Concern Trolls “Worry” About Covered Business Method Review

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As expected, once some ideas to deal with patent trolls were proposed by the President, the concern trolls came out in force to express “concern” about “uncertainty” and a possible, unexplained, negative effect on innovation. In short, the concern trolls tell us inventors will stop inventing, technology will stagnate, society will collapse, and Two and a Half Men will be renewed for another 12 seasons.

The reform that is generating the most worry is the expansion of the Covered Business Method (CBM) review program, which we wrote about last week.

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Troll Economics: The White House Weighs In

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Last week, the White House released its agenda of legislative priorities and executive actions on high-tech patent issues.  It was accompanied by a report, Patent Assertion and U.S. Innovation, that builds on recent research and makes the case for the agenda.  The agenda is attributed to the White House Task Force on High-Tech Patent Issues, while the report is a joint product of the Council of Economic Advisers (CEA), the National Economic Council (NEC), and the Office of Science & Technology Policy (OSTP).  Like the various proposals brewing in Congress, it is directed at patent assertion entities (PAEs), more commonly known as trolls.  But with seven legislative measures, five executive actions, and the report, the White House agenda is distinctly ambitious.

It is quite unusual for the White House to assume leadership on patent reform.  To my memory, the only comparable initiative was the President’s Commission on the Patent System of 1965-1966.  At President Johnson’s request, the Commission took a broad look at the patent system in a time of technological change and issued its report as “‘To Promote the Progress of …Useful Arts’ in an Era of Exploding Technology.”  The report made 35 thoughtful recommendations (including recommending against software patents) but got little political traction beyond the administration.  As noted by Commission member James Birkenstock (IBM):

The commission members were greatly pleased that the Johnson administration accepted all of its recommendations. Regrettably, only a few were enacted into law due to the highly influential Patent Law Bar that opposed most of the recommendations.

The Obama administration’s initiative is narrower, more targeted, and well-documented.  The report not only examines the troll problem in depth but links it to fundamental problems of functional claiming in software, uncertainty in the face of massive patenting, and the overshadowing of R&D by strategic patent acquisition and assertion.  The report recognizes that it is not just a problem of restraining and sanctioning a few bad actors.

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Roundup of This Week’s Patent News: June 14 Edition

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Hi there!  No, this week wasn’t quite as eventful as last week.  (If you missed the big patent news, check out last week’s roundup.)  But we still have some news you don’t want to miss.

First up, on Saturday June 8, our own Matt Levy’s Letter to the Editor was published in the New York Times, in which he explained the key takeaway of the administration’s proposal:

It’s important to understand the larger point of President Obama’s executive actions. The president has correctly identified software patents as the main fuel for the patent troll litigation wildfire. And he has proposed a reasonable solution: directing the Patent and Trademark Office to focus on limiting patents to what someone actually invented.

That refers to the functional claiming fix, which he explained in depth in a post last week.  In a post yesterday, Matt Levy did a deep dive into another desirable reform, the expansion of the Covered Business Method (CBM) review program, found in Senator Schumer’s Patent Quality Improvement Act, and also in the President’s proposal.  Senator Schumer also had a great op-ed in the Wall Street Journal (paywall alert, sorry!) yesterday, where he explained the benefits of expanding CBM review:

If a troll knows he can no longer trap a defendant in expensive and lengthy litigation, his interest in the suit will diminish substantially. And American businesses can get back to the work of innovation and growth, rather than frivolous litigation defense.

This week, Matt Levy also did a line-by-line takedown of an op-ed in the Boston Globe by former Senator John Sununu, debunking all of his classic pro-troll arguments, like: “Patents Are a Constitutional Right”, “Sure, There’s Abusive Litigation, but Reform Is Hard. And Also Trial Lawyers!”, “Look! Over There!”, “But Universities!”, and “What About Individual Inventors?”

Also, although it’s an area of patents we don’t often cover on Patent Progress, I just wanted to point out that the Supreme Court’s Myriad decision came out yesterday, and SCOTUS unanimously held human genes aren’t patentable.  A few interesting excerpts are below:

To be sure, it found an important and useful gene, but separating that gene from its surrounding genetic material is not an act of invention.

Groundbreaking, innovative, or even brilliant discovery does not by itself satisfy the §101 inquiry.

Did we miss something?  Questions or suggestions?  Feel free to leave a comment below, mention us on Twitter (@PatentProgress), or email us: patentprogress[AT]ccianet[DOT]org

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How Covered Business Method Review Can Help Beat Back the Trolls

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The term “Covered Business Method” seems a bit dry, but if you’re interested in making life tougher for patent trolls you’ll get acquainted with it. Last week, I focused on one of the Obama Administration’s Executive Actions: the effort to tighten functional claiming. That Executive Action is directed to stopping the flow of new, overbroad software patents. But what about the overbroad patents that are already out there?

One part of the solution is to make it easier to get the PTO to review those patents. The Covered Business Method (CBM) review program, which was implemented by the America Invents Act, is a good candidate to use. Here’s why: a person can request CBM review of a CBM patent (I’ll talk about what that means below) at any time, so long as the patent has been asserted against the requestor. You can request review based on any validity argument, and if there’s an infringement lawsuit pending, the judge is encouraged to stay (i.e., put on hold) the lawsuit until review is done.

CBM review is not cheap (the fee alone is $30,000), but it’s much cheaper than litigation. Also, businesses threatened over the same patent can pool resources to jointly file a CBM petition. The two other types of review created by the AIA, inter partes review (IPR) and post-grant review (PGR) are substantially more limited. For example, you can only request IPR based on certain prior art references, namely printed publications or patents and no other grounds of invalidity. And you can only request PGR on patents filed after March 16, 2013, and then only within the first 9 months after the patent issues. So PGR can’t help with most of the patents that trolls are currently using. There’s also no provision in either IPR or PGR to encourage a judge to stay a lawsuit if either type of review is going on, so neither type of review helps avoid the costs of litigation.

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Talking Points Mau-Mau: Sununu Objects to Reform on Patent Trolls

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Former Sen. John E. Sununu has an op-ed in the Boston Globe today that perfectly encapsulates the talking points of those who oppose efforts to clamp down on patent trolls.

First is the “Patents Are a Constitutional Right” argument:

A patent is a property right, written into the Constitution by the Framers to encourage innovation. The trolls have legally bought and own their patents. Arguing that some patent holders have full rights to sue while others do not flouts the principle of equality under the law.

This has been debunked so many times, it’s hard to believe it keeps coming up. Article I, Section 8, Clause 8 says,

Congress shall have power … To promote the progress of science and useful arts, by securing for limited times to authors and inventors the exclusive right to their respective writings and discoveries;

That is, Congress has the power to grant a limited monopoly to inventors in order “to promote the progress of … useful arts.” There is no right to a patent, much less a property right. Congress has no obligation to grant patents at all, and it certainly has the power to define the nature of the “limited monopoly” it grants.

Then, former Sen. Sununu moves on to the “Blame the PTO” argument:

The deeper problem begins with bad patents. When the US Patent and Trademark Office issues a patent that is overly vague, broad, or trivial, it invites uncertainty and litigation. The administration’s instruction to require more clearly defined patent claims illustrates this point. Don’t blame the person who made the application; blame the government that granted them 20 years of exclusivity.

Really? That’s like saying a con artist isn’t guilty because the victim fell for it. And even if it were the PTO’s fault, why should society subsidize someone who got a patent he shouldn’t have gotten?

Next, comes the “Sure, There’s Abusive Litigation, but Reform Is Hard. And Also Trial Lawyers!” argument:

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