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Patents Roundup: Microsoft, Embargo, Tax Evasion, Surveillance, and Censorship

Posted in America, Antitrust, Microsoft, Patents at 2:03 am by Dr. Roy Schestowitz

All the ‘great’ things that patent maximalism (insatiable appetite for more and more patents) has given society

Big appetite

Summary: An excess of patents and their overutilisation for purposes other than innovation (or dissemination of knowledge) means that society has much to lose, sometimes more than there is to gain

THE FOLLOWING potpourri of news spans a period of about 2 weeks. It hasn’t quite fit into or blended with our usual themes of coverage, but the pertinent developments are noteworthy, at least in brief.

Trolls of Microsoft

In his recent article (behind paywall until recently), entitled “Software patents in the cloud,” LWN’s Jonathan Corbet missed the full picture and failed to recognise that Azure and patents are a toxic mix similar to the Novell deal (2006), as we explained here a dozen times before, e.g. in [1, 2]. The closest he got to it is this part:

While Microsoft claims that it doesn’t normally transfer patents to trolls, this offering could be said to create a sort of moral hazard for the company. If a patent or two were to, somehow, end up in the hands of a troll that started asserting them widely, any customer thinking of leaving Azure would have to weigh the increased risk of attack that would result from such a move.

Microsoft is already passing patents to trolls — those which it can tame/control. We gave many examples. It’s imperative that people familiarise themselves with what Microsoft is up to now. It’s as nefarious as ever.

“Microsoft is already passing patents to trolls — those which it can tame/control.”This other new article totally missed the point of what Microsoft is really doing here. Microsoft is extorting legitimate companies. It’s essentially attacking Linux-powered products using patents, but the article’s headline uses words like “share patents”. Hilarious or outrageous?

Age of Embargo

When you cannot compete, as the saying goes, cheat. Or just embargo the competition. Manging IP will tell you how to do it in this event that it’s organising. To quote: “Speakers on an International Trade Commission panel at Manging IP’s recent US Patent Forum analysed recent notable cases such as February’s Organik Kimya Federal Circuit decision and gave best practices on enforcing an exclusion order” (“exclusion order” is another euphemism among many for embargo/sanction/injunction).

“When you cannot compete, as the saying goes, cheat.”There is a new example of this in the news. It was covered a week ago by American and British media [1, 2] (see background about this case, the Arista case, in older articles of ours).

To quote The Register:

Arista has been cleared by US Customs and Border Protection (CBP) to start shipping modified products to the United States again.

Arista sought the right to do so because of its long-running litigation with Cisco, which believes Arista has pinched its intellectual property.

So the company was threatened with embargo until it hobbled/ruined its own products. Cui bono?

“So the company was threatened with embargo until it hobbled/ruined its own products.”Just envision a UPC-imposed embargo if the EPO gets its way…

Saving Lives

The reforms at the USPTO may already be saving lives. PTAB recently took on a patent from Novartis and here is the latest on this from Patently-O:

This post follows-up on my recent essay on Novartis v. Torrent Pharma. If you recall, that decision by Judge Chen affirmed an IPR trial decision cancelling the claims of the Novartis patent as obvious.


FDA Approval: Moving back to the facts of Novartis, the patentee argued that its commercial success was based upon “Gilenya being the first commercially-available solid oral multiple sclerosis treatment.” Although that statement is true, the court found the commercial-availability focus misplaced for a non-obviousness argument.

MedCo v Mylan

Recently, Patently-O also covered MedCo v Mylan. Here is the key portion (in our humble assessment): “To spell out the results here. The appellate court reversed the district court’s decision based upon its revised claim construction. The claims require “batches” of the active ingredient that “have a maximum impurity level.” The court construed that term to require a consistent process for making all the batches, and then looked to the specification to note that the patentee intended to use an “efficient mixing” process as that consistent process since that was the type of process described in the specification; And then finally zeroed-in on the the “efficient mixing” process and required that it follow the particulars of “example 5” of the patent since that was the only detailed example given of efficient mixing. With that narrowed claim construction, non infringement was easy.”

Tax Evasion With Patents

Recently, wrote this Twitter user about the “Patent Box Regime”, this article in British media explained how it “enables UK companies to elect for a lower tax rate for profits earned from patented inventions…”

“Another facility for tax evasion, this time disguised as “innovation”?”We wrote a great deal about Patent Boxes, essentially yet another tax-dodging routine which sheds negative light on patents in general. To quote from the article itself: “The patent box regime enables UK companies to elect for a lower tax rate for profits earned from patented inventions and certain other intellectual property rights. The tax rate is being phased in but will be 10% by 1 April 2017.”

Who said there’s no future for the British economy after the Brexit disaster? Another facility for tax evasion, this time disguised as “innovation”? Another way to entice/incentivise businesses to come? If they bother at all…

Wearable Surveillance

“Sometimes patents are “good” in the sense that they discourage companies from doing malicious things (that are patented).”Mitek pursued a software patent on surveillance and it recently got it [1, 2]. So is someone going to be sued next? Well, in a sense we certainly hope so as the practice of such pervasive surveillance needs to be limited if not altogether eliminated. Sometimes patents are “good” in the sense that they discourage companies from doing malicious things (that are patented).

“Should Patent Law Be a First Amendment Issue?”

“The reality is, the public debate about patents is being perturbed; it’s not dominated by people who are affected by patents but by people who made patents (and patents alone) their livelihood.”There is an upcoming debate in Stanford in which Professor Lemley and others will participate. It’s about how software patents harm free speech, according to CAFC. Not only moderate voices will participate in this debate but also software patents proponents (not engineers but law firms) like Robert Sachs‏. “I’ll be speaking next week on Section 101 and the First Amendment,” he wrote. Why not focus on what programmers and engineers have to say? Why are they so often excluded from such debates? Who else might be at this debate? Radicals like Watchtroll? Who now protects a patent bully, as usual?

The reality is, the public debate about patents is being perturbed; it’s not dominated by people who are affected by patents but by people who made patents (and patents alone) their livelihood. It’s like letting arms manufacturers take charge of foreign policy.

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