Posts by: Joacim Lydén | (4) posts

The President-elect and Intellectual Property

As election night in the US evolved, the Democratic community slowly started to realise the probability, and later the certainty, that there would be a shift of political parties in the White House.

Trying to assess how this transition of power will affect the world of IP is not an easy task. Policy documents that President-elect Donald Trump released before the election offer little assistance to the person holding the crystal ball. Yet, although it may be difficult to predict what type of IP policies the president-elect will advocate for; like many of his policies it may be easier to predict what he will oppose. In that regard there are two areas where the president-elect’s electioneering rhetoric may offer some insights into his plan for evolving U.S. IP policy during his administration; namely his staunch opposition to legislation supported by his predecessor, President Obama, and his advocacy against foreign nations that he deems to be “ripping off” the American people.

In regard to the first point, there is some evidence to the effect that President-elect Trump could put an end to a renewed push for further patent reform legislations that was supported by his predecessor and the giants of Silicon Valley, and specifically spearheaded by Google. To continue this reasoning we therefore find it necessary to provide a brief background.

The Obama administration set a goal to “increase the quality” of issued patents, which has been eagerly supported by the tech giants. In the eyes of those who supported President Obama’s efforts, by the time he assumed office in January 2009, the U.S. patent system was awash in too many low-quality (i.e., invalid) patents that were being exploited by the so-called “patent trolls” in order to exact ransom-like royalties from companies that rightly feared the costs and uncertainty of U.S. patent litigation. In part an effort to curb such abuses the Leahy-Smith America Invents Act (AIA) was signed into law on September 16, 2011.

Among other things, the AIA made it much easier to challenge the validity of pending and issued patents. For example, the AIA offered additional avenues for third-parties to interfere in prosecution and challenging the validity of issued patents. The AIA specified an extended period for filing third-party submissions, and created new post-grant and inter partes review proceedings to challenge issued patents, without having to file suit in federal court. Further, the amendments to the novelty requirements (35 USC §102) also created more prior art, as it added foreign priority documents as well as public use and public sale outside of the U.S.

From a European practitioners perspective the initial reactions to the changes brought forth by the AIA were almost exclusively positive. The AIA makes the novelty statute much easier to understand, and the changes concerning third party submissions and post grant review further harmonises the US system with the European equivalent.

Much less discussed in Europe was the fact that the combination of the increased ways in which validity can be challenged and this past decade’s bar-raising case law have weakened the position of the patent holder. This of course also affects the value of US patents and thus the benefits of having a US patent.

In addition, President Obama’s selection of Michelle Lee as Director of the USPTO in 2014 – who was a former Deputy General Counsel for Google – did much to further the agenda favoured by the tech giants of Silicon Valley. Ms. Lee put her agenda into effect through both influencing the federal rules being set to implement the provisions of the AIA to make challenging the validity of patents easier and by pushing the USPTO on a path to increase the rigour of the examination process.

Given Mr. Trump’s railings against the recent cosiness between big business and the U.S. federal government and his general distrust of efforts pursued by his predecessor, this could signal that the idea that “increasing patent quality” as the main driver of U.S. patent policy could be coming to an end. Although large scale changes to the U.S. Patent Law are probably not in the near future, there are bills that would have taken Obama-era reforms even further that are likely dead in the water. Most notable are the Innovation Act and the PATENT Act which aimed to increase the requirements on the plaintiff in patent litigation and also shifts the fees to the losing party. The Innovation Act has the support of President Obama and would most probably have been supported by Secretary Clinton.

With Mr. Trump in the White House there is considerable probability that there will be at least a temporary halt in patent reform. Trump will most probably have a different view from that of Obama and Clinton (he is definitely a fan of court proceedings), and also, patent reform is probably very low on his list of priorities.  The main backers of further legislative changes were almost lockstep opposition to Mr. Trump’s candidacy.  Further, one could of course speculate that President-elect Trump’s advocacy for strong property rights in general could translate to strong support for intellectual property rights as well, meaning he would probably oppose further efforts to weaken the value of U.S. IP rights.

Secondly, strong IP protection could be considered one piece in his platform to increase the competitiveness of the US industry.  One of the hallmarks of Mr. Trump’s campaign was his focus on calling out countries, such as China, for what he alleged were unfair practices against the United States. Although not mentioning patents specifically, his campaign website did complain about China’s alleged misappropriation of U.S. trade secrets, stating that he intends to “[u]se every lawful presidential power to remedy trade disputes if China does not stop its illegal activities, including its theft of American trade secrets.”  His campaign website also extolled a recent U.S. International Trade Commission study that included “that improved protection of America’s intellectual property in China would produce more than 2 million more jobs right here in the United States.”

If Mr. Trump does intend to make it more difficult for countries that have a lower threshold of protection for IP rights to make their goods available in the U.S. market, increased support for strong patent rights could be one means for doing so. This is further evidence of his likely opposition of any further changes that would make patent rights harder to enforce and easier to challenge, and may even signal a shift away from the driving focus of patent quality during examination proceedings at the USPTO.

To summarise the speculations above, our best guess is that President-elect Trump’s entry into the White House may create a status quo in patent legislation and may signal a shift away from “patent quality” being the driver of USPTO policy. If that is good or bad probably comes down to which side of the table you are on.

Joe Klinicki, Patent Attorney, Condo Roccia Koptiw &
Joacim Lydén, European Patent Attorney & US Patent Agent, Awapatent

The value of design patents

It is a perfectly clear, crisp morning as I make my way from Washington DC’s Union Station, through a clean and perfectly trimmed Senate Park, to the white neoclassical palace that houses the United States Supreme Court. The wide pavement and massive stairs leading to the building’s entrance is filled with journalists, photographers and television crews gearing up alongside hundreds of gathered spectators. Inside, the Supreme Court is in session, hearing its first design patent case in 120 years.

What sparks such an unusual interest in the hearing of an IP case is the fact that this is one of the final chapters in the ultimate “super heavyweight” patent rumble, between the largest corporation in the US, Apple and the by far largest South Korean corporation, Samsung. This lengthy dispute has all the components necessary to attract the public’s eye: it concerns a category of products that basically everyone of us is using (on average 40 times per day), the design patents concerned are understandable and the patents cover the iconic design of the game changing iPhone.

The question that the Supreme Court agreed to hear is not that of infringement, which has already been settled in a final decision by the Court of Appeal for the Federal Circuit (CAFC). Instead, the court is reviewing the size of the damages, and in further detail, the relevance of a century old piece of legislation stating that the infringer in a design patent “shall be liable to the owner to the extent of his total profit”. This in practice means all profit generated by the infringing Samsung Smartphones (article of manufacture), and it is this wording that made the CAFC affirm the $400 million in damages awarded to Apple.

Samsung, as well as several academics, argue that a statement made by the US congress in 1887 that “it is the design that sells the article” (forming the basis for the above wording in the legislation), does not apply to complex products such as the iPhone. On the other side, Apple’s Chief Litigation Officer Noreen Krall, who by the way hired me to my first job in the IP industry, argues the opposite and stated that Apple’s “designers and engineers are distinguished by their originality” and that Apple “firmly believe that strong design patent protection spurs creativity and innovation”.

Knowing how dedicated Apple fans can be, and how much value the Apple customer places in the look and feel of the products, I am inclined to agree with Noreen and Apple. In many instances, I believe that originality and design are features that actually may trump the function of Apples products.

The Supreme Court’s decision is expected in early 2017. Whatever the outcome will be, i.e. if the Supreme Court confirms the principle of the “total profit” or chooses to interpret the law as meaning “total profit” attributed to the specific parts of the “article of manufacture” covered by the patent, the ruling will have a considerable impact on how the IP world views and values design patents.

Joacim Lydén, Awapatent Partner and temporary US Correspondent

Decision by the USPTO puts the spotlight on the “real party in interest”

One of the ways that companies in patent dense industries, such as consumer electronics, try to fend off claims from patent holders is by requesting assistance from patent risk management firms. Patent risk management firms generally assist their clients by acquiring patents, tracking litigation outcome, or by acting to remove questionable patents from the landscape.

Inter partes review* has been introduced in the US as a way of challenging the validity of an issued patent in administrative proceedings before the US Patent and Trademark Office (USPTO). In an effort to find additional means to invalidate patents under dispute, defendants have begun using inter partes review as a tool in patent infringement disputes. A defendant may however only file a petition for inter partes review during a time window of one year after the defendant has been served with a complaint alleging infringement of the patent. This time limitation is one reason why defendants have been turning to the patent risk management firms for assistance, another being the circumvention of the potential estoppel in future disputes that material from the inter partes proceedings may generate.

Consumer electronics corporation Apple has an ongoing patent dispute with the patent assertion entity Virntex concerning security solutions in the communication application FaceTime™. RPX Corporation is a patent risk management firm, with Apple among its clients. In a recent decision**, the USPTO denied RPX Corporation an inter partes review of some of Virntex patents which are part of the dispute with Apple. The denial was based on the ground that Apple is a client of RPX Corporation and, according to the decision, provided funds and instructions to RPX. The USPTO contends that the relationship between Apple and RPX Corporation makes Apple the “real party in interest”, even though RPX argues that it is operating entirely on its own.

The decision makes it clear that one of the requirements for inter parties review, that the petition must list all “real parties in interest”, will be scrutinized by the USPTO and that the use of patent risk management firms or the formation of consortia does not provide sufficient distance for the clients or members to remain anonymous.

One could argue that transparency in patent disputes always is of benefit to the credibility of the system, however, I would argue that sometimes the possibility or remaining anonymous makes it possible to separate the question of whether or not a patent is valid, from sensitive business relations. Ultimately, the quality of issued patents must be the fundamental idea behind systems like inter partes review.

Joacim Lydén, European Patent Attorney

* As of September 16, 2012, with the implementation of the Leahy-Smith America Invents Act, any third party may file a petition for inter partes review provided that the reason for the petition is that the claimed matter is anticipated or obvious in light of prior art in the form of patents or printed publications 35 USC §§ 311 – 319.

** RPX CORPORATION v. VIRNETX Before the patent trial and appeal board, Paper 49, June 5, 2014

Important judgement on business method patent in the United States

On 20 June 2014, the U.S. Supreme Court handed down an important decision, Alice v. CLS Bank, clarifying the extent to which business methods can be patented. The earlier stages of the proceedings have been well covered in the media as this is one of relatively few times the Supreme Court has interpreted 35 U.S.C. § 101, with a potential to shape the future of computer-implemented inventions in general. Some of the claims at issue were actually not explicitly drawn to computer implementations or software, but the Court alleges it has considered the claims with an understanding that they “require generic computer implementation.”

One of Alice’s claims is found here, and the full judgement here. From the explosion of analyses by local practitioners, we were particularly impressed by 1, 2 and 3 and recommend them to you.

The judgement affirms the lower-instance judgment, which in turn is in keeping with current practice in the USPTO. In brief, the Court decided to revoke Alice’s patent because the method claims were allegedly directed to an “abstract idea” whose implementation was too generic to transform the idea into a patentable invention. The computer system and storage media claims were refused for the same reason; possibly the decision would have been different had the claims recited more implementation details. The language may be problematic to practitioners: just how abstract is an “abstract idea”? and is a programmable computer too “generic”? The challenging task of steering clear of “abstract ideas” and “generic implementation” is illustrated by the allowed and rejected claims from previous Supreme Court judgements: compare, in the same claim tableFlook and Diehr.

The present case highlights the limited usefulness of the concept “software patents.” While patents covering software typically cause little or no public debate when granted for inventions in conventional technology, software realizing business methods is more controversial. As shown by an overwhelming majority of the submitted amicus curiae briefs in Alice, the IT industry has a keen desire to dissociate itself from the “plague of abstract computer-related patents”, as the brief by Amazon, Google and others puts it. The brief cites Bill Gates in 1991 (in another court case), where he claims the software industry would have been at a “complete standstill” if the early inventors had applied for all the patents they could. The statement illustrates not only that the USPTO has become more stringent, but also reminds us of the much higher IP awareness in Mr Gates’ industry today, which has had to get used to – and benefit from – the existence of patents just like in other technical fields.

As European practitioners, we regularly ask American patent attorneys to prosecute our applications before the USPTO, making it essential for us to keep our drafting practices up-to-date, to be able to present the invention from the right angle and in all required detail. Unlike judgements like Bilski (2010), the Alice case represents no sudden change but will probably be received as a sign that the practice has stabilized. With its insistence on technical improvement, the Alice judgement in fact lands its conclusions rather close to the current European examination practice, despite its very different legal starting point.

The judgement should be reassuring also to Japanese applicants, whose applications are normally drafted to convince the JPO examiner that “information processing by software is concretely realized by using hardware resources” (JPO Guidelines, part VII), sometimes rephrased to mean that the implementation is “particularly suitable for a use purpose”. This intention should also limit abstraction and genericness.

Anders Hansson and Joacim Lydén, European Patent Attorneys