Posts Tagged: "software patents"

Inventors are seeing the light and are looking increasingly to the East for protection of their patents. Specifically, to China, where patent protection was once non-existent; China has overhauled its patent system and become more attractive to inventors than the once mighty USPTO. In 2016, the State Intellectual Property Office of the People’s Republic of China (SIPO) received 1.3 million patent applications. That’s more than the combined total for the United States Patent and Trademark Office (USPTO; 605,571), the Japan Patent Office (JPO; 318,381), the Korean Intellectual Property Office (KIPO; 208,830) and the European Patent Office (EPO; 159,358).

It has been more than two years since I last wrote here that the U.S. Supreme Court’s 2014 Alice Corp. v. CLS Bank decision has left the IP bar without a clear and reliable test to determine when exactly a software (or computer-implemented) claim is patentable versus being simply an abstract idea “free to all men and reserved exclusively to none.” It is now mid-2019, and the USPTO’s newest Section 101 guidelines interpreting Alice—and the accompanying examples—have not cleared the confusion, and Alice continues to distract the USPTO, courts, and practitioners from focusing properly on Sections 102 (novelty) and 103 (obviousness). The net effects still being increased cost, lower patent quality, lower patent portfolio valuations, wasted patent reform lobbying dollars and, in many instances, the denial of patent protection for worthwhile software inventions. Meanwhile, in the real world, which is experiencing the Fourth Industrial Revolution—where even the average modern car contains roughly 150 million lines of code—the importance of software is undebatable.

On June 25, the U.S. Court of Appeals for the Federal Circuit issued an opinion in Cellspin Soft, Inc. v. Fitbit, Inc. (2018-1817, 2018-1819 to 1826), reversing a district court’s grant of various Rule 12(b)(6) motions to dismiss complaints that alleged patent infringement based on U.S. Pat. No. 8,738,794 (the ’794 patent), U.S. Pat. No. 8,892,752 (the ’752 patent), U.S. Pat. No. 9,258,698 (the ’698 patent), and U.S. Pat. No. 9,749,847 (the ’847 patent). The Federal Circuit did so because the district court misconstrued precedent from both Aatrix Software, Inc. v. Green Shades Software, Inc., 882 F.3d 1121 (Fed. Cir. 2018) and Berkheimer v. HP Inc., 881 F.3d 1360 (Fed. Cir. 2018). The Federal Circuit panel consisted of Judges Lourie, O’Malley, and Taranto. Judge O’Malley authored the panel’s opinion. he Federal Circuit agreed with the district court that the claims were directed to an abstract idea but reversed anyway on the basis of the district court failing to conduct a proper Alice step two. This was because the district court ignored Cellspin’s factual allegations that, when properly accepted as true, precluded the grant of a 12(b)(6) motion to dismiss.

The Investpic v. SAP America case (Supreme Court Dkt. No. 18-1199), which is the 44th patent eligibility case to be considered for certiorari since the notorious Alice Corp. decision, was announced earlier this week. Cert. denied. Unlike almost any other case, the Investpic decision represents a hostility to the patent rights of software developers based on capricious foundations. The Federal Circuit’s holding is inconsistent with the statutory language of Section 101, the holding is hostile to Section 112(f), and the holding has no nexus to preemption. Investpic is just one of Judge Taranto’s latest monstrosities that holds that a patent must be based on a “physical realm improvement” of the sort that has an “inventive concept.” Investpic also holds that one isn’t allowed to use functional claim language, and that algorithms are unworthy of patent protection.

Panelists in this past Thursday’s IPWatchdog webinar, “Dissecting Alice,” gave credit to the U.S. Patent and Trademark Office (USPTO) for the steps it has taken to minimize the damage caused by the courts’ lack of action on patent eligibility, but expressed concern that it simply isn’t enough. USPTO Commissioner for Patents Drew Hirshfeld joined the webinar to report on the progress made since the decision came out and said that, while Alice undoubtedly caused some confusion and disarray for practitioners, “we’re in a better place today than we were two or five years ago.” Hirshfeld explained that the Office’s initial approach to providing guidance for examiners on Alice was to use a “case law matching process,” which eventually became untenable after years of case law had built up. He said that the January 2019 Guidance—which Hirshfeld noted is also binding on the Patent Trial and Appeal Board—was developed over an intensive eight-month period by a small team of people that included Director Andrei Iancu himself and involved at least one full Sunday. He added that the examiner training effort for the 101 Guidance has also been more thorough than any he’s seen in his 25 years at the USPTO. The Office is currently in the process of developing additional concrete case examples for examiners and practitioners to work with in order to further enhance the guidance.

When it was announced that I would be testifying to the Senate Judiciary Subcommittee on IP about Section 101, I was surprised. Not only did they grant a critic of the 101 roundtables a chance to speak, but not one inventor who used patents to fund a startup has testified in any patent-related hearing in decades. This gave me faith that Senators Tillis and Coons are serious about fixing 101 right by considering what inventors need. When the hearing was announced, several inventors contacted me. They wanted to personally tell their stories to Congress. They trusted the government to protect them, but instead lost their careers, their secrets, and their investments of hard work and money. A few even lost their families, their home, or their health. The inventors were happy about eliminating all 101 exceptions, but the draft language of 100(k) and 112(f) transfer the damage to those sections.

During the week of June 10, the Patent Trial and Appeal Board (PTAB) issued institution decisions for 21 petitions seeking inter partes review (IPR) proceedings to challenge the validity of patents. In all, the PTAB instituted seven IPRs, denied eight, and terminated another six after granting motions for joinder. That latter group of IPRs were petitioned by Priceline.com and Booking.com, both of whom were successful in joining Shopify IPRs challenging the validity of three patents owned by DDR Holdings. The most IPR denials last week were issued to Comcast, but those petitions were denied in large part because they all challenged a patent which already had a pending IPR proceeding instituted against it. Other successful petitions at the PTAB included three IPRs instituted for 3Shape A/S, two IPRS instituted for ASM IP Holding, and one instituted for Cook Incorporated.

Last week, the Patent Trial and Appeal Board (PTAB) issued 51 institution decisions, with denials narrowly edging out institutions by a 26-25 margin. In a decision on six Apple petitions, the PTAB terminated the consumer electronics giant’s challenges as time-barred; Apple had sought joinder to an already-terminated proceeding brought by Samsung. Elsewhere, Apple did successfully team up with Samsung and LG Electronics to challenge two patents owned by non-practicing entity Uniloc. Comcast had five petitions challenging a Rovi patent denied, but succeeded on one petition, which included seven obviousness challenges on that same Rovi patent. Expedia and various Internet travel booking websites lost out on a challenge to an IBM patent based on arguments already considered by the PTAB. Peloton Interactive also faces the potential invalidation of claims of three patents after a trio of successful institutions for Flywheel Sports.

Wednesday’s Senate hearing on patent eligibility reform, which began more than 30 minutes late due to votes on the floor, opened with Senator Thom Tillis (R-NC) reiterating that his goal in holding three hearings on this topic and receiving testimony from 45 witnesses, which is not common, is to address the major concerns on all sides of the debate. Tillis noted that he and Coons had specifically invited many of the high-tech companies that do not appear on any of the rosters for the three hearings, but they chose not to participate and instead to be represented by David Jones, Executive Director of the High Tech Inventors Alliance (HTIA), who spoke today. While Tillis said, “that’s ok,” he noted that “silence is consent. What we want here is people working out of the shadows, collaboratively.” HTIA’s members include Amazon, Google, Adobe, Intel, Cisco, Oracle, Dell, and Salesforce. Many of today’s panelists raised more substantive issues with the proposed section 100(k) and 112(f) than did yesterday’s speakers. Section 100(k)defines the term “useful” in the new section 101 and section 100(f) would eliminate functional claiming. Barbara Fiacco, representing AIPLA; Henry Hadad of Bristol-Myers Squibb and the Intellectual Property Owners Association (IPO) President; Paul Morinville of U.S. Inventor; and Phil Johnson, representing the Coalition for 21st Century Patent Reform, all raised various concerns about one or both of these sections. Notably, Hadad said that IPO has not yet taken an official position on the draft, although it meshes with its own 101 proposal, and Fiacco said that AIPLA feels 112(f) and 100(k) are areas for “further consideration.” In addition to Senator Chris Coons (D-DE) and Tillis, Mazie Hirono (D-HI) and Richard Blumenthal (D-CT) asked several questions of the panelists.

The first of three scheduled hearings in which the Senate IP Subcommittee will hear testimony from a total of 45 witnesses on the subject of patent eligibility law raised many questions. While some read the proposed draft bill released by Congress last month as clearly overturning AMP v. Myriad, for example, Senator Chris Coons (D-DE), Ranking Member of the Senate IP Subcommittee, said today that was not his intention. In his opening statement, Coons pushed back against an article published on Monday by The Washington Post, which indicated that the proposed draft bill to revise Section 101 would enable the patenting of genes. Coons called the article “significantly misleading” and noted that “our proposal would not change the law to allow a company to patent a gene as it exists in the human body. I believe I speak for the Chairman and myself when I say we do not intend to overrule that holding of the 2013 Myriad decision.” The concerns leading to the Washington Post article arose in recent days, after the American Civil Liberties Union (ACLU) released a statement and held a phone briefing for Congressional staffers claiming that the proposed draft bill would enable the patenting of genes. Sherry Knowles, Principal of Knowles Intellectual Property Strategies and one of the witnesses at today’s hearing, penned a rebuttal of the ACLU’s position that IPWatchdog published on Monday. Knowles spoke in the second panel of today’s hearing and said she hopes the proposed bill would in fact overturn the Myriad decision because “there’s been a dead stop in research in the United States on isolated natural products. The highest public interest is life itself and that has to be the goal of this statute.”

To kick off the month in which Alice v. CLS Bank will turn five, the Senate Judiciary Committee’s Subcommittee on Intellectual Property will hold its first two hearings on “The State of Patent Eligibility in America.” The hearings are scheduled for Tuesday, June 4 and Wednesday June 5, both at 2:30 PM in the Dirksen Senate Office Building, and the Subcommittee has now published the rosters for both hearings. As mentioned in a Senate press release last week, there will be three hearings held in total, on June 4, 5 and 11, featuring three panels of five witnesses each, for a total of 45 witnesses over three days. Overall, it is quite balanced between those who will argue for and against reform. This is quite a change in and of itself; congressional hearings on patent legislation over the past decade have largely favored those arguing against pro-patent reforms. IPWatchdog will cover these hearings, and several of the witnesses testifying next week — Chief Judge Paul Michel, Sherry Knowles and Phil Johnson —will be speaking later in the month at our Patent Masters™ Symposium titled Alice Five Years Later. 

A group of Senators and Representatives has just released the draft text of a bipartisan, bicameral proposal to reform Section 101 of the Patent Act. Senators Thom Tillis (R-NC) and Chris Coons (D-DE), Chair and Ranking Member of the Senate Judiciary Subcommittee on Intellectual Property; Representative Doug Collins (R-GA-9), Ranking Member of the House Judiciary Committee; Hank Johnson (D-GA-4), Chairman of the House Judiciary Subcommittee on Intellectual Property and the Courts; and Steve Stivers (R-OH-15) sent the draft text via press release today. The stated goal of releasing the draft is to solicit feedback—there will be additional stakeholder feedback and Senate hearings, according to the press release.Senate hearings on the topic will be held on June 4, 5 and 11 featuring three panels of five witnesses each, for a total of 45 witnesses over three days. The draft text explicitly states that “the provisions of section 101 shall be construed in favor of eligibility.”

Business method patents have recovered under the new 2019 Revised Patent Subject Matter Eligibility Guidance. As the graph above shows, allowances per office action (APOA) dropped from 17% before the 2014 Alice decision to 4% right after the Alice decision. APOA then increased to about 11% in 2017 when a new business method director, Tariq Hafiz was appointed. Tariq made a special point of encouraging examiners to allow cases if they genuinely felt the claims met the 101 guidelines set forth by the patent office. APOA rose to 17% in 2019 after the new 2019 Guidance came out in January. It is now back at its pre-Alice level of 17%. It’s still not easy to get a business method patent. An APOA of 17% implies that, on average, an applicant will have to respond to five rejections before getting an allowance. Nonetheless, it is now at least a realistic possibility to get a business method patent in a reasonable amount of cost and time.

I am Emil Malak, CEO of VoIP-Pal.com Inc., and a named inventor on two U.S. patents–Mobile Gateway: US 8,630,234 & Electrostatic Desalinization and Water Purification: US 8,016,993. To date, our company owns 22 issued and or allowed patents, which we developed over the past 15 years. Against all odds, we have been 100% successful in defending eight Inter Partes Reviews (IPRs): four from Apple, three from AT&T, and one from Unified Patents. We are presently in litigation against Apple, Verizon, AT&T, Twitter and Amazon. My experience with Voip-Pal has made it painfully clear that the deck has been stacked against companies who own IP being used without license by large tech companies. The America Invents Act (AIA), orchestrated by Silicon Valley, was designed to destroy the very ladder they climbed to ascend to their lofty perch, and make certain that they could not be challenged.

In our first article examining the 2018 patent market, we provided an overview of the data and found that prices were stabilizing across listings, buying and selling programs were becoming more streamlined, and there were more transactions overall. This trend extends to “patent packages” as well. At 591 packages (502 last year), listings have increased by 17.7%. The only year in which we saw more listings was the 2016 market. If the assets from Provenance Asset Group were included in these numbers, the numbers would show an all-time high. The number of total assets and of U.S.-issued patents also increased (see Table 2). We have benchmarked our deal flow with that of other large corporations and defensive aggregators and have found that the number of brokered packages we received is generally similar, so we are confident that our numbers reflect the market. Compared to prior years, the total number of U.S.-issued assets listed in packages increased twice as fast as the number of packages listed. Notably though, the total number of assets listed increased even more than the U.S.-issued assets. This signifies the continued importance of international assets and an elevated level of focus on elements of a package other than U.S.-issued assets. But, U.S.-issued assets are still the focus in most listings (see Figure 4). While we limit the types of package included in this dataset to the more common types (e.g. quasi-public/brokered packages containing 200 or fewer assets), we also track larger bulk deals and private deals.