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10.10.17

US Congress Will Likely Stop Native American Tribes From Helping Patent Trolls by Misusing Sovereign Immunity

Posted in America, Patents at 8:57 am by Dr. Roy Schestowitz

Claire McCaskill (D-Mo.)

Summary: The US political system, in spite of its many flaws, steps in to defend the Patent Trial and Appeals Board (PTAB) from the “scam” which is passage of patents to tribes that have nothing to do with these patents (for the sake of immunity/protection from scrutiny)

IT HAS been just over a month since sites — including ours [1, 2, 3] — bemoaned this. Well, that trick or loophole didn’t last long, did it?

A patent trolls expert, Mr. Mullin, who was following this whole affair pretty closely since the very start (although Patently-O had beaten him to it), says that Senator McCaskill called it “[o]ne of the most brazen and absurd loopholes I’ve ever seen.”

Weeks after many of us protested Native Americans’ help to patent trolls it certainly looks like the loophole will be closed. To quote:

Allergan’s move to stop its patents from being reviewed by handing them off to a Native American tribe is winning support from few people outside the drug company. Now one lawmaker is seeking to ban it.

Sen. Claire McCaskill (D-Mo.) has introduced a bill (PDF) that would head off Allergan’s strategy without waiting to see whether the judges at the Patent Trial and Appeals Board will even approve it.

Mullin’s article does give the impression that there’s momentum and the “scam” (as some sites called it) is on borrowed time.

In the meantime, CCIA writes about “A Bridge To Sovereign Patent Funds”. Yesterday it explained how PTAB helps stop patent trolls/aggression and how the aggressors retreat to the above loophole not just in the US but also in Japan:

Patent trolls are a familiar concept at this point, but a “sovereign patent fund” (SPF) might not be. This isn’t the kind of sovereign I wrote about recently in regard to sovereign immunity. In essence, an SPF is simply a patent assertion entity (PAE) with backing from a national government.

While government-funded companies that create patent portfolios have been around for quite some time, such as South Korea’s ETRI, they typically functioned as operating companies and research institutions first, obtaining patents from their own research, and only secondarily as patent litigators. It’s only over the past few years that the first generation of sovereign patent funds has arisen, acquiring patents from external sources. These SPFs are formed for various reasons, but they all generally have a protectionist bent, focused on protecting local industry and keeping IP in local hands. IP Bridge, a Japanese SPF, openly states that one goal is to “aggregate [patents] and use them, for example, to support domestic1 SMEs [small and medium enterprises].”

So what can you do if a company backed by the resources of an entire foreign government targets you with a patent infringement lawsuit?

You can file a petition for inter partes review.

We wrote about IP Bridge many times before. Their main proponents are sites which favour patent trolls. We last wrote about it less than a week ago and many times earlier this year.

10.08.17

Patent Microcosm, Patent Media and Patent Office: “It’s a Big Club and You Ain’t in It”

Posted in America, Patents at 5:22 am by Dr. Roy Schestowitz

To use the famous saying from George Carlin

Great Seal of the United States

Summary: When the national patent law is constructed behind closed doors by a cabal of lawyers and few opportunists who attempt to justify their own existence rather than represent the innovators who they claim to be “protecting”

THE world has plenty of conflicting interests. The war industry, for instance, has a tremendous leverage over foreign policy. This would probably surprise nobody, but the same is true at the USPTO and the patent ‘industry’. Just look at their echo chamber-type events. Nowadays, it’s almost an accident if an actual engineer has a say on the subjects debated (sometimes they let some lawyer of massive corporations have a say).

What about judges? Well, they too are typically former lawyers.

And watch how Dennis Crouch categorises them (just before the weekend): “Chief Judge Prost, Judge Taranto and Judge Hughes – would not be identified as overly pro-patentee.”

Well, as if they fall into a category. At least he didn’t use a term like “anti-patents” or “anti-innovation” as Watchtroll likely would. Watchtroll has already called for the firing of one of their colleagues. Here is what Crouch wrote:

On appeal, the Federal Circuit has vacated the injunction – holding that the district court made reversible errors with regard to written description and enablement. Before walking through the decision, I’ll note here that the Federal Circuit panel here – made up of Chief Judge Prost, Judge Taranto and Judge Hughes – would not be identified as overly pro-patentee.

The problem is that many people read sites like the above, as well as Watchtroll. They wrongly assume there’s insight there because of the profession, often forgetting that this profession attempts to perpetuate if not expand itself. So the bias is dyed in the wool.

Days ago Watchtroll was reposting that old press release that said “Bednarek began his career in the early 1980s as patent examiner at the U.S. Patent and Trademark Office, examining some of the first software patents granted by the agency.”

He is moving from public to private, just like the crooked David Kappos. We wrote about it exactly a week ago. Nowadays software patents are no longer recognised by courts, but the USPTO continues to grant these. PTAB, which is run by David Ruschke, knows all about Alice, but he too will be lobbied in another echo chamber-type event of IAM, according to this blog post from a few days ago. Does he know who is funding IAM? Does he really want to be associated with that? Also in that event there will be the person behind the STRONGER Patents Act — a bill which strives to do the very opposite of making patents stronger. It could be renamed the Patent Trolling Act. To quote IAM: “Among the outstanding faculty members are: Senator Chris Coons, co-sponsor of the STRONGER Patents Act introduced into the Senate earlier this year; Joseph Matal, acting head of the US Patent and Trademark Office; and David Ruschke, chief judge of the Patent Trial and Appeal Board. They will be joining a number of other high-profile figures from the US patent community…”

The term “US patent community” just means the patent microcosm.

As we said a long time ago, IAM is in the business of lobbying and we know who it’s lobbying for; just follow the money.

Herein lies the key point. The media that covers patents, the patent ‘industry’ and the branch of government that deals with patents are all in the same bed. Their goal — unlike courts’ goal — is to just throw patents at everything. It cannot go on like this. That’s like putting companies that manufacture bombs in charge of foreign policy; obviously they would initiate war at any opportunity.

This is a real problem that more people ought to be speaking about. Such an incestuous relationship reveals disturbing lack of separation, maybe even collusion.

The other day IAM spoke to some law firms about patent policy. Here is what one firm from Malaysia said about software patents:

To what extent can inventions covering software or computer-implemented inventions be patented?

It is possible to protect software-related inventions in Malaysia, provided that these meet the statutory definition of an ‘invention’ (ie, an idea that solves a technical problem). Data processing which involves no technical effect or advance does not constitute a patentable invention. Software inventions which are construed as business methods are not patentable, as business methods are excluded from patentability.

According to MyIPO’s patent examination guidelines, claims directed to a computer program per se or a computer program embodied on a carrier, regardless of its content, are not allowed. A computer program may be patentable if the claimed subject matter makes a technical contribution to the art (eg, program-controlled machines or program-controlled manufacturing processes).

According to this, the rules in Malaysia are somewhat similar to what happens in the EPO. The End Software Patents (ESP) campaign said (back in 2010) that “Malaysia Section 13(1)(a) of the Malaysian Patents Act 1983 excludes from patentable subject matter “discoveries, scientific theories and mathematical methods” and paragraph (c) excludes “schemes, rules or methods for doing business, performing purely mental acts or playing games”.”

As we showed many times before, national policies on patents (in various patent offices) are often put together by the patent ‘industry’ and are influenced by their lobbyists. As soon as public officials find out about public views (the stance of those impacted by these laws) they correct these laws, as Australia recently did.

10.07.17

Gains for PTAB Supporters and Excuses From PTAB Opponents (the Litigation/Trolling ‘Industry’)

Posted in America, Courtroom, Patents at 5:24 pm by Dr. Roy Schestowitz

Aqua Products case a disappointment to PTAB foes

Aqua

Summary: The latest news updates about the Patent Trial and Appeal Board (PTAB), its proponents, and Aqua Products v Matal, which patent maximalists are attempting to spin in their favour because they’re not satisfied with the outcome

A COUPLE of days ago we noted that Cisco wholeheartedly supports PTAB, not only in terms of monetary means (for a pro-PTAB group) but also in words. The CCIA published a statement from Cisco. Well, the good news is that a former Cisco executive is now becoming Google’s chief patent personality. As IAM put it a few days ago:

Google has a new head of patents. Michael Lee, who joined the company from Cisco in January, has been appointed to the role following Allen Lo’s exit in August. Lee had been lead counsel for mobile at Google, having previously spent eight years at Cisco in a variety of roles including, most recently, as senior director IP strategy, marketplace and policy.

Lee’s appointment came to light via his LinkedIn profile which gives October 2017 as his start date. It’s not clear who Lee will be reporting into — he didn’t respond to a request for comment — but, according to one source Google, is in the midst of shaking up its IP function: an overall head is due to be appointed with the respective heads of patents, trademarks and copyright all reporting into whoever gets that job.

[...]

Prior to joining Cisco Lee was senior legal director for IP litigation and conflict management at Yahoo! and before that did stints in private practice with Shearman & Sterling and Fish & Neave.

The High Tech Inventors Alliance (HTIA), a pro-PTAB alliance, is supported by both Cisco and Google.

As we noted here just before the weekend, US politicians will probably have a closer look at — and possibly have immunity removed from — Native American tribes that help patent trolls dodge PTAB. This too has been noted by the patent microcosm. Another loophole to be closed soon? To quote Patently-O:

As discussed previously, Tribal Nation Sovereign Immunity is not Constitutionally protected and may be eliminated by particular acts of Congress. Thus, this Bill would seem to be effective to eliminate the ongoing concern regarding tribal immunity assertions. The proposal does lack an effective date and so the only missing element would be whether the Bill would retroactively veto pre-enactment claims of immunity.

Michael Loney, who is based New York and is watching PTAB pretty closely, has just spread some doubts about PTAB. Sites like Managing IP, proponents of patent trolls most of the time, seem to be rather upset that the Federal Circuit doesn’t stop PTAB. Loney wrote about the Aqua Products case and propagated the discreditisation, dubbing it “a wash out”:

The Federal Circuit’s en banc Aqua Products v Matal ruling has been described as “a complete non-event” and “a real mess” that “did little to resolve the big questions” surrounding the PTAB’s treatment of motions to amend. However, it did shift the burden of persuasion to the petitioner, while some believe the Chevron implications of the decision are most interesting

Not too shockingly, shortly after the typical PTAB bashing from IAM (site for patent trolls) came this post about the same case. It was composed by a patent trolls supporter and software patents pusher, Richard Lloyd. He’s one among several of those who try hard to eliminate PTAB by all means possible, in essence lobbying by twisting facts. Here’s an example:

In emails and conversations with a series of IPR specialists this week in the wake of the Court of Appeals for the Federal Circuit’s (CAFC) decision in Aqua Products v Matal, “this is a mess!” was a common response.

They basically try to discredit the outcome. So did Alden Abbott, who says he is “deputy director of the Edwin Meese III Center for Legal and Judicial Studies and the John, Barbara, and Victoria Rumpel Senior Legal Fellow.”

Yesterday he published this piece entitled “Erosion of Patent Rights Is a Threat to Innovation and American Prosperity” (there is no “Erosion of Patent Rights”, there’s improvement of patent quality and patents are not even a "right").

Watch who/what he leans on:

The Patent and Trademark Office, an agency within the Commerce Department, reviews patent applications and issues patents for inventions that meet patentability criteria.

[...]

As Gene Quinn, a leading patent lawyer, explains, these changes mean that today “there are many other parts of the world that have more expansive views of what can be patented, including Europe, Australia, and even China.”

If you are citing Watchtroll as an authority on patents, then you’re as about as extreme as a politician who promotes Breitbart. The usual "China!" line is there too, conflating trolls with “Innovation and American Prosperity”. And then comes the attack on PTAB, revealing that the author is more interested in trolls and low-quality patents, not “Innovation and American Prosperity”:

Patent experts note that this board has wreaked havoc, striking down the vast majority of patent claims it considers in a way that undermines fundamental due process rights of patent holders.

“Patent experts” just means patent microcosm, i.e. those who make a living from disputes.

Incidentally, speaking of China, Mark Kokes (the man who ruined BlackBerry and made it little more than a patent bully) did the usual deflection. Kokes wants us to focus on China again; the patent aggressors and trolls prefer China because it makes extortion easier, so watch what he was saying:

China gets a special mention – “We have had tremendous success at IT licensing there with the approach we have adopted.” – as does the US, though for less positive reasons: “The legal environment has changed dramatically. If you look at it from an asset perspective at a minimum you’d say that values are suppressed – even for high quality ones.” But overall Kokes is optimistic: “Innovation and having IP-centric economies is the right way to go. They are getting a lot more entrepreneurial in China and in parts of Europe, just as things are declining a little in the US.” But despite some head-winds his philosophy is very simple, he concludes: “If you are creative enough you can build your own markets.”

In other words, for litigation giants the US has become less attractive. Is that actually a bad thing? Well, for serial litigators it certainly is, but what have they ever given to society? PTAB and high patent quality (which IPRs entail) make the US a lot more competitive and productive. Less litigation, more development.

10.05.17

Misuse of Tribal ‘Immunity’ for Patent Trolling Has Just Come Under a Congressional Probe

Posted in America, Patents at 4:00 pm by Dr. Roy Schestowitz

Fallen tactics?

Fallen bee

Summary: Congressional scrutiny against a loophole at best or a “scam” at worst — a trick that is intended to shield dubious patents from a proper (re)assessment

TODAY we wrote about some prominent politicians coming out against patent trolls and in defense of PTAB, the Patent Trial and Appeal Board.

“Patent trolls [are] using Indian tribes proxy groups to fall under the “sovereign” shield,” Benjamin Henrion wrote, citing Slashdot, which in turn cites this report about Native Americans helping patent trolls for a quick buck. Last month we wrote two fairly long articles [1, 2] about the Mohawk people’s role in it and now comes a Congressional investigation:

Members of Congress want answers about a multinational drug company’s deal to save its patents by handing them off to a Native American tribe.

Last month, Allergan gave the St. Regis Mohawk Tribe six patents that protect Restasis, the company’s blockbuster eye drug. The goal is a sophisticated legal strategy to avoid having the US Patent Office proceed with a process called inter partes review, which is a kind of quasi-litigation in which opponents of a patent can try to have them revoked. Lawyers for Allergan are hoping that the principle of sovereign immunity, in which Native American tribes are treated as sovereign nations in certain ways, will protect their patents from government review.

From Slashdot’s summary of it:

But court cases have limited the scope of sovereign immunity (especially for commercial activity), and now Congress is investigating Allergan over the tactic that has Congress not only greatly concerned about competition in the drug industry (and exorbitant prices of pharmaceuticals), but also the questionable use of the sovereign immunity law. The four lawmakers who signed the letter to Allergan state: “The unconventional maneuver has received considerable criticism from the generic competitors challenging the drug’s patents under the process Congress created (IPR) to enable timelier review of such challenges (read: a fraction of the cost of a court trial).” The letter also notes that the key ingredient in the patent was set to expire in 2014 and that Allergan had filed more patents to extend patent protection to 2024, a signal that Congress is watching for exploitation of patent law to enable “perpetual patents” widely used by the pharmaceuticals.

Let’s hope that this “scam” (as some people have dubbed it) will be ended as soon as possible. Right now there are some copycats of it and this harms society at large.

“Cloud”, “AI”, and “IoT” Among the Buzzwords Used to Bypass Limitations/Bans on Software Patents

Posted in America, Patents at 4:30 am by Dr. Roy Schestowitz

Don’t fall for these tricks, which law firms advertise in the form of ‘drafting tips’

To bamboozle
Don’t be a victim of buzzwords and the art of semantics

Summary: Now that ‘pure’ software patents are pretty much impossible to enforce (except in China) there are efforts by law firms to mislead clients into further pursuits, usually relying on misleading words to avoid an impression of abstractness

THE REALITY in 2017 is that software patents are practically dead in the US courts. Sure, examiners still grant some (even at the EPO), but courts say “No!” almost every time (the higher the court, the more likely the rejection). Law firms that promote software patents consciously waste people’s time and money; after all, what do/why should they care about the outcome? They make money from legal fees either way (no matter the outcome). Yesterday we saw this article titled “Drafting Software Patents Post-Alice: Lessons From Courts” (which ones, district courts?).

Much of the article is behind a paywall, but the introduction says: “Since the decision in Alice[1] three years ago, applicants, patent practitioners and even patent examiners are trying to sort out what is and is not an abstract idea in the software arts for patentability purposes. With no clear objective test, each new decision potentially provides guidance on what may be determined to be abstract, and also may provide clues on how to better structure claims and specifications to avoid or at least overcome Alice-related rejections.”

But given the repeated rejection of such patents, what’s the point? Changing the words might help fool examiners into granting software patents, but courts (with witnesses, expert testimonies etc.) will almost always reach the same conclusion. Don’t bother. Don’t try to pursue software patents anymore. Don’t believe these law firms. They just try to make money for themselves, not for clients.

Unfortunately, we continue to see the dodge or departure from conventional language and into the realm of buzzwords, such as “AI”*. Even this morning we saw this piece published by a firm connected to Microsoft. It’s about Uniloc, a patent troll which has received money from Microsoft. It tries to use buzzwords to leverage software patents against companies: this time the buzzword is “cloud” and the author uses the euphemism “NPE”, which just means patent troll. To quote:

As Cloud IPQ will continue to demonstrate, a growing but often overlooked trend of NPE patent litigations against cloud computing providers and users has emerged in recent years. While many NPEs target big technology companies like Apple, Google and Microsoft, Uniloc has cast a wider net that includes health service providers, gaming companies and software developers. In less than two years, Uniloc has filed 59 district court cases against 39 defendants in the cloud computing space. The patents asserted relate to cloud software and platforms capable of remote network access and management in fields ranging from business management, software and game security, identity management, critical infrastructure security, and IP rights management. The lawsuits target both cloud computing providers (e.g., Nexon, Blackboard, Netsuite, Nutanix, etc.) and users (e.g., Riot Games, AthenaHealth, H&R Block, etc.).

These are just software patents. Courts or even PTAB would reject these post-Alice. Judges who don’t grasp these buzzwords will likely rely on technical people to explain/deconstruct these. It’s all abstract.

Another new example of a buzzword is “IoT” — an example we last wrote about in the weekend. Audrey Lo from Lee and Li Attorneys at Law has just published this article about the ‘dressing up’ of software patents as “IoT”. Just because one refers to software patents by some buzzword (with “things”, like “devices” in them) does not make these any more valid; it’s just a Trojan horse to fool examiners. As even Lo admits, “IoT technology is closely related to software development.” Here are some portions:

It is clear from the above that Taiwanese corporations lag much behind their foreign competitors in developing IoT technology. Moreover, according to the IoT patent report published by the UKIPO in 2014 and that by LexInnova in 2016, Chinese corporations were among the top three IoT patent applicants. However, none of the top ten IoT patent applicants in Taiwan came from China.

IoT technology is closely related to software development. Whether a patent can be granted depends greatly how the claims are drafted. Since the regulations and standards for assessing the patentability of software-related inventions are slightly different in each country, one should consider those differences in order to ensure the patentability of his/her invention. All the possible scenarios that may occur during enforcement must also be considered in claim drafting; otherwise, even if a patent is granted, the patent holder may not be able to enforce his/her patent against others.

It is worth noting that China does allow software patents (it’s one of the few countries that allow that), though we’re not sure about Taiwan, which China tries to assert sovereignty over.

As always, most software patents are laughable. Even patent maximalists like Patently-O are sometimes willing to admit this and days ago it gave an example — only to receive a threatening E-mail from the so-called ‘inventor’ (whereupon the blog published the E-mail). What’s the point trying to defend a terrible software patent which is obviously bogus? It’s 2017. We’re in the post-software patents era now. Just stop calling these patents things they’re not (buzzwords).
______
* There was another example of this last night, in a press release which said “Element Data, Inc., a decision support software platform that harnesses artificial intelligence and machine learning has acquired the assets and patent of BehaviorMatrix, LLC” (this patent is totally worthless as it’s a software patent).

PTAB Will Reach New Highs/All-Time Record This Year, Cleaning Up the Patent System by Throwing Away Invalid Patents

Posted in America, Patents at 3:46 am by Dr. Roy Schestowitz

Many of these are software patents which pose a threat

High Tech Inventors Alliance members
Even Cisco, which came under fire from PTAB, strongly supports PTAB

Summary: The Patent Trial and Appeal Board (PTAB) is defying resistance from the patent trolls’ lobby and the Court of Appeals for the Federal Circuit (CAFC) once again defends PTAB, in essence lifting a ban erroneous imposed by the United States International Trade Commission (ITC)

THE EPO is pushing away its appeal boards, but the USPTO does the exact opposite by sending more IPRs their way. IPRs are the procedure by which PTAB invalidates patents which should never have been granted in the first place.

Record year for PTAB IPRs (i.e. elimination of bad patents)? It certainly seems so. Even patent maximalists are willing to admit so, having crunched some numbers. But here’s the spin they put on it (as usual):

The third quarter had the fewest Patent Trial and Appeal Board petitions since the first quarter of 2016. In September, the Board designated one of its decisions as informative and also granted a rare rehearing in an IPR involving the Coalition for Affordable Drugs

Ignoring this kind of spin, which conveniently omits all the numbers from 2012-2015, the PTAB is set to break another new record this year. Thousands of bad patents are being looked at and many get invalidated.

The patent maximalists who try hard to crush PTAB, even by scandalising it, also wrote about Aqua Products v Matal yesterday. PTAB judges are being pressured to become more lenient. As one PTAB opponent put it:

The opinion package, is 148 pages in length and includes five separate opinions walking the question of deference to PTO Decisionmaking.

Michael Loney put it like this:

The long-awaited Aqua Products ruling is narrow – a result of different views on the judgment and the rationale that should be employed. The matter is remanded for the PTAB to consider the patentability of the proposed substitute claims without placing the burden of persuasion on the patent owner

That’s not a very profound difference. In fact, we very much doubt it will — in any shape or form — impact the numbers above. PTAB is generally very widely supported by industry. As we pointed out yesterday, all the PTAB opponents are connected to patent trolls and cranks.

As we noted yesterday, even Cisco openly supports PTAB. That’s in spite of the fact that, at least in the Arista case, PTAB was used against Cisco. The case was recalled yesterday (“Why Hewlett Packard Enterprise Is Backing Arista, Not Cisco”) and Jones Day wrote a long article about it. Here are some key bits:

The Federal Circuit has determined to partially stay an ITC exclusion order as it pertains to products redesigned after the remedial orders issued. We have previously posted about Certain Network Devices, Related Software and Components Thereof (II); Inv. No. 337-TA-745 and the ITC’s refusal to stay its remedial orders after the Patent Trial and Appeal Board found the asserted patents unpatentable in an IPR proceeding. Respondent Arista has had better luck in the Federal Circuit obtaining a stay of the remedial orders for its redesigned products.

[...]

Shortly after the Commission’s final determination and issuance of the remedial orders, the Patent Trial and Appeal Board issued final written decisions finding the asserted claims of the ‘577 and ‘668 patents unpatentable. In view of the PTAB’s findings, Arista filed an emergency petition asking the ITC to rescind or suspend the remedial orders. The Commission denied Arista’s request, concluding that the PTAB’s final written determinations did not constitute changed circumstances warranting rescission of the LEO or CDO.

[...]

The Federal Circuit’s order highlights the value of redesigning accused products to avoid patent claims as a defense in ITC investigations. Ordinarily, it is best for a respondent to develop and introduce potential product redesigns early in the underlying investigation. By asking the ITC to consider the redesigned products in the underlying investigation, respondents can avoid having to defend their redesigned products in a later enforcement proceeding, and preclude sanctions in the event that the redesign still infringes. Here, Arista was able to obtain a rare stay at the Federal Circuit based on its redesign, but it remains unclear whether the CAFC would have ruled the way it did if Cisco had not relied on the redesigned products to rebut irreparable harm to Arista. Eventually, Cisco may be successful in excluding Arista’s redesigned product from importation. But for now, despite the ITC’s remedial orders, Arista can continue to import at least some of its products.

In short, the Court of Appeals for the Federal Circuit (CAFC) quickly rectified the matter and the ban has been lifted. In some sense, CAFC stepped in to reaffirm PTAB’s judgment (subject also to a redesign).

It is utterly outrageous that the US ITC continues to pretend that invalid (invalidated by PTAB) patents still apply, as we said several times earlier this year (see 2017 articles in this wiki page).

Number of Patent Cases in the Eastern District of Texas Has Dropped by an Astounding Rate in Just a Few Months

Posted in America, Patents at 3:11 am by Dr. Roy Schestowitz

The political system wants change as much as Supreme Court (SCOTUS) Justices do

Orrin Hatch

Summary: The United States is moving closer to a post-trolls era, not just a post-software patents era, thanks in part to few outspoken politicians who can identify the issue with both

PATENT trolls are a big cause for concern in the US, more so than software patents (which about half a decade ago vanished from headlines).

The issues associated with patent trolls were mentioned in the latest post from Senator Orrin Hatch (we covered it on Wednesday and Patently-O published an outline of his points on the same day). Are patent trolls going to be a thing of the past any time soon? Maybe.

Following the SCOTUS intervention earlier this year (TC Heartland decision back in May), patent trolls based near the Eastern District of Texas are basically screwed, as many of us expected all along. The number of cases has “fallen to 16% post-TC Heartland from 34% before,” Managing IP wrote yesterday. Most of the article is behind paywall, as usual, but here is the key part:

The Eastern District of Texas’s share of US district court patent cases in 2017 has fallen to 16% post-TC Heartland from 34% before, while overall patent case filing is on course to fall 13% for the full year compared to 2016, reveals data from Unified Patents

Many of these cases are filed by trolls and many involve software patents. So this is a very big deal!

Yesterday, Josh Landau from the CCIA published a long article at Patent Progress in which he explained how PTAB (which Orrin Hatch also defends) has saved the world from a very nasty patent troll called MPHJ — one that uses a software patent, as usual. Here are some key portions:

MPHJ Threatens Basically Everyone

MPHJ had a very simple business model. If you were a business that used a scanner with a scan-to-email feature (which, these days, is just about any business copier/scanner), they would send you a letter. The letter would say “you need to pay us $1,000 per employee for use of our patent, or sign a letter swearing you don’t ever use scan-to-email, with a penalty of $1,000 per employee if you didn’t tell the truth.”

And MPHJ sent out more than 9,000 of these letters to small businesses. (According to the FTC, they specifically targeted businesses with 20-99 employees.)

The small businesses reacted in various ways. Some ignored the letters. Some paid up. But ultimately, it wasn’t reasonable for them to take on the burden of an expensive lawsuit or even a less expensive IPR, given that the amount at stake was always less than the cost of even filing an IPR. However, the way in which they operated did draw attention from the FTC and State Attorneys General, who successfully targeted the way in which MPHJ conducted their campaign. But simply targeting the enforcement approach wasn’t enough to shut down MPHJ.

[...]

MPHJ demanded around $1,000 per employee for a license. That means that the amount demanded from any given target was likely lower than the cost of an IPR, much less the cost of litigation, meaning that there was little incentive for any single MPHJ target to fight back. The companies that actually made the scanners that MPHJ claimed infringed might have had the financial incentive to fight back. But if IPR didn’t exist, those companies would have needed their customers to start fighting in court, at which point they could try to individually defend each of the 9,000 customers MPHJ sued. After several years of litigation, the manufacturer might be able to obtain a judgment of invalidity in a trial. Only at that point would other customers be safe.

Instead, they could file an IPR challenging the validity of the MPHJ patents. This enabled manufacturers to defend all small businesses using their products with a single action. IPR’s efficiency allowed the scanner makers to avoid duplication of litigation costs while also allowing them to protect their customers, the end users of the technology.

No one should have to worry that using a product they bought off the shelf at the office supply store in the way it’s designed to be used will result in a demand letter from a patent troll. IPR helps to prevent exactly that situation, allowing manufacturers to protect their end users.

In our next post we’ll deal with PTAB, for there’s a SCOTUS decision on the way about it. PTAB’s fate/future is probably safe, but we must keep abreast of what the trolls’ lobby is doing in an effort to undermine PTAB.

10.04.17

Momentum of PTAB is Growing and Political/Industrial Support is Growing Too

Posted in America, Patents at 6:38 am by Dr. Roy Schestowitz

Troll bookSummary: Cisco, CCIA, EFF and Senator Orrin Hatch are among the many who support the Patent Trial and Appeal Board (PTAB), whereas proponents of patent trolls try hard to destroy PTAB

THE role played by PTAB is growing. There’s no stopping or slowing down in spite of attempts to induce that.

PTAB has been good at stopping both software patents and patent trolls. It curtails abusive elements in the patent system.

A patent troll from Japan, according to IAM, is finally facing a challenge from PTAB. It typically uses the Eastern District of Texas to get money without doing anything productive, but now comes Intel (maybe PTAB too) and it could potentially put an end to all these shakedowns. To quote:

Japanese patent fund IP Bridge launched its fifth US patent assertion on Friday, filing a case against Intel in the Eastern District of Texas.

[...]

But despite the gauntlet of IPRs, IP Bridge has managed to secure a couple of settlements over the past four months that are very important validation for the company as it seeks to show that there is a place for patent monetisation entities in Japan’s relatively conservative IP business environment. In June, this blog reported the fund’s settlements with Broadcom and ARM – the latter of which did not stem from an infringement litigation. The company has around 700 semiconductor patents, and this Intel case suggests it will attempt to build on its deals with Broadcom and ARM to license the biggest players in the sector.

We expect and also hope that Intel will work towards invaliding these patents. IP Bridge, as we noted here before, is close to IAM; recall its cheering for it when it sued in the Eastern District of Texas.

We remind readers that IAM is little more than a megaphone of patent trolls. This new issue, for example, is full of puff pieces about trolls and full of attacks on PTAB. IAM is even publishing for a Koch-connected think tank which is against PTAB and for software patents. Adam Mossoff’s agenda has been documented here for years. Here is another new one from the latest issue. A better (corrected) headline would say “PTAB stops patent trolls…” (which is a great thing!)

But no, IAM is all about trolls and always against PTAB. It’s far from objective. Watchtroll too continues its daily attacks on PTAB (here is yesterday’s example, in essence lobbying for patent trolls, as usual).

What we are hoping to show here is the commonality among PTAB opponents. They’re not companies but trolls and publishers that they’re paying.

What about the real industry, i.e. companies that actually make things?

Well, Dan Lang, VP Intellectual Property at Cisco, speaks in support of PTAB (we mentioned him here earlier this year). Two days ago CCIA published this piece for him.

To quote:

The IPR procedure has been in operation for 5 years and has performed admirably with an affirmance rate of nearly 75% by the courts. The patent office collected broad input from stakeholders in setting the rules. The agency staffed the Patent Trial and Appeal Board (PTAB) with experienced technically trained litigators. Appellate review has given the PTAB important guidance in claim construction and validity analysis. The IPR procedure has become an indispensable mechanism for taking low quality patents out of circulation. Fewer than 4300 patents, out of 2.8 million in force, have been challenged, and of those the patent office has instituted proceedings on only 2400.

[...]

Whether or not to grant a stay of litigation after an appealable finding of invalidity by the PTAB is also a question of striking the right balance so that the system is fair. In a case Cisco is currently involved in, the ITC found intentional infringement by a direct competitor after a 10 ½ month procedural delay. The ITC considered and rejected our competitor’s contentions that the patents are invalid. In our court filings, we explained where and how we think the PTAB got it wrong and is likely to be corrected by appellate review. The Federal Circuit has now agreed with us that a stay is unwarranted. If a stay were to have been put in place, infringement would have continued and we as the innovators would have lost the benefit of temporary exclusivity that the patent system was designed to provide.

As strong supporters of the IPR system, we believe our appeal of the PTAB findings is exactly what a patent holder should do if the PTAB makes a ruling the patent holder disagrees with. At the same time, we view with alarm the increasingly shrill denunciations one hears today from interests that care less about patent quality than about preserving what they characterize as “quiet title” in an asset they never should have had in the first place. The IPR procedure is important and any needed adjustments are refinements rather than sweeping changes such as proposed in the STRONGER Act or abolition as requested by petitioners in Oil States on specious constitutional grounds.

We at Cisco have long advocated for a balanced patent system that helps innovation. We have encouraged all three branches of government to make sure that the patent system isn’t abused by opportunists and speculators who buy up patents and litigate for the purpose of extortion. But we shouldn’t lose sight of why America’s founders created the patent system in the first place – to encourage and reward innovation.

Cisco uses patents aggressively against smaller competitors, but it is also frequently targeted by trolls. Its support of PTAB is noteworthy, but oddly enough, Cisco now imposes an embargo on a competitor’s product in spite of PTAB invaliding the patent/s at hand. Even the CCIA spoke out against it last month.

The EFF decided to intervene too. Days after news about the Three Affiliated Tribes helping patents trolls and the Mohawk people doing something similar [1, 2] by shielding a corporation from PTAB the EFF complains above Native Americans helping patent trolls and generally impeding justice. To quote:

On September 8, 2017, the multi-billion dollar pharmaceutical company Allergan announced that it “sold” its patents relating to its eye drops “Restasis” to the Saint Regis Mohawk Tribe. But this was not a usual “sale.” The Tribe doesn’t appear to have paid anything in exchange for becoming the legal owner of Allergan’s patents. Instead, Allergan paid the Tribe $13.75 million, and also agreed to pay the Tribe up to $15 million more each year in exclusive licensing fees.

In other words, Allergan just paid out millions to give its patents away, and will pay millions more to license them back.

Why would a company pay a Native American tribe to take ownership of patents? Simple: to make those patents harder to invalidate.

Yesterday we found out that even Senator Orrin Hatch decided to intervene. In his blog he speaks out against patent trolls. To quote:

Our nation’s patent system has been in need of serious reform for many years. So-called “patent trolls” — entities that don’t actually make or sell anything but that instead buy patent licenses merely to extort settlements — have become a serious drain on our economy. According to one study, patent trolls and their frivolous lawsuits cost our country nearly $80 billion per year.

Here is the part about his support for PTAB:

Under the IPR process, an accused infringer can seek a ruling from the PTO that the patent the party is alleged to have infringed is in fact invalid. IPR proceedings are narrower in scope than traditional trial court litigation and allow for much more limited discovery, with the result that they tend to be both faster and cheaper than traditional litigation. As one might expect, IPR proceedings have become increasingly popular with parties accused of patent infringement.

IPR supporters say the process cuts down the costs of patent litigation and enables patent troll victims to more cheaply rebut frivolous claims. Opponents respond that the standards for proving invalidity in IPR are too low and that the IPR process too often eradicates sound patents. In addition, the Supreme Court is scheduled to hear arguments this term that the entire IPR process itself is unconstitutional. Clearly, this is an issue that warrants Congress’s attention.

“And if software patents [...] are invalid,” Benjamin Henrion’s tweet quoted him as saying, “business software developers may turn their attention to other products…”

Here is the part about patent scope:

Finally, at today’s meeting we’ll be discussing what sorts of limits Congress should place on what can and cannot be patented. The traditional rule has been that “anything under the sun that is made by man” is patentable. But there are also exceptions. And in a line of cases over the last decade, the Supreme Court has applied those exceptions in a way that has caused considerable uncertainty for technology and life sciences companies.

In two of those cases, Mayo and Myriad Genetics, the Court cast doubt on the ability of life sciences companies to patent treatments that derive from natural processes. In Mayo, the Court invalidated a patent for determining the proper dosage of naturally occurring metabolites to treat autoimmune disorders. In Myriad Genetics, the Court invalidated a patent on a gene sequence that could be used to detect elevated risks of breast and ovarian cancer.

The third case, Alice, involved a patent on a computer system to manage risk in escrow arrangements. The Court struck down the patent on the ground that it was directed toward an unpatentable “abstract idea” — managing risk through third-party escrow — and that the act of implementing that idea through a computerized process did not transform the idea into patentable subject matter.

These cases have potentially significant consequences for drug and software patents. If treatments derived from natural processes cannot be patented, life sciences companies may find their intellectual property rights sharply curtailed. Already we’re seeing lower courts move in this direction, with a recent case out of California casting doubt on the ability of dietary supplement companies to patent any of their products. And if software patents for business methods like third-party escrow are wholesale invalid, business software developers may turn their attention to other products.

What is noteworthy here is that every single opponent of PTAB is also well known as a proponent of patent trolls. This itself should serve as a clue to SCOTUS Justices.

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