get to first base. And, yes, there are those who are trying to piggyback on someone else’s work.

      The thing that does help with either funding or taking your invention to industry (with that same proviso) is the use of provisional patent applications. They are not nearly as formal, don’t need much in terms of claims, can be done fairly quickly, etc. You have a year to file a utility application, and very often, you know whether you have a good chance at success by then. But, don’t go to, or whomever George Foreman is fronting for, if you are going to do it yourself. Better probably is to buy and read “Patent It Yourself” by David Pressman. And, then after the year, go to a licensed patent attorney or agent if your invention still looks good.

      2. I think you are going to lose on the unconstitutionality. The Supreme Court was fine with the Mickey Mouse copyright term extension act, which essentially rewarded Disney, etc. without any quid pro quo on Disney’s part, which arguably violated the same clause. 100 years is still considered a limited number of years. Point is that the courts defer a lot to Congress in this area, and expect that they would here too.

      3. Your scheme might work. Except, maybe, that most people just don’t care that much about most inventions, and most patents/patent applications. A lot of pretty silly inventions out there. Would enough people spend enough time and effort reviewing all of the pending applications? I have my serious doubts. And, yes, there is a patent industrial complex, that includes patent attorneys, a government agency (with its thousands of unionized government employees), and industry, esp. large companies that mostly like how things currently are.

        PersonFromPorlock in reply to Bruce Hayden. | May 6, 2015 at 1:51 pm

        My inventions are so modest (e.g., an improvement to a lawn tractor) that my desire is mainly to be able to approach existing manufacturers with them, in hopes of getting some payback for their being incorporated into existing product lines. However, this is no longer possible, because of the patent troll problem. Manufacturers simply will not talk to you unless you have at least an application in, if then.

        I don’t worry a lot about having ideas stolen, at least by American companies, because I don’t think most of them have the initiative to steal.

        I think I might be on better grounds on the constitutional issue than you do, because the ‘first to file’ standard leaves ‘the inventor’ right out of it. And that aside, the practical unavailability of the patent system to most inventors (because of cost) means that it doesn’t meet the standard set forth for it in the Constitution. ‘Some inventors’ is not ‘the Inventor’, who is really a synecdoche for ‘all inventors’.

        “Would enough people spend enough time and effort reviewing all of the pending applications?” is a good question. I think there are enough crepe-hangers in the world that there would be, or that private examiners-for-hire would make themselves available to would-be licensees. But because I also know that, as you point out, there’s a bunch of people with an interest in the present system, I don’t expect the question ever to be more than moot.

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