02.25.16

Patents Roundup: Proxy Lawsuits, SCOTUS on Software Patents, Reform Agenda, and Lawyers Bypassing Alice

Posted in America, Patents at 8:58 am by Dr. Roy Schestowitz

Summary: A look at recent developments in the US patent system and how they relate to software patents in particular

TAKING a break from EPO articles and looking again at the USPTO, here is a roundup of recent developments.

Proxies in Patent Lawsuits

Nearly a decade ago we looked into why and how SCO had received money from Microsoft to sue Linux (or large corporations that rely on GNU/Linux). We also kept a close eye on patent trolls which often operate as proxies against a competitor. See for instance Intellectual Ventures and Acacia. They’re suspects.

“We also kept a close eye on patent trolls which often operate as proxies against a competitor.”This new article by Joe Mullin shows that litigation by proxy is a problem more widespread than just Microsoft and GNU/Linux, for patent trolls cannot be sued, making them convenient proxies (Intellectual Ventures, which is Microsoft-connected, is estimated to have about 2,000 satellite firms for litigation and Acacia too has many ‘branches’). Here is Mullin’s new article:

Company wrests $100k payment from patent troll but has no idea who paid

[...]

Lumen View Technology sued several small businesses in 2013 over a patent that described little more than online “matchmaking” before its demands for quick $50,000 payoffs ran into a Santa Barbara startup called Graphiq (formerly FindTheBest).

Graphiq CEO Kevin O’Connor, who had also co-founded online ad giant Doubleclick, pledged to spend his own money to defeat Lumen View—and defeat them he did. O’Connor’s battle with the patent-holding company has finally come to an end, with the still-unknown owners of Lumen View agreeing to pay him $100,000.

We remind people that the patent troll problem is more complex than people care to realise. A lot of this tends to be part of a broader anticompetitive picture. See what Microsoft did with Nokia and MOSAID.

“A lot of this tends to be part of a broader anticompetitive picture.”Tim Wilson (not my TechBytes co-host) used to write prolifically about the patent troll problem. That was years ago after he was personally hurt by them. Here he is again contributing a new article to IP Watch. The title of his article (and premise) is “Companies Can Inoculate Themselves Against Patent Trolls Through Their Supply Chain,” but it’s better to just eliminate trolls, which requires eliminating software patents because of the close correlation between the two.

Legislative Remedies for Software Patents

This new article from yesterday covered the SCOTUS stance on software patents as follows:

SUPREME COURT ON SOFTWARE PATENTS: During oral arguments at the Supreme Court on Tuesday, Justice Stephen Breyer said it is “unfortunate” that Congress hasn’t created special rules to deal with software patents, which are pervasive in the technology industry.

“Today’s patent world is not a steam ­engine world,” he said. “We have decided to patent tens of thousands of software products and similar things where hardly anyone knows what the patent’s really about.”

Related to SCOTUS as well, see “Supreme Court Oral Argument Reviewing Enhanced Damages” — a subject that many sites tackled yesterday. To quote Patent Docs: “Earlier today, the Supreme Court heard oral arguments in two related cases: Halo Electronics, Inc. v. Pulse Electronics, Inc. (Supreme Court docket number 14-1513) and Stryker Corp. v. Zimmer, Inc. (Supreme Court docket number 14-1520). The issue on appeal in the Halo case was limited to Question 1 presented in the petition…”

“Speaking of SCOTUS, remember that Apple’s war on Android may soon reach SCOTUS level.”The mass media covered this too, not just patent maximalists and (patent) law professors. Here is a useful overview from Patently-O):

Today the Supreme Court heard combined oral arguments in the willful infringement cases of:

Halo Electronics, Inc. v. Pulse Electronics, Inc., et al. (14-1513); and
Stryker Corporation, et al. v. Zimmer, Inc., et al. (14-1520)

Speaking of SCOTUS, remember that Apple’s war on Android may soon reach SCOTUS level. There is some misinformation about it out there. “Patenting company” is what patent maximalists now foolishly call Samsung; it also makes actual products, and it is not a patent aggressor, unlike Apple. These false narratives help distract from the reality of Apple’s aggression, which is making 'smart' phones hugely expensive to everyone. To quote this new tweet from the Web Foundation, “1/3rd of the cost of a midrange smartphone is down to patent royalties. Time for reform” (real patent reform).

Patent Reform (Tackling Trolls, Not Patent Scope)

“Patent law firms are just trying to find ways around Alice, in order to patent software despite the new rules.”A patent lawyer has just highlighted this article from a GOP-leaning site. It is against patent reform and the patent lawyer said “I agree” (only to be expected, as they profit from litigation).

Cheryl Wetzstein, “formerly national news reporter at The Washington Times,” is speaking to some academics for this article (at least they’re not just patent lawyers) and notes that “The recent death of U.S. Supreme Court Associate Justice Antonin Scalia could impact the fate of many bills, including the patent proposals.”

Another GOP-leaning site, Fox News, approached this from the “troll” angle and wrote: “A decision to let the ruling stand will further incentivize patent trolls to go after small businesses, a devastating blow to small and minority businesses that are instrumental to U.S. economic growth. Letting the ruling stand will solidify legal precedent that will hinder entrepreneurship and create significant barriers for Hispanic and other minority owned businesses.”

Patent Lawyers Prepare to Work Around the Rules

“Usually, following common sense, more litigation means less production because of allocation of financial and human resources.”An article by Lewis Roca Rothgerber Christie LLP continues to show a phenomenon which we repeatedly highlight here. Patent law firms are just trying to find ways around Alice, in order to patent software despite the new rules. James Cosgrove, Legal Analyst at Juristat, has just published a piece titled “Defeating Alice with Data”. To quote Cosgrove: “While all patent attorneys would like for Alice to be applied with consistency and predictability across all examiners and art units, the application of law is rarely predictable due to the personal experiences and preferences of individual examiners. However, there are tools that patent attorneys can use to at least get a head start on prosecution of software and business methods applications and market their expertise to clients who are looking for it. No strategy is going to guarantee a positive outcome in every prosecution, but patent attorneys can certainly increase their chances of success through careful study of the relevant data available to them.”

Litigation Epidemic

Usually, following common sense, more litigation means less production because of allocation of financial and human resources. According to this new analysis, so far in 2016 “the top patent defendants is comprised entirely of tech or e-commerce companies, most with a consumer focus: Expedia, Apple, AT&T Mobility, T-Mobile US, Huawei USA, Samsung, HP, T-Mobile USA, ZTE and Huawei.”

“With all these patent disputes no wonder a pair of shoes that costs just a few dollars to manufacture can cost as much as hundreds of dollars at the shops.”Clothing companies too are battling over patents, based on this article about CAFC, Nike, and Adidas. To quote the MIP article: “The Federal Circuit provided guidance on motions to amend in inter partes review proceedings in its recent Nike v Adidas decision. PTAB observers are hopeful it is a sign the court will be harder on the Board’s resistance to substitute claims…”

With all these patent disputes no wonder a pair of shoes that costs just a few dollars to manufacture can cost as much as hundreds of dollars at the shops. A society and an industry more cooperative would go a long way in serving the customers (or “consumers” as some call them).

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