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Intellectual Property

Deep Divisions Between Firms Large and Small Remain Over House Patent Reform Bill

After six years of consideration, multiple hearings, and two changes of party control of the House, stakeholders in the great patent reform debate still can’t agree on how to modernize U.S. law to stifle abuse of the system, and to streamline the process of awarding patents.



After six years and multiple hearings, stakeholders in the great patent reform debate still can’t agree on how to modernize U.S. law to stifle abuse of the system, and to streamline the process of awarding patents.

The House Judiciary Committee on Wednesday introduced its long-awaited patent reform legislation and once again several provisions sparked off a objections both from committee members as well as from witnesses.

Though the morass of companies and institutions on either side of the debate can make the issues confusing, one set of factors that establishes the dividing line that determines the position of a company is its size, the condition of its finances, and the centrality of a patent to the company’s survival.

Thus it wasn’t surprising on Wednesday when a group of mid-sized technology companies (some of which are headed by serial entrepreneurs) issued a statement that flat-out opposed the proposed legislation.

The group opposes the legislation because they fear that start-ups could be sabotaged by serial attempts to invalidate patents they’ve obtained at new post-grant proceedings at the USPTO.

“The Innovation Alliance is disappointed that the America Invents Act as introduced today in the House of Representatives does not include some important safeguards against the potential for abuse of the post-grant review procedures at the U.S. Patent and Trademark Office,” said Brian Pomper, the group’s executive director in a press statement. “In particular, the bill includes a weak threshhold for ‘second window’ interpartes review proceedings, one that will allow virtually all challenges to proceed to a trial-like hearing before an adminsitrative patent judge.”

“We believe a higher threshhold is needed to enable the USPTO to manage the increased workload of the new administrative review system fairly and efficiently by screening out meritless or unsubstantiated petitions.”

The Innovation Alliance’s members include Dolby Laboratories, Tessera, Digimarc.

Some inventors in the technology community worry that this new procedure at the patent office would result in so much uncertainty that it would undermine their ability to get financing, and to create new companies — even more so than the other provisions that have garnered so much press attention: The switch to First-To-File from First-To-Invent, and the changing of the rules governing the one-year ‘grace period’ that allows inventors to sell and practice their inventions prior to filing for a patent.

But large Silicon Valley technology companies that are often the target of what they deem are “frivolous” lawsuits support the change. They believe that the proposed changes will speed up the process of revoking patents that should never have been issued in the first place.

To be sure, many ideas in the legislation enjoy the support of a wide group of associations and companies. Even House Majority Leader Eric Cantor, R-Va., weighed in on Wednesday with his support.

“The bill introduced today by Chairman Lamar Smith and the House Judiciary Committee will streamline and modernize the patent approval process, so that the government can return to rewarding American ingenuity, which is the lifeblood of new job creation, entrepreneurialism and business growth,” Cantor said in the press statement.

Many of the concerns that sparked off calls for reforming the patent system have been addressed in the courts.

Both the House and Senate legislation takes up where the courts left off. The bills call for the harmonization of the U.S.’ legal system with the rest of the world’s by switching the way the U.S. awards its patents to those who file first for a patent, rather than to those who claim they invented something first. Another proposed change is a truncated “grace period,” the period during which an inventor is allowed to sell and use their invention before filing for a patent.

Although many small business representatives and others object to these changes, globalization means that small businesses should be thinking globally anyway, say many patent law experts.

Some U.S. entrepreneurs, for example, might never have the intention of selling a product in China, for example, but may find their products being copied there after some people were able to get access to their products at trade shows in the United States. If they haven’t filed for patents in China, they can’t protect their products there, or anywhere else outside of the United States where the products might be selling.

So having everyone on a similar system just makes the filing process easier, say advocates for the change.

Another proposal in the House bill that’s stirring up opposition is a proposal to extend prior-user rights. That’s the notion of protecting someone who is using an invention as a trade secret against a patent infringement lawsuit from someone who later discloses the invention, and filed for the patent.

During the Wednesday hearing, Rep. Jim Sensenbrenner, R-Wis. told David Kappos, the United States Patent and Trademark Office director, that the provision could act as a “poison pill” to the successful passage of the legislation.

Sensenbrenner said that, in his mind, Congress should just enact the provisions to make sure that the patent office is fully funded, and that would end fee diversion, and let the rest of the ideas in the legislation “sink or swim.”

Other legal professionals in the blogosphere agreed that the prior user rights provision is a bad idea.

“A patent system that rewards trade secret rights over patent rights is an abomination,” said patent attorney Gene Quinn on his popular patent law blog IPWatchDog.

But large U.S. technology firms that are often embroiled in patent infringement suits re-iterated their support for the idea in a statement issued Wednesday.

“We will continue to support prior user rights and a robust funding structure for the Patent and Trademark Office, and work with Congress to resolve our concerns,” read the statement from the Coalition for Patent Fairness, a group that includes Apple, Cisco, Dell, Google, Intel, Oracle and others.

For their parts, other members of congress also weighed in again on Wednesday with their opposition to the House legislation as introduced.

Rep. Mike Michaud of Maine, as well as Rep. Don Manzullo of Illinois issued statements re-iterating their concerns over various provisions of the legislation.

Unlike previous years, however, this year’s patent push is part of a larger economic agenda being promoted by the Obama Administration. The administration is touting reform as a way to revitalize job growth — hopefully to be sparked off by start-ups and small businesses.

And so there was an edge of desperation to the questions posed by many members of the House Judiciary committee in attendance on Wednesday.

“I’m in the reconciliation business,” Rep. Mel Watt, D-N.C. told one of the witnesses as he tried to coax concessions from the panel.

“At the end of this, my ultimate question is: Is there a way to reconcile where the three of you all are on this issue?” he asked.

It seemed as if many of them wanted the witnesses to say something good — anything good — about the legislation after six years of trying to forge a bill that could be acceptable to everyone.

If a compromise isn’t reached, the effort could just crash, the patent application backlog would  just continue to grow, and then it’ll be the tech companies and unemployed workers in the US economy that are desperate.

Instead of just thinking on behalf of certain constituents then, perhaps lawmakers can use their six years of debate to truly determine for themselves what might be best for job creation from the start-up point of view. After all, that’s where growth comes from.

As an official at the patent office recently stated during a panel organized by the Intellectual Property Breakfast Club: “You want a clean, consistent, efficient system that establishes rights, that establishes effective dates in a fair, and reasonable way.”

Perhaps that should be policymakers’ mantra as they continue to work on this legislation: Focus on getting the patent approval process right the first time, and then limit the processes for second-guessing the system.

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Public Knowledge Celebrates 20 Years of Helping Congress Get a Clue on Digital Rights



Screenshot of Gigi Sohn from Public Knowledge's 20th anniversary event

February 27, 2021 – The non-profit advocacy group Public Knowledge celebrated its twentieth anniversary year in a Monday event revolving around the issues that the group has made its hallmark: Copyright, open standards and other digital rights issues.

Group Founder Gigi Sohn, now a Benton Institute for Broadband and Society senior fellow and public advocate, said that through her professional relationship with Laurie Racine, now president of Racine Strategy, that she became “appointed and anointed” to help start the interest group.

Together with David Bollier, who also had worked on public interest projects in broadcast media with Sohn, and is now director of Reinventing the Commons program at the Schumacher Center for a New Economics, the two cofounded a small and scrappy Public Knowledge that has become a non-profit powerhouse.

The secret sauce? Timing, which couldn’t have been better, said Sohn. Being given free office space at DuPont Circle at the New America Foundation by Steve Clemmons and the late Ted Halstead, then head of the foundation, was instrumental in Public Knowledge’s launch.

The cofounders met with major challenges, Sohn and others said. The nationwide tragedy of September 11, 2001, occurred weeks after its official founding. The group continued their advocacy of what was then more commonly known as “open source,” a related grandparent to the new “net neutrality” of today, she said.

In the aftermath of September 11, a bill by the late Sen. Ernest “Fritz” Hollings, D-S.C., demonstrated a bid by large copyright interest to force technology companies to effectively be the copyright police. Additional copyright maximalist measures we launched almost every month, she said.

Public Knowledge grew into something larger than was probably imagined by the three co-founders. Still, they shared setbacks and losses that accompanied their successes and wins.

“We would form alliances with anybody, which meant that sometimes we sided with internet service providers [on issues like copyright] and sometimes we were against them [on issues like telecom],” said Sohn. An ingredient in the interest group’s success was its desire to work with everyone.

Congress didn’t have a clue on digital rights

What drove the trio together was a shared view that “Congress had no vision for the future of the internet,” explained Sohn.

Much of our early work was spend explaining how digitation works to Congress, she said. The 2000s were a time of great activity and massive growth in the digital industry and lawmakers at the Hill were not acquainted well with screens, computers, and the internet. They took on the role of explaining to members of Congress what the interests of their constituents were when it came to digitization.

Public Knowledge helped popularize digital issues and by “walking [digital information] across the street to [Capitol Hill] at the time created an operational reality with digitization,” said Bollier.

Racine remarked about the influence Linux software maker Red Hat had during its 2002 initial public offering. She said the founders of Red Hat pushed open source beyond a business model and into a philosophy in ways that hadn’t been done before.

During the early days of Public Knowledge, all sorts of legacy tech was being rolled out. Apple’s iTunes, Windows XP, and the first Xbox launched. Nokia and Sony were the leaders in cellphones at the time, augmenting the rise of technology in the coming digital age.

Racine said consumers needed someone in Washington who could represent their interests amid the new software and hardware and embrace the idea of open source technologies for the future.

Also speaking at the event was Public Knowledge CEO Chris Lewis, who said Public Knowledge was at the forefront of new technology issues as it was already holding 3D printing symposiums before Congress, something totally unfamiliar at the time.

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Intellectual Property

U.S. and EU Privacy and Intellectual Property Landscape Complicate Data Use Requirements



Photo of Lee Tiedrich in February 2020 from the Regulatory Review on Twitter

February 7, 2021 – Differences in the intellectual property and privacy landscape between Europe and the United States account are among the forces complicating the regulatory landscape around commercial data, partners at Covington’s Second Annual Technology Forum said on January 27.

Further, because intellectual property laws do not provide robust protection for databases, organizations are increasingly relying on contracts that define rights and restrictions to protect their data.

When learning how to best to handle data, companies need to know what sources it is coming from, said Lee Tiedrich, a partner at Covington. Knowing the type of data is quite important, he said, since data comes in many forms. For example, open or proprietary data should be handled differently than user contributions and scraped data that comes off of public websites.

Differences between U.S. and European intellectual property laws also factor into database protection. Clients need to know how to source data properly because they want to protect their rights to their data and reduce their liability risks, Tiedrich said.

There is no sui generis database protection in the U.S., a term which means databases do not have strong legal protections. This is not unusual as intellectual property laws in the U.S. typically do not provide protection for databases, said Tiedrich.

From a EU legal perspective, there may be some form of IP protection in data but that does not eliminate privacy requirements applying to that data, said Freddie Argent, a partner at Covington.  

The panelists also discussed key terms of contracts for data licensors. Data licensors need to employ best practices, have standardized terms, and apply consistency across deals, said Adrian Perry, partner at Covington. Terms of service and privacy policies require clarity with the licensee acknowledging and accepting it, Perry added.

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In Google v. Oracle, Supreme Court Hears Landmark Fair Use Case on Software Copyright



Photo of Tom Goldstein from the Peabody Award used with permission

October 12, 2020 – The Supreme Court on Wednesday publicly struggled with the copyrightability of software in a uniquely contested case between Google and Oracle, the outcome of which could play a significant role in the future of software development in the United States.

The oral arguments were the culmination of a battle that started 10 years ago, when tech company Oracle accused Google of illegally copying its code. Oracle owns the copyright to the Java application programming interface that Google utilized to establish a new mobile operating system.

The company has sued Google for more than $9 billion in damages.

Yet Google claimed a “fair use” defense to its copying. Google copied less than 1 percent of the Java code. Even though the law generally treats computer programs as copyrightable, Google’s attorney before the Supreme Court, Thomas Goldstein, said that by adapting Oracle’s code to serve a different purpose, Google’s use was “transformational,” and entitled to fair use protections.

Goldstein said that this form of unlicensed copying is completely standard in software, and saves developers time and lowers barriers to innovation.

He referenced a famous Supreme Court precedent about public domain works, Baker v. Selden, which in 1880 declared that once information is published to the public, the public has a right to use it.

“Google had the right to do this,” said Goldstein.

Still, Oracle attorney Joshua Rosenkranz asserted that the Java code is an expressive work eligible for copyright protections. Rosenkranz further argued that Google’s use of the code was not transformational.

Justice Sonia Sotomayor appeared to suggest that jurors in the lower court case properly found Google’s use to be transformational because it took the APIs from a desktop environment to smartphones.

“Interfaces have been reused for decades,” said Goldstein. Google had to reuse Oracle’s code to respond to interoperability demands.

“It has always been the understanding that this purely functional, non-creative code that is essentially the glue that keeps computer programs together could be reused, and it would upend that world to rule the other way,” he said.

Supreme Court observers said that the high court appeared leaning toward upholding the 2016 jury verdict vindicating Google’s fair use defense.

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