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.
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.
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.
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.
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.