PublishedSeptember 23, 2013

Concern Trolls Send Letter to Congress Opposing CBM Expansion

As I’ve written before, the Business Software Alliance (BSA) and its fellow “concern trolls” have continually opposed the expansion of the covered business method (“CBM”) review program from only financial services patents to all business patents, notably claiming the proposal could inadvertently put innovation at risk. Last Friday, BSA and a number of companies sent a letter to Senate and House Judiciary Committee leadership. Unfortunately, except for the company names there’s not much else in the letter that’s accurate.

BSA trots out, yet again, its line that CBM expansion would harm U.S. innovators (and even impact the relationship with our trading partners) by unnecessarily undermining the rights of patent holders. I feel like a broken record, but I need to ask BSA again how does expanding CBM review put innovation at risk, exactly?

Remember, if your patents are valid, then you have nothing to worry about. The PTO won’t review a patent under CBM review unless it decides that the patent is likely invalid.

Competition and innovation are good for the economy, and our patent policy should encourage, not stifle them. As I’ve discussed here, expanding CBM review would not harm competition or innovation — it would actually encourage it.

Why? The situation is exactly the same as I wrote in July:

Suppose a company has an innovative product and asserts a related patent against a competitor. If the competitor requests CBM review of the patent and wins, the original company still has an innovative product; the difference is that now it might have a competitor in the marketplace.

That’s actually a good thing. Now we have two companies with innovative products instead of just one. And the competitor is allowed to keep making its product, which might be even better than the original company’s.

But a company with a patent, even an invalid one, can stop an innovative product from coming to market or add significantly to the product’s cost. That’s because fighting patent infringement is incredibly expensive.

It’s no secret that patent litigation has skyrocketed in the last few years, due in large part to patent trolls wielding overly broad business method patents and forcing companies — particularly startups and non-tech companies, like retailers and grocery stores — to pay up or face massive legal fees. A recent study from PatentFreedom showed that patent trolls’ use of business method patents is increasing quickly. This wreaks havoc on our economy, and in some cases, has forced companies to lay off employees, delay hiring, or even go out of business.

There needs to be a way to challenge bad patents without the full expense of going to court. But that’s not the worst of the letter.

BSA also claims that expanding CBM review to all business method patents would threaten any patent in any field involving data processing. I’m not making this up, but BSA actually claims that we’d be risking new cancer treatments and car safety systems. And the skies will rain down frogs and locusts. OK, I made that last one up.

This is just ridiculous. First of all, “business method” refers to a method that is not technological. And second of all, if the inventions are really cutting edge, the patents are probably valid! So there’s no threat to them.

BSA would have us believe that business people will freeze with terror at the risk that a patent might be reviewed by the PTO. Oh no! Shut down the assembly lines because if we go and sue someone with one of our patents, that patent might get reviewed by the PTO! How will we ever focus on making our products now?

Please. I’m not sure that even mockery can do justice to the absurdity of this reasoning.

Probably the worst argument the letter makes is claiming that

Expanding Section 18 will not only stymie innovation at home, but it could also impact the relationship of the United States with its trading partners. We have already received questions from our colleagues abroad regarding how this expansion could be justified as compatible with the obligation of the United States under the Agreement on Trade-Related Aspects of Intellectual Property Rights to make patents “available and patent rights enjoyable without discrimination as to . . . the field of technology.” Apart from this question, however, it is clear that if this discriminatory treatment of a select category of patents opposed by special interests in the United States were to be made a permanent feature of U.S. law, it would create a harmful precedent for our trading partners to enact exceptions in their laws to protect special interests in their countries.

I don’t know which colleagues abroad they’re talking to, but they aren’t people who read their own countries’ patent laws or the TRIPS agreement. In all seriousness, this statement has no truth to it at all.

No other country allows patenting business methods the way the U.S. does. But more importantly, expanding review of business method patents does not change the standard for patentability. Same standard, just an opportunity to clear out patents that should never have issued. TRIPS allows a country to treat a category of patents differently in order to deal with issues specific to that category. It’s why we can treat pharmaceutical patents differently (i.e., the Hatch-Waxman Act) without violating TRIPS. This is really a non-issue.

No country in the world will care if we expand the CBM review program. They didn’t care when it started by allowing review of financial services patents, and they won’t care if it covers all business method patents.

And lastly, the signers are ever so worried that infringers could delay lawsuits by challenging patents using CBM review. Again, the PTO only reviews patents that it believes are probably invalid. If a patent is probably invalid, you probably shouldn’t be getting damages based on infringing it until after the PTO has double-checked. After all, why waste a court’s time and a defendant’s money if the patent is probably invalid?

The signers of this letter aren’t worried about stifling innovation. They’re worried that their junky patents won’t be as easy to sell to trolls. My heart bleeds.

Just don’t let these concern trolls derail the best chance we’ve got to disarm the patent trolls. Not one of its arguments holds up when you really think about it.

Perhaps jazz can properly express how you should read the letter. Here’s “It Ain’t Necessarily So” as performed by Art Farmer and Benny Golson:

[tweetbutton hashtag=’fixpatents’]Expand covered business method review now! #ExpandCBM[/tweetbutton]

Matt Levy

Previously, Matt was patent counsel at the Computer & Communications Industry Association

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