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Industry Insiders Reflect on the Biggest Moments of 2013


Written by Gene Quinn
President & Founder of IPWatchdog, Inc.
Patent Attorney, Reg. No. 44,294
Zies, Widerman & Malek
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Posted: December 31, 2013 @ 3:28 pm
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It is that time of the year when reflections are made on the year that is about to pass, wishes are made for the new year, and a prediction or two start to pop from both amateur and professional prognosticators alike. Once again this year I thought I would ask some industry insiders to reflect upon the biggest moments in intellectual property for 2013. We will get to the hopes, wishes and maybe a prediction or two for 2014 next week.

In this edition of Biggest Moments in IP we have a variety of reflections on a wide array of IP issues. Todd Dickinson goes international by pointing to the EU Unitary Patent as a very important long-term milestone, and congratulates the USPTO on being ranked the top place to work in the federal government. Scott McKeown focuses on a decision from the Federal Circuit that will allow collateral challenges to damage awards. Bob Stoll points to the Innovation act, Federal Circuit disarray over software, the “revolutionary” Supreme Court decision in Myriad and the Microsoft/Motorola FRAND decision.

In my mind the biggest story for 2013 is the unfortunate reality that the erosion of patent rights continues to accelerate. See Patent Erosion 2013: What Would the Founding Fathers Think?  For more thoughts take a look at Peter Pappas’ look backward and look ahead in Reflections on 2013 and Some Thoughts on the Year Ahead.

Additionally, it may be interesting to take a look at what those in the industry thought the biggest moments of 2012 were, see Industry Insiders Reflect on Biggest Moments in IP for 2012.

 

Todd Dickinson
Executive Director
American Intellectual Property Law Association
Former Director of the USPTO and Under Secretary of Commerce

It’s probably a little strange for the Executive Director of the AIPLA to say, but I think the most significant long-term moment of 2013 will be seen as the entering into in force of the EU’s Unitary Patent and the Unitary Patent Court last January.   While many details even now need to be worked out, this represents an achievement most thought would never come.  A singular achievement for the world’s largest trading zone and a milestone in the long march towards global patent harmonization.

Domestically, in spite of all the financial turmoil and management uncertainty, the fact that the USPTO is now rated by its own employees as the #1 place to work in the entire Federal government among some 300 similar subagencies is extraordinary and a testament to everyone at the USPTO.  A quality organization begets a quality work experience, and, frankly, a greater quality of work output than the Office is often given credit for.

 

Scott McKeown
Partner, Oblon Spivak
Author, Patents Post Grant Blog

From my perspective, the biggest story of 2013 was undoubtedly the outcome in Fresenius USA v. Baxter International (Fed. Cir. 2013). The ability to collaterally attack an outstanding damage verdict of a district court with a parallel patentability proceeding of the USPTO sent shockwaves through the patent litigation ranks. While the fact pattern in Fresenius is quite rare given the exceedingly long pendency of that particular litigation and reexamination, the new, lightning fast patentability challenges of the AIA may prove Fresenius to be a watershed moment in U.S. patent law.

 

James Yang
Author, OC Patent Lawyer

The most memorable moment in patent law this year was March 16, 2013, which was the effective date of the first to file provisions of the America Invents Act.  It was an extremely busy month for all patent attorneys.  Personally, I filed at least 10 patent applications for the month prior to that date so that inventors could take advantage of the first to invent system instead of living under the first to file system.  Even after that date, I had to slow down and figure out how to preserve the first to invent status of a pre-AIA patent application and whether filing a continuation in part application would still be worthwhile given the dangers of triggering the first to file.  (Click here).  Personally, I haven’t seen how the first to file rules help the solo inventors and small companies.  Now, I strongly recommend to my clients that they should not use the personal one year grace period under the AIA.

The next memorable moment occurred during the government shut down due to the gridlock over the Federal debt limit.  The Patent Office notified us that they had four weeks of funding before they had to stop all non-essential functions.  (Click here).  I had to start thinking through the various scenarios and how I might have to advise my clients especially in a first to file regime.

 

Bob Stoll
Drinker Biddle
Former Commissioner for Patents, USPTO

My uninitiated friends tell me that intellectual property law is boring, and when I turn our conversations to patents, they can only feign interest for short periods.  I am convinced they all have ADD.  Patent law is riveting – at least this year.  As acrimony between the political parties on the Hill reached epic proportions resulting in a government shutdown and the launch of the nuclear option in the Senate, as the atmosphere in Congress was arguably more fetid and toxic than it has ever been, a comprehensive patent bill sailed, no, rocketed through the House of Representatives in a mere six weeks from introduction to passage.  What happened to the legislative stalemate?  What happened to patent legislative fatigue after the AIA?  I guess that the fear of trolls got everybody out with their patented pitchforks!

After the Chairman of the Intellectual Property Subcommittee, Rep. Bob Goodlatte, removed an ill-advised provision to expand the newly created covered business method procedure to include software, many groups coalesced to support the bill.  Folks still have problems with the provisions related to stay and pleadings and the usurpation of judicial prerogatives, just to name a few.  But the conventional wisdom was to take the imperfect bill of the House and improve it in the Senate.  Hopefully this strategy will work, and we will end up with patent legislation that further improves the patent system while curbing outrageous predatory actions.

Another seminal event in 2013 was the Federal Circuit’s splintered decision in CLS Bank International v. Alice, which screamed for Supreme Court review.  The issues in the case related to patent subject matter eligibility, and one addressed whether the additional limitation of a computer overcomes the bar of patentability against algorithms. I shudder every time the Supremes take up a patent eligibility issue!   Our highest court seems to conflate eligibility with anticipation and obviousness and fails to value our established leadership in the emerging areas of software, diagnostic methods, and personalized medicine and their importance to our economic growth and job creation.  But this time the Supremes had little choice.  With seven different opinions and three distinct approaches from the en banc panel within the same court, intervention is warranted.

Further evidence of the Supremes unfavorable view of patent law is evidenced from their revolutionary decision in Myriad.  A unanimous decision on a technically and legally complex subject matter conflict that has reached the apex of our judicial system is stunning.  The robed ones determined that a DNA segment is naturally occurring and is not patent eligible because it has been isolated and purified.  But bonds are broken during the isolating and purifying processes making a different compound than the compound found in nature.  Where are the justices getting their technical advice?   Access to alternative tests should be available, but other mechanisms could be provided.  And where is the discussion about how this will impact our economy and the investment into the next diagnostic method?  At least the court also found that cDNA is still patentable, but for how long?

While not intending to discriminate against my brothers and sisters in the honored fields of copyright and trademark law, my last choice for important IP happenings in 2013 also involves patents.  The over two hundred page decision in Microsoft v. Motorola by Judge James Robart in the Western District of Washington was a landmark decision in the area of FRAND rate-setting.  The telecom wars were plastered over the front pages of every American newspaper this year, and many involved Standard Essential Patents (SEPs).  Companies participate in Standard Setting Organizations (SSOs) to develop standards that facilitate interoperability and provide the benefits of recognized industry leadership.  Participants also have the advantage of familiarity with the adopted platform, and a leg up on creating different products for the consumer.  The SSOs require disclosure of patents covered by the standard and the commitment to license those patents under Fair, Reasonable And Non-Discriminatory (FRAND) terms.  While some have sought exclusion orders from the ITC on products based upon SEPs, the agreement to license at a FRAND rate acknowledges that damages should suffice and makes  the need for a grant of injunctive relief extremely rare.  But setting that FRAND rate has been a legal nightmare.  Judge Robart adapted the fifteen Georgia-Pacific factors, those criteria for determining reasonable royalty rates where there is an unobligated patent, to fit the FRAND situation.  The detailed roadmap set forth by Judge Robart provides a mechanism for rationally determining fair royalties and provides guidance that will be employed worldwide.

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Posted in: Guest Contributors, IP News, IPWatchdog.com Articles, Patents

About the Author

is a Patent Attorney and the founder of the popular blog IPWatchdog.com, which has for three of the last four years (i.e., 2010, 2012 and 2103) been recognized as the top intellectual property blog by the American Bar Association. He is also a principal lecturer in the PLI Patent Bar Review Course. As an electrical engineer with a computer engineering focus his specialty is electronic and computer devices, Internet applications, software and business methods.

 

11 comments
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  1. This is a great list. I’d like to hear more from Todd Dickinson regarding the American Intellectual Property Law Association. It would make me feel better about membership if I felt the AIPLA were combating some of the forces that are trying to destroy our patent system.

  2. I would add to that list the GAO report stating that there isn’t a troll problem. The GAO is famous for being little influence by the political forces in DC.

  3. What are the chances of patent infringement having criminal penalties, like copyright infringement? This would increase the strength of patents no doubt.

  4. Gene,

    There are two that head my list:

    1. No objective standard yet for determining patent-eligibility under 35 USC 101. The Federal Circuit decisions continue the chaos created by SCOTUS in Bilski, Mayo, and Myriad. I’m sure some are hoping that Alice Corp. v. CLS Bank International will do something to alleviate this chaotic situation. But I’m pessimistic that SCOTUS do anything other than to continue, or worse yet (if possible), increase the chaos here.

    2. The continued penchant of Congress to mischaracterize what is a litigation abuse issue as a patent abuse problem. The misguided passage of HR 3309 (and the proposed S. 1270, amongst others) epitomizes this maniacal, one-sided and “we don’t care if the facts say otherwise” view by Congress. Congress has already done enough damage to the U.S. patent system with the AIA (Abominable Inane Act), and these “anti-troll” bills will simply make everything much worse for the innovative sector in this country. I also grow weary of Congress hiding the nonsense of these “anti-troll” bills behind misleading names.

  5. NWPA (and everyone)-

    I just want to take a minute to follow up with some perspective on what I asked folks to do. Todd’s participation in this endeavor was not intended to be exhaustive. He rightly assumed others would mention a variety of issues. I specifically asked for 1 to 3 paragraphs, so in that length it would be impossible to list everything that happened. Rather than republish the same thing over and over again I was looking for some perspective. I personally liked what Todd wrote. He and Scott McKeown came up with things that would’ be on the radar for many, but were no doubt important. Bob Stoll mentioned the legislation, but mostly focused mostly on case-law, even picking the FRAND case which may not have been on the radar either. I personally thought the “off the radar but important” matters would be most interesting. So to the extent that one or another of the contributors didn’t pick what you may think were the most mainstream issues, that is likely may fault.

    Also, I specifically asked contributors to reflect backward on the previous year. The Innovation Act is still just an Act, and it may or may not become the law. The Senate still has to hold a mark-up and a vote, and then if there are any differences the bill will ping back to the House. If the last round of patent reform taught us anything it has to be that patent legislation has a way of not happening even when it seems guaranteed. I can’t tell you how many times over the AIA pendency I was assured by various folks in the know that it was virtually a done deal. Thus, I think it is most fair to say that if the Innovation Act becomes the law it will be one of the biggest stories of 2014.

    WIth respect to AIPLA specifically, I personally think Todd and his team have done great work for the industry. In addition to being a member of AIPLA myself I closely follow what the organization does, particularly when they take public positions. One of the most recent public positions was Todd Dickinson’s testimony at the Senate Hearing, where he urged the Senate (and Congress more generally) to stand down and give the AIA time to work before any further changes are made. Take a look at this, which is a portion of his testimony republished with permission of AIPLA.

    http://www.ipwatchdog.com/2013/12/17/let-the-aia-reforms-have-an-opportunity-to-prove-they-work/id=46846/

    If you go through his entire prepared remarks you also see detailed and nuanced positions on the various issues, so if the Senate is going to move forward the AIPLA position has been made known in detail.

    -Gene

  6. Thanks Gene. As someone that has a paid a lot of membership dues to AIPLA I will take a look at that.

    I guess what is disturbing me is recent Obama activity. Appointing three judges with not one of them being a patent professional. And, then snicking in Lee. Obama is on a mission, and it appears to me to be just like what Clinton did to end Glass Steagal. Same type of fact pattern. The elites will get this problem fixed and then feeding us a load of &&%^ to explain what they are up to. I just don’t think the alarm has been sounded loud enough.

  7. NWPA-

    Are you including Ray Chen in that?

    -Gene

  8. Ray Chen does have a science/engineering background and Ray Chen does have some law firm experience, but primarily Ray Chen was a government attorney. So, I do not include Ray Chen as someone from the patent lawyer ranks.

  9. NWPA-

    Wow. So you classify Ray Chen as someone who is not a patent person. Yikes. I’m speechless.

    Clearly Ray Chen is a patent person with exceptionally strong patent credentials. In addition to being a patent attorney he has personally argued 22 patent cases at the Federal Circuit and has been involved in one way or another in virtually every appeal to the Federal Circuit from the Patent Office for years. He has also been intimately involved in the writing of patent rules, and the filing of briefs in courts other than the CAFC.

    I don’t know how you can characterize Ray Chen as a non-patent person.

    -Gene

  10. Gene,

    Chen is from the government. I agree that if you wanted to appoint someone from the federal government that it would be hard to find someone better qualified than Chen. But, still he is from the government. He has no real experience practicing patent law. He cannot bring to bear any real world experience in innovation, licensing, litigation, etc. The solicitor’s office at the PTO is full of talented people, but they are government people tasked with a government agenda.

    NWPA

  11. Not addressing either viewpoint (directly), but reminds me of the adage:

    “I’m here from the government , and I am here to help.”