Recent news in IP (Week of Mar. 10, 2017)

A few recent articles that have caught my eye:

The House Has Passed H.R.720: The Lawsuit Abuse Reduction Act of 2017

Source: Benesch's Sixth Circuit and Ohio Class Action-Plus Report

This is deep in the weeds if you don't follow civil trial procedure, but this could be a big deal. Any time a lawyer files something with a court, they are required to certify that the filing is done in good faith, is not frivolous, etc. This is codified in Federal Rules of Civil Procedure as Rule 11.

Currently, if a lawyer is caught doing something that the court considers in bad faith, the judge has the right to impose a variety of punishments, including fines that the lawyers or their clients must pay personally. As a practical matter, though, rule 11 motions are hardly ever made and the results are usually closer to a stern dressing-down than a penalty.

The linked bill (H.R. 720, the Lawsuit Abuse Reduction Act of 2017) changes rule 11 so that penalties are mandatory. It makes rule 11 challenges and findings much more serious.

From an IP perspective, one of the key enablers of patent litigation abuse is the ability patent plaintiffs to file cursory, technically incorrect, or astoundingly vague claims - and to keep defendants in the dark about the scope of their arguments until forced to make things clearer by the court... a year or more later.

I have frequently felt that filings that are clearly incorrect based upon publicly available information should be sanctionable under rule 11. If this bill passes, perhaps they may be.

Autonomous Driving in California: A New Frontier or Business as Usual?

Source: Squire Patton Boggs

This is reporting on some of the new autonomous driving regulations that are being promulgated by the California DMV. This is a final draft, so now it goes into the formal rulemaking process.

Even with the loosening up that these rules represent, it is still harder to test and deploy autonomous vehicles in California than in a lot of other states. This is a California currently has the most testing taking place, probably due to Silicon Valley, but there is apparently some willingness to test and deploy in other states that have a more accommodating regulatory stance.

I've been interested in this area for a while. I've been doing some study for my panel at the Connected and Automated Vehicle Workshop hosted by the Greater Austin-San Antonio Corridor Council. We are on the front end of a very large industry - this is a space to watch.

How tech’s ruling class stifles innovation with efficient infringement

Source: IPWatchdog

Another day, another hyperbolic IPWatchdog article. This takes a perfectly reasonable article (Tech’s Ruling Class Casts a Big Shadow) wondering whether there is too much consolidation in the tech industry and uses it, without support, to accuse the largest tech companies of "efficient infringement" - i.e., consciously violating IP rights because it is allegedly cheaper to litigate than to license.

I'll probably write something more about this in the future, but I have a hard time believing that efficient infringement exists on a commercially significant scale - and anyone who has been through multi-million dollar patent litigation would agree. This is especially true in light of recent Supreme Court rulings that make treble damages for willful infringement much easier to get. That's not to mention that any lawyer that recommended efficient infringement to a client would be committing malpractice and be potentially on the hook.

No, the problem is not with any mythical "efficient infringement," no matter how much some folks would like to elevate that to an evil on the same level as patent trolling. The problem is that people tend to overvalue and overstate the reach of their IP in the context of real business transactions, and so they are disappointed when they try to license and there are no takers.

An Economic Argument Against Mandatory Patent Exhaustion

Source: Patently-O

A guest post on Patently-O by Randy Barnett of Volokh Conspiracy fame, ahead of the Impression Products v. Lexmark argument at the Supreme Court.. He argues that the best policy is a "presumptive exhaustion" regime where the presumption can be overcome via clear contractual language.

I'm not sure I agree, but I take almost anything Randy Barnett says seriously. It's a good argument, at least with reference to the theory. But from a practical perspective, I don't think that the "presumptive exhaustion" would actually work. Specifically, the effect of a "presumptive exhaustion" doctrine would be mostly indistinguishable from a "no exhaustion" doctrine.

Why? Because lawyers are businesspeople too, and within seconds of the release of an opinion establishing presumptive exhaustion there would be lawyers offering client alerts saying, "Update your contracts now to maintain your patent rights!" There would surely be some one-time fallout for non-renegotiable contracts. But within weeks there would be a new slide in the "contract mistakes to avoid" CLE and non-exhaustion would become a new standard term in almost every contract.

Recent news in IP (Week of Mar. 3, 2017)

A few recent articles that have caught my eye:

The importance of balanced patent policy

Source: The Hill

I recommend this article for some clear thinking about the proper scope of patent enforcement.

At issue is a case at the ITC, in which a radiotherapy machine that has been judged to infringe some patents. Typically, this would result in the ITC putting in place an exclusion order barring the import of the infringing machines. In this case, however, there are evidently some people who are arguing that the public interest in having these medical devices available weighs against the entry of the exclusion order.

As the linked piece points out, this argument is bollocks. There are licensed, equally-functional alternatives to the infringing machine available from multiple sellers on the market, and the proposed exclusion order only bars the import of new infringing devices, and leaves the existing radiotherapy machines in place.

The patent law in the United States (as with most forms of IP) is a bargain designed to provide the structure that allows temporary market exclusivity in return for disclosure. When there is a clear-cut case like this, enforcing the patent law (and thus issuing the exclusion order) is the right thing to do.

IPR: Not Just for Litigants

Source: RPX Blog

One of the occasional strains in the drumbeat bemoaning IPRs is that organizations that have not been sued on patents still are able to challenge the patents in IPR and CBM proceedings. The linked article is RPX fighting back with data.

The summary is that non-litigants are relatively frequent IPR filers (top three non-litigant filers are ranked 12th, 35th, and 38th, respectively) and that, by and large, they do a relatively good job. RPX in particular looks good here, with a high institution and win rate.

Ropes & Gray Ending Patent Business

Source: Patently-O

Storied IP firm Ropes & Gray is leaving the patent prosecution business behind - presumably including a lot of the patent prosecutors it acquired from Fish & Neave a few years ago.

I would guess that this is a story of moving "up the stack" and focusing on more-lucrative litigation, with a side of reducing malpractice risk (don't blow deadlines!). Patent prosecution is a difficult business to make highly lucrative. Most companies impose caps or flat fees for patent prosecution, and that makes it harder to support the $800+ or $1000/hour fees that very large law firms want.

The Real Difference Between Google and Apple

Source: Design

An interesting take on the "innovation signatures" of Apple and Google - basically a graph-based visualization of patent co-authorship. The big takeaway is that Apple's inventing activity is more highly concentrated, and that is representative of the greater concentration within Apple.

Unfortunately, IPWatchdog took this as an excuse to take a whack at Google. Only a motivated analysis would take the finding that Google has more patents than Apple (12.3K vs 10.9k), with more inventors (8.9k vs. 5.2k), in a wider variety of areas, and use that as "proof" that Google is less innovative and is a poster child for the non-existent boogeyman of "efficient infringement."

Recent news in IP (Week of Feb. 27, 2017)

A few recent articles that have caught my eye:

Clearing the Underbrush: How to Fight Low Quality Patents Related to Commoditized Technology that Threaten Innovation

Source: IPWatchdog

I was surprised to see this opinion piece on IPWatchdog, as it takes the stance that there are some parts of the tech stack (the lower, "commodity" portions) that should be largely exempt from a lot of patent activity and that patenting, investment, and enforcement should be focused on the top, "differentiating" part of the stack. It is an unusual argument to be featured on IPWatchdog.

I am sympathetic to the argument that commodity functionality should largely be out of the realm of patent activity, but that is because most commodity stuff is old - far older than people think. The issue is not that certain parts of the stack should be free from patenting, but that a lack of specificity in patent claiming and enforcement allows a patent originally targeted at a particular niche to be reinterpreted to read on older, more broadly deployed tech.

I also think that it misses the point that there is both "commodity" and "differentiating" tech at each layer in the stack. The innovations may not be clearly visible if someone is not familiar with the underlying technology, but innovative things are going on at all layers of the stack.

Federal Circuit Sticks By Its Bad Law on Personal Jurisdiction In Patent Cases

Source: EFF Deeplinks

The issue brought up in this blog is interesting - What are the minimum actions needed to establish personal jurisdiction for purposes of a declaratory judgment action? The standard rule is that sending demand letters is not enough to establish personal jurisdiction (and frequently not enough to establish a case or controversy).

In the particular case cited (Xilinx, Inc. v. Papst Licensing GmbH & Co. KG, Fed. Cir. 2017), Xilinx was able to establish that Papst's actions were sufficient to establish jurisdiction in their particular case - but the Federal Circuit kept their same rule for the general case.

What hasn't been brought up so far is what effect TC Heartland may have on the DJ rules. The Supreme Court has been... shall we say unsympathetic?... to a number of the fixed rules that the Federal Circuit has established to govern patent cases. I don't see that this would necessarily be all that different. I wouldn't be surprised if this will be another area for appellate activity after TC Heartland comes down.

Patent Trolls and Small Business Employment

Source: Working Knowledge (Harvard Business School)

This is an NBER working paper evaluating the results of anti-patent troll legislation that has been working its way through the legislature in a number of states. It appears that these legislative efforts have a significant effect, which I didn't expect. Key finding:

"We find that the passage of this legislation leads to a 2% increase in employment at small firms in high-tech industries.... By contrast, the laws have no significant impact on employment at larger or non-high-tech firms. Anti-troll legislation is also associated with fewer business bankruptcies. Financing appears to be a key channel driving our findings: in states with an already established VC presence, the passage of anti-troll laws leads to a 19% increase in the number of firms receiving VC funding."

Oil States Energy Services v. Greene’s Energy Group

Source: Patently-O

The Supreme Court has asked the USPTO to comment on whether the PTO can cancel claims through the IPR/CBM/PGR process. There has been a drumbeat from a number of people (most cogently, Robert Greenspoon of Flachsbart and Greenspoon) arguing that patent rights are private rights, only subject to Article III tribunals, and it is a violation of the constitution for an Article II agency to cancel a patent.

The fact that the Supreme Court is asking for comment indicates that they think this is a subject worthy of consideration. But I ultimately don't think this will be successful. First, as long as Chevron deference is the law of the land, the PTO's own interpretation and rulemaking will be accorded significant weight. (In practice, I think that it would be accorded some weight even without Chevron deference.) Second, Dennis Crouch argues that rights don't need to be exclusively public or private; the courts are comfortable with quasi-private rights. Third, I think that this entire argument misses the context of the previous inter partes reexamination proceedings, which were similar in many respects.

The Copyrightability of APIs

Apropos to the current discussions in the Oracle-Google trial, I wrote this in 2007:


One particularly difficult issue concerns copyright protection of header files. An individual name or symbol in a header file cannot be copyrighted, but the particular selection of symbols may be. The selection of symbols to be exported is inherent to API design, which could be a copyrightable creative decision. If you have ever heard programmers talking about “beautiful” or “ugly” APIs, you have wandered into the tricky middle ground of barely copyrightable expression.

In my opinion, the most likely scenario is a case-by-case determination. A bunch of constants would probably not support copyright. The entirety of an exported API is more likely copyrightable, but the header files would probably only support a “thin” copyright, where even trivial changes would be enough to avoid infringement. No one really knows, though, because the law of copyright is changing day by day.

For header files in particular, the rationale for copyright protection is substantially weakened when there is a second compatible implementation of a library. In that case, the headers, as creative as they might be, would probably merge into the functional interface supported by many concrete implementations.

For example, take the C++ standard template library (STL). There are a number of different implementations of the STL, all copyrighted by different authors. The STL headers themselves, however, have become just functional descriptions of the underlying copyrighted implementations. All STL implementations must use identical function definitions in the header files, or they would not be source-compatible with each other.

This Fall is Our Last, Best Chance for Patent Reform

Congress returns to work next week. We need you to call your representatives in Congress. Ask them to pass meaningful patent reform, but tell them that we also need to keep the ability to challenge bad patents in the U.S. Patent and Trademark Office.

Patent reform is needed to reign in patent trolls — companies that buy up vague patents with the intent of suing other companies for infringement. There is perhaps no bigger threat to American innovation and entrepreneurship than these entities, which suck an estimated $1.5 billion from the U.S. economy — every week.

But without more support, we are in danger of losing another round of the fight. Our lobbyists tell us that if we don’t pass good patent reform legislation this fall, it will be very hard to pass in the midst of an election year. That means any meaningful reform would likely be delayed until 2017 or even 2018 – giving patent trolls another two or three more years.

At Rackspace, we have been working to support patent reform for years. There has been great progress in building broad support for dealing with patent trolls – just look at the list of companies supporting reform.

But challenges remain: the issues are complex and our opponents have been clever. They have introduced changes to the House and Senate bills designed to weaken our ability to challenge bad patents in the patent office through a procedure called inter partes reviews (IPRs). These changes are technical and hard for non-lawyers to interpret – but their effect will be profound.

Let’s be more concrete – remember when Rackspace was sued for having a smartphone app that rotated? I talk about it a little here:

Patent Reform Video

Rackspace used the IPR procedure to invalidate the patent, thus solving the problem for everyone. As we found out later, invalidating the patent saved about 400 lawsuits against companies all across the United States.

As for us, we will continue to fight – every time, every troll, every patent. And we will continue to win. But if we want to solve the problem, it can’t just be Rackspace, or NewEgg, or Vizio fighting. We all have to do it together.

Patent trolls are everyone’s problem. They are parasites, trying to suck money out of successful companies by abusing the legal system. We will continue to support meaningful reform, but we can’t do this alone. Click on the link to help.

(Cross-posted at the Rackspace blog)