Almost two years ago, I wrote about a new non-practicing entity (Non-Practicing Entity. A broad term associated with trolls but now disfavored because it includes universities and legitimate technology developers that seek to license technology in advance rather than after a producing company has independently developed it. More)—Blackbird Technologies. It claimed to be helping innovators, but the main innovation it helped promote was its own—having the lawyers own the patents on which Blackbird was suing.
When I first wrote about Blackbird, it had just sued Cloudflare over the ‘335 patent, which Blackbird had effectively interpreted as covering any system which modified electronic communications in transit. Now, two years later, after a district court decision, an appeal, and plenty of legal fees, the courts have made clear that Blackbird’s patent never should have issued in the first place. In particular, the district court held that Blackbird’s patent was directed to the Abstract ideas are not patent-eligible subject matter. This judicially developed exclusion was most recently explained by the Supreme Court in Bilski v. Kappos, 2010. More of monitoring a data stream and modifying it when a specific condition is identified and was thus invalid under 35 U.S.C. § 101.
That’s the right result, but if Cloudflare was sued today on the same patent, it’s not clear they’d have gotten to the same point—or at least, not as quickly as within two years. See CAFC cases like Berkheimer have made it harder to fight these sorts of patents early in litigation by converting the legal determination of invalidity into a factual dispute. And the Patent Office is pushing guidance on § 101 that could be misinterpreted by an examiner to allow more of this type of patent to issue in the first place.
These changes represent serious threats to the tools that have been developed to combat low-quality, invalid patents. Those patents, as I wrote earlier this week, do more than threaten to take money out of the pockets of large companies. They also threaten the existence of small companies—the exact companies who most need the kind of quick, inexpensive processes for fighting a patent that Berkheimer deters.