Archive for the ‘Patent Reform’ Category

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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by Manny Schecter
IBM Chief Patent Counsel

At long last, the Government Accountability Office (GAO) has submitted its report on patent litigation to the Committees on the Judiciary of the US Senate and House of Representatives, as authorized under the America Invents Act (AIA).  Unfortunately, the report is a day late and a dollar short. Actually, the report is more than a day late – the AIA required that the GAO submit its report within 1 year of its enactment. The AIA was enacted in 2011.  The report is also more than a dollar short –  the GAO ignored Section 34 of the AIA which specified the contents of the study (namely patent litigation initiated by Non-Practicing Entities (NPEs)), choosing instead to  focus on  a set of issues not within its Congressional remit.

First, let me provide some context.  In general, the report furthers the public dialogue on patent litigation, which is always helpful. So too is its focus on patent quality, and the need to improve patent claim clarity to make it easier for us all to understand the boundary between infringement and non-infringement. But in summarily reaching the surprising conclusion that NPEs are not the main cause of the increase in patent litigation, the GAO inexplicably turned its attention to an issue of its own manufacture, namely software patents.

As stated above, the GAO was not even asked to look at software patents….with good reason. Software patents – no matter how defined – should be judged against the same principles of patentability as any other patents. Patents should be granted for inventions that satisfy the criteria for patentability regardless of technology. Technology-specific requirements for patentability risk subjecting our patent system to the same special interests that distort our tax code. The patent system is intended to promote all innovation, not favor one type of innovation over another.

Assuming for the moment that we wanted to single out software patents as a topic for study, the GAO applied a deeply flawed categorization to determine what is and is not a software patent. The GAO report concluded that more than half of recently issued patents are for software. It appears the GAO essentially considered every patent relating to electrical technologies to be a software patent. But many new methods of operating electrical devices are embodied in device hardware, not software; accordingly, the GAO’s conclusions on how many software patents have issued, and the inferences the GAO draws from those conclusions, are highly questionable.

With their erroneous conclusions as a base, is it any wonder that the GAO found software patents to be the subject of a substantial portion of patent litigation? Is it any surprise that the majority of shoppers in grocery stores located in New York are residents of New York? Furthermore, the study assumes all patent litigation is bad and implies something is wrong with any patent involved in litigation, but we know that is not true. Some infringers will not voluntarily license a valid patent, and some licensors and licensees can not reach agreement on royalty rates. Litigation has long had, and will continue to have, a key role in protecting and enforcing patent rights. Perhaps the GAO should have done what it was instructed to do and focused more attention on litigation abuse, not the mere volume of litigation.

We need to maintain our perspective. The software industry is among the most innovative and successful of all industries worldwide. See the graphic below courtesy of the Business Software Alliance.

BSA software revenues graphic_9-12-13

Most of the leading software companies are US owned and based, which is due in part to the strong protections for investment and innovation that are provided by software patents in the US. We should think long and hard before we abrogate the protections to the US software industry provided by US patents. Our nation’s economic future, and even our jobs, are at stake.  The success of the software industry and the importance of patents in protecting software innovation are well documented.  See for example the works of Columbia Law Professor Ronald Mann.  See also my previous articles published in Wired and Smartplanet.

As for NPEs, the GAO downplayed their impact, focusing instead on the total number of patent infringement lawsuits. But as we previously reported in our earlier blog entry, NPEs are clearly the source of real growth in patent litigation. See the graph below from Patent Freedom, indicating that the number of counterparties (defendants plus declaratory judgment plaintiffs) in patent suits involving NPEs has increased at a compound annual growth rate of over 30% during the last decade:

Chart for Clearing the Air_1

The GAO report glosses over this fact with only a brief reference to accounting by number of defendants buried deep in the report. But make no mistake about it – the NPE business model, not software patents, is the main reason patent litigation has increased.

One final point. NPEs often assert patents against products and services that include software.  We can debate why that is…maybe infringements are easier to discover given publication of user manuals, redbooks, and the like on the internet…but that debate would overlook a more fundamental point. Implementing patent reforms specific to software, even if successful in reducing litigation relating to software patents, will not solve the patent litigation problem. NPEs will simply assert more patents relating to other technologies – we’re already starting to see this. It is fine to try to pinpoint the root cause of patent litigation, but our reforms should be targeted to specific issues and universal in scope, based on principles and behaviors, rather than specific technologies.

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by Manny Schecter, IBM Chief Patent Counsel

As the leading recipient of U.S. Patents for 20 consecutive years, we take pride in knowing that over the last 20 years the innovative talents of IBM inventors have generated thousands of original ideas and inventions that will enable fundamental advancements in technology and society. We are also proud because we believe patent leadership comes with a responsibility to continuously strive to improve the patent system, and we have taken many steps with a goal of fulfilling that obligation.

Patent leadership is an important reflection of IBM’s commitment to R&D and innovation. We believe our role as a leader places us in a unique position to help shape the patent system in the U.S. to promote innovation. Of course, this is a task that is never truly finished.

Among the steps we’ve  taken were to unilaterally commit to raise the bar on the technical content of business method patent applications; organize the Peer to Patent project to validate the ability of the public to assist patent examiners in identifying prior art (a capability now codified in the America Invents Act);  promote open innovation by pledging not to assert our patent rights in select areas of societal importance such as open source software, health care, and the environment; and demonstrate how metrics can be used to improve patent system transparency. We have also submitted numerous amicus briefs urging courts to interpret the law so as to best encourage innovation.

These were not actions that promoted our self interest or favored our short term business prospects.  We believed, however, that they were in the long-term interest of the health of the patent system and that what is good for innovation is ultimately also good for IBM.   That is why we continue to strive to optimize the patent system for all constituents.

Today, with many pundits arguing for the elimination of patents relating to software, we are advocating for the need to continue to protect this pervasive platform for innovation, and pointing out the inconsistency of protecting processes implemented mechanically or electrically (but not protecting the same processes implemented using software).

While some may question our motives, we will continue to take actions that we believe aid the patent system in fulfilling its objective of promoting innovation.  We view that as one of the responsibilities of patent leadership.


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Last September, years of effort by the patent community led to passage of the America Invents Act (AIA). The AIA’s sweeping reforms include significant changes to patent office practice, new definitions of prior art, and fee-setting authority for the U.S. Patent and Trademark Office (USPTO). These reforms have the potential to enhance and transform USPTO operations and, in turn, improve the patenting experience for inventors.

While the USPTO and the public are currently tackling a daunting array of rules packages to implement the AIA, the USPTO’s proposed fees have come under attack — from within the patent community. It is disappointing that users of the patent system would oppose the USPTO’s authority to recover its costs, yet nevertheless expect the patent office to fulfill its expanded responsibilities under the AIA .

There is no dispute that the USPTO should have sufficient funding to operate efficiently and effectively. During the years of wrangling over more controversial elements of the AIA, the vast majority of stakeholders agreed that USPTO fee diversion should be prevented. The AIA doesn’t go that far, but it does give the USPTO the power to set fees, a power that was also widely supported (particularly if the USPTO could keep those fees). The USPTO also succeeded in obtaining an appropriation from Congress sufficient to recover its fees, so it seems that for this fiscal year at least, the stars have aligned.

Under the AIA, the USPTO is required to set fees to recover aggregate costs. In an initial fee proposal, the USPTO did just this, with some adjustments designed to encourage certain activities such as filing new patent applications. While some have raised concerns over whether the method for calculating costs or the value proposed for the USPTO reserve fund is optimal, few dispute the USPTO’s goals in establishing them, i.e. to effectively and efficiently examine patent applications and review issued patents.

The USPTO has already put in place a number of procedures required by the AIA, such as accelerated examination and the new threshold for granting inter partes reexamination. In the upcoming months, the USPTO will begin to conduct an array of new post-issuance proceedings. Just as the patent community should have the opportunity to provide input on how these new procedures and proceedings work, we also need to work with the USPTO on how much they should cost. Sufficient funding at the right stages of the patent process is a requirement for a well-functioning patent system.

Members of the public should be encouraged to share views regarding specific fees proposed by the USPTO as part of the overall framework for the USPTO to recover its costs. As this process moves forward, the USPTO is expected to publish a final proposed fee schedule in June so the public can submit comments directly to the USPTO. By doing so, those with concerns about the fees should constructively engage in the fee setting process to help the USPTO help itself. But we shouldn’t expect the USPTO to get the job done without the fees.

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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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The U.S. House of Representatives today approved The America Invents Act, which will enhance the U.S. patent system, strengthen American competitiveness, and help generate job growth. IBM asserted its support for the House passage and urged quick adoption of the legislation.

The patent reform legislation, H.R. 1249, passed in a 304 to 117 vote.

President Obama has said he will sign the legislation into law, which will mark the most significant update to the U.S. patent system in almost 60 years.

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