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Gary Edwards

The True Story of How the Patent Bar Captured a Court and Shrank the Intellectual Commo... - 1 views

  • The change in the law wrought by the Federal Circuit can also be viewed substantively through the controversy over software patents. Throughout the 1960s, the USPTO refused to award patents for software innovations. However, several of the USPTO’s decisions were overruled by the patent-friendly U.S. Court of Customs and Patent Appeals, which ordered that software patents be granted. In Gottschalk v. Benson (1972) and Parker v. Flook (1978), the U.S. Supreme Court reversed the Court of Customs and Patent Appeals, holding that mathematical algorithms (and therefore software) were not patentable subject matter. In 1981, in Diamond v. Diehr, the Supreme Court upheld a software patent on the grounds that the patent in question involved a physical process—the patent was issued for software used in the molding of rubber. While affirming their prior ruling that mathematical formulas are not patentable in the abstract, the Court held that an otherwise patentable invention did not become unpatentable simply because it utilized a computer.
  • In the hands of the newly established Federal Circuit, however, this small scope for software patents in precedent was sufficient to open the floodgates. In a series of decisions culminating in State Street Bank v. Signature Financial Group (1998), the Federal Circuit broadened the criteria for patentability of software and business methods substantially, allowing protection as long as the innovation “produces a useful, concrete and tangible result.” That broadened criteria led to an explosion of low-quality software patents, from Amazon’s 1-Click checkout system to Twitter’s pull-to-refresh feature on smartphones. The GAO estimates that more than half of all patents granted in recent years are software-related. Meanwhile, the Supreme Court continues to hold, as in Parker v. Flook, that computer software algorithms are not patentable, and has begun to push back against the Federal Circuit. In Bilski v. Kappos (2010), the Supreme Court once again held that abstract ideas are not patentable, and in Alice v. CLS (2014), it ruled that simply applying an abstract idea on a computer does not suffice to make the idea patent-eligible. It still is not clear what portion of existing software patents Alice invalidates, but it could be a significant one.
  • Supreme Court justices also recognize the Federal Circuit’s insubordination. In oral arguments in Carlsbad Technology v. HIF Bio (2009), Chief Justice John Roberts joked openly about it:
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  • The Opportunity of the Commons
  • As a result of the Federal Circuit’s pro-patent jurisprudence, our economy has been flooded with patents that would otherwise not have been granted. If more patents meant more innovation, then we would now be witnessing a spectacular economic boom. Instead, we have been living through what Tyler Cowen has called a Great Stagnation. The fact that patents have increased while growth has not is known in the literature as the “patent puzzle.” As Michele Boldrin and David Levine put it, “there is no empirical evidence that [patents] serve to increase innovation and productivity, unless productivity is identified with the number of patents awarded—which, as evidence shows, has no correlation with measured productivity.”
  • While more patents have not resulted in faster economic growth, they have resulted in more patent lawsuits.
  • Software patents have characteristics that make them particularly susceptible to litigation. Unlike, say, chemical patents, software patents are plagued by a problem of description. How does one describe a software innovation in such a way that anyone searching for it will easily find it? As Christina Mulligan and Tim Lee demonstrate, chemical formulas are indexable, meaning that as the number of chemical patents grow, it will still be easy to determine if a molecule has been patented. Since software innovations are not indexable, they estimate that “patent clearance by all firms would require many times more hours of legal research than all patent lawyers in the United States can bill in a year. The result has been an explosion of patent litigation.” Software and business method patents, estimate James Bessen and Michael Meurer, are 2 and 7 times more likely to be litigated than other patents, respectively (4 and 13 times more likely than chemical patents).
  • Software patents make excellent material for predatory litigation brought by what are often called “patent trolls.”
  • Trolls use asymmetries in the rules of litigation to legally extort millions of dollars from innocent parties. For example, one patent troll, Innovatio IP Ventures, LLP, acquired patents that implicated Wi-Fi. In 2011, it started sending demand letters to coffee shops and hotels that offered wireless Internet access, offering to settle for $2,500 per location. This amount was far in excess of the 9.56 cents per device that Innovatio was entitled to under the “Fair, Reasonable, and Non-Discriminatory” licensing promises attached to their portfolio, but it was also much less than the cost of trial, and therefore it was rational for firms to pay. Cisco stepped in and spent $13 million in legal fees on the case, and settled on behalf of their customers for 3.2 cents per device. Other manufacturers had already licensed Innovatio’s portfolio, but that didn’t stop their customers from being targeted by demand letters.
  • Litigation cost asymmetries are magnified by the fact that most patent trolls are nonpracticing entities. This means that when patent infringement trials get to the discovery phase, they will cost the troll very little—a firm that does not operate a business has very few records to produce.
  • But discovery can cost a medium or large company millions of dollars. Using an event study methodology, James Bessen and coauthors find that infringement lawsuits by nonpracticing entities cost publicly traded companies $83 billion per year in stock market capitalization, while plaintiffs gain less than 10 percent of that amount.
  • Software patents also reduce innovation in virtue of their cumulative nature and the fact that many of them are frequently inputs into a single product. Law professor Michael Heller coined the phrase “tragedy of the anticommons” to refer to a situation that mirrors the well-understood “tragedy of the commons.” Whereas in a commons, multiple parties have the right to use a resource but not to exclude others, in an anticommons, multiple parties have the right to exclude others, and no one is therefore able to make effective use of the resource. The tragedy of the commons results in overuse of the resource; the tragedy of the anticommons results in underuse.
  • In order to cope with the tragedy of the anticommons, we should carefully investigate the opportunity of  the commons. The late Nobelist Elinor Ostrom made a career of studying how communities manage shared resources without property rights. With appropriate self-governance institutions, Ostrom found again and again that a commons does not inevitably lead to tragedy—indeed, open access to shared resources can provide collective benefits that are not available under other forms of property management.
  • This suggests that—litigation costs aside—patent law could be reducing the stock of ideas rather than expanding it at current margins.
  • Advocates of extensive patent protection frequently treat the commons as a kind of wasteland. But considering the problems in our patent system, it is worth looking again at the role of well-tailored limits to property rights in some contexts. Just as we all benefit from real property rights that no longer extend to the highest heavens, we would also benefit if the scope of patent protection were more narrowly drawn.
  • Reforming the Patent System
  • This analysis raises some obvious possibilities for reforming the patent system. Diane Wood, Chief Judge of the 7th Circuit, has proposed ending the Federal Circuit’s exclusive jurisdiction over patent appeals—instead, the Federal Circuit could share jurisdiction with the other circuit courts. While this is a constructive suggestion, it still leaves the door open to the Federal Circuit playing “a leading role in shaping patent law,” which is the reason for its capture by patent interests. It would be better instead simply to abolish the Federal Circuit and return to the pre-1982 system, in which patents received no special treatment in appeals. This leaves open the possibility of circuit splits, which the creation of the Federal Circuit was designed to mitigate, but there are worse problems than circuit splits, and we now have them.
  • Another helpful reform would be for Congress to limit the scope of patentable subject matter via statute. New Zealand has done just that, declaring that software is “not an invention” to get around WTO obligations to respect intellectual property. Congress should do the same with respect to both software and business methods.
  • Finally, even if the above reforms were adopted, there would still be a need to address the asymmetries in patent litigation that result in predatory “troll” lawsuits. While the holding in Alice v. CLS arguably makes a wide swath of patents invalid, those patents could still be used in troll lawsuits because a ruling of invalidity for each individual patent might not occur until late in a trial. Current legislation in Congress addresses this class of problem by mandating disclosures, shifting fees in the case of spurious lawsuits, and enabling a review of the patent’s validity before a trial commences.
  • What matters for prosperity is not just property rights in the abstract, but good property-defining institutions. Without reform, our patent system will continue to favor special interests and forestall economic growth.
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    "Libertarians intuitively understand the case for patents: just as other property rights internalize the social benefits of improvements to land, automobile maintenance, or business investment, patents incentivize the creation of new inventions, which might otherwise be undersupplied. So far, so good. But it is important to recognize that the laws that govern property, intellectual or otherwise, do not arise out of thin air. Rather, our political institutions, with all their virtues and foibles, determine the contours of property-the exact bundle of rights that property holders possess, their extent, and their limitations. Outlining efficient property laws is not a trivial problem. The optimal contours of property are neither immutable nor knowable a priori. For example, in 1946, the U.S. Supreme Court reversed the age-old common law doctrine that extended real property rights to the heavens without limit. The advent of air travel made such extensive property rights no longer practicable-airlines would have had to cobble together a patchwork of easements, acre by acre, for every corridor through which they flew, and they would have opened themselves up to lawsuits every time their planes deviated from the expected path. The Court rightly abridged property rights in light of these empirical realities. In defining the limits of patent rights, our political institutions have gotten an analogous question badly wrong. A single, politically captured circuit court with exclusive jurisdiction over patent appeals has consistently expanded the scope of patentable subject matter. This expansion has resulted in an explosion of both patents and patent litigation, with destructive consequences. "
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    I added a comment to the page's article. Patents are antithetical to the precepts of Libertarianism and do not involve Natural Law rights. But I agree with the author that the Court of Appeals for the Federal Circuit should be abolished. It's a failed experiment.
Paul Merrell

German Parliament Says No More Software Patents | Electronic Frontier Foundation - 0 views

  • The German Parliament recently took a huge step that would eliminate software patents (PDF) when it issued a joint motion requiring the German government to ensure that computer programs are only covered by copyright. Put differently, in Germany, software cannot be patented. The Parliament's motion follows a similar announcement made by New Zealand's government last month (PDF), in which it determined that computer programs were not inventions or a manner of manufacture and, thus, cannot be patented.
  • The crux of the German Parliament's motion rests on the fact that software is already protected by copyright, and developers are afforded "exploitation rights." These rights, however, become confused when broad, abstract patents also cover general aspects of computer programs. These two intellectual property systems are at odds. The clearest example of this clash is with free software. The motion recognizes this issue and therefore calls upon the government "to preserve the precedence of copyright law so that software developers can also publish their work under open source license terms and conditions with legal security." The free software movement relies upon the fact that software can be released under a copyright license that allows users to share it and build upon others' works. Patents, as Parliament finds, inhibit this fundamental spread.
  • Just like in the New Zealand order, the German Parliament carved out one type of software that could be patented, when: the computer program serves merely as a replaceable equivalent for a mechanical or electro-mechanical component, as is the case, for instance, when software-based washing machine controls can replace an electromechanical program control unit consisting of revolving cylinders which activate the control circuits for the specific steps of the wash cycle This allows for software that is tied to (and controls part of) another invention to be patented. In other words, if a claimed process is purely a computer program, then it is not patentable. (New Zealand's order uses a similar washing machine example.) The motion ends by calling upon the German government to push for this approach to be standard across all of Europe. We hope policymakers in the United States will also consider fundamental reform that deals with the problems caused by low-quality software patents. Ultimately, any real reform must address this issue.
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    Note that an unofficial translation of the parliamentary motion is linked from the article. This adds substantially to the pressure internationally to end software patents because Germany has been the strongest defender of software patents in Europe. The same legal grounds would not apply in the U.S. The strongest argument for the non-patentability in the U.S., in my opinion, is that software patents embody embody both prior art and obviousness. A general purpose computer can accomplish nothing unforeseen by the prior art of the computing device. And it is impossible for software to do more than cause different sequences of bit register states to be executed. This is the province of "skilled artisans" using known methods to produce predictable results. There is a long line of Supreme Court decisions holding that an "invention" with such traits is non-patentable. I have summarized that argument with citations at . 
Gonzalo San Gil, PhD.

The Evidence Is In: Patent Trolls Do Hurt Innovation - James Bessen - Harvard Business ... - 0 views

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    "by James Bessen | 10:00 AM July 25, 2014 Comments (12) Over the last two years, much has been written about patent trolls, firms that make their money asserting patents against other companies, but do not make a useful product of their own. Both the White House and Congressional leaders have called for patent reform to fix the underlying problems that give rise to patent troll lawsuits. "
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    "by James Bessen | 10:00 AM July 25, 2014 Comments (12) Over the last two years, much has been written about patent trolls, firms that make their money asserting patents against other companies, but do not make a useful product of their own. Both the White House and Congressional leaders have called for patent reform to fix the underlying problems that give rise to patent troll lawsuits. "
Gonzalo San Gil, PhD.

Good News: US Patent Office Now Rejecting A Lot More Software Patents | Techdirt - 0 views

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    "The impact of the Supreme Court's ruling in Alice v. CLS Bank continues to reverberate around the industry. We've already noted that courts have been rapidly invalidating a bunch of patents, and that related lawsuits appear to be dropping rapidly as well. And, now, a new analysis from a (pro-patent) law firm suggests that the US Patent Office is rejecting a lot more software patents as well. "
Gonzalo San Gil, PhD.

Infamous "podcast patent" heads to trial | Ars Technica - 0 views

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    [# ! Patents turned into a collecting business instead of a invention promotion mechanism :/ ...] "A few years later, "monetizing" patents through lawsuits turned into an industry of its own. Logan turned his patents into a powerhouse licensing machine, beginning with a case filed against Apple in 2009. He went to trial and won $8 million. Settlements with other industry giants, like Samsung and Amazon, followed."
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    [# ! Patents a collecting business instead of a invention promotion mechanism :/ ...] "A few years later, "monetizing" patents through lawsuits turned into an industry of its own. Logan turned his patents into a powerhouse licensing machine, beginning with a case filed against Apple in 2009. He went to trial and won $8 million. Settlements with other industry giants, like Samsung and Amazon, followed."
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    [# ! Patents turned into a collecting business instead of a invention promotion mechanism :/ ...] "A few years later, "monetizing" patents through lawsuits turned into an industry of its own. Logan turned his patents into a powerhouse licensing machine, beginning with a case filed against Apple in 2009. He went to trial and won $8 million. Settlements with other industry giants, like Samsung and Amazon, followed."
Gonzalo San Gil, PhD.

Introducing EFF's Stupid Patent of the Month | Electronic Frontier Foundation - 0 views

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    "Here at EFF, we see a lot of stupid patents. There was the patent on "scan to email." And the patent on "bilateral and multilateral decision making." There are so many stupid patents that Mark Cuban endowed a chair at EFF dedicated to eliminating them. We wish we could catalog them all, but with tens of thousands of low-quality software patents issuing every year, we don't have the time or resources to undertake that task."
Gonzalo San Gil, PhD.

Patent abuse litigation laws passed or pending in over twenty U.S. states | Opensource.com - 0 views

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    "Patent reform may have stalled this year at the federal level, but patent trolls may soon find their actions curtailed by a number of patent abuse litigation laws that have been passed or are pending in over twenty U.S. states."
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    "Patent reform may have stalled this year at the federal level, but patent trolls may soon find their actions curtailed by a number of patent abuse litigation laws that have been passed or are pending in over twenty U.S. states."
Gonzalo San Gil, PhD.

Patent Troll Sues Everyone For Infringing On Encryption-Related Patent By Encrypting Th... - 0 views

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    "from the um,-we-actually-offer-no-encryption-services-of-our-own.-sorry. dept Underdog Texas company takes on corporate giants! Scores of big brands - from AT&T and Yahoo! to Netflix, GoPro and Macy's - are being sued because their HTTPS websites allegedly infringe an encryption patent. It appears in May this year CryptoPeak Solutions, based in Longview, Texas, got its hands on US Patent 6,202,150, which describes "auto-escrowable and auto-certifiable cryptosystems." CryptoPeak reckons TLS-secured websites that use elliptic curve cryptography are infringing the patent - so it's suing owners of HTTPS websites that use ECC. Top tip: loads of websites use ECC these days to securely encrypt their traffic."
Gonzalo San Gil, PhD.

Patent Litigation Cost US Business About A Trillion Dollars In A Quarter Century, Outwe... - 0 views

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    "from the trolls-strike-again dept Techdirt recently wrote about the ever-growing flood of patents being granted by the USPTO. As we've emphasized, more patents do not mean more innovation; nor do they necessarily lead to greater overall benefits for business."
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    "from the trolls-strike-again dept Techdirt recently wrote about the ever-growing flood of patents being granted by the USPTO. As we've emphasized, more patents do not mean more innovation; nor do they necessarily lead to greater overall benefits for business."
Gonzalo San Gil, PhD.

Declaración de Tesla a favor del Open Source y contra las patentes - 0 views

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    "Texto de Elon Musk de hoy, 12 de junio de 2014, para anunciar la renuncia de Tesla Motors a todas sus patentes. Sin duda, toda una declaración de principios por parte de la compañía, a favor del movimiento Open Source y en contra de las patentes. "Ayer había una pared de patentes de Tesla en la recepción de nuestras oficinas centrales en Palo Alto. Ya no va a estar. Han sido eliminadas, en el espíritu del movimiento Open Source, por el progreso de la tecnología de los vehículos eléctricos."
Gonzalo San Gil, PhD.

Patent Reform Bill A Good Step, But Still Falls Way Short Of Fixing A Broken System | T... - 0 views

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    "from the it's-a-start dept As was widely expected, earlier this week, a bunch of high-profile Senators introduced a big patent reform bill, known as the Protecting American Talent and Entrepreneurship (PATENT) Act. It's backed by Senators Chuck Grassley, Patrick Leahy, Chuck Schumer and John Cornyn, and has a decent chance of becoming law."
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    "from the it's-a-start dept As was widely expected, earlier this week, a bunch of high-profile Senators introduced a big patent reform bill, known as the Protecting American Talent and Entrepreneurship (PATENT) Act. It's backed by Senators Chuck Grassley, Patrick Leahy, Chuck Schumer and John Cornyn, and has a decent chance of becoming law."
Gonzalo San Gil, PhD.

Rightscorp Granted Australian Patent to Chase Pirates - TorrentFreak [# ! Note] - 0 views

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    " Andy on October 8, 2015 C: 0 Breaking Rightscorp has been awarded a patent by the Australian Patent Office which should protect it from competitors looking to muscle in on its business model Down Under. The patent protects a system which helps Rightscorp identify repeat infringers, individuals it is now targeting in the United States with settlement demands and lawsuits."
Gonzalo San Gil, PhD.

Patent Trolls Working Overtime | FOSS Force - 0 views

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    "Christine Hall Unified Patents LogoThe trolls are still at it. In spite of the fact that the Supreme Court was busy ruling against them last year - between January and June it ruled against patent holders six times - the number of cases being brought by non-practicing entities (NPE), which is one measure of a troll, continues to rise."
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    "Christine Hall Unified Patents LogoThe trolls are still at it. In spite of the fact that the Supreme Court was busy ruling against them last year - between January and June it ruled against patent holders six times - the number of cases being brought by non-practicing entities (NPE), which is one measure of a troll, continues to rise."
Gonzalo San Gil, PhD.

Say It Ain't So, Woz: Steve Wozniak Says Patent Trolls Are Okay | Techdirt - 0 views

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    "from the too-bad dept Via Joe Mullin, we learn the rather unfortunate news that, when asked about Paul Allen's decision to sue lots of big tech companies over questionable patents, Wozniak comes out in favor of "patent trolls" and patent holders suing companies who actually innovate. "
Gonzalo San Gil, PhD.

MP3 Decoding Patent Is Expiring, Linux Distro Could Integrate It by Default - Softpedia - 0 views

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    "The patent legislation is extremely complicated and unclear The MP3 decoding patent is one those things that seems pretty harmless and present in pretty much any device around us, but it's actually something that generates tons of money per unit for Fraunhofer and Thompson. Linux distributions need to offer this feature and it means integrating a proprietary solution, although there is some hope now that the patent seems to have expired."
Gary Edwards

How to Read a Patent - Adler Vermillion, LLP - 0 views

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    "Patents are complex documents that bury a handful of important sentences under a mountain of fluff and jargon. If you're going to read a patent (and I urge you not to) you might as well start with the important parts, and read them correctly. Lets suppose you want to figure out whether your new technology might infringe some patent. Here's a simple strategy I might use to start the infringement analysis. First, skip down to the "claims.""
Gonzalo San Gil, PhD.

How operating companies can stop patent trolls: Cut off the ammo | Ars Technoica - 0 views

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    "Six tech companies have kicked off a new program that they hope will put a major dent in patent trolling, even with Congress unable to pass patent reform."
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    "Six tech companies have kicked off a new program that they hope will put a major dent in patent trolling, even with Congress unable to pass patent reform."
Gonzalo San Gil, PhD.

Will Molecular Biology's Most Important Discovery In Years Be Ruined By Patents? | Tech... - 1 views

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    "from the GNU-Emacs-for-DNA dept Techdirt readers hardly need to be reminded that, far from promoting innovation, patents can shut it down, either directly, through legal action, or indirectly through the chill they cast on work in related areas. But not all patents are created equal. Some are so slight as to be irrelevant, while others have such a wide reach that they effectively control an entire domain. Patents on a new biological technique based on a mechanism found in nature, discussed in a long and fascinating piece in the Boston Review, definitely fall into the second category. Here's the article's explanation of the underlying mechanism, known as CRISPR-Cas: "
Paul Merrell

Google Wins Patent For Data Center In A Box; Trouble For Sun, Rackable, IBM? -- Data Ce... - 0 views

  • Google (NSDQ: GOOG) has obtained a broad patent for a data center in a container, which might put a kink in product plans for companies like Sun Microsystems (NSDQ: JAVA), Rackable Systems, and IBM (NYSE: IBM). The patent, granted Tuesday, covers "modular data centers with modular components that can implemented in numerous ways, including as a process, an apparatus, a system, a device, or a method."
  • The U.S. Patent Trademark Office site reveals patent number 7,278,273 as describing modules in intermodal shipping containers, or those that can be shipped by multiple carriers and systems. It also covers computing systems mounted within temperature-controlled containers, configured so they can ship easily, be factory built and deployed at data center sites.
  • If this sounds familiar, it might just be. Google's patent description resembles Sun Microsystems' data center in a box, called Project Blackbox. During its debut last year, Sun installed a Blackbox -- essentially a cargo container for 18-wheelers -- outside of Grand Central Station in New York City to show how easily one of their data centers could be installed. Google's patent description also has similarities to Rackable Systems' ICE Cube as well as IBM's Scalable Modular Data Center.
Gonzalo San Gil, PhD.

Finjan, Cisco, JDate and Other Companies Acting Like Patent Trolls; New Threats to Linu... - 1 views

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    "Summary: News about patents from all across the Web, placing special emphasis on software patents and how these affect Free software projects, including Linux and Android"
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