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Subject: [IP] The sky is not falling; we just need more lawyers to hold it up]
---------------------------- Original Message ----------------------------
Subject: The sky is not falling; we just need more lawyers to hold it up
From: "Ted Nelson" <tandm@xanadu.net>
Date: Fri, June 8, 2007 9:57 pm
To: "David Farber" <dave@farber.net>
Cc: "Ted Nelson" <tandm@xanadu.net>
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Dave,
The witticism in the subject line is from my patent attorney,
who has given me permission to post to you his nice analysis
of the Hatch-Leahy patent bill. He wants his name withheld
only because he has no time to get into discussions.
His analysis of the bill is just below (with title he requested).
The Wall Street Journal treatment of the Hatch-Leahy bill
is further below.
Best, Ted
Theodor Holm Nelson
Visiting Fellow
Oxford Internet Institute
===RECENT ADVICE FROM MY PATENT LAWYER
Re:
I have followed this case through the Supreme Court and watched the
hysteria it has created. The only certain thing about anything here is
that we now have more uncertainty.
Somewhere in all of this the underlying issue often gets overlooked. To be
patentable an invention, or an improvement, must be new, useful, and
non-obvious. What is the standard for non-obviousness? Before the KSR
decision we had a long-used standard, albeit an increasingly unpopular
one. The Court has now ruled that this standard is still valid, but
wrongly being used, and indicated that it is not going to guide us in how
to rightly use it.
Accordingly, we now have so-called experts commanding high speaking fees
to tell us that the sky-is falling, that all patents are invalid, and that
this is a sign of the apocalypse. And we have legal scholars (some even
with recognized names) telling us this is just another example of how the
Court is out of touch and has again shirked its responsibilities (with
these scholars split about 50/50 on how KSR "should" have been
definitively decided).
Briefly, my own observations: The Supremes first made BIG noises --
shockingly so, very unusual, and interpreted by most as a portent of a new
age about to dawn. It said it was going to fix a long-festering and
growing legal mess by forging a new standard. Then the Court weaseled out
by merely holding that the lower courts had not followed the guidance in
prior Supreme Court rulings. In the Courts ruling, however, there is
nothing really clear at all what this guidance is, or which rulings it is
present in, or where in those it can be found.
To one unfamiliar with the law, and especially U.S. Supreme Court
practice, this has to all be incomprehensible. To one in the business
community (regardless of which way they would like to have seen a "real"
decision go), this is unconscionable. It undermines the very stability and
predictability that our courts, especially the higher courts like the
Court, are supposed to establish and maintain.
Some are calling for Congress to act. Lets be careful what we ask for. It
would be nice to have Congress legislate into existence some socially
beneficial guidance that the Supremes will have to follow. Unfortunately,
Congress cannot simply legislate that the Court cannot "punt." Congress
can merely legislate into existence new rules that, when properly followed
by the Court, should lead to a decision one way or another on an issue.
Here, with the business community split on which of two opposites is best,
I do not expect Congress to accomplish anything soon beyond milking both
sides for contributions.
So the sky is not falling; we just need more lawyers to hold it up.
On 6/7/07, Ron Groenendaal <groenendaal@gmail.com> wrote:
Industries Brace
For Tough Battle
Over Patent Law
Drug Makers Oppose
Overhaul Plan Backed
By Tech, Finance Firms
By GREG HITT
June 6, 2007; Page A1
WASHINGTON -- U.S. patent law, already shaken up by a Supreme Court ruling
this spring, is facing its biggest overhaul in 50 years, amid a
legislative battle that pits drug companies against some major players in
the financial and high-tech sectors.
The battle's next round is in the Senate, where a committee is set today
to consider legislation backed by Democratic and Republican
leaders that would make patents harder to get and easier to challenge. It
would also reduce penalties for violating them.
WSJ's Greg Hitt discusses how the proposed legislation may affect
patent lawsuits, including how it may significantly raise the bar for
patent-infringement awards.
The proposed legislation reflects years of criticism from judges and
businesses that the nation's current system of protecting intellectual
property is ill-suited to the modern economy, where new inventions crop up
quickly and often involve the marriage of hundreds of
potentially patentable technologies and ideas. Many large companies also
complain that patent litigation is becoming increasingly common and
judgments against patent infringers increasingly costly.
Mark Chandler, the general counsel for Silicon Valley giant Cisco
Systems Inc., who is in Washington this week to rally support for the
proposed legislation, says the current patent system has encouraged
"lottery ticket" litigation and deterred innovation. Critics complain the
system as it stands now abets inventors and companies who patent
incremental advances in technology largely to gain the right to sue for
damages if their patents are infringed, rather than to develop products
based on those advances.
In March 2006, little-known patent-holding company NTP Inc. won a
windfall settlement from Research in Motion Ltd., maker of the popular
BlackBerry wireless email device. Faced with the possibility a
court-ordered shutdown of its services in the U.S. without a license from
NTP, RIM, of Waterloo, Ontario, agreed to pay $612 million to NTP, whose
patents had never been applied to an actual product. The case produced
widespread calls for patent reform.
Cisco has been joined in its support of the overhaul legislation by
high-tech leaders including Microsoft Corp. Goldman Sachs Group Inc. and
other financial-services companies are also backing the changes. The
widening use of patents on "business methods," such as ways to service
mortgages or clear checks, has prompted the industry to focus on the
patent issue, as has the industry's rapid embrace of the
Internet and other high technology.
The financial-services industry is particularly vulnerable to
"infringement suits and nuisance claims," says John Squires, Goldman's
chief intellectual-property counsel. Mr. Squires, who is scheduled to
testify today in the Senate, says the legislation is needed to
"restore some balance and fairness to the litigation landscape."
But pharmaceutical companies like Eli Lilly & Co. and Pfizer Inc., along
with manufacturers like Caterpillar Inc. and Dow Chemical Co., have been
telling lawmakers the proposed measure goes too far. They say the
legislation wouldn't only weaken the value of patents, but would make
challenges to them too easy to launch -- and win.
"It's almost everything an infringer could ever want," says Phil
Johnson, the chief patent attorney for health-care products maker
Johnson & Johnson. He says the legislation being pushed by the
leadership of the influential Senate and the House judiciary
committees would make "very sweeping changes," and would be a "very
substantial policy shift away from fostering innovation."
Drug makers have jealously guarded their technology against challenges by
Congress and the courts, arguing that their patents make up the bulk of
their real assets, and that any weakening of patent
protections would discourage expensive research into next-generation cures.
Critics, however, have pushed long and hard for an overhaul of the system,
which still follows the basic framework of the Patent Act of 1952, enacted
well before the computer age sparked a whole new level -- and style -- of
innovation. But the issues involved in the debate are complex, and
Congress until recently had left it largely to the courts to sort them
out.
In recent years, the Supreme Court has underscored the patent system's
disrepair in a series of rulings rejecting the way lower courts have been
interpreting existing law. The justices have declared, in effect, that the
patent system, as it has developed through the courts, has deviated from
the balance Congress set a half-century ago between
promoting innovation and spreading the fruits of progress.
This spring, the high court, in two important rulings, took action that
made it harder to get new patents and defend existing ones. In one of
those decisions, the justices sided with critics who contend innovation
has been stifled by lower-court rulings that gave patent holders more
power than Congress intended. The legislation now on
Capitol Hill marks an effort to transform what have been piecemeal court
rulings into a comprehensive set of changes.
Democratic leaders came to power last fall vowing to make patent
reform a priority, as part of a broader agenda to stimulate innovation in
the economy. But the current initiatives have a strong bipartisan flavor,
increasing their chances for passage. In the House, Rep.
Howard Berman (D., Calif.) is working with Rep. Lamar Smith (R.,
Texas), while Sens. Patrick Leahy (D., Vt.) and Orrin Hatch (R., Utah) are
teaming up on the Senate side of the Capitol.
The bill has already cleared an important hurdle, winning approval in May
from the House Judiciary Subcommittee on Intellectual Property. The
measure is expected to go to the full House Judiciary Committee later this
month, and could be ready for floor action in July. Today's hearing before
the Senate Judiciary Committee is designed to set the stage for formal
action in the chamber later this summer.
Lawmakers have introduced identical bills in the House and Senate, as part
of a strategy to push legislation through before the 2008
presidential campaign draws much nearer. "We're on a fast track," says Mr.
Berman, who is chairman of the House Judiciary Subcommittee on
Intellectual Property.
Under the legislation, patents would still be granted by the
government for as long as 20 years. But the legislation would make some
fundamental changes in how they are issued and defended. Among other
things, the legislation would create a "first to file" system for granting
patents, bringing U.S. rules in line with those used by the rest of
developed world.
Under the current U.S. system, patents typically go to the first
inventor. Under a "first to file" system, a patent would go to the first
individual or entity that filed a claim with the government. That could
put smaller companies and individual inventors at a
disadvantage, but the shift could streamline the patent-approval
process by eliminating debates about who first came up with an idea.
Another proposal would make it easier to challenge a patent already
approved by the U.S. Patent and Trademark Office. Today, patents can be
challenged in two ways: through a special administrative proceeding within
the agency or through litigation. The legislation would create a third
avenue -- a three-judge tribunal that would consider the
validity of patents.
Supporters say the proposal would cut down on questionable patents and
reduce the number of lawsuits. They say such a tribunal would be
better suited to sorting out the complicated disputes that arise in the
high-tech and financial sectors.
But the Coalition for 21st Century Patent Reform -- a broad group that
includes drug makers as well as manufacturers like 3M Co. and United
Technologies Corp. -- contends the tribunal approach would subject a
patent to open-ended challenges. That would be a big problem for
pharmaceutical companies, which sometimes spend hundreds of millions of
dollars to develop products based on a single patent.
"It cuts right to the business model of our industry," says Ken
Johnson, a spokesman for the Pharmaceutical Research and Manufacturers of
America, the trade group representing major brand-name drug makers.
Another hotly contested proposal is designed to rein in damage awards in
patent-infringement cases. The legislation would limit the
circumstances under which damages could be trebled. It would generally
prescribe damage awards based on the narrow value of an infringed
patent, which might only cover one component in a broader product.
For supporters of the legislation, a federal jury's decision last
winter to order Microsoft to pay $1.52 billion to Alcatel-Lucent SA
underscored the need for controls on damages in patent litigation. The
jury found that Microsoft had infringed patents related to the MP3
technology used for playing and recording digital audio, but critics said
the final damage award far exceeded the value of the technology at issue
in the case.
The debate is multilayered, and many of the industries involved aren't
unified. Some technology companies, for example, oppose the
legislation. Bruce G. Bernstein, the chief intellectual-property
officer at InterDigital Communications Corp. in King of Prussia, Pa.,
complains the changes are being pushed by larger, more established
technology companies, which are already working the issue aggressively on
Capitol Hill. "They've got a big head start," adds Mr. Bernstein, who is
scheduled to testify at today's hearing.
The Bush administration has taken a mixed position on the overhaul
legislation. It has commended the "bicameral and bipartisan"
legislative effort, while also expressing concerns about details of the
bipartisan bill. Among other things, the administration has raised
questions about the new procedures proposed for reviewing existing patents
and the patent office's ability to handle the additional
workload. But the administration's statement stressed that it "looks
forward" to working with Congress as the measure moves forward.
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