If you’re trying to draft a patent application for a computer-related invention, you’re basically left in a mess of opinions that the Federal Circuit refers to as CLS Bank Int’l v. Alice Corp. The decision, described by Judge Rader as a failure of his institution, left us wanting for just a tad —by a tad I actually mean a ton— more predictability. For now, we can only try to parse out why the opinions differed, take cues from our historical backdrop, and revise our prosecution strategy accordingly.
“A lot of times when we talk about patent eligibility we really need to know what the claims look like, so I thought we could spend four or five hours discussing this claim. Oh not enough time,” says Bruce Sunstein, founder of Sunstein, Kann, Murphy, and Timbers LLP at the 2013 AIPLA Annual Meeting. Fair point, Sunstein. So here’s the gist of CLS Bank. We have a computer readable medium claim in a format we’re accustomed to and that seems to be perfectly acceptable— program code for this program code for that. There are system claims that also would seem completely okay. Finally, there’s a method claim, which notably doesn’t include the word “computer.” Unfortunately for us, seeming completely okay was clearly not the test for patent eligibility. This was an en banc decision. The 10 available votes came out as follows:
Judge Lourie writing with Dyk, Prost, Reyna, and Wallach says none of the claims are patent eligible. They reject the method claims for being too abstract. Then they say the storage and systems claims are just method claims in disguise, and so are also not patent eligible.
Judge Rader with Linn, Moore, and O’Malley says the systems claims are patent eligible, because the computer is performing a specific method. Rader with Moore again says that the method claims are patent ineligible, because they’re too abstract. On the other hand, Linn and O’Malley say all these claims are okay.
Newman says all the claims should be patent eligible, because they’re within statutory classes. “She as usual wrote a brilliant opinion well worth reading, cutting to the chase, and if everyone voted with Judge Newman our world would be simpler,” says Sunstein.
But since our world isn’t simple, Lourie’s opinion is the one to further analyze. He finds the systems claims patent ineligible, and believes the test for patent eligibility should be whether the claim in practical effect places an abstract idea at risk of preemption. If the claims do place preemption at risk, then we have to look at the inventive concept in the claim and decide if theres enough extra stuff in the claim to go beyond abstract idea. If there’s not enough extra stuff, the claims will not be patent eligible. “Now there’s a completely simple and easy to implement test,” jokes Sunstein.
The main authority for Lourie’s opinion is the Mayo v. Prometheus decision, which said laws of nature, natural phenomena, and abstract ideas are not patent eligible. Those exceptions came long before the Prometheus decision and even the Patent Act of 1952. To understand the Prometheus decision Lourie leans on, we need to go back and try to glean the still-standing principles that seem to come from these older cases.
Let’s start with the 1853 case O’Reilly v. Morse. “It was really astounding how many of the issues that were raised [in this case] are the same kind of issues that are going on today,” says Jerry Selinger, partner at Patterson & Sheridan LLP and current chair of AIPLA amicus committee. In this case, the claim at issue was basically for sending information at a distance using “the motive power of the electric or galvanic current, which I call electro-magnetism…of which I claim to be the first inventor or discoverer.” (Oh, mighty Morse, could you have any more hubris?) There the court distinguished an earlier English decision, Neilson v. Harford. In the English case the purpose of the invention was to have a more efficient furnace by heating hot air in a receptacle before you blew it into a furnace. There we can see that the abstract principle was that hot air better transfers heat than cold air. The court pondered whether putting a receptacle between the fan and furnace was too abstract or whether that was in fact an application of the idea. It was upheld on the grounds that the invention was a machine embodying a principle and not just a principle alone. In contrast, the court in Morse said claiming the use of electromagnetism for communication was too abstract. The point to take away — other than the abstract idea exception itself— is that fact-specific assessment is not a recent invention of the Federal Circuit or the Supreme Court. Moore brings attention to that lesson in her opinion in CLS Bank. She cites the Morse case but says the abstract idea exception is being given too much scope today. If you keep stretching the exception, we would abolish all business method, financial system, and software patents entirely.
More than a century after Morse, and after the Patent Act of 1952, the Supreme Court revisited patentable subject matter again in Gottschalk v. Benson. The invention in this case was a method of converting binary-coded decimal into pure binary numbers on a general-purpose computer. Just a reminder: we’re working from the backdrop that the discovery of a phenomenon of nature is not patentable, but an application of a law of nature to a new useful end is patentable. Also, transformation or reduction of article to different state or thing is a clue to patentability of a process claim that does not include particular machines. Benson later went on to clarify that the process patent does not have to be tied to particular machine or apparatus or operate to change articles or materials. Given these principles, Douglas with 5 other justices made a fact-specific decision saying the claims were ineligible because granting a patent in this case would be like granting a patent on the algorithm itself since there was no practical application except in a digital computer. Lourie followed suit in CLS Bank; he used Benson to find the fact that the system claims occurred in a computer insufficient to make them more than abstract.
Six years after Benson, in 1978, the court in Parker v. Flook reiterated that the discovery of a natural phenomenon alone cannot be patented. The invention provided a way to figure out the limit numbers between which the catalytic conversion of hydrocarbons can occur; once outside the range an alarm would sound. The court said that limiting the formula to the catalytic conversion of hydrocarbons was not enough to make the claim patent eligible. The court went out of its way to say any “competent draftsman could attach some form of post-solution activity to almost any mathematical formula.” In other words, they’re saying you can’t just add some non-inventive stuff onto the end of a mathematical formula to make the claim patentable. “I think what that says is you may have achieved ‘transformation’ but it may not matter.. [the court] never said nor implied that the transformation test trumps the law of nature exclusion,” says Selinger. That concept is an important line of demarkation you see between the opinions of CLS Bank.
Just a few years after Flook, the court in Diamond v. Diehr held that a process for molding rubber products by using the Arrhenius equation was patent eligible on the grounds that claiming a physical process that used a mathematical formula was not the same as just claiming the abstract formula. (And then all the software developers got a glimmer of hope.) Rader relies on the logic in Diehr to support his opinion in CLS Bank, saying that the claim there is for when a computer performs a specific application of a principle.
So then we —finally— come to Prometheus. Here we have a claim for a method to figure out how to adjust dosage. The doctor administers a drug to a subject who has a gastrointestinal disorder by giving them a pill. Then, the doctor determines the level of a metabolite by drawing blood. These steps seem concrete enough. Then if the measurement of metabolite is below some threshold he indicates a need to increase drug dosage to increase efficiency, and if its above a threshold then he identifies a need to decrease the dosage to avoid unsafe side effects. A unanimous decision by Breyer said the correlation between a specific metabolite level and the dosing “sweet spot” was a law of nature, and therefore not patent eligible. The court was looking for something else in the claim to go beyond just claiming the law of nature— an inventive concept. However, according to the court the administering steps refer simply to the relevant audience: doctors, who treat patents; the wherein clause simply tells the doctor about natural laws, and the determining step tells the doctor to engage in well understood routine, conventional activity. The court slips in one sentence about a new drug or a new way of using a drug being safe from this inventive concept analysis. This tells us two things: 1) if we’re in the law of nature realm, we’re going to have to look outside that law for an inventive concept; and 2) as put by Courtenay Brinckerhoff, partner at Foley & Lardner LLP, “In law school we learned bad cases can make bad law, and here we have perhaps an example of bad claims making bad law.”
As we know, five judges in CLS Bank would use Prometheus to find the claims were patent ineligible. Alice Corp’s claims are for methods of reducing fraud and non-payment by effecting trades through a third party intermediary who makes sure both parties can pay before allowing the trade to happen. The court found that the method was an abstract idea, because it is a “disembodied concept … a basic building block of human ingenuity, untethered from any real-world application.” As for tying the methods to an application in a computer, Lourie says the systems claims also don’t provide any significant inventive concept in addition to that abstract idea. (Here’s where Rader chooses to rely on Diehr to approve the systems claims.)
Wait but isn’t this idea articulated by Lourie about looking for an inventive concept old hat? “That’s the stuff that was before the Patent Act of 1952 right? I agree that all this is blarney,” says Sunstein. The Patent Act promoted the idea that there is no gist of invention in patent claiming. Even §103 was revised to steer away from requiring this “flash of genius” inventiveness.
We’re likely to hear more from the Supreme Court on the subject. “But they’re the ones who brought us Mayo v. Prometheus, and the problem with Mayo v. Prometheus in my view is there no articulated standard for evaluating anything,” says Sunstein.
We’ve got a couple cases following CLS Bank that give us clues as to what a computer-related claim should look like post-CLS Bank. In the Ultramercial v. Hulu case, Rader and Lourie are surprisingly on the same side. The patent covers a method relating to a user seeing an advertisement before getting exposure to his desired media content. A point that I’ll circle back to in a minute is that there were 11 steps recited in the method claims in Ultramercial. As expected, Rader writes an opinion saying this stuff goes on in a computer so we find it’s patent eligible— think Diehr/CLS Bank logic. What’s interesting is Lourie writes a concurring opinion, using as precedent his oh-so-decisive plurality opinion in CLS Bank. He found that unlike in CLS Bank where intermediation was too abstract a concept and the claims added nothing inventive, in this case the limitations represent significantly more than the underlying abstract idea of using advertising.
The Accenture case is the most recent in the string. This patent was for systems and method claims relating a computer program for handling insurance-related tasks. The interesting thing here is the method claim ineligibility determination by the federal court was not appealed. So Judge Lourie writing for the majority says the system claims on appeal are just like the method claims, and since the method claims were bad, the system claims are ineligible too. He goes on to say the system claims would be bad independently too, but that doesn’t need to be analyzed.
This means that including different types of claims may not save you in terms of eligibility, because Lourie will just say they’re just like the method claims. Rader in the dissent says you can look at the abstract idea behind something to invalidate any invention, and you can’t just go hunting for abstractions by ignoring the specific stuff that is in the claim. Indirectly, this is a criticism not just of Judge Lourie in CLS Bank, but also of the Supreme Court in Mayo v. Prometheus. “So if you want to know how your claim is going to be evaluated, just find out which judges are on your panel, and you have your answer. See how they voted in CLS Bank,” says Sunstein.
It seems like if you past Judge Lourie you optimize your chances, so the real question is how do you get past Judge Lourie? Well Accenture had an extremely long disclosure for the claims, so length is clearly not enough on its own. In the claims in Accenture all the limitations was in last element compared to Ultramercial where there were 11 steps. This suggests that the rule is to atomize your structures. In other words, if you want to get past Judge Lourie instead of putting all the good stuff in the last claim like in Accenture, spread the limitations throughout the claims because then it’ll be harder for him to abstract. “It’s a terrible lesson, because it goes against the court telling us it shouldn’t be up to a clever claims drafter, but thats what it’s all about isn’t it? That’s how we earn our living,” says Sunstein.
There’s a petition for writ of cert in the CLS Bank and Ultramercial cases so hopefully we’ll have more clarification on the matter soon.
*originally written for ipwatchdog.com*
The room was packed with us IP people of all kinds. A group of patent agents from Mexico City, a couple of eager trademark students from the south, a patent attorney from Canada with a great Judge Rader impersonation, big wigs from the IP section of the ABA, and many many more. Half of us were in suits, half had managed to run up to their rooms and change into jeans. Most of our brains were filled to the brim with hours of CLE events, and now our glasses were filled to the brim as well. We had come to the end of the third day of the AIPLA Annual meeting in DC, all of us hoping to get better at what we do and all the same time feeling like our efforts may be futile because our oh-so-terrible system needs to be reformed.
Jeffrey Lewis, the now (as of Friday) past president of the AIPLA, drew the attention of the room to give an unbelievably inspiring speech about the future of intellectual property and innovation that I can only hope to pass on without diluting. He started by telling us about all the great talks on the law, about how the communications that we have at these events is pivotal to making progress. He then with great fervor spoke about how the media has been trashing IP law over and over. How people uninformed have been spreading this negativity, and that it has unfortunately found its way into the ears of the decision makers. “In this state where the government can seem to do nothing at all, the one thing which they all miraculously have managed to agree is that patent law is bad,” Lewis said. He continued to speak about how frustrating this trashing was, and how we are lucky to have a few people on our side who can make people understand the importance of an intellectual property system. (Way to go Bob Armitage!) He referenced the fact that place in Europe and Asia have a stronger system for genetic patents, more protection for software patents, and that here we have a bunch of chatter that doesn’t seem to be helping any of us. The crowded nodded, a few “amens,” the clinking of martini glasses.
“What they forget is that without this system is that without it we would not have the drugs which cure diseases. We would not have the trademarks that protect our consumers…” he said. He did not say reform was uncalled for, but instead he reminded us how far we have come, to keep hope, and to change to dialogue for the positive. It is through this lens and with renewed optimism that I kindly but confidently reject the arguments of Michele Boldrin and David Levine in “The Case Against Patents.”
If you haven’t had a chance to look at it the basic premise of that paper is that “weak patent systems may mildly increase innovation with limited side effects…[and] strong patent systems retard innovation.” To the authors of this paper I ask the following question: what is the point of innovation if all those brilliant ideas never make it to the public? Yes, perhaps abolishing our system would maybe allow some fledgling companies to come up with more or better ideas, but without our system no investor would be compelled to make those ideas a product tangible to consumers.
Several of the criticisms of the system by the authors make clear that they have no faith in or respect for the art of patent prosecution. (As for their complaints about patent thickets, I’ll shamelessly direct you to this article I wrote on one way for us to develop IP strategy to deal with that.) For instance take their comment that “modern disclosure in patents is negligible- it is essentially impossible to build a functioning device or software program from a modern patent application, a fact which is especially clear since some patented ideas do not- and cannot- work.” Honestly, have a little respect for the very technically skilled, very experienced patent examiners at the USPTO who I know from personal experience love to give 112 (written description) rejections. They later go onto say examiners are encouraged to be more generous in giving patents. I would urge them to go read the promptly issued Myriad memo that was issued to the USPTO, which said isolated DNA was not patentable subject matter. They also point to the Amazon one-click patent as so clearly obvious, to which I would like to kindly point out that if it was so obvious, it would have been in the prior art. They say the USPTO affirmed the patent “albeit limiting it scope slightly,” and then proceed to mock the patent. Even a slight change in the scope of a claim can eliminate issues of breadth and enablement.
“Few patents are activity used. Patent litigation typically involves dying firms, that have accumulated stockpile of patents but are no longer able to produce marketable products, suing new and innovative firms.” Um. Firstly, the authors are writing this article by sitting on a chair protected by a patent, on a computer full of hundreds of patents, with the help of a mouse protected by a patent. If they’re working really hard they’re probably drinking coffee out of a cup protected by a patent with a cup holder protected by a patent. So, “few” isn’t the word I would use. Secondly, what part of Apple v. Samsung screams lack of marketable products? I’ll admit the buyout of companies for portfolios just for the sole purpose of litigation is maybe not the best thing for innovation, but it’s also not the only thing happening. A lot of portfolio acquisitions lead to further product developments.
Another point. The authors speak about the litigation driven by patent trolls. There are provisions in the AIA which now force NPEs/trolls/PAEs/whatever-you-need-to-call-thems to split up their suits so we no longer get one entity suing every company that could possibly have the technology at once. That’s a step in the right direction that needs to be recognized.
I get the sense that the authors have fallen victim to the media trash-talking Lewis was talking about. Even our greatest mistakes in implementing this system should only help us pave the way for reform. Rader in an event on litigation inefficiencies at AIPLA this past Friday said, “CLS Bank was a personal failure and a failure of my institution. But what it gives us an opportunity to find more predictable law.” We need to recognize that our patent examiners have experience, and what few things manage to get by them will be tackled by a court that is specialized and informed on the issues of patent law. “I have often said that I’ll put my bar up against any bar in the world. I think you have judges that warrant the same compliment,” said Rader.
By Michael Crowley
In the last decade, as NASA has shifted away from the center of space innovation in the United States in favor of supporting innovation in the private space industry, there has been a major shift in their research and development policy. These changes have produced debate over the best way to spur innovation. Specifically, what role will intellectual property protection play in the future development of space technology, and what level of control should NASA retain over intellectual property developed by private companies that receive public funding?
Historically, NASA has acted as a title-taking agency, meaning that any “intellectual property developed under a traditional NASA contract belongs to NASA.”* Many believed that this title-taking policy stifled private innovation by undermining the patent system’s inherent quid pro quo. Companies had to disclose their inventions to NASA and potential competitors, but were unable to obtain the benefit of a technological monopoly that patent protection usually provides. In an effort to promote private sector innovation, NASA has implemented a new system of intellectual property ownership. NASA’s third round of investment in private space companies, the Commercial Crew integrated Capability (CCiCap), allows NASA to waive all rights to the companies’ inventions in advance, thereby ensuring that the private space company can control their intellectual property.
This system will allow companies greater control by permitting them to obtain and own patents to their inventions. However, it is unclear how many companies will take advantage of these new provisions to obtain patent protection. For example, Elon Musk, the storied founder of SpaceX, has consistently refused to patent new technologies that the company develops, preferring instead to utilize trade secret protection. By electing trade secret protection, SpaceX has been able to prevent disclosure of newly developed technologies, thereby keeping private competitors and foreign space agencies alike from benefiting from their innovation.*
Trade secrets and patents are diametrically opposed both practically and philosophically, and this tension is evident in the private space industry. One of the bedrock goals of the patent system is to allow the public access to new technological advances through mandatory disclosure, thereby enabling downstream research to benefit from the upstream discovery. In contrast, trade secrets, by definition, forbid disclosure. Electing trade secret protection confers private benefit, but no downstream public benefit is obtained because of the secretive nature of technological developments.
In the search for ways to grow the national private space industry, it would seem that any policy that promotes the use of trade secret protection in the private space industry would hinder long-term development of space technology. For example, NASA’s agreement with SpaceX, SpaceX’s CCiCap Space Act Agreement (SSA), says that:
When Inventions made under this agreement are reported and disclosed to NASA in accordance with the provisions of this Article, NASA agrees to withhold such reports or disclosures from public access for a reasonable time (presumed to be two (2) years unless otherwise mutually agree) …
If this two year presumption stands, then it seems that the companies involved in the CCiCap would be unable to keep their inventions as trade secrets. However, if NASA allows the companies to keep their trade secrets, then the space industry as a whole will be deprived of their technological advances, creating the potential for a long term deleterious impact on future advancement.
It’s an unanswered question of what stimulates innovation better. Is it better to allow companies to control their own intellectual property and risk creating an industry where each company jealously guards all technological breakthroughs, or is it better to potentially stifle innovation by denying companies the economic fruits of their labor? Both NASA and the public have a stake in this question because the private space industry is being created and nurtured with public money. NASA’s answer to this question will help shape the relationship between public agencies, private companies, intellectual property law, and the future of humanity as a spacefaring race.
LSAG is all about helping law students. As a regular feature on the LSAG blog, we are soliciting advice from IP lawyers across the country. In our third installment, an Atlanta copyright and trademark lawyer offers advice about calling ahead when you are going to be late:
For crying out loud, when you’re meeting up with an attorney (for an interview, an informal coffee, anything), call, text or email us when you’re going to be late. Even if you’re only 5 minutes late. And, don’t wait to call until the time you’re supposed to arrive; call as soon as you know you will be late, or as soon as you think you’ll be late. Calling ahead allows us that you are respectful of our time and that you can function like a responsible adult. We are all late from time to time, so we get it.
When you call ahead to let us know how late you will be, we are able to adjust our schedules accordingly and continue to operate as efficiently as possible. If I know a student is about to come through my door, I will put off starting certain billable tasks because I don’t want to be interrupted in the middle of the task. And we all know you don’t want to mess with a lawyer’s billables!
LSAG is all about helping law students. As a new regular feature on the LSAG blog, we are soliciting advice from IP lawyers across the country. In our first second, a Chicago patent lawyer offers advice about knowing your interviewer.
"Do your research before meeting with someone. Being able to speak about an interviewer’s work is a great way to make you memorable. I was once told by an interviewer that all it takes from you is a quick Google search, but the payoff is big because the interview will feel that it is nice to be flattered. However, do not let this backfire on you. If you bring up something that your interviewer has worked on, make sure you know it well enough to engage the interviewer in conversation about it. Chances are you will not end up in an in depth conversation, but if they ask you something about it, you want to be able to respond intelligently."
By: Catherine Rucker, 3L at Golden Gate University School of Law
This meeting on October 17, 2013 at Berkeley Law was the third in a series where the USPTO is presenting information to the public on the issues surrounding claim construction in high-tech patents, and is soliciting feedback in order to improve the system.
The USPTO stated that The White House issued seven legislative recommendations and five executive actions (on June 4, 2013). See Fact Sheet: White House Task Force on High-Tech Patent Issues. Available at: http://www.whitehouse.gov/the-press-office/2013/06/04/fact-sheet-white-house-task-force-high-tech-patent-issues
General Discussion / Issues Raised:
Should a patent applicant specify when section 112f is being used (means plus function)?
The USPTO plans to conduct more random quality assurance reviews
The USPTO is implementing “means plus function” training modules for its examiners, and they are available on the USPTO webpage.
Suggestion that USPTO office actions should have a standardized form so that they can be easily searched.
Some USPTO examiners understand software technology, and some do not. [Some examiners are a person having ordinary skill in the art (PHOSITA), whereas others are not.]
Should a glossary of terms be required in patent applications?
The USPTO has a “glossary team” in Alexandria. Also, the USPTO is considering whether to launch a glossary pilot program.
Pros to having a glossary in the patent application:
Glossaries can help to clarify the claims.
Patents are like a contract between an inventor and the jurisdiction, and many contracts have a glossary.
A good glossary can help the examiner in the search for prior art. If a glossary provides an example, then that can help the examiner.
Cons to having a glossary in the patent application:
Glossaries themselves can be ambiguous.
A glossary will add to the expense when an attorney drafts the application. And pro se applicants will have to figure out how to create a proper glossary.
It is not possible to introduce “new matter” during patent prosecution. Therefore, it will likely not be possible to update the glossary during prosecution. Note: If the glossary were part of the “file history,” then it could be updated during the prosecution.)
The system is supposed to be flexible. But requiring a glossary is rigid.
Note: There is tension because in patent drafting you want the broad meaning. But during the prosecution you want a specific meaning in order to help the examiner.
This discussion is taking the Markman decision to the next level. See Markman v. Westview Instruments, 517 U.S. 370 (1996)(also referred to as “Markman II”). Markman held that claim interpretation was a matter of law that could be decided by a judge. Therefore, a judge could decide on the claim meaning at a hearing before trial. These are now known as “Markman Hearings.”
With Markman, the court system’s goal may have been, in the interest of efficiency, to reduce the number of patent trials by holding more front-loaded hearings instead. Now the USPTO is considering whether to push the burden of proving claim construction all the way back to the patent application.
A glossary in a patent application can be helpful, or it can be harmful; it can be either a “sword or a shield.” I tend to agree with the commentator who said that there is no need for new laws for claim clarity because the current laws (section 112) and rules are sufficient.
The website with the webex link from the meeting and a link to the “glossary polling form”: http://www.uspto.gov/patents/init_events/software_partnership.jsp#heading-1
“To promote the Progress of Science and useful Arts, by securing for limited Times to Authors and Inventors the exclusive Right to their respective Writings and Discoveries”—Article 1, Section 8, Clause 8
But what exactly counts as “the progress,” and how are we supposed to “promote” whatever that is? The leading school of thought is that IP rights will incentivize inventors and authors to innovate, and that in turn will “promote the progress.” That justification seems sound to me, except you know it requires that inventors and authors are actually incentivized by IP rights, which as Jessica Silbey points out is not usually the case.
Silbey’s collection of interviews in Harvesting Intellectual Property illustrates that the initial reason for engaging in creative invention is not connected to IP rights or even money. First to address the money point. If the question is “why did you embark on the project that you’re doing?” I’m not sure anyone in any career, even those completely outside of the realms of IP, would have the guts to answer, “for the money” even if that was the case. I mean I didn’t go to law school for the money, but I’d be lying if I said it wasn’t at least a perk I considered. But in any case, I think Silbey’s main point is that money isn’t the primary reason for embarking on a creative endeavor, and that I can completely agree with. Whether it’s passion, serendipity, or the need to solve a problem, it seems pretty clear that the jumping off point is rarely tied to IP. Once the idea is crafted, inventors think of their idea as a product of their hard work and time invested, and then want to protect them in a way that will preserve their reputation and the integrity of the invention. And here, Silbey says, is where we run into a problem. The kind of protection that inventors want for their innovations —and presumably the promise of which would incentivize them to innovate— is not the kind of protection offered by IP law as it stands today.
As is though, the IP protections offered do incentivize firms, including their business agents and lawyers. The firms think about IP rights from the starts, allocating research and development resources and strategizing around the ability to leverage the IP that will be produced. So I think this circles back to the question of how we are going to “promote the progress.” Silbey sets up the following ultimatum: If we think we need to promote it by encouraging innovation by inventors, we should maybe reform IP to protect the kind of things that inventors care about or maybe we rely on a different mechanism entirely. If we think we need to promote by encouraging firms to invest resources, we should stop justifying the reason for IP as an incentive for inventors and maybe even reform the law to focus more directly on aspects of commercialization that would compel firms to invest.
I agree that there’s a strong tension between these two theories, and that IP law is far from perfect or at least far from clear. However, I think that what we have might be an attempted balance of these two theories— an imperfect compromise, but a compromise nonetheless. Let me explain.
Silbey does acknowledge that it’s not that inventors never think about IP; they just think about it later. It helps them with business negotiations, growth, conflict, facilitating distribution and commercialization. Okay so if we think that “promote the progress” actually means help us with the implementation of your ideas to the general public, which actually makes some sense, then by helping with the later stages and interests of the inventors, we can do that. It’s not a solid model, but at least it addresses both sides. We can’t be sure whether we’re supposed to promote the progress by doing the commercialization-based stuff or whether we’re supposed to do it by encouraging individuals to invent. So what we do is craft a somewhat shaky law that exploits the intersection of interests between the inventor and the firm to make sure the public gets the greatest possible benefit, while also at least partially satisfying both parties.
I understand Silbey’s desire to pick a route and stick with it, and I think it might be a proposal worth looking into. However, I think the one thing we’ll lose in doing that is that by having the system we do that addresses both sides, we need not change the law every time the nature of innovation changes. Maybe there are times when it benefits the public to cater to the inventor in the lab and times where it benefits the public to cater to the big companies with the money.
Another (massive) point to consider is the start-up. The number of tech start-ups especially in New York City is increasing exponentially from year to year. The typical company structure is being replaced by four or five people working in a rented space to invent a product that can hopeful gather enough momentum and support to be something successful. In that space, the persona of an inventor is being shifted completely. Not only are you the coder/inventor/idea man, but if you want to be at all successful and get your company off the ground you are also the business man from the beginning. The New York tech community is constantly inundating inventors with the importance of planning an IP strategy right from the initial coding, and tech transaction lawyers are advocating an awareness of IP at least 18 months before IPO (initial public offering). So for the start-up man or woman wearing multiple hats, the system as it is might be a better option than starkly picking one IP law theory over another.
I’m not sure which option is best, or even how closely we’re supposed to be tailoring the law to our needs in this field given the field’s constant state of flux. Whatever your thoughts, Silbey’s question “Why does IP law talk about rights being granted to incentivize creators (the myth of the romantic author and mad scientist) and not to firms?” at least brings to our attention an important task. Even if we don’t choose to reform the law in this area, we at least need to reform the dialogue to reflect what is actually going on so we can make more informed policy decisions about IP law.
By Catherine Rucker
The purpose of the webinar was to present how to succeed in complying with the AIA, and how to avoid some of the main pitfalls.
The first speaker was Acting USPTO Director Theresa Stanek Rea. Director Rea provided some overarching information. She pointed out that with the AIA, now the US is more in line with foreign patent requirements. Since the AIA, the USPTO has several main goals. It is striving to process patent applications more quickly. It is also improving the quality of patent applications by allowing 3rd parties to provide information. The new post-grant review program is beneficial because it is better to settle uncertainties earlier, and without having to go to court. The USPTO has one satellite offices (in Detroit) and is adding more (in Dallas, TX; Denver, CO; Arlington, VA; and in Menlo Park, CA) so that it can work to reduce the number of appeals.
The “Track One” Prioritized Examination Program.
A typical patent application takes 22 months to process, and the “track one” goal is to process within 12 months. The three main reasons why “track one” applications are rejected are: 1) oath issues, 2) excess claims, and 3) unpaid fees. So if an applicant can avoid those types of issues, then the application can be processed more quickly.
3rd Party Submissions
Some reminders about 3rd party submissions are that they must be made “prior to” the submission date, and not “on” the submission date. Further, 3rd parties must not submit documents that do not qualify as “publications.” See MPEP sec 2128. There are several important rules about 3rd party submissions. For example, affidavits and declarations must be limited to the facts establishing why a submitted document qualifies as a publication. One rule about the “concise description of relevance,” is that since a 3rd party is not allowed to participate in the patent prosecution, then a 3rd party cannot argue against patentability in the “concise description of relevance” section. There are also strict rules about the signature on the 3rd party submission. For example, the submission cannot be anonymous. If a 3rd party wants to remain anonymous, then another 3rd party must sign the submission.
The USPTO commented that when non-patent literature (NPL) is submitted, then that helps the patent examiners. Basically, “concise explanations” give patent examiners a head start.
The USPTO also presented information about substitute statements, identifying an assignee and providing power of attorney, the four requirements for a “micro-entity” discount, the advantages of the “supplemental examination” program. The USPTO has an AIA micro (web)site, where it posts a “best practices” document and FAQ’s.
Patent Examiner Training
The USPTO is busy training the patent examiners so that they will be able to recognize whether the AIA applies, and how to proceed. The webinar included going through two exercises that the patent examiners will go through during upcoming hands-on workshops.
Several judges from the PTAB formed a panel to provide advice. They said to stay focused on the strongest issues, rather than bringing multiple issues. They also said to follow the rules carefully, and that their specific rules are posted on the PTAB’s website. The panel raised some interesting points. One is that the PTAB uses a broader standard to evaluate claims than the District Court uses because the applicant has the opportunity to amend at the PTAB. Another interesting point is that the PTAB requirements for discovery are different from the District Court requirements.
The USPTO has been tasked with streamlining the patent prosecution process. Patent applicants who are able to use the “track one” program should immediately benefit from faster processing times. Because the AIA has instituted so many changes, then everyone involved will be on a learning curve for the foreseeable future. I assume that there will be more errors for the examiners to catch. If that is the case, then there will be more issues within the Office Actions, and those applications will be delayed.
The patent prosecution process can proceed much more smoothly if the application is filed correctly in the first place. The USPTO provides detailed instructions for how to file correctly. The USPTO also notifies applicants about the most common errors so that they can be avoided. Further, the fact that the PTAB system is being expanded with more satellite offices and more judges should greatly improve the patent appeals process.
A lot of thoughtful planning has gone into improving the USPTO’s operations. In addition to applying the AIA requirements, the USPTO has also been tasked with streamlining all of its operations. All of the new programs were designed to enable faster patent prosecutions, but the kinks will have to be worked out first.
If you’re in the mood for overly broad, useless generalizations that contradict from chapter to chapter, grab a highlighter and a cup of hot coffee and be ready to be amazed. If, however, you’re looking to read a compilation of a comprehensive scope of opinions that provides directed insight into how economic theory works or why it matters in the world of modern day IP, keep looking— or at least look past Lawrence Lessig’s Remix. (No offense, Lawrence. I know you’re a genius, but this one wasn’t for me.)
First a little background as to understand my response. We start with chapter six, which to summarize is a 60 page attempt to succinctly set up two types of economies: commercial and sharing. In a commercial economy you use money as the unit of exchange. For example, you pay for your meal at a restaurant. In a sharing economy you exchange for something that’s not money based. You provide moral support to a friend at their swim meet in exchange for them being nice, wonderful, and so on to you when you need it. If the exchanges are mutually valuable, you continue in this way and as soon as they aren’t you generally stop. (I’ll save you a rehash of Lessig’s distasteful and unnecessary comment about battered spouses.) Lessig also makes a point of saying we expect certain types of economies in certain situations, which he then proceeds to demolish by showing that sex for instance can exist in both economic models, hypothetically love-expressing sex in the sharing economy and prostitution in the commercial one. Then we get to the point where Lessig picks random examples and attempts to put them in the commercial category, Netflix and Google for instance, or the sharing one, like Wikipedia. I would explain his logic behind a “commercial” characterization but for one I don’t agree with it. Take for instance his assertion that “It is not a gift relationship that defines your employment contract … Nor should it be.” I have factored my personal relationships with people, the supportive vibe, my future coworkers willingness to participate in post-work shenanigans into every employment decision I’ve ever made regarding how much I should or would be willing to get paid. I doubt I’m alone in that. In any case, he proceeds to do away with most of these constructs and stick most everything under the hybrid category in the next chapter anyways so I won’t dwell on the point.
So I’ll spend my time inherently apologizing to someone clearly smarter and more accomplished than me but also critiquing Lessig’s argument about why sharing happens in pure sharing economy and in a hybrid economy. Lessig provides an example of a programmer for IBM who is paid to add code to a free-software project, articulating that the freedoms shared with that software are not tied to money. I can agree that the developer is not charging per use or making money off of any sort of licensing deals, but to say that his exchanging this code for a lump upfront sum which IBM pays him is not tied to money seems bizarre to me. Even if you say it’s not every transaction that’s connected, his sharing this thing openly is weighed against his getting paid. He could have chosen to not work for IBM, to make the software proprietary and sold it. Still not convinced? Let’s change the fact pattern.
Let’s take a photographer, who happens to be a skilled PHP developer on the side. Or an EMT who does Ruby-on-Rails in his spare time. (These may or may not be my roommates.) They develop some cool code and stick it online for free. They answer questions about code problems, hiccups, glitches in current software. Lessig would probably argue here that they are sharing for a reason unconnected to money. Maybe he’d cite to that study saying “intellectual stimulation” would be a likely reason. We’ll ignore for a minute the fact that the sorts of developers that are partaking in psychological studies about why they contribute code for free are probably a self-selecting and biased group that skew the results of a study and don’t reflect the typical coder. Maybe passion plays a role, but one pivotal thing Lessig fails to recognize here is reputation and the corresponding resume factor, which are directly tied to money. By creating an online presence that is known for correctly answering questions about code, you become well respected in the developer community which plays a direct role in you being able to get a job in the first place. On top of this is the fact that now almost every tech job asks for code samples. If you haven’t had the chance to work on something proprietary— as is the case with most start-up folks and entry-level developers— this is a way for you to display your credentials as well as the online communities reaction to them. Your link to code samples available freely online may very well be the thing that allows a senior technical director to be able to determine how good you really are at what you do, which oh-so-shockingly correlates to your job salary, or the price of your project in the case of my roommates. All of the tech recruiters I know will at least ask for some code prior to even looking at a resume. To take this out of the tech space for a moment for the purpose of clarity, this is the equivalent of a freelance journalist hosting a blog. It might not be directly for money, but you’re definitely going to be including that link on your resume so whoever is hopefully going to hire you can see your writing skills. You are sharing those freedoms for the price of whatever your future salary is going to be, or at least whatever portion you think is attributable to your having your work on display for comment, reaction, and evaluation.
This point is one that applies in both purely sharing and hybrid economies. Lessig’s statement that “if those within the sharing economies begin to think of themselves as tools of a commercial economy, they will be less willing to play” is easily disabled by saying that the fact that developers think of themselves as tools of the commercial economy (seeking salaries) is at least some part of the reason (maybe the whole reason if they’re a job seeker) they were participating in the sharing economy to begin with.
As far as leveraging the value of a sharing that stems from diversity and sheer volume, I agree with Lessig that this is something that proves beneficial to companies. I also don’t think that observation is anything particularly ground breaking. Of course if you can get the benefits of something for free, you will be inclined to do so. What I was hoping for at this point and upon reading the title “Hybrid Economies” was some clear opinion from Lessig on how to leverage sharing for use in the commercial economy. What I got was a really tactful little jig around any sort of concrete opinion— though I guess I should be thankful that I didn’t get a solid opinion that was then contradicted five pages later. What he does tell us is paying the sharer’s probably isn’t the perfect answer. He also manages to read into a hesitation by Warner’s Brandon that giving up some IP rights to allow kids to talk about Harry Potter online is exploiting the sharing by teens as great marketing value that translates to money for Warner Bros. Interesting that he sees the link to money here, but not in the case of an IBM developer.
I will say Remix provided a large quantity of examples spanning many different topics in the modern world that illustrated how complex economies and IP in the internet age are. I’m just not sold that they led to any of the conclusions Lessig presented, and to be frank it didn’t seem like Lessig was either.
By Amanda Levendowski
Lauren LoPrete was doing research for her record label when she came across a bizarre concert poster for a 1986 The Smiths show. The poster featured Charlie Brown lying down in the grass with one of Charles Schulz’s iconic speech bubbles floating over his head. Instead of a Peanuts quote, though, Charlie chanted “WHY? WHY? WHY? WHY?” In August, the Oakland-based graphic designer started This Charming Charlie, a Tumblr featuring mash-ups of Peanuts panels with The Smiths’ lyrics. The juxtaposition of Peanuts’ melodrama with Morrissey’s melancholy practically wrote itself.
This Charming Charlie attracted buzz immediately. The blog gained more than 60,000 followers. LoPrete’s work was featured on Huffington Post and Rolling Stone, but her work also attracted more than adoration from fans. This Charming Charlie grabbed the attention of Universal Music Publishing, which holds the copyright to The Smiths’ songs. Universal presumably filed several §512 take-down notices with Tumblr. In her post “I Know It’s Over,” LoPrete explained that six This Charming Charlie posts had already been pulled. More were removed over the next several hours.
Section 512 was enacted as part of the Digital Millennium Copyright Act (“DMCA”). The “safe harbor” provisions of §512 shield service providers, like Tumblr, from secondary or vicarious liability if a user posts copyrighted content. A service provider can only avail itself of the safe harbor if it does not have “actual knowledge that the material or an activity using the material on the system or network is infringing,” and complies with other statutory requirements. 17 U.S.C. §512(c)(1)(A).
Service providers play host to hundreds of thousands of user-uploaded videos, pictures and songs a day. Asking Tumblr to make itself aware of every piece of possibly copyrighted content – hiring employees, creating training programs and best practices, distinguishing legal content from illegal content, tracking down and identifying rights holders – is unreasonable.
That’s why the safe harbor also outline procedures for copyright owners to notify service providers about infringing content. 17 U.S.C. §512(2)(e); 17 U.S.C. §512(c)(3). In Viacom v. YouTube, Judge Cabrenes explained that the §512 cannot place the “burden of determining whether materials are actually illegal on a service provider.” Viacom Int’l., Inc. v. YouTube, Inc. 676 F.3d 19, 32 (2d Cir. 2012). On remand, the lower court acknowledged that the burden of “identifying what must be taken down is to be on the copyright owner.” Viacom Int’l Inc. v. YouTube, Inc., 07 CIV. 2103 LLS, 2013 WL 1689071 (S.D.N.Y. Apr. 18, 2013).
In Universal Music, Judge Fisher explained why placing that responsibility on copyright holders, rather than service providers, makes sense. “Copyright holders know precisely what materials they own, are thus better able to efficiently identify infringing copies than service providers… who cannot readily ascertain what material is copyrighted and what is not.” UMG Recordings, Inc. v. Shelter Capital Partners LLC, 718 F.3d 1006, 1022 (9th Cir. 2013). To that end, the “actual knowledge” provision of §512(c) requires “knowledge or awareness of facts or circumstances that indicate specific and identifiable instances of infringement,” rather than some nebulous awareness that users may be uploading copyrighted content. Viacom, 676 F.3d at 32 (emphasis added).
Implicit in that decision is copyright holders’ responsibility to demonstrate that the content they are flagging is actually infringing. Section 512(f) explains that any copyright holder who “knowingly materially misrepresents… that material or activity is infringing” in a take-down notice may be liable for damages incurred by the alleged infringer. Although Larry Lessig is currently suing Liberation Music for issuing a borderline-farcical take-down over one of his lectures (which uses clips of copyrighted material to illustrate the fair use doctrine), cases applying §512(f) are few and far between.
This January, the Northern District of California finally issued a ruling in the “dancing baby case,” Lenz v. Universal Music. Universal filed a take-down over a 29-second video of Lenz’s son dancing while Prince’s “Let’s Go Crazy” played in the background. Judge Fogel denied both parties’ motions for summary judgment, but held that “a copyright owner must make at least an initial assessment as to whether the fair use doctrine applies to the use in question in order to make a good faith representation that the use is not ‘authorized by law.’” Lenz v. Universal Music Corp., 5:07-CV-03783-JF, 2013 WL 271673, at *6 (N.D. Cal. Jan. 24, 2013)
As LoPrete’s lawyers explained in a short, simple letter to Tumblr, the lyrics featured in the disputed This Charming Charlie posts are fair use: only snippets of the lyrics are used, the blog has no impact on the commercial value or market for The Smiths’ music and LoPrete’s reimagining of The Smiths’ lyrics as Peanuts comics is obviously transformative. Booth Sweet LLP, http://thischarmingcharlie.tumblr.com/post/62086118078 (last visited Sept. 29, 2013).
Universal announced that it is no longer pursuing the matter earlier this week. Based on the language of §512(f), LoPrete has a credible claim that Universal knowingly materially misrepresented that her use of The Smiths’ lyrics infringed on their copyrights. Unlike the mass-batch take-down notices issued in Viacom and UMG Recordings, even an “initial assessment” of the challenged This Charming Charlie posts reveals that “the fair use doctrine applies to the use in question.” Lenz. 2013 WL 271673, at *6.
Although there are remedies available to those whose work is mistakenly removed, including counter-notification under §512(g)(3), few artists are aware of these remedies. Even fewer are able to spend the time and money necessary to fight a bogus take-down notice. According to the LA Times, LoPrete actually announced the demise of her blog before Booth Sweet LLP offered to represent her.
Even after the Lenz decision, §512 is still something of an unsafe harbor: artists must go to trial to show that the copyright holder knowingly misrepresented its take-down notice. Until §512 is amended, or circuit courts interpret §512 to make it easier to respond to unfounded take-down notices, activists and artists will have to keep hoping that they’ll get what they want next time.
The U.S. Patent and Trademark Office is one of the few government entities able to remain open and functioning during government shutdowns. Surplus fee reserves from the previous year can cover four weeks of standard USPTO operation. While no one expects the lapse in congressional appropriations to last this long, the USPTO has linked to an 87 page, pre-decisional document from the Department of Commerce that outlines how the office will handle a shutdown if its reserves run out.
Currently, due to the use of fee reserves, all of the PTO’s 11,789 employees are considered “excepted” and are able to keep working. However, once reserves run out, only106 employees would remain. Transitioning to this barebones patent office would take up to two and a half days in order to give 8 human resource employees time to process furlough notices, adjust employee time and attendance reporting, cancel oral arguments, and halt the recruiting process.
The following is a breakdown of how many employees would remain and in what areas:
- 64 remaining employees, or slightly over 60% of all excepted positions at the PTO would be IT specialists, computer engineers, and programmers dedicated to keeping the online services running. The primary focus of the PTO during a shutdown would be maintaining the hardware, networks, data, and security for the online services associated with preserving patent and trademark rights. The office emphasizes the need to preserve the public’s ability to make filings and pay maintenance fees, even during a shutdown.
- 14 excepted employees are commissioners and policy advisers for various areas including patent examination policy, patent administration, mechanical, and electrical. This group also includes the Detroit office regional manager – the only excepted employee outside of Alexandria.
- 9 excepted employees would remain active from the Office of the Chief Financial Officer. These employees would be responsible for the processing of incoming fees and manage budgetary accounts.
- 5 of the excepted employees would come from the Office of General Counsel, and would advise on the legal implications of an ongoing government shutdown, prepare court filings and extension requests, and prepare for resuming activities once the shutdown ends.
- 4 of the excepted employees would remain on site as security functions – monitoring the contracted guard force, managing physical PTO access, and ensuring the safety of the remaining employees.
- 3 excepted employees would act as caretakers exclusively in the Trademark division largely preserving systems to keep us compliant with the Madrid Protocol.
- 3 excepted employees are judges and paralegals for the PTAB and TTAB. These employees are needed to sign orders to preserve party rights in ongoing contested proceedings or for emergency motions.
- Of the 4 remaining excepted positions, one would oversee the contract workers who maintain the processing of incoming mail (date stamping, sorting). The other 3 include high level oversight officers including the Chief Administration Officer, the Chief of Staff, and the Deputy Under Secretary of Commerce for Intellectual Property and Deputy Director of the USPTO.
Update: They are estimating 4 weeks. So the earliest it would likely shutdown would be October 25th.
LSAG is all about helping law students. As a regular feature on the LSAG blog, we are soliciting advice from IP lawyers across the country. In our first installment, an anonymous IP lawyer offers advice about informational interviews:
Before I ever went to law school, I cold-called bunches of attorneys, like a dork, asking about their practices, what they liked and what they hated. I always offered that they could bill me for their time - and of course they never did. However, one patent attorney in Louisville, KY, told me that in lieu of paying him, I had to promise to pay it forward with students who approached me in the future. To this day, I will talk with any student who contacts me, and I truly believe the majority of attorneys would do the same. That said, be respectful of our time. Prepare before the call, know what questions you’d like to ask, and do a little research into my practice areas.