Patent

  • January 26, 2016
    Guest Post

    by Kristen Osenga, Professor of Law, University of Richmond School of Law; Senior Scholar, Center for the Protection of Intellectual Property

    *This post is part of the ACSblog Symposium on Patent Law Reform.

    I have often argued that we do not need so-called patent “reform.” But I’ve had a change of heart. We absolutely need patent reform, but not the kind proposed in the Innovation Act, H.R. 9, and the PATENT Act, S. 1137. To get the real kind of reform that will encourage a strong and vibrant innovation economy, we first need a role reversal. Let me explain.

    If you ask any first-year law student about the roles of Congress and the courts, the likely answer is that Congress makes the laws and the courts interpret them. That answer, although simplistic and lacking nuance, is essentially correct. What’s happening currently in patent law, however, is the exact opposite, and innovation is going to suffer as a result. Courts, especially the U.S. Supreme Court, are creating brand new rules, making up patent law from whole cloth. Congress, on the other hand, is considering bills that micromanage the courts, trampling on areas traditionally left to judicial discretion and seeking to procedurally stack the deck against individual inventors and small companies who own patents.

    To illustrate the above point, let’s consider two issues: (1) patentable subject matter eligibility and (2) the customer suit exception.

    Many years ago, Congress spoke plainly in 35 U.S.C. §101 about the types of inventions that were eligible for patenting: processes, machines, manufactures, and compositions of matter. The courts initially (and correctly) interpreted that provision broadly as including “anything under the sun made by man” and limited by only a few judicially created exceptions. Recently, and devoid of any legislative intervention, the courts have been chipping away at the types of inventions eligible for patent protection. After the Supreme Court’s 2014 decision in Alice Corp. v. CLS Bank Int’l, many commentators have suggested that the realm of inventions that can actually be patented has significantly diminished. The Alice opinion represents a sea change, or significant alteration, in the previously existing law . . . and yet it occurred entirely within the courts.

    The activity surrounding the customer suit exception, on the other hand, demonstrates how Congress is trying to undermine judicial discretion in favor of bright line rules that make it systematically harder for individual inventors and small companies to defend their patents. In appropriate circumstances, judges traditionally will stay a patent infringement suit against a small retailer or end-user customer in favor of a suit against a manufacturer when the infringement results from the customer using the manufacturer’s product. This makes sense, for example, when a patent owner sues a mom-and-pop coffee shop for infringement based on the coffee shop’s use of an infringing wireless router. The company that manufactures and sells the router is in a much better position than the coffee shop to dispute whether or not the router is infringing the patent. The courts have been staying cases like these for years, and it’s working well.

  • January 22, 2016
    Guest Post
    by Daniel Nazer, Staff Attorney and Mark Cuban Chair to End Stupid Patents, Electronic Frontier Foundation
     
    *This post is part of the ACSblog Symposium on Patent Law Reform.
     
    If you got sued for patent infringement in 2015, chances are pretty good that you were sued in the Eastern District of Texas. An astonishing 2,514 patent lawsuits – or 44 percent of the national total – were filed there this year. Over 1,500 of these cases were filed before a single judge: Judge Rodney Gilstrap. While patent suits have clustered in Eastern Texas for nearly a decade, this year saw an unprecedented concentration. This extreme forum shopping raises important questions about procedural fairness and due process.
     
    Why are so many patent cases filed in the Eastern District of Texas? It’s not for the barbecue. And it’s not because the remote, largely rural district is a technology hub. Rather, it’s because local rules and practices make the district attractive to patent plaintiffs. More specifically, local practices make the district very attractive to companies – known as patent trolls – whose sole business model is to buy patents and sue.
     
    For example, the Eastern District of Texas judges that most frequently hear patent cases have standing orders requiring parties to submit letter briefs asking permission to file for summary judgment. This makes it harder for defendants to avoid a costly trial. A recent study found that judges in the district granted only 18 percent of motions for summary judgment on the basis of patent invalidity. (In contrast, the grant rate nationwide was 31 percent.) Considering that this study did not include cases where the defendant wasn’t even permitted to file for summary judgment in the first place, it follows that the true grant rate in the Eastern District of Texas is even lower.
     
    In addition to the inconvenience of litigating in a distant forum, local rules make discovery more expensive. The local discovery order in patent cases requires parties to automatically begin producing documents before the other side even requests them. This practice ‒ which, in EFF’s view, is not consistent with the Federal Rules ‒ particularly burdens patent defendants. That is because unlike shell company patent trolls, operating companies need to search and produce a huge volume of documents. These burdensome discovery practices create pressure to settle weak cases and thus attract trolls to the district.
  • January 21, 2016
    Guest Post

    by Colleen V. Chien, Associate Professor of Law, Santa Clara University School of Law, former White House Senior Advisor on intellectual property and innovation; and Michael Risch, Professor of Law, Villanova University School of Law

    *This post is part of the ACSblog Symposium on Patent Law Reform.

    Although patent reform is not a partisan issue, it has divided those who write and think about the patent system for a living. Earlier this year, 51 law and economics professors wrote a letter to Congress pointing to the “large and increasing body of evidence” supporting legislative patent reform. Weeks later, 40 professors shot back, expressing “deep concerns with the many flawed studies.” We aren’t saying who was right, because one of us signed the second letter and the other authored a number of the contested studies. One of us joined the Obama administration to support patent reform, the other opposes it.

    But there is one issue upon which we — and most stakeholders — agree: The staggering concentration of patent cases in just a few federal district courts is bad for the patent system. We believe that changing where patent lawsuits can be filed will solve many of the problems in the debate.

    Last year, more patent cases (44 percent to be exact) were initiated in the Eastern District of Texas than anywhere else, as the following chart shows.

                                 

    Under a 1990 federal circuit court ruling, defendants can be sued in any district where they sell their products, which is basically anywhere. According to a forthcoming paper by Professors John Allison (University of Texas at Austin), Mark Lemley (Stanford) and David Schwartz (Northwestern), non-practicing entities — pejoratively referred to as “patent trolls” — bring a majority of the patent cases decided in the Eastern District of Texas. The issue is not limited to trolls, however: Kraft Foods is a plaintiff in Delaware in a current case on this issue.

  • January 19, 2016
    Guest Post

    by Kali Murray, Associate Professor of Law, Marquette University Law School

    *This post is part of the ACSblog Symposium on Patent Law Reform.

    Recently, I was informed that I needed to stop using the words “patent reform” in my work. Such words, it was explained to me, had become too contested. The words “patent reform” had become a political tool used by one side or the other in the fierce debate over how to effectively police the specter of patent trolls, whether through congressional reform or state and federal administrative efforts. It seems to me, though, that these words—“patent reform”—are too important to give up to one side or another, and so, this is an attempt to give new meaning to these words going forward.

    What then are the steps that must be taken if we are to give meaning to the words “patent reform?” First, any patent reform needs to take into account what I and my co-author Erica George have referred to as the dual objectives of the patent system. Our constitutional patent regime seeks not only to incentivize the economic activity of a patent claimant but also to protect the preconditions for creative activity that serve as the basic building blocks of scientific inquiry and information exchange. We call this the patent bargain: The patent owner gains a property right in the information in exchange for disclosure of the patent to the public. Too often though, when we speak about patent law, we value the rights of the patent claimant over the right of the public to have access and use to the information contained within the patent.

    Recognizing these dual objectives would center patent reform in two ways. Initially, if we see that patent reform serves democratic values other than the economic goals of innovation, it may limit the ongoing deterioration of our current debate into a contest between different interest groups. As we have seen within the context of copyright law, this can lead to significant industry capture that can harm coherence and continuity of the current law. Additionally, honoring the dual objectives of the patent system may also help to center the debate in progressive values of transparency, access, and equity. I object, for instance, to the current legislation before Congress that imposes significant attorney fees in patent litigation because it may dissuade nonprofits and public interest groups from engaging in litigation to challenge undesirable patents. Such choices would significantly undermine access to different avenues of patent litigation, thus undermining the dual objectives embodied in our patent bargain.

  • March 4, 2014
    Guest Post
    by Sandra S. Park, Senior Staff Attorney, ACLU Women’s Rights Project
     
    This post originally appeared at the ACLU's Free Future.
     
    Last April, during the Supreme Court oral arguments in our case challenging patents on human genes, Justice Kagan remarked, “The PTO seems very patent happy.” Her comment, and the unanimous decision invalidating gene patents, clearly expressed the Court’s concern that the Patent Office is overstepping its authority by approving patents that thwart, rather than foster, scientific inquiry and progress.
     
    The Supreme Court will soon re-visit whether the Patent Office has gone too far in granting exclusive rights to what should properly remain in the commons. In the next few months, it will rule in Alice Corp. Pty. Ltd. v. CLS Bank International, a software patent case that completely divided the U.S. Court of Appeals for the Federal Circuit and is sparking controversy in the tech world. Alice follows three recent decisions—with the gene patents case being the last—issued by the Court reaffirming the longstanding principle that the Patent Act does not permit patents on products of nature, laws of nature, and abstract ideas. Patents on abstract ideas are especially likely to raise First Amendment problems, as the First Amendment protects freedom of speech and thought.
     
    The case involves patents on a method for addressing the risk that one party might back out of a deal after the other one has already paid. You can read about the details of the patents here, but the steps of Alice’s patented method essentially call for a third party to keep track of financial transactions between two parties and then to instruct another institution to adjust the two parties’ accounts accordingly at the end of the day. It’s simple enough to imagine carrying out this process using pencil and paper to add up the transactions and a phone to communicate the account adjustment, but Alice’s patents claim any computer implementation of this process. That means Alice has a monopoly on any software or hardware that performs this way of using a third party to address settlement risk, even when Alice has not created the programming code or designed the computer that has this capability.