Wall Street Journal opinion piece criticizes patent "reform"

From the Wall Street Journal opinion piece:

Some big businesses appear to ignore patents owned by individuals and small businesses thinking their potential infringement won’t be challenged. They
are lobbying hard for the pending legislation mentioned in Mr. Malanga’s piece to make it extremely risky for individuals and small businesses to sue infringers. If they are successful, patents will no longer be financially feasible for most individuals and small businesses, making their innovations and development results much less valuable, leading to a huge disincentive to their research and development. This will greatly reduce technical progress.

Link: http://www.wsj.com/articles/remember-what-a-patent-is-supposed-to-protect-1442259488

The “extremely risky” comment likely refers to the presumption of “loser pays” in Goodlatte’s
Innovation Act.

If a smaller entity, such as an individual inventor or university, sues an alleged infringer, and loses,
that smaller entity will have to pay lawyers to show “why” it should not pay the alleged infringer’s legal fees.

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  • Electronic Frontier Foundation Successful in DMCA Take-Down Ninth Circuit Case But Issues Remain

    The U.S. Court of Appeals for the Ninth Circuit (with jurisdiction over federal appeals in California and several other western states) issued an opinion in Lenz v. Universal Music Corporation.  The Ninth Circuit held that before submitting a Digital Millennium Copyright Act take-down notice a content holder must determine that a use was not a fair use.  The Lenz case involved a take-down notice based on a portion of a Prince song playing during a posted video of Ms. Lenz’s children playing.   The Electronic Frontier Foundation, that represented Ms. Lenz with Keker and Van Nest, noted that the decision is particularly important given the upcoming Presidential election and the amount of critical content that may be subject to efforts to censure.  However, the Ninth Circuit also stated that:

    To be clear, if a copyright holder ignores or neglects our unequivocal holding that it must consider fair use before sending a takedown notification, it is liable for damages under § 512(f). If, however, a copyright holder forms a subjective good faith belief the allegedly infringing material does not constitute fair use, we are in no position to dispute the copyright holder’s belief even if we would have reached the opposite conclusion. A copyright holder who pays lip service to the consideration of fair use by claiming it formed a good faith belief when there is evidence to the contrary is still subject to § 512(f) liability. . . .

    In order to comply with the strictures of § 512(c)(3)(A)(v), a copyright holder’s consideration of fair use need not be searching or intensive. We follow Rossi’s guidance that formation of a subjective good faith belief does not require investigation of the allegedly infringing content. See 391 F.3d at 1003, 1005. We are mindful of the pressing crush of voluminous infringing content that copyright holders face in a digital age. But that does not excuse a failure to comply with the procedures outlined by Congress.

    The Ninth Circuit went on to later hold that “willful blindness doctrine may be used to determine whether a copyright holder “knowingly materially misrepresent[ed]” that it held a “good faith belief” the offending activity was not a fair use.”  Notably, the Ninth Circuit briefly touched on the usage of software to discover potentially infringing content, but expressly declined to address the important issue:

    We note, without passing judgment, that the implementation of computer algorithms appears to be a valid and good faith middle ground for processing a plethora of content while still meeting the DMCA’s requirements to somehow consider fair use. Cf. Hotfile, 2013 WL 6336286, at *47 (“The Court . . . is unaware of any decision to date that actually addressed the need for human review, and the statute does not specify how belief of infringement may be formed or what knowledge may be chargeable to the notifying entity.”). For example, consideration of fair use may be sufficient if copyright holders utilize computer programs that automatically identify for takedown notifications content where: “(1) the video track matches the video track of a copyrighted work submitted by a content owner;(2) the audio track matches the audio track of that same copyrighted work; and (3) nearly the entirety . . . is comprised of a single copyrighted work.” . . . Copyright holders could then employ individuals like Johnson to review the minimal remaining content a computer program does not cull. . . . During oral argument Universal explained that service providers now use screening algorithms. However, we need not definitively decide the issue here because Universal did not proffer any evidence that—at the time it sent the takedown notification to Lenz—it used a computer program to identify potentially infringing content.

    The value of copyrights (and trademarks) rely upon cost-effective enforcement for sure.  And, the issue of automated processing of analysis of trademark and copyright infringement is an important one.  Notably, the U.S. does not have an analogous statutory take-down procedure for trademarks as well.  However, websites are known to follow the basic procedures of the Digital Millennium Copyright Act when trademark owners allege trademark infringement based on third party posting of content on a website.  Trademark owners would be wise to consider whether to follow the Lenz case before issuing a trademark take-down notice. 

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  • "Invention companies that rely on patent-licensing fees are outnumbered and outgunned in lobbying by the companies selling products that are in high demand because of the valuable technologies inside them. "

    TheHill has commentary related in part to non-practising entities (NPEs):

    Meanwhile, policy discussions have focused on theories, promoted by parties that would profit from lower patent licensing fees, of alleged patent hold-up and royalty stacking — which suggest patent holders can charge excessive royalties – despite the utter lack of evidence offered by proponents of these theories. To the contrary, there is abundant evidence showing the smartphone market is open, competitive, accelerating with innovation and technology adoption, and increasingly cost effective for consumers. Unsurprisingly, no party seeking to reduce its royalty costs has yet tried to prove in court the total amount of the alleged smartphone “royalty stack,” or more importantly, that the total amount of royalties they pay to use technologies they did not invent is “excessive.”

    Antitrust agencies should resist pressures from vested interests to regulate the market in favor of one business model over another. Invention companies that rely on patent-licensing fees are outnumbered and outgunned in lobbying by the companies selling products that are in high demand because of the valuable technologies inside them. If this free-market economic balance shifts to favor short-term profits of technology implementers over long-term innovation, consumers will be the biggest losers.

    link: http://thehill.com/blogs/congress-blog/technology/253324-competition-agencies-should-beware-of-buy-side-slant-in-patent

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  • CBS Sunday Morning on September 13, 2015: Jan Crawford interviews Justice Stephen Breyer

    Charles Osgood introduced the stories for September 13, 2015, beginning with the cover story by Lee Cowan on athletes not managing their finances well. A later pulse poll revealed 67% of the population think athletes are paid too much.

    The almanac was on the birth of Milton Hershey. Of interest, Hershey’s decision to do chocolate was a result of a visit to Chicago’s Worlds Fair in 1893. This World’s Fair was pivotal as to Edison and ac/dc as well as for the use of batteries in cars and other things. Not mentioned in the piece was the furor from 2002. From Wikipedia: On July 25, 2002 it became public knowledge that the Hershey Trust Company was seeking to sell its controlling interest in the Hershey Foods Corporation. The value of Hershey stock skyrocketed 25% with over 19 million shares trading that day. But over the following 55 days, widespread press coverage, as well as pressure from Pennsylvania Attorney General Mike Fisher, the community of Hershey, and Dauphin County Orphans’ Court Senior Judge Warren G. Morgan, led to the sale being abandoned.
    In terms of intellectual property, wikipedia notes: Hershey’s filed a lawsuit against Let’s Buy British Imports, and Posh Nosh Imports because of the aforementioned companies importation of Nestlé’s Yorkie, and Toffee Crisp, for Hershey’s claim of alleged resemblance to York Peppermint Patties and Reese’s Peanut Butter Cups, respectively; despite the fact that Hershey’s and Nestlé’s respective products are different types of candy. Hershey also claimed that import of original British Rolo by Nestlé violated its licensed rights to the Rolo brand in the US, and sought the end of importation of Rolo into the US.

    Hershey’s also sought the halting of the importation of British, South African, Canadian, Australian, New Zealander, and all other Cadbury brand chocolate other than Hershey’s licensed chocolate product produced in the US and marketed under the Cadbury brand name. Hershey’s claimed that the importers, LBB Importers and Posh Nosh, were infringing on their rights to the Cadbury brand name in the US due to their licensing agreement with Cadbury, a division of Mondelez.

    In addition, Hershey’s claimed that the two importers needed to stop importing Mars’s Maltesers malted milk balls because Hershey’s makes their own malted milk balls under the Maltesers name. Hershey’s itself has been sued by Mars for violating Mars’ trademark and rights to Maltesers, Mars has said that Hershey’s has copied Maltesers brand, packaging, and products; that lawsuit has not settled as of 16 February 2015.

    The Jan Crawford interview with Stephen Breyer included the text:

    Breyer has just written a new book, “The Court and the World: American Law and the New Global Realities” (Knopf), which argues that while our nation’s justice system remains an example to other democracies, it must also evolve to meet the demands of a rapidly-changing world.

    That puts him at odds with conservative Justice Antonin Scalia — a familiar place for Breyer. He’s not only known as a liberal-leaning justice, but also the one most willing to publicly debate Scalia and other Justices who adhere to “Originalism” — a philosophy focused on the original understanding of the Constitution. Breyer thinks the meaning of the Constitution can change with the times.

    The contrast was clear earlier this summer, when Breyer said the Justices should rethink the constitutionality of the death penalty — a punishment accepted by the founding fathers.

    Justice Scalia called it “gobbledy-gook.”

    link: http://www.cbsnews.com/news/q-a-justice-stephen-breyer/

    The moment of nature was on a coral reef in Honduras

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  • The U.S. Presidential Race and Pharmaceutical Pricing (and More)

    The U.S. Presidential Race is pressing ahead.  I’ve written a bit about Donald Trump and the value of his name, here.  Trump has continued to receive a mixed response to his ideas about immigration and has come under increased fire from his party.  Notably, (mostly) conservative commentator Charles Krauthammer recently confounded conservative talk-show host Bill O’Reilly of Fox News by making the case that Trump’s “rounding people up for deportation and possible reimportation” was not only illegal, but morally wrong (and prohibitively expensive).  Krauthammer pointed to the heart-breaking Elian Gonzalez episode.

    The number two democratic candidate, Senator Bernie Sandershas introduced a bill in Congress designed to lower the cost of pharmaceuticals (press release).  The fact sheet is here.  While the bill apparently allows the negotiation of drug prices under the Medicare Part D prescription drug program, it also allows prescription drug importation from Canada.  Notably, “The bill also directs the United States Trade Representative to reject provisions in the negotiation of any trade agreement that would raise drug prices in the U.S., extend periods of patent exclusivity, or remove flexibilities in U.S. law regarding drug pricing.”  Additionally, the bill:

    would prohibit anti-competitive arrangements between brand and generic drug makers where the brand name drug manufacturers pays the generic manufacturer to delay bringing their generic alternative to market. According to the FTC, these anticompetitive deals cost consumers and taxpayers at least $3.5 billion in higher drug costs every year. In FY 2012, the FTC found that there were 40 potential pay-for-delay deals involving 31 branded products with combined U.S. sales of $8.3 billion.

    Finally, the bill also would terminate any market exclusivity if fraud is demonstrated, which would include “off-label promotion, kickbacks, anti-monopoly practices, and Medicare fraud.”  Interestingly, the bill further requires:

    pharmaceutical companies to publicly report information that affects drug pricing, including the total costs incurred for research and development and clinical trials, as well as the portion of drug development expenses offset by tax credits or paid by federal grants.

    The legislation also requires drug companies to report not only the price information charged to federal payers, but also requires companies to submit prices, profits, and sale information in other countries in which those products are sold.

    The additional information will likely set the stage for more criticism about the current systemMore information about the subsidization of federal research through the Bayh-Dole Act for prescription drugs, particularly biologics, will be interesting.  The bill in its entirety can be found, here.

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  • Must Request Authorization to File Motion to Submit Supplemental Information Within One Month of Institution IPR2015-00324

    Takeaway: When a petitioner wishes to seek authorization to submit supplemental information, it must actually request authorization to file a motion to submit supplemental information—and not merely request a conference call with the Board—within one month of institution of trial.  … Continue reading

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  • Massachusetts Court Upholds Software Method Patent

    By: Stuart P. Meyer On September 4, a Massachusetts district court issued an interesting ruling that calls into question many of the recent preliminary stage Alice-based invalidations we’ve seen over the past year. The decision, the latest round in ongoing litigation between DataTern and numerous defendants, is notable for the following reasons: It expressly recognizes that the presumption of validity applies to subject matter eligibility, saying that notwithstanding some suggestions in the Federal Circuit to the contrary (see Judge Mayer in Ultramercial III, 772 F.3d at 720-721), the Supreme Court’s unanimous statement in Microsoft Corp. v. i4i Ltd. Partnership, 131…

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  • Denying Patent Owner’s Motion for Additional Discovery Regarding Secondary Considerations and Real Parties-in-Interest IPR2015-00083; IPR2015-00085; IPR2015-00088

    Takeaway: Constraints imposed by a protective order in a related district court litigation does not relieve a party from providing reliable, specific evidence and information sufficient to establish that the requested additional discovery is necessary in the interest of justice. … Continue reading

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  • The American Spectator gets it wrong on HR 9, the Innovation Act

    An article in the American Spectator by David Applegate and Gene J. Koprowski contains the following questionable text:

    House Resolution 9 (H.R. 9) seems today most favorable to technology industries, including Silicon Valley and biotech and pharma, among the current batch of laws being considered by the Congress.

    link: http://spectator.org/articles/64020/patent-legislation-pending

    Jim Greenwood of BIO wrote in TheHill in July 2015:

    Unfortunately, some of the current patent reform bills working their way through Congress do not sufficiently address this abuse. And our industry is not alone when it comes to concerns that H.R. 9, the bill moving through the House of Representatives, will undermine intellectual property rights by creating great uncertainty about the reliability and enforceability of patents. As of today, 145 prominent American research universities, hundreds of businesses of all sizes and independent investors in innovation have joined in registering their concerns about the bill. And our industry has worked — and will continue to work — in the spirit of cooperation to help get the legislation right.

    link: http://thehill.com/opinion/op-ed/248567-congress-must-keep-trolls-away-from-medical-patents

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  • Inventorship dispute at the University of Pittsburgh

    The Pittsburgh Post-Gazette has an article about academic intrigue and patents, titled
    Federal patent office rules against two Pitt doctors on vaccine application.

    There was a patent application filed by Professors Jay Kolls and Mingquan Zheng. The aggrieved complainants were Pitt researchers Karen Norris, an immunology professor at UPitt, and Heather Kling, a postdoctoral student in her lab.

    The issue:

    In 2011, Dr. Norris complained to Pitt officials that Dr. Kolls and Dr. Zheng, who had moved to Children’s Hospital of Pittsburgh of UPMC from Louisiana State, had falsely claimed they did the monkey research that was the basis for seeking a patent on a pneumocystis vaccine. She contended that the Kolls-Zheng lab had received samples of the pneumocystis protein cited in the patent documents from her lab; that the Kolls-Zheng lab never worked with monkeys, only mice; and that Dr. Kolls had learned about details of her lab’s research when he served as a member of Dr. Kling’s dissertation committee.


    When Dr. Kolls failed to add her name, Dr. Norris sought a university investigation. That was carried out by a faculty committee, which ruled in 2013 that even though the Norris lab had made the original discovery of the protein fragment cited in the patent application, it could not determine whether Dr. Kolls and Dr. Zheng had engaged in outright misconduct. Instead, the panel said, the two physicians were guilty of “research impropriety.”

    Ironically, the patent office cited the Pitt faculty committee’s own report as the primary basis for ruling against Dr. Kolls and Dr. Zheng on the patent application. “The threshold question in determining inventorship is who conceived the invention,” the office said. “Unless a person contributes to the conception of the invention, he is not an inventor.” The “evidence appears to indicate that Kolls and Zheng do not meet the requirements of inventorship.”

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  • Kenya to copy DMCA, block hosts of infringing sites?

    Via Infojustice comes “Upcoming Kenyan Copyright Amendments to Target Local Internet Service Providers Hosting Infringing Content”, which tells us the following:

    The Kenya Copyright Board (KEBCO) is preparing to propose amendments to the Copyright Act that would block sites hosting content which infringes local creators’ copyrights. Local internet service providers that refuse to take down content would face fines and even prison sentences. KEBCO’s webpage notes that the new rules should “come into play by the end of the year… The laws will be ready for public discussions next month before they go to Parliament.” Head of the Kenya Copyright Board (Kecobo) Edward Sigei told the Standard:

    “We are proposing to introduce an amendment in the Copyright Act that will place the onus of responsibility for Kenyan content illegally downloaded, squarely on local internet service providers … We are borrowing from the Digital Millennium Copyright Act of America and others that have come after it and we have designed an amendment where the ISP will be liable under certain circumstances for infringements that happen through their channels.”

    This is part of a larger effort to promote the local TV and movie industry. The government is also working with broadcasters to increase the coverage of local content.

    This blogger, apart from being curious as to why the Kenya Copyright Board is both “KEBCO” and “Keboco”, wonders how long it will take to get this law — assuming that it will be passed — up and running, and how effective it will be.  He hopes to hear from his Kenyan friends as to their hopes, expectations and analysis of the provision and its likely efficacy.

    Thanks to Chris Torrero for this link.

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  • Infringement Complaint Provides Notice of Infringement for All Patent Claims IPR2015-00530

    Takeaway: When a complaint alleging infringement of a patent alleges infringement of “one or more claims” or “at least claim X” of the patent, the defendant is on notice concerning potential infringement of any claims of the patent, and later … Continue reading

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  • Getting Priorities Straight: Patents Have No Presumptive Entitlement to Priority Date of Provisional Applications

    Author: Carlos J. Rosario Editor: Lauren J. Dreyer In Dynamic Drinkware v. National Graphics, No. 15-1214 (Fed. Cir. Sept. 4, 2015), the Federal Circuit affirmed the Patent Trial and Appeal Board’s finding that IPR Petitioner Dynamic Drinkware failed to prove that its cited prior art U.S. patent was not entitled to its provisional application’s priority […]

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  • Deja vu all over again: threats against buyers of patented products

    The caption of the famous Selden car case which found Henry Ford did not infringe the Selden patent is — Columbia Motor Car Co. et al. v. C.A. Duerr & Co. et al., 184 F. 893 (2d Cir. 1911). — If you are wondering, C. A. Duerr and Company was Ford’s New York distributor.

    Ford and a Ford customer were separately sued.

    Flash forward one hundred or so years and look at the recent Pfizer case in England:

    From Bloomberg:

    Pfizer Inc. was accused by a U.K. judge of making “groundless threats” of legal action against British doctors and drugstores if they prescribed or sold a generic version of its best-selling Lyrica treatment.
    Judge Richard Arnold issued the rebuke as he ruled that Allergan Plc’s Actavis unit didn’t infringe Pfizer patents with its version of the drug pregalbin.
    Pfizer “cannot justify the threat” in letters and e-mails to British health authorities and pharmacy groups that they may have been breaking the law by offering a generic version, Arnold said. Some of the messages were “calculated to have a chilling effect on the willingness of pharmacies to stock and dispense generic pregalbin.”

    link: http://www.bloomberg.com/news/articles/2015-09-10/pfizer-made-groundless-threats-to-pharmacies-in-patent-dispute

    **From LBE’s article in Intellectual Property Today titled “Looking Backward”

    The beginning of the decision reads: “The subject is most important; the interests involved, of great magnitude; the record phenomenally long; and the questions presented, complex.” The decision continued: “During this long time the […] art made marked advances along different lines, and when, in […], the patent was granted, it disclosed nothing new. Others had then made the patentee’s discovery and had reduced it to practice in ignorance of what he had done. While he withheld his patent, the public learned from independent inventors all that it could teach. For the monopoly granted by his patent he had nothing to offer in return. The public gained absolutely nothing from his invention, whatever it was. Fromthe point of view of public interest it were even better that the patent had never been granted.”

    The patent in question is not to a business method, nor even to such a thing as BT’s claim to a hyperlink. It is not a patent to Lemelson. The patent in question is US 549,160 issued in 1895 to a Rochester lawyer named George B. Selden and the decision in question is Columbia Motor Car Co. v. C. A. Duerr, 184 F. 893 (CA 2 1911), which found, among other things, that Henry Ford’s cars did not fall within the scope of the patent, mainly because Ford’s cars employed an engine different from that disclosed in the ‘160 patent.


    Henry Ford tried to join [ALAM] in 1903, but was rebuffed. In one version of the story, his 1903 application was denied on the basis his company was more an ‘assembler of parts’ than a true ‘manufacturer’. Although somewhat debated, the real issue was price fixing of the cars, rather than the technology per se. Unlike today’s rather tame times, there was a real issue of lawsuits against buyers. ALAM ran ads “Do Not Buy a Lawsuit with Your Automobile” and Ford, in turn, took out ads took offering to indemnify both buyers and sellers of his cars from any lawsuits claiming Selden patent infringement.

    Of the patent suit itself, Ford lost at trial, but established noninfringement on appeal. More so than in today’s patent suits, the news of his victory was a big deal. Ford was quoted: “Probably nothing so well advertised the Ford car and the Ford Motor Company as did this suit.” After the appellate decision on the Selden patent, Ford looked to market forces to solve business problems, much as certain software entrepreneurs wish in the year 2001. However, Ford was not a continuous innovator; for example, in 1922 he remarked “It is strange how just as soon as an article becomes successful, somebody starts to think that it would be more successful if only it were different. There is a tendency to keep monkeying with styles and to spoil a good thing by changing it.”

    From footnote 4 of the IPT article:

    To the extent that Selden’s idea was not to build such a vehicle but to wait around for someone else to do so and then cash in on his patent, there is relation to Edward Bellamy’s “Looking Backward” (1888), which was published between the application (1879) and issuance (1895) of Selden’s patent: “Living in luxury, and occupied only with the pursuit of pleasures and refinements of life, I derived the means of support from the labor of others, rendering no sort of service in return.” “In the United States there was not, after the beginning of the last quarter of the century, any opportunity whatever for individual enterprise in any important field of industry, unless backed by great capital.”

    One notes “patent troll” issues can involve threats against buyers of patented technology.

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  • Denying Motion to Apply for Subpoena for Failure to Provide Basis for Cross-Examination of Translator IPR2015-00083; IPR2015-00085; IPR2015-00088

    Takeaway: The Board has discretion to limit routine discovery, especially with regard to cross-examination of a translator’s affidavit testimony. In its Order, the Board denied a motion to authorize Patent Owner to apply for a subpoena for the deposition of … Continue reading

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