Bernard Cassidy, the General Counsel of Tessera Technologies, posted a provocative blog on IP Watchdog entitled Follow the Money – Will the ITC Lose Patent Jurisdiction?  In it, he accuses a group of tech companies, including HP, of lobbying Congress to “radically curb” the ITC’s enforcement powers and to “delegitimize all patents.”   He attributes this lobbying to a business model of his own invention he coins “efficient infringement,” under which he claims tech companies choose to infringe patents and pay damages later, rather than to take patent licenses.  After standing up this straw man, he knocks it down, claiming it enables tech companies to steal the fruits of the labors of the inventors of new tech products and services.  He repeatedly claims the victims of this scheme are “inventors who neither have the capital nor the business model to commercialize their own inventions.”  Finally, he associates this all with “outsourcing” to “cheap labor from China,” though he makes no link between “efficient infringement” and overseas manufacturing other than that both lower costs.

What Mr. Cassidy seems to be saying is that the recent stampede of complainants to the ITC (all of whom sell no products) had valuable tech inventions to commercialize, but tech companies refused to license these inventions and instead copied them to avoid paying license fees.  But Mr. Cassidy does not quite say that.  And he cannot.  All of the appropriation is by the complainants themselves, to whom I will refer as “patent assertion entities” (PAEs).  (I will not use the term “Non Practicing Entity” or “NPE” because it sweeps in patent holders who are not abusing the ITC, such as universities and, ironically, Tessera.)  The PAEs in the ITC are patent litigation investors.  For example, there is Beacon Navigation Gmbh, a Swiss PAE which is holding up Ford, GM and every other auto maker.  In virtually every  suit, these PAEs assert patents they claim read on products independently created and commercialized by others, with no knowledge of these patents or so-called “inventors.” 

On Thursday, March 1, 2012, at 2:00pm ET, the United States Patent and Trademark Office held a ceremony in the North Auditorium of the Madison Building on the campus of the USPTO.  The ceremony was for the purpose of swearing in 9 new Administrative Patent Judges, with the oath of office being administered by Chief Judge Paul Michel (ret.) of the United States Court of Appeals for the Federal Circuit.  The ceremony was nicely done, as always is the case at the USPTO.  It was punctuated on several occasions by crying babies — twins to be exact.  New APJ Trevor Jefferson is the proud new father of twins, both of whom were in attendance on this very special day.

The last such swearing in ceremony occurred on January 25, 2012, when 10 APJs were sworn in.  Thus over the last 5 weeks the Patent Office has added 19 new Administrative Patent Judges, but the Office is not done.  The USPTO is currently in the process of doubling the size of the Board by the end of fiscal year 2012, so expect more new appointments soon!  In fact, the USPTO is advertising for APJs for the Mechanical Group, APJs for the Communication/Computer/Electrical Groups.  I also understand that APJs will be hired for the Detroit satellite office, which will open during the summer of 2012.

The statement of Senator Patrick Leahy in the Congressional Record sums it all up nicely: “After dozens of congressional hearings, markup sessions, and briefings, and countless hours of Member and staff meetings, through two Presidential administrations, and three Congresses, patent reform is finally a reality.”

On September 16, 2011 President Barack Obama signed into law the America Invents Act, which constituted the most significant overhaul to the U.S. patent system since the Patent Act of 1952.  Some of the most pronounced amendments to Title 35 of the United States Code include replacing interference proceedings with derivative proceedings, initiation of inter partes review, eliminating failure to disclose the best mode as a challenge to a claim, the addition of post grant review process and various changes to the fee setting authority by the USPTO.  But that was just the beginning.

As most of you are undoubtedly aware, the United States Patent and Trademark Office has been cranking out proposed rule packages one right after another.  The speed at which these rules packages are coming out is impressive, but also makes it virtually impossible to keep pace while you continue to try and represent clients.  The USPTO is obviously putting in a lot of time and effort, and by and large it seems that they are doing a good job.  But as you start to review proposed rules package after proposed rules package you start to get the sense that the America Invents Act (AIA) is going to change even more than anyone expected.

One of the rules packages that is sure to capture the attention of patent attorneys and litigators alike is the recently released Rules of Practice for Trials Before the Trial and Appeal Board and Judicial Review of Patent Trial and Appeal Board Decisions (hereinafter “Board rules”).  What a mouthful! This particular rules package is some 35 pages in the Federal Register 3 column format.  If you copy and past into Word with Arial 12 point font this rules package is 86 pages, just to give you some idea of the magnitude.

Much has been said about the fact that the USPTO has struggled for too many years yet fails to keep up with filings.  In a message dated January 25, 2012, Professor Harold Wegner pointed out that, currently, 46% of “new” applications are not new at all but are actually RCE’s.  USPTO “count reform,” intended to encourage greater efficiency in the examination process, had only reduced the rate of growth of RCE filings to 10.7 percent.  At least one response to Prof. Wegner, shared in another posting on January 25, stated the view that doing away with RCE practice would serve only to generate a staggering number of appeals and shift the backlog to the Board of Appeals, make the application process inordinately costly, and discourage inventors from ever applying for a patent at all.  As things stand, there is not much doubt about such a result.

Considering the amount of hand-wringing that has occurred over the matter, and the disappointing results thus far, it appears that, as things stand, there is little hope for the PTO to get is work done in any timely manner except by hiring a veritable army of examiners, legions of administrative patent judges, together with innumerable support staff.   It is not difficult to foresee how a budget request for such an approach would be received in Congress.

Whenever a newly-minted lobbying group proposes to radically curb a government agency’s enforcement powers, it’s wise to ask, Who will benefit?

Such is the case with the newest lobby in Washington, the self-described “ITC Working Group.” You won’t learn anything about this organization by searching Google — odd, considering that Google is a member — but according to industry sources, its aim is twofold: First, it wants to block the International Trade Commission (ITC) from hearing patent infringement cases brought by “non-practicing entities” — i.e., patent holders like universities, independent inventors, and others who license their patents for manufacturers to commercialize. And second, it wants to weaken the ITC’s power to block the importation of infringing products into the U.S.

Art 4Last week I spoke at the 6th Annual Patent Law Institute hosted by the Practising Law Institute.  The topic of my presentation was largely a “dealer’s choice” if you will, with the segment being billed as PLI Authors: Hot Topics in Patent Prosecution. I spoke at the New York City location and Jeffrey Sheldon, author of How to Write a Patent Application.  With me being able to pick whatever prosecution topic I wanted, I decided to focus on Track 1 as a strategy to deal with Art Units where patents seem to go to die, which allowed me to discuss what I was finding from PatentCore relative to the Art Units that handle business method patents.  See Business Methods by the Numbers and Appealed Patent Allowances.

After my presentation, as you might expect, I was approached by a number of patent attorneys.  Story after story it was the same thing I have heard from so many others — depressing tales of not being able to get a patent.  One particularly egregious thing I heard was from a patent attorney who told me about a conversation he recently had with a SPE from one of the business method art units.  I don’t know which Art Unit, and frankly I didn’t ask, although it is probably easy enough to narrow down the Art Unit.  This patent attorney told me that the SPE said: “we just don’t issue patents unless the Board orders us to.”  If that is in fact what was said and is in fact what is happening then there is a systematic denial of due process at the United States Patent and Trademark Office, and that is wholly unacceptable.

Lately I have been getting a lot of inquiries again from inventors who are interested in contingency fee representation.  There is no such thing as contingency representation for purpose of preparing, filing and ultimately obtaining a patent.  Patent attorneys and agents just don’t take contingency clients when the matter is patent procurement.

I write on this topic with some frequency, the last time being the spring of 2011.  Please don’t take offense, this is a “tough love” article that may come across as a lecture.  I have always believed that the overwhelming majority of inventors want to hear it straight and are looking for a road-map to get from point A to point B.  The thing I preach all the time, and the theme of this article, is understanding the industry.  The more you understand about what you should do, when you should do it and the economic realities facing the various players you will come in contact with the better off you will be to safely and successfully navigate the difficult waters of going from invention to money.