Paul Allen’s road to monetize his huge patent portfolio took an abrupt detour when Judge Marsha Peckham of the Western District of Washington stayed Allen’s eleven infringement cases, pending completion of reexamination proceedings for the patents-in-suit.
Allen, a co-founder or Microsoft, established Interval Research Corporation and then set about acquiring an enormous number of patents, assigning them to Interval Research. For years, his patents sat quietly as idle assets. The subject of constant speculation in the high-tech community, Allen’s patents remained untested. But on August 27, 2010, Allen, through corporate subsidiary Interval Licensing, sued a who’s-who of computer and Internet companies in the District Court in Seattle, notably AOL, Apple, eBay, Facebook, Google, Netflix, Office Depot, OfficeMax, Staples, Yahoo!, and YouTube. Apart from a minor hic-up in December, when Judge Peckham ordered Interval Licensing to state the basis for its infringement allegations with greater specificity, see Complaint Dismissed, the case proceeded smoothly.
At approximately 5:50pm the United States House of Representatives passed H.R. 1249, which is known as the America Invents Act, by a vote of 304-117. This bill differs from the Senate version of patent reform, S. 23, so there will be no bill going to the desk of President Obama just yet. There are important differences between the two bills, chief among them is funding for the United States Patent and Trademark Office. The bill passed by the Senate put an end to the practice of fee diversion, which occurs when the Congress appropriates the USPTO less than they collect in fees. The excess in the fees collected from users of the USPTO then go to the federal government as general revenues and are used for purposes other than the operation of the United States Patent and Trademark Office.
Shortly after 2pm Eastern Time the United States House of Representatives voted on the Managers Amendment to the America Invents Act, H.R. 1249. The Managers Amendment passed by a vote of 283 – 140. The House then proceeded to address several amendments to H.R. 1249. It seems that there will be a vote on H.R. 1249 later today, and the way the amendments are going it seems as if the House will pass patent reform.
The one thing in the Senate version of patent reform that everyone agreed on was the end to fee diversion. The House of Representatives, however, has decided that an end to fee diversion should not be included in patent reform, which is causing a great unease within the industry.
The Senate had struggled with patent reform for years, and in February 2011 they broke through with a carefully crafted balance. The Senate version of patent reform is light on “reform” in any real sense, except for one. The Senate voted to end the practice of diverting fees collected by the Patent and Trademark Office to other, completely unrelated purposes. The House of Representatives, lead by Congressman Hal Rogers (R-KY) who is Chair of the Appropriations Committee, demanded that the USPTO do with the amount of funds appropriators want to give the Office, not the amount of funds collected from users who pay for the Office. This is causing many industry groups to openly withdraw support and fight against patent reform; a remarkable turn of events.
Earlier this year we learned that General Electric (NYSE:GE) paid no taxes for 2010. See G.E.’s Strategies Let It Avoid Taxes Altogether. Yes, the largest corporation in the United States had a very good 2010. They booked over $14 billion in profits, with over $5 billion coming from U.S. operations, yet they paid not a dime in taxes to the Federal Government. To add insult to injury, General Electric was able to claim a tax benefit of $3.2 billion for 2010, making its effective tax rate for 2010 substantially negative.
But General Electric was not the only large U.S. corporation not to pay taxes. According to Citizens for Tax Justice, General Electric had some company. In fact, American Electric Power, Dupont, Verizon, Boeing, Wells Fargo, FedEx and Honeywell all had tax rates between -0.7 percent and -9.2 percent for the stretch between 2008 to 2010. See Study finds many corporations pay tax rate of effectively zero.
On the other hand, the United States Patent and Trademark Office continues to have user funds siphoned off, making the USPTO a much larger taxpayer than the largest U.S. corporations.
Justice Stephen Breyer wanted to decide the case, thankfully enough others didn't.
Court Watchers know that there are approximately 8,000 petitions filed with the Supreme Court each year and an additional 1,200 applications of various kinds are filed per year that can be acted upon by a single Justice. There is simply not enough time to consider each case where Supreme Court review is sought, so the Court has historically been very selective in choosing cases, normally only issuing full opinions in roughly 85 cases each year. Notwithstanding, this Supreme Court has shown great interest in patent matters, particularly questions of fundamental importance such as what is patent eligible subject matter (See Bilski v. Kappos and Mayo v. Prometheus), what is considered obvious (See KSR v. Teleflex) and the appropriate level for the presumption of validity of an issued patent (See Microsoft v. i4i). The Roberts Court is no doubt placing its stamp on patent law, and it does not appear as if that will cease any time soon.
Notwithstanding, tomorrow is an anniversary of a peculiar Supreme Court event. Five years ago the United States Supreme Court decided not to issue a ruling in the case of Laboratory Corporation of America v. Metabolite Laboratories. This may not seem like an appropriate event to revisit, or even a noteworthy decision at all, but the issue in the case — what is patent eligible subject matter — has continued to be a question of great concern to the courts, including the Supreme Court. Indeed, with the Supreme Court recently granting cert. in Mayo v. Prometheus, it seems that it is only a matter of time before the issues in Lab Corp. make their way to a decision on the merits by the Supreme Court.
Earlier today the United States Supreme Court granted certiorari in Mayo Collaborative Services v. Prometheus Laboratories, Inc., which sets up another foray into the patent eligible subject matter waters for the Supreme Court in the October 2011 term. This appeal by Mayo will challenge the December 17, 2010 decision of the United States Court of Appeals for the Federal Circuit, one of the first patentable subject matter cases for the Federal Circuit in the wake of the Supreme Court’s decision in Bilski v. Kappos. In fact, this case was returned from the Supreme Court to the Federal Circuit for further consideration in light of the Supreme Court ruling in Bilski v. Kappos.
The United States Patent and Trademark Office has just announced the expansion of the PCT-PPH pilot program with the Korean Intellectual Property Office (KIPO), as well as two new PPH pilot programs; a new pilot project for the Patent Prosecution Highway with the Nordic Patent Institute (NPI) based on NPI’s Patent Cooperation Treaty (PCT) work products and a new pilot project for the Patent Prosecution Highway (PPH) with the Israel Patent Office (ILPO).
How to Write a Patent Application is a must own for patent attorneys, patent agents and law students alike. A crucial hands-on resource that walks you through every aspect of preparing and filing a patent application, from working with an inventor to patent searches, preparing the patent application, drafting claims and more.
Without hesitation I recommend One Simple Idea and think it should be required reading for any motivated inventor. There is so much to like about the book and so much that I think author Stephen Key nails dead on accurate. The book is educational, information and inspirational. For the $14 cover price it is essential reading.
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