Putting Limits on Patent Trolling: An Infringement Litigator's Perspective
The whole question of patent trolling, and the concern over it, is an issue that has gnawed at me for some time, having defended small companies against patent infringement claims by competing manufacturers and having prosecuted licensing disputes on behalf of non-manufacturing, but inventive, patent holders. My latest bugaboo on this topic is the massive patent infringement lawsuit launched by patent holding entity Rockstar against Google, and the continuing effort by state Attorney Generals to crack down on entities deemed by those offices to be trolls. What bothers me, at the end of the day, is the promiscuous use of the term patent troll, and the underlying – and somewhat Orwellian – extent to which the term is clearly thrown into the lexicon to create a negative impression of non-manufacturing patent holders who seek to enforce their rights. Certainly, there are some patent holding entities, and their accompanying lawyers, who are basically in the business of simply suing on patents to collect licensing revenue or damages. This does not, however, mean that it is fair or appropriate to call all patent holders who do not manufacture or sell in the market trolls, or to treat all such entities as somehow entitled to less than the full protection of the patent laws. Many of us have experience with university patent holders, or have worked –as I have– with inventors whose very purpose is to invent and patent a product, to thereafter license it (hopefully); sometimes these types of patent holders are never able to find a market for their product, and thus their invention is never manufactured, but this should not deprive them later of their right to damages if, years down the road, a company sells a product that infringes on one of their patents.
The Rockstar lawsuit is another perfect example. I was not the first (I suspect) and will probably not be the last to refer to IP litigation between two competitors in the marketplace as the continuation of business by other means and, frankly, I am not sure there is anything wrong with that. The big players are big boys, and if they want to invest a fortune in legal fees to attack their marketplace rivals in that way, so be it. It doesn’t change the fact, though, that such a patent infringement dispute is only tangentially about invention, and much more about collecting damages or obtaining a competitive advantage in the marketplace.
So what do you do? Everyone who sues over a patent but doesn’t manufacture or sell a product can’t be – and clearly isn’t – a patent troll, nor deserves to be tarred with that smear, and yet we know that the sole value of some patents, and sole reason for the existence of some of their holders, is to sue those who do manufacture and sell (and who by doing so create a significant number of jobs, something not true of entities that exist solely to prosecute patent infringement claims).
To my mind, the answer is easy, and doesn’t even require any type of extensive change to the patent laws or the patent process. Instead, all that is necessary is to change the damages provisions of the patent laws: create some type of sliding scale of potential recovery that is inverse to the extent of manufacturing activity, selling activity, or effort to do so (even if unsuccessful) by the patent holder. It would be easy enough to create some sort of step in the litigation process – just as there is a Markman hearing, or preliminary injunction hearing, or a summary judgment proceeding – where the evidence on this could be submitted and a court could decide this issue and determine the extent of potential damages if and when the case were to go to trial. Alternatively, one could decide that, instead, this determination should be a jury question to be decided as part of the trial. Either way, though, you could seriously alter the incentives for trolling if you made the damages recoverable by patent holders dependent on the extent to which they themselves had tried to put the patented product or method into the marketplace.
Lessons on Intellectual Property Litigation From the Baltimore Ravens Defense
This is a great story on long running copyright litigation between the Baltimore Ravens football club and a security guard and doodler, over the rights to the Ravens’ emblem. The court bifurcated the case, with liability being tried first. The jury in the liability portion of the case found infringement, but the next jury, in the damages portion of the case, awarded nothing in damages, finding that the plaintiff was not injured by the infringement. I bring this story up for three reasons. The first is that it is a just plain, good old fashioned read, even if you don’t care one bit about copyright law or, perhaps even more unforgivably, the Ravens.
The second though, is the more important one. I have done a fair bit of patent and copyright litigation (especially the latter) over the years, almost exclusively for defendants, and it is a lot harder to actually win and recover significant money on copyright infringement claims than many people – including most lawyers – believe. The headline stories of massive awards in patent infringement cases lead people to extrapolate across the board to other types of intellectual property cases, but those cases don’t actually extrapolate well. The various defenses available to defense counsel in copyright infringement cases makes for a tough road in that area for plaintiffs (much to my happiness, I admit, when I am representing copyright defendants).
And finally, the third point the article drives home is this one. When representing plaintiffs in intellectual property cases, always think twice before deciding to accept bifurcation without a vigorous battle. Its hard enough to convince a jury to find infringement, but once having done so, it is better to move onto damages in front of that same jury, with whom you have presumably already established credibility. Bifurcation forces the plaintiff to reestablish that credibility, and any sympathy, all over again in front of a new jury, and causes the plaintiff to lose whatever momentum led to the liability verdict in the first place. All trial lawyers have their own pet theories; that is one of mine.
Working Backwards From a Closing
This is a very entertaining and interesting piece from AON’s Mark Hermann, leaving aside any qualms about the seriousness of the website that published it. In it, Hermann makes the case for litigation counsel to provide overviews to their clients structured around the question of how they plan to win the case, rather than just by providing an overview of the case and its history. I will take his thought one step further, and argue that every single thing a litigator does on a case should be done with that in mind; that, in essence, every decision in a case and every step taken should be subject to a litmus test of whether it gets the client one step closer to winning the case. In many ways, that was the thesis of this article of mine, on patent infringement litigation, in which I discussed the difficulties of cost faced by smaller companies forced to litigate such cases. Having litigated a number of intellectual property cases – including trying a patent case – for smaller and emerging companies who were facing off against deeper pocketed rivals, I knew that the key to cost containment was to focus strategy, discovery, expert issues, and motion practice only on the pieces needed to win at trial or summary judgment, and to avoid the siren song of pursuing interesting but expensive and likely not important side issues in the case. As I explained in the article, costs could be controlled by focusing only on the themes and issues relevant to winning, rather than pursuing every possible thing that could, but probably would not, affect the outcome of the case.
This approach – which Hermann likens to focusing on the closing of a trial – can and should influence everything a trial lawyer does, from the reporting to the client that is the focus of Hermann’s piece to discovery strategy to motion practice, all the way up to trial. If it doesn’t matter to winning, or to preventing the other side from winning (to the extent the two concepts aren’t entirely co-extensive), than it is has no purpose in a case. Deposition practice, for instance, is a perfect example. Sure, there are instances in which a deposition is taken just to get background information and understand what actually occurred. For the most part, though, depositions involve witnesses who have a known role in the events at issue and in those instances, I almost never ask a question that doesn’t already fit my plan for one of three things: what I am going to prove to obtain summary judgment, what I am going to use to prevent the other side from obtaining summary judgment, or what I am going to prove at trial. When it comes to a deposition, if a lawyer cannot explain how a particular question or answer fits into one of those three rubrics, 90% of the time the question and its answer has no purpose in the case, and serves only to extend the length of depositions and the cost of discovery to clients.
You can carry Hermann’s concern across the entire length of a case, from beginning to end. And, as Hermann suggests and my article on patent infringement litigation focused on, you can use that concern to reduce legal costs and get better results, all at the same time.
On the Patentability of Computer-Generated Inventions
So, so, so very far behind. Its even creeped onto the blog, and in particular into our serialization of The Genie In the Machine. Oh, well, better late than never. Here is the last and final installment of our semi-serialization of Robert Plotkin’s book on automated inventing, and its impact on patent law. Meanwhile, you can find the first three installments here, here and here.
Automated Inventing: Should Computer-Generated Inventions be Patentable?
In my previous entries I have discussed how "artificial invention technology" is being used to invent new products automatically. In this entry I will argue that such computer-generated inventions should be patentable, but that the legal requirements for patentability will need to be recalibrated in light of artificial invention technology.
For an invention to be patentable, it must (among other things) be "nonobvious." Imagine, for example, that you design a new pencil. Assume that all previous pencils have been constructed from pine wood and that your pencil is constructed from oak, but in all other respects is the same as an existing pencil. Should you be entitled to a patent on your pencil? It satisfies patent law's "novelty" requirement because it differs in some way from previously-existing pencils. Yet it most likely does not satisfy patent law's "nonobviousness" requirement. A product is considered "obvious," and therefore not patentable, if the product design would have been obvious to a "person having ordinary skill in the art" of the product at the time the product was designed.
Patent law's "person having ordinary skill in the art" (PHOSITA), like tort law's "reasonable person," is a legal fiction, intended to represent the current level of skill of people currently practicing in a particular technological field (art). If a court were to determine whether your oak pencil is obvious, it would first ask, "what was the ordinary level of skill of pencil designers at the time you designed your pencil"? The court would answer this question by looking at factors such as the educational degrees typically held by pencil designers and the number of years of experience they have. A typical statement by a court is that "pencil designers of ordinary skill as of January 1, 2009 had a Bachelor's Degree in Mechanical Engineering and 6 years of work experience designing pencils." Based on this finding, the court attempts to determine whether such a hypothetical person would have found it obvious, on January 1, 2009, to construct pencils out of oak rather than pine.
If all pencil designers were to go back to school and obtain Ph.D.'s in Mechanical Engineering tomorrow, courts would recognize the resulting increased skill of the "person having ordinary skill in the art" in subsequent patent cases. The basic effect would be to raise the bar for nonobviousness, thereby making it more difficult for people to obtain patents on pencils.
Creation and adoption of artificial invention technology by pencil designers could have a similar real-world effect on the ability of pencil designers to create new pencils. One person who I interviewed for The Genie in the Machine said that he considers an engineer with a Bachelor's Degree, but equipped with artificial invention technology, to be as effective at solving problems as an unaided engineer with a Ph.D. If pencil designers worldwide were to adopt, and become skilled at using, artificial invention technology, the law of nonobviousness should take this increase in "effective inventive skill" into account. As a result, it should generally become more difficult to obtain patents on new pencils. Intuitively, someone should not be able to obtain a patent on a pencil that could have been created by any pencil designer merely by applying ordinary skill to widely-available invention automation technology.
Yet it is at best unclear whether this is how the nonobviousness standard will adapt to artificial invention technology. The caselaw on nonobviousness pays very little attention to the technologies that inventors use to assist them in the inventive process, focusing instead primarily on inventors' education and training. Even the U.S. Supreme Court's most recent pronouncement on obviousness in KSR v. Teleflex, 550 U.S. 398 (2007), declined to address this issue as directly as it could have. As a result, we are left with incomplete guidance regarding whether the level of skill of those having ordinary skill in an art in a particular patent case will be interpreted in light of the skill that those in the art have at using extant invention automation technology to solve problems. If invention automation technology is not taken into account when calibrating the level of skill of PHOSITA in particular cases, we run the risk of allowing inventions which could be produced using only ordinary skill to be patented. This would run counter to the very purpose of the nonobviousness requirement and of patent law itself.
As with the other topics addressed in my previous blog entry, I discuss the relationship between nonobviousness and invention automation technology in much more detail in The Genie in the Machine. I hope you have enjoyed this overview of the promise of invention automation technology, and of the challenges that such technology rises for patent law. I look forward to your comments and questions and to an ongoing dialogue.
The Impact of Automated Inventing on Patent Law - Round 2
Last week, we commenced our (quasi-) serialization of Robert Plotkin's book, The Genie in the Machine: How Computer-Automated Inventing is Revolutionizing Law and Business. Here, as promised, is part 2 in the series.
Automated Inventing: The Challenge for Patent Law
As I explained in my previous entry, increasingly powerful computer software is being used to automate the process of inventing. Since such software takes a wide variety of forms, I use the term "artificial invention technology" to refer to all of it. Patent law was originally developed in a time when all inventing was performed manually. Now, however, patent law must be ready to deal with attempts to patent artificial invention technology and the inventions it produces.
In my book, The Genie in the Machine, I explain how patent law can be updated to face this challenge. To give a flavor of how patent law needs to be reformed, let me start by explaining the meaning of the book's title. You can view a computer that is equipped with artificial invention software as a kind of artificial genie. A human inventor can provide such a computer with an abstract description of a problem that he or she wants to solve -- such as creating a toothbrush that can whiten teeth more efficiently than previous toothbrushes. This description, which must be written in a language that the artificial genie can understand, is like a wish for a better toothbrush. The artificial invention software (i.e., the genie) uses this artificial wish to create a computer model of an improved toothbrush -- the wish come true. In some cases, the product itself can be manufactured automatically based on the digital design.
In short, the basic pattern described above can be represented by the following simple diagram:
Human Inventor --> Wish --> Artificial Invention Technology --> Wish Come True (Product Design)
This exposes very clearly the questions that patent law must be prepared to answer, namely whether -- and under which circumstances -- each of the following should be patentable:
- Artificial "wishes" (the input that a human inventor provides to artificial invention technology to create a new product design)
- Artificial invention technology (the computer hardware and software that can create new product designs automatically)
- Wishes come true (product designs created using artificial invention technology)
In my next blog entry I will give a flavor for how patent law can be updated to answer these questions.
How Computer-Automated Inventing is Revolutionizing Law and Business
I have always maintained a digressions section of the blog, down in the corner of the left hand side of the blog, for the purpose of allowing me to talk about areas of my practice - like intellectual property litigation - other than those listed in the title of the blog; its also there to give me space for subjects that are of interest to me but of only tangential relation to the subjects of either the blog or my practice, such as the financial underpinnings of the Massachusetts Health Care Reform Act.
This time around I have decided to make use of my editorial prerogatives and the digressions section of the blog to welcome my first ever guest blogger, Robert Plotkin. Longtime readers may remember other references to Robert in patent related blog entries; Robert is a long time patent lawyer who specializes, in particular, in patent protection for computer technology, and was named a "Go-To Law Firm for Leading Technology Companies" by American Lawyer Media in 2008.
Stanford University Press has just published Robert’s new book, The Genie in the Machine: How Computer-Automated Inventing is Revolutionizing Law and Business, and the ideas behind it - the manner in which such automated inventing strays from and thus may impact the paradigms under which we understand patent prosecution and patent law - fascinate me. The Boston ERISA and Insurance Litigation blog, despite its massive advertising revenue (place tongue firmly in cheek while reading that line), lost the bidding for serialization rights for the book, so I asked Robert if he would write a series of blog posts detailing the issues covered by the book. Robert agreed, and I plan to run them every Friday for the next few weeks. Note that Robert’s blog on automated inventing, by the way, can be found here.
Here’s the first of the series:
Automatic Product Design and Its Impact on Patent Law
Inventors have long been using software to help them design new products. For example, computer-aided design (CAD) software enables engineers to draw three-dimensional models of the components of an automobile engine, and even to "connect" those components together to see how they will interact without needing to build physical prototypes.
Few people are aware that software now exists which can not only display product designs which have been drawn by a human engineer, but also create such designs itself. In addition, today's latest "artificial invention" software can simulate the operation of a new product -- such as an automobile engine -- evaluate its performance, and then refine the product design repeatedly to improve the end product. One example of such software -- Stephen Thaler's "Creativity Machine" -- has been called "Thomas Edison in a box." In my book, The Genie in the Machine, I describe the history of such technology and provide many real-world examples of the products it has been used to create -- everything from toothbrushes to antennas to the nosecone on the Japanese bullet train.
Artificial invention technology has the potential to enable us to create better products more quickly and inexpensively than ever before. Such software often produces designs that surprise expert human inventors, because software lacks the blindspots and prejudices that can stop human engineers from pursuing pathways that are fruitful but which contradict conventional wisdom. Businesses are already using invention automation software -- including evolutionary algorithms and artificial neural networks -- to slash their research and development costs.
Patent law has yet to grapple with the implications of computer-automated inventing. Yet it must do so if patent law is to continue promoting innovation. In my next blog entry, I will point out some of the challenges that artificial invention technology poses for patent law.
What Patry Has to Do With ERISA
Permalink | Geez, I hope it isn’t something I said. Some of you may remember that a little while back, in a post discussing why I blog predominately on ERISA and insurance issues but only occasionally on intellectual property issues, I mentioned that there were a lot of terrific intellectual property blogs already out there, mentioning in particular William Patry’s copyright blog. Mr. Patry responded by quitting blogging.
I don’t really think I had anything to do with that, because he gave his primary reason for stopping, and it is one that is telling. He explained that:
my final reason for closing the blog [is] my fear that the blog was becoming too negative in tone. I regard myself as a centrist. I believe very much that in proper doses copyright is essential for certain classes of works, especially commercial movies, commercial sound recordings, and commercial books, the core copyright industries. I accept that the level of proper doses will vary from person to person and that my recommended dose may be lower (or higher) than others. But in my view, and that of my cherished brother Sir Hugh Laddie, we are well past the healthy dose stage and into the serious illness stage. Much like the U.S. economy, things are getting worse, not better. Copyright law has abandoned its reason for being: to encourage learning and the creation of new works. Instead, its principal functions now are to preserve existing failed business models, to suppress new business models and technologies, and to obtain, if possible, enormous windfall profits from activity that not only causes no harm, but which is beneficial to copyright owners.
What is interesting about this is I think that anyone who works on copyright or other intellectual property cases and who looks at things with clear eyes -rather than on the old mantra of where you stand depends on where you sit - knows there is some deep truth to what he is saying, and it is interesting in and of itself for that reason. But it becomes even more interesting when you tie it back in to this blog, and my prior discussions of my skepticism about the patenting of ERISA strategies, which, much like Patry’s comments about copyright, seems to me -as I discussed here- to serve only to lock down for one party the opportunity to pursue a specific business/ERISA related strategy, without any accompanying benefits to the public as a whole, such as encouraging innovation in the field, etc. Maybe I am just ERISA-centric, and I see everything as circling back to that topic, but that’s what I thought of when I read Patry’s post resigning from the blogosphere.
Insurance and the World at Large
Permalink | I am asked on occasion about the topics of this blog and their connection to my practice, more particularly how I ended up focusing the blog on its two primary subjects. For years, my litigation practice has focused primarily on three areas: intellectual property, ERISA and insurance coverage, in no particular order. A joke which I have long used and which always fails to elicit anything more than a pained half-smile is that 50% of my practice is insurance coverage, 50% of my practice is ERISA litigation, and 50% of my practice is intellectual property litigation.
Why did the blog end up focusing on two of those topics - ERISA and insurance coverage - and not the third, intellectual property? Well, one reason is that my experience is that intellectual property cases are heavily fact driven more than they are a product of interesting evolution in case law, limiting the appeal of blogging on them, and another is that, as a very knowledgeable legal blogging guru told me when I started the blog, there were already a lot of - mostly very good - intellectual property focused blogs; all you have to do is take one quick look at William Patry’s copyright blog to see how well tilled that soil already is.
But beyond that, and in contrast, I have found that my other two primary areas of practice, which are the central focuses of this blog (although as the digression section over on the blog topic list on the left hand side of your screen reflects, I do on occasion venture here into intellectual property issues of interest to me), provide a rich vein of endlessly interesting topics and legal developments. ERISA litigation, for instance, is a remarkably and endlessly evolving area of the law, as the courts develop what is in essence a federal common law covering the field, and as the courts deal with new types of retirement plans, plan investments, and increased litigation over both. And the intersection of insurance and the business world is a truly fascinating place to be, as the two come together at every major point in the economy and at every major issue in it as well. Here’s a good story, about the general counsel at Lloyd's of London, that makes that point.
Controlling Costs in Patent Infringement Litigation
Permalink | I tried a patent infringement case to a jury last spring, and while I was quite pleased with the outcome, I left the experience very concerned about the tremendous cost of litigating patent infringement cases. Thinking back over the course of the litigation, I was able to identify some central principles for reigning in the costs of such suits, and I now regularly use those ideas in guiding my own recommendations to clients and approaches to litigation in intellectual property cases. New England In-House magazine has now published my article on this topic, titled “Patent Litigation Doesn’t Have to be Prohibitively Expensive,” which details my ideas on controlling the expense of litigating these types of cases. You can find the article right here.
Where Patent Law Stands Today
Permalink | On Friday I feel free to deviate from the usual topics of this blog into the topics covered under the digressions category over on the left hand side of the blog. Today being Friday, that’s what I’m going to do, this time returning to an issue I have discussed before, the Supreme Court’s targeting last term of the law governing patent litigation and whether patent reform remains necessary - if it ever was - after the Court’s decisions. SCOTUSBlog has this post about the Michigan Law Review’s on-line companion and its collection of shorter pieces addressing exactly those questions. I have read most of the pieces, and in particular recommend Robert Armitage’s piece on the judiciary’s ability to respond to problems in this field of law without legislative reforms and Professor John Duffy’s piece on the impact of the Court’s treatment of the obviousness standard.
It’s a terrific collection, done just the way legal scholarship should be done to have relevance to the practicing bar and not just to other academics. Short, readable, accessible, and thought provoking. Exactly what I have argued before law reviews and law faculty must provide if they are to influence the development of the law, rather than just the heft of law reviews.
Is This The End For Patenting ERISA Strategies?
Permalink | I have talked before - probably too much - on this blog about patents, patent reform, and the fact that the courts are in the process, as far as I am concerned, of reigning in what some see as abuse in the patent system and in patent infringement litigation against large technology and other companies. Of particular note, I have written before about the particular question of whether ERISA strategies should be subject to patent, and, as I discussed in a BNA article on the subject, I don’t run with those who think business method patents should be pushed that far. The Wall Street Journal law blog has an interesting post today that touches on all of this, in particular on a new appellate decision concerning business method patents that may well drive the final nail in the coffin on the idea of patenting ERISA strategies. As that blog puts it: “Legal experts say the court’s ruling . . .may make it more difficult to obtain and enforce business-method patents, which are granted for abstract processes rather than specific devices. . . .The decision suggests that business-method patents will now be considered invalid unless the invention has a practical application and can be linked to a particular technology, such as a computer. The court said that ‘mental processes—or processes of human thinking—standing alone aren’t patentable even if they have practical application.’" Seems to me that ERISA strategies fall exactly within that category of unpatentable mental processes. In fact, frankly, if you read the opinion itself, it is pretty doggone clear that ERISA strategy patents, as distinct from patents involving computer processes for managing ERISA claims for example, should never have been granted, and won’t be in the future.
Does KSR Mean Patent Reform Isn't Needed?
Permalink | Regular readers know I like hard data, including statistics or other quantitative support for a position. In their absence, most legal and policy arguments are, well, just opinions. With that in mind, LegalMetric, which studies and reports on patent litigation data, has provided an interesting snapshot of the impact on patent infringement litigation of the Supreme Court’s KSR ruling from a few months back. The company’s findings: that “[s]ince the Supreme Court decision in KSR, patent owner win rates [have fallen] substantially below their long-term averages.” You can find some slides provided by the company that detail their findings here, which the company has offered to let me post with the proviso that I note that the data is their property.
Now, KSR, for those of you readers who aren’t patent people, made it, in theory, easier to invalidate a patent and therefore to defend against a claim of patent infringement, as discussed here. The findings reported by LegalMetric obviously reflects a small snapshot of a very short window in time, but if it holds up, it would suggest that patent reform, which is being pursued vigorously at the federal level by corporations who are frequently targeted by patent infringement suits, is not really needed to stem the claimed tide of unsupportable and vexatious patent infringement suits. Rather, the only thing actually needed may have been to tweak the courts’ interpretation and application of existing patent law, a pro-defendant tweak that the Supreme Court, based on this data, very clearly provided with its ruling in KSR.
But I Digress: Robert Plotkin on Patent Applications and Changes at the PTO
Ever mystified by what goes on inside that black box with the colorful flat screen on top that sits on your desk at work? Me too, and when I am I check in with my colleague Robert Plotkin, a patent prosecutor who specializes in computer patents. Robert is a fine source of expertise on patent law and computer technology, and I thought I would pass along this link to his patent tip for August 07, which discusses changes at the Patent and Trademark Office concerning continuation applications. As Robert points out in his publication, the rule change will alter patent applications in a manner that may increase their expense, but do not go into effect until November, creating a short window that patent applicants should try to exploit before the effective date of these changes. And as Robert doesn’t point out in his note on the subject, but did mention to me - given that I litigate patent infringement actions but don’t prosecute patents - the shakeout from the rule change is likely to affect litigation over patents as well, as we move down the road and past the implementation date of these changes.
And aside from my professional interest in patent litigation, how does this relate back to the primary subject matters of this blog? Well, we might point out that business strategy patenting has caused ERISA law to crash head long into patent law, as discussed in this BNA article that I am quoted in.
Patent Infringement Cases Never Go To Trial, Yet Somehow Cost Billions of Dollars
Permalink | Having recently tried a patent infringement case to a jury, I was amused by this article in IP Law & Business pointing out that patent cases are almost never tried and few patent lawyers have actually tried a case to a jury. The key statistic is here, in this line in the article: “there were only 102 jury trials about patent disputes in 2006, out of 2,830 such cases filed, according to the Administrative Office of the U.S. Courts.” I had a lot of fun trying the case, and am circulating an article for publication based on lessons learned from it, but given these numbers, I can only wonder how soon it will be before I get another one past the hurdles of settlement and summary judgment, and into trial.
On a more substantive note, this article here recounts the research of James Bessen, a lecturer at Boston University Law School, who has found that the costs of patent infringement litigation actually exceed the economic value across all industries of patenting inventions. That’s a lot of legal fees, for a field of litigation that almost never gives rise to a trial. More interestingly, Bessen has gathered statistics suggesting that for many industries and many business people, pursuing patents may not be a profitable, or even useful, business strategy. His data points towards something we already know, which is that for those industries, such as the pharmaceutical industry, where holding exclusive rights on a product is crucial, the patent system drives both innovation and large profits, but that for decision makers in other industries, seeking a patent may not always be the best way to proceed with regard to a given product. Certainly though, for the individual inventor, it is probably the necessary first step to ever being able to successfully maintain marketplace control and exploitation of an invention, no matter if, across the economic universe as a whole, businesses may spend more money litigating patent disputes than they earn off of patents.
The Case for More Patent Infringement Litigation
Permalink | Well, not really. More like an argument for a little healthy skepticism when it comes to the subject of patent reform, which as pitched on blogs, in the popular media and elsewhere, really consists of proposals directed at two themes: reducing or at least discouraging the filing of patent infringement lawsuits, and restricting the ability to patent things that are not really advances at all. Now I am all for efforts to tighten the standards for patenting supposedly new discoveries, to more effectively limit patents to developments that are really innovative and not obvious, and anyone who has read my comments in this BNA article here knows I am a bit of a skeptic when it comes to the idea of broadly allowing patenting of business methods or other supposed advances that, frankly, just may not be all that unique or imaginative. And to some extent, we are already seeing a judicial response to this problem, as we see in the Supreme Court’s KSR ruling that makes it harder to maintain patents that do not reflect real innovation and advances in a particular art.
And I don’t necessarily even have a problem with pitches being made by the wealthier part of the tech industries that the patent laws be shifted to protect them against suits by inventors, or licensees, who do not manufacture but are instead simply holders of patents allegedly infringed upon by the manufacturers, such as argued for in this post here by the general counsel of Sun, although I think there should be a high bar for triggering such protections, namely proof, first, of real diligence by the alleged infringer in determining prior to manufacture whether there may be patents out there covering some aspect of the manufactured product and, second, of legitimate efforts by the manufacturer to license any such patents at fair market value.
But what we should be skeptical about is allowing some legitimate ideas for improving the patent system to be used as cover, almost as a Trojan horse, for what may well be a less legitimate goal of simply protecting large companies from smaller companies and even from lone inventors, which is what many people fear they are really hearing when someone with a vested interest in reducing patent infringement claims uses the term patent reform, and we should be very cautious when it comes to changes that reduce the incentives for the little guy or woman, even the lone tinkerer in a garage, to invent something. And the reason for this is right here, in this article about amateur inventors coming close to or bettering the best work of NASA and the large industrial companies that supply it.
Worried about jobs going overseas, about engineering and drug manufacturing going to India, about products being manufactured in China? The best defense against those events impoverishing the American economy is the kind of invention and developments of new products and ideas that the patent system encourages, and of the kind that is reflected in this article.
Patenting Tax and ERISA Strategies
Permalink | There’s a hot topic of discussion out there all of a sudden - I think originally triggered by this post a few weeks back by Suzanne Wynn - concerning whether ERISA strategies should be able to be patented. The discussion, thanks to a detailed look at the issue in this week’s issue of the BNA Pension and Benefits Reporter, has finally reached the point where there is now more light than heat on the subject. I am quoted extensively in the BNA article, which is A WARNING TO ERISA PRACTITIONERS: YOUR BENEFIT PLAN STRATEGIES MAY BE PATENTED, 34 Pens. & Benefits Rep. (BNA) 1329. As per my usual practice of deeming it fair use for purposes of the copyright laws to quote verbatim sections of articles that quote me, here is what I had to say on the question of whether these types of strategies should be covered by the patent regime:
Stephen Rosenberg, a partner with The McCormack Firm LLC, Boston, told BNA in an e-mail May 20 that he is "not a big fan" of business method and similar patents, such as for tax strategies, because these patents "aren't really advancing technology and the like in the scientific or mechanical arts." Rosenberg is a commercial litigator who specializes in litigating ERISA and intellectual property cases.
"With regard to patenting ERISA ideas and methods in particular, I believe you are moving out of patenting innovation and really simply into the realm of what is, in essence, simply the professional knowledge and expertise of the practitioner," Rosenberg told BNA. He added that he did not believe that the counseling of a lawyer or other professional service provider, who is simply applying his or her learned expertise in a particular field of training, should fall within the patent regime. Rosenberg said he believes that advances in professional knowledge of ERISA "should belong to the profession as a whole, as part of the advancement of knowledge in that field."
Rosenberg said that the real purpose of a patent is to provide protection to those who have invested resources into inventing something and who, without patent protection to allow them to exploit the invention, would not profit from it sufficiently to warrant the investment. "I am hard pressed to believe that a professional in the ERISA community who comes up with a new idea for how to attack an ERISA strategy problem won't go forward without [the protection of a patent]; instead, they will sell it to the client, with the expectation the client will be impressed enough to keep returning for more professional services and will recommend that provider to others," Rosenberg said in the e-mail.
In addition, Rosenberg said he believes that patents should not be granted to advances that would be obvious to others who are skilled in the particular field. "I am highly skeptical that a new ERISA strategy is likely to be so beyond what other practitioners, presented with the same problem by clients, would have come up with that it would justify placing exclusivity in the hands of the first to seek a patent for it," Rosenberg added.
I guess you can tell from my comments that I think it is pushing business method patenting a little too far, and in a direction that is simply not beneficial to clients, the profession or the public.
This whole question of how far patent protection should be allowed to extend echoes as well in what the WSJ Law Blog is calling the Patent Reform Battle Royale among the real big spenders, Cisco and Goldman Sachs and big pharma, and in the alleged patent troll problem complained about by Sun’s general counsel on his blog. Weighing in on what they have to say and how it fits in with the questions posed in the BNA article would take a lot more words than I have time to type today, but their posts on the issue are worth taking the time to read; you can then draw your own conclusions as to whether their complaints about the patent system likewise support precluding the patenting of ERISA strategies. If you would like a little more substance on the patent reforms at issue, you can find it here and here.
KSR, Patent Infringement and Obviousness
Permalink | I don’t know how many people with an interest in ERISA litigation share my interest as well in patent and other intellectual property litigation, although I know from experience that I am not the only lawyer who practices in both areas. Either way, for anyone who has been following the issue of the Supreme Court’s recent decision in KSR on the standards for proving that an invention was too obvious to be patented, this article here is as good an overview of the topic as I have come across. Its everything you need to know in a readable nutshell, which is not an easy trick when you are starting out with a complex subject that is founded on decades of jurisprudence on a particular issue.
And to tie the discussion back in more closely to the ostensible subject matter of this blog, here is Suzanne Wynn’s recent post pointing out the possibility of patenting particular approaches to solving ERISA problems; for those of you, who like me, might find the possibility of this occurring troubling, the new rules on proving obviousness might go far to precluding the patenting of such solutions to common problems in the ERISA field.
Patent Infringement Trial
Permalink | Today’s post is sort of a place holder, in a way. My associate Eric Brodie, who is my crack science guy, and I are starting a patent infringement trial this morning in federal court that is expected to last two or three weeks. As a result, I don’t know how much I will be posting for the next couple weeks, although I will try to post here and there, when I have a chance, and will certainly make a point to at least put up short posts drawing attention to new decisions that are handed down while I am on trial or to particularly interesting blog posts or articles published during that time; the posts will undoubtedly lack much discussion by me about those decisions and publications, although, if they merit it, I will return to them to provide comments in a couple of weeks, when I have more time.
Blog vendor Kevin O’Keefe at LexBlog likes to suggest that lawyers blog during the downtime in trials, and comment on what is going on at court, in the interest of showing - in his words - that you not only talk the talk, but also walk the walk. I don’t know whether I will do that during this trial, partly because I am not all that comfortable with blogging about an ongoing court proceeding in which I am involved; I am not sure I feel that it fits my obligations to either the client or to the court, but, if there is something interesting to comment on involving something other than the case I am actually trying, I might put something up from court, maybe over the midmorning break. We’ll have to see on that.
Why Hire Coverage Counsel?
Permalink | If I have said it once on this blog, in seminars and in meetings, I have said it a thousand times: always look to your insurance coverage when sued, even if you don’t think the lawsuit fits within the coverages you or your company purchased, and when necessary, such as if the dollar amounts at issue are significant, hire coverage counsel to look into that question and to press for coverage. There are various ways in which policies can be triggered, often providing at least coverage of defense costs for claims that do not seem to fall within the express language of a policy. In seminars, when I start talking about examples of coverage being found for patent infringement actions, despite the absence of any policy expressly granting coverage of such claims, that is when the pens start scribbling furiously in the audience. And that is just one example of the type of claims that experienced coverage counsel may be able to force into the scope of a policy, even a policy that may never have been written to cover that type of claim. Now I am not saying that all of those types of claims should be covered, but, given the vagaries of policy language and the manner in which courts interpret them, they sometimes are, regardless of whether or not they should be, and it is the job of a policyholder’s coverage counsel to try to find coverage where none was intended (and the job of the insurer’s coverage counsel to prevent that). This article makes the same point, discussing how marshaling corporate insurance policies when threatened with significant litigation should be a first step in defending the company.
Intellectual Property, Advertising Injury Coverages, and Licensing
Permalink | At the risk of turning this into blog reader month, I thought today I would pass along this article on the use of intellectual property in growing a business that was passed along to me by blog reader Mike Kraft of Customer Standpoint, who specialize in the analysis of the customer experience. It may not be entirely on point for this blog, but for those of you who may come here looking for information on advertising injury coverages, which, as I have discussed before, can cover some intellectual property claims against insureds, it is a good overview of how any business, including insured companies, put intellectual property assets to use.
Moreover, you can see in the article the range of activities - beyond just inventing technology, which is the popular image of intellectual property development - that businesses engage in involving their intellectual property assets and, if you think about it, you can spot all the different possible points of liability exposure in those actions. Advertising injury coverage can insulate a company against liability on at least some of those fronts, and the question for lawyers and brokers who represent insureds who engage in these types of activities is how to structure an insurance program that protects against all the other liabilities as well.
Insurance Coverage Trial Exhibits
I added a new category today, Insurance Coverage Trials, as a place to collect useful tips, ideas and articles on trying insurance coverage cases that might be useful to readers of this blog who either try such cases or hire (and thereafter manage) lawyers who try such cases. What prompted this idea was a long and very comprehensive pretrial conference in a patent infringement action I am litigating, during which I got to thinking about trial graphics and other fancy doodads and geegaws to submit to the jury; this in turn reminded me of Marc Mayerson's terrific, near scholarly recent piece about designing and admitting into evidence trial graphics in insurance coverage litigation. Marc talks in detail about best practices in designing these types of trial aids, and about the rules for getting them before the jury. What I like best though, I think, is that his post is really focused on design issues, and about what types of graphics best communicate information to a jury.
Readers of other posts of mine, like this one here, know I have a layperson's interest in design (the very thing which got me interested in intellectual property litigation and rights in the first place), so it is fun for me to see a lawyer address from a somewhat different direction, namely that of graphic design, a subject - trial graphics and exhibits - that litigators normally don't consider from that perspective.
Patent Infringement, Copyright Infringement, and the Costs of Doing Business
In addition to litigating ERISA and insurance coverage cases, I have maintained a pretty active intellectual property litigation practice for a number of years. Routinely, when I meet with business people to discuss intellectual property problems, the subject of the expense of protecting intellectual property rights and how to control legal costs in doing so comes up. This is especially the case when I talk with entrepreneurs and people at small start ups who feel that the intellectual property at the heart of their business plans has been misappropriated by someone else - often a more established competitor - but don't think they can afford to do anything about it given the high hourly rates often charged by lawyers.
Now I have written before about better ways to fund insurance coverage litigation than simply paying counsel by the hour, and when it comes to protecting intellectual property, I tell these people the same thing, that they should not let the billable hour model frighten them off from protecting their intellectual property and vindicating their rights. There are, or should be if the lawyers they are talking to are willing to put a little skin of their own in the game, other ways to pay counsel, that are more economically feasible for businesses that don't already have the deepest pockets in the world, but hope to some day, than paying lawyers by the hour to prosecute a patent or copyright infringement action.
And this article here presents those options quite nicely, although in more words than I use when I discuss the same topics with business folk.