Patent reform
Not all patents on business methods
have led to controversy. Still, most critics would agree that the
system needs some fixing and that the recent changes have
been a good start. Yet other critics would say that innovation
drives high-tech commerce, and the rules regarding this highstakes
game rest in a precious few congressional hands.
The largest group lobbying Congress in support of the Patent
Reform Act of 2007 is the Coalition for Patent Fairness, whose
members include Apple, Broadcom, Cisco, Intel, HP, Microsoft,
Oracle, Google, and many other large corporations. Yet this
coalition doesn’t include universities, small companies, individuals,
the Department of Commerce, or the USPTO.
In fact, many smaller organizations as well as some large
companies, the Department of Commerce, and Chief Justice
Paul Michel of the U.S. Court of Appeals for the Federal Circuit
have all spoken out against the Patent Reform Act.
The act protects the right of the first inventor to file, which
probably is a good thing, eliminating a court battle or two and
keeping U.S. innovation on par with the rest of the world. But
its other provisions require all complainants (except for
“micro-entities”) to search for prior art and prove the prior
art’s relevance to patentability, tasks that used to be the USPTO’s
responsibility. While large corporations have the
resources to tackle these jobs, smaller organizations don’t.
The act also protects the right of the first inventor to
obtain damages. Yet it places the onus on the court to determine
“reasonable royalty” damages and the economic value
of prior art and “other features or improvements, whether or
not patented, that contribute economic value to the infringing
product or process.” Chief Judge Paul R. Michel noted
how impractical this approach would be in a letter to the
Judiciary Subcommittee.
Critics say this provision protects infringing licensees and
deals a great blow to patent owners, and the Department of
Commerce also responded with a letter to the Judiciary Subcommittee.
“While the appropriateness of damages awards
in a number of patent cases may be subject to debate, DOC
does not believe that a sufficient case has been made for a
legislative provision to codify or emphasize any one or more
factors that a court must apply when determining reasonable
royalty rates,” wrote DOC chair Howard Berman.
Allen Baum, president of the Licensing Engineering Society,
says that the appropriate government agencies have not
coordinated their efforts to see if any tweaks to the act will
be necessary now that the act is in effect—or make sure we
aren’t heading for a “train wreck.”
“We have a system that works [and] is the envy of the
world. The fact that it may have some flaws is natural,” said
Dan Leckrone, chair of the TPL Group. Leckrone also says
interested parties should urge Congress to slow down and reevaluate
the complex changes that have already been made.
“What’s the hurry?” he asked. “Wait until the system digests
what has happened so far before making more changes.”
References
1. “eBay wins round in ‘Buy it now’ patent redux,” ZDNN Staff,
News.com, published on ZDNet News: July 30, 2007
(news.zdnet.com/2100-9588_22-6199585.html)
A landmark case: AMD v. Intel |
A year in patent reform: the new rule and law changes |
2007 patent reform act at a glance |
|
In 1982, Intel and AMD signed a 10-year product-sharing contract based
on an extremely complex point system that virtually guaranteed a decade-long
oligopoly. |
AMD sought both the rights to Intel’s 80386 architecture and $2.3 billion
in damages. |
A retired superior judge acting as a fully empowered arbitrator handled
the case. |
| The case was only supposed to last five weeks instead of five years. |
Even though AMD failed on many of its claims, it still won the right to
produce its own version of the 80386 royalty-free. With that ruling, Intel’s
monopoly on the CPU market was broken, and AMD was likely saved from
going out of business. |
For more about the legendary AMD v. Intel court battle, see “A
Conversation With Judge J. Barton Phelps: Reliving The Landmark AMD v.
Intel Case” at www.electronicdesign.com, Drill Deeper 17458. |
|
May 2006, eBay v. MercExchange: In the case of patent infringement, the
U.S. Supreme court sets a precedent and rules that injunctions barring the
infringer from using a patent don’t have to automatically follow a decision.
Instead, courts will weigh four traditional factors to determine if an injunction
is justified. |
April 30, 2007, KSR v. Teleflex: The U.S. Supreme Court sets a new precedent
for technology patentability based on obviousness. Large high-tech
firms are happy about the decision, believing it will lead to lower cost and
less uncertainty about patent litigation. |
August 20, 2007: The U.S. Federal Circuit sets a precedent for willful
infringement, placing the onus on the plaintiff to show “objective reckless
ness” instead of the “due care” precedent used for the past 24 years. The
decision is hailed as one that will lead to more settlements and reduce litigation
costs. |
November 1, 2007: The USPTO’s new rules limit the number of
independent and total claims per patent. These rules also shift the
research burden to the applicant for claims that exceed the limit. For a
full copy of the new rules, go to
www.uspto.gov/web/offices/pac/dapp/
opla/presentation/clmcontfinalrule.html. |
|
Right of the first inventor to file: The act adopts the same standard—the first
inventor to file, instead of the first inventor to conceive—that the rest of the
world is using. It also replaces the current “Interference” procedure with a
new “Derivation” procedure to determine which applicant is the patent
owner when multiple inventors have claimed to be the first inventor. |
Right of first inventor to obtain damages: The act modifies the provision
with respect to reasonable royalty damages. It does not address other
forms of damages, such as lost profits. Also, it directs the court to calculate
“reasonable royalty” damages and “the economic value properly attributable
to the prior art, and other features or improvements, whether or not
patented, that contribute economic value to the infringing product or
process.” The second part of this section deals with willful infringement,
which the U.S. Federal Circuit ruled on in August. |
Post-grant procedures and other quality enhancements: The act modifies
provisions related to reexamination of patents by the Director of the
USPTO and to repeal inter partes reexamination procedures. It establishes
a new post-grant review procedure, enabling anyone besides the
patent owner to file a petition challenging a patent up to 12 months
after the issue date. Also, it eliminates the presumption that a patent is
valid in the review proceedings and places the burden of proof on the
petitioner, who must prove that the patent is invalid by a “preponderance
of the evidence” (a lower standard than the “clear and convincing
standard” in litigation). |
Submissions by third parties: The act allows third parties to submit prior
art to the USPTO if such submission is in writing; made before the earlier
of (i) a notice of allowance; (ii) six months after the date on which the
application for patent is published; or (iii) the USPTO’s first office action;
and is accompanied by a fee, a certification, and a description of the prior
art’s relevance. |
Venue and jurisdiction: The act limits where infringement suits and
declaratory judgment actions may be filed to judicial districts: first, where
the defendant has its principal place of business; second, where the
“defendant has committed substantial acts of infringement” and has “an
established physical facility... that constitutes a substantial portion” of the
defendant’s operations; third, where the “primary plaintiff” resides if the
primary plaintiff is an institution of higher education, a non-profit, or a
patent and licensing organization for an institution of higher learning; or
fourth, where the plaintiff resides if the sole plaintiff is an individual inventor
qualified as micro-entity. |
Applicant quality submissions: The act requires applicants to submit a
prior art search and analysis of the prior art’s relevance to patentability. It
exempts micro-entities from the prior art search requirement. This section
is similar to the USPTO rules change, except there is no limit on the number
of claims after which this would be required. |
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