Last week, a bunch of banks won a major federal appellate court victory. That’s no surprise, of course, but the case nonetheless signals slow but steady progress in the otherwise dismal field of patent law, particularly as it applies to patents involving matters of abstract reasoning like computer software and business methods.

First, a refresher. Surely you remember how a bill becomes a law. But what happens when the bill doesn’t say much, and it’s left to the Executive Branch and the Judiciary to figure out what it means?

That, in a nutshell, is what has happened with the Patent Act. Congress passed a law way back in 1793 providing patent protection for “any new and useful art, machine, manufacture or composition of matter and any new and useful improvement on any art, machine, manufacture or composition of matter.” The only real difference after 1952 is the addition of the term “process” in lieu of “art,” with a definition of “process” so expansive — e.g., the “term ‘process’ means process, art or method, and includes a new use of a known process, machine, manufacture, composition of matter, or material” — that it makes the word virtually limitless.

Back in 1952, Congress enacted a couple changes around the fringes — without reconsidering the core text of the statute — for a variety of reasons, including because, when it came to assessing whether an invention really deserved a patent, “judges did whatever they felt like doing according to whatever it was that gave the judge his feelings—out of the evidence coupled with his past mental conditioning—and then selected those precedents which supported his conclusions.” George M. Sirilla & Hon. Giles S. Rich, 35 U.S.C. 103: From Hotchkiss to Hand to Rich, the Obvious Patent Law Hall-of-Famers, 32 J. Marshall L. Rev. 437, 501 (1999). The 1952 Act was supposed to fix that by replacing judicially-created standards for “inventiveness” and the like with an objective test for “obviousness.”

That’s pretty much been the course ever since then: Congress hasn’t made much effort to define the limits of patent law, and so it’s determined by way of a strange triangulation between the U.S. Patent Office, which issues patents in the first place, the Federal Circuit Court of Appeals, the one and only court to which plaintiffs in patent cases have a right to appeal, and, the Supreme Court, which occasionally grants certiorari and gives the lower courts guidance. It is not a healthy way to run a patent system; neither executive agencies nor courts are particularly well-suited to consider and to address large societal changes like, say, the rise of the digital computer, which took place almost entirely after the last major revision to the Patent Act more than half a century ago.

Yet, somebody has to do the job, and the bulk of that work has fallen to the Federal Circuit. Last week, they issued a doozy of an en banc opinion in CLS Bank v. Alice Corp. The JURIST’s Paper Chase has links to the software patents at issue. Frankly, it’s hard to call any of them “inventions.” The “inventors” didn’t actually make anything; instead, they tried to shoehorn some ideas for software code — which is already protected by copyright — into the definition of a “process” or a “machine.” This is only allowed because courts have said it’s allowed, not because of any indisputable argument for calling a general description of  software running on a computer a “process” or a computer with a certain type of software on it a “machine” in the same ways those terms were understood in 1952.

The opinion, in which seven of the ten Federal Circuit judges agreed the “inventions” in the patents weren’t really worthy of patent protection, has garnered significant press. It’s unfortunate that there wasn’t any agreement by a majority of judges for why the inventions weren’t eligible for patent protection, but it’s quite fortunate that a significant majority of the Federal Circuit held that the abstract claims at issue in the case — in essence, the “inventions” were nothing more than general descriptions of how to make software that help financial traders in particular circumstances — shouldn’t have been granted patents. 
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Patent trolls are back in the news again, primarily as a result of the re-introduction of the “Saving High-tech Innovators from Egregious Legal Disputes” Act. (As The Register notes, the “SHIELD Act” is “risibly backronymed.”) Yesterday, the United States House of Representatives Subcommittee on the Courts, Intellectual Property and the Internet held a hearing on “abusive patent litigation.” I would say their heart was in the right place, but, in typical congressional committee fashion, rather than host a forum at which worthy ideas could be debated for the benefit of society, the subcommittee called four management-level lawyers at Fortune 500 companies, one lawyer from a multi-billion-dollar private company that provides software to most of the Fortune 500, and one lawyer from a litigation firm that touts its success representing Fortune 500 companies.

The SHIELD Act was first introduced last fall and it was, to be frank, useless. The original SHIELD Act would have forced plaintiffs to pay the defendants’ attorney’s fees if the defendant could show the plaintiff “did not have a reasonable likelihood of succeeding.” That sounds all well and good, except that the primary problem with our current patent system is not that plaintiffs are filing wholly-frivolous lawsuits (i.e., where there’s no chance of proving infringement), but that patents are granted way too easily, and then cost too much to invalidate. “A reasonable likelihood of succeeding” is a meaningless phrase — indeed, what better indication of the “reasonableness” of a patent infringement lawsuit could there be than the existence of a valid patent granted by the patent office?

The revised SHIELD Act (copy available via the EFF at this link) makes far more sense. Instead of attacking purely frivolous claims — which simply aren’t the problem — the SHIELD Act has an elegant solution to the patent troll problem: to maintain an infringement lawsuit, the plaintiff must be able to show it is engaged in “a substantial investment… in the exploitation of the patent through production or sale of an item covered by the patent.”

If enacted, the bill would end the practice of companies buying patents and then enforcing them against others without bothering to do anything with the patent themselves. Patent protection exists to protect legitimate inventors trying to utilize their patents, not to enrich shell companies unwilling to take on the risk of making a product that actually uses the invention. The revised SHIELD Act would be a step in the right direction, but it has three big exceptions that render it toothless in most cases. Moreover, it fails to attack the primary problem with patent lawsuits these days: the lopsided cost of pursuing a patent lawsuit to defending one, which gives the holders of weak patents the power to extract sub-million-dollar settlements without their patents actually being tested in court. 
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[Update, October 23, 2012: As an anonymous commentator points out (with this link), the US Patent Office has tentatively invalidated Apple’s silly patent on the rubber-band effect in the iPhone’s user interface.

Update II, December 19, 2012: in re-examination, the USPTO has rejected much of the ‘915 patent, too.]

Humanity’s scientific progress never ceases to amaze. Recently, we successfully shot the Mars Curiosity rover from our home planet (moving at 66,000 miles per hour) at a target smaller than the State of New Hampshire on another plant (itself moving at 54,000 miles per hour) over 30 million miles away, where it now tweets pictures to us; and, the Large Hadron Collider smashed together billions of protons all at once to successfully take a picture of the shadow of something — the very something that makes us things, not just bundles of energy — that only exists for less than a billionth of a billionth of a second.

Oh, and Samsung owes Apple more than a billion dollars because it made smartphones in which, if you spread your fingers apart, it will zoom out on the document, smartphones in which the objects on the screen roll around and bounce back like you’re spinning the Wheel of Fortune.

On December 14, 2007, Apple laid claim to the supposed novel invention of “list scrolling and document translation, scaling, and rotation on a touch-screen display,” the formal title of United States Patent 7,469,381 B2, with a patent application granted after a year-long review by the patent office that apparently didn’t include watching this scene from 2002’s Minority Report, where Tom Cruise does all of those things and more with a spiffy 3D interface.

There has been plenty of good reporting on the Apple v. Samsung case, like this pre-verdict summation from Wired and this easy summary of the verdict from Huffington Post, so I don’t won’t recite the basics. On the more critical side, Groklaw has rightly questioned a number of problems with the jury verdict, and we’ll likely hear more about that over the next month or so. I raised my own concerns at the beginning of the trial that Judge Koh seemed to be unduly harsh on Samsung’s lawyers, both in restricting the use of evidence and in trying to control Samsung’s public relations.

There’s also all kinds of interesting inside-baseball going on here, from the curious fact that Samsung is one of the largest suppliers of iPhone and iPad components to the role of Google as the wizard behind the curtain because its Android operating system underlies Samsung’s user interface. There’s also some contrarian opinions out there that $1 billion was, all things considered, a modest cost for Samsung to be both the largest manufacturer of smartphones and to be considered as a peer with Apple in terms of design and user interface.

Two thoughts, one on the nitty-gritty of the law, the other on the big picture of the law.
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As I’ve discussed at length before, patent infringement litigation is both hot and controversial these days, and no realm of patent infringement is as hotly contested as the smartphone world. PCMag and Visual.ly have both put together impressive infographics portraying the convoluted battleground.

The three most interesting fights this year have been Oracle v. Google, Apple v. Motorola Mobility, and Apple v. Samsung, each of which has produced their own drama, drama that may foreshadow increased involvement by the courts (other than the Federal Circuit Court of Appeals) in reshaping the landscape of patent law. Lacking any useful reform on the horizon, the courts are taking matters into their own hands.

The Oracle v. Google trial ended not with a bang but a whimper: a jury rejected the patent infringement claim, and then Judge William Alsup knocked out Oracle’s claim to copyright not just the programming code, but the actual structure of how the code is put together: “So long as the specific code used to implement a method is different, anyone is free under the Copyright Act to write his or her own code to carry out exactly the same function or specification of any methods used in the Java API.” Oracle accepted $0 in damages to get moving on an appeal — and then came the fireworks this week, with Judge Alsup suddenly ordering both companies disclose any “authors, journalists, commentators or bloggers” they paid to comment on the case.

The Apple v. Motorola Mobility (which Google bought) trial ended much more spectacularly with Judge Posner (normally of the Seventh Circuit, presiding over the trial by designation), who has been quite vocal about the problems with our patent system both before and after the case, dismissing the entire case for “a simple failure of proof” of monetary damages or of entitlement to an injunction. The opinion is (of course) on appeal before the Federal Circuit. Richard Epstein has been harshly critical of the opinion, disingenuously arguing that the same layperson juries he thinks can’t understand medical malpractice should be trusted with evaluating the reasonable royalty to be paid for the programming code that runs smartphones even in the absence of competent expert testimony.

The Apple v. Samsung trial is going on right now (it seems CNET puts up another post every few hours), but it has already produced a fascinating, if a bit disturbing, exchange in which Judge Koh repeatedly denied Samsung’s efforts to introduce evidence showing that certain Samsung designs predated the iPhone. Samsung took the issue to the press, releasing the slides they wanted to show the jury during opening statements — incurring Judge Koh’s wrath and a sanctions motion from Apple, and necessitating an affidavit from Samsung attorney John Quinn explaining how the information was released.

Let’s put aside, for the moment, the technical details of these cases and the specific legal issues involved, and instead focus on the role of litigants and courts in shaping the public debate over patent law, particularly with regard to software patents. All of these judges are off the reservation — and that might be a good thing.
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It’s no secret that patent infringement is one of the hottest areas in which to practice law these days.  The inventor-friendly principles that governed the original United States Patent Office back when Thomas Jefferson ran it (though he personally wasn’t too much a fan of patents) are still the law today, even though the scope of prior art in most industries has expanded far beyond the point where any patent examiner could reasonably review it, much less ensure an inventor in an ex parte proceeding fairly describes it.

These days, if an inventor has enough determination, or enough funds to pay for his or her patent registration attorneys to go the whole nine yards, then they can likely obtain a patent even if their invention is at beast only arguably novel or useful. Once granted, the patent has immense value, and is protected against all but the strongest invalidity challenges thanks to the Supreme Court’s opinion in Microsoft v. i4i last summer.

As a matter of law, from the plaintiff’s perspective patent infringement claims are a sweet deal (assuming your claims aren’t totally meritless, in which case the sanctions can be quite severe). Patent infringement cases are less of an uphill climb than, say, anti-trust, drug or medical device product liability, or any claims dependent upon a class action, all of which have been under attack by the Supreme Court for years.  It’s no surprise that defendants facing patent infringement claims often run scared to large corporate defense firms, asking them to pull out all the stops to defend them.

As a practical matter, though, patent infringement cases are a little more complicated than that. 
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[Update: the America Invents Act passed. Interesting passage from one of the reports: “Companies like Google, Dell, IBM, Apple, Cisco, and others also applauded the bill’s passage.  Innovation Alliance, which represents smaller tech companies, was more muted in its response. The bill was criticized by some in Congress for favoring larger businesses.” Indeed. The primary change to “first to file” and the secondary change allowing more administrative appeals benefits large companies with large budgets for patent filings. It doesn’t do anything at all to help small businesses; it puts them at a competitive disadvantage.

Update II: Freakonomics has a post about a recent study indicating that, when Canada passed the same change to “first to file,” individual inventors were disadvantaged. That’s consistent with my analysis below.]

Patent trolls, particularly software patent holding companies, are back in the news again with an excellent This American Life broadcast, “When Patents Attack”, examining Nathan Myhrvold’s company, Intellectual Ventures:

We told Intellectual Ventures that Chris Sacca compared their business to a mafia shakedown and in an e-mail, Peter Detkin called that ridiculous and offensive. He then reiterated some of the arguments you’ve heard about how IV protects inventors and went on to say, “We’re a disruptive company that’s providing a way for patent-holders to recognize value.” (By “recognize value,” he means “make money.”) “That wasn’t available before we came on the scene, and we are making a big impact on the market. That obviously makes people uncomfortable. But no amount of name-calling changes the fact that ideas have value.”

David E. Martin, Chairman of M·CAM Inc. (which has various patent analysis services), told NPR that ‘30 percent of U.S. patents are essentially for things that have already been invented.’

That’s a problem. Software patents have fallen under particular criticism because of their ability to frustrate the fast pace (and sometimes shoestring budgets) of internet startup companies. Smart folks who know about software and startups like Paul Graham and Marco Arment have differing views on whether software should even be eligible for patent protection.

Where ever one falls on it — I represent plaintiffs (in this context, inventors or their assignees) so am generally favorable to them, though at the moment I’m defending a infringement suit, too — there are obviously numerous problems with our patent prosecution and patent infringement litigation systems. In sum, patents are granted too easily and then patent infringement suits are too expensive to defend.


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One of the nice things about the being a Justice of the United States Supreme Court is that you never have to explain yourself. You don’t have to ask questions at oral argument. You don’t have to read the briefs filed by the parties, not really, because you can interpret the facts stated and arguments

It’s not easy being Google. (I’m talking about the company itself; it’s easy to be famous, powerful, and wealthy, so I don’t feel sorry for the management and shareholders of Google.) When you are that big, and asked to do that much, it’s inevitable that everyone will have some sort of complaint about you.

Thus

There’s been a wave of antitrust class actions predicated on patent misuse by pharmaceutical companies of the past decade. The troublesome Illinois Brick decision prevents “indirect purchasers” — which means you, me, and our health insurance plans — from bringing federal antitrust claims, so plaintiffs’ lawyers have had to get creative in use of state

The Limited Scope Of Inventors’ and Creators’ Rights Under Copyright, Trademark, and Patent Infringement Law

The business lawsuits actually filed, and defamation lawsuit not filed, surrounding Mark Zuckerberg and Facebook have inspired some of my more popular posts. But there is one litigious part of the Facebook story that I did not cover,