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by Manny Schecter
IBM Chief Patent Counsel

IBM congratulates the White House and the US Patent & Trademark Office (USPTO) for recently announced Executive Actions relating to crowdsourcing prior art and more ro-bust technical training and expertise for patent examiners. IBM supports these initiatives to improve patent examination quality.

As members of the public and patentees, we all should have an interest in improving patent examination, and thus patent quality. We should favor correct examination at the outset rather than trying to address a wrongly granted patent after issuance – when both the burden of proving invalidity and the cost of doing so are higher and the public has already expended considerable resources avoiding infringement.

For 21 consecutive years, IBM has been the leading recipient of US patents and, through-out this period, we have consistently supported efforts to advance and enable robust pat-ent examination. We organized the Peer to Patent pilot project, in conjunction with New York Law School and the USPTO that demonstrated the feasibility of crowdsourcing prior art, and was particularly effective at identifying non-patent technical literature. We promoted the third-party submission of prior art provisions of the America Invents Act to enable the benefits of crowdsourcing prior art to become part of the examination process for all patents. In addition, we have for several decades published technical journals and documentation — including the IBM Technical Disclosure Bulletin — that are among the non-patent technical literature most widely cited by patent examiners during patent ex-amination. Finally, we have long cooperated with the USPTO in providing technical education for patent examiners and we will continue to do so.

The patent system benefits us all by promoting innovation. We call on other users of the patent system to join IBM in supporting and assisting the USPTO in enhancing the qual-ity of patent examination.

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“In another moment down went Alice after it, never once considering how in the world she was to get out again.”Lewis Carroll, Alice’s Adventures In Wonderland

This spring in Alice v. CLS Bank, the Supreme Court will once again confront the issue of patent eligibility, this time asking whether computer-implemented inventions are the types of innovations our patent system should protect. It may seem curious–or ‘curiouser and curiouser’–to many that the Court feels the need to address this issue after over a half century of breakthrough software inventions backed by software patents. But the Court seems particularly focused on the question of eligibility. In fact, Alice is the fourth time in as many years the Court has heard appeals asking whether inventions ranging from isolated DNA to business methods can be protected by patents.

We believe the Court is revisiting the issue of patent eligibility because it is struggling to formulate a workable test. The patent statute has no limitations on patent eligibility, as long as an invention is directed to a machine, product, process, or chemical composition it is eligible for patenting. Over the years, the Supreme Court has created exceptions for laws of nature, natural phenomena, and abstract ideas. It is the last exception that is relevant to computer-implemented inventions — i.e. is this invention ineligible because it is an “abstract idea”?

In IBM’s amicus brief in Alice, we argue that the abstract idea test doesn’t work for computer implemented inventions. The Court has not provided guidance on how to identify a patent ineligible abstract idea, and thus lower courts, the PTO and the public can not consistently apply the test. In the present case, this confusion resulted in multiple opinions (with no majority) spanning over one hundred pages at the Federal Circuit, despite that court’s decision to hear the case en banc. A closer look at the types of concerns raised by certain computer implemented inventions reveals that the non-obviousness requirement would be a more appropriate vehicle to address these concerns, because the inventions are in fact old methods implemented on computers using conventional means — embodying nothing truly new. More importantly, when properly understood, computer-implemented inventions are never really abstract because they are implemented on a machine.

Computer implemented inventions, particularly in software, form the basis for innovation not only in the technology products we use every day, such as laptops and smartphones, but in everything from cars to surgical techniques to innovations that increase efficiency and production in factories. Strong and effective patent protection for these innovations in the U.S. has fostered a fertile environment for research and development and, as a result, the US is the undisputed leader in the software industry. We stand at the threshold of a new era of cognitive computing—ushered in by advances such as IBM’s Watson — in which machines will learn, reason and interact with people in more natural ways. Patents have helped fuel the software breakthroughs we rely on today, and will help spur the innovations of tomorrow. We hope the Court — and the patent community — will consider our future as we address the fundamental issue of what our patent system is and should be designed to protect.

Additional perspective about IBM’s stance on software patents and CLS Bank amicus brief can be found at:

Gene Quinn, IPWatchdog: Supreme Court “Abstract Idea Doctrine” Is Unworkable

Steven Lundberg, National Law Review: IBM Weighs in on CLS Bank: The Abstract Idea Test is Unworkable for Computer-Implemented Inventions and Should be Abandoned

Kelly G. Hyndman, Jurinspired 005, January 31, 2014

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By Manny Schecter, IBM Chief Patent Counsel

After a recent respite, plenty has been said in the blogosphere of late in defense of non-practicing entities (NPEs) often referred to derogatorily as patent trolls. Perhaps the renewed discourse stems from the passage of the America Invents Act or the smartphone patent wars. Before the conversation gets too passionate, let’s examine a few facts, which reveal that NPEs still pose serious problems.

Some pundits recently dismissed the impact of NPEs by noting that the number of patent suits initiated in the US remained flat from 2001 to 2010 and that only about 100 lawsuits actually go to trial each year. The inference is that the impact of NPEs cannot be substantial if patent litigation has not increased. But this is a plateau that was reached after the number of suits doubled to 3,000 annually over the previous decade, according to data from the Administrative Office of the US Courts.

Furthermore, in 2011, the number of patent suits initiated in the US spiked once again – so the upward trend has apparently renewed. A snapshot of a carefully chosen time period is simply not a fair assessment, particularly when a broader time period results in a different outcome. In addition, even if the number of suits levels off again, who is to say why or whether the level is acceptable?

And what should we glean from only 100 patent suits actually going to trial per year? Not much. Might the capacity of the federal court system be at play? Should we only concern ourselves with the number of trials? The number of suits is, obviously, far greater than the number of trials. And let’s not forget that the number of disputes (settled out of court) is certainly far greater than the number of suits. So, the impact is far greater than a statistic such as 100 suits per year suggests at first blush.

A narrow view of the total number of patent suits or trials is also not the best perspective of the negative impact that NPEs have on innovation and the economy. Better data is available from Patent Freedom, a community that shares information on NPEs. As the chart below shows, the number of patent suits initiated by operating companies has remained flat in recent years, but spiked up in 2011 in correspondence with the uptick in all patent suits. More significantly, the number of counterparties (defendants plus declaratory judgment plaintiffs) in patent suits involving NPEs has increased at a compound annual growth rate over 30% during the same period. The growth rate is also not uniform throughout the economy – the growth rate is significantly higher in some industries, such as financial services. NPEs frequently sue multiple defendants in the same suit, something that operating companies typically do not do. Clearly, there is something different about NPEs and the way they operate.

Concerns about the significantly increased rate of patent litigation by NPEs led to certain provisions in the America Invents Act, including an enhanced ability to challenge patents without resort to litigation, and an “anti-joinder” provision preventing patentees from joining unrelated defendants in the same suit based merely on the infringement of the same patent. These reforms could curb the way NPEs operate.

More data on the impact of trolls may be forthcoming as a result of patent reform legislation. While the AIA was the most extensive patent reform in the US in decades, it simply could not address every NPE behavior that operating companies have expressed concern about – such as shielding the true ownership of patents, assertions of irrelevant patents, strained interpretations of patent claims, and outrageous demands for damages. The AIA requires the Comptroller General of the US to study the consequences of litigation by NPEs. The comptroller’s report is schedule to be issued in September. The results may add greater depth to our understanding of the issue and perhaps even point toward potential solutions.

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By Manny W. Schecter

Chief Patent Counsel, IBM Corporation

The recently-released tally of US Patents awarded in 2011 gives those who are concerned about America’s global competitiveness plenty to think about. Only two US companies, IBM at No. 1 and Microsoft at No. 6, appear on the top 10 list. Hewlett-Packard and Intel have dropped off. The rest of the companies in the top 10 are headquartered in Asia.

This news reminds us that we live in a highly competitive, global economy and it is vital that we remain vigilant about preserving and fostering an environment for US companies to innovate. That includes strengthening science, technology, engineering, and math curricula at all levels, investing in fundamental scientific research, making it easier for entrepreneurs to launch and grow their companies, and strengthening our patent system.

There is another message hidden in the rankings. The results show that the United States is a magnet for global innovation. Why do foreign companies apply for so many patents here? Simple: The US has balanced intellectual property laws, a fair patent system and a strong rule of law that protects the creative work of inventors.

The recently-enacted America Invents Act (AIA) is the most significant reform to the patent system in 60 years.  The AIA improves the fairness of the system and the quality of patents by giving third parties the opportunity to submit information related to a pending application for consideration by the patent examiner and by expanding the ability to challenge existing patents. These reforms will help ensure that patents are issued  and enforced only for inventions that are truly novel and deserving of a patent. The Act also harmonizes US patent law with those of other major countries by switching to a first-inventor-to-file system from a first-to invent system. This is important for businesses that must operate in an increasingly global economy and will help speed examination by promoting work sharing between patent offices.

On the judicial front, America’s court system provides patent holders ample opportunities to enforce their patent rights while at the same time providing fairness and balance in the remedies applied. The US Supreme Court decision in eBay Inc. v. MercExchange LLC established firm guidance for the lower courts: the balance of hardships between plaintiff and the defendant—and the public interest—must be considered before issuing an injunction preventing the sale of products. In cases where the plaintiff does not use the patented invention in products, lower courts’ application of eBay has resulted in fewer injunctions.  As the Federal Trade Commission indicated in its recent Evolving IP Marketplace report, the eBay decision allows courts a more nuanced analysis that recognizes injunctions may in some situations unnecessarily raise costs and deter innovation.

Reform isn’t a one-time act. It must be continuous in response to changing circumstances. So we applaud US PTO Director David Kappos’s vow to produce what he calls a “National IP Strategy” this year. He aims to outline the Obama administration’s key IP priorities, its plan to improve patent protection for small businesses and efforts to increase engagement with China on issues of IP enforcement.

It’s a remarkable time for innovation globally. Think of IBM’s Watson data management and analytics technology, Samsung’s advances in flat-screen TVs, Apple’s iPad, and Facebook’s social media. The future will be bright, too, and the United States will continue to be a locus for innovation, if American companies and foreign firms alike get world-class protections for their inventions and fairness in resolving competing claims. Government and industries must continue to work together to preserve and strengthen U.S. innovation.

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IBM congratulates the U.S. Senate and House of Representatives for reaching a consensus on patent reform legislation today. This landmark action is an important step toward preserving American innovation leadership and stimulating economic growth.

As the leading recipient of U.S. patents for the past 18 years, IBM has supported patent reform since the moment the legislation was first introduced over five years ago. An efficient and effective patent system is vital to the American inventors and innovators who help fuel our nation’s competitiveness in the global economy.

The America Invents Act, which will become law when it is signed by President Obama, marks the most extensive and important update to the U.S patent system in nearly 60 years. This legislation balances the needs of patent system participants and will enhance the quality of patents issued by the USPTO.

Following years of deliberation and revisions, our elected officials have produced balanced, common-sense legislation that will lead to significant improvements to our patent system, which has not kept pace with dramatic changes in technology and innovation over the last half century. The patent bill is poised to usher in a variety of changes that will improve the patent system, such as:

  • Expanding rights for third parties to submit information related to published applications to a patent examiner, and establishing a post-grant review process, which will improve the quality of issued patents.
  • Increasing U.S. competitiveness by transitioning to a more objective first-inventor-to-file system, which is used throughout the rest of the world.
  • Providing fee setting authority to the USPTO, which will give it the ability to implement the new programs, address the backlog in patent applications, etc.

This patent legislation, together with the recent court decisions, puts the US patent system in a much better position to spur innovation in the 21st century.

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In an op-ed running on The Hill.com, IBM Senior Vice President and Director of Research, Dr. John E. Kelly III, calls for the U.S. House of Representatives to vote in support of the America Invents Act (H.R. 1249) patent reform legislation which will stimulate U.S. innovation, economic competitiveness and jobs.

Dr. Kelly’s op-ed, asserts that H.R. 1249 is important legislation that will facilitate improvements to the U.S. patent system, while balancing the needs of inventors of all sizes in all industries.

As the leading recipient of U.S. patents for 18 consecutive years, IBM understands and appreciates the importance of strong intellectual property laws, and encourages swift passage of H.R. 1249.

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IBM congratulates House Judiciary Committee Chairman Lamar Smith and the Committee for overwhelmingly approving the America Invents Act, H.R. 1249, by a vote of 32-3.

IBM strongly supports H.R. 1249 and urges the House to act quickly to pass this patent reform legislation. H.R. 1249 is important legislation that will create a contemporary patent system, spur innovation and create jobs. In addition, this legislation balances the needs of inventors of all sizes in all industries and will enable essential and significant improvements to the operation of our nation’s patent system. This common-sense set of reforms will update patent laws to keep pace with the cutting edge of innovation and will significantly enhance patent quality.

It is crucial that the House enact H.R. 1249 now to preserve American innovation leadership and spur economic growth.

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This week, the Senate will renew debate on an important bill that will transform our nation’s patent system and, in turn, enhance our competitiveness, create jobs and stimulate economic growth.

The proposed patent legislation—the Patent Reform Act of 2011—offers a reasonable and thoughtful set of reforms that balance the interests of all stakeholders, and updates U.S. patent laws for the first time in more than 50 years.

After years of deliberation and revision, the patent bill proposed by Senators Leahy, Hatch, Grassley and others presents an opportunity to make necessary, vital improvements to the U.S. patent system to protect inventors and promote innovation.

While Congress has grappled with contentious provisions that hindered previous versions of the bill, the Patent Reform Act of 2011 (S.23), is buoyed by broad consensus and support, as reflected by the unanimous vote in its favor by the Senate Judiciary Committee.

Under the bi-partisan legislation, the patent system would undergo important changes. The U.S. Patent & Trademark Office would get the tools it desperately needs to reduce the backlog of pending patent applications, while improving the quality of patents issued to inventors. This transformation would bolster American competitiveness in the global economy and help stimulate innovation.

We live in the most innovative country in the world, yet our patent system has not kept pace with changing times. Inventors large and small, as well as the patent bar, universities, and a wide spectrum of industries, are united in their support for the pending patent legislation. Now is the time for Congress to take action and quickly pass the patent reform bill.

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By Manny Schecter, IBM Chief Patent Counsel

With the introduction of new U.S. patent reform legislation, Senate leaders continue plans for the most significant update to the nation’s patent laws in more than 50 years. IBM endorses the bill, which we believe will bolster American competitiveness in the global economy and help stimulate innovation.

Senators Leahy, Hatch, Grassley and others have proposed a bill that will benefit the entire patent community. The Patent Reform Act of 2011 (S.23) will modernize and provide essential improvements to the U.S. patent system, protect inventors and promote innovation.

As the top recipient of U.S. patents for the last 18 years, IBM  is the largest user of the U.S. Patent & Trademark Office and has long been a leading supporter of patent reform. We believe the new bill strikes a careful balance among various users of the U.S. patent system, while updating a system that has not kept pace with dramatic changes in technology and innovation.

The time has come for Congress to act and swiftly adopt this legislation to help preserve American innovation leadership and spur economic growth.

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