Patent Reform Act Stalls in the Senate

Coauthored by EFF Activist Richard Esguerra

The progress Congress was making on the Patent Reform Act (S. 1145) has stalled and Senate Majority Leader Harry Reid has pulled the bill from the floor schedule.

The lack of progress is disappointing. Despite its flaws, the proposed legislation would make important and necessary changes to the patent law. In particular, the bill would limit damages for infringement so that they bear some relationship to the actual value of the damage to the patent owner.

S. 1145 would also have clearly defined situations in which defendants would be liable for willful infringement, which can result in treble damages for the losing party. Until the recent Federal Circuit Court of Appeals decision in In re Seagate Technology, the law allowed defendants to be found liable for willful infringement if they merely knew of the existence of the patent. As a result of that case, enhanced damages are now only available for willful patent infringement that is at least "objectively reckless."

One of the basic goals of the patent system is to get inventors to reveal the secrets of their technology — in published patent applications — so that others could build on it. The low threshold for a finding of willfulness, coupled with the threat of treble damages, chilled innovation by discouraging competitors from even reading each other's patents. In addition, many companies, especially small businesses, preferred to license patents of questionable validity rather than risk litigation.

The Wall Street Journal reported that negotiations between Senate Judiciary Committee members stalled over changes in the way damage awards would be made in patent infringement suits. Intellectual Property Watch also suggests that a political fight over the confirmation of federal judges may have played a role in the postponement.

At least the troubling portion of the draft committee report on post-grant review and third-party reexamination — the process by which the EFF Patent Busting Project fights bogus patents — is now off the table. Third-party reexamination allows organizations like EFF to protect the public interest, so we actively sought, with the community's help, to retain the procedures that provided for reexamination practice.

There's no schedule for when the bill will return. Most sources are reporting that the bill is not dead, but it appears that the committee members will have to resolve their differences before patent reform is to continue. Encouragingly, the committee chairman, Senator Leahy, expressed a strong interest in following through, saying in a statement: "Thousands of hours have been spent in negotiations to address the concerns of 100 Senators, hundreds of Representatives, and dozens of stakeholders. [...] I have said repeatedly that the time for patent reform is now. Unfortunately, some have yet to fully grasp this fact, and have stalled meaningful reform."

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Reexamination Improves Patent Quality: A Look at the Latest USPTO Filing Data

Coauthored by Policy Intern Raeanne Young

The latest statistics [PDF] from the Patent and Trademark Office prove what EFF has been saying for years: third party challenges to patent validity provide an invaluable check on improper and overbroad patents. According to these records, in the 25 years since ex parte reexamination became possible, the PTO has granted the vast majority of reexamination requests. In other words, the PTO found that the third party challenge raised substantial new questions of patentability. Thus, rather than overburdening the examiners, reexamination requests are helping the PTO separate the wheat from the chaff, fix mistakes and meet its stated goal: to promote innovation.

Since the start of ex parte reexamination in 1981, there have been over nine thousand requests that the PTO revisit issued patents, averaging over five hundred annually in recent years. From 1981 through the end of 2007, the Office of the Patent Commissioner has granted over ninety percent of these ex parte reexamination requests. Out of the eight thousand requests that have been granted since the start of ex parte reexamination, six thousand and sixty resulted in a narrowing of claims. In other words, the PTO grants 92% of the reexamination requests it receives, and in 3 out of 4 of those cases, the requests are having a substantial effect on the claims.

This data demonstrates how reexamination can help limit the impact of illegitimate patents on the public domain. With the PTO reworking 3 out of 4 patents in reexamination and often revoking the entire patent, these proceedings are clearly essential to the PTO’s continuing ability to pursue high patent quality.

Unfortunately, the success of ex parte reexamination proceedings is being overlooked by the latest draft of S.1145, the Patent Reform Act of 2007, which is raising some serious concerns about the ability of the PTO to continue to ensure good patent quality. As we recently reported, the latest draft of the Patent Reform Act of 2007 replaces the current reexamination processes with an inadequate form of post-grant review and places undue restrictions on third party participation. This portion of the Act could essentially eliminate important public interest projects, such as EFF's Patent Busting Project which uses inter and ex parte reexamination proceedings to challenge patents that endanger the public domain. The PTO recently granted EFF's fifth patent reexamination request.

EFF is working to gather more information about recent patent reexamination proceedings and other public interest efforts to control patent quality through the reexamination process. If you have information that could be helpful, please contact patent@eff.org. To keep third party reexamination as a component of the Patent Reform Act, take action now.

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Wanted: Prior Art to Bust Firepond/Polaris Patent

The Patent Busting Project fights back against bogus patents by filing requests for reexamination against the worst offenders. We've successfully pushed the Patent and Trademark Office to reexamine four of the ten patents on our Most Wanted list, and now we need your help to bust another.

A company called Polaris has a patent on a method for telling whether or not an incoming message (e.g., an email) is a simple, standard request that can be answered automatically, and, if so, for answering it. The method processes incoming messages by consulting two databases: a database of IF-THEN rules, and another database of previously classified messages (cases). In other words, Polaris claims to have invented the basic concept of almost any technology that is used to determine whether the message can be answered automatically or must instead be forwarded to a human being.

To bust this overly broad patent, we need to find prior art that describes a product made before 1997 in this way. Take a look at the description and please forward it to anyone you know who might have special knowledge related to natural language processing. Prior Art can be submitted here.

We anticipate that a lot of useful prior art will lie in the area of helpdesk automation or customer service automation or in server software. Consider specifically:

• Helpdesk automation systems that automatically respond to user queries or
• Systems that help customer service operatives identify solutions to user problems by means of both rule and case databases.

Where to send information on prior art:
Email: priorart@eff.org
Web submissions: http://w2.eff.org/patent/wanted/contribute.php?p=firepond

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EFF Asks U.S. Senate To Protect Reexamination Proceedings (and the Patent Busting Project)

Today EFF submitted a letter to Senators Leahy and Specter calling their attention to a portion of the Draft Judiciary Committee Report of the Patent Reform Act of 2007 which has the potential to kill EFF's Patent Busting Project.

The Report states that “Section 5 of the Act creates a new post-grant review (PGR) system for United States patents, replacing and eliminating inter partes reexamination, in a new chapter 32 in title 35.” This statement is followed by footnote 87:

Ex-parte reexamination, based on a request by the patentee, is retained. See new Section 303(a) of the Act. However, third parties may no longer request an ex-parte reexamination. Thus, third parties wishing to challenge the patent will use the new post grant review system; patentees wishing to have additional art considered by [sic] will use the old ex-parte reexamination system.

This sounds reasonable, but the implications turn out to be deeply problematic.

The form of PGR currently proposed in the Senate’s bill is an inadequate substitute for reexamination because it would only permit non-profit organizations like EFF to question the validity of issued patents within twelve months of issuance. Since the true effect of a patent on the public is frequently not realized until well after the first year of its term, there would be no way for us to then have any concerns we may have regarding its validity addressed.

Finally, since there is only a proposal for a second opportunity to challenge the patent if an individual or entity is economically harmed by a patent, 501(c)(3) entities like EFF would have difficulty meeting that standard and would in many cases be prevented from standing up against invalid patents.

To be clear, EFF supports the Patent Reform Act generally and the creation of a post-grant review procedure, but this should not mean the elimination of the ex parte or inter partes systems because the PGR system cannot meet the public’s needs on its own.

EFF's Patent Busting Project is one of a number of public-interest projects that use the reexamination process to defend the public against the most dubious patents. Four of our five petitions for reexamination have been granted, and EFF expects the last will be after the PTO has had an opportunity to review it (it was filed last week). One of the first reexamination requests submitted by EFF has already resulted in the PTO revoking the patent.

The public has a right to defend itself against patents that should never have been granted, and organizations like EFF exist to assist in this process. Reexamination proceedings are essential for us to continue this work.

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Barracuda Networks Asks For Help in Defending Free and Open Source Patent Claim

Barracuda Networks Inc. today announced that it plans "to defend itself, the open source community and the free and open source Clam AntiVirus software from a patent by Trend Micro."

The patent at issue in the litigation is U.S. Patent Number 5,623,600 and is directed generally to virus detection and removal apparatus for computer networks.

Basically Trend Micro's claim is that Barracuda infringed its patent by incorporating into its products the free and open source Clam AntiVirus software, which scans for viruses at the mail gateway. EFF has long worried that bogus patent claims could threaten the free and open source software community, and we'll be watching this case closely. While this claim was made against a company using the tool, if it's successful the same argument could be targeted at a university or even an individual, so it's important to pay attention at the early stages.

Barracuda has asked for help from the community in seeking prior art for the patent, much as EFF does in its Patent Busting Project. As FSF's Eben Moglen says, "[c]ollective defense from software patents is a shared responsibility for everyone in the free software ecosystem.”

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U.S. Patent Office officially rejects all sixteen Test.com patent claims

In another step forward for EFF's Patent Busting Project, the United States Patent and Trademark Office (PTO) last week issued an official rejection of all sixteen claims of the Test.com Internet test-taking method patent. The PTO granted re-examination last year after EFF submitted a petition that included several examples of prior art from a company called IntraLearn that had not previously been part of the PTO record. In light of that prior art, the PTO has now found that all sixteen of Test.com's claims obvious and non-patentable.

So what's next? Well, if Test.com wants to fight to save its patent, it's going to have to come up with some pretty clever arguments to somehow explain why it wasn't obvious to offer online test-taking in 1999, especially in light of the materials we submitted showing that companies like IntraLearn were already doing so. The other option is to somehow attempt to narrow their claims down to something innovative and non-obvious that they did invent. However, given the basic nature of the method and underlying technology, it's hard to imagine what, if anything, they could salvage. When they do respond, we'll make sure to post it on the site and let you decide for yourselves what to make of it.

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Should Yahoo! be able to patent "smart drag and drop"?

Help the US Patent Office reject a bogus patent claim

The Peer-To-Patent Project (PtP) is a new initiative by New York Law School's Do Tank in cooperation with the US Patent Office (USPTO) that uses open source and open knowledge techniques to help stop the deluge of bad software patents in America. The project works by posting new software patent applications that have been voluntarily submitted by their inventors and asking the public to comment on them. It has been endorsed by such open source and Internet luminaries as Tim O'Reilly and PJ from Groklaw.

Participants can point out prior art, explain technological concepts, or even opine on whether a certain technique is obvious (and thus non-patentable) or not. After two months of commenting, the top submissions are sent off to the Patent Office to help them decide whether or not to grant the patent.

There have been a series of new applications hitting the PtP site lately, some of which are pretty broad and outrageous. For example, check out this one from Yahoo! claiming to have patented "smart" drag-and-drop technology. Here's claim one:

A computer-implemented method for manipulating objects in a user interface, comprising:

• providing
  the user interface including a first interface object operable to be
  selected and moved within the user interface; and

• in response to selection and movement of the first interface object in the user interface, presenting at least one additional interface object in the user interface in proximity of the first interface object, each additional interface object representing a drop target with which the first interface object may be associated.

That's it. You drag, you drop, you infringe. Crazy, eh?

So what does this have to do with you? It's time to do something about it -- if you have examples of drag and drop interfaces that can invalidate this claim, go to the PtP site and submit them here (heads up: some registration required). Your submissions could mean the difference between Yahoo! getting a bogus patent or not. So, if you want to help fight an overbroad software patent, now is the time to act. There are only 31 days left to submit prior art to the USPTO on this patent.

(For additional help and information about participating, check out PtP's tutorial.)

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Carfax patents online searching for used cars with clean titles

The current state of patent law allows for all sorts of ridiculous claims that wouldn?t pass muster if basic common sense principles were applied. Here?s a particularly egregious example to ponder:

U.S. Patent No. 7,228,298
Apparatus and method for perusing selected vehicles having a clean title history
Assignee: Carfax, Inc.
Issued: June 5, 2007
Filed: September 3, 2002
Abstract: A system and method for allowing a consumer to search a database containing used vehicles from a variety of sellers that can be queried to provide search results that include only vehicles having clean title histories.

Here's Claim 1:

1. A method for perusing and searching used vehicles comprising:

• analyzing vehicle identification numbers to determine title information indicative of whether each of a plurality of vehicles have at least one of a clean title in which the corresponding vehicle has no known title discrepancies, and a branded title in which the corresponding vehicle has a title discrepancy;

• providing a classifieds database that stores vehicle information and title information regarding at least a portion of said plurality of vehicles analyzed by said vehicle history management system;
• and remotely searching said classifieds database for vehicles based on search query criteria that includes whether vehicles have branded titles; wherein said classifieds database stores vehicle information and title information for vehicles that are determined not to have branded titles.

English translation:

A method of searching for used vehicles comprising:

• Using VIN numbers to look up the title status of a vehicle;

• Storing the title status of the vehicle in a database; and
• Providing a list of vehicles based on title status to users who search for them online.

Could this be any more obvious? Even the patent itself admits that methods of compiling title information on used cars have been around since 1991. So what's the novel aspect of this invention? According to the patent:

While such systems and methods have been perfectly adequate for their intended use, they do not provide potential buyers with the opportunity to selectively search a database that includes a large selection of vehicles for sale that have been prescreened and found not to have any discrepancies in the vehicle title. Likewise, such systems did not provide sellers with the opportunity to offer a prescreened vehicle, that does not have any discrepancies in the vehicle title, from one seller along with prescreened vehicles from other sellers in a single searchable database.

Yup, that's right, according to the patent, the only novel aspect to this method is that it provides a single searchable database with the ability to prescreen for cars with clean titles. In other words, it allows you to adjust the results of any search based on pre-selected fields and criteria ? just like every other database ever invented in the last twenty years.

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Four Justices Question Patent Trolls and Business Methods at the Supreme Court

News hit today that the U.S. Supreme Court has reversed a lower court decision to issue an injunction against eBay for infringing a patent owned by MercExchange on the "Buy Now" feature associated with auction services. EFF filed an amicus brief [PDF] on eBay's behalf. While the decision primarily concerns itself with the proper test for injunctions, one of the concurrences previews four Justices' ideas on the controversial topics of patent trolls and business method patents.

Justice Kennedy's concurrence (joined by Justices Souter, Stevens, and Breyer) also took care to emphasize the importance of patent rights but went on to note that there are situations in which the patent system seems to be failing in its purpose:

An industry has developed in which firms use patents not as a basis for producing and selling goods but, instead, primarily for obtaining licensing fees. . . . For these firms, an injunction, and the potentially serious sanctions arising from its violation, can be employed as a bargaining tool to charge exorbitant fees to companies that seek to buy licenses to practice the patent.

When the patented invention is but a small component of the product the companies seek to produce and the threat of an injunction is employed simply for undue leverage in negotiations, legal damages may well be sufficient to compensate for the infringement and an injunction may not serve the public interest.

In addition injunctive relief may have different consequences for the burgeoning number of patents over business methods, which were not of much economic and legal significance in earlier times. The potential vagueness and suspect validity of some of these patents may affect the calculus under the four-factor test.

With Congress in gridlock over proposed patent reform legislation and four Justices concerned about the potential threat of both patent trolls and business methods to innovation, you can expect many more petitions to the Supreme Court to address these issues.

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Philips Patents DRM To Stop Commercial Skipping, Changing Channels

According to DesignTechnica, Philips has patented a "technology ... [that] would prevent users from changing channels to avoid watching television commercials as well as prevent viewers from fast-forwarding through recorded advertisements."

Why would Philips invent such an absurd restriction when it will never be voluntarily licensed? After all, in a competitive market, technology companies who adopt Philips' patented system will be shunned by customers; no one wants a device that says, "Now improved -- blocks changing channels during commercials!"

Perhaps Philips believes that, at some point in the future, Hollywood might push for a government mandate forcing technology companies to incorporate anti-skipping technology. If that happens, this patent could be the federally-set standard, and tech creators would have to pay Philips every time they want to sell a new device.

Instead of wasting its time with this anti-user opportunism, Philips should focus on building technologies that satisfy its customers.

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