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PATENT

DESPAIR?

Patent Quality,

Licensing and

Monetization Where do we go from here?

By Gene Quinn and John White

1

An Ambitious Agenda

Phase 4

Phase 1

Phase 2

Phase 3

A Brief History of the Problem

Patent Quality

Q&A

2

The Reality of Patent Value

A Brief History of the Problem Phase1

For a very long time there has been a belief that innovation simply happens.

Some innovations, even if new/useful, don’t deserve to be patented.

Whenever a patent is granted something has been taken from the public domain.

This view traces all the way back to SCOTUS flash of creative genius test.

Today the problem is ignorance, misinformation and propaganda.

3

Flash of Creative Genius

Since Hotchkiss v. Greenwood, decided in 1851, it has been recognized that, if an improvement is to obtain the privileged position of a patent, more ingenuity must be involved than the work of a mechanic skilled in the art... That is to say, the new device, however useful it may be, must reveal the flash of creative genius, not merely the skill of the calling. If it fails, it has not established its right to a private grant on the public domain.

Cuno Engineering Corp. v. Automatic Devices Corp., 314 U.S. 84 (1941)

4

Modern Problem: SCOTUS

28

Phase 1

Scalia Absence

http://www.ipwatchdog.com/2016/02/17/what-justice-antonin-scalia-means-for-scotus-patent-jurisprudence/id=66247/

Given the fact that most Supreme Court patent decisions are unanimous or at least overwhelmingly one-sided decisions, the passing of Justice Scalia does not seem likely to have much of an impact on intellectual property cases, particularly patent cases.

Having said that, there is a potential that the absence of Justice Scalia may have some impact when the arguments being offered relate to legislative history. Most notably, the America Invents Act (AIA) was passed in September 2011 with a long and cumbersome legislative history, which Justice Scalia would never have considered himself and certainly would have lobbied against considering.

eBay v. MercExchange 547 U.S. 388 (2006) http://www.supremecourt.gov/opinions/05pdf/05-130.pdf

Familiar principles of equity should apply to patent disputes. Translation: rule that an injunction should issue absent the presence of a sound reason for denying it was erased in favor of the traditional four-factor test for injunctions. Need to demonstrate: (1) suffered an irreparable injury; (2) remedies available at law, such as monetary damages, are inadequate; (3) considering the balance of hardships between the plaintiff and defendant, a remedy in equity is warranted; and (4) public interest would not be disserved by a permanent injunction.

KSR v. Teleflex 550 U.S. 398 (2007) http://www.supremecourt.gov/opinions/06pdf/04-1350.pdf

If an invention is “common sense” then it is obvious has lead to real mischief. Some (i.e., examiners and Judges) incorrectly interpret this statement to mean that if they think it is common sense then they can reject even if each and every aspect of the invention is not in the prior art. In KSR the Supreme Court really quite directly ignored Congress, the 1952 Patent Act and the legislative history accompanying the 1952 Patent Act. Applied literally the Supreme Court decision in KSR takes us backwards to flash of creative genius.

Mayo v. Prometheus 566 U.S. ____ (2012) http://www.supremecourt.gov/opinions/11pdf/10-1150.pdf

SCOTUS proclaimed that they “decline the Government’s invitation to substitute §§102, 103, and 112 inquiries for the better established inquiry under §101.” First, it is not an invitation to use 102 and 103 for novelty and non-obviousness; it is absolutely required by Title 35. Second, 101 is not the “better established inquiry” because in the 200 years leading up to Mayo v. Prometheus it had NEVER been used by any court to find a patent claim invalid because it lacked novelty, which is exactly what the Supreme Court did when it acknowledged that the claims did not cover a law of nature but rather only added conventional steps.

AMP v. Myriad Genetics U.S. Supreme Court, June 13, 2013 http://www.supremecourt.gov/opinions/12pdf/12-398_1b7d.pdf

“cDNA is not a product of nature and is patent eligible under §101, except insofar as very short series of DNA may have no intervening introns to remove when creating cDNA. In that situation, a short strand of cDNA may be indistinguishable from natural DNA.”

“Nor are Myriad’s claims saved by the fact that isolating DNA from the human genome severs chemical bonds and thereby creates a nonnaturally occurring molecule.”

But Chakrabarty said: “[R]espondent’s micro-organism plainly qualifies as patentable subject matter. His claim is not to a hitherto unknown natural phenomenon, but to a nonnaturally occurring manufacture or composition of matter – a product of human ingenuity…”

Alice v. CLS Bank Decided June 2014 http://www.supremecourt.gov/opinions/13pdf/13-298_7lh8.pdf

Used the Mayo framework, which is ironic given how the Court so famously misapplied patent law in the Mayo case. First, determine whether the claims at issue are directed a patent-ineligible concept. Second, examine claim elements to determine whether it contains an inventive concept sufficient to transform the claimed abstract idea into a patent-eligible application. “The relevant question is whether the claims here do more than simply instruct the practitioner to implement the abstract idea of intermediated settlement on a generic computer. They do not.” “The method claims recite the abstract idea implemented on a generic computer; the system claims recite a handful of generic computer components configured to implement the same idea.”

Alice/Mayo Framework

Is Software Patentable?

The USPTO continues to issue patents on software in at least some Art Units, while others remain a pit of despair. AIA: Any strategy for reducing, avoiding, or deferring tax liability, whether known or unknown at the time of the invention or application for patent, is deemed insufficient to differentiate a claimed invention from the prior art. This does not apply to computer program products or systems for preparing a tax filing. CBM: A covered business method patent is “a patent that claims a method or corresponding apparatus for performing data processing or other operations used in the practice, administration, or management of a financial product or service.” Enfish, BASCOM, and DDR Holdings are 3 examples from the CAFC.

TC 3600 Allowance Rates http://www.ipwatchdog.com/2016/07/14/where-patent-applications-go-die/id=70913/

Applicant Hurdles http://www.ipwatchdog.com/2016/07/20/prosecution-reopened-examiners-stop-applicants-appealing/id=71087/ http://www.ipwatchdog.com/2016/07/17/impotence-patent-trial-and-appeal-board/id=70952/ http://www.ipwatchdog.com/2016/07/24/alice-experts-second-pair-of-eyes/id=71185/ http://www.ipwatchdog.com/2016/07/25/anatomy-bogus-alice-rejection/id=71192/

A disturbing trend where the Board reverses patent examiners on every issue and yet no patent is issued. Instead, patent examiners conduct new searches, which the MPEP 1214.04 tells them they are not supposed to do. Reopening of prosecution after the applicant has filed an appeal brief, many times with the examiner concluding that the brief is not persuasive because it did not address any of the new rejections made by the examiner AFTER the brief was filed. A return of second pair of eyes to Alice affected Art Units. Bogus Alice rejections where the examiner says there is nothing significantly more than the abstract idea because there is nothing more than the abstract idea, which when parsed essentially says the claim is abstract because the claim is abstract.

http://www.uspto.gov/web/offices/pac/mpep/s1214.html

Patent Trial and Appeal Board http://www.ipwatchdog.com/2016/07/17/impotence-patent-trial-and-appeal-board/id=70952/ http://www.ipwatchdog.com/2016/06/26/cuozzo-ipr-death-american-inventor/id=70382/

The sad truth is the Board has no authority over patent examiners because the Board is subordinate to TC Directors. A Board decision reversing an examiner is merely advisory, at best. The ultimate decision making authority at the Patent Office on whether to issue patents resides in the TC Center Director. The Board seems to be comprised of the most brilliant legal minds on the planet when they are stripping patents away from patent owners, but suddenly become a bunch of incompetent Keystone cops incapable of doing a thorough and complete job when they don’t see any valid reason to prevent a patent from issuing. The PTO touts statistics that claim most patent claims challenged in IPR are not invalidated. These stats do not take into account claims patent owners simply give up on because it is too expensive to fight, and they ignore the reality that once an IPR is actually instituted virtually no claims are adjudicated to be patentable.

Patent Quality: The New Reality Phase 2

http://www.ipwatchdog.com/2016/01/25/quality-patent-requires-patent-quality-from-start/id=65331/

The granting of the patent does not even guarantee that the claims will be presumed valid. Patent owners must go farther than ever before to ensure that the rights they are obtaining are going to be able to stand up to challenge at the PTAB. Getting whatever you can sneak by a patent examiner was probably never a wise strategy, but today it is worse than useless, IT IS HARMFUL. If you get patent claims that won’t stand the test of time all you are doing is wasting the client’s prosecution budget, forcing them to pay for the issuance of meaningless rights, maintain a patent that is a dead weight on a portfolio, and which will contaminate other claims during a 101 analysis. (See Alice) At times hard decisions will need to be made about the continued viability of a patent application, and perhaps filing that 6th or 7th Request for Continued Examination doesn’t make a lot of sense A lot of considerations that go into prosecution strategy, and perhaps stalling and waiting for a better climate is the best strategy. No one size fits all strategy can be employed any longer by those who want to achieve good, strong patent rights.

Phase 3 Patent Quality all about Value

The meaning of the term “patent quality” depends on your viewpoint, but for a patent owner patent quality is all about value. For patent owner’s it is virtually impossible to divorce patent quality from patent value. The value of a patent is related to the likelihood that it could be successfully enforced in litigation. The value of the patent is also a function of the likely damages that could be obtained in litigation. Having said that, even in a portfolio that is licensed there will be only a small handful of anchor patents that are of primary importance, with the remainder of the portfolio there to create volume, or safety in numbers. The issuance of a patent also doesn’t guarantee that the underlying innovation is of any kind of foundational importance, or that the patent and claims are written in ways that suggest the patented innovation is valuable.

Patent Quality Phase 2

US Patent No. 5,884,289 Debit card fraud detection and control system Issued March 16, 1999 Abstract: A computer based system that alerts financial institutions (FIs) to undetected multiple debit card fraud conditions in their debit card bases by scanning and analyzing cardholder debit fraud information entered by financial institution (FI) participants. The result of this analysis is the possible identification of cardholders who have been defrauded but have not yet realized it, so they are "at risk" of additional fraudulent transactions. The system also identifies "at risk" cards in the criminal's possession which have not yet been used. The system's early identification of these "at risk" cardholders helps limit losses to individual FIs and the FI community at large. It also provides the coordinated information necessary to the speedy apprehension of the perpetrators.

Patent Quality Phase 2 Claim 1 of US Patent No. 5,884,289


US Patent No. 6,857,073 System and method for authentication of network users Issued February 15, 2005 Abstract: A network authentication system provides verification of the identity or other attributes of a network user to conduct a transaction, access data or avail themselves of other resources. The user is presented with a hierarchy of queries based on wallet-type (basic identification) and non-wallet type (more private) information designed to ensure the identity of the user and prevent fraud, false negatives and other undesirable results. A preprocessing stage may be employed to ensure correct formatting of the input information and clean up routine mistakes (such as missing digits, typos, etc.) that might otherwise halt the transaction. Queries can be presented in interactive, batch processed or other format. The authenticator can be configured to require differing levels of input or award differing levels of authentication according to security criteria.

Patent

Quality

Phase 2

Claim 1 of US Patent No. 6,857,073


US Patent No. 9,361,658 System and method for enhanced protection and control over use of identity Issued June 7, 2016 Abstract: A method of protecting use of an entity's identity is provided. The method comprises setting a status of the identity to a first state, the first state defining a scope of permitted use of the identity, changing, in advance of an intended use of the identity, the status to a second state defining a scope of permitted use of the identity that is different from the first state, requesting use of the identity after the changing; and returning, after the requesting, the state back to the first state.

Patent

Quality

Phase 2


Phase 3

http://www.ipwatchdog.com/2016/02/08/2015-brokered-patent-market/id=65747/

Phase 3

http://www.ipwatchdog.com/2016/02/07/surviving-alice-signs-patent-market-weathered-alice-storm-least-now/id=65859/

Phase 3

http://www.ipwatchdog.com/2015/11/01/sound-patent-portfolio-management-key-innovation-success/id=62674/

Phase 3

http://www.ipwatchdog.com/2016/04/25/patent-value-changing-metrics/id=68525/

Phase 3

http://www.ipwatchdog.com/2016/07/21/demand-driven-patent-acquisition/id=71103/

The End ~ Q&A

Gene Quinn Patent Attorney Founder of IPWatchdog.com Email: [email protected]

Phase 4

John White Patent Attorney Director, Soryn IP Group Email: [email protected]

mailto:[email protected]

mailto:[email protected]

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