Sweeping changes continue to sweep up the patent mess in the USPTO

Summary: News about Microsoft's love of [patents against] Linux, the persistent issue of patent maximalists guiding US patent law, and an update regarding the Patent Trial and Appeal Board (PTAB) that cleans up the mess left by these aforementioned actors

SOFTWARE PATENTS have always been our primary focus, since the site began exactly 10 years ago.

"I’m not talking about software patents, whose disappearance I would welcome," said the author of this new article titled "The End of Intellectual Property?"

Patent practitioners must understand that in order for their profession to maintain legitimacy (positive public perception) they need to ensure that patents are granted only on things where patenting can be justified, economically in particular. Not every thing in existence should be patented. That's just common sense, as authors who studied the effects of monopolies explained in scholarly work for decades if not centuries. Patent law -- like copyright law -- must examine/study the broader effects, including the externalities.

Today's article is a mix of news found and collected over the past week. We present the news in no special order.

Microsoft Still Evil and Dangerous

Microsoft is lobbying against Alice (and for software patents, as usual). How do we know? This report from last week reminds us that Microsoft is a nasty, malicious company that intends to continue to sue rivals using software patents. To quote: "As Microsoft's Micky Minhas sees it, Alice may be dissuading IP owners from other countries from patenting their products here, placing the US at a disadvantage. As China considers accepting patents for business methods, the US is heading "in the opposite direction," he said."

Does that mean that China's patent system is getting better? No, it's getting worse and patent trolling has gotten a foothold there, as we so often/habitually noted this year. Looking at what Microsoft actually continues to do, consider this new and timely article titled "No, Microsoft does not love open source" (published by the corporate media about a week ago). To quote the key part:

I used to follow Microsoft's intellectual property Twitter account in order to see exactly how much Microsoft loved open source as it bragged about all the people it had coerced into signing patent agreements. I guess someone realized that crowing about that was not a great idea, because today the feed tweets puff pieces about how great software patents are and how they drive innovation (through litigation).

The truth is that Microsoft’s principal open source strategy hasn’t changed and probably never will. The point of open source to Microsoft (or any other company) is to give you an on-ramp to its platform. For Microsoft, that platform is morphing from Windows to Azure, so of course Microsoft has dialed back its rhetoric toward Linux. If you read Microsoft hates Linux, then you probably won’t host your VMs on Azure -- same deal if you have a choice between two virtual private clouds. Duh, Microsoft loves Linux ... on Azure. Why wouldn’t it?

Microsoft may even be willing to accept open source that's tied to its technologies, but not directly to its platform. Generally these will be “children’s edition” versions like .Net Core. I’m not saying Visual Studio for Linux isn’t progress, but is anyone really itching to run .Net on Linux? I mean, after the outrageous commercial success of Mono (/sarcasm), are any of you going, “Woo-hoo, I want to write .Net code and run it on Linux”? Bueller? Bueller? Anyone?

Now, about those lawsuits -- Microsoft likes it both ways: Embrace on one hand, and get tidy patent settlements on the other. People who work at Microsoft say it's a big company, and as with all big companies, the left hand doesn’t know what the right hand is doing. Actually, that would be dismal management -- if “we love open source” was really part of Microsoft's strategy.

As evidence that Microsoft loves open source and Linux, last year Microsoft noted some long-running lawsuits that it wasn't really winning and dropped them. Repositioning “we cut our losses” to “because we love you” is good PR. Respect! But let’s talk about real change.

For those who think that Microsoft has changed, be sure to check if media coverage changed rather than Microsoft itself. We wrote quite a few articles this year about new instances of Microsoft blackmail using patents, targeting companies which distribute Linux devices.

Patents That Harm Society

There is a new paper (more than a fortnight old by now, which in academic terms/by academic standards is very little) that focuses on patent litigation. Litigation is rarely indicative of success; rather, litigation is invoked when there is a failure and when parties fail to agree about patents. Who benefits from all this the most? Patent lawyers of course, at both sides (offensive and defensive). Here we have a new report about a patent lawsuit against solar panel company . Earth Solar Power, a Chinese solar panel company, got sued. Does the environment benefit from it? Certainly not. What does public interest say about all this? Also see this report about Octane. "Ninth Circuit’s en banc ruling says a case in which fee-shifting is appropriate is “simply one that stands out from others with respect to the substantive strength of a party’s litigating position”," to quote MIP. Where does the public stand on this? Whose fees are "shifting" and who pays the price for all these lawsuits? Here is another new MIP article, this one speaking about a lawsuit with a decision composed by Justice Ginsberg. It's not a new case, but here's what MIP says:

In 2014, the US Supreme Court heard Petrella v Metro-Goldwyn-Mayer, which asked the same question of copyright law. In a majority opinion written by Justice Ginsberg, the Court decided that laches should not be an available defense in copyright infringement cases. The Court has recently shown a tendency to want to maintain consistency across the branches of IP law. In this case the Justices will have to interpret whether the statute creates a statute of limitation for damages in patent infringement cases, or if this is not established, whether laches are needed to effect this limitation upon suit delays.

Baby products are not improving because of lawsuits like this (see context in this article) and certainly society loses a lot. Maybe the problem is that too many patents are being granted in too many domains.

Tastelessly enough (in our view), Professor Crouch now uses his student Zachary Kasnetz to criticise a decision he doesn't seem to approve of. Crouch is part of that crowd (or the insulated choir) that wants us that believe that more patents mean more success, more innovation, or whatever. His blog is usually quite informative (with detailed graphs and everything), but he is clearly subjective and he has become a symptom of a patent system led and steered by maximalists, not moderates. Some of them have become so greedy that they burn down the system and alienate the public. No wonder the connotation with patents among many members of the public isn't quite so positive. Many now find "patents" synonymous with "trolls" rather than light bulbs, innovation, etc.

Here is a new article where Crouch shows the proportion of abandoned patent applications in the US going down over time. Is this indicative of a patent quality problem? Remember that the real number is FAR higher than what's shown by Crouch, around 92% if one considers revisions and re-applications. Here is another Crouch article about "USPTO Allowance Rate" and further commentary about it ("What is the Steady-State Patent Allowance Rate?"). In recent years, based on these figures, the USPTO got ever more terrible at rejecting bogus patents. David Kappos as Director (now lobbyist) made things ever more dire.

Courts Meet Avalanche of Bogus Patents

The USPTO has created a mess. It certainty did, but it profited from it. It's obvious at whose expense and to whose gain. The incompetence (top-down, management instructing examiners) now overloads the PTAB staff and leads to a sort of 'scatterback' that falls back on courts. Only lawyers and trolls win here.

How did it all happen and what does the USPTO plan to do about it now? Well, based on Patently-O (Crouch's blog), the "USPTO Proposed to Revise Rule 56". David says in this article, while linking to a PDF, that the "announcement is here. I will be submitting comments before the 12/27 deadline, and so if you have any ideas or thoughts, please post away."

So basically policy is being shaped by those who profit from it. We don't expect public interest groups to have anything to say. Here is the nasty Watchtroll pushing his own agenda with this article about a "new memorandum on software eligibility". Want to guess what Watchtroll will tell them?

Here is Watchtroll bemoaning the CAFC for smashing about 90% of software patent cases that it deals with. These people just can't help themselves. Whenever the system tries to correct itself they panic and try to keep it ruined, as from ruin comes more business to them (consulting, applications, litigation etc.) and it's frustrating to think that the public pays the price for all this unproductive chaos. The public pays, these people pocket it all.

The mess created by the USPTO, which granted patents on software for a number of decades (because it got greedy), scatters back on CAFC now. We see a growing number of reports about it. Kyle Bass, a person whom patent maximalists like to hate, goes on a PTAB winning streak ahead of the winter break. By invalidating crappy patents (granted by USPTO in error) he actually makes money. While opportunistic and selfish, at least it helps keep applicants honest (out of fear). Here is how MIP put it the other day. "The Coalition for Affordable Drugs has notched a flurry of PTAB wins in the past two weeks. The next decisions will not come until the new year," Michael Loney wrote.

Drugs being more affordable is a good thing, right?

Here is another new update about PTAB, courtesy of Mr. Loney:

The past four months have been stable for Patent Trial and Appeal Board filings, while October saw the Federal Circuit giving another ruling on reviewability of IPR institution in Medtronic, the PTAB issue Kyle Bass and printed publication decisions, and the USPTO propose fee increases and changes to patent agent privilege

The monthly numbers of Patent Trial and Appeal Board (PTAB) petitions filed for the past four months have been within a 14-petition range, after displaying volatility at the start of the year.

There is no sign of stopping at PTAB and we are gratified to know that those who attack PTAB (Watchtroll for example) are not succeeding. In another report from MIP it's stated that the "Federal Circuit [is] falling behind as PTAB appeals stack up," confirming what we saw other sources claim. IAM 'magazine', in the mean time, has a new "Report" (usually paid) which shows that CAFC further limits patent scope (not just impacting software but also logic circuit designs) and it leaves us very hopeful. Is this combination of CAFC and PTAB, inheriting the 'genes' of the SCOTUS, going to make software patents a thing of the past everywhere? It's definitely an attainable future. We're partly there already.

What got a lot of this reform rolling was the America Invents Act (AIA), which brought PTAB just a few years before Alice. According to Patently-O,"AIA Patents [are] Approaching 50% of newly issued patents" and here is what they mean by AIA Patents:

By the end of the calendar year, most newly issued US utility patents will be considered “AIA Patents.” AIA-patents are examined under the first-to-file rules of the America Invents Act of 2011 and are also subject to potential post-grant-review proceedings. The chart below shows results from a random sample of 7,300 recently issued patents.

Soon enough there might not be many software patents left (not already expired) and Alice/Section 101 accomplished more than just software patents abolition, based on this report about industrial machines. It seems too good to be true, but it's true. This is why patent law firms are hopping mad.

The US patent system is still messy, but we are optimistic and we believe it's getting better; most developments these days are positive ones. ⬆